EXHIBIT 99.2
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
- ------------------------------------
In the Matter of )
)
Chevron Corporation, )
a corporation, ) FTC File No. 011 0011
)
and )
)
Texaco Inc., )
a corporation. )
)
- ------------------------------------
AGREEMENT CONTAINING CONSENT ORDERS
The Federal Trade Commission ("Commission"), having initiated an
investigation of the proposed merger of Respondent Chevron Corporation
("Chevron") and Respondent Texaco Inc. ("Texaco"), and it now appearing that
Chevron and Texaco, sometimes referred to as "Proposed Respondents," are willing
to enter into this Agreement Containing Consent Orders ("Consent Agreement") to
divest certain assets and providing for other relief:
IT IS HEREBY AGREED by and between Proposed Respondents, by their duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed Respondent Chevron is a corporation organized, existing and
doing business under and by virtue of the laws of the state of Delaware, with
its office and principal place of business located at 575 Market Street, San
Francisco, CA 94105.
2. Proposed Respondent Texaco is a corporation organized, existing and
doing business under and by virtue of the laws of the state of Delaware, with
its office and principal place of business located at 2000 Westchester Ave.,
White Plains, NY 10650.
3. Proposed Respondents admit all the jurisdictional facts set forth in
the draft of Complaint here attached.
4. Proposed Respondents waive:
1. any further procedural steps;
2. the requirement that the Commission's Decision and Order and Order
to Hold Separate and Maintain Assets, attached hereto and made a
part hereof, contain a
statement of findings of fact and conclusions of law;
3. all rights to seek judicial review or otherwise to challenge or
contest the validity of the Decision and Order or the Order to Hold
Separate and Maintain Assets entered pursuant to this Consent
Agreement; and
4. any claim under the Equal Access to Justice Act.
5. Proposed Respondents shall submit an initial report within thirty
(30) days after they execute this Consent Agreement and every thirty (30) days
thereafter until the Decision and Order becomes final, pursuant to Section 2.33
of the Commission's Rules, 16 C.F.R. ss. 2.33, signed and verified by the
Proposed Respondents setting forth in detail the manner in which the Proposed
Respondents have prepared to comply, are complying, and will comply with the
Decision and Order and Order to Hold Separate and Maintain Assets. Such reports
will not become part of the public record unless and until the Consent
Agreement, Decision and Order, and Order to Hold Separate and Maintain Assets
are accepted by the Commission for public comment.
6. Because there may be interim competitive harm, the Commission may
issue its Complaint and Order to Hold Separate and Maintain Assets in this
matter at any time after it accepts the Consent Agreement for public comment.
7. This Consent Agreement shall not become part of the public record of
the proceeding unless and until it is accepted by the Commission. If this
Consent Agreement is accepted by the Commission, it, together with the draft of
Complaint contemplated hereby, will be placed on the public record for a period
of thirty (30) days and information in respect thereto publicly released. The
Commission thereafter may either withdraw its acceptance of this Consent
Agreement and so notify Proposed Respondents, in which event it will take such
action as it may consider appropriate, or issue or amend its Complaint (as the
circumstances may require) and issue its Decision and Order, in disposition of
the proceeding.
8. This Consent Agreement is for settlement purposes only and does not
constitute an admission by Proposed Respondents that the law has been violated
as alleged in the draft of Complaint here attached, or that the facts as alleged
in the draft Complaint, other than jurisdictional facts, are true.
9. This Consent Agreement contemplates that, if it is accepted by the
Commission, the Commission may (1) issue and serve its Complaint corresponding
in form and substance with the draft of Complaint here attached, (2) issue and
serve its Order to Hold Separate and Maintain Assets, and (3) make information
public with respect thereto. If such acceptance is not subsequently withdrawn by
the Commission pursuant to the provisions of ss. 2.34 of the Commission's Rules,
16 C.F.R. ss. 2.34, the Commission may, without further notice to Proposed
Respondents, issue the attached Decision and Order, in disposition of this
proceeding. When
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final, the Decision and Order and the Order to Hold Separate and Maintain Assets
shall have the same force and effect and may be altered, modified or set aside
in the same manner and within the same time provided by statute for other
orders. The Decision and Order and Order to Hold Separate and Maintain Assets
shall become final upon service. Delivery of the Complaint, Decision and Order,
and Order to Hold Separate and Maintain Assets to Proposed Respondents by any
means specified in Commission Rule 4.4(a), 16 C.F.R. ss. 4.4(a), shall
constitute service. The Proposed Respondents waive any right they may have to
any other manner of service. Proposed Respondents also waive any right they may
otherwise have to service of any Appendices incorporated by reference into the
Decision and Order, and agree that they are bound to comply with and will comply
with the Decision and Order to the same extent as if they had been served with
copies of the Appendices, where Proposed Respondents are already in possession
of copies of such Appendices. The Complaint may be used in construing the terms
of the Decision and Order and Order to Hold Separate and Maintain Assets, and no
agreement, understanding, representation, or interpretation not contained in the
Consent Agreement, Decision and Order, or Order to Hold Separate and Maintain
Assets may be used to vary or contradict the terms of the Decision and Order or
the Order to Hold Separate and Maintain Assets.
10. By signing this Consent Agreement, Proposed Respondents represent and
warrant that they can comply with the provisions of the attached Decision and
Order and Order to Hold Separate and Maintain Assets, and that all subsidiaries,
affiliates, and successors necessary to effectuate the full relief contemplated
by this Consent Agreement, the Decision and Order, and the Order to Hold
Separate and Maintain Assets are parties to the Consent Agreement.
11. Proposed Respondents have read the proposed Complaint, Decision and Order,
and Order to Hold Separate and Maintain Assets contemplated hereby. Proposed
Respondents understand that once the Decision and Order has been issued, they
will be required to file one or more compliance reports showing that they have
fully complied with the orders. Proposed Respondents agree to comply with the
proposed Decision and Order from the date they sign this Consent Agreement.
Proposed Respondents understand that they may be liable for civil penalties in
the amount provided by law for each violation of the Decision and Order and
Order to Hold Separate and Maintain Assets after they have become final.
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Signed this ____ day of August, 2001.
CHEVRON CORPORATION FEDERAL TRADE COMMISSION
By: ------------------------------ By: -----------------------------
David J. O'Reilly Dennis F. Johnson
Chairman and Chief Executive Officer Attorney
Bureau of Competition
------------------------------
Terry Calvani Approved:
Counsel for Chevron Corporation
------------------------------
TEXACO INC. Phillip L. Broyles
Assistant Director
Mergers III
Bureau of Competition
------------------------------
Glenn F. Tilton
Chairman and Chief Executive Officer
------------------------------
Michael E. Antalics
Deputy Director
------------------------------ Bureau of Competition
Marc G. Schildkraut
Counsel for Texaco Inc.
------------------------------
M. Sean Royall
Deputy Director
Bureau of Competition
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS: Timothy J. Muris, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary
- ------------------------------------
In the Matter of )
)
Chevron Corporation, )
a corporation, ) Docket No. C-4023
)
and )
)
Texaco Inc., )
a corporation. )
)
- ------------------------------------
DECISION AND ORDER
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed merger (the "Merger") of Respondent Chevron
Corporation ("Chevron") and Respondent Texaco Inc. ("Texaco"), and Respondents
having been furnished thereafter with a copy of a draft of Complaint that the
Bureau of Competition proposed to present to the Commission for its
consideration and which, if issued by the Commission, would charge Respondents
with violations of Section 5 of the Federal Trade Commission Act, as amended, 15
U.S.C. ss. 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. ss. 18;
and
Respondents, their attorneys, and counsel for the Commission having
thereafter executed an Agreement Containing Consent Orders ("Consent Agreement")
containing an admission by Respondents of all the jurisdictional facts set forth
in the aforesaid draft of Complaint, a statement that the signing of said
Consent Agreement is for settlement purposes only and does not constitute an
admission by Respondents that the law has been violated as alleged in such
Complaint, or that the facts as alleged in such Complaint, other than
jurisdictional facts, are true, and waivers and other provisions as required by
the Commission's Rules; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that Respondents have violated said
Acts, and that a Complaint should issue stating its charges in that respect, and
having thereupon issued its Complaint and its Order to Hold Separate and
Maintain Assets, and having accepted the executed Consent Agreement and placed
such Consent Agreement on the public record for a period of thirty (30) days for
the receipt and
consideration of public comments, now in further conformity with the procedure
described in Commission Rule 2.34, 16 C.F.R. ss. 2.34, the Commission hereby
makes the following jurisdictional findings and issues the following Decision
and Order ("Order"):
1. Respondent Chevron is a corporation organized, existing and doing
business under and by virtue of the laws of the state of Delaware,
with its office and principal place of business located at 575
Market Street, San Francisco, CA 94105.
2. Respondent Texaco is a corporation organized, existing and doing
business under and by virtue of the laws of the state of Delaware,
with its office and principal place of business located at 2000
Westchester Ave., White Plains, NY 10650.
3. The Commission has jurisdiction of the subject matter of this
proceeding and of Respondents, and the proceeding is in the public
interest.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions
shall apply:
A. "Chevron" means Chevron Corporation, its directors, officers,
employees, agents, representatives, predecessors, successors,
and assigns; its joint ventures, subsidiaries, divisions,
groups, and affiliates controlled by Chevron, and the
respective directors, officers, employees, agents,
representatives, successors, and assigns of each.
B. "Texaco" means Texaco Inc., its directors, officers,
employees, agents, representatives, predecessors, successors,
and assigns; its joint ventures, subsidiaries, divisions,
groups, and affiliates controlled by Texaco, and the
respective directors, officers, employees, agents,
representatives, successors, and assigns of each.
C. "Avfuel" means Avfuel Corporation, a corporation organized,
existing and doing business under and by virtue of the laws of
the state of Michigan, with its office and principal place of
business located at 47 West Ellsworth, Ann Arbor, Michigan
48108.
D. "Aviation Fuel" means Aviation Gasoline and Jet Fuel.
E. "Aviation Fuel Divestiture Agreement" means all agreements
entered into between Respondents and AvFuel relating to the
sale of Texaco's Overlap General Aviation Business Assets,
including but not limited to the Purchase and Sale Agreement,
the Trademark License Agreement, all supply agreements, and
all other ancillary agreements, dated August 7, 2001, and
attached hereto as Confidential Appendix B to this Order.
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F. "Aviation Gasoline" or "AvGas" means gasoline intended for
aviation use that meets the specifications set forth by the
American Society for Testing and Materials, ASTM specification
D910.
G. "Aviation Marketing Agreements" means all agreements or
contracts between Texaco and any Person relating to such
Person's right or obligation to sell, resell or distribute
Aviation Fuel under the Texaco brand.
H. "Aviation Overlap State" means each of the following states:
Alabama, Alaska, Arizona, California, Florida, Georgia, Idaho,
Louisiana, Mississippi, Nevada, Oregon, Tennessee, Utah, and
Washington.
I. "Aviation Supply Agreements" means all agreements or contracts
between Texaco and any Person relating to an obligation to
sell or supply Aviation Fuel to Texaco, including but not
limited to supply agreements and exchange agreements.
J. "Aviation Terminal" means a facility that provides temporary
storage of Aviation Fuel received from a pipeline, marine
vessel, truck or railway and the redelivery of Aviation Fuel
from storage tanks into tank trucks, transport trailers or
railcars.
K. "Aviation Terminal Throughput Agreements" means all agreements
or contracts between Texaco and any Person relating to
Texaco's right to use or have another Person use any tanks,
equipment, pipelines, trucks, or other services or facilities
at an Aviation Terminal.
L. "Aviation Transportation Agreements" means all agreements or
contracts between Texaco and any Person relating to the
transportation of Aviation Fuel.
M. "Change of Control Provisions" means Section 12.04 of the
Equilon LLC Agreement or the Motiva LLC Agreement.
N. "Concentration Levels" means market concentration, measured in
annual volume (gallons) sold (or, if volume in gallons is not
available, other standard industry measures), as determined by
the Herfindahl Hirschmann Index.
O. "Disclose" means to convey by any means or otherwise make
available information to any person or persons.
P. "Discovery Producer Services LLC" means the limited liability
company established by the Second Amended and Restated Limited
Liability Company Agreement dated May 15, 1998, between and
among Texaco Discovery Holdings LLC, Mapco Energy L.L.C., and
British-Borneo Pipeline LLC.
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Q. "Discovery System" means Discovery Producer Services LLC, and
all of its assets, including but not limited to Discovery Gas
Transmission LLC and all of its assets, and including all
pipelines of the system that transport natural gas offshore of
Louisiana and onshore to the processing plant at LaRose,
Louisiana; the processing plant at Larose, Louisiana; all
pipelines that transport natural gas between the processing
plant and natural gas transmission pipelines; all pipelines
that transport raw mix between the processing plant and the
fractionating plant at Paradis, Louisiana; the fractionating
plant at Paradis, Louisiana; and equipment including but not
limited to condensate stabilization facilities and pumping
stations.
R. "Divestiture Trustee" means a trustee appointed pursuant to
Paragraph III.B. of this Order with the obligation to divest
TRMI and/or TRMI East pursuant to this Order.
S. "Enterprise Fractionating Plant" means the fractionating plant
at Mont Belvieu, Texas, operated by Enterprise Products
Company and partially owned by Texaco.
T. "Equilon" means Equilon Enterprises LLC, a joint venture
formed pursuant to the Equilon LLC Agreement.
U. "Equilon Interest" means all of the ownership interests in
Equilon owned directly or indirectly by Texaco, including the
interests owned by TRMI and its wholly owned subsidiaries,
Texaco Convent Refining Inc., and Texaco Anacortes
Cogeneration Company.
V. "Equilon LLC Agreement" means the Limited Liability Company
Agreement of Equilon Enterprises LLC dated as of January 15,
1998 among certain subsidiaries of Shell and Texaco, as
amended.
W. "General Aviation Business Agreements" means all Aviation
Supply Agreements, Aviation Terminal Throughput Agreements,
Aviation Transportation Agreements, Aviation Marketing
Agreements, and all other agreements or contracts related to
Texaco's Domestic General Aviation Business, including but not
limited to aviation retail sales agreements, aviation fuel
agreements, aviation dealer support agreements, customer
agreements, credit card agreements, distributor agreements,
marketer agreements, supply agreements, rail contracts,
railcar lease agreements, barge agreements, refueler
agreements, loans, grants, or leases.
X. "Jet Fuel" means fuel intended for use in jet airplanes that
meets the specifications set forth by the American Society for
Testing and Materials, ASTM specification D1655.
Y. "JV Agreements" means the Equilon LLC Agreement and the Motiva
LLC Agreement.
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Z. "Members Committee" means the "Members Committee" as defined
in Section 6.03 of the Equilon LLC Agreement and the Motiva
LLC Agreement.
AA. "Merger" means any merger between Respondents, including the
proposed merger contemplated by the Agreement and Plan of
Merger dated October 15, 2000, as amended, among Respondents
and Keepep Inc.
BB. "Merger Date" means the date on which the Merger is
consummated.
CC. "Metropolitan Area" means any Metropolitan Area (including
Metropolitan Statistical Areas, Consolidated Metropolitan
Statistical Areas, or Primary Metropolitan Statistical Areas)
as defined by the U.S. Office of Management and Budget.
DD. "Motiva" means Motiva Enterprises LLC, a joint venture formed
pursuant to the Motiva LLC Agreement.
EE. "Motiva Interest" means all of the ownership interests in
Motiva owned directly or indirectly by Texaco, including the
interest owned by TRMI East.
FF. "Motiva LLC Agreement" means the Limited Liability Company
Agreement of Motiva Enterprises LLC dated as of July 1, 1998,
among Shell, Shell Norco Refining Company, SRI and TRMI East.
GG. "Non-Public Equilon Or Motiva Information" means any
information not in the public domain relating to Equilon or
Motiva.
HH. "Operating Trustee" means each trustee appointed pursuant to
Paragraph III.O. of this Order with the obligation to manage
TRMI and/or TRMI East pursuant to this Order.
II. "Person" means any individual, partnership, firm, trust,
association, corporation, joint venture, unincorporated
organization, or other business or governmental entity.
JJ. "Relevant OCS Area" means the Grand Isle, Grand Isle South,
South Timbalier, and South Timbalier South areas as defined by
the Department of Interior Minerals Management Service.
KK. "Respondents" means Chevron and Texaco, individually and
collectively, and any successors.
LL. "Section of the Country" means a Metropolitan Area in those
cases where the retail outlets that Respondents have agreed to
supply pursuant to Paragraph IV.F. are located in a
Metropolitan Area, or a county in those cases where the retail
outlets that
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Respondents have agreed to supply are located outside of a
Metropolitan Area.
MM. "Shell" means Shell Oil Company, a Delaware corporation, with
its principal place of business located at One Shell Plaza,
Houston, Texas 77002, its parents, and its subsidiaries
controlled by Shell.
NN. "SRI" means Saudi Refining, Inc., a Delaware corporation, with
its principal place of business located at 9009 West Loop
South, Houston, TX 77210, its parents, and its subsidiaries
controlled by SRI.
OO. "Substitute Aviation Fuel Divestiture Agreement" means an
agreement, other than the Aviation Fuel Divestiture Agreement,
approved by the Commission, for the divestiture of Texaco's
Domestic General Aviation Business Assets to an acquirer
approved by the Commission.
PP. "Texaco-Williams Contract" means the Product Sale, Purchase
and Exchange Agreement dated February 1, 1997, between Mapco
Energy L.L.C. and Bridgeline Gas Distribution LLC.
QQ. "Texaco's Domestic General Aviation Business" means the
supply, distribution, marketing, transportation, and sale of
Aviation Fuel by Texaco on a direct or distributor basis to
customers (other than commercial airlines and military) in the
United States (including the Aviation Overlap States),
including but not limited to fixed base operators, airport
dealers, distributors, jobbers, resellers, brokers, corporate
accounts, or consumers.
RR. "Texaco's Domestic General Aviation Business Assets" means all
assets, tangible or intangible, relating to Texaco's Domestic
General Aviation Business in the United States, including but
not limited to all General Aviation Business Agreements used
in or relating to Texaco's Domestic General Aviation Business.
SS. "Texaco's Overlap General Aviation Business" means the supply,
distribution, marketing, transportation, and sale of Aviation
Fuel by Texaco on a direct or distributor basis to customers
(other than commercial airlines and military) in the Aviation
Overlap States, including but not limited to fixed base
operators, airport dealers, distributors, jobbers, resellers,
brokers, corporate accounts, or consumers, but excluding the
assets and agreements set forth on Schedule 2.3(c) of the
Aviation Fuel Divestiture Agreement.
TT. "Texaco's Overlap General Aviation Business Assets" means all
assets, tangible or intangible, relating to Texaco's Overlap
General Aviation Business, including but not limited to all
General Aviation Business Agreements used in or relating to
Texaco's Overlap General Aviation Business, but excluding the
assets and agreements set forth on Schedule 2.3(c) of the
Aviation Fuel Divestiture Agreement.
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UU. "TRMI" means Texaco Refining and Marketing Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Texaco,
and its subsidiary, Texaco Convent Refining Inc., and Texaco's
interest in all other subsidiaries, divisions, groups, joint
ventures, or affiliates of Texaco that own or control any
ownership interest in Equilon.
VV. "TRMI East" means Texaco Refining and Marketing (East) Inc., a
Delaware corporation and an indirect wholly owned subsidiary
of Texaco, and Texaco's interest in all other subsidiaries,
divisions, groups, joint ventures, or affiliates of Texaco
that own or control any ownership interest in Motiva.
WW. "Trust" means the trust established by the Trust Agreement.
XX. "Trust Agreement" means the Agreement and Declaration of Trust
approved by the Commission and attached hereto and made part
hereof as Appendix B to this Order.
YY. "Venice System" means Venice Energy Services Company, L.L.C.,
and all of its assets, including but not limited to (i)
natural gas processing, fractionation and natural gas liquids
storage and terminaling facilities at the Venice Complex (as
that term is defined in the Second Amended and Restated
Limited Liability Company Agreement of Venice Energy Services
Company, L.L.C.), (ii) onshore and offshore natural gas
pipelines upstream from the Venice Complex, known as the
Venice Gathering System, (iii) compression, separation,
dehydration, and residue gas and liquid gas handling
facilities at or associated with the Venice Complex (excluding
any residue gas pipelines and metering facilities owned by the
downstream pipelines), and (iv) natural gas liquids facilities
(excluding natural gas liquids pipelines downstream from the
Venice Complex) related to such processing, fractionation,
storage and termination facilities.
II.
IT IS FURTHER ORDERED that:
A. Respondents shall divest:
1. either (a) the Equilon Interest to Shell no later
than the Merger Date, in a manner that receives the
prior approval of the Commission, or (b) no later
than eight (8) months after the Merger Date, in a
manner that receives the prior approval of the
Commission, either (i) the Equilon Interest to Shell
or (ii) TRMI, absolutely and in good faith, at no
minimum price, to an acquirer or acquirers that
receive the prior approval of the Commission;
and
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2. either (a) the Motiva Interest to Shell and/or SRI no
later than the Merger Date, in a manner that receives
the prior approval of the Commission, or (b) no later
than eight (8) months after the Merger Date, in a
manner that receives the prior approval of the
Commission, either (i) the Motiva Interest to Shell
and/or SRI or (ii) TRMI East, absolutely and in good
faith, at no minimum price, to an acquirer or
acquirers that receive the prior approval of the
Commission.
Such divestitures shall be accomplished by Respondents prior to or on
the Merger Date or, after the Merger Date, by the Divestiture Trustee
pursuant to the provisions of Paragraph III. of this Order or as
otherwise approved by the Commission.
B. Respondents shall not consummate the Merger unless and until
Texaco:
1. has either (a) divested the Equilon Interest pursuant
to Paragraph II.A.1.(a) of this Order or (b)
transferred TRMI to the Trust pursuant to Paragraph
III. of this Order;
and
2. has either (a) divested the Motiva Interest pursuant
to Paragraph II.A.2.(a) of this Order or (b)
transferred TRMI East to the Trust pursuant to
Paragraph III. of this Order.
Provided, however, if Texaco has triggered the Change of Control
Provisions pursuant to either or both of the JV Agreements, then the
transfer by Respondents to the Trust of TRMI and/or TRMI East shall not
prevent Shell and/or SRI from exercising any rights they may have under
the applicable JV Agreement to acquire the Equilon Interest and/or the
Motiva Interest pursuant to the valuation process described in Sections
12.04 and 12.05 of the JV Agreement; further, should Shell and/or SRI
decline to exercise their rights to acquire the Equilon Interest and/or
the Motiva Interest pursuant to Section 12.04 of the applicable JV
Agreement, then Shell and/or SRI shall not be precluded, as a result of
the transfer to the Trust or as a result of Shell and/or SRI declining
to exercise their rights, from offering to acquire either the Equilon
Interest or TRMI and/or the Motiva Interest or TRMI East pursuant to
Paragraph III. of this Order.
