Agreement and Plan of Merger - Unocal Corp. and ChevronTexaco Corp.
AGREEMENT AND PLAN OF MERGER
dated as of
APRIL 4, 2005
among
UNOCAL CORPORATION,
CHEVRONTEXACO CORPORATION
and
BLUE MERGER SUB INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER.......................................................1
Section 1.1 The Merger................................................1
Section 1.2 Certificate of Incorporation and Bylaws of the
Surviving Corporation.....................................2
Section 1.3 Directors and Officers of the Surviving Corporation.......2
Section 1.4 Effect on Capital Stock...................................2
Section 1.5 Election Procedures.......................................4
Section 1.6 Dissenting Shares.........................................6
Section 1.7 Stock Options and Equity Awards...........................6
Section 1.8 Shares Held by Company Affiliates.........................8
ARTICLE II EXCHANGE OF CERTIFICATES.........................................8
Section 2.1 Surrender and Payment.....................................8
Section 2.2 Fractional Shares........................................10
Section 2.3 Lost Certificates........................................11
Section 2.4 Withholding Rights.......................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................11
Section 3.1 Corporate Existence and Power............................11
Section 3.2 Corporate Authorization..................................12
Section 3.3 Governmental Authorization...............................12
Section 3.4 Non-Contravention........................................13
Section 3.5 Capitalization...........................................13
Section 3.6 Subsidiaries.............................................14
Section 3.7 Commission Filings.......................................15
Section 3.8 Financial Statements.....................................16
Section 3.9 Disclosure Documents.....................................16
Section 3.10 Controls and Procedures..................................16
Section 3.11 Absence of Certain Changes...............................18
Section 3.12 No Default...............................................19
Section 3.13 No Undisclosed Material Liabilities......................19
Section 3.14 Litigation...............................................20
Section 3.15 Taxes....................................................20
Section 3.16 Employee Benefit Plans; Employment.......................21
Section 3.17 Compliance with Laws.....................................23
Section 3.18 Certain Business Practices...............................23
Section 3.19 Environmental Matters....................................23
Section 3.20 Compliance with Laws.....................................24
Section 3.21 Hydrocarbon Contracts....................................25
Section 3.22 Material Contracts.......................................25
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Section 3.23 Intellectual Property....................................25
Section 3.24 Confidentiality and Other Agreements.....................26
Section 3.25 Brokers; Financial Advisors..............................26
Section 3.26 Opinion of Financial Advisor.............................27
Section 3.27 Takeover Statutes........................................27
Section 3.28 Stockholder Rights Plan..................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY......................................................27
Section 4.1 Corporate Existence and Power............................27
Section 4.2 Corporate Authorization..................................28
Section 4.3 Governmental Authorization...............................28
Section 4.4 Non-Contravention........................................28
Section 4.5 Capitalization...........................................29
Section 4.6 Commission Filings.......................................29
Section 4.7 Financial Statements.....................................30
Section 4.8 Disclosure Documents.....................................30
Section 4.9 Controls and Procedures..................................31
Section 4.10 Absence of Certain Changes...............................32
Section 4.11 No Undisclosed Material Liabilities......................33
Section 4.12 Litigation...............................................33
Section 4.13 Compliance with Laws.....................................33
Section 4.14 Tax Treatment............................................33
Section 4.15 Capitalization of Merger Subsidiary......................33
ARTICLE V COVENANTS OF THE COMPANY........................................34
Section 5.1 Conduct of the Company...................................34
Section 5.2 Company Stockholder Meeting; Proxy Material..............37
Section 5.3 Resignation of Company Directors.........................39
Section 5.4 Other Actions............................................39
ARTICLE VI COVENANTS OF PARENT.............................................39
Section 6.1 Obligations of Merger Subsidiary.........................40
Section 6.2 Director and Officer Liability...........................40
Section 6.3 Form S-4.................................................40
Section 6.4 Stock Exchange Listing...................................40
Section 6.5 Employee Benefits........................................41
ARTICLE VII COVENANTS OF PARENT AND THE COMPANY.............................42
Section 7.1 Best Efforts.............................................43
Section 7.2 Certain Filings..........................................44
Section 7.3 Access to Information....................................44
Section 7.4 Tax Treatment............................................45
Section 7.5 Public Announcements.....................................45
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Section 7.6 Further Assurances.......................................45
Section 7.7 Notices of Certain Events................................45
Section 7.8 Affiliates...............................................46
Section 7.9 No Solicitation..........................................46
Section 7.10 Takeover Statutes........................................48
Section 7.11 Section 16(b)............................................49
ARTICLE VIII CONDITIONS TO THE MERGER........................................49
Section 8.1 Conditions to the Obligations of Each Party..............49
Section 8.2 Conditions to the Obligations of Parent and Merger
Subsidiary...............................................50
Section 8.3 Conditions to the Obligations of the Company.............51
ARTICLE IX TERMINATION.....................................................52
Section 9.1 Termination..............................................52
Section 9.2 Effect of Termination....................................53
ARTICLE X MISCELLANEOUS...................................................53
Section 10.1 Notices..................................................53
Section 10.2 Non-Survival of Representations and Warranties...........54
Section 10.3 Amendments; No Waivers...................................54
Section 10.4 Expenses.................................................54
Section 10.5 Company Termination Fee..................................55
Section 10.6 Successors and Assigns...................................55
Section 10.7 Governing Law............................................56
Section 10.8 Enforcement; Jurisdiction................................56
Section 10.9 Waiver of Jury Trial.....................................56
Section 10.10 Counterparts; Effectiveness..............................56
Section 10.11 Entire Agreement.........................................56
Section 10.12 Captions.................................................57
Section 10.13 Severability.............................................57
EXHIBITS
Exhibit A -- Form of Certificate of Incorporation of Merger Subsidiary
Exhibit B -- Form of Affiliate's Rule 145 Letter
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DEFINED TERMS
SECTION
2005 Pro Rata Bonus.......................................................6.5(e)
2006 Pro Rata Bonus.......................................................6.5(e)
Acquisition Proposal......................................................7.9(b)
Affected Employees........................................................6.5(b)
Affected Retirees.........................................................6.5(b)
Affiliate Agreement.......................................................7.8(a)
Agreement...............................................................Preamble
Anti-Discrimination Laws.................................................3.16(j)
Antitrust Laws........................................................7.1(b)(ii)
Available Cash Election Amount........................................1.4(a)(ii)
Book-Entry Shares.........................................................2.1(a)
Cancelled Shares..........................................................1.4(d)
Cash Election.........................................................1.4(a)(ii)
Cash Election Amount..................................................1.4(a)(ii)
Cash Election Share...................................................1.4(a)(ii)
Cash Fraction.........................................................1.4(a)(ii)
CERCLA...................................................................3.19(b)
Certificate...............................................................1.4(b)
Change in Control.........................................................6.5(a)
Change in the Company Recommendation......................................5.2(a)
Closing...................................................................1.1(d)
Closing Date..............................................................1.1(d)
Code....................................................................Recitals
Commission................................................................1.7(c)
Common Shares Trust.......................................................2.2(b)
Company.................................................................Preamble
Company 10-K..............................................................3.7(a)
Company Award.............................................................1.7(b)
Company Award Plans.......................................................1.7(b)
Company Balance Sheet........................................................3.8
Company Balance Sheet Date...................................................3.8
Company Benefit Plans....................................................3.16(a)
Company By-laws..............................................................3.1
Company Capital Stock........................................................3.5
Company Charter..............................................................3.1
Company Commission Documents..............................................3.7(a)
Company Common Stock.........................................................3.5
Company Disclosure Schedules...........................................Article 3
Company Intellectual Property............................................3.23(a)
Company Material Adverse Effect..............................................3.1
Company Material Contracts..................................................3.22
Company Pension Plan.....................................................3.16(e)
Company Phantom Stock Option..............................................1.7(a)
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Company Preferred Stock......................................................3.5
Company Proxy Statement...................................................3.9(a)
Company Recommendation....................................................5.2(f)
Company Rights...............................................................3.5
Company Rights Agreement.....................................................3.5
Company Securities...........................................................3.5
Company Stock Option......................................................1.7(a)
Company Stock Option Plans................................................1.7(a)
Company Stockholder Approval..............................................3.2(a)
Company Stockholder Meeting...............................................5.2(f)
Company Subsidiary Securities.............................................3.6(b)
Confidentiality Agreement....................................................7.3
DGCL......................................................................1.1(a)
Dissenting Share.............................................................1.6
EC Merger Regulation.........................................................3.3
Effective Time............................................................1.1(b)
Electing Stockholder......................................................2.1(a)
Election Deadline.........................................................1.5(b)
Election Form.............................................................1.5(a)
Election Form Record Date.................................................1.5(a)
End Date...............................................................9.1(b)(i)
Environmental Laws.......................................................3.19(b)
ERISA....................................................................3.16(a)
ERISA Affiliate..........................................................3.16(d)
Excess Shares.............................................................2.2(a)
Exchange Act.................................................................3.3
Exchange Agent............................................................2.1(a)
Exchange Ratio.......................................................1.4(a)(iii)
Financial Advisor...........................................................3.25
Foreign Company Benefit Plan.............................................3.16(a)
Form S-4..................................................................4.8(a)
GAAP.........................................................................3.8
Hazardous Substance......................................................3.19(b)
HSR Act......................................................................3.3
Hydrocarbon Contract.....................................................3.21(a)
Hydrocarbons.............................................................3.21(a)
Indemnitees...............................................................6.2(a)
Intellectual Property....................................................3.23(a)
knowledge................................................................3.10(e)
Lien.........................................................................3.4
Mailing Date..............................................................1.5(a)
Merger....................................................................1.1(a)
Merger Consideration......................................................1.4(a)
Merger Subsidiary.......................................................Preamble
Mixed Consideration Election Share.....................................1.4(a)(i)
Mixed Election.........................................................1.4(a)(i)
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Mixed Election Stock Exchange Ratio....................................1.4(a)(i)
No Election Shares........................................................1.5(b)
NYSE......................................................................2.2(a)
Parent..................................................................Preamble
Parent 10-K...............................................................4.6(a)
Parent Balance Sheet.........................................................4.7
Parent Balance Sheet Date....................................................4.7
Parent Commission Documents...............................................4.6(a)
Parent Common Stock..........................................................4.5
Parent Disclosure Schedules...........................................Article IV
Parent Material Adverse Effect...............................................4.1
Parent Securities............................................................4.5
Per Share Cash Amount..................................................1.4(a)(i)
Per Share Cash Election Consideration.................................1.4(a)(ii)
Per Share Mixed Consideration..........................................1.4(a)(i)
Person....................................................................2.1(c)
RCRA.....................................................................3.19(b)
Release..................................................................3.19(b)
RFG Patents..............................................................3.23(a)
Sarbanes-Oxley Act.......................................................3.10(a)
Securities Act...............................................................3.3
Significant Subsidiaries..................................................3.6(a)
Stock Award Exchange Ratio................................................1.7(a)
Stock Consideration..................................................1.4(a)(iii)
Stock Election.......................................................1.4(a)(iii)
Stock Election Share.................................................1.4(a)(iii)
Subsidiary................................................................3.6(a)
Substantial Detriment.....................................................7.1(c)
Superior Proposal.........................................................7.9(b)
Surviving Corporation.....................................................1.1(a)
Tax Returns.................................................................3.15
Taxes.......................................................................3.15
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of April 4,
2005 by and among UNOCAL CORPORATION, a Delaware corporation (the "COMPANY"),
CHEVRONTEXACO CORPORATION, a Delaware corporation ("PARENT"), and BLUE MERGER
SUB INC., a newly formed Delaware corporation and a direct wholly-owned
subsidiary of Parent ("MERGER SUBSIDIARY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Subsidiary
and the Company have each approved this Agreement and the transactions
contemplated hereby, including the merger of the Company with and into Merger
Subsidiary (the "MERGER"), upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of the Company deems it advisable and in
the best interest of the Company and its stockholders that the Company enter
into the Merger to advance the strategic business interests of the Company by
putting under common ownership, and permitting the coordination of activities
conducted by, Company subsidiaries and subsidiaries of Parent, and otherwise
participating in growth opportunities of Parent, its subsidiaries and
affiliates; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger will qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE");
NOW, THEREFORE, in consideration of the promises and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined below), the Company shall be merged
(the "MERGER") with and into Merger Subsidiary in accordance with the
requirements of the General Corporation Law of the State of Delaware (the
"DGCL"), whereupon the separate existence of the Company shall cease, and Merger
Subsidiary shall be the surviving corporation in the Merger (the "SURVIVING
CORPORATION").
(b) On the Closing Date, immediately after the Closing, the Company will
file a certificate of merger with the Secretary of State of the State of
Delaware and make all other filings or recordings required by the DGCL in
connection with the Merger. The Merger shall become effective at such time as
the certificate of merger is duly filed with the Secretary of State
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of the State of Delaware or at such later time as Parent and the Company may
agree and is specified in the certificate of merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under the DGCL.
(d) The closing of the Merger (the "CLOSING") shall take place (i) at the
offices of Pillsbury Winthrop Shaw Pittman LLP, 50 Fremont Street, San
Francisco, California, as soon as practicable on the day on which the last to be
fulfilled or waived of the conditions set forth in Article 8 (other than those
conditions that by their nature are to be fulfilled at the Closing, but subject
to the fulfillment or waiver of such conditions) shall be fulfilled or waived in
accordance with this Agreement, or (ii) at such other place and time as the
Company and Parent may agree in writing (the "CLOSING DATE").
Section 1.2 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.
(a) At the Effective Time, the certificate of incorporation of the
Surviving Corporation, shall be the certificate of incorporation of Merger
Subsidiary as set forth in EXHIBIT A, except for Article FIRST thereof which
shall be amended to read as follows: "The name of this corporation is Unocal
Corporation."
(b) The by-laws of Merger Subsidiary, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended or changed as provided therein or by the DGCL.
Section 1.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Subsidiary immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation, and the officers of Merger Subsidiary immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal.
Section 1.4 EFFECT ON CAPITAL STOCK.
(a) At the Effective Time, subject to the other provisions of Articles 1
and 2, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Company Common Stock owned by
Parent, Merger Subsidiary or the Company or any of their respective wholly-owned
subsidiaries and except for any Dissenting Shares), together with the Company
Rights attached thereto or associated therewith, shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be converted
into and shall thereafter represent the right to receive the following
consideration (collectively, the "MERGER CONSIDERATION"):
(i) Each share of Company Common Stock with respect to which an
election to receive a combination of stock and cash (a "MIXED ELECTION")
has been effectively made and not revoked or lost pursuant to Section 2.1
(each, a "MIXED CONSIDERATION
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ELECTION SHARE") and each No Election Share (as that term is defined in
Section 1.5(b) hereof) shall be converted into the right to receive the
combination (which combination shall hereinafter be referred to as the "PER
SHARE MIXED CONSIDERATION") of (x) $16.25 in cash (the "PER SHARE CASH
AMOUNT") and (y) 0.7725 of a share of validly issued, fully paid and
non-assessable shares of Parent Common Stock (the "MIXED ELECTION STOCK
EXCHANGE RATIO"), subject to adjustment in accordance with Section 1.4(c);
(ii) Each share of Company Common Stock with respect to which an
election to receive cash (a "CASH ELECTION") has been effectively made and
not revoked or lost pursuant to Section 2.1 (each, a "CASH ELECTION SHARE")
shall be converted (provided that the Available Cash Election Amount (as
defined below) equals or exceeds the Cash Election Amount (as defined
below)) into the right to receive $65.00 in cash without interest (the "PER
SHARE CASH ELECTION CONSIDERATION"); IF, HOWEVER, (A) the product of the
number of Cash Election Shares and the Per Share Cash Election
Consideration (such product being the "CASH ELECTION AMOUNT") exceeds (B)
the difference between (x) the product of the Per Share Cash Amount and the
total number of shares of Company Common Stock (other than the Cancelled
Shares) issued and outstanding immediately prior to the Effective Time
minus (y) the product of the number of Mixed Consideration Election Shares
(provided that No Election Shares shall be deemed to be Mixed Consideration
Election Shares for purposes of this Section 1.4(a)(ii)) and the Per Share
Cash Amount (such difference being the "AVAILABLE CASH ELECTION AMOUNT"),
then each Cash Election Share shall be converted into a right to receive
(1) an amount of cash (without interest) equal to the product of (p) the
Per Share Cash Election Consideration and (q) a fraction, the numerator of
which shall be the Available Cash Election Amount and the denominator of
which shall be the Cash Election Amount (such fraction being the "CASH
FRACTION") and (2) a number of validly issued, fully paid and
non-assessable shares of Parent Common Stock equal to the product of (r)
the Exchange Ratio and (s) one (1) minus the Cash Fraction;
(iii) Each share of Company Common Stock with respect to which an
election to receive stock consideration (a "STOCK ELECTION") is properly
made and not revoked or lost pursuant to Section 2.1 (each, a "STOCK
ELECTION SHARE") shall be converted (provided that the Cash Election Amount
equals or exceeds the Available Cash Election Amount), into the right to
receive 1.03 shares (the "EXCHANGE RATIO") of validly issued, fully paid
and non-assessable shares of Parent Common Stock, subject to adjustment in
accordance with Section 1.4(c) (together with any cash in lieu of
fractional shares of Parent Common Stock to be paid pursuant to Section
2.2, the "STOCK CONSIDERATION"); PROVIDED HOWEVER, if the Available Cash
Election Amount exceeds the Cash Election Amount, then each Stock Election
Share shall be converted into the right to receive (1) an amount of cash
(without interest) equal to the amount of such excess divided by the number
of Stock Election Shares and (2) a number of validly issued, fully paid and
non-assessable shares of Parent Common stock equal to the product of (x)
the Exchange Ratio and (y) a fraction, the numerator of which shall be the
Per Share Cash Election Consideration minus the amount calculated in clause
(1) of this paragraph and the denominator of which shall be the Per Share
Cash Election Consideration.
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(b) From and after the Effective Time, all of the shares of Company Common
Stock, and associated Company Rights, converted into the Merger Consideration
pursuant to this Article 1 shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate (each a "CERTIFICATE") previously representing any such shares
of Company Common Stock shall thereafter cease to have any rights with respect
to such securities, except the right to receive (i) the Merger Consideration,
(ii) any dividends and other distributions in accordance with Section 2.1(f),
and (iii) any cash to be paid in lieu of any fractional share of Parent Common
Stock in accordance with Section 2.2.
(c) 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, exchange or readjustment of
shares, or any stock dividend thereon with a record date during such period, the
Merger Consideration, the Per Share Cash Amount, the Mixed Election Stock
Exchange Ratio, the Exchange Ratio 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.