C. If the Trust is rescinded, unwound, dissolved, or otherwise
terminated at any time after the Merger but before Respondents
have complied with Paragraph II.A. of this Order, then
Respondents shall immediately upon such rescission, unwinding,
dissolution, or termination, hold TRMI and TRMI East separate
and apart from Respondents pursuant to the Order to Hold
Separate and Maintain Assets issued in this matter.
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D. The purpose of these divestitures is to ensure the
continuation of Equilon and Motiva as ongoing, viable
businesses engaged in the same businesses as Equilon and
Motiva are presently engaged, to ensure the ownership of the
Equilon Interest (or TRMI) and the Motiva Interest (or TRMI
East) by a person other than Respondents that has been
approved by the Commission, and to remedy the lessening of
competition resulting from the Merger as alleged in the
Commission's Complaint.
III.
IT IS FURTHER ORDERED that, if Respondents have not divested the
Equilon Interest to Shell and/or the Motiva Interest to Shell and/or SRI
pursuant to the requirements of Paragraph II. of this Order on or before the
Merger Date:
A. Texaco shall, on or before the Merger Date: (1) enter into the
Trust Agreement, and (2) transfer or cause to be transferred
(a) TRMI to the Trust if the Equilon Interest has not been
divested to Shell, and/or (b) TRMI East to the Trust if the
Motiva Interest has not been divested to Shell and/or SRI.
Simultaneously with the Merger, Texaco shall cause its
representatives to resign from the Members Committee of
Equilon and Motiva.
B. Respondents shall agree to the appointment of Robert A. Falise
as Divestiture Trustee and enter into the Trust Agreement no
later than the Merger Date.
C. No later than the Merger Date, Respondents shall transfer to
the Divestiture Trustee the sole and exclusive power and
authority to divest TRMI and/or TRMI East or to divest the
Equilon Interest to Shell and/or the Motiva Interest to Shell
and/or SRI, consistent with the terms of Paragraph II. of this
Order and subject to the prior approval of the Commission.
After such transfer, the Divestiture Trustee shall have the
sole and exclusive power and authority to divest such assets
or interests, subject to the prior approval of the Commission,
and the Divestiture Trustee shall exercise such power and
authority and carry out the duties and responsibilities of the
Divestiture Trustee in a manner consistent with the purposes
of this Order in consultation with the Commission's staff.
D. The Divestiture Trustee shall have eight (8) months from the
Merger Date to accomplish the divestitures required by
Paragraph II. of this Order, which shall be subject to the
prior approval of the Commission. If, however, at the end of
the eight-month period, the Divestiture Trustee has submitted
a plan of divestiture or believes that divestiture can be
achieved within a reasonable time, the Divestiture Trustee's
divestiture period may be extended by the Commission. An
extension of time by the Commission under this subparagraph
shall not preclude the Commission from seeking any relief
available to it for any failure by Respondents to divest the
Equilon Interest or TRMI and/or the Motiva Interest or TRMI
East consistent with the requirements of Paragraph II. of this
Order.
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E. If, on or prior to the Merger Date, Texaco has executed but
has not consummated an agreement or agreements to divest the
Equilon Interest to Shell and/or the Motiva Interest to Shell
and/or SRI, and the Commission has approved such agreement or
agreements, then Texaco shall, no later than the Merger Date,
assign such agreement or agreements to the Trust and grant
sole and exclusive authority to the Divestiture Trustee to
consummate any divestiture contemplated thereby.
F. The Divestiture Trustee shall divest the Equilon Interest to
Shell and/or the Motiva Interest to Shell and/or SRI, in a
manner that receives the prior approval of the Commission,
pursuant to the terms of the applicable agreement or
agreements approved by the Commission, if either (1) Texaco
has executed an agreement or agreements with Shell and/or SRI
with respect to such divestiture or divestitures prior to the
Merger Date, and such agreement or agreements have been
approved by the Commission and have not been breached by Shell
and/or SRI; or (2) Shell has exercised its right to acquire
the Equilon Interest pursuant to the Equilon LLC Agreement
and/or Shell and/or SRI have exercised their rights to acquire
the Motiva Interest pursuant to the Motiva LLC Agreement.
G. Subject to Respondents' absolute and unconditional obligation
to divest expeditiously at no minimum price, the Divestiture
Trustee shall use his or her best efforts to negotiate the
most favorable price and terms available for the divestiture
of (1) TRMI if the Divestiture Trustee has not divested the
Equilon Interest pursuant to subparagraph F. of this Paragraph
and/or (2) TRMI East if the Divestiture Trustee has not
divested all or part of the Motiva Interest pursuant to
subparagraph F. of this Paragraph. Each divestiture shall be
made only in a manner that receives the prior approval of the
Commission, and, unless the acquirers are Shell and/or SRI,
the divestiture shall be made only to an acquirer or acquirers
that receive the prior approval of the Commission; provided,
however, if the Divestiture Trustee receives bona fide offers
from more than one acquiring entity, and if the Commission
determines to approve more than one such acquiring entity, the
Divestiture Trustee shall divest to the acquiring entity or
entities selected by Respondents from among those approved by
the Commission; provided further, however, that Respondents
shall select such entity within five (5) days of receiving
notification of the Commission's approval.
H. The Divestiture Trustee shall have full and complete access to
all personnel, books, records, documents, and facilities of
Respondents, TRMI and TRMI East, as needed to fulfill the
Divestiture Trustee's obligations, or to any other relevant
information, as the Divestiture Trustee may reasonably
request, including but not limited to all documents and
records kept in the normal course of business that relate to
Respondents' obligations under this Order. Respondents or the
Operating Trustees, as appropriate, shall develop such
financial or other information as the Divestiture Trustee may
reasonably request and shall cooperate with the Divestiture
Trustee.
10
Respondents shall take no action to interfere with or impede
the Divestiture Trustee's ability to perform his or her
responsibilities.
I. The Divestiture Trustee shall serve, without bond or other
security, at the cost and expense of Respondents, on such
reasonable and customary terms and conditions as the
Commission may set. The Divestiture Trustee shall have the
authority to employ, at the cost and expense of Respondents,
such financial advisors, consultants, accountants, attorneys,
and other representatives and assistants as are reasonably
necessary to carry out the Divestiture Trustee's duties and
responsibilities.
J. Respondents shall indemnify the Divestiture Trustee and hold
the Divestiture Trustee harmless against any losses, claims,
damages, liabilities, or expenses arising out of, or in
connection with, the performance of the Divestiture Trustee's
duties, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for, or
defense of any claim, whether or not resulting in any
liability, except to the extent that such liabilities, losses,
damages, claims, or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by the
Divestiture Trustee.
K. The Divestiture Trustee shall account for all monies derived
from the sale and all expenses incurred, subject to the
approval of the Commission. After approval by the Commission
of the account of the Divestiture Trustee, all remaining
monies shall be paid as directed in the Trust Agreement, and
the Divestiture Trustee's powers shall be terminated.
L. The Divestiture Trustee shall report in writing to the
Commission thirty (30) days after the Merger Date and every
thirty (30) days thereafter concerning the Divestiture
Trustee's efforts to accomplish the requirements of this Order
until such time as the divestitures required by Paragraph II.
of this Order have been accomplished and Respondents have
notified the Commission that the divestitures have been
accomplished.
M. If, for any reason, Robert A. Falise cannot serve or cannot
continue to serve as Divestiture Trustee, or fails to act
diligently, the Commission shall select a replacement
Divestiture Trustee, subject to the consent of Respondents,
which consent shall not be unreasonably withheld. If
Respondents have not opposed, in writing, including the
reasons for opposing, the selection of any replacement
Divestiture Trustee within ten (10) days after notice by the
staff of the Commission to Respondents of the identity of any
proposed replacement Divestiture Trustee, Respondents shall be
deemed to have consented to the selection of the proposed
replacement Divestiture Trustee. The replacement Divestiture
Trustee shall be a person with experience and expertise in
acquisitions and divestitures.
11
N. The Commission may on its own initiative or at the request of
the Divestiture Trustee issue such additional orders or
directions as may be necessary or appropriate to assure
compliance with the requirements of this Order.
O. Respondents shall agree to the appointment of Joe B. Foster as
Operating Trustee of TRMI (with respect to the Equilon
Interest) and John Linehan as Operating Trustee of TRMI East
(with respect to the Motiva Interest) and enter into the Trust
Agreement no later than the Merger Date.
P. The Operating Trustees shall have sole and exclusive power and
authority to manage TRMI and/or TRMI East (as the case may
be), as set forth in the Trust Agreement and specifically to
cause TRMI and TRMI East respectively to exercise the rights
of TRMI and TRMI East under the Equilon and Motiva LLC
Agreements. Each Operating Trustee may engage in any other
activity such Operating Trustee may deem reasonably necessary,
advisable, convenient or incidental in connection therewith
and shall exercise such power and authority and carry out the
duties and responsibilities of the Operating Trustee in a
manner consistent with the purposes of this Order in
consultation with the Commission's staff.
Q. Each Operating Trustee shall have full and complete access to
all personnel, books, records, documents, and facilities of
TRMI and/or TRMI East as needed to fulfill such Operating
Trustee's obligations, or to any other relevant information,
as such Operating Trustees may reasonably request, including
but not limited to all documents and records kept in the
normal course of business that relate to Respondents'
obligations under this Order. Respondents shall develop such
financial or other information as such Operating Trustees may
reasonably request and shall cooperate with the Operating
Trustees. Respondents shall take no action to interfere with
or impede the Operating Trustees' ability to perform his or
her responsibilities.
R. The Operating Trustees shall serve, without bond or other
security, at the cost and expense of Respondents, on such
reasonable and customary terms and conditions as the
Commission may set. Each Operating Trustee shall have the
authority to employ, at the cost and expense of Respondents,
such consultants, accountants, attorneys, and other
representatives and assistants as are reasonably necessary to
carry out such Operating Trustee's duties and
responsibilities.
S. Respondents shall indemnify each Operating Trustee and hold
each Operating Trustee harmless against any losses, claims,
damages, liabilities, or expenses arising out of, or in
connection with, the performance of such Operating Trustee's
duties, including all reasonable fees of counsel and other
expenses incurred in connection with the preparation for, or
defense of any claim, whether or not resulting in any
liability, except to the extent that such liabilities, losses,
damages, claims, or expenses result from misfeasance, gross
negligence, willful or wanton acts, or bad faith by such
Operating Trustee.
12
T. The Operating Trustees shall account for all expenses
incurred, including fees for his or her services, subject to
the approval of the Commission.
U. Each Operating Trustee shall report in writing to the
Commission thirty (30) days after the Merger Date and every
thirty (30) days thereafter concerning the Operating Trustee's
performance of his or her duties under this Order and the
Trust Agreement. The Operating Trustees shall serve until such
time as Respondents have complied with their obligation to
divest TRMI and/or TRMI East as required by this Order and
Respondents have notified the Commission that the divestitures
have been accomplished.
V. If for any reason Joe B. Foster cannot serve or cannot
continue to serve as Operating Trustee of TRMI or John Linehan
cannot serve or cannot continue to serve as Operating Trustee
of TRMI East, or fails to act diligently, the Commission shall
select a replacement Operating Trustee, subject to the consent
of Respondents, which consent shall not be unreasonably
withheld. If Respondents have not opposed, in writing,
including the reasons for opposing, the selection of any
replacement Operating Trustee within ten (10) days after
notice by the staff of the Commission to Respondents of the
identity of any proposed replacement Operating Trustee,
Respondents shall be deemed to have consented to the selection
of the proposed replacement Operating Trustee. The replacement
Operating Trustee shall be a person with experience and
expertise in the management of businesses of the type engaged
in by Equilon and Motiva.
W. The Commission may on its own initiative or at the request of
either Operating Trustee issue such additional orders or
directions as may be necessary or appropriate to assure
compliance with the requirements of this Order.
X. Except as provided herein or in the Trust Agreement, neither
the Divestiture Trustee nor the Operating Trustees shall
disclose any Non-Public Equilon Or Motiva Information to an
employee of Respondents.
Y. Respondents may require the Divestiture Trustee or Operating
Trustees to sign a confidentiality agreement prohibiting the
disclosure of any information gained as a result of his or her
role as Divestiture Trustee or Operating Trustee to anyone
other than the Commission.
Z. The purpose of this Paragraph III. is to effectuate the
divestitures required by Paragraph II. of this Order and to
maintain operation of TRMI, TRMI East, Equilon and Motiva
separate and apart from Respondents' operations pending the
required divestitures.
IV.
IT IS FURTHER ORDERED that:
13
A. Respondents shall offer to extend the license provided to Equilon and
Motiva, on terms and conditions comparable to those in existence as of
the date the Consent Agreement is executed by Respondents, for the use
of the Texaco brand for the marketing of motor fuels until June 30,
2002 for Equilon and until June 30, 2003, for Motiva (the "Brand
License Date"). Provided however, the license for the marketing of
motor fuels shall be provided on an exclusive basis in those areas of
the United States where Equilon and Motiva respectively are currently
licensed to market motor fuels.
B. For the purposes of this Paragraph IV., "Waives and Releases" shall
mean to waive and release: (1) all amounts any Texaco branded dealer or
wholesale marketer may be required to pay under any Facility
Development Incentive Program Agreement (or any other agreement
requiring that such dealer or marketer reimburse Equilon or Motiva) in
existence as of the date the Commission accepts this Order for public
comment, which amounts become due (or which Equilon or Motiva contends
become due) as a result of the loss of the Texaco brand at any retail
outlet; and (2) all deed restrictions prohibiting or restricting the
sale of motor fuel not sold by Equilon or Motiva at any Texaco retail
outlet for which Equilon or Motiva has not executed an agreement for
the sale of Shell branded gasoline on or before the Brand License Date.
C. If Equilon Waives and Releases the amounts and deed restrictions set
forth in Paragraph IV.B., Texaco shall further offer (1) to extend the
license set forth in Paragraph IV.A. to Equilon on an exclusive basis
until June 30, 2003 (which shall then become the new "Brand License
Date" for Equilon), and (2) to extend the license on a nonexclusive
basis for up to an additional three (3) years, until June 30, 2006, on
terms and conditions comparable to those in existence as of the date
the Consent Agreement is executed by Respondents, for all retail
outlets for which Equilon has executed agreements with such retail
outlets on or before the Brand License Date for the conversion of such
retail outlets to the Shell brand.
D. If Motiva Waives and Releases the amounts and deed restrictions set
forth in Paragraph IV.B., Texaco shall further offer to extend the
license set forth in Paragraph IV.A. to Motiva on a nonexclusive basis
for up to an additional three (3) years, until June 30, 2006, on terms
and conditions comparable to those in existence as of the date the
Consent Agreement is executed by Respondents, for all retail outlets
for which Motiva has executed agreements with such retail outlets on or
before the Brand License Date for the conversion of such retail outlets
to the Shell brand.
E. If either Equilon or Motiva does not Waive and Release the amounts set
forth in Paragraph IV.B., Respondents shall indemnify each Texaco
dealer and wholesale marketer for all amounts such dealer or marketer
may be required to pay under any Facility Development Incentive Program
Agreement (or any other agreement requiring that such dealers or
marketers reimburse Equilon or Motiva) in existence as of the date the
Commission accepts this Order for public comment, which amounts become
due (or which Equilon or Motiva contends become due) as a result of the
loss of the Texaco brand at any retail outlet, together
14
with any reasonable litigation or arbitration expenses incurred by such
dealer or marketer in contesting or defending against such payment,
provided that (1) the dealer or marketer has declined a request for
payment from Equilon or Motiva, (2) Equilon or Motiva has commenced
litigation or arbitration to compel payment, and (3) the dealer or
marketer has, at the Respondents' option, either (a) vigorously
defended the litigation or arbitration or (b) afforded Respondents the
right to defend the litigation or arbitration on the dealer's or
marketer's behalf. Provided further, however, that no such
indemnification need be provided for any retail outlet (a) as to which
the dealer or marketer terminates its brand relationship prior to the
Brand License Date, (b) which becomes a Shell branded outlet, or (c)
which received or will receive compensation, directly or indirectly,
for the amounts such dealer or marketer may be required to pay, but
only to the extent of such compensation.
F. For a period of one (1) year following the date on which Equilon or
Motiva stops supplying gasoline under the Texaco brand to any retail
outlet branded Texaco as of the date this Consent Agreement is executed
by Respondents, Respondents shall not enter into any agreement for the
sale of branded gasoline to such retail outlet, sell branded gasoline
to such retail outlet, or approve the branding of such retail outlet,
under the Texaco brand or under any brand that contains the Texaco
brand, unless either (1) such agreement, sale, or approval would not
result in an increase in Concentration Levels in the sale of gasoline
in any Section of the Country, based on market share data supplied to
the Commission by Respondents that is verifiable by the Commission, or
(2) there are no sales of Chevron branded gasoline in that Section of
the Country. Respondents shall notify the Commission of each such
agreement no later than sixty (60) days after the execution of the
agreement, including in the notification: (1) a copy of the agreement,
(2) the address (street, city, county, state) of each retail outlet
covered by the agreement, and the most recent annual sales volume (in
gallons) at each such retail outlet, (3) the identity of the branded
dealer or wholesale marketer that owns or supplies the retail outlets
covered by the agreement, (4) the identity of each Section of the
Country in which each such retail outlet is located, (5) the changes in
Concentration Levels that Respondents believe will result from such
agreement in each Section of the Country, together with the basis for
such belief, (6) to the extent known or reasonably available, the
annual sales volume and market shares of each of Shell, Texaco and
Chevron branded gasoline, and the retail outlets subject to the
agreement, in each Section of the Country affected by the agreement,
both prior to and after execution of the agreement, measured by volume
in gallons sold (or, if volume in gallons is not available, by other
standard industry measures), and (7) all market survey data for such
Section of the Country obtained from New Image, NPD, Lundberg, or any
other independent third-party market surveyor, or conducted by
Respondents, together with all other data relied upon by Respondents as
the basis for their assessment of Concentration Levels or changes in
Concentration Levels. This Paragraph IV.F. shall expire on June 30,
2007.
(1) It shall not be a violation of this Order if Respondents
rescind any agreement for the sale of Texaco branded gasoline
to a retail outlet that results in an increase in
Concentration Levels under the standards set forth in this
Paragraph IV.F., if Respondents rescind such agreement within
thirty (30)
15
days of being informed by the Commission that the Commission
believes such agreement would result in such an increase.
(2) In any enforcement proceeding brought by or on behalf of the
Commission, pursuant to Section 5(l) of the Federal Trade
Commission Act, 15 U.S.C. Sec. 45(l), or any other statute
enforced by the Commission, Respondents shall have the burden
of proving that the agreement does not result in an increase
in Concentration Levels in the sale of gasoline in any Section
of the Country.
V.
IT IS FURTHER ORDERED that:
A. Respondents shall, within six (6) months of the Merger Date,
divest absolutely and in good faith, at no minimum price, all
of Texaco's interest in the Discovery System.
B. Respondents shall divest all of Texaco's interest in the
Discovery System only to an acquirer or acquirers that
receives the prior approval of the Commission and only in a
manner that receives the prior approval of the Commission.
C. Respondents shall, prior to divestiture of Texaco's interest
in the Discovery System and subject to the prior approval of
the Commission, enter into an agreement with the acquirer of
Texaco's interest in the Discovery System for the purchase,
sale or exchange of natural gas liquids that is no less
favorable for the acquirer than the terms of the
Texaco-Williams Contract; provided, however, that the volumes
of natural gas liquids to be transported or exchanged under
such agreement may be limited to volumes attributable to
natural gas production transported by the Discovery System
from natural gas producing wells originating from the Relevant
OCS Area. The purpose of this agreement is to prevent
Respondents from imposing rates or terms for pipeline
transportation to markets from the Discovery System's
fractionating plant that would impede the ability of the
Discovery System to compete for natural gas transportation
from the Relevant OCS Area, and to fully preserve the
viability of the Discovery System.
D. Respondents shall waive and not enforce Texaco's right to
terminate the Texaco-Williams Contract pursuant to Section 1.1
of the Texaco-Williams Contract if Texaco owns less than a
twenty percent (20%) interest in the Discovery System.
E. No later than five (5) business days following the Merger
Date, Respondents shall, pursuant to the Agreement for the
Operation and Management of the Larose Gas Processing Plant &
Paradis Fractionation Facility dated February 1, 1997, and any
other applicable agreements, give notice to the other owners
of the Discovery System of Texaco's resignation as operator of
the Discovery System. Texaco shall resign as operator of the
Discovery System immediately after it obtains the approvals
required
16
by the Agreement for the Operation and Management of the
Larose Gas Processing Plant & Paradis Fractionation Facility
dated February 1, 1997, and any other applicable agreements,
but in no event later than one (1) year from the date
Respondents give notice of Texaco's resignation as operator of
the Discovery System. Respondents shall use best efforts to
obtain those approvals as early as possible.
F. The purpose of the divestiture of Texaco's interest in the
Discovery System is to eliminate the overlap of ownership
between the Discovery System and the Venice System and to
remedy the lessening of competition resulting from the
proposed Merger as alleged in the Commission's Complaint.
VI.
IT IS FURTHER ORDERED that:
A. Respondents shall divest, absolutely and in good faith and at
no minimum price, within six (6) months from the Merger Date,
all of Texaco's interest in the Enterprise Fractionating
Plant.
B. Respondents shall divest all of Texaco's interest in the
Enterprise Fractionating Plant only to an acquirer that
receives the prior approval of the Commission and only in a
manner that receives the prior approval of the Commission.
C. The purpose of the divestiture of Texaco's interest in the
Enterprise Fractionating Plant is to eliminate an overlap of
ownership between the Enterprise Fractionating Plant and other
fractionating plants at Mont Belvieu, Texas, in which
Respondents or their affiliates own interests, and to remedy
the lessening of competition resulting from the proposed
Merger as alleged in the Commission's Complaint.
VII.
IT IS FURTHER ORDERED that:
A. No later than ten (10) days after the Merger Date, Respondents
shall divest, absolutely and in good faith, Texaco's Overlap
General Aviation Business Assets to Avfuel, pursuant to and in
accordance with the Aviation Fuel Divestiture Agreement. Any
failure by Respondents to comply with any provision of the
Aviation Fuel Divestiture Agreement shall constitute a failure
to comply with this Order; provided, however, that if
Respondents fail to divest Texaco's Overlap General Aviation
Business Assets to Avfuel pursuant to and in accordance with
the Aviation Fuel Divestiture Agreement within ten (10) days
after the Merger Date, Respondents shall divest Texaco's
Domestic General Aviation Business Assets, at no minimum
price, to an acquirer or acquirers that receive the prior
approval of the Commission in a
17
manner that receives the prior approval of the Commission
pursuant to a Substitute Aviation Fuel Divestiture Agreement.
Divestiture of Texaco's Domestic General Aviation Business
Assets to an acquirer or acquirers that receive the prior
approval of the Commission in a manner that receives the prior
approval of the Commission pursuant to a Substitute Aviation
Fuel Divestiture Agreement shall not preclude the Commission
or the Attorney General from seeking civil penalties or any
other relief available pursuant toss.5(l) of the Federal Trade
Commission Act, or any other statute enforced by the
Commission, for any failure by the Respondents to comply with
their obligation to divest Texaco's Overlap General Aviation
Business Assets to Avfuel pursuant to the Aviation Fuel
Divestiture Agreement.
B. If Respondents have divested Texaco's Overlap General Aviation
Business Assets to Avfuel pursuant to the Aviation Fuel
Divestiture Agreement, and at the time the Commission makes
this Order final, it determines that Avfuel is not acceptable
as the acquirer of Texaco's Overlap General Aviation Business
Assets or that the Aviation Fuel Divestiture Agreement is not
an acceptable manner of divestiture, and the Commission so
notifies Respondents, Respondents shall within ten (10) days
of such notification rescind the Aviation Fuel Divestiture
Agreement with Avfuel.
C. If the Aviation Fuel Divestiture Agreement with Avfuel is
rescinded pursuant to Paragraph VII.B. of this Order, then
Respondents shall, within four (4) months of the Merger Date,
divest Texaco's Domestic General Aviation Business Assets, at
no minimum price, to an acquirer or acquirers that receive the
prior approval of the Commission and in a manner that receives
the prior approval of the Commission, pursuant to a Substitute
Aviation Fuel Divestiture Agreement.
D. On or before the date of consummation of the Substitute
Aviation Fuel Divestiture Agreement, Respondents shall assign
to the acquirer all General Aviation Business Agreements used
in or relating to Texaco's Domestic General Aviation Business;
provided, however, should Respondents fail to obtain any such
assignments, Respondents shall, subject to the prior approval
of the Commission, substitute alternative agreements or
arrangements sufficient to enable the acquirer approved by the
Commission to operate Texaco's Domestic General Aviation
Business in the same manner and at the same level and quality
as Texaco operated it at the time of the announcement of the
Merger.
E. Respondents shall include in the Substitute Aviation Fuel
Divestiture Agreement, at the option of the acquirer, a
license for a period of up to ten (10) years from the date of
such Agreement to use the Texaco brand in connection with the
acquirer's operation of Texaco's Domestic General Aviation
Business Assets. The license shall be royalty free for five
(5) years from the date of consummation of such Substitute
Aviation Fuel Divestiture Agreement, but subject to Commission
approval may provide for payments beginning five (5) years
after the date of the Agreement and escalating each year until
the end of the ten-year term.
18
F. For a period of six (6) months after the date of consummation
of any Substitute Aviation Fuel Divestiture Agreement,
Respondents shall not solicit, engage in discussions
concerning, participate in, offer to enter into, or enter
into, any contract or agreement for the direct supply of
branded Aviation Fuel to any fixed base operator or
distributor that had a Marketing Agreement for the sale of
Texaco-branded Aviation Fuel in the United States.
G. For a period of twelve (12) months after the acquirer pursuant
to any Substitute Aviation Fuel Divestiture Agreement stops
supplying Texaco-branded Aviation Fuel to a fixed base
operator or distributor, Respondents shall not (1) enter into
any contract or agreement for the direct or indirect supply of
Texaco-branded Aviation Fuel to such fixed base operator or
distributor, or (2) approve the branding of such fixed base
operator or distributor with the Texaco brand.
H. The purpose of the divestiture of Texaco's Overlap General
Aviation Business Assets, or of Texaco's Domestic General
Aviation Business Assets, is to ensure the continuation of
such assets in the same business in which the assets were
engaged at the time of the announcement of the Merger by a
Person other than Respondents, and to remedy the lessening of
competition alleged in the Commission's Complaint.
VIII.
IT IS FURTHER ORDERED that:
A. If Respondents have divested neither: (1) Texaco's Overlap
General Aviation Business Assets as required by Paragraph VII.
of this Order, nor (2) Texaco's Domestic General Aviation
Business Assets as required by Paragraph VII. of this Order
within four (4) months of the Merger Date, the Commission may
appoint a trustee to divest Texaco's Domestic General Aviation
Business Assets. In the event that the Commission or the
Attorney General brings an action pursuant toss.5(l) of the
Federal Trade Commission Act, 15 U.S.C.ss.45(l), or any other
statute enforced by the Commission, Respondents shall consent
to the appointment of a trustee in such action. Neither the
appointment of a trustee nor a decision not to appoint a
trustee under this Paragraph shall preclude the Commission or
the Attorney General from seeking civil penalties or any other
relief available to it, including a court-appointed trustee,
pursuant toss.5(l) of the Federal Trade Commission Act, or any
other statute enforced by the Commission, for any failure by
the Respondents to comply with this Order.
B. If a trustee is appointed by the Commission or a court
pursuant to Paragraph VIII.A. of this Order, Respondents shall
consent to the following terms and conditions regarding the
trustee's powers, duties, authority, and responsibilities:
19
1. The Commission shall select a trustee, subject to the
consent of Respondents, which consent shall not be
unreasonably withheld. The trustee shall be a Person
with experience and expertise in acquisitions and
divestitures. If Respondents have not opposed, in
writing, including the reasons for opposing, the
selection of the proposed trustee within ten (10)
days after notice by the staff of the Commission to
Respondents of the identity of any proposed trustee,
Respondents shall be deemed to have consented to the
selection of the proposed trustee.
2. Subject to the prior approval of the Commission, the
trustee shall have the exclusive power and authority
to divest the Texaco Domestic General Aviation
Business Assets.
3. Within ten (10) days after appointment of the
trustee, Respondents shall execute a trust agreement
that, subject to the prior approval of the Commission
and, in the case of a court-appointed trustee, of the
court, transfers to the trustee all rights and powers
necessary to permit the trustee to effect the
divestitures required by this Order.
4. The trustee shall have four (4) months from the date
of appointment to accomplish the divestiture, which
shall be subject to the prior approval of the
Commission. If, however, at the end of the four-month
period, the trustee has submitted a plan of
divestiture or believes that divestiture can be
achieved within a reasonable time, the divestiture
period may be extended by the Commission, or, in the
case of a court-appointed trustee, by the court;
provided, however, the Commission may extend this
period only two (2) times. The decision by the
Commission to extend the time during which the
trustee may accomplish the divestiture shall not
preclude the Commission or the Attorney General from
seeking civil penalties or any other relief available
to it, including a court-appointed trustee, pursuant
toss.5(l) of the Federal Trade Commission Act, or any
other statute enforced by the Commission, for any
failure by the Respondents to comply with this Order.
5. The trustee shall have full and complete access to
the personnel, books, records and facilities related
to the assets to be divested or to any other relevant
information, as the trustee may request. Respondents
shall develop such financial or other information as
such trustee may request and shall cooperate with the
trustee. Respondents shall take no action to
interfere with or impede the trustee's accomplishment
of the divestiture. Any delays in divestiture caused
by Respondents shall extend the time for divestiture
under this Paragraph in an amount equal to the delay,
as determined by the Commission or, for a
court-appointed trustee, by the court.
6. The trustee shall use his or her best efforts to
negotiate the most favorable
20
price and terms available in each contract that is
submitted to the Commission, subject to Respondents'
absolute and unconditional obligation to divest
expeditiously at no minimum price. The divestiture
shall be made in the manner and to the acquirer or
acquirers as set out in Paragraph VII. of this Order,
as applicable; provided, however, if the trustee
receives bona fide offers from more than one
acquiring entity, and if the Commission determines to
approve more than one such acquiring entity, the
trustee shall divest to the acquiring entity or
entities selected by Respondents from among those
approved by the Commission.
7. The trustee shall serve, without bond or other
security, at the cost and expense of Respondents, on
such reasonable and customary terms and conditions as
the Commission or a court may set. The trustee shall
have the authority to employ, at the cost and expense
of Respondents, such consultants, accountants,
attorneys, investment bankers, business brokers,
appraisers, and other representatives and assistants
as are necessary to carry out the trustee's duties
and responsibilities. The trustee shall account for
all monies derived from the divestiture and all
expenses incurred. After approval by the Commission
and, in the case of a court-appointed trustee, by the
court, of the account of the trustee, including fees
for his or her services, all remaining monies shall
be paid at the direction of the Respondents, and the
trustee's power shall be terminated. The trustee's
compensation shall be based at least in significant
part on a commission arrangement contingent on the
trustee's divesting the assets to be divested.
8. Respondents shall indemnify the trustee and hold the
trustee harmless against any losses, claims, damages,
liabilities, or expenses arising out of, or in
connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and
other expenses incurred in connection with the
preparation for, or defense of any claim, whether or
not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or
expenses result from misfeasance, gross negligence,
willful or wanton acts, or bad faith by the trustee.
9. If the trustee ceases to act or fails to act
diligently, a substitute trustee shall be appointed
in the same manner as provided in Paragraph VIII.B.1.
of this Order.
10. The Commission or, in the case of a court-appointed
trustee, the court, may on its own initiative or at
the request of the trustee issue such additional
orders or directions as may be necessary or
appropriate to accomplish the divestitures required
by this Order.
11. The trustee shall have no obligation or authority to
operate or maintain the
21
assets to be divested.
12. The trustee shall report in writing to Respondents
and the Commission every sixty (60) days concerning
the trustee's efforts to accomplish the divestitures.
IX.
IT IS FURTHER ORDERED that, within sixty (60) days after the date this
Order becomes final and every sixty (60) days thereafter until Respondents have
fully complied with the provisions of Paragraphs II., III., IV., V., VI., VII.,
VIII., and XI. of this Order, Respondents shall submit to the Commission a
verified written report setting forth in detail the manner and form in which
they intend to comply, are complying, and have complied with those provisions.
Respondents shall include in their compliance reports, among other things that
are required from time to time, a full description of all contacts or
negotiations with prospective acquirers for the divestitures of assets or
businesses specified in this Order, including the identity of all parties
contacted. Respondents also shall include in their compliance reports copies of
all written communications to and from such parties, and all internal memoranda,
reports and recommendations concerning divestiture.
X.
IT IS FURTHER ORDERED that, for the purposes of determining or securing
compliance with this Order, and subject to any legally recognized privilege,
upon written request and on reasonable notice to Respondents made to its
principal office, Respondents shall permit any duly authorized representatives
of the Commission:
A. During office hours and in the presence of counsel, access to
all facilities and access to inspect and copy all books,
ledgers, accounts, correspondence, memoranda and other records
and documents in the possession or under the control of
Respondents relating to any matters contained in this Order;
and
B. Upon five (5) days' notice to Respondents and without
restraint or interference from Respondents, to interview
officers or employees of Respondents who may have counsel
present, regarding such matters.
XI.
IT IS FURTHER ORDERED that within five (5) business days after the date
on which the Commission accepts this Order for public comment, but in no event
less than thirty (30) days before the Merger Date, Respondents shall notify
Shell and SRI of the projected Merger Date and shall serve on Shell and SRI, by
overnight delivery, copies of the Agreement Containing Consent Orders and all
documents attached thereto, including the Trust Agreement, omitting or redacting
from such service any information contained therein or attached thereto that is
confidential business information. Any omissions or redactions to such
agreements or documents attached thereto shall
22
be subject to the prior approval of the Commission.
XII.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at
least thirty (30) days prior to any proposed change in the corporate Respondents
such as dissolution, assignment, sale resulting in the emergence of a successor
corporation, or the creation or dissolution of subsidiaries or any other change
in the corporation that may affect compliance obligations arising out of the
Order.
XIII.
IT IS FURTHER ORDERED that:
A. If (i) the Divestiture Trustee or Respondents have submitted a
complete application in support of the divestiture of the
assets, interests or businesses to be divested pursuant to
Paragraph II. of this Order (including the buyer, manner of
divestiture and all other matters subject to Commission
approval) at least one month before the deadline for such
divestiture; and (ii) the Commission has approved the
divestiture and has not withdrawn its acceptance; but (iii)
the Divestiture Trustee or Respondents have certified to the
Commission within ten (10) days after the Commission's
approval of the divestiture that a State, notwithstanding
timely and complete application by Respondents to the State,
has failed to approve the divestiture under a consent decree
in an action commenced by any State requiring such
divestiture, then, with respect to that divestiture, the time
in which the divestiture is required under this Order to be
complete shall be extended for sixty (60) days. During such
sixty (60) day period, Respondents or the Divestiture Trustee
shall exercise utmost good faith and best efforts to resolve
the concerns of the particular State.
B. If any Trustee or Respondents are unable to comply with any
obligation of this Order, with the exception of the
obligations of Paragraph II. of this Order, because of any
failure to act or any action by any State or any court
pursuant to a consent decree in an action commenced by any
State in connection with the Merger, the time in which such
obligation of this Order must be completed shall be extended
for sixty (60) days. During such sixty (60) day period,
Respondents or the applicable Trustee shall exercise utmost
good faith and best efforts to resolve the concerns of the
particular State or court.
By the Commission.
Donald S. Clark
Secretary
23
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS: Timothy J. Muris, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary
- ------------------------------------
In the Matter of: )
)
Chevron Corporation, )
a corporation, ) Docket No. C-4023
)
and )
)
Texaco Inc., )
a corporation. )
)
- ------------------------------------
ORDER TO HOLD SEPARATE AND MAINTAIN ASSETS
The Federal Trade Commission ("Commission") having initiated an
investigation of the proposed merger (the "Merger") of Respondent Chevron
Corporation ("Chevron") and Respondent Texaco Inc. ("Texaco"), and Respondents
having been furnished thereafter with a draft of Complaint that the Bureau of
Competition proposed to present to the Commission for its consideration and
that, if issued by the Commission, would charge Respondents with violations of
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. ss. 45, and
Section 7 of the Clayton Act, as amended, 15 U.S.C. ss. 18; and
Respondents, their attorneys, and counsel for the Commission having
thereafter executed an Agreement Containing Consent Orders ("Consent Agreement")
containing an admission by Respondents of all the jurisdictional facts set forth
in the aforesaid draft of Complaint, a statement that the signing of the Consent
Agreement is for settlement purposes only and does not constitute an admission
by Respondents that the law has been violated as alleged in such Complaint, or
that the facts as alleged in such Complaint, other than jurisdictional facts,
are true, and waivers and other provisions as required by the Commission's
Rules; and
The Commission having thereafter considered the matter and having
determined that it had reason to believe that Respondents have violated said
Acts, and that a Complaint should issue stating its charges in that respect, and
having determined to accept the executed Consent Agreement and to place such
Consent Agreement containing the Decision and Order on the public record for a
period of thirty (30) days for the receipt and consideration of public comments,
now in further
conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. ss.
2.34, the Commission hereby issues its Complaint, makes the following
jurisdictional findings and issues this Order to Hold Separate and Maintain
Assets ("Hold Separate Order"):
1. Respondent Chevron is a corporation organized, existing and doing
business under and by virtue of the laws of the state of Delaware, with its
office and principal place of business located at 575 Market Street, San
Francisco, CA 94105.
2. Respondent Texaco is a corporation organized, existing and doing
business under and by virtue of the laws of the state of Delaware, with its
office and principal place of business located at 2000 Westchester Ave., White
Plains, NY 10650.
3. The Federal Trade Commission has jurisdiction of the subject
matter of this proceeding and of Respondents, and the proceeding is in the
public interest.
ORDER
I.
IT IS ORDERED that, as used in this Hold Separate Order, the following
definitions shall apply:
A. "Chevron" means Chevron Corporation, its directors, officers,
employees, agents, representatives, predecessors, successors, and
assigns; its joint ventures, subsidiaries, divisions, groups, and
affiliates controlled by Chevron, and the respective directors,
officers, employees, agents, representatives, successors, and assigns
of each.
B. "Texaco" means Texaco Inc., its directors, officers, employees, agents,
representatives, predecessors, successors, and assigns; its joint
ventures, subsidiaries, divisions, groups, and affiliates controlled by
Texaco, and the respective directors, officers, employees, agents,
representatives, successors, and assigns of each.
C. "Agreement Containing Consent Orders" means the agreement executed by
Respondents in this matter containing the Decision and Order and this
Hold Separate Order.
D. "Avfuel" means Avfuel Corporation, a corporation organized, existing
and doing business under and by virtue of the laws of the state of
Michigan, with its office and principal place of business located at 47
West Ellsworth, Ann Arbor, Michigan 48108.
E. "Aviation Fuel" means Aviation Gasoline and Jet Fuel.
F. "Aviation Fuel Divestiture Agreement" means all agreements entered into
between Respondents and AvFuel relating to the sale of Texaco's Overlap
General Aviation Business
2
Assets, including but not limited to the Purchase and Sale Agreement,
the Trademark License Agreement, all supply agreements, and all other
ancillary agreements, dated August 7, 2001, and attached as
Confidential Appendix B to the Decision and Order.
G. "Aviation Overlap State" means each of the following states: Alabama,
Alaska, Arizona, California, Florida, Georgia, Idaho, Louisiana,
Mississippi, Nevada, Oregon, Tennessee, Utah, and Washington.
H. "Decision and Order" means the Decision and Order contained in the
Agreement Containing Consent Orders accepted by the Commission in this
matter.
I. "Disclose" means to convey by any means or otherwise make available
information to any person or persons.
J. "Discovery System" means Discovery Producer Services LLC, and all of
its assets, including but not limited to Discovery Gas Transmission LLC
and all of its assets, and including all pipelines of the system that
transport natural gas offshore of Louisiana and onshore to the
processing plant at LaRose, Louisiana; the processing plant at Larose,
Louisiana; all pipelines that transport natural gas between the
processing plant and natural gas transmission pipelines; all pipelines
that transport raw mix between the processing plant and the
fractionating plant at Paradis, Louisiana; the fractionating plant at
Paradis, Louisiana; and equipment including but not limited to
condensate stabilization facilities and pumping stations.
K. "Divestiture Trustee" means a trustee appointed pursuant to Paragraph
III.B. of the Decision and Order with the obligation to divest TRMI
and/or TRMI East.
L. "Enterprise Fractionating Plant" means the fractionating plant at Mont
Belvieu, Texas, operated by Enterprise Products Company and partially
owned by Texaco.
M. "Equilon" means Equilon Enterprises LLC, a joint venture formed
pursuant to the Equilon LLC Agreement.
N. "Equilon Interest" means all of the ownership interests in Equilon
owned directly or indirectly by Texaco, including the interests owned
by TRMI and its wholly owned subsidiaries, Texaco Convent Refining Inc.
and Texaco Anacortes Cogeneration Company.
O. "Equilon LLC Agreement" means the Limited Liability Company Agreement
of Equilon Enterprises LLC dated as of January 15, 1998 among certain
subsidiaries of Shell and Texaco, as amended.
P. "Held Separate Business" means all of Respondents' interests and assets
comprising the Trust, as defined and described in the Decision and
Order, immediately before rescission of the Trust, including but not
limited to TRMI and TRMI East to the extent they are assets of
3
the Trust at such time.
Q. "Hold Separate Operating Trustees" means the same person as each of the
Operating Trustees or any replacement Operating Trustees.
R. "Hold Separate Divestiture Trustee" means the same person as the
Divestiture Trustee or any replacement Divestiture Trustee.
S. "Hold Separate Agreement" means the agreement between and among
Respondents and the Hold Separate Operating Trustees and the Hold
Separate Divestiture Trustee to effectuate the divestitures required by
Paragraph II. of the Decision and Order, substantially similar to the
Trust Agreement, and subject to the prior approval of the Commission.
T. "Hold Separate Period" means, if the Trust is rescinded, unwound,
dissolved, or otherwise terminated at a time after the Merger but
before Respondents have complied with Paragraph II.A. of the Decision
and Order, the period beginning on the Rescission Date and lasting
until the business day after the divestitures required by the Decision
and Order in this matter have been accomplished and Respondents have so
notified the Commission.
U. "JV Agreements" means the Equilon LLC Agreement and the Motiva LLC
Agreement.
V. "Merger" means any merger between Respondents, including the proposed
merger contemplated by the Agreement and Plan of Merger dated October
15, 2000, as amended, among Respondents and Keepep Inc.
W. "Motiva" means Motiva Enterprises LLC, a joint venture formed pursuant
to the Motiva LLC Agreement.
X. "Motiva Interest" means all of the ownership interests in Motiva owned
directly or indirectly by Texaco, including the interest owned by TRMI
East.
Y. "Motiva LLC Agreement" means the Limited Liability Company Agreement of
Motiva Enterprises LLC dated as of July 1, 1998, among Shell, Shell
Norco Refining Company, SRI and TRMI East.
Z. "Non-Public Equilon Or Motiva Information" means any information not in
the public domain relating to Equilon or Motiva.
AA. "Non-Public Discovery System Information" means any information not in
the public domain relating to the Discovery System, including but not
limited to information pertaining to the Relevant OCS Area Disclosed by
customers or potential customers to employees or representatives of the
Discovery System. Non-Public Discovery System Information shall not
include information that was publicly available prior to the date this
Hold Separate Order is signed by Respondents or that is thereafter
Disclosed to Respondents without any
4
violation of this Hold Separate Order by Respondents or violation of
law by or known to Respondents.
BB. "Non-Public Venice System Information" means any information not in the
public domain relating to the Venice System, including but not limited
to information pertaining to the Relevant OCS Area Disclosed by
customers or potential customers to employees or representatives of the
Venice System. Non-Public Venice System Information shall not include
information that was publicly available prior to the date this Hold
Separate Order is signed by Respondents or that is thereafter Disclosed
to Respondents without any violation of this Hold Separate Order by
Respondents or violation of law by or known to Respondents.
CC. "Operating Trustee" means each trustee appointed pursuant to Paragraph
III.O. of the Decision and Order with the obligation to manage TRMI
and/or TRMI East pursuant to the Decision and Order.
DD. "Rescission Date" means the date on which the Trust was rescinded,
unwound, dissolved, or otherwise terminated, if such rescission,
unwinding, dissolution, or termination occurs.
EE. "Respondents" means Chevron and Texaco, individually and collectively,
and any successors.
FF. "Shell" means Shell Oil Company, a Delaware corporation, with its
principal place of business located at One Shell Plaza, Houston, Texas
77002, its parents, and its subsidiaries controlled by Shell.
GG. "SRI" means Saudi Refining, Inc., a Delaware corporation, with its
principal place of business located at 9009 West Loop South, Houston,
TX 77210, its parents, and its subsidiaries controlled by SRI.