(d) At the Effective Time, (1) all shares of Company Common Stock that are
owned by Parent, Merger Subsidiary or the Company (the "CANCELLED SHARES") shall
be cancelled and retired and shall cease to exist and no stock of Parent, cash
or other consideration shall be delivered in exchange therefor and (2) each
share of Company Common Stock held by any direct or indirect wholly-owned
Subsidiary of Parent (other than Merger Subsidiary) or the Company, in each
case, immediately prior to the Effective Time, shall be converted into the right
to receive the Per Share Stock Consideration. The Per Share Stock Consideration
paid pursuant to this Section 1.4(d) shall not be subject to, and will not be
deemed to be Stock Election Shares or otherwise taken into account in
calculating, adjustments under the proviso to Section 1.4(a)(iii). For the
avoidance of doubt, this Section 1.4(d) shall not apply to shares of Company
Common Stock held in trust or otherwise set aside from shares held in the
Company's treasury pursuant to a Company Benefit Plan (as such term is defined
in Section 3.16) other than a Company Stock Option Plan or a Company Award Plan.
(e) Each issued and outstanding share of common stock, par value $0.01 per
share of Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one fully paid and non-assessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
Section 1.5 ELECTION PROCEDURES.
(a) An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates theretofore representing shares of Company Common
Stock shall pass, only upon proper delivery of such Certificates to the Exchange
Agent) in such form as Parent shall specify and as shall be reasonably
acceptable to the Company (the "ELECTION FORM") shall be mailed together with
the Proxy Statement or at such other time as the Company and Parent may agree
(the "MAILING DATE") to each holder of record of Company Common Stock as of the
close of business
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on the record date for notice of the Company Stockholder Meeting (the "ELECTION
FORM RECORD DATE").
(b) Each Election Form shall permit the holder (or the beneficial owner
through appropriate and customary documentation and instructions), other than
any holder of Dissenting Shares, to specify (i) the number of shares of such
holder's Company Common Stock with respect to which such holder elects to
receive the Per Share Mixed Consideration, (ii) the number of shares of such
holder's Company Common Stock with respect to which such holder elects to
receive the Per Share Stock Consideration, (iii) the number of shares of such
holder's Company Common Stock with respect to which such holder elects to
receive the Per Share Cash Consideration, or (iv) that such holder makes no
election with respect to such holder's Company Common Stock ("NO ELECTION
SHARES"). Any Company Common Stock with respect to which the Exchange Agent has
not received an effective, properly completed Election Form on or before 5:00
p.m., New York time, on the twentieth (20th) day following the Mailing Date (or
such other time and date as the Company and Parent shall agree) (the "ELECTION
DEADLINE") (other than any shares of Company Common Stock that constitute
Dissenting Shares as of such time) shall also be deemed to be No Election
Shares.
(c) Parent shall make available one or more Election Forms as may
reasonably be requested from time to time by all Persons who become holders (or
beneficial owners) of Company Common Stock between the Election Form Record Date
and the close of business on the Business Day prior to the Election Deadline,
and the Company shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein.
(d) Any such election shall have been properly made only if the Exchange
Agent shall have actually received a properly completed Election Form by the
Election Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more Certificates (or customary affidavits and, if
required by Parent or the Surviving Corporation, the posting by such Person of a
bond, in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate) representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included in the
Election Form. Any Election Form may be revoked or changed by the Person
submitting such Election Form, by written notice received by the Exchange Agent
prior to the Election Deadline. In the event an Election Form is revoked prior
to the Election Deadline, the shares of Company Common Stock represented by such
Election Form shall become No Election Shares and Parent shall cause the
Certificates representing such shares of Company Common Stock to be promptly
returned without charge to the Person submitting the Election Form upon written
request to that effect from the holder who submitted the Election Form, except
to the extent (if any) a subsequent election is properly made with respect to
any or all of such shares of Company Common Stock. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in the Election
Forms, and any good faith decisions of the Exchange Agent regarding such matters
shall be binding and conclusive. None of Parent, Company or the Exchange Agent
shall be under any obligation to notify any Person of any defect in an Election
Form.
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Section 1.6 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, with respect to each share of Company Common Stock as to which
the holder thereof shall have properly complied with the provisions of section
262 of the DGCL as to appraisal rights (each, a "DISSENTING SHARE"), if any,
such holder shall be entitled to payment, solely from the Surviving Corporation,
of the appraisal value of the Dissenting Shares to the extent permitted by and
in accordance with the provisions of section 262 of the DGCL; provided, however,
that (i) if any holder of Dissenting Shares, under the circumstances permitted
by and in accordance with the DGCL, affirmatively withdraws his demand for
appraisal of such Dissenting Shares, (ii) if any holder of Dissenting Shares
fails to establish his entitlement to appraisal rights as provided in the DGCL
or (iii) if any holder of Dissenting Shares takes or fails to take any action
the consequence of which is that such holder is not entitled to payment for his
shares under the DGCL, such holder or holders (as the case may be) shall forfeit
the right to appraisal of such shares of Company Common Stock and such shares of
Company Common Stock shall thereupon cease to constitute Dissenting Shares and
if such forfeiture shall occur following the Election Deadline, each such share
of Company Common Stock shall thereafter be deemed to have been converted into
and to have become, as of the Effective Time, the right to receive, without
interest thereon, the Per Share Stock Consideration; provided that Parent shall
be entitled to convert each such share into the right to receive the Per Share
Cash Consideration or a combination of the Per Share Cash Consideration and Per
Share Stock Consideration if (x) Parent shall have received an opinion from
McDermott Will & Emery LLP and (y) the Company shall have received an opinion
from Wachtell, Lipton, Rosen & Katz, in each case, to the effect that the Merger
will not fail to satisfy the continuity of interest requirement under Section
368 of the Code as a result thereof. The Company shall give Parent prompt notice
of any demands received by the Company for appraisal of shares of Company Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not settle, make any
payments with respect to, or offer to settle, any claim with respect to
Dissenting Shares without the written consent of Parent.
Section 1.7 STOCK OPTIONS AND EQUITY AWARDS.
(a) The Board of Directors of the Company shall take such action as is
necessary so that at the Effective Time, each outstanding option to purchase
shares of Company Common Stock (a "COMPANY STOCK OPTION") and each phantom
option to receive cash measured by an increase in value of Company Common Stock
over a specified base or exercise price (a "COMPANY PHANTOM STOCK OPTION")
granted under the Company's plans or agreements identified in Section 3.16(a) of
the Company Disclosure Schedules as being, to the Company's knowledge, the only
employee benefit plans or agreements (including nonemployee director plans) as
to which shares of Company Common Stock may be issued upon exercise of an option
(collectively the "COMPANY STOCK OPTION PLANS"), whether or not vested, shall
cease to represent a right to acquire shares of Company Common Stock or a
Company Phantom Stock Option with respect to Company Common Stock, and shall
thereafter constitute an option to acquire or to be a phantom option with
respect to, as the case may be, on the same terms and conditions as were
applicable under such Company Stock Option or Company Phantom Stock Option, as
applicable, pursuant to the relevant Company Stock Option Plan under which it
was issued and the agreement evidencing the grant thereof prior to the Effective
Time, including any provisions for acceleration (as such terms and conditions
have been interpreted and applied by the Company in accordance with its past
practice), the number (rounded down to the nearest whole
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number) of shares of Parent Common Stock determined by multiplying (x) the
number of shares of Company Common Stock subject to such Company Stock Option or
Company Phantom Stock Option immediately prior to the Effective Time by (y) the
Stock Award Exchange Ratio. The exercise price or base price per share of Parent
Common Stock subject to any such Company Stock Option or Company Phantom Stock
Option at and after the Effective Time shall be an amount (rounded up to the
nearest one hundredth of a cent) equal to (A) the exercise price or base price
per share of Company Common Stock subject to such Company Stock Option or
Company Phantom Stock Option prior to the Effective Time divided by (B) the
Stock Award Exchange Ratio. In addition, prior to the Effective Time, the
Company shall make any amendments to the terms of such Company Stock Option
Plans that are necessary to give effect to the transactions contemplated by this
Section 1.7. For purposes of this Section 1.7, the "STOCK AWARD EXCHANGE RATIO"
shall mean the sum of (i) the Mixed Election Stock Exchange Ratio plus (ii) the
fraction resulting from dividing the Per Share Cash Amount by the closing price
per share of the Parent Common Stock on the NYSE on the last trading day
immediately preceding the Closing Date.
(b) At the Effective Time each right, award or account, contingent or
accrued, to receive shares of Company Common Stock or benefits measured in whole
or in part by the value of a number of shares of Company Common Stock, and each
award of any kind consisting of shares of Company Common Stock, outstanding as
of the Effective Time other than a Company Stock Option or a Company Phantom
Stock Option (a "COMPANY AWARD") granted under any employee incentive or benefit
plan, program or agreement or nonemployee director plan maintained by the
Company or any Subsidiary on or prior to the date hereof that provides for
grants of equity-based awards or equity-based accounts and which are identified
on Schedule 3.16 (collectively the "COMPANY AWARD PLANS") whether or not vested,
shall cease to represent a right, award or account with respect Company Common
Stock and shall thereafter constitute a right, award or account, on the same
terms and conditions as were applicable under such Company Award pursuant to the
relevant Company Award Plan under which it was issued and the agreement,
including any provisions for acceleration (as such terms and conditions have
been interpreted and applied by the Company in accordance with its past
practice), with respect to the number (rounded to the nearest whole number) of
shares of Parent Common Stock determined by multiplying (x) the number of shares
of Company Common Stock subject to such Company Award immediately prior to the
Effective Time by (y) the Stock Award Exchange Ratio, PROVIDED that in the case
of any performance shares outstanding as of the Effective Time, such performance
shares shall be paid at the Effective Time at 100% of target, except that the
2005 performance share awards shall be paid at the Effective Time at between
100% and 150% of target, as determined in good faith by the Company's Management
Development and Compensation Committee pursuant to the terms of the plan and the
underlying award agreement. The other terms and conditions of each Company
Award, and the plans or agreements under which they were issued, shall continue
to apply in accordance with their terms and conditions, including any provisions
for acceleration (as such terms and conditions have been interpreted and applied
by the Company in accordance with its past practice). The Company represents and
warrants that to the Company's knowledge there are as of the date hereof no
Company Awards or Company Stock Options other than those reflected in Schedule
3.5.
(c) (i) Parent shall take all corporate action necessary to assume as of
the Effective Time the Company's obligations under the Company Stock Options and
Company Awards and
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reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery pursuant to the terms set forth in this Section 1.7. (ii) As soon as
practicable after the Effective Time and in any event no later than five days
after the Effective Time, Parent shall file with the U.S. Securities and
Exchange Commission (the "COMMISSION") a registration statement on an
appropriate form or a post-effective amendment to a previously filed
registration statement under the Securities Act with respect to the Parent
Common Stock subject to options and other equity-based awards described in this
Section 1.7 and shall use its reasonable best efforts to maintain the current
status of the prospectus contained therein, as well as comply with any
applicable state securities or "blue sky" laws, for so long as such options or
other equity-based awards remain outstanding.
Section 1.8 SHARES HELD BY COMPANY AFFILIATES. Anything to the contrary
herein notwithstanding, no shares of Parent Common Stock (or certificates
therefor) shall be issued in exchange for any Certificate to any "affiliate" of
the Company (identified pursuant to Section 7.8) until such Person shall have
delivered to Parent duly executed letters as contemplated by Section 7.8. Such
Persons shall be subject to the restrictions described in such letters, and such
shares (or certificates therefor) shall bear a legend describing such
restrictions.
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1 SURRENDER AND PAYMENT.
(a) Prior to the Effective Time, Parent shall appoint Mellon Investor
Services LLC or such other exchange agent reasonably acceptable to the Company
(the "EXCHANGE AGENT") for the purpose of exchanging Certificates representing
shares of Company Common Stock and non-certificated shares represented by book
entry ("BOOK-ENTRY SHARES") for the Merger Consideration. Parent will make
available to the Exchange Agent, as needed, the Merger Consideration to be
delivered in respect of the shares of Company Common Stock. Promptly after the
Effective Time, Parent will send, or will cause the Exchange Agent to send, to
each holder of record of shares of Company Common Stock as of the Effective Time
(other than any holder which has previously and properly surrendered all of its
Certificates(s) to the Exchange Agent in accordance with Section 1.5 (each, an
"ELECTING STOCKHOLDER")), a letter of transmittal for use in such exchange
(which shall specify that the delivery shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) in such form as the Company and Parent may reasonably agree, for use in
effecting delivery of shares of Company Common Stock to the Exchange Agent.
Exchange of any Book-Entry Shares shall be effected in accordance with Parent's
customary procedures with respect to securities represented by book entry.
(b) Each holder of shares of Company Common Stock that have been converted
into a right to receive the Merger Consideration, upon (i) with respect to any
Electing Stockholder, completion of the calculations required by Section 1.4(a)
or (ii) with respect to any holder that is not an Electing Stockholder,
surrender to the Exchange Agent of a Certificate, together with a properly
completed letter of transmittal, will be entitled to receive (A) one or more
shares of Parent Common Stock (which shall be in non-certificated book-entry
form unless a physical
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certificate is requested) representing, in the aggregate, the whole number of
shares of Parent Common Stock, if any, that such holder has the right to receive
pursuant to Section 1.4 and (B) a check in the amount equal to the cash portion
of the Merger Consideration, if any, that such holder has the right to receive
pursuant to Section 1.4 and this Article 2, including cash payable in lieu of
fractional shares pursuant to Section 2.2 and dividends and other
distributions pursuant to Section 2.1(f). No interest shall be paid or accrued
on any Merger Consideration, cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of Certificates. Until so
surrendered, each such Certificate shall, after the Effective Time, represent
for all purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be registered in the
name of a Person other than the Person in whose name the applicable surrendered
Certificate is registered, it shall be a condition to the registration thereof
that the surrendered Certificate shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such delivery of the
Merger Consideration shall pay to the Exchange Agent any transfer or other
similar Taxes required as a result of such registration in the name of a Person
other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such Tax has been paid or is not
payable. For purposes of this Agreement, "PERSON" means an individual, a
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of shares of Company Common Stock. If, after the Effective Time,
Certificates are presented to the Exchange Agent, the Surviving Corporation or
the Parent, they shall be canceled and exchanged for the consideration provided
for, and in accordance with the procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.1(a) that remains unclaimed by the holders of shares
of Company Common Stock one year after the Effective Time shall be returned to
Parent, upon demand, and any such holder who has not exchanged his shares of
Company Common Stock for the Merger Consideration in accordance with this
Section 2.1 prior to that time shall thereafter look only to Parent for delivery
of the Merger Consideration in respect of such holder's shares. Notwithstanding
the foregoing, Parent shall not be liable to any holder of shares for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property laws. Any Merger Consideration remaining unclaimed by holders of shares
of Company Common Stock three years after the Effective Time (or such earlier
date immediately prior to such time as such amounts would otherwise escheat to
or become property of any governmental entity) shall, to the extent permitted by
applicable law, become the property of Parent free and clear of any claims or
interest of any Person previously entitled thereto.
(f) No dividends or other distributions with respect to shares of Parent
Common Stock issued in the Merger shall be paid to the holder of any
unsurrendered Certificates or Book-Entry Shares until such Certificates or
Book-Entry Shares are surrendered as provided in this Section 2.1. Following
such surrender, there shall be paid, without interest, to the record holder of
the shares of Parent Common Stock issued in exchange therefor (i) at the time of
such
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surrender, all dividends and other distributions payable in respect of such
shares of Parent Common Stock with a record date after the Effective Time and a
payment date on or prior to the date of such surrender and not previously paid
and (ii) at the appropriate payment date, the dividends or other distributions
payable with respect to such shares of Parent Common Stock with a record date
after the Effective Time but with a payment date subsequent to such surrender.
For purposes of dividends or other distributions in respect of shares of Parent
Common Stock, all shares of Parent Common Stock to be issued pursuant to the
Merger shall be entitled to dividends pursuant to the immediately preceding
sentence as if issued and outstanding as of the Effective Time.
(g) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 2.1 to pay for Shares for which appraisal rights shall
have been perfected shall be returned to Parent, upon demand.
Section 2.2 FRACTIONAL SHARES.
(a) 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 2.2, a cash payment in lieu of such fractional shares of Parent Common
Stock representing such holder's proportionate interest, if any, in the proceeds
from the sale by the Exchange Agent 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 2.1(a) over (y) the aggregate number of whole shares of Parent Common
Stock to be distributed to the holders of Certificates pursuant to Section
2.1(b) (such excess being herein called the "EXCESS SHARES"). The parties
acknowledge that payment of the cash consideration in lieu of issuing fractional
shares was not separately bargained-for consideration but merely represents a
mechanical rounding off for purposes of avoiding the expense and inconvenience
to Parent that would otherwise be caused by the issuance of fractional shares.
As soon as practicable after the Effective Time, the Exchange Agent, as agent
for the holders of the Certificates representing shares of Company Common Stock,
shall sell the Excess Shares at then prevailing prices on the New York Stock
Exchange ("NYSE") in the manner provided in the following paragraph.
(b) The sale of the Excess Shares by the Exchange Agent, as agent for the
holders that would otherwise receive fractional shares, shall be executed on the
NYSE through one or more member firms of the NYSE and shall be executed in round
lots to the extent practicable. The compensation payable to the Exchange Agent
and the expenses incurred by the Exchange Agent, in each case, in connection
with such sale or sales of the Excess Shares, and all related commissions,
transfer taxes and other out-of-pocket transaction costs, will be paid by the
Surviving Corporation out of its own funds and will not be paid directly or
indirectly by Parent. Until the proceeds of such sale or sales have been
distributed to the holders of shares of Company Common Stock, 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
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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.
(c) 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 shares of Company Common Stock without
interest, subject to and in accordance with Section 2.1.
Section 2.3 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to be paid in respect of the shares of
Company Common Stock represented by such Certificate as contemplated by this
Article 2.
Section 2.4 WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to Articles 1 and 2 such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign tax law. To the extent that
amounts are so deducted or withheld by the Surviving Corporation or Parent, as
the case may be, and paid over to the applicable governmental entity, such
deducted or withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except as disclosed in
the Company Commission Documents (as hereinafter defined) filed or furnished
prior to the date hereof or in the correspondingly numbered section of the
disclosure schedules delivered by the Company to Parent simultaneously with the
execution of this Agreement (the "COMPANY DISCLOSURE SCHEDULES") (it being
agreed that disclosure of any item in any section of the Company Disclosure
Schedules shall be deemed disclosure with respect to any other section of this
Agreement to which the relevance of such item is reasonably apparent):
Section 3.1 CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental franchises,
licenses, permits, authorizations, consents and approvals required to enable it
to own, lease or otherwise hold its properties and assets and to carry on its
business as now conducted, except for those the absence of which
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would not, individually or in the aggregate, be reasonably likely to have a
Company Material Adverse Effect (as defined below). The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities or the ownership or leasing of its properties make
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect. For purposes of this
Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on
the financial condition, business, liabilities, assets or continuing results of
operations of the Company and its Subsidiaries, taken as a whole, except to the
extent resulting from (x) any changes in general United States or global
economic conditions, or (y) any changes affecting the oil and gas industry in
general (including changes to commodity prices). The Company has heretofore made
available to Parent true and complete copies of the Certificate of Incorporation
of the Company, as amended to the date of this Agreement (as so amended, the
"COMPANY CHARTER"), and the By-laws of the Company, as amended to the date of
this Agreement (as so amended, the "COMPANY BY-LAWS").