HH. "Texaco's Domestic General Aviation Business" means the supply,
distribution, marketing, transportation, and sale of Aviation Fuel by
Texaco on a direct or distributor basis to customers (other than
commercial airlines and military) in the United States (including the
Aviation Overlap States), including but not limited to fixed base
operators, airport dealers, distributors, jobbers, resellers, brokers,
corporate accounts, or consumers
II. "Texaco's Domestic General Aviation Business Assets" means all assets,
tangible or intangible, relating to Texaco's Domestic General Aviation
Business in the United States, including but not limited to all General
Aviation Business Agreements used in or relating to Texaco's Domestic
General Aviation Business.
JJ. "Texaco's Overlap General Aviation Business" means the supply,
distribution, marketing, transportation, and sale of Aviation Fuel by
Texaco on a direct or distributor basis to customers (other than
commercial airlines and military) in the Aviation Overlap States,
5
including but not limited to fixed base operators, airport dealers,
distributors, jobbers, resellers, brokers, corporate accounts, or
consumers, but excluding the assets and agreements set forth in
Schedule 2.3(c) of the Aviation Fuel Divestiture Agreement.
KK. "Texaco's Overlap General Aviation Business Assets" means all assets,
tangible or intangible, relating to Texaco's Overlap General Aviation
Business, including but not limited to all General Aviation Business
Agreements used in or relating to Texaco's Overlap General Aviation
Business, but excluding the assets and agreements set forth in Schedule
2.3(c) of the Aviation Fuel Divestiture Agreement.
LL. "TRMI" means Texaco Refining and Marketing Inc., a Delaware corporation
and an indirect wholly owned subsidiary of Texaco, and its subsidiary,
Texaco Convent Refining Inc., and Texaco's interest in all other
subsidiaries, divisions, groups, joint ventures, or affiliates of
Texaco that own or control any ownership interest in Equilon.
MM. "TRMI East" means Texaco Refining and Marketing (East) Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Texaco, and
Texaco's interest in all other subsidiaries, divisions, groups, joint
ventures, or affiliates of Texaco that own or control any ownership
interest in Motiva.
NN. "Trust" means the trust established by the Trust Agreement as required
by the Decision and Order.
OO. "Trust Agreement" means the Agreement and Declaration of Trust approved
by the Commission and attached as Appendix A to the Decision and Order.
PP. "Venice System" means Venice Energy Services Company, L.L.C., and all
of its assets, including but not limited to (i) natural gas processing,
fractionation and natural gas liquids storage and terminaling
facilities at the Venice Complex (as that term is defined in the Second
Amended and Restated Limited Liability Company Agreement of Venice
Energy Services Company, L.L.C.), (ii) onshore and offshore natural gas
pipelines upstream from the Venice Complex, known as the Venice
Gathering System, (iii) compression, separation, dehydration, and
residue gas and liquid gas handling facilities at or associated with
the Venice Complex (excluding any residue gas pipelines and metering
facilities owned by the downstream pipelines), and (iv) natural gas
liquids facilities (excluding natural gas liquids pipelines downstream
from the Venice Complex) related to such processing, fractionation,
storage and termination facilities.
II.
IT IS FURTHER ORDERED that
A. Pending divestiture of Texaco's interest in the Discovery System,
Respondents shall vote Texaco's interest in the Discovery System in
accordance with the majority of votes cast by
6
its other owners so long as Texaco's rights and obligations arising
from the vote are commensurate with Texaco's ownership interest in the
Discovery System.
B. Pending divestiture of Texaco's interest in the Enterprise
Fractionating Plant, Respondents shall vote Texaco's interest in the
Enterprise Fractionating Plant in accordance with the majority of votes
cast by its other owners, so long as Texaco's rights and obligations
arising from the vote are commensurate with Texaco's ownership interest
in the Enterprise Fractionating Plant.
C. From the date Respondents sign the Consent Agreement in this matter
until the divestiture required by Paragraph V. of the Decision and
Order has been completed or the Commission determines that no further
relief pursuant to Paragraph V. of the Decision and Order is necessary,
Respondents shall not Disclose any Non-Public Discovery System
Information to (1) any employee of Respondents who receives any
Non-Public Venice System Information, (2) any employees of the Venice
System, or (3) any employees of any other owner of the Venice System.
D. From the date Respondents sign the Consent Agreement in this matter
until the divestiture required by Paragraph V. of the Decision and
Order has been completed or the Commission determines that no further
relief pursuant to Paragraph V. of the Decision and Order is necessary,
Respondents shall not Disclose any Non-Public Venice System Information
to (1) any employee of Respondents who receives any Non-Public
Discovery System Information, (2) any employees of the Discovery
System, or (3) any employees of any other owner of the Discovery
System.
E. Respondents shall take all steps to ensure that if, contrary to the
requirements of Paragraph II.C. of this Hold Separate Order, Respondent
employees who receive any Non-Public Venice System Information receive
any Non-Public Discovery System Information during the time period
described in Paragraph II.C., they will not use such information for
any purpose.
F. Respondents shall take all steps to ensure that if, contrary to the
requirements of Paragraph II.D. of this Hold Separate Order, Respondent
employees who receive any Non-Public Discovery Information, receive any
Non-Public Venice System Information during the time period described
in Paragraph II.D., they will not use such information for any purpose.
III.
IT IS FURTHER ORDERED that
A. During the Hold Separate Period, Respondents shall hold the Held
Separate Business separate, apart, and independent as required by this
Hold Separate Order and shall not exercise direction or control over,
or influence directly or indirectly, the Held Separate Business or any
of its operations, or the Hold Separate Operating Trustees, except to
the
7
extent that Respondents must exercise direction and control over the
Held Separate Business to assure compliance with this Hold Separate
Order, or with the Decision and Order issued in this matter, and except
as otherwise provided in this Hold Separate Order or the Decision and
Order, and shall vest the Held Separate Business with all rights,
powers, and authority necessary to conduct its business.
B. The purpose of this paragraph of this Hold Separate Order is, in the
event that the Trust is rescinded, unwound, dissolved, or otherwise
terminated at any time after the Merger but before Respondents have
complied with Paragraph II.A of the Decision and Order, to: (i)
preserve the Held Separate Business, including TRMI and TRMI East, as
viable, competitive, and ongoing businesses independent of Respondents
until the divestitures required by the Decision and Order have been
accomplished; (ii) prevent interim harm to competition pending the
relevant divestitures; and (iii) help remedy any anticompetitive
effects of the proposed Merger.
C. Respondent shall hold the Held Separate Business separate, apart, and
independent on the following terms and conditions:
1. No later than two (2) business days after the Rescission Date,
Respondents shall agree to the appointment of Robert A. Falise
as Hold Separate Divestiture Trustee and enter into an
agreement substantially similar to the Trust Agreement,
subject to the prior approval of the Commission, that
transfers to the Hold Separate Divestiture Trustee the sole
and exclusive power and authority to divest TRMI and/or TRMI
East or to divest the Equilon Interest to Shell and/or the
Motiva Interest to Shell and/or SRI, consistent with the terms
of Paragraph II. of the Decision and Order and subject to the
prior approval of the Commission as set forth in such Decision
and Order. After such transfer, the Hold Separate Divestiture
Trustee shall have the sole and exclusive power and authority
to divest such assets or interests, subject to the prior
approval of the Commission as set forth in such Decision and
Order, and the Hold Separate Divestiture Trustee shall
exercise such power and authority and carry out the duties and
responsibilities of the Hold Separate Divestiture Trustee in a
manner consistent with the purposes of this Hold Separate
Order in consultation with the Commission's staff.
2. The Hold Separate Divestiture Trustee shall have eight (8)
months from the Merger Date and such additional time as is
provided pursuant to Paragraph XIII. of the Decision and Order
to accomplish the divestitures required by Paragraph II. of
the Decision and Order, which shall be subject to the prior
approval of the Commission as set forth in the Decision and
Order. If, however, at the end of this period, the Hold
Separate Divestiture Trustee has submitted a plan of
divestiture or believes that divestiture can be achieved
within a reasonable time, the Hold Separate Divestiture
Trustee's divestiture period may be extended by the
Commission. An extension of time by the Commission under this
subparagraph shall not preclude the Commission from seeking
any relief available to it for any failure by Respondents to
divest the
8
Equilon Interest or TRMI and/or the Motiva Interest or TRMI
East consistent with the requirements of Paragraph II of the
Decision and Order.
3. If, on or prior to the Rescission Date, Respondents have
executed but have not consummated an agreement or agreements
to divest the Equilon Interest to Shell and/or the Motiva
Interest to Shell and/or SRI, then Respondents shall, no later
than the Rescission Date, grant sole and exclusive authority
to the Hold Separate Divestiture Trustee to consummate any
divestiture contemplated thereby subject to the Commission's
prior approval as set forth in the Decision and Order.
4. The Hold Separate Divestiture Trustee shall divest the Equilon
Interest to Shell and/or the Motiva Interest to Shell and/or
SRI, in a manner that receives the prior approval of the
Commission, pursuant to the terms of the applicable agreement
or agreements approved by the Commission, if either (a)
Respondents have executed an agreement or agreements with
Shell and/or SRI with respect to such divestiture or
divestitures prior to the Rescission Date, and such agreement
or agreements have been approved by the Commission and have
not been breached by Shell and/or SRI; or (b) Shell has
exercised its right to acquire the Equilon Interest pursuant
to the Equilon LLC Agreement and/or Shell and/or SRI have
exercised their rights to acquire the Motiva Interest pursuant
to the Motiva LLC Agreement.
5. Subject to Respondents' absolute and unconditional obligation
to divest expeditiously at no minimum price, the Hold Separate
Divestiture Trustee shall use his or her best efforts to
negotiate the most favorable price and terms available for the
divestiture of (a) TRMI, if the Hold Separate Divestiture
Trustee has not divested the Equilon Interest pursuant to
subparagraph 4 of this paragraph, and/or (b) TRMI East, if the
Hold Separate Divestiture Trustee has not divested all or part
of the Motiva Interest pursuant to subparagraph 4 of this
paragraph. Each divestiture shall be made only in a manner
that receives the prior approval of the Commission, and,
unless the acquirers are Shell and/or SRI, the divestiture
shall be made only to an acquirer or acquirers that receive
the prior approval of the Commission; provided, however, if
the Hold Separate Divestiture Trustee receives bona fide
offers from more than one acquiring entity, and if the
Commission determines to approve more than one such acquiring
entity, the Hold Separate Divestiture Trustee shall divest to
the acquiring entity or entities selected by Respondents from
among those approved by the Commission; provided further,
however, that Respondents shall select such entity within five
(5) days of receiving notification of the Commission's
approval.
6. The Hold Separate Divestiture Trustee shall have full and
complete access to all personnel, books, records, documents,
and facilities of Respondents, TRMI and TRMI East, as needed
to fulfill the Hold Separate Divestiture Trustee's
obligations, or to any other relevant information, as the Hold
Separate Divestiture Trustee may reasonably request, including
but not limited to all documents and records kept in the
normal course of business that relate to Respondents'
obligations under this Hold
9
Separate Order and the Decision and Order. Respondents or the
Hold Separate Operating Trustees, as appropriate, shall
develop such financial or other information as the Hold
Separate Divestiture Trustee may reasonably request and shall
cooperate with the Hold Separate Divestiture Trustee.
Respondents shall take no action to interfere with or impede
the Hold Separate Divestiture Trustee's ability to perform his
or her responsibilities.
7. The Hold Separate Divestiture Trustee shall serve, without
bond or other security, at the cost and expense of
Respondents, on such reasonable and customary terms and
conditions as the Commission may set. The Hold Separate
Divestiture Trustee shall have the authority to employ, at the
cost and expense of Respondents, such financial advisors,
consultants, accountants, attorneys, and other representatives
and assistants as are reasonably necessary to carry out the
Hold Separate Divestiture Trustee's duties and
responsibilities.
8. Respondents shall indemnify the Hold Separate Divestiture
Trustee and hold the Hold Separate Divestiture Trustee
harmless against any losses, claims, damages, liabilities, or
expenses arising out of, or in connection with, the
performance of the Hold Separate Divestiture Trustee's duties,
including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of
any claim, whether or not resulting in any liability, except
to the extent that such liabilities, losses, damages, claims,
or expenses result from misfeasance, gross negligence, willful
or wanton acts, or bad faith by the Hold Separate Divestiture
Trustee.
9. The Hold Separate Divestiture Trustee shall account for all
monies derived from the sale and all expenses incurred,
subject to the approval of the Commission. After approval by
the Commission of the account of the Hold Separate Divestiture
Trustee, all remaining monies shall be paid as directed in the
Hold Separate Agreement, and the Hold Separate Divestiture
Trustee's powers shall be terminated.
10. The Hold Separate Divestiture Trustee shall report in writing
to the Commission thirty (30) days after appointment and every
thirty (30) days thereafter concerning the Hold Separate
Divestiture Trustee's efforts to accomplish the requirements
of this Hold Separate Order and the Decision and Order until
such time as the divestitures required by Paragraph II. of the
Decision and Order have been accomplished and Respondents have
notified the Commission that the divestitures have been
accomplished.
11. If, for any reason, Robert A. Falise cannot serve or cannot
continue to serve as Hold Separate Divestiture Trustee, or
fails to act diligently, the Commission shall select a
replacement Hold Separate Divestiture Trustee, subject to the
consent of Respondents, which consent shall not be
unreasonably withheld. If Respondents have not opposed, in
writing, including the reasons for opposing, the selection of
any
10
replacement Hold Separate Divestiture Trustee within ten (10)
days after notice by the staff of the Commission to
Respondents of the identity of any proposed replacement Hold
Separate Divestiture Trustee, Respondents shall be deemed to
have consented to the selection of the proposed replacement
Hold Separate Divestiture Trustee. The replacement Hold
Separate Divestiture Trustee shall be a person with experience
and expertise in acquisitions and divestitures.
12. The Commission may on its own initiative or at the request of
the Hold Separate Divestiture Trustee issue such additional
orders or directions as may be necessary or appropriate to
assure compliance with the requirements of this Hold Separate
Order or the Decision and Order.
13. No later than two (2) business days after the Rescission Date,
Respondents shall agree to the appointment of Joe B. Foster as
Hold Separate Operating Trustee of TRMI (with respect to the
Equilon Interest) and John Linehan as Hold Separate Operating
Trustee of TRMI East (with respect to the Motiva Interest) and
enter into a Hold Separate Agreement substantially similar to
the Trust Agreement, subject to the prior approval of the
Commission, that transfers to the Hold Separate Operating
Trustees sole and exclusive power and authority to manage TRMI
and/or TRMI East (as the case may be).
14. The Hold Separate Operating Trustees shall have sole and
exclusive power and authority to manage TRMI and/or TRMI East
(as the case may be), as set forth in the Hold Separate
Agreement and specifically to cause TRMI and TRMI East
respectively to exercise the rights of TRMI and TRMI East
under the Equilon and Motiva LLC Agreements. Each Hold
Separate Operating Trustee may engage in any other activity
such Hold Separate Operating Trustee may deem reasonably
necessary, advisable, convenient or incidental in connection
therewith and shall exercise such power and authority and
carry out the duties and responsibilities of the Hold Separate
Operating Trustee in a manner consistent with the purposes of
this Hold Separate Order and the Decision and Order in
consultation with the Commission's staff.
15. Each Hold Separate Operating Trustee shall have full and
complete access to all personnel, books, records, documents,
and facilities of TRMI and/or TRMI East as needed to fulfill
such Hold Separate Operating Trustee's obligations, or to any
other relevant information, as such Hold Separate Operating
Trustees may reasonably request, including but not limited to
all documents and records kept in the normal course of
business that relate to Respondents' obligations under this
Hold Separate Order and the Decision and Order. Respondents
shall develop such financial or other information as such Hold
Separate Operating Trustees may reasonably request and shall
cooperate with the Hold Separate Operating Trustees.
Respondents shall take no action to interfere with or impede
the Hold Separate Operating Trustees' ability to perform his
or her responsibilities.
11
16. The Hold Separate Operating Trustees shall serve, without bond
or other security, at the cost and expense of Respondents, on
such reasonable and customary terms and conditions as the
Commission may set. Each Hold Separate Operating Trustee shall
have the authority to employ, at the cost and expense of
Respondents, such consultants, accountants, attorneys, and
other representatives and assistants as are reasonably
necessary to carry out such Hold Separate Operating Trustee's
duties and responsibilities.
17. Respondents shall indemnify each Hold Separate Operating
Trustee and hold each Hold Separate Operating Trustee harmless
against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of such
Hold Separate Operating Trustee's duties, including all
reasonable fees of counsel and other expenses incurred in
connection with the preparation for, or defense of any claim,
whether or not resulting in any liability, except to the
extent that such liabilities, losses, damages, claims, or
expenses result from misfeasance, gross negligence, willful or
wanton acts, or bad faith by such Hold Separate Operating
Trustee.
18. The Hold Separate Operating Trustees shall account for all
expenses incurred, including fees for his or her services,
subject to the approval of the Commission.
19. Each Hold Separate Operating Trustee shall report in writing
to the Commission thirty (30) days after the Rescission Date
and every thirty (30) days thereafter concerning the Hold
Separate Operating Trustee's performance of his or her duties
under this Hold Separate Order, the Decision and Order, and
the Hold Separate Agreement. The Hold Separate Operating
Trustees shall serve until such time as Respondents have
complied with their obligation to divest TRMI and/or TRMI East
as required by this Hold Separate Order and the Decision and
Order, and Respondents have notified the Commission that the
divestitures have been accomplished.
20. If for any reason Joe B. Foster cannot serve or cannot
continue to serve as Hold Separate Operating Trustee of TRMI
or John Linehan cannot serve or cannot continue to serve as
Hold Separate Operating Trustee of TRMI East, or fails to act
diligently, the Commission shall select a replacement Hold
Separate Operating Trustee, subject to the consent of
Respondents, which consent shall not be unreasonably withheld.
If Respondents have not opposed, in writing, including the
reasons for opposing, the selection of any replacement Hold
Separate Operating Trustee within ten (10) days after notice
by the staff of the Commission to Respondents of the identity
of any proposed replacement Hold Separate Operating Trustee,
Respondents shall be deemed to have consented to the selection
of the proposed replacement Hold Separate Operating Trustee.
The replacement Hold Separate Operating Trustee shall be a
person with experience and expertise in the management of
businesses of the type engaged in by Equilon and Motiva.
12
21. The Commission may on its own initiative or at the request of
either Hold Separate Operating Trustee issue such additional
orders or directions as may be necessary or appropriate to
assure compliance with the requirements of this Hold Separate
Order or the Decision and Order.
22. Except as provided herein or in the Hold Separate Agreement,
neither the Hold Separate Divestiture Trustee nor the Hold
Separate Operating Trustees shall disclose any Non-Public
Equilon or Motiva Information to an employee of Respondents.
23. Respondents may require the Hold Separate Divestiture Trustee
or Hold Separate Operating Trustees to sign a confidentiality
agreement prohibiting the disclosure of any information gained
as a result of his or her role as Hold Separate Divestiture
Trustee or Hold Separate Operating Trustee to anyone other
than the Commission.
24. The purpose of this Paragraph III is to effectuate the
divestitures required by Paragraph II. of the Decision and
Order and to maintain operation of TRMI, TRMI East, Equilon
and Motiva separate and apart from Respondents' operations
pending the required divestitures.
IV.
IT IS FURTHER ORDERED that, pending divestiture of Texaco's Overlap
General Aviation Business Assets (or Texaco's Domestic General Aviation Business
Assets, as appropriate) pursuant to Paragraphs VII. or VIII. of the Decision and
Order, Respondents shall take such actions as are necessary to maintain the
viability, marketability, and competitiveness of Texaco's Domestic General
Aviation Business Assets and to prevent the destruction, removal, wasting, or
deterioration of Texaco's Domestic General Aviation Business Assets, except for
ordinary wear and tear and as would otherwise occur in the ordinary course of
business.
V.
IT IS FURTHER ORDERED that Respondents shall, within ten (10) days of
the Rescission Date, circulate to all of Respondents' employees a copy of this
Hold Separate Order and shall post a notice accessible to all employees
informing employees of Respondents' obligations pursuant to this Hold Separate
Order.
VI.
IT IS FURTHER ORDERED that:
A. Within thirty (30) days after the Rescission Date and every sixty (60)
days thereafter until Respondents have fully complied with Paragraphs
II and III of the Decision and Order, Respondents shall submit to the
Commission a verified written report setting forth in detail
13
the manner and form in which they intend to comply, are complying, and
have complied with those provisions. Respondents shall include in their
compliance reports, among other things that are required from time to
time, a full description of all contacts or negotiations with
prospective acquirers for the divestitures of assets or businesses
specified in this Hold Separate Order, including the identity of all
parties contacted. Respondents also shall include in their compliance
reports, copies of all written communications to and from such parties,
and all internal memoranda, reports and recommendations concerning
divestiture.
B. Within thirty (30) days after this Hold Separate Order is final, and
every sixty (60) days thereafter until Respondents have fully complied
with Paragraphs II. and IV. of this Hold Separate Order, Respondents
shall submit to the Commission a verified written report setting forth
in detail the manner and form in which they intend to comply, are
complying, and have complied with those provisions.
C. With the agreement of the staff of the Commission, Respondents may
submit one compliance report to the Commission, at sixty (60) day
intervals, including the information required by Paragraphs VI.A. and
VI.B. of the Hold Separate Order, and Paragraph IX. of the Decision and
Order, which will, if it includes all required information, be
considered a timely filing of each of the compliance reports required
by these provisions.
VII.
IT IS FURTHER ORDERED that for the purposes of determining or securing
compliance with this Hold Separate Order, and subject to any legally recognized
privilege, upon written request and on reasonable notice to Respondents made to
its principal office, Respondents shall permit any duly authorized
representatives of the Commission:
A. During office hours and in the presence of counsel, access to all
facilities and access to inspect and copy all books, ledgers, accounts,
correspondence, memoranda and other records and documents in the
possession or under the control of Respondents relating to any matters
contained in this Hold Separate Order; and
B. Upon five business days' notice to Respondents and without restraint or
interference from Respondents, to interview officers or employees of
Respondents who may have counsel present, regarding such matters.
By the Commission.
14
Appendix A
FORM OF
AGREEMENT AND DECLARATION OF TRUST
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Name..................................................................................... 5
SECTION 2.02. Principal Office......................................................................... 5
SECTION 2.03. Address of the Delaware Trustee; Delaware Trustee........................................ 5
SECTION 2.04. Purposes of the Trust.................................................................... 5
SECTION 2.05. Contributions............................................................................ 6
SECTION 2.06. Declaration of Trust..................................................................... 6
SECTION 2.07. No Individual Ownership.................................................................. 6
SECTION 2.08. Limited Liability........................................................................ 7
SECTION 2.09. Tax Treatment............................................................................ 7
SECTION 2.10. Fiscal Periods........................................................................... 7
ARTICLE 3
JV TRANSFERS AND OTHER OBLIGATIONS OF THE
CHAIRMAN AND DIVESTITURE TRUSTEE
AND THE OPERATING TRUSTEES
SECTION 3.01. The JV Transfers......................................................................... 7
SECTION 3.02. Distributions............................................................................ 9
SECTION 3.03. Restrictions on Distributions from the Trust.............................................10
SECTION 3.04. Restrictions on Agreements...............................................................10
SECTION 3.05. Advisory Committee.......................................................................10
SECTION 3.06. The Operating Trustees...................................................................11
ARTICLE 4
MANAGEMENT OF THE TRUST
SECTION 4.01. Management Generally.....................................................................12
SECTION 4.02. Authority of the Co-Trustees.............................................................12
SECTION 4.03. Reliance by Third Parties................................................................15
SECTION 4.04. Exculpation..............................................................................15
SECTION 4.05. Indemnification..........................................................................15
SECTION 4.06. Payment of Costs and Expenses............................................................16
SECTION 4.07. Assignability of Interest................................................................16
SECTION 4.08. Resignation, Removal and Replacement of Co-Trustees......................................16
(i)
ARTICLE 5
DISSOLUTION AND WINDING-UP
SECTION 5.01. Events Causing Dissolution................................................................17
SECTION 5.02. Winding-up................................................................................17
SECTION 5.03. Cancellation of Certificate...............................................................18
ARTICLE 6
BOOKS AND RECORDS; TAX RETURNS; REPORTS
SECTION 6.01. Books and Records........................................................................18
SECTION 6.02. Accounting; Tax Year.....................................................................18
SECTION 6.03. Filing of Tax Returns....................................................................18
SECTION 6.04. Reports..................................................................................18
SECTION 6.05. Confidentiality Provisions and Limitations on Access.....................................19
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. General..................................................................................19
SECTION 7.02. Amendments to this Declaration of Trust..................................................19
SECTION 7.03. Choice of Law............................................................................20
SECTION 7.04. Notices..................................................................................20
SECTION 7.05. Expenses.................................................................................21
SECTION 7.06. Headings.................................................................................22
SECTION 7.07. Construction and Interpretation..........................................................22
SECTION 7.08. Limitation of Co-Trustee's Liability.....................................................22
SECTION 7.09. Guarantee from Parent....................................................................22
SECTION 7.10. Approval by the Commission and the States................................................22
(ii)
AGREEMENT AND DECLARATION OF TRUST
THIS AGREEMENT AND DECLARATION OF TRUST (as amended from time to time,
this "Declaration of Trust"), dated as of ________, 2001 by and among Robert A.
Falise, as the Chairman and Divestiture Trustee, John C. Linehan, as the TRMI
East Operating Trustee, Joe B. Foster, as the TRMI Operating Trustee (the TRMI
East Operating Trustee and the TRMI Operating Trustee collectively, the
"Operating Trustees"), Wilmington Trust Company, a Delaware banking corporation,
as Delaware trustee (the "Delaware Trustee" and, together with the Chairman and
Divestiture Trustee and the Operating Trustees referred to herein as the
"Co-Trustees"), the Grantor (as defined below), Texaco Inc., a Delaware
corporation ("Texaco"), and Chevron Corporation, a Delaware corporation which is
expected to be renamed ChevronTexaco Corporation at the Effective Time defined
below ("Parent"), to establish the Texaco Alliance Trust (as the same may be
constituted from time to time, the "Trust") under the Delaware Business Trust
Act (12 Del. C. ss. 3801, et. seq.) (as amended from time to time and any
successor to such statute, the "Act") for the benefit of the Grantor.
WITNESSETH:
WHEREAS, the parties hereto desire to establish a Delaware business
trust under the Act;
WHEREAS, Texaco has entered into an Agreement and Plan of Merger dated
as of October 15, 2000, as amended, with Parent and Keepep Inc. (the "Merger
Agreement");
WHEREAS, this Trust is being established to address certain
governmental concerns relating to the consummation of the transactions
contemplated by the Merger Agreement by providing for the divestiture of the JV
Interests (as defined below) whether through a sale to a third party, a public
offering, a spin-off to the shareholders of Parent or otherwise, and by
providing for the management and operation of the JV Interests pending such
divestiture;
WHEREAS, Texaco has nominated Robert A. Falise to serve as Chairman
and Divestiture Trustee, John C. Linehan to serve as TRMI East Operating Trustee
and Joe B. Foster to serve as TRMI Operating Trustee, and the Commission (as
defined below) has accepted such nominations; and
WHEREAS, the parties hereto desire to provide for the governance of
the Trust and to set forth in detail their respective rights and duties to the
Trust.
NOW, THEREFORE, each of the Chairman and Divestiture Trustee and the
Operating Trustees hereby agrees that it will hold, administer and deal with all
money and property received by it hereunder, IN TRUST, upon the following terms
and conditions:
ARTICLE 1
DEFINITIONS
The defined terms used in this Declaration of Trust shall, unless the
context otherwise requires or unless defined elsewhere in this Declaration of
Trust, have the meanings specified in this Article 1.
"Accountants" means such internationally recognized firm of
independent certified public accountants as shall be engaged from time to time
by the TRMI Operating Trustee on behalf of the Trust to audit the books and
records of the Trust.
"Advisory Committee" means the committee constituted pursuant to
Section 3.05 hereof for the purpose of consulting with the Chairman and
Divestiture Trustee on matters relating to the JV Transfers.
"Affiliate" with respect to a specified Person, means a Person that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person specified.
"Business Day" means any day on which the Delaware Trustee is open for
business.
"Certificate of Trust" means the certificate of trust of the Trust
filed with the Secretary of State of Delaware and as amended from time to time
in accordance with the Act.
"Chairman and Divestiture Trustee" means Robert A. Falise, or any
other Person that becomes a successor Chairman and Divestiture Trustee of the
Trust as provided herein, in such Person's capacity as Chairman and Divestiture
Trustee of the Trust.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time (including any corresponding provision of succeeding law).
"Commission" means the Federal Trade Commission.
"Committee Members" is defined in Section 3.05.
"Consent Order" means the Decision and Order of the Commission
contained in the Agreement Containing Consent Orders dated as of August 10,
2001, among Parent, Texaco and the Commission, as the same may be amended,
together with any final order which may be issued by the Commission in respect
thereof.
"Covered Person" means (i) the Co-Trustees, (ii) the Committee
Members, (iii) any Affiliate of the Co-Trustees or Committee Members, (iv) any
officers, directors, shareholders, partners, members, employees, investment
managers, representatives or agents of the Co-Trustees, Committee Members or
their respective Affiliates, and (v) any employee or agent of the Trust or its
Affiliates.
"Delaware" means the State of Delaware.
2
"Effective Time" means the time the merger between Texaco and a
subsidiary of Parent pursuant to the Merger Agreement shall become effective.
"Equilon" means Equilon Enterprises LLC, a Delaware limited liability
company.
"Equilon Interest" means all of the ownership interests in Equilon
owned directly or indirectly by Texaco, including the interests owned by TRMI
and its wholly owned subsidiaries TCRI and Texaco Anacortes Cogeneration
Company.
"Final Judgment" means the judgment entitled "State of California, et
al. v. Chevron Corporation, a Delaware corporation and Texaco Inc., a Delaware
corporation" filed in the Central District of California on or about August 20,
2001, and as the same may be amended by any orders of the court.
"Fiscal Year," "Fiscal Period" and "Fiscal Quarters" have the
respective meanings given such terms in Section 2.10.
"Grantor" means either (i) TRMI Holdings Inc., a Delaware corporation,
if the capital stock of TRMI is contributed to the Trust under Section 2.05 or
(ii) TRMI, if the capital stock of TRMI East (but not the capital stock of TRMI)
is contributed to the Trust under Section 2.05.
"JV Holdco" means TRMI and/or TRMI East, as the context may require.
"JV Interests" means the Equilon Interest and the Motiva Interest.
"JV Parties" means Shell and/or SRI, as the context may require.
"JVs" means Equilon and Motiva.
"JV Transfer" shall mean the consummation of a disposition, including
pursuant to a Spin-off, of all or a portion of a JV Interest or the stock of
TRMI or TRMI East, as the case may be, in accordance with Section 3.01 hereof.
"Law" means any applicable federal, state, local or foreign law,
statute, ordinance, directive, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
governmental or regulatory authority, agency, commission, tribunal or other
governmental entity.
"LLC Agreements" means the (i) Limited Liability Company Agreement of
Equilon Enterprises LLC dated as of January 15, 1998 (as amended as of the date
hereof) (the "Equilon LLC Agreement") and (ii) the Limited Liability Company
Agreement of Motiva Enterprises LLC dated as of July 1, 1998 (the "Motiva LLC
Agreement").
"Motiva" means Motiva Enterprises LLC, a Delaware limited liability
company.
"Motiva Interest" means all of the ownership interests in Motiva owned
directly or indirectly by Texaco, including the interest owned by TRMI East.
3
"Net Proceeds" means the aggregate purchase price paid to the Trust
in respect of a JV Transfer minus the amount of any fees and, if any, expenses
incurred by the Trust in connection therewith.
"Normal Distributions" shall have the meaning set forth in Annex I-A
hereto.
"Person" means any individual, corporation, partnership, trust,
limited liability company, unincorporated organization or association, or other
entity.
"Public Offering" means a sale pursuant to an effective registration
statement under the Securities Act or a private placement effected under Rule
144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Shell" means Shell Oil Company, a Delaware corporation.
"Sole Financial Risk Methodology" shall have the meaning set forth in
Annex I-B hereto.
"Sole Financial Risk Project" shall have the meaning set forth in
Annex I-C hereto.
"Spin-off" means the distribution of the Spin Stock to the
stockholders of Parent after the Effective Time.
"Spin Stock" means the securities of the JV Holdco or other Person
that owns the JV Interests and which are distributed in the Spin-off.
"SRI" means Saudi Refining, Inc., a Delaware corporation.
"States" means the state attorneys general of Alaska, Arizona,
California, Florida, Hawaii, Idaho, Missouri, Nevada, New Mexico, Oregon, Texas,
Utah and Washington, acting by and through the State of California.
"TCRI" means Texaco Convent Refining Inc., a Delaware corporation and a
wholly owned subsidiary of TRMI.
"TRMI" means Texas Refining and Marketing Inc., a Delaware corporation
and an indirect wholly owned subsidiary of Texaco.
"TRMI East" means Texaco Refining and Marketing (East) Inc., a Delaware
corporation and a wholly owned subsidiary of TRMI.
"TRMI East Operating Trustee" means John C. Linehan or any other
Person that becomes a successor Operating Trustee of the Trust as provided
herein, in such Person's capacity as Operating Trustee of the Trust with respect
to TRMI East, including the Motiva Interest.
"TRMI Operating Trustee" means Joe B. Foster or any other Person that
becomes a
4
successor Operating Trustee of the Trust as provided herein, in such Person's
capacity as Operating Trustee of the Trust with respect to TRMI, including the
Equilon Interest.
"Trust Interest" means the beneficial ownership interest in the Trust
of the Grantor.
"United States" or "U.S." means the United States of America.
"$" means United States dollars.
ARTICLE 2
GENERAL PROVISIONS
SECTION 2.01. Name. The name of the Trust is "Texaco Alliance Trust."
The Trust's business may be conducted under the name of the Trust or any other
name or names selected by the TRMI Operating Trustee.
SECTION 2.02. Principal Office. The principal office of the Trust
shall be at 1111 Bagby Street, Houston, Texas, 77002, or such other place as may
from time to time be designated by the TRMI Operating Trustee. The TRMI
Operating Trustee shall give prompt notice of any such change to the Grantor and
the other Co-Trustees. The Chairman and Divestiture Trustee will have an office
at 2000 Westchester Avenue, White Plains, New York, 10650, or such other place
as may from time to time be designated by the Chairman and Divestiture Trustee.
SECTION 2.03. Address of the Delaware Trustee; Delaware Trustee. The
address of the Delaware Trustee in Delaware is Wilmington Trust Company, 1100
North Market Street, Wilmington, Delaware 19890. The Delaware Trustee is
appointed to serve as the trustee of the Trust in Delaware for the sole purpose
of satisfying the requirement of Section 3807 of the Act that the Trust have at
least one trustee with a principal place of business in Delaware. It is
understood and agreed by the parties hereto that the Delaware Trustee shall have
none of the duties or liabilities of the Chairman and Divestiture Trustee or the
Operating Trustees. The duties of the Delaware Trustee shall be limited to (a)
accepting legal process served on the Trust in Delaware and (b) the execution of
any certificates required to be filed with the Delaware Secretary of State which
the Delaware Trustee is required to execute under Section 3811 of the Act. To
the extent that, at law or in equity, the Delaware Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or the Grantor,
it is hereby understood and agreed by the parties hereto, including the Grantor,
that such duties and liabilities are replaced by the duties and liabilities of
the Delaware Trustee expressly set forth in this Declaration of Trust.
SECTION 2.04. Purposes of the Trust. (a) The Trust is created for the
object and purpose of, and the nature of the business to be conducted and
promoted by the Trust is, engaging in any lawful act or activity for which
Delaware business trusts may be formed under the Act, including, without
limitation, (i) effecting the JV Transfers pursuant to Article 3 hereof, the
Consent Order and the Final Judgment, and, until such JV Transfers are effected,
holding and
5
managing the JV Interests and (ii) engaging in all activities and transactions
as the Chairman and Divestiture Trustee or the Operating Trustees may deem
reasonably necessary, advisable, convenient or incidental in connection with the
JV Transfers and the holding and managing of the JV Interests.
(b) The Trust shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or for the
furtherance of the purposes and business described herein and for the protection
and benefit of the Trust, and shall have, without limitation, any and all of the
powers that may be exercised on behalf of the Trust by the Chairman and
Divestiture Trustee or the Operating Trustees pursuant to this Declaration of
Trust, the Consent Order and the Final Judgment. Each of the Chairman and
Divestiture Trustee and each Operating Trustee may authorize any Person to enter
into and perform any other document on behalf of the Trust, to the extent such
entry or performance is within the scope of the powers of each such Co-Trustee
under this Declaration of Trust, the Consent Order and the Final Judgment.
SECTION 2.05. Contributions. (a) Concurrently with the execution of
this Declaration of Trust, the Grantor will contribute to the Trust all of the
outstanding capital stock of TRMI and/or TRMI East, as the Consent Order or the
Final Judgment may require.
(b) The Trust shall cause the JV Holdco to continue to perform, or
cause to be performed, all of the obligations pursuant to the LLC Agreements,
including, without limitation, Section 12.04 of the LLC Agreements (which
sections are reproduced in Annex II-A and Annex II-B hereto) as provided in
Section 3.01(a) hereof.
SECTION 2.06. Declaration of Trust. The Chairman and Divestiture
Trustee and each Operating Trustee hereby declares that it will hold the assets
of the Trust in trust upon and subject to the conditions set forth herein for
the benefit of the Grantor. It is the intention of the parties hereto that the
Trust be a business trust under the Act. The Co-Trustees are hereby authorized
to execute the Certificate of Trust and any amendment and/or restatement thereof
and to file it with the Secretary of State of Delaware. The Trust is not
intended to be, shall not be deemed to be, and shall not be treated as, a
general partnership, limited partnership, joint venture, corporation or joint
stock company.
SECTION 2.07. No Individual Ownership. Title to all of the assets of
the Trust shall be vested in the Trust until the Trust dissolves in accordance
with Article 5 of this Declaration of Trust; provided, however, if the
applicable Laws of any jurisdiction require that title to any part of the assets
of the Trust be vested in a trustee of the Trust, then title to that part of the
assets of the Trust shall be vested in the Chairman and Divestiture Trustee to
the extent so required, but the beneficial interest with respect to such assets
shall remain in the Trust. None of the Grantor, Texaco and Parent shall have any
ownership in any particular asset or investment of the Trust or any part
thereof; provided that such lack of ownership shall not preclude the Commission
or the States from seeking any relief available for any failure of Texaco or
Parent to divest TRMI and/or TRMI East consistent with the requirements of
Paragraph II of the Consent Order and Section III of the Final Judgment.
6
SECTION 2.08. Limited Liability. The Grantor shall be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of Delaware.
SECTION 2.09. Tax Treatment. The parties hereby agree that the Trust
shall be treated as a "grantor trust" or, in the event the Trust shall be
engaged in the conduct of a business for profit, as a business entity that is
disregarded as separate from the Grantor for purposes of the U.S. federal, state
and local tax laws, and further agree not to take any position (or cause the
Trust to do so), in a tax return or otherwise, or take any other action that is
inconsistent with that treatment.
SECTION 2.10. Fiscal Periods. The fiscal year of the Trust ("Fiscal
Year") shall end on December 31 of each year. The "Fiscal Quarters" of the Trust
shall end on March 31, June 30, September 30 and December 31 of each Fiscal
Year. A "Fiscal Period" of the Trust shall commence at the beginning of the
Fiscal Year and shall end on the date immediately preceding the next Fiscal
Period or Fiscal Year.
ARTICLE 3
JV TRANSFERS AND OTHER OBLIGATIONS OF THE CHAIRMAN AND
DIVESTITURE TRUSTEE AND THE OPERATING TRUSTEES
SECTION 3.01. The JV Transfers. The Chairman and Divestiture Trustee
hereby acknowledges that the principal purpose of the Trust is to cause, as
promptly as possible, the JV Transfers to be effected, individually or jointly,
so that the Trust ceases to hold any JV Interest, pursuant to the terms and
conditions of this Declaration of Trust and subject to the Consent Order and the
Final Judgment, and specifically to effectuate the remedial purposes of the
Consent Order and the Final Judgment as set forth therein, taking into account
the obligation under the Consent Order and the Final Judgment to effectuate such
JV Transfers at no minimum price. Subject to the Consent Order and the Final
Judgment and the obligations under the Consent Order and the Final Judgment to
effectuate such JV Transfers at no minimum price, the Chairman and Divestiture
Trustee shall effectuate the JV Transfers in a manner that is reasonably
calculated to maximize value (taking into account tax and other costs and
certainty of completion) for Texaco and its stockholders and, after the
Effective Time, Parent and its stockholders. The Chairman and Divestiture
Trustee shall use his or her reasonable best efforts to effect such disposition
as follows:
(a) The Chairman and Divestiture Trustee shall have eight (8) months
from the Effective Time to accomplish the divestitures required by Paragraph II
of the Consent Order and Section III of the Final Judgment, which shall be
subject to the prior approval of the Commission and the States. If, however, at
the end of the eight-month period, the Chairman and Divestiture Trustee has
submitted a plan of divestiture or believes that divestiture can be achieved
within a reasonable time, the Chairman and Divestiture Trustee's divestiture
period may be extended by the Commission or the States.
7
(b) The Chairman and Divestiture Trustee shall serve, without bond or
other security, at the cost and expense of Texaco. The Chairman and Divestiture
Trustee shall have the authority to employ, at the cost and expense of Texaco,
such financial advisors, consultants, accountants, attorneys, and other
representatives and assistants as are reasonably necessary to carry out the
Chairman and Divestiture Trustee's duties and responsibilities.
(c) Subject to the absolute and unconditional obligation of Parent and
Texaco in the Consent Order and the Final Judgment to divest at no minimum
price, and subject to the provisions of Section 3.01(e) of this Declaration of
Trust, the Chairman and Divestiture Trustee shall use his or her reasonable best
efforts to negotiate the most favorable price and terms available for the
divestiture of TRMI (if the Chairman and Divestiture Trustee has not divested
the Equilon Interest pursuant to Paragraph III.F of the Consent Order and
Section IV of the Final Judgment) and/or TRMI East (if the Chairman and
Divestiture Trustee has not divested all or part of the Motiva Interest pursuant
to Paragraph III.F of the Consent Order and Section IV of the Final Judgment).
The divestiture shall be made only in a manner that receives the prior approval
of the Commission and the States and, unless the acquirers are Shell and/or SRI,
the divestiture shall be made only to an acquirer or acquirers that receive the
prior approval of the Commission and the States; provided, however, if the
Chairman and Divestiture Trustee receives bona fide offers from more than one
acquiring entity, and if the Commission determines to approve more than one such
acquiring entity, the Chairman and Divestiture Trustee shall divest to the
acquiring entity or entities selected by Parent and Texaco from among those
approved by the Commission and the States; provided further, however, that
Parent and Texaco shall select such entity within five (5) days of receiving
notification of the Commission's and the States' approval.
(d) If, prior to the establishment of the Trust, Texaco or any of its
Affiliates shall have executed an agreement for the sale of the JV Interests to
the JV Parties and such agreement shall have been approved by the Commission and
the States and shall have been assigned to the Trust, the Chairman and
Divestiture Trustee shall consummate the sale of the JV Interests to the JV
Parties pursuant to the terms of such agreement as soon as practicable.
(e) Unless the JV Parties shall have waived their rights under Section
12.04 of the LLC Agreements, prior to the establishment of the Trust, Texaco
shall cause to be delivered to each of the JV Parties the notices contemplated
by Section 12.04(a) of the LLC Agreements notifying them of the occurrence of a
Change of Control (as defined in the LLC Agreements). Unless there is an
agreement for the sale of the JV Interests to the JV Parties which has been
assumed by the Trust, the Chairman and Divestiture Trustee shall carry out the
valuation procedures set forth in Section 12.05 of the LLC Agreements (which
sections are reproduced in Annex II-A and Annex II-B hereto). In the event one
or both JV Parties shall elect to acquire the relevant JV Interests pursuant to
Section 12.04(b) of the LLC Agreements, the Chairman and Divestiture Trustee
shall consummate the sale of the JV Interests in accordance with Section
12.04(c) of the LLC Agreements.
(f) In the event one or both JV Interests are not disposed of in
accordance with Section 3.01(d) or 3.01(e) of this Declaration of Trust, the
Chairman and Divestiture Trustee shall use his or her reasonable best efforts to
dispose of the capital stock of the JV Holdco through a sale to
8
one or more third parties, through one or more Public Offerings or through a
distribution of the interests to the stockholders of Parent in a Spin-off,
subject to the prior approval of the Commission and the States. In determining
which divestiture to pursue, the Chairman and Divestiture Trustee shall consider
which alternative will result in the most viable and competitive entity and may
consider which alternative will yield maximum value for the stockholders of
Parent after the Effective Time (taking into account tax and other costs and
certainty of completion) on the most commercially reasonable terms in order to
effectuate the remedial purposes of the Consent Order and the Final Judgment as
set forth therein, provided, however, that the Chairman and Divestiture Trustee
will not take any action which if taken by the Grantor would be in violation of
Section 7.4 of the Merger Agreement or applicable Law. Notwithstanding any of
the foregoing, the Chairman and Divestiture Trustee may prepare to sell the
capital stock of the JV Holdco in accordance with this Section 3.01(f) in
advance of the expiration of the time periods set forth in Section 12.04 of the
LLC Agreements by, without limitation, preparing offering memoranda and
registration statements and taking any other action the Chairman and Divestiture
Trustee deems advisable.