Section 3.2 CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and, except for any required
approval by the Company's stockholders (the "COMPANY STOCKHOLDER APPROVAL") in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. The affirmative vote of holders of a majority of the
outstanding shares of Company Common Stock in favor of the approval and adoption
of this Agreement and the Merger is the only vote of the holders of any of the
Company's capital stock necessary in connection with consummation of the Merger.
Assuming due authorization, execution and delivery of this Agreement by Parent
and Merger Subsidiary this Agreement constitutes a valid and binding agreement
of the Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights, and to general equity principles.
(b) The Company's Board of Directors, at a meeting duly called and held on
or prior to the date hereof, has (i) determined that this Agreement and the
transactions contemplated hereby (including the Merger) are fair to and in the
best interests of the Company's stockholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby (including the Merger), and
(iii) resolved (subject to Section 5.2) to recommend the approval and adoption
of this Agreement and the Merger by its stockholders.
Section 3.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than
(a) the filing of a certificate of merger in accordance with the DGCL, (b)
compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (c) compliance with any
applicable requirements of Council Regulation (EC) No. 139/2004 of 20 January
2004 on the control of concentrations between undertakings (published in the
Official Journal of the European Union on
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January 29, 2004 at L 24/1) (the "EC MERGER REGULATION"), (d) compliance with
any applicable requirements of laws, rules and regulations in other foreign
jurisdictions governing antitrust or merger control matters, (e) compliance with
any applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the "EXCHANGE ACT"), (f)
compliance with any applicable requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "SECURITIES
ACT"); (g) the appropriate filings and approvals under the rules of the NYSE;
and (h) other actions or filings which if not taken or made would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
Section 3.4 NON-CONTRAVENTION. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not, assuming compliance with
the matters referred to in Sections 3.2 and 3.3, (a) contravene or conflict with
the Company Charter or the Company By-Laws or the organizational documents of
any Company Subsidiary, (b) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company or any of its Subsidiaries,
(c) constitute a default (or an event which with notice or the passage of time
would become a default) under or give rise to a material right of termination,
cancellation or acceleration of any right or obligation of the Company or any of
its Subsidiaries or to a loss of any material benefit to which the Company or
any of its Subsidiaries is entitled under any provision of any agreement,
contract or other instrument binding upon the Company or any of its Subsidiaries
or any license, franchise, permit or other similar authorization held by the
Company or any of its Subsidiaries, or (d) result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries, except for
such contraventions, conflicts or violations referred to in clause (b) or
defaults, rights of termination, cancellation or acceleration, or losses or
Liens referred to in clause (c) or (d) that would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect. For
purposes of this Agreement, "LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such asset other than any such mortgage, lien, pledge, charge,
security interest or encumbrance (i) for Taxes (as defined in Section 3.15) not
yet due or being contested in good faith (and for which adequate accruals or
reserves have been established on the Parent Balance Sheet or the Company
Balance Sheet, as the case may be) or (ii) which is a carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like lien arising in the
ordinary course of business.
Section 3.5 CAPITALIZATION. The authorized capital stock of the Company
consists of 750,000,000 shares of common stock, par value $1.00 per share (the
"COMPANY COMMON STOCK") and 100,000,000 shares of preferred stock, par value
$0.10 per share (the "COMPANY PREFERRED STOCK", and together with the Company
Common Stock, the "COMPANY CAPITAL STOCK"). As of March 31, 2005, there were
outstanding (i) 271,654,896 shares of Company Common Stock, (ii) no shares of
Series B Junior Participating Preferred Stock (all of which are reserved for
issuance in accordance with the Rights Agreement (as amended, the "COMPANY
RIGHTS AGREEMENT") dated as of January 5, 2000, as amended, between the Company
and Mellon Investor Services LLC (formerly known as ChaseMellon Shareholder
Services, L.L.C.), as Rights Agent, pursuant to which the Company has issued
rights to purchase Series B Junior Participating Preferred Stock ("COMPANY
RIGHTS")) and no other shares of capital stock or other voting securities of the
Company were then outstanding. All outstanding shares of Company
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Capital Stock have been duly authorized, validly issued, and are fully paid and
nonassessable. As of March 31, 2005, there were outstanding (A) Company Awards
(other than shares of restricted stock or other awards included in the number of
shares of Company Common Stock outstanding set forth above) with respect to
983,963 shares of Company Common Stock and (B) Company Stock Options to purchase
6,278,458 shares of Company Common Stock. Except as set forth in this Section
3.5 and except for changes since the close of business on March 31, 2005
resulting from the exercise of employee stock options outstanding on such date,
or the payment or redemption of other stock-based awards outstanding on such
date or other securities issued as permitted by Section 5.1, there are
outstanding (a) no shares of capital stock or other voting securities of the
Company, (b) no Company Awards and (c) except for the Company Rights, (1) no
options, warrants or other rights to acquire from the Company any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company, and (2) no preemptive or similar
rights, subscription or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the capital stock of
the Company, obligating the Company to issue, transfer or sell any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company or obligating the Company to
grant, extend or enter into any such option, warrant, subscription or other
right, convertible security, agreement, arrangement or commitment (the items in
the foregoing subclauses (a), (b) and (c) being referred to collectively as
"COMPANY SECURITIES"). Except as required by the terms of any Company Stock
Options or Company Awards as permitted by Section 5.1(e), there are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities.
Section 3.6 SUBSIDIARIES.
(a) Each Subsidiary of the Company is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, has all
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except for those the absence
of which would not, individually or in the aggregate, be reasonably likely to
have a Company Material Adverse Effect. For purposes of this Agreement, the term
"SUBSIDIARY" when used with respect to any Person means any other Person,
whether incorporated or unincorporated, of which (i) more than fifty percent of
the voting securities or other ownership interests or (ii) securities or other
interests having by their terms ordinary voting power to elect more than fifty
percent of the board of directors or others performing similar functions with
respect to such corporation or other organization, is directly owned or
controlled by such Person or by any one or more of its Subsidiaries. Each
Subsidiary of the Company is duly qualified to do business and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect. All "significant subsidiaries," as such term is defined
in Section 1-02 of Regulation S-X under the Exchange Act of the Company and all
entities listed on Exhibit 21 to the Company 10-K (collectively, "SIGNIFICANT
SUBSIDIARIES") and their respective jurisdictions of incorporation are
identified in Section 3.6(a) of the Company Disclosure Schedules.
(b) Except for directors' qualifying shares, all of the outstanding capital
stock of, or other ownership interests in, each Significant Subsidiary of the
Company is owned by the
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Company, directly or indirectly, free and clear of any material Lien and free of
any other material limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). There are no outstanding (i) securities of the Company or
any of its Significant Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Significant Subsidiary of the Company or (ii) options, warrants or other rights
to acquire from the Company or any of its Significant Subsidiaries any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities or
ownership interests in, any Significant Subsidiary of the Company, and no
preemptive or similar rights, subscription or other rights, convertible
securities, agreements, arrangements or commitments of any character, relating
to the capital stock of any Significant Subsidiary of the Company, obligating
the Company or any of its Significant Subsidiaries to issue, transfer or sell,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Significant Subsidiary of the Company
or obligating the Company or any Significant Subsidiary of the Company to grant,
extend or enter into any such option, warrant, subscription or other right,
convertible security, agreement, arrangement or commitment (the items in the
foregoing subclauses 3.6(b)(i) and (ii) being referred to collectively as
"COMPANY SUBSIDIARY SECURITIES"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding Company Subsidiary Securities. No Subsidiary of the Company is,
or since January 1, 2003 has been, subject to any requirement to file periodic
reports under the Exchange Act.
Section 3.7 COMMISSION FILINGS.
(a) The Company has made available to Parent (i) its annual reports on Form
10-K for its fiscal years ended December 31, 2003 and 2004, (ii) its quarterly
reports on Form 10-Q for its fiscal quarters ended after December 31, 2004,
(iii) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of the Company held since December
31, 2003, and (iv) all of its other reports, statements, schedules and
registration statements filed with the Commission since December 31, 2003 (the
documents referred to in this Section 3.7(a) being referred to collectively as
the "COMPANY COMMISSION DOCUMENTS"). The Company's annual report on Form 10-K
for its fiscal year ended December 31, 2004 is referred to herein as the
"COMPANY 10-K."
(b) As of its filing date, each Company Commission Document complied as to
form in all material respects with the applicable requirements of the Exchange
Act, the Securities Act and the Sarbanes-Oxley Act of 2002 and the rules and
regulations thereunder.
(c) As of its filing date, each Company Commission Document filed pursuant
to the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each registration statement, as amended or supplemented, if applicable,
filed by the Company since January 1, 2003 pursuant to the Securities Act as of
the date such statement or amendment became effective did not contain any untrue
statement of a material fact or omit to
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state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) The Company has timely filed with or furnished to the Commission all
forms, reports, schedules, registration statements, proxy statements and other
documents required to be filed with or furnished to the Commission by the
Company since January 1, 2003.
Section 3.8 FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company (including any related notes and schedules) included in its annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in
Section 3.7 present fairly, in all material respects, the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and their cash flows
for the periods then ended (subject to normal year-end adjustments and the
absence of notes in the case of any unaudited interim financial statements), in
each case in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may be indicated in
the notes thereto). For purposes of this Agreement, "COMPANY BALANCE SHEET"
means the consolidated balance sheet of the Company as of December 31, 2004 set
forth in the Company 10-K and "COMPANY BALANCE SHEET DATE" means December 31,
2004.
Section 3.9 DISCLOSURE DOCUMENTS.
(a) Neither the proxy statement of the Company (the "COMPANY PROXY
STATEMENT") to be filed with the Commission in connection with the Merger, nor
any amendment or supplement thereto, will, at the date the Company Proxy
Statement or any such amendment or supplement is first mailed to stockholders of
the Company or at the time such stockholders vote on the adoption and approval
of this Agreement and the transactions contemplated hereby, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company Proxy Statement, including all
amendments or supplements thereto, will, when filed, comply as to form in all
material respects with the requirements of the Exchange Act. Notwithstanding the
foregoing, no representation or warranty is made by the Company in this Section
3.9 with respect to statements made or incorporated by reference therein based
on information supplied by Parent or Merger Subsidiary for inclusion or
incorporation by reference in the Company Proxy Statement.
(b) None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Form S-4 (as defined in Section
4.8(a)) or any amendment or supplement thereto will, at the time the Form S-4 or
any such amendment or supplement becomes effective under the Securities Act or
at the Effective Time, as the case may be, contain any untrue statement of a
material fact or omit to state a material fact required to be included in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 3.10 CONTROLS AND PROCEDURES.
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(a) Each of the principal executive officer and the principal financial
officer of the Company (or each former principal executive officer and former
principal financial officer of the Company, as applicable) has made all
certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 and the related rules and regulations promulgated thereunder and under the
Exchange Act (collectively, the "SARBANES-OXLEY ACT") with respect to Company
Commission Documents, and the Company has delivered to Parent a summary of any
disclosure made by management to the Company's auditors and audit committee
since January 1, 2003 referred to in such certifications. For purposes of the
preceding sentence, "principal executive officer" and "principal financial
officer" shall have the meanings given to such terms in the Sarbanes-Oxley Act.
(b) The Company has (i) designed and maintained disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) to ensure that
material information required to be disclosed by the Company in the reports it
files or furnishes under the Exchange Act is communicated to its management by
others within those entities as appropriate to allow timely decisions regarding
required disclosure, (ii) disclosed, based on its most recent evaluation, to its
auditors and the audit committee of its Board of Directors (A) any significant
deficiencies or material weaknesses in the design or operation of internal
controls over financial reporting which could adversely affect its ability to
record, process, summarize and report financial data and (B) any fraud, whether
or not material, that involves management or other employees who have a
significant role in its internal controls over financial reporting and (iii)
identified for the Company's auditors any material weaknesses in internal
controls. The Company has provided to Parent true and correct copies of any of
the foregoing disclosures to the auditors or audit committee that have been made
in writing from January 1, 2003 through the date hereof, and will promptly
provide to Parent true and correct copies of any such disclosure that is made
after the date hereof.
(c) The Company has designed and maintains a system of internal controls
over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
sufficient to provide reasonable assurance concerning the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including reasonable assurance (i) that
transactions are executed in accordance with management's general or specific
authorizations and recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability and (ii)
regarding prevention or timely detection of any unauthorized acquisition, use or
disposition of assets that could have a material effect on the Company's
financial statements. The Company's management, with the participation of the
Company's principal executive and financial officers, has completed an
assessment of the effectiveness of the Company's internal controls over
financial reporting in compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act for the year ended December 31, 2004, and such assessment
concluded that such internal controls were effective using the framework
specified in the Company 10-K.
(d) No personal loan or other extension of credit by the Company or any
Subsidiary to any of its or their executive officers or directors has been made
or modified (other than as permitted by Section 13 of the Exchange Act and
Section 402 of the Sarbanes-Oxley Act) since July 31, 2002.
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(e) Since January 1, 2003, (i) neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any director, officer, employee,
auditor, accountant or representative of the Company or any of its Subsidiaries
has received any written complaint, allegation, assertion, or claim that the
Company or any of its Subsidiaries has engaged in improper or illegal accounting
or auditing practices or maintains improper or inadequate internal accounting
controls and (ii) no attorney representing the Company or any of its
Subsidiaries, whether or not employed by the Company or any of its Subsidiaries,
has reported evidence of a material violation of U.S. federal or state
securities laws, a material breach of fiduciary duty or similar material
violation by the Company, any of its Subsidiaries or any of their respective
officers, director, employees or agents to any officer of the Company, the Board
of Directors of the Company or any member or committee thereof. For purposes of
this Agreement, "KNOWLEDGE" of any Person means the actual knowledge of any
officer (as such term is defined in Rule 16a-1(f) under the Exchange Act) of
such Person.
Section 3.11 ABSENCE OF CERTAIN CHANGES. From the Company Balance Sheet
Date to the date hereof, the Company and its Subsidiaries have conducted their
business in the ordinary course of business, consistent with past practice, and
there has not been:
(a) any event, occurrence, change or development of a state of
circumstances or facts which, individually or in the aggregate, has had, or
would be reasonably likely to have, a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company
(other than the Company's regular quarterly cash dividend and dividends or
distributions by any direct or indirect wholly-owned Subsidiary to the
Company or any wholly-owned Subsidiary of the Company, and except for
dividends or distributions by other Subsidiaries of the Company for which
the portion of such dividends or distributions not payable to a direct or
indirect wholly-owned Subsidiary of the Company did not exceed $10,000,000
in value in the aggregate for all such dividends and distributions), or any
repurchase, redemption or other acquisition by the Company or any of its
wholly-owned Subsidiaries of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or any of
its Significant Subsidiaries (other than (i) any such repurchases prior to
the date hereof pursuant to the Company's publicly announced stock buyback
program or, after the date hereof, as permitted under Section 5.1(e) or
pursuant to the terms of Company Stock Options and Company Awards, in each
case subject to Section 7.4), and (ii) any such transaction solely among
the Company and its wholly-owned Subsidiaries or solely among the Company's
wholly-owned Subsidiaries;
(c) any amendment of any material term of any outstanding security of
the Company or any of its Significant Subsidiaries (other than wholly-owned
Subsidiaries);
(d) to the knowledge of the Company's Management Committee, any
transaction or commitment made, or any contract, agreement or settlement
entered into, by (or judgment, order or decree affecting) the Company or
any of its Subsidiaries relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the
Company or any of its Subsidiaries of any contract or other
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right, in either case, material to the Company and its Subsidiaries taken
as a whole, other than transactions, commitments, contracts, agreements or
settlements (including without limitation settlements of litigation and tax
proceedings) in the ordinary course of business consistent with past
practice, those expressly permitted by this Agreement, or as agreed to in
writing by Parent;
(e) any change in any method of financial accounting or financial
accounting practice (other than any change for tax purposes) by the Company
or any of its Subsidiaries, except for any such change which is not
material or which is required by reason of a concurrent change in GAAP or
applicable law;
(f) any (i) grant of any severance or termination pay to (or amendment
to any such existing arrangement with) any director, officer or employee of
the Company or any of its Subsidiaries, other than in accordance with
existing plans and policies, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company
or any of its Subsidiaries, other than in accordance with existing plans
and policies, (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements or (iv)
increase in (or amendments to the terms of) compensation, bonus or other
benefits payable to directors, officers or employees of the Company or any
of its Subsidiaries, other than increases made in the ordinary course of
business with respect to employees other than executives; or
(g) any (i) Tax election made or changed, (ii) Tax audit settled, or
(iii) amended Tax Return filed, in each case, that is reasonably likely to
result in an increase to a Tax liability, which increase is material to the
Company and its Subsidiaries, taken as a whole.
Section 3.12 NO DEFAULT. Neither the Company nor any of its Subsidiaries
is in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (i) its certificate of incorporation, by-laws or the
comparable charter or organizational documents, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license to which the Company or any
of its Subsidiaries is now a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets is bound or (iii)
any permit, license, order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of its Subsidiaries, except in the
case of (ii) and (iii) for defaults or violations which in the aggregate would
not reasonably be expected to result in a Company Material Adverse Effect.
Section 3.13 NO UNDISCLOSED MATERIAL LIABILITIES. As of the date hereof,
there are no material liabilities of the Company or any Subsidiary of the
Company of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than:
(a) liabilities disclosed or provided for in the Company Balance Sheet
or in the notes thereto;
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(b) liabilities incurred since the Company Balance Sheet Date in the
ordinary course of business consistent with past practice and which,
individually or in the aggregate, would not be reasonably likely to have a
Company Material Adverse Effect;
(c) liabilities disclosed in the Company Commission Documents filed
prior to the date of this Agreement;
(d) liabilities or obligations that have been discharged or paid in
full in the ordinary course of business; and
(e) liabilities under this Agreement.
Section 3.14 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or, to the knowledge of the Company, threatened
against or affecting, the Company or any of its Subsidiaries or any of their
respective properties or any of their respective officers or directors before
any court or arbitrator or any governmental body, agency or official except as
would not, individually or in the aggregate, be reasonably likely to have a
Company Material Adverse Effect.