(g) The Chairman and Divestiture Trustee may consult with the Advisory
Committee regarding tax and accounting matters that may arise in connection with
the JV Transfers.
(h) The Chairman and Divestiture Trustee shall use his or her
reasonable best efforts to ensure that the consideration payable in respect of
the JV Interest consists solely of cash and be payable in full at the closing of
the applicable JV Transfer, subject to the Consent Order and the Final Judgment
to the obligation under the Consent Order and the Final Judgment to effectuate
such JV Transfer at no minimum price. In the event the Chairman and Divestiture
Trustee proposes to accept any other form of consideration or other terms of
payment, the Chairman and Divestiture Trustee shall first advise the Advisory
Committee, the Commission and the States.
(i) Notwithstanding any other provision of this Declaration of Trust,
the Chairman and Divestiture Trustee shall take all such actions in connection
with any JV Transfer as may be required by applicable Law.
(j) The Chairman and Divestiture Trustee shall have full and complete
access to all personnel, books, records, documents, and facilities of Parent,
Texaco, TRMI, TRMI East or the Grantor as needed to fulfill the Chairman and
Divestiture Trustee's obligations, or to any other relevant information, as the
Chairman and Divestiture Trustee may reasonably request, including but not
limited to all documents and records kept in the normal course of business that
relate to Parent's and Texaco's obligations under the Consent Order and the
Final Judgment. Parent, Texaco or the Operating Trustees, as appropriate, shall
develop such financial or other information as the Chairman and Divestiture
Trustee may reasonably request and shall cooperate with the Chairman and
Divestiture Trustee. Neither Parent, Texaco nor the Grantor shall take any
action to interfere with or impede the Chairman and Divestiture Trustee's
ability to perform his or her responsibilities.
SECTION 3.02. Distributions. (a) Upon any JV Transfer, the Chairman and
Divestiture Trustee shall cause the Trust to distribute to the Grantor the Net
Proceeds in respect of such JV Transfer.
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(b) The Chairman and Divestiture Trustee shall cause the Trust to
distribute to the Grantor, as promptly as practicable upon the receipt thereof
by the Trust, any cash, assets or other property (other than Net Proceeds)
received by the Trust or the JV Holdco in respect of the JV Interests, provided,
however, that the Chairman and Divestiture Trustee may retain such amounts as
may be required to pay any amounts pursuant to Section 4.06(b).
(c) Except as provided in Section 5.02(b), the Trust shall not
distribute the JV Interests, or any instrument representing an equity ownership
therein, to the Grantor; provided that, upon completion of the disposition of
the last JV Interest, the Chairman and Divestiture Trustee shall distribute the
capital stock of the JV Holdco to the Grantor if such capital stock was not
disposed of in connection with the disposition of the JV Interests.
(d) Notwithstanding any other provision of this Declaration of Trust,
the Chairman and Divestiture Trustee is authorized to take any action that it
determines to be necessary or appropriate to cause the Trust to comply with any
federal, state, local and foreign withholding requirement with respect to any
payment or distribution by the Trust to the Grantor or any other Person. All
amounts so withheld, and, in the manner determined by the Chairman and
Divestiture Trustee, amounts withheld with respect to any payment or
distribution by any Person to the Trust, shall be treated as distributions to
the Grantor. If any such withholding requirement with respect to any Grantor
exceeds the amount distributable to the Grantor under this Section 3.02 or
Article 5, the Grantor and any successor or assignee with respect to the
Grantor's interest in the Trust will indemnify and hold harmless the Chairman
and Divestiture Trustee and the Trust for such excess amount or such withholding
requirement, as the case may be (including interest on such amount at the prime
rate as published in The Wall Street Journal on the business day prior to the
date such amount is paid by the Grantor, compounded semiannually).
SECTION 3.03. Restrictions on Distributions from the Trust. The
foregoing provisions of this Article 3 to the contrary notwithstanding, no
distribution shall be made (a) if such distribution would violate any contract
or agreement to which the Trust is then a party or any Law, or (b) to the extent
that the Chairman and Divestiture Trustee, upon the advice of counsel,
determines that any amount otherwise distributable should be retained by the
Trust to pay, or to establish a reserve for the payment of, any liability or
obligation of the Trust, whether liquidated, fixed, contingent or otherwise.
SECTION 3.04. Restrictions on Agreements. None of the Co-Trustees shall
enter into any contract or agreement that would prevent or materially restrict
the JV Transfer.
SECTION 3.05. Advisory Committee. (a) Concurrently with the execution
of this Declaration of Trust, the Grantor shall establish an Advisory Committee.
The Advisory Committee shall consist of four members (each, a "Committee
Member"), two of which shall be designated by the Grantor at the direction of
Parent ("Parent Members") and two of which shall be designated by the Grantor
("Texaco Members"). The Person entitled to so designate or direct the
designation of any Committee Member shall have the power to remove, or direct
the removal, as applicable, of such Committee Member, with or without cause. If,
as a result of death, disability, retirement, resignation, removal or otherwise,
there shall exist or occur any vacancy on the Advisory Committee, the Person
entitled under this Section to designate or direct
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the designation of such Committee Member whose death, disability, retirement,
resignation or removal resulted in such vacancy may designate or direct the
designation of another individual to fill such vacancy. Each Committee member
shall be entitled to one vote, and no action shall be taken by the Advisory
Committee without the unanimous approval of the Advisory Committee.
(b) The Advisory Committee shall meet every other week (or at such
times as the Advisory Committee shall otherwise agree) with the Chairman and
Divestiture Trustee. The Chairman and Divestiture Trustee shall keep the
Advisory Committee, the Commission and the States informed of all material
developments relating to the JV Transfers and shall advise the Advisory
Committee, the Commission and the States as to all material issues that may
arise in connection with the JV Transfers, including, without limitation,
strategies for completion of the JV Transfers, issues which may affect the
timing of the JV Transfers or the value of the Net Proceeds, the methods for
executing the JV Transfers and other similar matters.
SECTION 3.06. The Operating Trustees. (a) The Operating Trustees shall
manage the operations of the JV Holdco including the JV Interests. The Operating
Trustees shall not consult with the Advisory Committee but shall consult with
the Chairman and Divestiture Trustee on any issue which may affect the JV
Transfers.
(b) The Operating Trustees shall have sole and exclusive power and
authority to manage TRMI and/or TRMI East (as the case may be), as set forth in
this Declaration of Trust and specifically to cause TRMI and TRMI East
respectively to exercise the rights, duties and obligations of TRMI and TRMI
East under the Equilon and Motiva LLC Agreements. Each Operating Trustee may
engage in any other activity such Operating Trustee may deem reasonably
necessary, advisable, convenient or incidental in connection therewith and shall
exercise such power and authority and carry out the duties and responsibilities
of the Operating Trustee in a manner consistent with the purposes of the Consent
Order and Final Judgment in consultation with the Commission's staff and the
States.
(c) Each Operating Trustee shall have full and complete access to all
personnel, books, records, documents, and facilities of TRMI and/or TRMI East as
needed to fulfill such Operating Trustee's obligations, or to any other relevant
information, as such Operating Trustee may reasonably request, including but not
limited to all documents and records kept in the normal course of business that
relate to Texaco's and Parent's obligations under the Consent Order and Final
Judgment. Texaco and Parent shall develop such financial or other information as
such Operating Trustees may reasonably request and shall cooperate with the
Operating Trustees. Texaco and Parent shall take no action to interfere with or
impede the Operating Trustees' ability to perform their responsibilities.
(d) The Operating Trustees shall serve, without bond or other
security, at the cost and expense of Texaco. Each Operating Trustee shall have
the authority to employ, at the cost and expense of Texaco, such consultants,
accountants, attorneys, and other representatives and assistants as are
reasonably necessary to carry out such Operating Trustee's duties and
responsibilities.
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ARTICLE 4
MANAGEMENT OF THE TRUST
SECTION 4.01. Management Generally. Subject to Section 4.02 and
Article 3, the management of the Trust shall be vested in the Operating Trustees
and, to the extent set forth in Section 4.02(a), in the Chairman and Divestiture
Trustee. Parent, Texaco and the Grantor shall have no part in the management of
the Trust, and shall have no authority or right to act on behalf of the Trust in
connection with any matter (including, without limitation, the JV Holdco, the JV
Interests, or the respective businesses thereof) or to bind the Trust.
SECTION 4.02. Authority of the Co-Trustees. (a) Subject to Section
4.02(c) and Article 3, the Chairman and Divestiture Trustee shall have the power
by itself on behalf and in the name of the Trust to carry out any and all of the
objects and purposes of the Trust set forth in Section 2.04 as the same relate
to the JV Transfers described in Article 3, and to perform all acts and enter
into and perform all contracts and other undertakings which it may deem
necessary, advisable, convenient or incidental thereto (other than those powers
which are reserved for the Operating Trustees pursuant to Section 4.02(b)),
including, without limitation, the power to:
(i) enter into, or cause the JV Holdco to enter into, such
binding agreements in connection with and providing for the JV
Transfers as the Chairman and Divestiture Trustee shall deem
reasonable, consistent with the purpose of this Trust (which
agreements may provide for indemnification);
(ii) employ, retain or otherwise secure, or enter into
contracts, agreements and other undertakings with, Persons in
connection with the JV Transfers including, without limitation, any
financial advisors, attorneys and accountants, all on such terms and
for such consideration as the Chairman and Divestiture Trustee deems
commercially reasonable; provided, however, that any such contracts,
agreements or other undertakings and transactions with the Chairman
and Divestiture Trustee and the Grantor or any of their respective
Affiliates shall be on terms and for consideration which are
arm's-length and fair to the parties consistent with the duties of the
Chairman and Divestiture Trustee as provided herein;
(iii) open, maintain and close accounts with banks and others;
(iv) in connection with the JV Transfers, draw checks or other
orders for the payment of monies, and issue all instructions and
authorizations to entities regarding the purchase and sale or entering
into, as the case may be, of securities, certificates of deposit,
bankers acceptances, instruments and investments for the purpose of
seeking to achieve the Trust's purposes as well as to facilitate
distributions, withdrawals, the payment of Trust expenses and business
and affairs of the Trust in general;
(v) in connection with the JV Transfers, deposit, withdraw,
invest, pay, retain and distribute the Trust's funds or other assets
in a manner consistent with the provisions of this Declaration of
Trust; and
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(vi) authorize any officer, director, employee or other agent of
the Co-Trustees (other than the Delaware Trustee) or any employee or
agent of the Trust to act for and on behalf of the Trust in any or all
of the foregoing matters and all matters incidental thereto.
(b) (i) Subject to Sections 4.02(b)(ii) and 4.02(c) and except as
provided in Article 3, each Operating Trustee shall have the power by itself on
behalf of and in the name of the Trust to carry out all of the objects and
purposes of the Trust set forth in Section 2.04 as the same relate to the
operation of the JV Holdco including the JV Interests and the management and
operation of the Trust's business, and to perform all acts and enter into and
perform all contracts and other undertakings which it may deem necessary,
advisable, convenient or incidental thereto, including without limitation, the
power to:
(A) exercise voting rights, rights to consent to corporate
action and any other rights as owner of the JV Holdco, including those
pertaining to the JV Interests, provided, however that such Operating
Trustee shall have no power to cause TRMI or TRMI East to vote (I) to
authorize Normal Distributions from Equilon in excess of the amount
resulting from the formula prescribed in the second sentence of Section
5.01(f) of the Equilon LLC Agreement or from Motiva in excess of the
formula prescribed in the first sentence of the Section 5.01(f) of the
Motiva LLC Agreement (plus the amount of special distributions already
included in Motiva's business plan in order to compensate the members
for distributions not paid in 1999) or (II) to propose a Sole Financial
Risk Project be undertaken on its behalf in either Equilon or Motiva
(provided, that the Operating Trustee may concur with a Sole Financial
Risk Methodology proposed by the other members of Equilon or Motiva);
(B) employ, retain or otherwise secure, or enter into
contracts, agreements or other undertakings with Persons in connection
with the management and operation of the JV Holdco including the JV
Interests and the management and operation of the Trust's business,
all on such terms and for such consideration as such Operating Trustee
deems commercially reasonable; provided, however, that any such
contracts, agreements or other undertakings and transactions with such
Operating Trustee and the Grantor or any of their respective
Affiliates shall be on terms and for consideration which are
arm's-length and fair to the parties consistent with the duties of
such Operating Trustee as provided herein;
(C) bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the JV Holdco or the Trust;
(D) do any and all acts appropriate as an owner of the JV
Holdco, including with respect to the JV Interests, and exercise all
rights as an owner of the JV Holdco, with respect to their interests in
any property, including, without limitation, the voting of securities,
participation in arrangements with creditors, the institution and
settlement or compromise of suits and administrative proceedings and
other like or similar matters;
(E) perform, or supervise the performance of, the management
and
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administrative services necessary for the operation of the Trust;
(F) draw checks or other orders for the payment of monies, and
issue all instructions and authorizations to entities regarding the
purchase and sale or entering into, as the case may be, of securities,
certificates of deposit, bankers acceptances, instruments and
investments for the purpose of seeking to achieve the Trust's purposes
as well as to facilitate distributions, withdrawals, the payment of
Trust expenses and business and affairs of the Trust in general;
(G) deposit, withdraw, invest, pay, retain and distribute the
Trust's funds or other assets in a manner consistent with the
provisions of this Declaration of Trust;
(H) cause the Trust to carry such indemnification insurance
as such Operating Trustee deems necessary to protect it and any other
individual or entity entitled to indemnification pursuant to Section
4.05;
(I) do any and all acts on behalf of the Trust, and exercise
all rights of the Trust, with respect to its interest in any property,
including, without limitation, the voting of securities, participation
in arrangements with creditors, the institution and settlement or
compromise of suits and administrative proceedings and other like or
similar matters; and
(J) authorize any officer, director, employee or other agent
of the Co-Trustees (other than the Delaware Trustee) or any employee
or agent of the Trust to act for and on behalf of the Trust in any or
all of the foregoing matters and all matters incidental thereto.
(ii) The TRMI Operating Trustee shall manage the operation of TRMI,
and the TRMI East Operating Trustee shall manage the operation of TRMI East. In
each case, the Operating Trustee shall manage the operation of the relevant JV
Holdco in a manner, in the good faith judgment of such Trustee, that ensures the
continuation of Equilon or Motiva, as applicable, as an ongoing, independent,
competitive, viable business engaged in the same businesses as it is presently
engaged, without favoring the interests of Parent, Texaco or any owner of
Equilon or Motiva over the interest of any other owner, and in compliance with
all applicable Laws, the Consent Order and the Final Judgment.
(c) Notwithstanding any provision of this Declaration of Trust, none
of the Co-Trustees shall (i) reorganize the interests owned by the JV Holdco,
contribute the JV Interests to any Person, merge, distribute or otherwise
reorganize and dissolve the JV Holdco, unless such a reorganization is required
to effect a JV Transfer, and in each case, only upon receipt of a legal opinion
that such reorganization does not adversely effect the salability of the JV
Interests, or (ii) amend or agree to amend any of the Equilon Joint Venture
Documents or the Motiva Joint Venture Documents, in each case as those terms are
defined in the LLC Agreements. The Co-Trustees shall act consistently with the
Consent Order and the Final Judgment.
(d) In the event that the Chairman and Divestiture Trustee and/or the
Operating Trustees
14
shall be unable to agree as to whether any particular action or inaction shall
be properly within the powers of the Chairman and Divestiture Trustee or an
Operating Trustee, any Co-Trustee may request the Commission and the States to,
and if so requested the Commission and the States shall, resolve any such
dispute. Resolution by the Commission and the States of any such dispute shall
be conclusive and binding on the Chairman and Divestiture Trustee and the
Operating Trustees.
SECTION 4.03. Reliance by Third Parties. Persons dealing with the
Trust are entitled to rely conclusively upon the certificate of the Chairman and
Divestiture Trustee or an Operating Trustee, as applicable, to the effect that
it is then acting as the Chairman and Divestiture Trustee or Operating Trustee,
as applicable, and upon the power and authority of such Co-Trustee and any
employee or agent of such Co-Trustee or the Trust as herein set forth.
SECTION 4.04. Exculpation. No Covered Person shall be liable to the
Grantor, Parent, Texaco or the Trust for any act or failure to act on behalf of
the Trust, unless such act or failure to act resulted from the gross negligence,
fraud, reckless disregard, willful violation of Law, material and willful
violation of this Declaration of Trust or intentional misconduct of the Covered
Person. Each Covered Person may consult with counsel and accountants in respect
of Trust affairs and shall be fully protected and justified in any action or
inaction which is taken in accordance with the advice or opinion of such counsel
or accountants. In addition, none of the Co-Trustees shall be liable for the
negligence, dishonesty or bad faith of any employee, broker or other
representative selected by such Co-Trustee with reasonable care. Notwithstanding
any of the foregoing to the contrary, the provisions of this Section 4.04 shall
not be construed so as to relieve (or attempt to relieve) any Covered Person of
any liability, to the extent (but only to the extent) that such liability may
not be waived, modified or limited under applicable Law, but shall be construed
so as to effectuate the provisions of this Section 4.04 to the fullest extent
permitted by law.
SECTION 4.05. Indemnification. (a) Texaco shall indemnify and hold
harmless each Covered Person from and against any loss, expense, judgment,
settlement cost, fee and related expenses (including reasonable attorneys' fees
and expenses), costs or damages suffered or sustained by or imposed on a Covered
Person in any way relating to or arising out of this Declaration of Trust, the
Trust or the management or administration of the Trust or in connection with the
business or affairs of the Trust or the activities of such Covered Person on
behalf of the Trust as long as such Covered Person has not acted with gross
negligence, fraud, reckless disregard, or intentional misconduct, or in willful
violation of Law or material and willful violation of this Declaration of Trust.
Texaco shall advance to any Covered Person reasonable attorneys' fees and other
costs and expenses incurred in connection with the defense of any action or
proceeding which arises out of conduct which is the subject of the
indemnification provided hereunder. Each of the Chairman and Divestiture Trustee
and the Operating Trustees hereby agrees and each other Covered Person shall
agree, that in the event such Covered Person receives any such advance, such
Covered Person shall reimburse Texaco for such advance to the extent that it
shall be finally judicially determined that such Covered Person was not entitled
to indemnification under this Section 4.05. The provisions of this Section 4.05
shall survive termination of this Declaration of Trust.
15
(b) Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 4.05 shall not be construed so as to provide for the
indemnification of any Covered Person for any liability to the extent (but only
to the extent) that such indemnification would be in violation of applicable Law
or such liability may not be waived, modified or limited under applicable Law,
but shall be construed so as to effectuate the provisions of this Section 4.05
to the fullest extent permitted by law.
SECTION 4.06. Payment of Costs and Expenses. (a) Texaco shall be
responsible for all legal and accounting fees, costs and other expenses incurred
by the Trust and the Co-Trustees in connection with the initial structuring and
organization of the Trust.
(b) The Operating Trustees shall provide to the Chairman and
Divestiture Trustee, and the Chairman and Divestiture Trustee shall provide to
Texaco, within 10 days following the end of every month, an accounting of any
fees and expenses to be paid or payable by the Trust during that month, together
with supporting documentation, and an estimate of fees and expenses reasonably
likely to be incurred in the following month. In the event the liquid assets of
the Trust then available or which are expected to be available shall be
insufficient to pay such fees and expenses (it being understood that the
Co-Trustees are neither required nor permitted to sell any portion of the JV
Interests in order to obtain cash to pay such expenses), Texaco shall, within 10
days of receipt of a request for funds, contribute to the Trust any amount
necessary to pay such fees and expenses. Except as otherwise provided herein,
all ongoing Trust expenses, including, but not limited to, all
investment-related expenses, including all taxes imposed on or payable by the
Trust and investment expenses (i.e., expenses which the Chairman and Divestiture
Trustee reasonably determines to be directly related to the investment of the
Trust's assets), all fees payable by Texaco to the Co-Trustees, legal expenses,
financial advisory, auditing and tax preparation expenses, mailing expenses,
printing and postage expenses, insurance expenses, external accounting expenses
related to the Trust and its investments and extraordinary expenses (such as
litigation and indemnification of the Co-Trustees) shall be paid by the Trust as
provided in this Section 4.06(b).
SECTION 4.07. Assignability of Interest. The Grantor may not assign,
sell, transfer, pledge, hypothecate or otherwise dispose of any of the Trust
Interests in whole or in part to any Person except that the Grantor may assign
its right to receive any distributions made pursuant to Section 3.02 or 5.02 to
any Person.
SECTION 4.08. Resignation, Removal and Replacement of Co-Trustees.
(a) Any Co-Trustee may resign effective at any time upon 30 days'
prior written notice to the Grantor provided, that the Delaware Trustee's
resignation shall not be effective until a replacement Delaware Trustee
satisfying the requirements of Section 3807 of the Act has been selected and has
accepted its appointment.
(b) If, for any reason, the Chairman and Divestiture Trustee cannot
serve or cannot continue to serve as Chairman and Divestiture Trustee, or fails
to act diligently, the Commission and the States shall select a replacement
Chairman and Divestiture Trustee, subject to the consen
16
of the Grantor, which consent shall not be unreasonably withheld. If the Grantor
has not opposed, in writing, including the reasons for opposing, the selection
of any replacement Chairman and Divestiture Trustee within ten (10) days after
notice by the staff of the Commission and the States to the Grantor of the
identity of any proposed replacement Chairman and Divestiture Trustee, the
Grantor shall be deemed to have consented to the selection of the proposed
replacement Chairman and Divestiture Trustee. The replacement Chairman and
Divestiture Trustee shall be a person with experience and expertise in
acquisitions and divestitures.
(c) If, for any reason, an Operating Trustee cannot serve or cannot
continue to serve in such capacity or fails to act diligently, the Commission
and the States shall select a replacement Operating Trustee, subject to the
consent of the Grantor, which consent shall not be unreasonably withheld. If the
Grantor has not opposed, in writing, including the reasons for opposing, the
selection of any replacement Operating Trustee within ten (10) days after notice
by the staff of the Commission to the Grantor of the identity of any proposed
replacement Operating Trustee, the Grantor shall be deemed to have consented to
the selection of the proposed replacement Operating Trustee. The replacement
Operating Trustee shall be a person with experience and expertise in the
management of businesses of the type engaged in by Equilon and Motiva.
(d) The Grantor may remove the Delaware Trustee. Upon the resignation
or removal of the Delaware Trustee, the Grantor shall select a new Delaware
Trustee and shall notify the Commission and the States of such selection.
ARTICLE 5
DISSOLUTION AND WINDING-UP
SECTION 5.01. Events Causing Dissolution. The Trust shall be dissolved
and its affairs shall be wound up, in the absence of objection from the
Commission and the States after 30 days' notice, only upon the occurrence of any
of the following events:
(a) twenty-four months from the Effective Time, provided, however,
that if the JV Interests have not then been fully divested and all other
purposes of the Consent Order and the Final Judgment have not then been
fulfilled, such date shall be automatically extended for eighteen months and
thereafter for successive periods of eighteen months until such conditions have
been met;
(b) upon the completion of the JV Transfers and the final distribution
of the Net Proceeds, if any;
(c) upon the termination of the Merger Agreement; or
(d) the entry of a decree of judicial dissolution.
17
SECTION 5.02. Winding-up. Upon dissolution of the Trust, the TRMI
Operating Trustee shall carry out the winding up of the Trust's affairs and
shall, within no more than 30 days after completion of a final audit of the
Trust's books and records (which shall be performed within 90 days of such
dissolution):
(a) make distributions, out of Trust assets, in the following manner
and order:
(i) to satisfaction (whether by payment or reasonable
provision therefor) of claims of all creditors of the Trust (other than
the Grantor); and
(ii) to satisfaction (whether by payment or reasonable
provision therefor) of the claims of the Grantor as creditor of the
Trust (and any remaining assets, which shall include any rights to
receive any portion of the purchase price or other payments in respect
of a JV Interest payable following such dissolution, shall thereafter
be distributed to the Grantor); and
(b) distribute, in the event the Trust is dissolved pursuant to
Section 5.01, any remaining assets of the Trust, including, if applicable, the
capital stock of the JV Holdco if such capital stock was not disposed of in
connection with the disposition of the JV Interests, to the Grantor.
SECTION 5.03. Cancellation of Certificate. Notwithstanding anything to
the contrary in this Declaration of Trust, the existence of the Trust as a
separate legal entity shall continue until the cancellation of the Certificate
of Trust in accordance with the Act.
ARTICLE 6
BOOKS AND RECORDS; TAX RETURNS; REPORTS
SECTION 6.01. Books and Records. The books and records of the Trust
shall be maintained at the principal office of the Trust. The Trust may maintain
such other books and records and may provide such financial or other statements
as the TRMI Operating Trustee in its discretion deems advisable.
SECTION 6.02. Accounting; Tax Year. (a) The books and records of the
Trust shall be kept on the accrual basis. To the extent permitted by Law, the
Trust may report its operations for tax purposes in accordance with GAAP. The
taxable year of the Trust shall be the same as that of the Grantor.
(b) The books and records of the Trust shall be audited by Accountants
as of the end of each Fiscal Year, commencing with the first partial Fiscal
Year, of the Trust.
SECTION 6.03. Filing of Tax Returns. The TRMI Operating Trustee shall
prepare and file, or cause the Accountants of the Trust to prepare and file, to
the extent required under Law, information returns for each tax year of the
Trust.
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SECTION 6.04. Reports. (a) The Chairman and Divestiture Trustee shall
report in writing to the Commission, the Grantor and the States thirty (30) days
after the Effective Time and every thirty (30) days thereafter concerning the
Chairman and Divestiture Trustee's efforts to accomplish the requirements of the
Consent Order and the Final Judgment until such time as the divestitures
required by Paragraph II of the Consent Order and Section III of the Final
Judgment have been accomplished and Texaco and Parent have notified the
Commission and the States that the divestitures have been accomplished. Such
reports shall set forth the Chairman and Divestiture Trustee's efforts to effect
the JV Transfers, including (i) a summary of all discussions and negotiations
held with, and the identities of, all interested Persons, and (ii) copies of
offers, counter offers and correspondence concerning a proposed JV Transfer. A
copy of each such report shall also be delivered to the Advisory Committee.
(b) In addition, the Chairman and Divestiture Trustee and the
Operating Trustees shall provide to the Grantor and the Advisory Committee, with
a copy to the Commission and the States, such information (i) with respect to
the financial condition of the JV Interests, and such other information about
the Trust and its activities as Parent or Grantor may require for financial or
tax reporting purposes or to comply with any requirements imposed on Parent or
Grantor under applicable Law, or (ii) as Parent or Grantor may request, but in
the case of clause (ii), only with the approval of the Commission and the
States.
(c) Each Operating Trustee shall report in writing to the Commission
and the States thirty (30) days after the Effective Time and every thirty (30)
days thereafter concerning the performance of his or her duties under the
Consent Order and the Final Judgment and this Declaration of Trust. Each
Operating Trustee shall serve until such time as Texaco and Parent have complied
with their obligation to divest TRMI and/or TRMI East, as applicable, as
required by the Consent Order and the Final Judgment, and Texaco and Parent have
notified the Commission and the States that the divestitures have been
accomplished.
SECTION 6.05. Confidentiality Provisions and Limitations on Access.
The Chairman and Divestiture Trustee and the Operating Trustees may, to the
maximum extent permitted by applicable Law, keep confidential from the Grantor
and the Advisory Committee any information the Chairman and Divestiture Trustee
or an Operating Trustee, as the case may be, reasonably believes the Trust or
such Trustee is required by Law or contract to keep confidential.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01. General. This Declaration of Trust may be executed,
through the use of separate signature pages or in any number of counterparts
with the same effect as if the parties executing such counterparts had all
executed one counterpart.
19
SECTION 7.02. Amendments to this Declaration of Trust. The terms and
provisions of this Declaration of Trust may be modified or amended at any time
and from time to time with the written consent of the Grantor, Parent, the
Operating Trustees and the Chairman and Divestiture Trustee and subject to the
approval of the Commission and the States, insofar as is consistent with the
Laws governing this Declaration of Trust, provided, however, that the rights,
duties, responsibilities and compensation of the Delaware Trustee shall not be
changed without the prior written consent of the Delaware Trustee.
SECTION 7.03. Choice of Law. Notwithstanding the place where this
Declaration of Trust may be executed by any of the parties thereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of Delaware without regard to principles of conflict of laws and,
without limitation thereof, that the Act as now adopted or as may be hereafter
amended shall govern the Business Trust aspects of the Declaration of Trust.
SECTION 7.04. Notices. Each notice relating to this Declaration of
Trust Shall be in writing and delivered in person, by facsimile or by registered
or certified mail and shall be given,
if to the Delaware Trustee, to:
Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890
Facsimile: 302-651-8882
Attention: Corporate Trust Administration
if to the TRMI Operating Trustee, to:
Joe B. Foster
if to the TRMI East Operating Trustee, to:
John C. Linehan
if to the Chairman and Divestiture Trustee, to:
Robert A. Falise
20
if to the Grantor or to Texaco, to:
Texaco Inc.
2000 Westchester Avenue
White Plains, NY 10650
Facsimile: (914) 253-4280
Attention: William M. Wicker
Senior Vice President
if to Parent, to:
Chevron Corporation
575 Market Street
San Francisco, CA 94105
Facsimile: (415) 894-6017
Attention: Harvey D. Hinman, Esq.
Vice President and General
Counsel
if to the Commission, to:
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Facsimile: (202) 326-2655
Attention: Assistant Director Compliance
Division
if to the States, to:
Margaret Spencer
Deputy Attorney General
California Department of Justice
Antitrust Division
300 South Spring Street, Suite 500
Los Angeles, CA 90013
Facsimile: (213) 897-2801
or to such other address or telecopier number as such party may hereafter
specify for the purpose by notice to the other parties.
Unless otherwise specifically provided in this Declaration of Trust, a
notice shall be deemed to have been effectively given when faxed or mailed by
registered or certified mail to the
21
proper address or when delivered in person.
SECTION 7.05. Expenses. Except as expressly provided herein, all costs
and expenses incurred by the parties hereto in connection with this Declaration
of Trust (including the costs and expenses incurred by such party in connection
with the execution hereof) shall be paid by the party incurring such cost or
expense.
SECTION 7.06. Headings. The titles to the Articles and the headings of
the Sections of this Declaration of Trust are for convenience of reference only,
and are not to be considered in constructing the terms and provisions of this
Declaration of Trust.
SECTION 7.07. Construction and Interpretation. This Declaration of
Trust constitutes the entire agreement among the parties hereof with respect to
the subject matter hereof. This Declaration of Trust supersedes any prior
agreements or understanding among the parties and may not be modified or amended
in any manner other than as set forth herein. To the extent there is any
conflict between the provisions of this Declaration of Trust and the provisions
of the Consent Order, the Consent Order shall control. To the extent there is
any conflict between the provisions of this Declaration of Trust and the
provisions of the Final Judgment, the Final Judgment shall control. If any
question should arise with respect to the operation of the Trust, which is not
otherwise specifically provided for in this Declaration of Trust or the Act, or
with respect to the interpretation of this Declaration of Trust, the TRMI
Operating Trustee subject to the approval of the Commission and the States is
hereby authorized to make a final determination with respect to any such
question and to interpret this Declaration of Trust in such a manner as it shall
deem fair and equitable, and its determination and interpretations so made shall
be final and binding on all parties. Whenever possible, the provisions of this
Declaration of Trust shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Declaration of
Trust shall be unenforceable or invalid under said applicable law, such
provision shall be ineffective only to the extent of such unenforceability or
invalidity, and the remaining provisions of this Declaration of Trust shall
continue to be binding and in full force and effect.
SECTION 7.08. Limitation of Co-Trustee's Liability. Except as
expressly set forth in this Declaration of Trust, each Co-Trustee acts solely as
a trustee hereunder and not in its individual capacity, and all Persons having
any claim against any Co-Trustee by reason of the transactions contemplated by
this Declaration of Trust shall look only to the Trust's property for payment or
satisfaction thereof.
SECTION 7.09. Guarantee from Parent. Parent hereby guarantees all
payment obligations of Texaco under this Declaration of Trust arising after the
Effective Time.
SECTION 7.10. Approval by the Commission and the States. Where this
Declaration of Trust grants approval rights to both the Commission and the
States as to any matter, the applicable Co-Trustee shall endeavor to obtain
approvals from both; provided, however, in the event of a disagreement between
the Commission and the States with respect to any such matter, the decision of
the Commission shall control if the States do not act within ten days after the
22
Commission has decided.
23
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first above written.
CHAIRMAN AND
DIVESTITURE TRUSTEE:
ROBERT A. FALISE
---------------------------
Name: Robert A. Falise
TRMI OPERATING TRUSTEE:
JOE B. FOSTER
---------------------------
Name: Joe B. Foster
TRMI EAST OPERATING TRUSTEE:
JOHN C. LINEHAN
----------------------------
Name: John C. Linehan
DELAWARE TRUSTEE:
WILMINGTON TRUST COMPANY,
as trustee and not in its
individual capacity
By:-------------------------
Name:
Title:
GRANTOR:
--------------------------
By:-----------------------------
Name:
Title:
CHEVRON CORPORATION
By:-----------------------------
Name:
Title:
TEXACO INC.
By:--------------------------------
Name:
Title:
Annex I-A
Definition of "Normal Distributions"
------------------------------------
"Normal Distributions" has the meaning set forth in Section 5.01(f) of
the Equilon LLC Agreement or the Motiva LLC Agreement, as the circumstance
requires. Excerpts from the LLC Agreements are set forth below.
* * * * *
Equilon LLC Agreement:
- ----------------------
Excerpts from Equilon LLC Agreement Section 5.01:
(f) The Principal Members shall determine, not less
frequently than quarterly, the amount then available for distribution
to the Members (after making distributions with respect to any Sole
Financial Risk Projects, distributions with respect to any Deepwater
GOM Transportation Systems and Tax Distributions) and the amount that
the Company will distribute to the Members ("Normal Distributions").
Subject to the restrictions in Section 5.01(g), 5.01(h), unless agreed
otherwise by Unanimous Approval, Normal Distributions for a Fiscal
Year should be reflected in the Annual Budget and paid at a level
approximating the greater of (A) 50% of the Company's Net Income
during that Fiscal Year, excluding from Net Income (i) the amount of
any distributions due or made with respect to Sole Financial Risk
Projects, (ii) the amount of any distributions due or made pursuant to
Annex B hereto, and (iii) the amount of Tax Distributions due or made
for such Fiscal Year or (B) during the first twelve months from the
Effective Time, 8% to 10% of the total of the balances in the Members'
equity accounts (excluding any amounts associated with Sole Financial
Risk Projects or Thirdco Transportation Systems), as noted in the
Company's audited financial statements as of December 31 of the
preceding Fiscal Year, and 10% of such total for each year thereafter.
However, it is recognized that the Principal Members may unanimously
agree to cause the Company to make Normal Distributions in amounts
greater or less than described in the preceding sentence in
furtherance of the investment opportunities of the Members and the
prudent management of the Company.
(g) Notwithstanding Section 5.01(f) above, in the event
either Principal Member believes, in its sole discretion, that payment
of a Normal Distribution in an amount calculated pursuant to the
formula set forth in the second sentence of Section 5.01(f) would be
imprudent, and so notifies the other Principal Member in writing (a
"Dividend Reduction Notice"), Normal Distributions thereafter payable
shall be in amounts agreed by Unanimous Approval until such Dividend
Reduction Notice is withdrawn or the Principal Members adopt a new
method of calculating Normal Distributions. Following delivery of a
Dividend Reduction Notice, the Principal Members shall consult in good
faith to adopt a new method of calculating Normal Distributions. At any
time 180 or more days after receipt of a Dividend Reduction Notice, so
long as such
Dividend Reduction Notice remains outstanding, the Principal Member in
receipt of such Dividend Reduction Notice may initiate dissolution
proceedings pursuant to Article 14 by delivering written notice thereof
to the other Principal Member (a "Dividend Deadlock Notice").
(h) Notwithstanding any provision of this Agreement to the
contrary, (i) no distributions shall be made pursuant to this Agreement
except to the extent permitted under the Delaware Act and other
Applicable Laws and (ii) a distribution of cash otherwise required by
Section 5.01, (A) unless otherwise agreed by Unanimous Approval, shall
not be made to the extent that, after giving effect to such
distribution, taking into account the Company's expected cash flow, the
Company would have insufficient financial resources (including amounts
that could be borrowed under the Financing Facilities or any other
credit facility, then existing or which can prudently be put in place,
of the Company) to satisfy its minimum operating requirements, to make
any required payments under the terms of the outstanding Indebtedness
and to make any capital expenditures that it is then legally obligated
to make, and (B) shall be subject to any restrictions then applicable
under the Financing Documents or then. applicable to any other
Indebtedness of the Company or its Subsidiaries incurred in accordance
herewith.
Selected Definitions:1
"Annual Budget" means the Initial Budget, an Approved Annual
Budget or a Default Budget.
"Approved Annual Budget" is defined in Section 6.12(b) of the
LLC Agreement [and generally means a proposed annual budget that
receives Unanimous Approval].
"Default Budget" is defined in Section 6.12(c) of the LLC
Agreement [and generally means a budget, based on a specified formula,
for any fiscal year for which no proposed budget is approved].
"Effective Time" is defined in Section 2.03 of the Master
Agreement [and generally means 12:01 a.m. (New York time) on January 1,
1998].
"Fiscal Year" means each fiscal year referred to in Section
8.01 of the LLC Agreement [and generally means each fiscal year of the
Company ending on December 31 in each year].
"Initial Budget" is defined in Section 6.12(a) of the LLC
Agreement [and generally means the Company's budget for the period from
the Effective Time through the end of the Company's first full Fiscal
Year].
- ----------------------
1 The information appearing in square brackets below is not part of the formal
definition of each term, and is provided only for the convenience of the reader.
"Net Income or Net Loss" means the taxable income or loss of
the Company for federal income tax purposes, determined in accordance
with Section 703(a) of the Code (and for this purpose, all items of
income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable
income or loss), increased by the income and gain exempt from federal
income tax, and decreased by expenditures of the Company described in
Section 705(a)(2)(B) of the Code (including expenditures treated as
described in Section 705(a)(2)(B) of the Code under Regulation Section
1.704-1(b)(2)(iv)(i)); provided, that with respect to property that has
been contributed by a Member or revalued pursuant to Regulation Section
1.704-1(b)(2)(iv)(f), gain or loss and depreciation, depletion,
amortization and cost recovery deductions shall be determined as
computed for "book" purposes in accordance with Regulation Section
1.704-1(b)(2)(iv)(g); provided further, that to the extent an
adjustment to the adjusted basis of any Company asset pursuant to
Section 734(b) of the Code is required, pursuant to Regulation Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
capital accounts as a result of a distribution other than in
liquidation of a Member's interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
such basis) from the disposition of such asset and shall be taken into
account for purposes of computing Net Income or Net Loss. To the extent
consistent with the foregoing, Net Income and Net Loss shall be
determined under the accrual method of accounting and in accordance
with GAAP.
"Tax Distributions" means distributions pursuant to Section
5.01(b) of the LLC Agreement.
"Unanimous Approval" means, with respect to any action or
matter requiring approval of the Principal Members at any time, the
approval, by vote at a meeting or by written consent in accordance with
Article 6 of the LLC Agreement, of all of the Principal Members
eligible to vote on such action or matter pursuant to the terms of the
LLC Agreement.
* * * * *
Motiva LLC Agreement:
- ---------------------
Excerpts from Motiva LLC Agreement Section 5.01:
(f) Subject to the restrictions in Section 5.01(h), the amount which
will be distributed to Members (after making distributions with respect to any
Sole Financial Risk Projects and distributions pursuant to Section 5.0 1(b))
("Normal Distributions") for a Fiscal Year should be reflected in the Annual
Budget and paid. not less frequently than quarterly, at a level approximating
the greater of (i) 50% of the difference between (A) the Company's financial
statement earnings before tax (excluding the impact of asset write downs,
severance and relocation costs and other unusual and out-of-period items, in
each case, associated with start-up of the Company ("Organizational
Extraordinary Items")), as may be modified by Unanimous
Approval to reflect extraordinary items other than Organizational Extraordinary
Items (such sum, "Earnings") during such Fiscal Year and (B) the sum of (1) the
amount of any distributions due or made with respect to Sole Financial Risk
Projects for such Fiscal Year and (2) the amount of Tax Distributions due or
made for such Fiscal Year (such difference, "Earnings Before Normal
Distributions") or (ii) (A) during the first twelve months from the Effective
Time, 8% to 10% (as determined by Majority Approval within such range) of the
total of the balances in the Members' book equity accounts (excluding any
amounts associated with Sole Financial Risk Projects) (the "Equity Balance") as
of the Effective Time and (B) thereafter, 10% of the Equity Balance as reflected
in the Company's audited financial statements as of December 31 for the
immediately preceding Fiscal Year. To the extent that actual Earnings for a
Fiscal Year differs from Earnings set forth in the Annual Budget for the same
Fiscal Year, or to the extent that the actual Equity Balance for such Fiscal
Year differs from the Equity Balance set forth in the Annual Budget for the same
Fiscal Year, and if such differences would change the Normal Distribution
amounts calculated pursuant to the preceding sentence, an adjustment to correct
the Normal Distributions previously paid will be made in the first quarter
Normal Distribution of the following Fiscal Year (or at such earlier date as
agreed by Unanimous Approval) and in subsequent Normal Distributions, as
necessary. It is recognized that the Principal Members may agree by Unanimous
Approval to cause the Company to make Normal Distributions in amounts greater or
less than described in the first sentence of this Section 5.01(f) in furtherance
of the investment opportunities of the Members and the prudent management of the
Company. Notwithstanding any provision of this Agreement to the contrary, to the
extent that Normal Distributions exceed Earnings Before Normal Distributions (in
each case, on a cumulative basis, but excluding from such cumulative Earnings
Before Normal Distributions the results of any Fiscal Year in which Earnings
Before Normal Distributions are less than zero) by an amount greater than 5% (or
such other amount as determined from time to time by Unanimous Approval) of the
sum of (x) the Equity Balance existing as of the Effective Time and (y) all
subsequent capital contributions by the Members (other than contributions
associated with Sole Financial Risk Projects) (such sum, the "Base Equity
Amount"), Unanimous Approval will be required to make such Normal Distributions.
In addition, Unanimous Approval would be required for any Normal Distribution
which would reduce the Equity Balance to any amount below the Base Equity Amount
if, at the time the Normal Distribution was to be paid or after making such
Normal Distribution, the credit rating on the Company's long term indebtedness
was or would be below investment grade or classified at the lowest level of
investment grade with a negative outlook. If such Unanimous Approval is not
obtained in either of the above cases, the CEO shall submit a new Proposed
Budget as soon as possible but in any case, not longer than ninety days after
the Members Committee's vote on such Normal Distribution. In the event such
Proposed Budget fails to receive Unanimous Approval, such failure shall
constitute a persistent inability of the Principal Members to agree on a course
of action with respect to a material matter despite good faith efforts to reach
agreement, which inability has persisted for over 30 days after such inability
first arose, within the meaning of Section 6.10. For each quarter in any Fiscal
Year in which the Company operates pursuant to a Default Budget as a result of
the failure to achieve Unanimous Approval for any Proposed Budget proposed
pursuant to this Section 5.01(f), the Company shall make Normal Distributions in
an aggregate amount equal to the lesser of (A) the sum of (x) one hundred
percent (100%) of the Company's Earnings Before Normal Distributions for the
immediately preceding quarter (which shall in no event be less than zero) plus
(y) for up
to twelve quarters. one-fourth of one percent (0.25%) of the Base Equity Amount
and (B) two and one-half percent (2.5%) of the Equity Balance as noted in the
Company's financial statements for the last day of the immediately preceding
quarter.
(g) Prior to each Normal Distribution which falls subsequent to the end
of the first full Fiscal Year and prior to the calculation, if any, of
provisional Ownership Percentages (or, with regard to the period after the
seventh full Fiscal Year, Final Ownership Percentages) for the Fiscal Year in
which such Normal Distribution is to be made, the Company shall make a good
faith estimate of the Ownership Percentage of each Member to be effective with
respect to distributions made during such Fiscal Year (based on the information
then available), and distributions shall be made to the Members on the basis of
such good faith estimate. In the event that it is subsequently determined that
the Normal Distributions required to be made to such Member for such Fiscal Year
exceed or are less than the Normal Distributions made on the basis of the
Ownership Percentages estimated pursuant to the immediately preceding sentence,
the Company shall make appropriate adjustments to the amount of subsequent
Normal Distributions in order to give effect to the net cumulative amount of
such excess or deficiency, as the case may be. as promptly as possible.
(h) Notwithstanding any provision of this Agreement to the contrary,
(i) no distributions shall be made pursuant to this Agreement except to the
extent permitted under the Delaware Act and other Applicable Laws and (ii) a
distribution of cash otherwise required by Section 5.01, (A) unless otherwise
agreed by Unanimous Approval, shall not be made to the extent that, after giving
effect to such distribution, taking into account the Company's expected cash
flow, the Company would have insufficient financial resources (including amounts
that could be borrowed under the Financing Facilities or any other credit
facility, then existing or which can prudently be put in place, of the Company)
to satisfy its operating requirements, to make any required payments under the
terms of the outstanding Indebtedness and to make any capital expenditures that
it is then legally obligated to make, and (B) shall be subject to any
restrictions then applicable under the Financing Documents or then applicable to
any other Indebtedness of the Company or its Subsidiaries incurred in accordance
herewith.