Section 3.15 TAXES. Except as set forth in the Company Balance Sheet
(including the notes thereto) and except as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, (i)
all Company Tax Returns required to be filed with any taxing authority by, or
with respect to, the Company and its Subsidiaries have been filed in accordance
with all applicable laws; (ii) the Company and its Subsidiaries have timely paid
all Taxes shown as due and payable on the Company Tax Returns that have been so
filed, and, as of the time of filing, the Company Tax Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities and the status of the Company and its Subsidiaries (other than, in
the case of clause (i) or clause (ii) hereof, with respect to Taxes and Tax
Returns for which the position has been taken in good faith and for which
adequate reserves are reflected on the Company Balance Sheet, as adjusted for
operations in the ordinary course of business since the date of the Company
Balance Sheet); (iii) the Company and its Subsidiaries have made provision for
all Taxes payable by the Company and its Subsidiaries for which no Company Tax
Return has yet been filed; (iv) the charges, accruals and reserves for Taxes
with respect to the Company and its Subsidiaries reflected on the Company
Balance Sheet are adequate under GAAP to cover the Tax liabilities accruing
through the date thereof; (v) there is no action, suit, proceeding, audit or
claim now proposed or pending against or with respect to the Company or any of
its Subsidiaries in respect of any Tax where there is a reasonable possibility
of an adverse determination; (vi) to the best of the Company's knowledge and
belief, neither the Company nor any of its Subsidiaries is liable for any Tax
imposed on any entity other than such Person, except as the result of the
application of Treas. Reg. section 1.1502-6 (and any comparable provision of the
tax laws of any state, local or foreign jurisdiction) to the affiliated group of
which the Company or any of its Subsidiaries is or was the common parent; and
(vii) neither the Company nor any Company Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying or
intended to qualify for tax-free treatment under Section 355 of the Code in the
two years prior to the date of this Agreement. For purposes of this Agreement,
"TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including, without limitation, all net
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income, gross income, gross receipts, excise, stamp, real or personal property,
ad valorem, withholding, social security (or similar), unemployment, occupation,
use, production, service, service use, license, net worth, payroll, franchise,
severance, transfer, recording, employment, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
capital stock, profits, disability, sales, registration, value added,
alternative or add-on minimum, estimated or other taxes, assessments or charges
imposed by any federal, state, local or foreign governmental entity and any
interest, penalties, or additions to tax attributable thereto. For purposes of
this Agreement, "TAX RETURNS" shall mean any return, report, form or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.16 EMPLOYEE BENEFIT PLANS; EMPLOYMENT.
(a) The Company has provided Parent with a list (set forth in Section
3.16(a) of the Company Disclosure Schedules) identifying each material "employee
benefit plan", as defined in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), each material employment,
consulting, severance, change in control or similar contract, plan, funding
arrangement or policy applicable to any director, former director, employee or
former employee of the Company or any Company Subsidiary, and each material
plan, funding vehicle or arrangement (written or oral), providing for
compensation, bonuses, profit-sharing, stock option or other stock-related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, death benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits, change in control
benefits and post-employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits) which is maintained,
administered or contributed to by the Company or its subsidiaries) and covers
any employee or director or former employee or director of the Company or any of
its Subsidiaries; PROVIDED, HOWEVER, that such list need not include any Company
Benefit Plan that constitutes a Foreign Company Benefit Plan (as defined below).
The material plans, agreements or arrangements of the Company and its
Subsidiaries referred to in the first sentence of this paragraph (a) (excluding
any such plan that is a "multiemployer plan," as defined in section 3(37) of
ERISA, but including Foreign Company Benefit Plans) are referred to collectively
herein as the "COMPANY BENEFIT PLANS." "FOREIGN COMPANY BENEFIT PLAN" means any
Company Benefit Plan primarily maintained for the benefit of employees and
former employees in jurisdictions other than the United States. To the extent
practicable, the Company shall provide and deliver to Parent a list of Foreign
Company Benefit Plans as soon as practicable following the date hereof.
(b) The Company has made available to Parent true, complete and correct
copies of (i) each Company Benefit Plan (or, in the case of any unwritten
Company Benefit Plan, a description thereof) and any amendments thereto, (ii)
the most recent annual report on Form 5500 and Schedule B thereto (including any
related actuarial valuation report) filed with the Internal Revenue Service with
respect to each Company Benefit Plan (if any such report was required), and
(iii) the most recent summary plan description for each Company Benefit Plan for
which such summary plan description is required.
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(c) Each Company Benefit Plan has been established and maintained in
material compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations (including, but not limited to,
the extent applicable, ERISA and the Code) which are applicable to such Plan.
(d) (i) Neither the Company nor any other entity which is a member of a
controlled group of entities (within the meaning of Sections 414(b), (c), (m) or
(o) of the Code) of which the Company is a member (each, an "ERISA AFFILIATE")
has incurred a material liability under Title IV of ERISA or Section 412 of the
Code that has not been satisfied in full, and no reasonably foreseeable
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability; and (ii) all material insurance
premiums with respect to Company Benefit Plans, including premiums to the
Pension Benefit Guaranty Corporation, have been paid when due.
(e) All "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) that are Company Benefit Plans ("COMPANY PENSION PLAN") intended to be
qualified under Section 401(a) of the Code have been the subject of "GUST II"
determination letters from the Internal Revenue Service to the effect that such
Company Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code. No Company Benefit Plan
is a "multiemployer plan," as defined in Section 3(37) of ERISA.
(f) Other than (i) any provision that delays the effective date of such
amendment or termination or (ii) any benefit under a Company Benefit Plan
disclosed on Section 3.16(g) of the Company Disclosure Schedules that arises
solely as a result of the transactions contemplated by this Agreement or (iii)
any employment agreement to which the Company or any of its Subsidiaries is a
party, each Company Benefit Plan that is an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) (including any such plan covering retirees or
other former employees) may be freely amended or terminated by the Company, any
ERISA Affiliate or any successor thereto on or at any time after the Effective
Time.
(g) Set forth on Section 3.16(g) of the Company Disclosure Schedules is,
based on the assumptions set forth therein, (i) a good faith estimate of a
reasonable amount subject to Section 280G of the Code, including any tax
gross-up, that could be paid to each of the 65 most-highly compensated employees
of the Company and its Subsidiaries under all employment, severance and
termination agreements, other compensation arrangements and Company Benefit
Plans currently in effect as a result of the transactions contemplated by this
Agreement, and (ii) the estimated cost to the Company and its Subsidiaries of
making such payments, including any tax gross-ups with respect to such
employees.
(h) The consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (A) entitle any
current or former employee, consultant or officer of the Company or any its
Subsidiaries to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement or as required by applicable Law,
or (B) accelerate the time of payment or vesting, increase the amount of
compensation due any such employee, consultant or officer or trigger any other
material obligation pursuant to any Company Benefit Plan, except as expressly
provided in this Agreement. Section 3.16 of the Company Disclosure Schedules
lists all the agreements,
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arrangements and other instruments which give rise to an obligation to make or
set aside amounts payable to or on behalf of the officers of the Company and its
Subsidiaries as a result of the transactions contemplated by this Agreement
and/or any subsequent employment termination, true and complete copies of which
have been previously provided to Parent.
(i) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Subsidiaries relating to,
or change in, employee participation or coverage under, or any adoption of, any
Company Benefit Plan (other than a Foreign Company Benefit Plan) which would
increase materially the expense of maintaining such Company Benefit Plan above
the level of expense incurred in respect thereof for the 12 months ended on the
Company Balance Sheet Date.
(j) Except as would not, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect, the Company and its
Subsidiaries are in material compliance with all collective bargaining
agreements and all applicable federal, state and local laws, rules and
regulations respecting employment, employment practices, labor, occupational
safety and health, and wages and hours, including Section 8 of the National
Labor Relations Act and all civil rights and anti-discrimination laws, rules and
regulations (collectively, "ANTI-DISCRIMINATION LAWS"). Except as would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect, no work stoppage, slowdown or labor strike against the
Company or any of its Subsidiaries is pending or threatened, nor is the Company
or any of its Subsidiaries involved in or threatened with material labor
disputes, grievances or litigation relating to labor matters, including with
respect to Anti-Discrimination Laws.
(k) No Company Benefit Plan provides a gross-up for any Taxes which may be
imposed for failure to comply with the requirements of section 409A of the Code.
Section 3.17 COMPLIANCE WITH LAWS. To the Company's knowledge, neither the
Company nor any of its Subsidiaries is in violation of, or, since January 1,
2002, has violated, any applicable provisions of any laws, statutes, ordinances
or regulations except for any violations that, individually or in the aggregate,
would not be reasonably likely to have a Company Material Adverse Effect.
Section 3.18 CERTAIN BUSINESS PRACTICES. To the knowledge of the Company's
Management Committee, since January 1, 2002, neither the Company nor any of its
Subsidiaries nor any director, officer, employee or agent of the Company or any
of its Subsidiaries has (a) used any funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity or (b)
made any unlawful payment to any government official or employee or to any
political party or campaign or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
Section 3.19 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Company Commission Documents filed prior to
the date hereof and with such exceptions as, individually or in the aggregate,
would not be reasonably likely to have a Company Material Adverse Effect, (i) no
notice, notification, demand, request for information, citation, summons,
complaint or order has been received by, and no
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investigation, action, claim, suit, proceeding or review is pending or, to the
knowledge of the Company, threatened by any Person against the Company or any of
its Subsidiaries, and no penalty has been assessed against the Company or any of
its Subsidiaries, in each case, with respect to any matters arising out of any
Environmental Law; (ii) the Company and its Subsidiaries are in compliance with
all Environmental Laws; (iii) there are no liabilities of the Company or any of
its Subsidiaries arising out of any Environmental Law, whether accrued,
contingent, absolute, or determined, and, to the knowledge of the Company, there
is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such a liability; and (iv) there has been no
material environmental investigation, study, audit, test, review or other
analysis conducted since January 1, 2005 of which the Company has knowledge in
relation to any current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned, leased or
operated by the Company or any of its Subsidiaries which has not been delivered
to Parent prior to the date hereof.
(b) For purposes of this Section 3.19, the term "ENVIRONMENTAL LAWS" means
federal, state, local and foreign statutes, laws (including, without limitation,
common law), judicial decisions, regulations, ordinances, rules, judgments,
orders, codes, injunctions, permits, governmental agreements or governmental
restrictions relating to relating to: (A) the protection, investigation or
restoration of the environment or natural resources, (B) the handling, use,
presence, disposal, Release or threatened Release of any Hazardous Substance or
(C) noise, odor, indoor air, employee exposure, electromagnetic fields,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property relating to any Hazardous Substance. As used herein, the term
"HAZARDOUS SUBSTANCE" means any "hazardous substance" and any "pollutant or
contaminant" as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"); any
"hazardous waste" as that term is defined in the Resource Conservation and
Recovery Act ("RCRA"); and any "hazardous material" as that term is defined in
the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 ET SEQ.), as
amended (including as those terms are further defined, construed, or otherwise
used in rules, regulations, standards, orders, guidelines, directives, and
publications issued pursuant to, or otherwise in implementation of, said Laws);
and including, without limitation, any petroleum product or byproduct, solvent,
flammable or explosive material, radioactive material, asbestos, lead paint,
polychlorinated biphenyls (or PCBs), dioxins, dibenzofurans, heavy metals, radon
gas, mold, mold spores, and mycotoxins. As used herein, the term "RELEASE" means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, placing, discarding, abandonment, or
disposing into the environment (including the placing, discarding or abandonment
of any barrel, container or other receptacle containing any Hazardous Substance
or other material).
Section 3.20 TITLE TO PROPERTIES. Except in each case as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, each of the Company and each of its Subsidiaries has
good title to, or valid leasehold or other ownership interests or rights in, all
its material properties and assets except: (i) for such interest or rights as
are no longer used or useful in the conduct of its businesses or as have been
disposed of in the ordinary course of business, and (ii) for defects in title,
easements, restrictive covenants and similar encumbrances or impediments that,
in the aggregate, do not and will not interfere with its ability to conduct its
business as currently conducted. As of the date of this Agreement, none of the
properties and assets of the Company or any of its Subsidiaries are subject to
any Liens that,
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in the aggregate, interfere with the ability of the Company and the Company
Subsidiaries to conduct business as currently conducted to an extent that have
had or would reasonably be expected to have a Company Material Adverse Effect.
Section 3.21 HYDROCARBON CONTRACTS.
(a) Except in each case as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (i) the
Hydrocarbon Contracts are in full force and effect in accordance with their
respective terms; (ii) all royalties, rentals and other payments due thereunder
have been properly and timely paid; (iii) there are currently pending no written
requests or demands for payments, adjustments of payments or performance
pursuant thereto; (iv) none of the Company or any of its Subsidiaries is in
breach of any of its obligations under any Hydrocarbon Contracts; and (v) to the
knowledge of the Company, no other party to any Hydrocarbon Contract is in
breach of any of its obligations thereunder. The term "HYDROCARBON CONTRACT"
means a material Hydrocarbon production sharing contract, lease or license,
permit or other similar agreement or right permitting the Company or any of its
Subsidiaries to explore for, develop, use, produce, sever, process, operate and
occupy Hydrocarbon interests and associated fixtures or structures for a
specified period of time. The term "HYDROCARBON CONTRACT" also includes any
farm-out or farm-in agreement, operating agreement, unit agreement, pooling or
communitization agreement, declaration or order, joint venture, option or
acquisition agreement, any oil and gas production, sales, marketing,
transportation, exchange and processing contract and agreement, or any other
contract affecting the ownership or operation of properties held for exploration
or production of Hydrocarbons, or the disposition of the Hydrocarbons produced
therefrom, in each case to which the Company or any of its Subsidiaries is a
party. The term "HYDROCARBONS" means any of oil, bitumen and products derived
therefrom, synthetic crude oil, petroleum, natural gas, natural gas liquids,
coal bed methane, and any and all other substances produced in association with
any of the foregoing, whether liquid, solid or gaseous.
(b) Except in each case as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) the
Company and its Subsidiaries have filed with the applicable government
authorities all applications and obtained all licenses, permits and other
authorizations required for operations under the Hydrocarbon Contracts, and (ii)
the Company and its Subsidiaries have complied with all rules and regulations of
any applicable government authority with respect to operations under the
Hydrocarbon Contracts.
Section 3.22 MATERIAL CONTRACTS. Except for this Agreement and except as
set forth in the Company Commission Documents, as of the date hereof, neither
the Company nor any of its Subsidiaries is a party to or bound by any "material
contract" (as such term is defined in item 601(b)(10) of Regulation S-K of the
Commission) (all contracts of the type described in this Section 3.22 being
referred to herein as "COMPANY MATERIAL CONTRACTS").
Section 3.23 INTELLECTUAL PROPERTY.
(a) Except as would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect, (i) the Company and its
Subsidiaries possess the valid right to use, license and enforce all patents,
trademarks, trade names, service marks,
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Internet domain names, copyrights, applications for any of the foregoing,
computer software programs or applications, geophysical data, trade secrets,
know-how, data and other proprietary rights (collectively, "INTELLECTUAL
PROPERTY") that are used in the conduct of the business of the Company and its
Subsidiaries as currently conducted (collectively, the "COMPANY INTELLECTUAL
PROPERTY"); (ii) to the knowledge of the Company, the conduct of the business of
the Company and its Subsidiaries and use of the Company Intellectual Property
does not infringe upon or otherwise violate any Intellectual Property rights of
any other Person; (iii) to the knowledge of the Company, no third party is
challenging, infringing or otherwise violating any right of the Company and its
Subsidiaries in the Company Intellectual Property; (iv) neither the Company nor
any of its Subsidiaries has received written notice of any pending claim, order
or proceeding with respect to any alleged or potential infringement or other
violation of Intellectual Property rights of any other Person or with respect to
any Company Intellectual Property; and (v) to the knowledge of the Company, no
Company Intellectual Property is being used or enforced by the Company or any of
its Subsidiaries in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability of any Company Intellectual
Property; PROVIDED, HOWEVER, that for purposes of this Section 3.23 only,
Company Intellectual Property shall not include RFG Patents. For purposes of
this Agreement, the term "RFG PATENTS" shall mean United States Patent Nos.
5,288,393; 5,593,567; 5,653,866; 5,837,126 and 6,030,521 and any reissues,
divisionals, reexaminations, continuations or continuations-in-part or foreign
counterparts of such United States Patents.
(b) As of the date hereof, the Company and its Subsidiaries have not
entered into any contractual arrangement that would limit Parent's or the
Company's or their respective Subsidiaries' freedom to license, cross-license or
otherwise dispose of the RFG Patents, except for the nine (9) licensing
agreements the Company or its Subsidiaries have heretofore entered into with
motor gasoline refiners, blenders and importers under the RFG Patents, as
identified in the Company 10-K.
Section 3.24 CONFIDENTIALITY AND OTHER AGREEMENTS.
(a) None of the confidentiality agreements or standstill agreements the
Company has entered into with any third party (or any agent thereof) that is in
effect on the date hereof contains any exclusivity or standstill provisions that
are or will be binding on the Company, any of its Subsidiaries or, after the
Effective Time, Parent or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries is a party to any
agreement that would expressly and materially limit the ability of Parent or any
Subsidiary of Parent, after the Effective Time, to compete in or conduct any
line of business or compete with any Person or in any geographic area or during
any period of time.
Section 3.25 BROKERS; FINANCIAL ADVISORS. No broker, investment banker,
financial advisor or other Person, other than Morgan Stanley (the "FINANCIAL
ADVISOR") (the terms of the engagement having been heretofore provided to
Parent), and the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Merger as a result of being engaged by the
Company or any Subsidiary or affiliate of the Company.
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Section 3.26 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of the Financial Advisor, dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Merger by
the holders of the shares of Company Common Stock is fair to the Company's
stockholders from a financial point of view.
Section 3.27 TAKEOVER STATUTES. The Board of Directors of the Company has
taken the necessary action to render section 203 of the DGCL, any other
potentially applicable antitakeover or similar statute or regulation and the
provisions of Article SEVENTH of the Company Charter inapplicable to this
Agreement and the transactions contemplated hereby.