Selected Definitions:2
"Annual Budget" means the Initial Budget, an Approved Annual
Budget or a Default Budget.
"Approved Annual Budget" is defined in Section 6.12(b) of the
LLC Agreement [and generally means a proposed budget that receives
Unanimous Approval].
"Default Budget" is defined in Section 6.12(c) of the LLC
Agreement [and generally means a budget, based on a specified formula,
for any fiscal year for which no proposed budget is approved].
- -------------------
2 The information appearing in square brackets below is not part of the formal
definition of each term, and is provided only for the convenience of the reader.
"Effective Time" is defined in Section 2.04 of the Master
Agreement [and generally means 12:01 a.m. (New York time) on the
Closing Date].
"Fiscal Year" means each fiscal year referred to in Section
8.01 of the LLC Agreement [and generally means each fiscal year of the
Company ending on December 31 in each year].
"Initial Budget" is defined in Section 6.12(a) of the LLC
Agreement [and generally means the Company's budget for the period from
the Effective Time through the end of 1998].
"Tax Distributions" means distributions pursuant to Section
5.01(b) of the LLC Agreement.
"Unanimous Approval" means, with respect to any action or
matter requiring approval of the Principal Members at any time, the
approval, by vote at a meeting or by written consent in accordance with
Article 6 of the LLC Agreement, of all of the Principal Members
eligible to vote on such action or matter pursuant to the terms of the
LLC Agreement.
Annex I-B
Definition of "Sole Financial Risk Methodology"
-----------------------------------------------
"Sole Financial Risk Methodology" has the meaning set forth in Section
7.01(a) of the Equilon LLC Agreement or the Motiva LLC Agreement, as the
circumstance requires. As set forth in the LLC Agreements, "Sole Financial Risk
Methodology" refers to (A) the manner of determining the cost of making and
operating a Sole Financial Risk Project and (B) a formula and all necessary
related methodology required to apportion future revenues and expenses between a
Sole Financial Risk Project and all other activities of a JV, including any
other Sole Financial Risk Project.
Annex I-C
Definition of "Sole Financial Risk Project"
-------------------------------------------
"Sole Financial Risk Project" has the meaning set forth in Section
7.01(a) of the Equilon LLC Agreement or the Motiva LLC Agreement, as the
circumstance requires. As set forth the LLC Agreements, if a member of a JV
desires that the JV make a capital improvement (above specific investment
levels) but the other member(s) do not approve such improvement or funding
therefor is not available, the member who desires such capital improvement may
direct that the JV make such capital improvement at such member's sole cost and
expense. This is referred to as a "Sole Financial Risk Project" in the LLC
Agreements.
Annex II-A
Sections 12.04 and 12.05 of the Equilon LLC Agreement
-----------------------------------------------------
and
---
Selected Defined Terms
----------------------
SECTION 12.04. Rights to Acquire Interest in Certain Events. (a) In the
event of a Change of Control of any Member (the "Changed Member") or an Event of
Default in respect of any Member (the "Defaulting Member"), the Principal Member
affiliated with the Changed Member or the Defaulting Member, as the case may be,
shall, following such Change of Control or such Event of Default, as the case
may be, promptly notify the Other Principal Member in writing of such event,
setting forth the date and circumstances of the Change of Control and the
identity of the Third Party that has acquired control of the Changed Member or
the circumstances of such Event of Default, as applicable. If the Principal
Member that is, or that is affiliated with, the Changed Member or the Defaulting
Member, as the case may be, fails to give such notice, the Other Principal
Member may give such notice. Promptly after delivery of any such notice by any
Principal Member, or of otherwise ascertaining that such Change of Control or
Event of Default has occurred, the Principal Members shall cause Fair Market
Value of the Company to be determined in accordance with Section 12.05.
(b) Within 30 days following the determination of Fair Market Value of
the Company, the Principal Member that is not affiliated with the Changed Member
or the Defaulting Member, as the case may be, may provide a notice (the
Principal Member providing such notice, a "Triggering Member"), to the Principal
Member that is affiliated with the Changed Member or the Defaulting Member, as
the case may be, indicating its desire to acquire the Ownership Interest of such
Member's Principal Member Group for the Applicable Change Price, and setting
forth the date on which such Triggering Member intends to acquire such Ownership
Interest pursuant to this Section 12.04, which date shall be as soon as
practicable after delivery of the notice delivered by a Triggering Member
pursuant to this Section 12.04(b). If the Triggering Member provides such
notice, it shall have the right to acquire all but not less than all of the
Ownership Interest of the Principal Member Group of the Changed Member or the
Defaulting Member, as the case may be, subject to the provisions of Section
12.04(c), for the Applicable Change Price. As used in this Agreement, the term
"Applicable Change Price" means, with respect to any Principal Member Group's
Ownership Interest, (x) 90% of the Fair Market Value of the Company multiplied
by (y) such Principal Member Group's Ownership Percentage.
(c) Upon the consummation of any purchase and sale pursuant to this
Section 12.04(c), each Member of the Principal Member Group of the Changed
Member or Defaulting Member, as the case may be, shall deliver its Ownership
Interest, free and clear of all Liens (other than any Lien created under the
Financing Documents), together with duly executed written instruments of
transfer with respect thereto, in form and substance reasonably satisfactory to
the purchasing Member, against payment of the Applicable Change Price by wire
transfer, in immediately available funds, to the bank account of the Principal
Member that is or is affiliated
with the Changed Member or Defaulting Member designated for such purpose at
least two Business Days prior to the date of such purchase and sale; provided
that certain Intellectual Property licenses granted by the Principal Member that
is or is affiliated with the Changed Member or the Defaulting Member, as the
case may be, shall terminate in accordance with the Shell Intellectual Property
Agreements or the Texaco Intellectual Property Agreements, as the case may be.
SECTION 12.05. Valuation Procedures. (a) Promptly following delivery of
any notice pursuant to Section 12.04(a), the Principal Members will seek to
agree on the Fair Market Value of the Company.
(b) If the Principal Members cannot agree on the Fair Market Value
within 30 days of delivery of such notice, the Triggering Member will select an
independent investment banking firm of recognized international standing (an "IB
Firm") (the "First Appraiser") and the Other Principal Member will select an IB
Firm (the "Second Appraiser" and, together with the First Appraiser, the
"Appraisers") to determine the Fair Market Value of the Company. The fees and
expenses of each Appraiser will be borne by each of the Principal Members that
have retained such Appraiser.
(c) Within 45 days of the date of selection of the Appraisers, each of
the First Appraiser and the Second Appraiser will determine the Fair Market
Value and will notify the Principal Members in writing of such determination
(specifying the Fair Market Value as determined by such Appraiser and setting
forth, in reasonable detail, the basis for such determination). If the Fair
Market Value as determined by one Appraiser is not more than 110% of the Fair
Market Value as determined by the other Appraiser, the Fair Market Value of the
Company will be the average of the two amounts. In all other cases, the
Appraisers will jointly select a third IB Firm (the "Third Appraiser"). The fees
and expenses of the Third Appraiser will be borne by the Principal Members
equally.
(d) The Third Appraiser will, within 45 days of its retention,
determine its view of the Fair Market Value, and the Fair Market Value will
thereupon be the average of (i) the Fair Market Value as determined by the Third
Appraiser and (ii) whichever of the Fair Market Values as determined by the
First Appraiser and the Second Appraiser is closer to the Fair Market Value as
determined by the Third Appraiser; provided that if Fair Market Values as
determined by the First Appraiser and the Second Appraiser differ by the same
amount from the Third Appraiser's determination of Fair Market Value, the Fair
Market Value will be as determined by the Third Appraiser. The determination of
Fair Market Value in accordance with this Section 12.05 will be final, binding
and conclusive upon the Members.
(e) Each Principal Member will share with the Other Principal Member
any written information it provides to the Third Appraiser and will not
communicate other than in writing with the Third Appraiser without giving the
Other Principal Member an opportunity to be present at any such communication.
* * * * *
Selected Defined Terms:
"Beneficial Ownership" shall have the meaning set forth in Rule 13D
under the Exchange Act.
"Change of Control" with respect to a Member means the occurrence of
any of the following at any time after the date hereof:
(i) in the case of a Member that is a Shell Group Entity, (A)
Shell shall cease to Beneficially Own, directly or indirectly through
Subsidiaries, at least 75% of the Voting Securities of any such Member
(other than itself), (B) the shareholders of such Member shall approve
a consolidation, merger or any other corporate reorganization of such
Member that would cause the situation described in clause (A) to occur,
(C) a Royal Dutch/Shell Group Entity shall cease to Beneficially Own,
directly or indirectly through Subsidiaries, at least 70% of the Voting
Securities of Shell or (D) the Board of Directors of Shell shall
approve the sale of all or substantially all the assets of Shell to any
Third Party or Third Parties in a transaction or a series of related
transactions; and
(ii) in the case of a Member that is a Texaco Group Entity,
(A) Texaco shall cease to Beneficially Own, directly or indirectly
through Subsidiaries, at least 75% of the Voting Securities of any such
Member (other than itself), (B) the shareholders of such Member shall
approve a consolidation, merger or any other corporate reorganization
of such Member that would cause the situation described in clause (A)
to occur, (C) any Person or "Group" (within the meaning of Rule 13D
under the Exchange Act) of Persons shall have become the Beneficial
Owner of more than 30% of the then outstanding Voting Securities of
Texaco, (D) Texaco's shareholders shall approve any consolidation,
merger, business combination or any other transaction or series of
transactions as a result of which the Persons having the Beneficial
Ownership of the Voting Securities of Texaco immediately prior to any
such transaction or series of transactions would, upon the consummation
of such transaction, own less than 70% of the Voting Securities of the
entity surviving the consummation of such transaction or series of
transactions, (E) a majority of the Board of Directors of Texaco shall
consist at such time of individuals other than (1) members of the Board
of Directors of Texaco on the date hereof and (2) other members of such
Board of Directors recommended, elected or approved to succeed or
become a director of such Person by a majority of such members referred
to in clause (1) or by members so recommended, elected or approved, or
(F) the Board of Directors of Texaco shall approve the sale of all or
substantially all the assets of Texaco to any Third Party or Third
Parties in a transaction or a series of related transactions.
"Fair Market Value" means, as of any determination time, (i) with
respect to the Company as a whole, the price at which a willing seller under no
compulsion to sell would sell, and a willing buyer under no compulsion to
purchase would purchase, 100% of the Ownership Interests in the Company (subject
to all Indebtedness, liabilities and other obligations of the Company
outstanding at such time), (ii) with respect to the Ownership Interest of any
Member,
the product of (x) the Fair Market Value of the Company at such time, determined
in accordance with clause (i) above, and (y) the Ownership Percentage in the
Company represented by the Ownership Interest being valued and (iii) with
respect to any other asset, Contract, property or security, the price at which a
willing seller under no compulsion to sell would sell, and a willing buyer under
no compulsion to purchase would purchase, such asset, Contract, property or
security. Notwithstanding the foregoing, costs of re-branding are to be excluded
in determining the Fair Market Value of the Company.
"Member" means each Person that becomes a member of the Company as of
the Effective Time as provided in Section 3.01 of the LLC Agreement, and each
Person that is admitted as a member of the Company after the date thereof in
accordance with Article 12 of the LLC Agreement, in each case in such Person's
capacity as a member of the Company.
"Ownership Interest" means, with respect to any Member, such Member's
limited liability company interest in the Company.
"Texaco Group" means, at any time, TRMI, TRMI Holdings, Texaco
Pipeline, Texaco Trading, Texaco Convent, Texaco Anacortes and each Subsidiary
of Texaco of which Texaco, directly or indirectly through Subsidiaries,
Beneficially Owns at least 75% of the outstanding Voting Securities at such
time.
"Texaco Group Entity" means, at any time, a Person included in the
Texaco Group at such time.
"Transfer" means any sale, transfer, exchange, pledge, hypothecation,
or other disposition, by operation of Applicable Law or otherwise.
"Voting Securities" means, with respect to any Person at any time,
securities or other Ownership Interests the holders of which are at such time
entitled to vote for the election of directors or other persons performing
similar functions.
Annex II-B
Sections 12.04 and 12.05 of the Motiva LLC Agreement
----------------------------------------------------
and
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Selected Defined Terms
----------------------
SECTION 12.04. Rights to Acquire Interest in Certain Events. (a) In the
event of a Change of Control of any Member (the "Changed Member") or an Event of
Default in respect of any Member (the "Defaulting Member"), the Principal Member
affiliated with the Changed Member or the Defaulting Member, as the case may be,
shall, following such Change of Control or such Event of Default, as the case
may be, promptly notify each of the Other Principal Members in writing of such
event, setting forth the date and circumstances of the Change of Control and the
identity of the Third Party that has acquired control of the Changed Member or
the circumstances of such Event of Default, as applicable. If the Principal
Member that is, or that is affiliated with, the Changed Member or the Defaulting
Member, as the case may be, fails to give such notice, either of the Other
Principal Members may give such notice. Promptly after delivery of any such
notice by any Principal Member, or of otherwise ascertaining that such Change of
Control or Event of Default has occurred, the Principal Members shall cause Fair
Market Value of the Company to be determined in accordance with Section 12.05.
(b) Within 30 days following the determination of Fair Market Value of
the Company, either or both of the Principal Members that is not affiliated with
the Changed Member or the Defaulting Member, as the case may be, may provide a
notice (each of Principal Members providing such notice, a "Triggering Member"),
to the Principal Member that is affiliated with the Changed Member or the
Defaulting Member, as the case may be, indicating its desire to acquire the
Ownership Interest of such Member's Principal Member Group for the Applicable
Change Price, and setting forth the date on which such Triggering Member intends
to acquire such Ownership Interest pursuant to this Section 12.04, which date
shall be as soon as practicable after delivery of the notice delivered by a
Triggering Member pursuant to this Section 12.04(b). If both of the Other
Principal Members are Triggering Members, they shall have the right to acquire
all but not less than all of the Ownership Interest of the Principal Member
Group of the Changed Member or the Defaulting Member, as the case may be,
subject to the provisions of Section 12.04(c), pro rata based on the Ownership
Percentages of the Triggering Members at such time (unless the Triggering
Members shall agree to a different allocation) for the Applicable Change Price.
If only one of the Triggering Members provides such notice, it shall have the
right to acquire all but not less than all of the Ownership Interest of the
Principal Member Group of the Changed Member or the Defaulting Member, as the
case may be, subject to the provisions of Section 12.04(c), for the Applicable
Change Price. As used in this Agreement, the term "Applicable Change Price"
means, with respect to any Principal Member Group's Ownership Interest, (x) 90%
of the Fair Market Value of the Company multiplied by (v) such Principal Member
Group's Ownership Percentage.
(c) Upon the consummation of any purchase and sale pursuant to this
Section 12.04(c), each Member of the Principal Member Group of the Changed
Member or Defaulting Member, as the case may be, shall deliver its Ownership
Interest, free and clear of all Liens (other than any Lien created under the
Financing Documents), together with duly executed written instruments of
transfer with respect thereto, in form and substance reasonably satisfactory to
the purchasing Member or Members, against payment of the Applicable Change Price
by wire transfer, in immediately available funds, to the bank account of the
Principal Member that is or is affiliated with the Changed Member or Defaulting
Member designated for such purpose at least two Business Days prior to the date
of such purchase and sale; provided that certain Intellectual Property licenses
granted by the Principal Member that is or is affiliated with the Changed Member
or the Defaulting Member, as the case may be, shall terminate in accordance with
the Shell Intellectual Property Agreements or the Texaco Intellectual Property
Agreements, as the case may be.
SECTION 12.05. Valuation Procedures. (a) Promptly following delivery of
any notice pursuant to Section 12.04(a), the Principal Members will seek to
agree on the Fair Market Value of the Company.
(b) If the Principal Members cannot agree on the Fair Market Value
within 30 days of delivery of such notice, the Triggering Member or the
Triggering Members will select an independent investment banking firm of
recognized international standing (an "IB Firm") (the "First Appraiser") and the
Principal Member that is or is Affiliated with the Defaulting Member or Changed
Member, as the case may be, will select an IB Firm (the "Second Appraiser" and,
together with the First Appraiser, the "Appraisers") to determine the Fair
Market Value of the Company. The fees and expenses of each Appraiser will be
borne by each of the Principal Members that have retained such Appraiser.
(c) Within 45 days of the date of selection of the Appraisers, each of
the First Appraiser and the Second Appraiser will determine the Fair Market
Value and will notify the Principal Members in writing of such determination
(specifying the Fair Market Value as determined by such Appraiser and setting
forth, in reasonable detail, the basis for such determination). If the Fair
Market Value as determined by one Appraiser is not more than 110% of the Fair
Market Value as determined by the other Appraiser, the Fair Market Value of the
Company will be the average of the two amounts. In all other cases, the
Appraisers will jointly select a third IB Firm (the "Third Appraiser"). The fees
and expenses of the Third Appraiser will be borne by the Triggering Member(s)
and the Principal Member that is or is Affiliated with the Defaulting Member or
the Changed Member, as the case may be, pro rata in accordance with their
Principal Member Group's respective Ownership Percentages.
(d) The Third Appraiser will, within 45 days of its retention,
determine its view of the Fair Market Value, and the Fair Market Value will
thereupon be the average of (i) the Fair Market Value as determined by the Third
Appraiser and (ii) whichever of the Fair Market Values as determined by the
First Appraiser and the Second Appraiser is closer to the Fair Market Value as
determined by the Third Appraiser; provided that if Fair Market Values as
determined by the First Appraiser and the Second Appraiser differ by the same
amount from the Third Appraiser's
determination of Fair Market Value, the Fair Market Value will be as determined
by the Third Appraiser. The determination of Fair Market Value in accordance
with this Section 12.05 will be final, binding and conclusive upon the Members.
(e) Each Member will share with the Other Principal Members any written
information it provides to the Third Appraiser and will not communicate other
than in writing with the Third Appraiser without giving the Other Principal
Members an opportunity to be present at any such communication.
* * * * *
Selected Defined Terms:
"Beneficial Ownership" shall have the meaning set forth in Rule 13D
under the Exchange Act.
"Change of Control" with respect to a Member means the occurrence of
any of the following at any time after the date hereof:
(i) in the case of a Member that is a Shell Group Entity,
(A) Shell shall cease to Beneficially Own, directly
or indirectly through Subsidiaries, at least 75% of
the Voting Securities of any such Member (other than
itself), (B) the shareholders of such Member shall
approve a consolidation, merger or any other
corporate reorganization of such Member that would
cause the situation described in clause (A) to occur,
(C) a Royal Dutch/Shell Group Entity shall cease to
Beneficially Own, directly or indirectly through
Subsidiaries, at least 70% of the Voting Securities
of Shell or (D) the Board of Directors of Shell shall
approve the sale of all or substantially all the
assets of Shell to any Third Party or Third Parties
in a transaction or a series of related transactions;
(ii) in the case of a Member that is an SRI Group Entity,
(A) SRI shall cease to Beneficially Own, directly or
indirectly through Subsidiaries, at least 75% of the
Voting Securities of any such Member (other than
itself), (B) the shareholders of such Member shall
approve a consolidation, merger or any other
corporate reorganization of such Member that would
cause the situation described in clause (A) to occur,
(C) Saudi Aramco shall cease to Beneficially Own,
directly or indirectly through Subsidiaries, at least
70% of the Voting Securities of SRI or (D) the Board
of Directors of Saudi Aramco shall approve the sale
of all or substantially all the assets of SRI to any
Third Party or Third Parties in a transaction or a
series of related transaction;
(iii) in the case of a Member that is a Texaco Group
Entity, (A) Texaco shall cease to Beneficially Own,
directly or indirectly through Subsidiaries, at least
75% of the Voting Securities of any such Member
(other than itself),
(B) the shareholders of such Member shall approve a
consolidation, merger or any other corporate
reorganization of such Member that would cause the
situation described in clause (A) to occur, (C) any
Person or "Group" (within the meaning of Rule 13D
under the Exchange Act) of Persons shall have become
the Beneficial Owner of more than 30% of the then
outstanding Voting Securities of Texaco, (D) Texaco's
shareholders shall approve any consolidation, merger,
business combination or any other transaction or
series of transactions as a result of which the
Persons having the Beneficial Ownership of the Voting
Securities of Texaco immediately prior to any such
transaction or series of transactions would, upon the
consummation of such transaction, own less than 70%
of the Voting Securities of the entity surviving the
consummation of such transaction or series of
transactions, (E) a majority of the Board of
Directors of Texaco shall consist at such time of
individuals other than (1) members of the Board of
Directors of Texaco on the date hereof and (2) other
members of such Board of Directors recommended,
elected or approved to succeed or become a director
of such Person by a majority of such members referred
to in clause (1) or by members so recommended,
elected or approved, or (F) the Board of Directors of
Texaco shall approve the sale of all or substantially
all the assets of Texaco to any Third Party or Third
Parties in a transaction or a series of related
transactions.
"Fair Market Value" means, as of any determination time, (i) with
respect to the Company as a whole, the price at which a willing seller under no
compulsion to sell would sell, and a willing buyer under no compulsion to
purchase would purchase, 100% of the Ownership Interests in the Company (subject
to all Indebtedness, liabilities and other obligations of the Company
outstanding at such time), (ii) with respect to the Ownership Interest of any
Member, the product of (x) the Fair Market Value of the Company at such time,
determined in accordance with clause (i) above, and (y) the Ownership Percentage
in the Company represented by the Ownership Interest being valued and (iii) with
respect to any other asset, Contract, property or security, the price at which a
willing seller under no compulsion to sell would sell, and a willing buyer under
no compulsion to purchase would purchase, such asset, Contract, property or
security. Notwithstanding the foregoing, costs of re-branding are to be excluded
in determining the Fair Market Value of the Company.
"Member" means each Person that becomes a member of the Company as of
the Effective Time as provided in Section 3.01 of the LLC Agreement, and each
Person that is admitted as a member of the Company after the date thereof in
accordance with Article 12 of the LLC Agreement, in each case in such Person's
capacity as a member of the Company.
"Ownership Interest" means, with respect to any Member, such Member's
limited liability company interest in the Company.
"Texaco Group" means, at any time, TRMI (East) and each Subsidiary of
Texaco of which Texaco, directly or indirectly through Subsidiaries,
Beneficially Owns at least 75% of the outstanding Voting Securities at such
time.
"Texaco Group Entity" means, at any time, a Person included in the
Texaco Group at such time.
"Transfer" means any sale, transfer, exchange, pledge, hypothecation,
or other disposition, by operation of Applicable Law or otherwise.
"Voting Securities" means, with respect to any Person at any time,
securities or other Ownership Interests the holders of which are at such time
entitled to vote for the election of directors or other persons performing
similar functions.