Section 3.28 STOCKHOLDER RIGHTS PLAN. The Board of Directors of the Company
has resolved to, and the Company promptly after execution of this Agreement
will, take all action necessary to render the rights issued pursuant to the
terms of the Company Rights Agreement inapplicable to the Merger and this
Agreement and the other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary represent and warrant to the Company that,
except as disclosed in the Parent Commission Documents (as hereinafter defined)
filed or furnished prior to the date hereof or in the correspondingly numbered
section of the disclosure schedules delivered by Parent to the Company
simultaneously with the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULES") (it being agreed that disclosure of any item in any section of the
Parent Disclosure Schedules shall be deemed disclosure with respect to any other
section of this Agreement to which the relevance of such item is reasonably
apparent):
Section 4.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except for those the absence of which
would not, individually or in the aggregate be reasonably likely to have a
Parent Material Adverse Effect. Parent is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, be
reasonably likely to have a Parent Material Adverse Effect. For purposes of this
Agreement, the term "PARENT MATERIAL ADVERSE EFFECT" means a material adverse
effect on the financial condition, business, liabilities, assets or continuing
results of operations of Parent and its Subsidiaries, taken as a whole, except
to the extent resulting from (x) any changes in general United States or global
economic conditions, or (y) any changes affecting the oil and gas industry in
general (including changes to commodity prices). Since the date of its
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement. Parent has heretofore
delivered to the Company true and complete copies of Parent's and Merger
Subsidiary's certificate of incorporation and by-laws as currently in effect.
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Section 4.2 CORPORATE AUTHORIZATION.
(a) The execution, delivery and performance by Parent and Merger Subsidiary
of this Agreement and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby are within the corporate powers of Parent and
Merger Subsidiary and have been duly authorized by all necessary corporate
action. Assuming due authorization, execution and delivery of this Agreement by
the Company, this Agreement constitutes a valid and binding agreement of each of
Parent and Merger Subsidiary, enforceable against such party in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. The shares of
Parent Common Stock issued pursuant to the Merger, when issued in accordance
with the terms hereof, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
(b) Parent's Board of Directors, at a meeting duly called and held on or
prior to the date hereof, has (i) determined that the transactions contemplated
hereby (including the Merger) are fair to and in the best interests of Parent's
stockholders and (ii) approved the execution of this Agreement and the
transactions contemplated hereby (including the Merger).
Section 4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority other than (a) the filing of a certificate
of merger in accordance with the DGCL, (b) compliance with any applicable
requirements of the HSR Act, (c) compliance with any applicable requirements of
the EC Merger Regulation, (d) compliance with any applicable requirements of
laws, rules and regulations in other foreign jurisdictions governing antitrust
or merger control matters, (e) compliance with any applicable requirements of
the Exchange Act, (f) compliance with any applicable requirements of the
Securities Act, (g) the appropriate filings and approvals under the rules of the
NYSE and (h) other actions or filings which if not taken or made would not,
individually or in the aggregate, be reasonably likely to have a Parent Material
Adverse Effect or prevent or materially delay Parent's and Merger Subsidiary's
consummation of the Merger.
Section 4.4 NON-CONTRAVENTION. The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will
not, assuming compliance with the matters referred to in Sections 4.2 and 4.3,
(a) contravene or conflict with the certificate of incorporation or by-laws of
Parent or Merger Subsidiary, (b) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Parent or any of its Subsidiaries, (c)
constitute a default under or give rise to any material right of termination,
cancellation or acceleration of any right or obligation of Parent or any of its
Subsidiaries or to a loss of any material benefit to which Parent or any of its
Subsidiaries is entitled under any provision of any agreement, contract or other
instrument binding upon Parent or any of its Subsidiaries or any license,
franchise, permit or other similar authorization held by Parent or any of its
Subsidiaries or (d) result in the creation or imposition of any Lien on any
asset of Parent or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or defaults, rights of
termination,
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cancellation or acceleration, or losses or Liens referred to in clause (c) or
(d) that would not, individually or in the aggregate, be reasonably likely to
have a Parent Material Adverse Effect. The approval of the stockholders of
Parent is not required by applicable law or the rules of the NYSE to effect the
transactions contemplated by this Agreement.
Section 4.5 CAPITALIZATION. The authorized capital stock of Parent consists
of 4,000,000,000 shares of common stock, par value $0.75 per share ("PARENT
COMMON STOCK"), and 100,000,000 shares of preferred stock, par value $1.00 per
share (of which 5,000,000 are designated Series A Participating Preferred Stock,
and the remaining shares of such preferred stock are not subject to any
designation). As of the close of business on December 31, 2004, there were
outstanding 2,274,032,014 shares of Parent Common Stock, no shares of Series A
Participating Preferred Stock, and no other shares of capital stock or other
voting securities of Parent. All outstanding shares of capital stock of Parent
have been duly authorized and validly issued and are fully paid and
nonassessable. As of December 31, 2004, there were outstanding (i) options to
purchase 54,352,000 shares of Parent Common Stock and (ii) other stock-based
awards (other than shares of restricted stock or other equity based awards
included in the number of shares of Parent Common Stock outstanding set forth
above) with respect to 200,747 shares of Parent Common Stock. Except as set
forth in this Section 4.5 and except for changes since the close of business on
December 31, 2004 resulting from the exercise of employee stock options
outstanding on such date or the payment or redemption of other stock-based
awards outstanding on such date and except for the shares to be issued in
connection with the Merger, there are outstanding (a) no shares of capital stock
or other voting securities of Parent, and (b) except for securities issuable
pursuant to employee benefit plans or arrangements, including options issued
pursuant to Parent stock option plans and awards payable in Parent Common Stock,
(i) no options, warrants or other rights to acquire from Parent any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of Parent, and (ii) no preemptive or similar
rights, subscription or other rights, convertible securities, agreements,
arrangements, or commitments of any character, relating to the capital stock of
Parent, obligating Parent to issue, transfer or sell any capital stock, voting
security or securities convertible into or exchangeable for capital stock or
voting securities of Parent or obligating Parent to grant, extend or enter into
any such option, warrant, subscription or other right, convertible security,
agreement, arrangement or commitment (the items in the foregoing subclauses (a)
and (b) being referred to collectively as "PARENT SECURITIES"). Except as
required by the terms of any employee or director options or other stock based
awards, there are no outstanding obligations of Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Parent Securities.
Section 4.6 COMMISSION FILINGS.
(a) Parent has made available to the Company (i) its annual reports on Form
10-K for its fiscal years ended December 31, 2003 and 2004, (ii) its quarterly
reports on Form 10-Q for its fiscal quarters ended after December 31, 2004,
(iii) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of Parent held since December 31,
2003, and (iv) all of its other reports, statements, schedules and registration
statements filed with the Commission since December 31, 2003 (the documents
referred to in this Section 4.6(a) being referred to collectively as the "PARENT
COMMISSION DOCUMENTS").
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Parent's annual report on Form 10-K for its fiscal year ended December 31, 2004
is referred to herein as the "PARENT 10-K."
(b) As of its filing date, each Parent Commission Document complied as to
form in all material respects with the applicable requirements of the Exchange
Act, the Securities Act and the Sarbanes-Oxley Act.
(c) As of its filing date, each Parent Commission Document filed pursuant
to the Exchange Act did not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each registration statement, as amended or supplemented, if applicable,
filed by Parent since January 1, 2003 pursuant to the Securities Act as of the
date such statement or amendment became effective did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(e) Parent has timely filed with or furnished to the Commission all forms,
reports, schedules, registration statements, proxy statements and other
documents required to be filed with or furnished to the Commission by Parent
since January 1, 2003.
Section 4.7 FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
(including any related notes and schedules) included in the annual reports on
Form 10-K and the quarterly reports on Form 10-Q referred to in Section 4.6
present fairly, in all material respects, the consolidated financial position of
Parent and its Subsidiaries as of the dates thereof and the consolidated results
of their operations and their cash flows for the periods then ended (subject to
normal year-end adjustments and the absence of notes in the case of any
unaudited interim financial statements), in each case in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto).
For purposes of this Agreement, "PARENT BALANCE SHEET" means the consolidated
balance sheet of Parent as of December 31, 2004 set forth in the Parent 10-K and
"PARENT BALANCE SHEET DATE" means December 31, 2004.
Section 4.8 DISCLOSURE DOCUMENTS.
(a) The Registration Statement on Form S-4 of Parent (the "FORM S-4") to be
filed under the Securities Act relating to the issuance of Parent Common Stock
in the Merger, and any amendments or supplements thereto, will, when filed,
subject to the last sentence of PSection 4.8(b), comply as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
(b) Neither the Form S-4 nor any amendment or supplement thereto will at
the time it becomes effective under the Securities Act or at the Effective Time
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by Parent in this Section 4.8 with respect to statements made or incorporated
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by reference therein based on information supplied by the Company for inclusion
or incorporation by reference in the Form S-4.
(c) None of the information supplied or to be supplied by Parent for
inclusion or incorporation by reference in the Company Proxy Statement or any
amendment or supplement thereto will, at the date the Company Proxy Statement or
any amendment or supplement thereto is first mailed to stockholders of Company
or at the time such stockholders vote on the adoption and approval of this
Agreement and the transactions contemplated hereby, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 4.9 CONTROLS AND PROCEDURES.
(a) Each of the principal executive officer and the principal financial
officer of Parent (or each former principal executive officer and former
principal financial officer of Parent, as applicable) has made all
certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act
with respect to Parent Commission Documents, and Parent has delivered to the
Company a summary of any disclosure made by management to Parent's auditors and
audit committee since January 1, 2003 referred to in such certifications. For
purposes of the preceding sentence, "principal executive officer" and "principal
financial officer" shall have the meanings given to such terms in the
Sarbanes-Oxley Act.
(b) Parent has (i) designed and maintained disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) to ensure that
material information required to be disclosed by Parent in the reports it files
or furnishes under the Exchange Act is communicated to its management by others
within those entities as appropriate to allow timely decisions regarding
required disclosure, (ii) disclosed, based on its most recent evaluation, to its
auditors and the audit committee of its Board of Directors (A) any significant
deficiencies or material weaknesses in the design or operation of internal
controls over financial reporting which could adversely affect its ability to
record, process, summarize and report financial data and (B) any fraud, whether
or not material, that involves management or other employees who have a
significant role in its internal controls over financial reporting and (iii)
identified for Parent's auditors any material weaknesses in internal controls.
Parent has provided to the Company true and correct copies of any of the
foregoing disclosures to the auditors or audit committee that have been made in
writing from January 1, 2003 through the date hereof, and will promptly provide
to the Company true and correct copies of any such disclosure that is made after
the date hereof.
(c) Parent has designed and maintains a system of internal controls over
financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
sufficient to provide reasonable assurance concerning the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP, including reasonable assurance (i) that
transactions are executed in accordance with management's general or specific
authorizations and recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability and (ii)
regarding prevention or timely detection of any unauthorized acquisition, use or
disposition of assets that could have a material effect on Parent's financial
statements. Parent's management, with the participation of
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Parent's principal executive and financial officers, has completed an assessment
of the effectiveness of Parent's internal controls over financial reporting in
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for
the year ended December 31, 2004, and such assessment concluded that such
internal controls were effective using the framework specified in the Parent
10-K.
(d) No personal loan or other extension of credit by Parent or any
Subsidiary to any of its or their executive officers or directors has been made
or modified (other than as permitted by Section 13 of the Exchange Act and
Section 402 of the Sarbanes-Oxley Act) since July 31, 2002.
(e) Since January 1, 2003, (i) neither Parent nor any of its Subsidiaries
nor, to Parent's knowledge, any director, officer, employee, auditor, accountant
or representative of Parent or any of its Subsidiaries has received any written
complaint, allegation, assertion, or claim that Parent or any of its
Subsidiaries has engaged in improper or illegal accounting or auditing practices
or maintains improper or inadequate internal accounting controls and (ii) no
attorney representing Parent or any of its Subsidiaries, whether or not employed
by Parent or any of its Subsidiaries, has reported evidence of a material
violation of U.S. federal or state securities laws, a material breach of
fiduciary duty or similar material violation by Parent, any of its Subsidiaries
or any of their respective officers, directors, employees or agents to any
officer of Parent, the Board of Directors of Parent or any member or committee
thereof.
Section 4.10 ABSENCE OF CERTAIN CHANGES. Since the Parent Balance Sheet
Date, Parent and its Subsidiaries have conducted their business in the ordinary
course of business, consistent with past practice and there has not been:
(a) any event, occurrence, change or development of a state of
circumstances or facts which, individually or in the aggregate, has had, or
would be reasonably likely to have, a Parent Material Adverse Effect; or
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent (other
than regular quarterly cash dividends payable by Parent (x) consistent with
past practice (including periodic dividend increases consistent with past
practice) and (y) that are not special dividends), or any repurchase,
redemption or other acquisition by Parent or any of its wholly-owned
Subsidiaries of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, Parent or any of its
Significant Subsidiaries (other than (i) any such repurchases prior to the
date hereof pursuant to Parent's publicly announced stock buyback program
or, after the date hereof, or pursuant to the terms of employee and
director stock options and (ii) any such transaction solely among Parent
and its wholly-owned Subsidiaries or solely among Parent's wholly-owned
Subsidiaries);
(c) any change prior to the date hereof in any method of financial
accounting or financial accounting practice by Parent or any of its
Subsidiaries, except for any such change which is not material or which is
required by reason of a concurrent change in GAAP or by applicable law; or
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(d) any (i) Tax election made or changed, (ii) Tax audit settled, or
(iii) amended Tax Return filed, in each case, that is reasonably likely to
result in an increase to a Tax liability, which increase is material to
Parent and its Subsidiaries, taken as a whole.
Section 4.11 NO UNDISCLOSED MATERIAL LIABILITIES. As of the date hereof,
there are no material liabilities of Parent or any Subsidiary of Parent of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than:
(a) liabilities disclosed or provided for in the Parent Balance Sheet
or in the notes thereto;
(b) liabilities incurred since the Parent Balance Sheet Date in the
ordinary course of business consistent with past practice and which,
individually or in the aggregate, would not be reasonably likely to have a
Parent Material Adverse Effect;
(c) liabilities disclosed in the Parent Commission Documents filed
prior to the date of this Agreement;
(d) liabilities or obligations that have been discharged or paid in
full in the ordinary course of business; and
(e) liabilities under this Agreement.
Section 4.12 LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Parent threatened against or
affecting, Parent or any of its Subsidiaries or any of their respective
properties or any of their respective officers or directors before any court or
arbitrator or any governmental body, agency or official except as would not,
individually or in the aggregate, be reasonably likely to have a Parent Material
Adverse Effect.
Section 4.13 COMPLIANCE WITH LAWS. To Parent's knowledge, neither Parent
nor any of its Subsidiaries is in violation of, or has since January 1, 2003
violated, any applicable provisions of any laws, statutes, ordinances or
regulations except for any violations that, individually or in the aggregate,
have not had, and would not be reasonably likely to have, a Parent Material
Adverse Effect.
Section 4.14 TAX TREATMENT. Neither Parent nor any of its Subsidiaries has
taken or agreed to take any action or is aware of any fact or circumstance that
would prevent or impede, or would be reasonably likely to prevent or impede, the
Merger from qualifying as a reorganization under Section 368(a) of the Code.
Section 4.15 CAPITALIZATION OF MERGER SUBSIDIARY. The authorized capital
stock of Merger Subsidiary consists solely of 1,000 shares of Common Stock, par
value $0.01 per share, all of which are validly issued and outstanding. All of
the issued and outstanding capital stock of Merger Subsidiary is, and at the
Effective Time will be, owned by Parent. Merger Subsidiary has not conducted any
business prior to the date hereof and has, and prior to the Effective Time will
have, no assets, liabilities or obligations of any nature other than those
incident to its
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formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
Company agrees that:
Section 5.1 CONDUCT OF THE COMPANY. From the date of this Agreement until
the Effective Time, the Company and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and in a manner
not involving the entry by the Company or its Subsidiaries into businesses that
are materially different from the businesses of the Company and its Subsidiaries
on the date hereof, and shall use their commercially reasonable efforts to
preserve intact their business organizations and relationships with third
parties. Without limiting the generality of the foregoing, except with the prior
written consent of Parent, as expressly permitted by this Agreement or as set
forth in Section 5.1 of the Company Disclosure Schedules, from the date hereof
until the Effective Time:
(a) the Company will not, and will not permit any of its Subsidiaries
to, adopt or propose any change in its certificate of incorporation or
by-laws, or amend or waive any provision of the Company Rights Agreement;
(b) the Company will not, and will not permit any Subsidiary of the
Company to, adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries;
(c) the Company will not, and will not permit any Subsidiary of the
Company to, issue, sell, transfer, pledge, dispose of or encumber any
shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of capital stock of any class or series of the Company or its Subsidiaries
other than (i) issuances pursuant to the exercise of convertible securities
outstanding on the date hereof or issuances pursuant to stock based awards
or options that are outstanding on the date hereof and are reflected in
Section 3.5 or are granted in accordance with clause 5.1(c), (ii) if the
Effective Time occurs in 2006, grants to be made in 2006 in accordance with
the Company's customary schedule in accordance with past practice and (iii)
grants made to directors of the Company and newly hired and promoted
employees in the ordinary course of business in accordance with past
practice;
(d) the Company will not, and will not permit any Subsidiary of the
Company to, (i) split, combine, subdivide or reclassify its outstanding
shares of capital stock, or (ii) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock other than (x) regular quarterly cash dividends payable by
the Company or such Subsidiary consistent with past practice, but not
including any special dividend or (y) dividends paid by any Subsidiary of
the Company to the Company or any wholly-owned Subsidiary of the Company;
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(e) the Company will not, and will not permit any Subsidiary of the
Company to, redeem, purchase or otherwise acquire directly or indirectly
any of the Company's or any Subsidiary's capital stock, except for
repurchases, redemptions or acquisitions (x) required by the terms of its
capital stock or any securities outstanding on the date hereof, (y)
required by or in connection with the respective terms, as of the date
hereof, of any Company Stock Option Plan or any dividend reinvestment plan
as in effect on the date hereof in the ordinary course of the operations of
such plan consistent with past practice and only to the extent consistent
with Section 7.4 or (z) effected in the ordinary course consistent with
past practice and only to the extent consistent with Section 7.4;
(f) the Company will not amend the terms (including the terms relating
to accelerating the vesting or lapse of repurchase rights or obligations)
of any outstanding options to purchase shares of Company Common Stock or of
any outstanding restricted stock, stock units or stock appreciation rights
(which, it is understood, will not limit the administration of the relevant
plans in accordance with past practices and interpretations of the
Company's Board and the Company's Compensation Committee to the extent
consistent with Section 7.4);
(g) except (A) as consistent with the capital budgets set forth in
Section 5.1(g) of the Company Disclosure Schedules or (B) if the Effective
Time occurs in 2006, with respect to capital expenditures in future periods
that are not covered by such capital budgets, as based on a reasonable
extrapolation of permissible expenditures for the capital budgets set forth
in Section 5.1(g) of the Company Disclosure Schedules, the Company will
not, and will not permit any Subsidiary of the Company to, make or
authorize any capital expenditure in excess of $50 million;
(h) the Company will not, and will not permit any Subsidiary of the
Company to, (1) increase the compensation or benefits of any director,
officer or employee, except for normal increases in the ordinary course of
business consistent with past practice or as required under applicable law
or any Company Benefit Plan existing on the date hereof, or (2)(i) enter
into, (ii) adopt, (iii) extend or renew (with respect to clause (iii) only,
for a term in excess of one year) (or waive or amend any performance or
vesting criteria or accelerate funding under) any employment, change in
control, severance, bonus, profit sharing, retirement, restricted stock,
stock option, deferred compensation or other director, executive or
employee benefit plan, policy, agreement or arrangement except as required
by applicable law or the terms of an agreement or arrangement existing on
the date hereof or, with respect to individual non-U.S. payroll employees,
in the ordinary course of business consistent with past practice or as
required by applicable law;
(i) the Company will not, and will not permit any of its Subsidiaries
to, acquire a material amount of assets or property (as measured with
respect to the consolidated assets of the Company and its Subsidiaries
taken as a whole) of any other Person (other than the Company or a
wholly-owned Subsidiary of the Company), except in the ordinary course of
business consistent with past practice;
(j) except as expressly permitted by Section 7.1, the Company will
not, and will not permit any of its Subsidiaries to, sell, lease, license,
encumber (including by the
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grant of any option thereon) or otherwise dispose of any material assets or
property except pursuant to existing contracts or commitments or except in
the ordinary course of business consistent with past practice and in no
event in an amount exceeding $50 million in the aggregate;
(k) the Company will not, and will not permit any of its Subsidiaries
to, incur any indebtedness for borrowed money (other than (i) any such
indebtedness among the Company and its wholly-owned Subsidiaries or among
the Company's wholly-owned Subsidiaries or (ii) additional short-term debt
not to exceed $500,000,000 in the aggregate) or guarantee or assume any
such indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any such indebtedness of another Person,
enter into any "keep well" or other agreement to maintain any financial
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, in each case other than in the
ordinary course of business, consistent with past practice;
(l) the Company will not, and will not permit any of its Subsidiaries
to, (i) modify, amend, terminate or waive any material rights under any
Company Material Contract or (ii) enter into any agreement that would
constitute a Company Material Contract if entered into as of the date of
this Agreement other than (with respect to clause (ii)) in the ordinary
course of business, consistent with past practice;
(m) the Company will not, and will not permit any of its Subsidiaries
to, settle or compromise any claim, demand, lawsuit or state or federal
regulatory proceeding, whether now pending or hereafter made or brought, or
waive, release or assign any rights or claims, in any such case in an
amount in excess of $20 million or that is otherwise qualitatively material
to the Company, PROVIDED that Parent will not unreasonably withhold its
consent to any such settlement or compromise;
(n) except for any such change which is not material or which is
required by reason of a concurrent change in GAAP or applicable law, the
Company will not, and will not permit any Subsidiary of the Company to,
change any method of financial accounting or financial accounting practice
(other than any change for tax purposes) used by it;
(o) the Company will not, and will not permit any Subsidiary of the
Company to, enter into any material joint venture, partnership or other
similar arrangement or make any loan, capital contribution or advance to or
investment in any other Person (other than the Company or any wholly-owned
Subsidiary of the Company) other than in the ordinary course of business,
consistent with past practice or in an amount not exceeding $10 million;
(p) the Company will not, and will not permit any of its Subsidiaries
to, take any action which would limit Parent's or the Company's freedom to
license, cross-license or otherwise dispose of any Company Intellectual
Property;
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(q) the Company will not amend or waive any provisions of any
standstill agreement;
(r) except as required by Law, the Company will not (i) make or change
any Tax election, (ii) settle any Tax audit or (iii) file any amended Tax
Return, in each case, that is reasonably likely to result in an increase to
a Tax liability, which increase is material to the Company and its
Subsidiaries, taken as a whole;
(s) except as contemplated by Section 7.1, the Company will not, and
will not permit any of its Subsidiaries to, enter into any agreement that
limits (other than in an insignificant manner) the ability of the Company
or any Subsidiary of the Company, or would limit (other than in an
insignificant manner) the ability of Parent or any Subsidiary of Parent
after the Effective Time, to compete in or conduct any line of business or
compete with any Person in any geographic area or during any period, it
being understood that any restriction that by its terms does not extend
more than six (6) months beyond the Effective Time shall be deemed to be
insignificant;
(t) the Company will not, and will not permit any of its Subsidiaries
to, take any action that would prevent, materially delay or materially
impede the consummation of the Merger; and
(u) the Company will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
Section 5.2 COMPANY STOCKHOLDER MEETING; PROXY MATERIAL.
(a) Except as permitted by Section 5.2(b) below, the Board of Directors of
the Company shall recommend approval and adoption of this Agreement and the
Merger by the Company's stockholders, and unless permitted by Section 5.2(b),
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw, modify or qualify, or propose publicly to withdraw, modify or
qualify, in any manner adverse to Parent, the approval of this Agreement, the
Merger or the Company Recommendation (as defined in Section 5.2(f) below) (any
of the foregoing, a "CHANGE IN THE COMPANY RECOMMENDATION"), or (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal. For purposes of this Agreement, a Change in the Company Recommendation
shall include any approval or recommendation (or public proposal to approve or
recommend), by the Board of Directors of the Company or any committee thereof of
an Acquisition Proposal, or any failure by the Company's Board of Directors to
recommend against an Acquisition Proposal.
(b) The Board of Directors of the Company shall be permitted not to
recommend to the Company's stockholders that they give the Company Stockholder
Approval or to withdraw or modify in a manner adverse to Parent the Company
Recommendation, only if and to the extent that all of the following conditions
are met: (v) the Company Stockholder Approval has not been obtained; (w) the
Board of Directors of the Company determines in good faith, after consulting
with outside legal counsel, that failure to so withdraw or modify the Company
Recommendation would be inconsistent with the directors' exercise of their
fiduciary duties to stockholders under applicable law; (x) before taking any
such action, the Company promptly
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gives Parent written notice advising Parent of the decision of the Board of
Directors of the Company to take such action, including the reasons therefor
and, in the event that such decision relates to an Acquisition Proposal, such
notice specifies the material terms and conditions of such Acquisition Proposal
and identifies the Person making such Acquisition Proposal (and the Company will
also promptly give Parent such a notice with respect to any subsequent change in
such proposal) and the Company has given Parent at least three (3) Business Days
after delivery of each such notice to propose revisions to the terms of this
Agreement (or to make another proposal) in response to such Acquisition Proposal
and has negotiated in good faith with Parent with respect to such proposed
revisions or other proposal, if any, (y) if such withdrawal or modification
relates to an Acquisition Proposal received by the Company or made directly to
the Company's stockholders, such Acquisition Proposal constitutes a Superior
Proposal (as defined in Section 7.9(b)); and (z) the Company has complied with
its obligations set forth in Section 7.9; provided, however, that
notwithstanding any Change in the Company Recommendation, the Company shall
nevertheless submit this Agreement and the Merger to the stockholders of the
Company for the purpose of obtaining the Company Stockholder Approval at the
Company Stockholder Meeting and nothing contained herein shall be deemed to
relieve the Company of such obligation, unless Parent otherwise directs the
Company in writing or this Agreement shall have been terminated in accordance
with its terms prior to the Company Stockholder Meeting.
(c) As promptly as practicable following the date of this Agreement, Parent
and the Company shall prepare, and Parent shall file with the Commission, the
Form S-4, in which the Company Proxy Statement will be included as a prospectus.
Each of Parent and the Company shall use all reasonable efforts to have the Form
S-4 declared effective under the Securities Act, and for the Company Proxy
Statement to be cleared by the Commission and its staff under the Exchange Act,
as promptly as practicable after such filing. Without limiting any other
provision herein, the Form S-4 and the Company Proxy Statement will contain such
information and disclosure reasonably requested by either Parent or the Company
so that the Form S-4 conforms in form and substance to the requirements of the
Securities Act and the Company Proxy Statement conforms in form and substance to
the requirements of the Exchange Act. The Company shall use its reasonable best
efforts to cause the Company Proxy Statement to be mailed to holders of Company
Common Stock as promptly as practicable after the Form S-4 is declared
effective.
(d) If at any time prior to the Effective Time there shall occur (i) any
event with respect to the Company or any of its Subsidiaries, or with respect to
other information supplied by Company for inclusion in the Form S-4 or the Proxy
Statement, or (ii) any event with respect to Parent, or with respect to
information supplied by Parent for inclusion in the Form S-4 or the Company
Proxy Statement, in either case, which event is required to be described in an
amendment of or a supplement to the Form S-4 or the Company Proxy Statement,
such event shall be so described, and such amendment or supplement shall be
promptly filed with the Commission and, as required by Law, disseminated to the
stockholders of the Company.
(e) Each of the Company and Parent shall (i) promptly notify the other of
the receipt of any comments from the Commission or its staff or any other
applicable government official and of any requests by the Commission or its
staff or any other applicable government official for amendments or supplements
to any of the filings with the Commission in connection with the
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Merger and other transactions contemplated hereby or for additional information
and (ii) promptly supply the other with copies of all correspondence between the
Company or any of its representatives, or Parent or any of its representatives,
as the case may be, on the one hand, and the Commission or its staff or any
other applicable government official, on the other hand, with respect thereto.
The Company and Parent shall use their respective reasonable best efforts to
respond to any comments of the Commission or its staff with respect to the Form
S-4 and the Company Proxy Statement as promptly as practicable. The Company and
Parent shall cooperate with each other and provide to each other all information
necessary in order to prepare the Form S-4 and the Company Proxy Statement as
expeditiously as practicable, and each of them shall provide promptly to the
other party any information that such party may obtain that could necessitate an
amendment or supplement to any such document.
(f) The Company shall, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act, duly call, give notice of, convene
and hold a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") for
the purpose of obtaining the Company Stockholder Approval, and the Company Board
shall recommend to the Company's stockholders the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby (the
"COMPANY RECOMMENDATION") and shall include such recommendation in the Company
Proxy Statement; PROVIDED, HOWEVER, that the Company Board shall not be required
to make such Company Recommendation to the extent that it effects a Change in
the Company Recommendation in accordance with Section 5.2(b). Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 5.2(f) or its other obligations
under this Section 5.2 shall not be affected by the commencement, public
proposal, public disclosure or communication to the Company or its
representatives of any Acquisition Proposal. The Company shall use its best
efforts to hold the Company Stockholder Meeting as soon as practicable after the
Form S-4 becomes effective and (subject to any Change in the Company
Recommendation expressly permitted by Section 5.2(b)) to obtain the Company
Stockholder Approval. The Company shall otherwise coordinate and cooperate with
Parent with respect to the timing of the Company Stockholder Meeting and will
otherwise comply with all legal requirements applicable to the Company
Stockholder Meeting.
Section 5.3 RESIGNATION OF COMPANY DIRECTORS. In order to fulfill the
requirements of Section 1.3, the Company shall (i) cause each director of the
Company to deliver a written resignation to the Company effective at the
Effective Time and (ii) cause the vacancies resulting from such resignations to
be filled by Persons who are directors of Merger Subsidiary immediately prior to
the Effective Time.
Section 5.4 OTHER ACTIONS. As provided in Article VII, the Company and
Parent shall cooperate with each other to lift any injunctions or remove any
other impediment to the consummation of the transactions contemplated herein.
ARTICLE VI
COVENANTS OF PARENT
Parent agrees that:
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Section 6.1 OBLIGATIONS OF MERGER SUBSIDIARY. Parent will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
Section 6.2 DIRECTOR AND OFFICER LIABILITY.
(a) For six years after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless, to the greatest extent
permitted by law as of the date of this Agreement, the individuals who on or
prior to the Effective Time were officers, directors and employees of the
Company or its Subsidiaries (collectively, the "INDEMNITEES") with respect to
all acts or omissions by them in their capacities as such or taken at the
request of the Company or any of its Subsidiaries at any time prior to the
Effective Time. Parent shall cause the Surviving Corporation to honor all
indemnification agreements with Indemnitees (including under the Company's
by-laws) in effect as of the date hereof in accordance with the terms thereof.
The Company has disclosed to Parent all such indemnification agreements prior to
the date hereof.
(b) For six years after the Effective Time, Parent shall procure the
provision of officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Person
currently covered by the Company's officers' and directors' liability insurance
policy on terms with respect to coverage and in amounts no less favorable than
those of such policy in effect on the date hereof; PROVIDED, that if the annual
aggregate premiums for such insurance at any time during such period shall
exceed 300% of the per annum rate of premium paid by the Company and its
Subsidiaries as of the date hereof for such insurance, then Parent shall, or
shall cause its Subsidiaries to, provide only such coverage as shall then be
available at an annual premium equal to 300% of such rate.
(c) The obligations of Parent under this Section 6.2 shall not be
terminated or modified in such a manner as to adversely affect any Indemnitee to
whom this Section 6.2 applies without the consent of such affected Indemnitee
(it being expressly agreed that the Indemnitees to whom this Section 6.2 applies
shall be third party beneficiaries of this Section 6.2).
Section 6.3 FORM S-4. Subject to the terms and conditions of this
Agreement, Parent shall prepare and file with the Commission under the
Securities Act the Form S-4, and shall use its reasonable best efforts to cause
the Form S-4 to be declared effective by the Commission a sufficient time prior
to the Company Stockholder Meeting to allow the Company to mail the Company
Proxy Statement to the Company stockholders, as required by the rules and
regulations of the Commission, prior to the Company Stockholder Meeting. Parent
shall take any action required to be taken under foreign or state securities or
Blue Sky laws in connection with the issuance of Parent Common Stock in
connection with the Merger.
Section 6.4 STOCK EXCHANGE LISTING. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in connection
with the Merger to be listed on the NYSE, subject to official notice of
issuance.
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Section 6.5 EMPLOYEE BENEFITS.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to honor in accordance with their terms all benefits and
obligations, subject to Section 6.5(b) hereof, under the Company Benefit Plans,
each as in effect on the date hereof (or as amended to the extent permitted by
Section 5.1), to the extent that entitlements or rights, actual or contingent
(whether such entitlements or rights are vested as of the Effective Time or
become vested or payable only upon the occurrence of a further event, including
a discretionary determination) exist in respect thereof as of the Effective
Time. Parent and the Company hereby agree that the consummation of the Merger
shall constitute a "CHANGE IN CONTROL" for purpose of any employee arrangement
and all other Company Benefit Plans, pursuant to the terms of such plans in
effect on the date hereof. No provision of this Section 6.5(a) shall be
construed as a limitation on the right of Parent to amend or terminate any
Company Benefit Plans which the Company would otherwise have under the terms of
such Company Benefit Plan, and no provision of this Section 6.5(a) shall be
construed to create a right in any employee or beneficiary of such employee
under a Company Benefit Plan that such employee or beneficiary would not
otherwise have under the terms of such plan; PROVIDED, HOWEVER, that Parent
agrees that it will respect deferrals of salary, bonus or other compensation in
place prior to the Effective Time pursuant to the Company Benefit Plans.
(b) Following the Effective Time, Parent shall continue to provide to
individuals who are employed by the Company and the Company Subsidiaries as of
the Effective Time who remain employed with Parent or any Subsidiary of Parent
("AFFECTED EMPLOYEES"), for so long as such Affected Employees remain employed
by Parent or any Subsidiary of Parent, compensation and employee benefits (i)
pursuant to the Company's or the Company Subsidiaries' compensation and employee
benefit plans, programs, policies and arrangements as provided to such employees
immediately prior to the Effective Time or (ii) pursuant to compensation and
employee benefit plans, programs, policies or arrangements maintained by Parent
or any Subsidiary of Parent providing coverage and benefits, which, in the
aggregate, are no less favorable than those provided to employees of Parent in
positions comparable to positions held by Affected Employees of Parent and its
Subsidiaries from time to time after the Effective Time. Following the Effective
Time, Parent shall continue to provide to former employees of the Company or its
Company Subsidiaries (and to employees of the Company or its Company
Subsidiaries whose employment terminates prior to the Effective Time) ("AFFECTED
Retirees") post-retirement benefits (other than pensions) (i) pursuant to the
Company Benefit Plans applicable to such Affected Retirees, each as in effect on
the date of this Agreement, or (ii) pursuant to employee benefit plans,
programs, policies or arrangements maintained by Parent or any Subsidiary of
Parent providing post-retirement coverage and benefits (other than pensions),
which, in the aggregate, are no less favorable than those provided from time to
time after the Effective Time to former employees of Parent that served in
positions comparable to positions that were held by Affected Retirees of Parent
and its Subsidiaries.
(c) Parent will, or will cause the Surviving Corporation to, give Affected
Employees full credit for purposes of eligibility, vesting and benefit accrual
(including benefit accrual under any defined benefit pension plans, PROVIDED
that a participant's benefit under any such defined benefit pension plan may be
offset by such participant's benefit accrued through the Effective Time under
the Unocal Corporation Retirement Plan) under any employee benefit plans or
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arrangements maintained by Parent or any Subsidiary of Parent for such Affected
Employees' service with the Company or any Subsidiary to the same extent
recognized by the Company immediately prior to the Effective Time.
(d) Parent will, or will cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such employees may be eligible to
participate in after the Effective Time, other than limitations or waiting
periods that are already in effect with respect to such employees and that have
not been satisfied as of the Effective Time under any welfare plan maintained
for the Affected Employees immediately prior to the Effective Time, and (ii)
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that such employees are
eligible to participate in after the Effective Time.
(e) If the Effective Time occurs in 2005, following the payment of pro rata
bonuses under the annual bonus plan for 2005 as provided under, and in
accordance with the terms of such bonus plan (the "2005 PRO RATA BONUS"), Parent
will cause the Company to (A) maintain a bonus plan for the remainder of 2005 on
the same terms and conditions and pursuant to the same targets and performance
measures as were in effect for the 2005 calendar year and (B) pay bonuses within
two and a half months following the end of the 2005 calendar year in an amount
equal to the excess, if any, of (i) the annual bonus which would have been
earned by the participants for the entire 2005 calendar year under the bonus
plan described in clause (A) of this Section 6.5(e) (without reference to the
2005 Pro Rata Bonus) over (ii) the 2005 Pro Rata Bonus. If the Effective Time
occurs in 2006, the Company shall be permitted prior to the Effective Time to
establish a bonus plan for 2006, based upon targets and goals substantially
similar to those established for 2005. In addition, in the event the Effective
Time occurs in 2006, participants in the 2006 bonus plan will be paid a pro rata
bonus for 2006 (the "2006 PRO RATA BONUS") in accordance with the terms of the
Company's annual bonus plan, and total bonuses for 2006 will be calculated based
upon the excess of actual bonus earned for 2006 over the 2006 Pro Rata Bonus in
the same manner as total bonuses for 2005 would have been calculated as
described above had the Effective Time occurred in 2005. Company performance in
respect of calculations made under the bonus plans and the Company Plans for the
calendar years 2005 and 2006 shall be calculated without taking into account any
expenses or costs associated with or arising as a result of transactions
contemplated by this Agreement or any nonrecurring charges that would not
reasonably be expected to have been incurred had the transactions contemplated
by this Agreement not occurred, and if the Effective Time occurs prior to
payment of 2005 calendar year bonuses, shall not be subject to negative
discretion by the administrator for the Bonus Plan. In no event will the 2005
Pro Rata Bonus or the 2006 Pro Rata Bonus for any employee exceed 150% of the
target amount for such employee for such year.
ARTICLE VII
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
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Section 7.1 BEST EFFORTS.
(a) Subject to Sections 5.2, 7.1(b) and 7.1(c), the Company and Parent
shall each cooperate with the other and use (and shall cause their respective
Subsidiaries to use) their respective best efforts to promptly (i) take or cause
to be taken all necessary actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable laws to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable, including, without limitation,
preparing and filing promptly and fully all documentation to effect all
necessary filings, notices, petitions, statements, registrations, submissions of
information, applications and other documents and (ii) obtain as soon as
practicable all approvals, consents, registrations, permits, authorizations and
other confirmations required to be obtained from any third party necessary,
proper or advisable to consummate the Merger and the other transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, the Company and Parent shall have the right to review
in advance, and to the extent practicable each will consult the other on any
filing made with, or written materials submitted to, any third party and/or any
governmental authority in connection with the Merger and the other transactions
contemplated by this Agreement. The Company and Parent shall provide the other
party with the opportunity to participate in any meeting with any governmental
entity in respect of any filing, investigation or other inquiry in connection
with the transactions contemplated hereby; PROVIDED that Parent will lead all
such processes; PROVIDED FURTHER that the foregoing shall not limit in any
respect any party's obligations under this Agreement. Prior to the Effective
Time, Parent shall not, and shall not permit any of its Subsidiaries to, enter
into or agree to enter into any agreement for the acquisition of any business or
Person which acquisition would reasonably be expected to materially impair
Parent's ability to consummate the transactions contemplated hereby.
(b) Without limiting Section 7.1(a), Parent and the Company shall, subject
to Section 7.1(c), as applicable:
(i) each use its best efforts to avoid the entry of, or to have
vacated or terminated, any decree, order, or judgment that would restrain,
prevent or delay the Closing, on or before the End Date (as defined in
Section 9.1(b)(i)), including without limitation defending through
litigation on the merits any claim asserted in any court by any Person; and
(ii) each use its best efforts to avoid or eliminate each and every
impediment under any antitrust, competition or trade regulation law that
may be asserted by any governmental authority with respect to the Merger
(collectively, "ANTITRUST LAWS") so as to enable the Closing to occur as
soon as reasonably possible (and in any event no later than the End Date),
including, without limitation, (x) proposing, negotiating, committing to
and effecting, by consent decree, hold separate order, or otherwise, the
sale, divestiture or disposition of such businesses, product lines or
assets of Parent, the Company and their respective Subsidiaries and (y)
otherwise taking or committing to take actions that after the Closing Date
would limit Parent or its Subsidiaries' freedom of action with respect to,
or its or their ability to retain, one or more of the businesses, product
lines or assets of Parent, the Company and their respective Subsidiaries,
in each case as may be required in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary
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restraining order, or other order in any suit or proceeding, which would
otherwise have the effect of preventing or materially delaying the Closing.
Parent and, if requested by Parent, the Company shall agree to divest,
sell, dispose of, hold separate, or otherwise take or commit to take any
action that limits its freedom of action with respect to, or Parent or
Parent's Subsidiaries' ability to retain, any of the businesses, product
lines or assets of Parent, the Company or any of their respective
Subsidiaries, provided that any such action is conditioned upon the
consummation of the Merger. The Company agrees and acknowledges that,
notwithstanding anything to the contrary in this Section 7.1, in connection
with any filing or submission required, action to be taken or commitment to
be made by Parent, the Company or any of their respective Subsidiaries to
consummate the Merger or other transactions contemplated by this Agreement,
neither the Company nor any of the Company's Subsidiaries shall, without
Parent's prior written consent, sell, divest, or dispose of any assets,
license any Company Intellectual Property, commit to any sale, divestiture
or disposal of businesses, product lines or assets of the Company and the
Company's Subsidiaries or any license of Company Intellectual Property or
take any other action or commit to take any action that would limit the
Company's, Parent's or any of their respective Subsidiaries' freedom of
action with respect to, or their ability to retain any of, their
businesses, product lines or assets or Company Intellectual Property;
provided that the foregoing shall not relieve any party of its obligations
under this Agreement.
(c) Notwithstanding anything else contained herein, the provisions of this
Section 7.1 shall not be construed to require Parent or any of Parent's
Subsidiaries to undertake any efforts or to take any action if such efforts or
action would, or would reasonably be expected to, result in a Substantial
Detriment. "SUBSTANTIAL DETRIMENT" shall mean changes or effects which would,
individually or in the aggregate (and after giving effect to any reasonably
expected proceeds of any divestiture or sale of assets), result in, or be
reasonably likely to result in, a Company Material Adverse Effect, at or after
the Effective Time; PROVIDED that any requirement to divest or hold separate, or
limit the operation of, any division, Subsidiary, interest, business, product
line, asset or property relating to the operations conducted by Parent and its
Subsidiaries prior to the Effective Time shall be deemed to result in a
Substantial Detriment if such action with respect to a comparable amount of
assets or businesses of the Company and its Subsidiaries would be reasonably
likely, in the aggregate, to have a Company Material Adverse Effect, at or after
the Effective Time.
Section 7.2 CERTAIN FILINGS. The Company and Parent shall cooperate with
one another (a) in determining whether any action by or in respect of, or filing
with, any governmental body, agency or official, or authority is required, or
any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company Proxy Statement
or the Form S-4 and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 7.3 ACCESS TO INFORMATION. From the date of this Agreement until
the Effective Time, to the extent permitted by applicable law, the Company and
Parent will, during normal business hours and upon reasonable request give the
other party, its counsel, financial
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advisors, auditors and other authorized representatives complete access at all
reasonable times to the offices, properties, books and records of such party and
its Subsidiaries, furnish to the other party, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such Persons may reasonably request and will instruct
its own employees, counsel and financial advisors to cooperate with the other
party in its investigation of the business of the Company or Parent, as the case
may be; PROVIDED, that such investigation shall not disrupt the Company's or
Parent's operations; AND, PROVIDED FURTHER that no such investigation shall
affect any representation or warranty given by either party hereunder. All
information obtained by Parent or the Company pursuant to this Section 7.3 shall
be kept confidential in accordance with, and shall otherwise be subject to the
terms of, the Confidentiality Agreement dated as of February 11, 2005 between
Parent and the Company (the "CONFIDENTIALITY AGREEMENT").
Section 7.4 TAX TREATMENT. Neither Parent nor the Company shall, nor shall
they permit their Subsidiaries to, take any action, and Parent and the Company
shall not, and shall ensure that its Subsidiaries do not, fail to take any
action which action or failure to act would prevent or impede, or would be
reasonably likely to prevent or impede, the Merger from qualifying as a
reorganization under Section 368(a) of the Code.
Section 7.5 PUBLIC ANNOUNCEMENTS. Parent and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and shall not
issue any press release or make any public statement without the prior consent
of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, any press release or public statement as may be
required by applicable law or any listing agreement with any national securities
exchange may be issued prior to such consultation, if the party making the
release or statement has used its reasonable best efforts to consult with the
other party.
Section 7.6 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take any
other actions and do any other things, in the name and on behalf of the Company
or Merger Subsidiary, reasonably necessary to vest, perfect or confirm of record
or otherwise in the Surviving Corporation any and all right, title and interest
in, to and under any of the rights, properties or assets of the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger.
Section 7.7 NOTICES OF CERTAIN EVENTS.
(a) Each of the Company and Parent shall promptly notify the other Party
of:
(i) Any written notice or other written communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
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(ii) Any notice or other written communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) Any actions, suits, claims, investigations or proceedings (A)
commenced or (B) to the best of its knowledge, threatened against, relating
to or involving or otherwise affecting such party or any of its
Subsidiaries which relate to the consummation of the transactions
contemplated by this Agreement.
PROVIDED, HOWEVER, that no such notification (and no other notification required
to be given by the Company under any other Section of this Agreement) shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
Section 7.8 AFFILIATES.
(a) Not less than forty-five (45) days prior to the Effective Time, the
Company (i) shall deliver to Parent a letter identifying all Persons who, in the
Company's opinion, may be, as of the Effective Time, its "affiliates" for
purposes of Rule 145 under the Securities Act, and (ii) shall use its reasonable
best efforts to cause each Person who is identified as an "affiliate" of it in
such letter to deliver to Parent, as promptly as practicable but in no event
later than thirty (30) days prior to the Effective Time, a signed agreement
substantially in the form attached as Exhibit A (an "AFFILIATE AGREEMENT"). The
Company shall notify Parent from time to time after the delivery of the letter
described above of any Person not identified on such letter who then is, or may
be, such an "affiliate" and use its reasonable best efforts to cause each
additional Person who is identified as an "affiliate" to execute an Affiliate
Agreement.
(b) Neither Parent or the Company shall register, or allow its transfer
agent to register, on its books, any transfer of any shares of Parent Common
Stock or Company Common Stock of any affiliate of the Company who has not
provided an executed Affiliate Agreement in accordance with this Section 7.8
unless the transfer is made in compliance with the foregoing.
Section 7.9 NO SOLICITATION.
(a) The Company and its Subsidiaries will not, and the Company will direct
and use its reasonable best efforts to cause its and its Subsidiaries'
respective officers, directors, employees, investment bankers, consultants,
attorneys, accountants, agents and other representatives not to, directly or
indirectly, take any action to solicit, initiate, or knowingly encourage or
facilitate the making of any Acquisition Proposal (including without limitation
by amending, or granting any waiver under, the Company Rights Agreement, as
applicable) or any inquiry with respect thereto or engage in discussions or
negotiations with any Person with respect thereto (except to notify such Person
of the existence of the provisions of this Section 7.9), or disclose any
nonpublic information or afford access to properties, books or records to, any
Person that has made, or to the Company's knowledge is considering making, any
Acquisition Proposal, or approve or recommend, or propose to approve or
recommend, or execute or enter into any letter of intent, agreement in
principle, merger agreement, option agreement, acquisition agreement or other
similar agreement relating to an Acquisition Proposal,
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or propose publicly or agree to do any of the foregoing relating to an
Acquisition Proposal. Nothing contained in this Agreement shall prevent the
Board of Directors of the Company from (i) complying with Rule 14e-2 under the
Exchange Act with regard to an Acquisition Proposal or (ii) making any
disclosure if, in the good faith judgment of the Company's Board of Directors,
after consultation with outside counsel, failure so to disclose would be
inconsistent with the directors' exercise of their fiduciary obligations to the
Company's stockholders under applicable law; PROVIDED, HOWEVER, that any such
disclosure that relates to an Acquisition Proposal shall be deemed to be a
Change in the Company Recommendation unless the Company's Board of Directors
reaffirms the Company Recommendation in such disclosure. Notwithstanding
anything to the contrary in this Agreement, prior to (but not after) the date of
the Company Stockholder Approval, the Company may, directly or indirectly
through its advisors, agents or other intermediaries (A) furnish information and
access, but only in response to a request for information or access, to any
Person making an Acquisition Proposal to the Board of Directors of the Company
after the date hereof which was not solicited, initiated or knowingly encouraged
by the Company or any of its affiliates or any director, employee,
representative or agent of the Company or any of its Subsidiaries (including,
without limitation, any investment banker, attorney or accountant retained by
the Company or any of its Subsidiaries) on or after the date hereof (and to such
Person's advisors, agents and intermediaries) and (B) may participate in
discussions and negotiate with such Person concerning any such unsolicited
Acquisition Proposal, if and only if, in any such case set forth in clause (A)
or (B) of this sentence, (i) the Board of Directors of the Company concludes in
good faith, after (x) receipt of the advice of a financial advisor of nationally
recognized reputation and outside legal counsel, that there is a reasonable
likelihood that such Acquisition Proposal will result in a Superior Proposal and
(y) taking into account any revisions to the terms of the Merger or this
Agreement proposed by Parent after being notified pursuant to Section 5.2(b),
that doing so is necessary for the Company's Board of Directors to comply with
its fiduciary duties to the Company's stockholders under applicable law, (ii)
the Company complies with all of its obligations under Section 5.2 and Section
7.9(b) below, and (iii) the Board of Directors of the Company receives from the
Person making such an Acquisition Proposal an executed confidentiality agreement
the material terms of which, as they relate to confidentiality, are (without
regard to the terms of such Acquisition Proposal) in all material respects (x)
no less favorable to the Company and (y) no less restrictive to the Person
making such Acquisition Proposal than those contained in the Confidentiality
Agreement and any information provided to such Person has previously been
provided to Parent or is provided to Parent promptly after its provision to such
Person.
(b) In the event the Company receives an Acquisition Proposal, any
indication of which the Company has knowledge that any Person is considering
making an Acquisition Proposal, or any request for nonpublic information
relating to the Company or any Subsidiary of the Company or for access to the
properties, books or records of the Company or any Subsidiary of the Company by
any Person that has made, or to the Company's knowledge may be considering
making, an Acquisition Proposal, the Company will (A) promptly (and in no event
later than twenty-four (24) hours after receipt of any Acquisition Proposal)
notify (which notice shall be provided orally and in writing and shall identify
the Person making such Acquisition Proposal or request and set forth the
material terms thereof) Parent thereof and (B) will keep Parent reasonably and
promptly informed of the status and material terms of (including with respect to
changes to the status or material terms of) any such Acquisition Proposal or
request. The Company (x) shall, and shall cause its Subsidiaries to, immediately
cease and cause to be
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terminated and shall use reasonable best efforts to cause its and their
officers, directors, employees, investment bankers, consultants, attorneys,
accountants, agents and other representatives to, immediately cease and cause to
beterminated, all discussions and negotiations, if any, that have taken place
prior to the date hereof with any Persons with respect to any Acquisition
Proposal and (y) shall promptly request each Person, if any, that has executed a
confidentiality agreement within the nine (9) months prior to the date hereof in
connection with its consideration of any Acquisition Proposal to return or
destroy all confidential information heretofore furnished to such Person by or
on behalf of it or any of its Subsidiaries.
For purposes of this Agreement, "ACQUISITION PROPOSAL" means any bona fide
written offer or proposal for, or any bona fide written indication of interest
in, any (i) direct or indirect acquisition or purchase of any business or assets
of the Company or any of its Subsidiaries that, individually or in the
aggregate, constitutes 20% or more of the net revenues, net income or assets of
the Company and its Subsidiaries, taken as a whole, (ii) direct or indirect
acquisition or purchase of 20% or more of any class of equity securities of the
Company or any of its Subsidiaries whose business constitutes 20% or more of the
net revenues, net income or assets of the Company and its Subsidiaries, taken as
a whole, (iii) tender offer or exchange offer that, if consummated, would result
in any Person beneficially owning 20% or more of any class of equity securities
of the Company or any of its Subsidiaries whose business constitutes 20% or more
the net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole, or (iv) merger, consolidation, business combination, joint
venture, partnership, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries whose business
constitutes 20% or more of the net revenue, net income or assets of the Company
and its Subsidiaries, taken as a whole, other than the transactions contemplated
by this Agreement. For purposes of this Agreement, "SUPERIOR PROPOSAL" means any
bona fide written Acquisition Proposal for or in respect of at least a majority
of the outstanding shares of Company Common Stock or all or substantially all of
the Company's and its Subsidiaries' assets (i) on terms that the Board of
Directors of the Company determines in its good faith judgment (after
consultation with, and taking into account the advice of, a financial advisor of
nationally recognized reputation and outside legal counsel, taking into account
all the terms and conditions of such Acquisition Proposal, including any
break-up fees, expense reimbursement provisions and conditions to consummation,
as well as any revisions to the terms of the Merger or this Agreement proposed
by Parent after being notified pursuant to Section 5.2(b)) are more favorable to
the Company and its stockholders than the Merger and the other transactions
contemplated hereby and (ii) that constitutes a transaction that is reasonably
likely to be consummated on the terms so proposed, taking into account all
legal, financial, regulatory and other aspects of such proposal.
(c) The Company agrees that it will take the necessary steps promptly to
inform its Subsidiaries and its officers, directors, investment bankers,
consultants, attorneys, accountants, agents and other representatives of the
obligations undertaken in this Section 7.9.
Section 7.10 TAKEOVER STATUTES. If any anti-takeover or similar statute or
regulation is or may become applicable to the transactions contemplated hereby,
each of the parties and its Board of Directors shall grant such approvals and
take all such actions as are legally permissible so that the transactions
contemplated hereby may be consummated as promptly as practicable on
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the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of any such statute or regulation on the transactions contemplated
hereby.
Section 7.11 SECTION 16(B). Parent shall take all such steps as may be
reasonably necessary to cause the transactions contemplated hereby and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Exchange Act.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction (or, to the extent legally permissible, waiver) of
the following conditions:
(a) this Agreement and the Merger shall have been approved and adopted
by the stockholders of the Company in accordance with DGCL;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
(c) any applicable approval by the European Commission of the
transactions contemplated by this Agreement shall have been obtained
pursuant to the EC Merger Regulation;
(d) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit or enjoin the consummation of
the Merger;
(e) the Form S-4 shall have been declared effective under the
Securities Act and no stop order suspending the effectiveness of the Form
S-4 shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the Commission;
(f) the shares of Parent Common Stock to be issued in the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance;
(g) neither the U.S. Federal Trade Commission nor the Antitrust
Division of the U.S. Department of Justice, as the case may be, shall have,
as a condition to its approval of the Merger and the other transactions
contemplated by this Agreement, required Parent to take any action which,
individually or in the aggregate, would result in, or be reasonably likely
to result in, a Substantial Detriment;
(h) there shall not be instituted or pending any action or proceeding
by any governmental authority (whether domestic, foreign or supranational)
before any court or governmental authority or agency, domestic, foreign or
supranational, seeking to
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(i) restrain, prohibit or otherwise interfere with the ownership or
operation by Parent or any Subsidiary of Parent of all or any material
portion of the business of the Company or any of its Subsidiaries or of
Parent or any of its Subsidiaries or to compel Parent or any Subsidiary of
Parent to dispose of or hold separate all or any portion of the businesses,
product lines or assets of the Company or any of its Subsidiaries or of
Parent or any of its Subsidiaries, (ii) impose or confirm limitations on
the ability of Parent or any Subsidiary of Parent effectively to exercise
full rights of ownership of the shares of Company Common Stock (or shares
of stock of the Surviving Corporation) including, without limitation, the
right to vote any shares of Company Common Stock (or shares of stock of the
Surviving Corporation) on any matters properly presented to stockholders or
(iii) require divestiture by Parent or any Subsidiary of Parent of any
shares of Company Common Stock (or shares of stock of the Surviving
Corporation), if any such matter referred to in subclauses (i), (ii) and
(iii) hereof, individually or in the aggregate, would result in, or would
be reasonably likely to result in, a Substantial Detriment;
(i) there shall not be any statute, rule, regulation, injunction,
order or decree, enacted, enforced, promulgated, entered, issued or deemed
applicable to the Merger and the other transactions contemplated hereby (or
in the case of any statute, rule or regulation, awaiting signature or
reasonably expected to become law), by any court, government or
governmental authority or agency or legislative body, domestic, foreign or
supranational, which, individually or in the aggregate, would result in, or
would be reasonably likely to result in, a Substantial Detriment; and
(j) all required approvals or consents of any governmental authority
(whether domestic, foreign or supranational) in connection with the Merger
and the consummation of the other transactions contemplated hereby shall
have been obtained (and all relevant statutory, regulatory or other
governmental waiting periods, whether domestic, foreign or supranational,
shall have expired) unless the failure to receive any such approval or
consent would not be reasonably expected to result in a Substantial
Detriment and all such approvals and consents which have been obtained
shall be on terms which, individually or in the aggregate, would not be
reasonably likely to result in, a Substantial Detriment.
Section 8.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY.
The obligations of Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction (or, to the extent legally permissible, waiver) of
the following further conditions:
(a) (i) The Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it as of or prior to the
Closing Date, (ii) (A) the representations and warranties of the Company set
forth in this Agreement which are qualified by a "Company Material Adverse
Effect" qualification shall be true and correct in all respects as so qualified
at and as of the date of this Agreement and at and as of the Closing Date as
though made at and as of the Closing Date and (B) the representations and
warranties of the Company set forth in this Agreement which are not qualified by
a "Company Material Adverse Effect" qualification shall be true and correct at
and as of the date of this Agreement and at and as of the Closing Date as though
made at and as of the Closing Date, except for such failures to be true and
correct as would not, in the aggregate, reasonably be expected to have a Company
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Material Adverse Effect; PROVIDED, HOWEVER, that, with respect to clauses (A)
and (B) hereof, representations and warranties that are made as of a particular
date or period shall be true and correct (in the manner set forth in clauses (A)
or (B), as applicable), only as of such date or period;
(b) Parent shall have received an opinion of McDermott Will & Emery LLP (or
such other counsel reasonably acceptable to Parent), on the basis of
representations and assumptions set forth or referred to in such opinion, dated
as of the Closing Date, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the provisions
of Section 368(a) of the Code. In rendering such opinion, such counsel shall be
entitled to receive and rely upon representations of officers of Parent, the
Company or others reasonably requested by counsel; and
(c) since the date of this Agreement, there shall not have been any event,
occurrence, development or state of circumstances which, individually or in the
aggregate, would be reasonably likely to have a Company Material Adverse Effect.
Section 8.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of
the Company to consummate the Merger is subject to the satisfaction (or, to the
extent legally permissible, waiver) of the following further conditions:
(a) (i) Parent shall have performed in all material respects all of its
obligations hereunder required to be performed by it as of or prior to the
Closing Date, (ii) (A) the representations and warranties of Parent and Merger
Subsidiary set forth in this Agreement which are qualified by a "Parent Material
Adverse Effect" qualification shall be true and correct in all respects as so
qualified at and as of the date of this Agreement and at and as of the Closing
Date as though made at and as of the Closing Date and (B) the representations
and warranties of Parent and Merger Subsidiary set forth in this Agreement which
are not qualified by a "Parent Material Adverse Effect" qualification shall be
true and correct at and as of the date of this Agreement and at and as of the
Closing Date as though made at and as of the Closing Date, except for such
failures to be true and correct as would not, in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect; PROVIDED, HOWEVER, that, with
respect to clauses (A) and (B) hereof, representations and warranties that are
made as of a particular date or period shall be true and correct (in the manner
set forth in clauses (A) or (B), as applicable), only as of such date or period;
(b) the Company shall have received an opinion of Wachtell, Lipton, Rosen &
Katz (or such other counsel reasonably acceptable to the Company), on the basis
of representations and assumptions set forth or referred to in such opinion,
dated as of the Closing Date, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the provisions
of Section 368(a) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon representations of officers of Parent, the Company or
others reasonably requested by counsel; and
(c) since the date of this Agreement, there shall not have been any event,
occurrence, development or state of circumstances which, individually or in the
aggregate, would be reasonably likely to have a Parent Material Adverse Effect.
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ARTICLE IX
TERMINATION
Section 9.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding the
obtaining of the Company Stockholder Approval):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent;
(i) if the Merger has not been consummated by December 31, 2005
(the "END DATE"); PROVIDED, HOWEVER, that if (x) the Effective Time
has not occurred by such date by reason of nonsatisfaction of any of
the conditions set forth in Sections 8.1(b), 8.1(c), 8.1(g), 8.1(h),
8.1(i) or 8.1(j) and (y) all other conditions in Article 8 have
theretofore been satisfied or (to the extent legally permissible)
waived or are then capable of being satisfied, the End Date will be
August 31, 2006; PROVIDED FURTHER that the right to terminate this
Agreement under this Section 9.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
caused or resulted in the failure of the Effective Time to occur on or
before the End Date; or
(ii) if the Company Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or any adjournment thereof;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent
or the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable; PROVIDED
that the party seeking to terminate this Agreement pursuant to this Section
9.1(c) shall have complied with its obligations in Section 7.1 hereof;
(d) by Parent, if (i) the Board of Directors of the Company shall have
failed to recommend its approval or recommendation of this Agreement or the
Merger or there has otherwise been a Change in the Company Recommendation,
whether or not permitted by the terms hereof, or the Company shall be in
breach of its obligation to call and hold the Company Stockholder Meeting
or to prepare, obtain Commission clearance for and mail the Proxy Statement
in accordance with Section 5.2 or otherwise comply with such Section (or
the Board of Directors of the Company or any committee thereof shall
resolve to do any of the foregoing) or (ii) the Company shall have
materially breached its obligations in Section 7.9 hereof to the material
detriment of Parent; or
(e) by either Parent or the Company, if there shall have been a breach
by the other of any of its representations, warranties, covenants or
obligations contained in this Agreement, which breach would result in the
failure to satisfy one or more of the
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conditions set forth in Section 8.2(a) (in the case of a breach by the
Company) or Section 8.3(a) (in the case of a breach by Parent), and in any
such case such breach shall be incapable of being cured or, if capable of
being cured, shall not have been cured within 30 days after written notice
thereof shall have been received by the party alleged to be in breach.
The party desiring to terminate this Agreement pursuant to clause (b), (c),
(d) or (e) of this Section 9.1 shall give written notice of such termination to
the other party in accordance with Section 10.1, specifying the provision hereof
pursuant to which such termination is effected.
Section 9.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that (a) the agreements
contained in this Section 9.2, in Section 10.4 and 10.5 hereof and in the
Confidentiality Agreement shall survive the termination hereof and (b) no such
termination shall relieve any party of any liability or damages resulting from
any willful breach by that party of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given,
if to Parent or Merger Subsidiary, to:
ChevronTexaco Corporation
6001 Bollinger Canyon Road
San Ramon, California 94583
Facsimile No.: (925) 842-1230
Attention: David J. O'Reilly, Chairman of the Board and Chief
Executive Officer Charles A. James, Vice President and
General Counsel
and
Pillsbury Winthrop Shaw Pittman LLP
50 Fremont Street
San Francisco, California 94105
Facsimile No.: (415) 983-1200
Attention: Alfred L. Pepin, Jr.
Robert A. James
Terry M. Kee
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if to the Company, to:
Unocal Corporation
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
Facsimile No.: (310) 726-7815
Attention: Samuel H. Gillespie III, Senior Vice President, Chief
Legal Officer & General Counsel/Law
with copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403 2000
Attention: Daniel A. Neff
David C. Karp
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 10.1
and the appropriate facsimile confirmation is received or (b) if given by any
other means, when delivered at the address specified in this Section 10.1.
Section 10.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement.
Section 10.3 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement (including the Exhibits and Schedules
hereto) may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Parent and Merger Subsidiary, or in the case of a waiver, by the
party against whom the waiver is to be effective; PROVIDED that after the
adoption of this Agreement by the stockholders of the Company, no such amendment
or waiver shall, without the further approval of such stockholders, alter or
change (i) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company or (ii) any term of the certificate
of incorporation of Parent.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.4 EXPENSES. Except as otherwise specified in Section 10.5 or as
otherwise agreed to in writing by the parties, all costs and expenses incurred
in connection with this
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Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such cost or expense, except that those expenses incurred in
connection with printing, mailing and filing the Registration Statement and all
fees paid in respect of HSR in connection with the Merger shall be borne by
Parent.
Section 10.5 COMPANY TERMINATION FEE. If:
(i) Parent shall terminate this Agreement pursuant to Section 9.1(d);
or
(ii) either the Company or Parent shall terminate this Agreement
pursuant to Section 9.1(b)(ii) and prior to the Company Stockholder Meeting
but after the date hereof an Acquisition Proposal shall have been made
known to the Company (including any of its agents or representatives) and
communicated publicly or to any substantial number of stockholders of the
Company or shall have been made directly to the stockholders of the Company
by any Person or any Person shall have publicly announced an intention
(whether or not conditional) to make an Acquisition Proposal; or
(iii) after the date hereof, an Acquisition Proposal by any Person
shall have been made known to the Company (including any of its agents or
representatives) and communicated publicly or to any substantial number of
stockholders of the Company or shall have been made directly to the
stockholders of the Company by any Person, or any Person shall have
publicly announced an intention (whether or not conditional) to make an
Acquisition Proposal, and thereafter this Agreement is terminated pursuant
to Section 9.1(b)(i) and the Company Stockholder Approval shall not
theretofore have been obtained;
then in any case as described in clause (i), (ii), or (iii) the Company shall
pay to Parent (by wire transfer of immediately available funds) (x) $250,000,000
not later than the date of termination of this Agreement and (y) an additional
$250,000,000 if and not later than the date an Acquisition Proposal is
consummated or a definitive agreement is entered into by the Company providing
for any Acquisition Proposal, as long as such Acquisition Proposal is
consummated or such definitive agreement is executed within 12 months after the
date of termination of this Agreement; PROVIDED, HOWEVER, that for the purpose
of this clause (y), all references in the definition of Acquisition Proposal to
20% shall instead refer to 50%. The Company acknowledges that the agreements
contained in this Section 10.5 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement. Accordingly, if the Company fails to pay timely
any amount due pursuant to this Section 10.5 and, in order to obtain such
payment, Parent commences a suit which results in a judgment against the Company
for the amount payable to Parent pursuant to this Section 10.5, the Company
shall pay to Parent its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the amount so
payable at the rate on six (6)-month United States Treasury obligations (as of
the date such payment was required to be made pursuant to this Agreement) plus
three percent (3%).
Section 10.6 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED that no party may assign, delegate
or otherwise transfer any of its rights or
55
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obligations under this Agreement without the consent of the other parties hereto
except that Merger Subsidiary may transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, its rights under this Agreement,
but any such transfer or assignment will not relieve Merger Subsidiary of its
obligations hereunder.
Section 10.7 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without regard
to principles of conflicts of law.
Section 10.8 ENFORCEMENT; JURISDICTION. 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 or were otherwise
breached, for which monetary damages would not be an adequate remedy, and
accordingly, each party agrees that the other party shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which the parties are entitled at law or in equity. Any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby or thereby may be brought in any federal or state court
located in the State of Delaware, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 10.1
shall be deemed effective service of process on such party.
Section 10.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 10.10 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 10.11 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto), constitutes the entire agreement between the parties with
respect to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof and thereof. Except as provided in Section
6.2(c), no provision of this Agreement or any other agreement contemplated
hereby is intended to confer on any Person other than the parties hereto any
rights or remedies.
56
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Section 10.12 CAPTIONS. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 10.13 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
57
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
UNOCAL CORPORATION
By: /s/ Charles R. Williamson
-----------------------------------------
Name: Charles R. Williamson
Title: Chairman of the Board and Chief
Executive Officer
CHEVRONTEXACO CORPORATION
By: /s/ David J. O'Reilly
-----------------------------------------
Name: David J. O'Reilly
Title: Chairman of the Board and Chief
Executive Officer
BLUE MERGER SUB INC.
By: /s/ David J. O'Reilly
-----------------------------------------
Name: David J. O'Reilly
Title: President
<PAGE>
EXHIBIT A:
FORM OF CERTIFICATE OF INCORPORATION OF MERGER SUBSIDIARY
* * *
CERTIFICATE OF INCORPORATION
OF
BLUE MERGER SUB INC.
* * *
ARTICLE I
The name of the corporation is Blue Merger Sub Inc.
ARTICLE II
The address of its registered office in the State of Delaware is 2711
Centerville Road, Suite 400, in the City of Wilmington, County of New Castle,
State of Delaware. The name of its registered agent at such address is
Corporation Service Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of all classes of capital stock that the
corporation shall have authority to issue is 1,000 shares of common stock, par
value $0.01 per share.
ARTICLE V
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware:
A. The Board of Directors is expressly authorized to adopt, amend or repeal
the By-laws of the corporation, provided, however, that the By-laws may only be
amended in accordance with the provisions thereof.
B. Elections of directors need not be by written ballot unless the By-laws
of the corporation shall so provide.
C. The books of the corporation may be kept at such place within or without
the State of Delaware as the By-laws of the corporation may provide or as may be
designated from time to time by the Board of Directors.
<PAGE>
ARTICLE VI
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) under Section 174 of the Delaware General Corporation Law;
or (4) for any transaction from which the director derived an improper personal
benefit.
If the Delaware General Corporation Law hereafter is amended to further
eliminate or limit the liability of directors, then the liability of a director
of the corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended Delaware
General Corporation Law.
ARTICLE VII
Except as otherwise provided in this Certificate of Incorporation, the
corporation reserves the right to amend or repeal any provision, rescind or
amend in any respect any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon a stockholder herein are granted subject to this
reservation.
<PAGE>
EXHIBIT B
FORM OF AFFILIATE'S RULE 145 LETTER
* * *
[Address to:
ChevronTexaco Corporation
6001 Bollinger Canyon Road
San Ramon, California 94583
Attention: Lydia Beebe]
The undersigned is a holder of shares of common stock, par value $1.00 per
share ("Company Common Stock"), of Unocal Corporation (the "Company") and will
receive shares of common stock, par value $0.75 per share (the "Parent Common
Stock") of ChevronTexaco Corporation ("Parent"), in connection with the merger
(the "Merger") of the Company with and into Blue Merger Sub Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent. The undersigned
acknowledges that the undersigned may be deemed an "affiliate" of the Company
within the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act
of 1933, as amended (the "Act"), although nothing contained herein should be
construed as an admission of such fact.
If, in fact, the undersigned were an affiliate under the Act, the
undersigned's ability to sell, assign or transfer the Parent Common Stock
received in exchange for Company Common Stock pursuant to the Merger might be
restricted unless the securities involved in such transaction were registered
under the Act or an exemption from such registration were available. The
undersigned understands that such exemptions are limited and the undersigned has
obtained advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby covenants with Parent that the undersigned will not
offer to sell, assign, transfer or otherwise dispose of any of the Parent Common
Stock received in exchange for shares of Company Common Stock pursuant to the
Merger except (i) pursuant to an effective Registration Statement under the Act,
(ii) in compliance with Rule 145 under the Act (as such rule may be amended from
time to time) or (iii) in a transaction which does not require registration
under the Act. In the event of a sale or other disposition by the undersigned of
Parent Common Stock pursuant to Rule 145, the undersigned will supply Parent
with evidence of compliance with such Rule, in the form of a letter in the form
of ANNEX I hereto, or an opinion, in form and substance reasonably acceptable to
Parent, from independent counsel or a "no-action" letter or interpretive letter
from the staff of the SEC. The undersigned understands that Parent may instruct
its transfer agent to withhold the transfer of any securities disposed of by the
undersigned except in compliance with this letter, but that upon receipt of
evidence of such compliance the transfer agent shall effectuate the transfer of
the Parent Common Stock sold.
The undersigned acknowledges and agrees that, unless the transfer by the
undersigned of Parent Common Stock issued to the undersigned as a result of the
Merger has been registered
<PAGE>
under the Act or such transfer is made in conformity with the provisions of Rule
145(d) under the Act, the following legend may be placed on certificates
representing such shares of Parent Common Stock received by the undersigned in
the Merger or held by a transferee thereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), APPLIES. THE
SHARES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS
OF RULE 145 OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR IN ACCORDANCE WITH AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF, THE ACT."
It is understood and agreed that the legend set forth above shall be
removed by delivery of substitute certificates without such legend and/or any
stop transfer instructions will be lifted if (A) one year (or such other period
as may be required by Rule 145(d)(2) or any successor thereto) shall have
elapsed from the date on which the undersigned acquired the Parent Common Stock
received in the Merger and the provisions of Rule 145(d)(2) (or any successor
thereto) are then available to the undersigned, (B) two years (or such other
period as may be required by Rule 145(d)(3) or any successor thereto) shall have
elapsed from the date the undersigned acquired the Parent Common Stock received
in the Merger and the provisions of Rule 145(d)(3) (or any successor thereto)
are then available to the undersigned or (C) the undersigned shall have
delivered to Parent a copy of a "no-action" letter or interpretative letter from
the staff of the SEC, or an opinion of counsel in form and substance reasonably
satisfactory to Parent, to the effect that such legend is not required for
purposes of the Act.
Execution of this letter should not be considered an admission on the part
of the undersigned of "affiliate" status as described in the first paragraph of
this letter agreement, or as a waiver of any rights the undersigned may have to
object to any claim that the undersigned is such an affiliate on or after the
date of this letter.
The undersigned acknowledges that the undersigned has carefully read this
letter and understands the requirements hereof and the limitations imposed upon
the distribution, sale, transfer or other disposition of Parent Common Stock.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of Delaware. This letter agreement may be executed in
counterparts, all of which when so executed shall constitute one agreement,
notwithstanding that all of the signatories are not signatories to the original
or the same counterpart.
Very truly yours,
By: __________________________________
Name:
<PAGE>
Accepted this ____ day of
________________, 2005.
CHEVRONTEXACO CORPORATION
By: _____________________________
Name:
Title:
<PAGE>
ANNEX I
[Name] [Date]
On ___________, the undersigned sold the securities of ChevronTexaco
Corporation, a Delaware corporation ("PARENT"), described below in the space
provided for that purpose (the "SECURITIES"). The Securities were received by
the undersigned in connection with the merger of Unocal Corporation, a Delaware
corporation, with and into Blue Merger Sub Inc., a Delaware corporation.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "SECURITIES ACT").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
Description of the Securities: