EXHIBIT 99.3
BILL LOCKYER
Attorney General of the State of California
PETER SIGGINS
Chief Deputy Attorney General
RICHARD M. FRANK
Chief Assistant Attorney General
KATHLEEN FOOTE
Acting Assistant Attorney General
BARBARA M. MOTZ
Supervising Deputy Attorney General
MARGARET E. SPENCER, CBA#62870
Deputy Attorney General
QUYEN NGUYEN, CBA#195429
Deputy Attorney General
300 South Spring Street
Los Angeles, CA 90013
Telephone: (213)897-2685
Fax: (213)897-2801
Attorneys for Plaintiff State of California, and Appearing as
Local Counsel for Plaintiffs
(See Signature page for other parties)
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
- ----------------------------------------------------------)
)
STATE OF CALIFORNIA, et al., ) CASE NO.
)
Plaintiffs, ) FINAL JUDGMENT
)
v. )
)
CHEVRON CORPORATION, a Delaware )
corporation and TEXACO INC., a Delaware )
corporation, )
)
Defendants. )
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The State attorneys general of Alaska, Arizona, California, Florida,
Hawaii, Idaho, Nevada, New Mexico, Texas, Oregon, Utah and Washington ("the
States") initiated an investigation of the proposed merger (the "Merger") of
Defendants Chevron Corporation ("Chevron") and Texaco Inc. ("Texaco").
Defendants were furnished with copies of the Complaint that the States
intend to file in this matter alleging violations of Section 7 of the Clayton
Act, as amended, 15 U.S.C. ss. 18, and the
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antitrust and unfair competition laws in several of the States. Defendants have
waived service of summons.
Defendants agree that the Court has jurisdiction over this matter as set
forth in the aforesaid Complaint, consent to entry of this Final Judgment
without trial or adjudication of any issue of fact or law alleged in the
Complaint, have waived notice or presentation of this Final Judgment, and
represent that they can and will fulfill their obligations set forth in this
Final Judgment. As such, Defendants agree to be bound by the provisions of this
Final Judgment and that there is no just reason for delay in its entry.
Entry of this Final Judgment does not constitute evidence against or an
admission by Defendants 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.
Prompt and certain divestiture of assets and interests is the essence of
this Final Judgment. The States intend to require Defendants to divest or assign
certain assets and interests so as to ensure, to the sole satisfaction of the
States and the Federal Trade Commission, that the assets will be maintained as
competitive, viable, and ongoing.
The Court hereby issues the following findings:
I. JURISDICTIONAL FINDINGS
--------------------------
The Court has jurisdiction over the subject matter of this action and over
each of the parties hereto. The Complaint states claims upon which relief may be
granted against Defendants under Section 7 of the Clayton Act, as amended (15
U.S.C.ss.18) and under the antitrust and unfair competition laws alleged in the
aforesaid Complaint. The state Attorneys General have authority to bring this
action pursuant to Section 16 of the Clayton Act, 15 U.S.C.ss. 26, and Ariz.
Rev. Stat.ss.44-1407, Fla. Stat.ss.ss.542.22(2) and 542.27(2), Haw. Rev.
Stat.ss.480-20, Idaho Codess.48-106, N.M. Stat. Ann.ss.57-1-3, Or. Rev.
Stat.ss.ss.646.730, 646.760, 646.770 and 646.775, Tex. Bus. & Com.
Codess.ss.15.20 (b) and 15.26, Utah Code Ann.ss.ss.76-10-916(3) and
76-10-919(3), and Wash. Rev. Codess. 19.86.080.
//
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Defendant 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. Chevron conducts business in the Central District of California.
Defendant 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. Texaco conducts business in the Central District of California.
Defendants conduct business in the states of Alaska, Arizona, California,
Florida, Hawaii, Idaho, Nevada, New Mexico, Texas, Oregon, Utah, and Washington.
ORDER
The Court hereby ORDERS:
II. DEFINITIONS
---------------
The following definitions shall apply to this Final Judgment:
1. "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.
2. "Aviation Fuel" means Aviation Gasoline and Jet Fuel.
3. "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 A to
this Final Judgment. 4. "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.
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5. "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.
6. "Change of Control Provisions" means "Change of Control Provisions"
as defined in Section 12.04 of the Equilon LLC Agreement or the
Motiva LLC Agreement.
7. "Commission" means the Federal Trade Commission.
8. "Compliance Action" means any action by the states to remedy any
violation of the Final Judgment taken pursuant to section XIV of
this Final Judgment.
9. "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.
10. "Disclose" means to convey by any means or otherwise make available
information to any person or persons.
11. "Defendants" means Chevron and Texaco, individually and
collectively, and the successor corporation.
12. "Divestiture Trustee" means a trustee appointed pursuant to Section
IV of this Final Judgment with the obligation to divest TRMI and
TRMI East pursuant to this Final Judgment.
13. "Equilon" means Equilon Enterprises LLC., a joint venture formed
pursuant to the Equilon LLC Agreement.
14. "Equilon Interest" means all of the limited liability company
interest in Equilon owned directly or indirectly by Texaco,
including the interest owned by TRMI and its wholly owned
subsidiary, Texaco Convent Refining Inc.
15. "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.
//
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16. "Equiva" means Equiva Trading Company, a general partnership serving
as the trading unit for Equilon and Motiva.
17. "Non-urban Area" means, if Defendants enter into a Texaco Branded
Relationship in the States with a retail gasoline outlet that is
located outside of all cities and towns, as recognized by the U.S.
Census Bureau, an area that is within five miles in every direction
of such outlet.
18. "Fixed Base Operators" or "FBOs" means business establishments that
sell aviation gasoline to consumers at airports.
19. "Gasoline" means various grades of refined motor fuel products
commonly sold at retail sites as fuel for motor vehicles.
20. "General Aviation Business Agreements" means all Supply Agreements,
Terminal Throughput Agreements, Transportation Agreements, 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.
21. "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.
22. "JV Agreements" means the Equilon LLC Agreement and the Motiva LL
Agreement.
23. "Kern" means Kern Oil & Refining Company, with offices located at
180 East Ocean Blvd., Suite 1010, Long Beach, California 90802, and
any of its successors or assigns that continue the operation of
Kern's oil refinery near Bakersfield in the San Joaquin Valley of
California.
24. "Marketing Agreements" means all agreements or contracts between
Defendants and any other Person relating to such Person's right or
obligation to sell, resell or distribute Aviation Fuel under the
Texaco brand.
//
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25. "Members Committees" means the "Members Committee" as defined in
Section 6.03 of each of the Equilon LLC Agreement and the Motiva LLC
Agreement.
26. "Merger" means any merger between Defendants including the proposed
merger contemplated by the Agreement and Plan of Merger dated
October 15, 2000, among Defendants and Keepep, Inc.
27. "Merger Date" means the date on which the merger is consummated.
28. "MSA" means a Metropolitan Statistical Area (MSA) as defined by the
United States Office of Management and Budget, and applied by the
United States Census Bureau.
29. "Motiva" means Motiva Enterprises LLC, a joint venture formed
pursuant to the Motiva LLC Agreement.
30. "Motiva Interest" means all of the limited liability company
interest in Motiva owned directly or indirectly by Texaco, including
the interest owned by TRMI East.
31. "Motiva LLC Agreement" means the Limited Liability Company Agreement
dated July 1, 1998 among Shell, Shell Norco Refining Company, SRI,
and TRMI East.
32. "Operating Trustee" means each trustee appointed pursuant to Section
IV of this Final Judgment with the obligation to manage TRMI and
TRMI East pursuant to this Final Judgment.
33. "Overlap State" means each of the following states: Alabama, Alaska,
Arizona, California, Florida, Georgia, Idaho, Louisiana,
Mississippi, Nevada, Oregon, Tennessee, Utah, and Washington.
34. "Person" means any individual, corporation, partnership, trust,
limited liability company, unincorporated organization or
association, or other entity.
35. "San Joaquin Refining" means San Joaquin Refining Company, Inc.,
with offices located at 3129 Standard Street, Bakersfield,
California 93388, and any of its successors or assigns that continue
the operation of San Joaquin Refining Company, Inc.'s oil refinery
near Bakersfield in the San Joaquin Valley of California.
36. "Section of the States" means a city or town located in one of the
States based on the United States Census Bureau's recognition of
such city or town for purposes of the
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year 2000 census or, in the case of a retail gasoline outlet covered
by a Texaco Branded Relationship that is not located in any such
city or town, the Non-urban Area.
37. "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.
38. "SRI" means Saudi Refining, Inc., a Delaware corporation, with its
principal place of business located at 9009 West Loop South,
Houston, Texas 77210, its parents, and its subsidiaries controlled
by SRI.
39. "States" means the states of Alaska, Arizona, California, Florida,
Hawaii, Idaho, Nevada, New Mexico, Texas, Oregon, Utah, and
Washington. Provided, however, that "state", "states", or "state(s)"
shall mean one or more of the States.
40. "Substitute Aviation Fuel Divestiture Agreement" means an agreement,
other than the Aviation Fuel Divestiture Agreement, approved by the
States, for the divestiture of Texaco's Domestic General Aviation
Business Assets to an acquirer approved by the States.
41. "Supply Agreements" means all agreements or contracts between Texaco
and any other Person relating to an obligation to sell or supply
Aviation Fuel to Texaco, including but not limited to supply
agreements and exchange agreements.
42. "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.
43. "Terminal Throughput Agreements" means all agreements or contracts
between Texaco and any other Person relating to Texaco's right to
use or have another Person use any tanks, equipment, pipelines,
trucks, or other services or facilities at a Terminal.
44. "Texaco" means Texaco Inc., a Delaware corporation with its
principal place of business in White Plains, New York, its
directors, officers, employees, agents, representatives,
predecessors, successors, and assigns; its joint ventures,
subsidiaries,
//
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divisions, groups, and affiliates controlled by Texaco, and the
respective directors, officers, employees, agents, representatives,
successors, and assigns of each.
45. "Texaco Branded Relationship" means any agreement with Defendants
either (1) for the sale of Texaco branded gasoline to a retail
outlet in the States that had been supplied gasoline under the
Texaco brand by Equilon or Motiva (by direct supply or by
jobber-supply) within one year of the formation of such Relationship
and was branded Texaco as of the date this Final Judgment is
executed by Defendants, (2) for the sale of Texaco branded gasoline
by Defendants to such retail outlet within such one-year time
period, or (3) for the approval by Defendants of the branding of
such retail outlet under the Texaco brand or under any brand that
contains the Texaco brand within such one-year time period.
46. "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 Overlap States), including but not limited to fixed base
operators, airport dealers, distributors, jobbers, resellers,
brokers, corporate accounts, or consumers.
47. "Texaco's Domestic General Aviation Business Assets" means all
assets, tangible or intangible, relating to Texaco's 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.
48. "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 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.
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49. "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.
50. "Transportation Agreements" means all agreements or contracts
between Texaco and any other Person relating to the transportation
of Aviation Fuel.
51. "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 limited liability
company interest in Equilon.
52. "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 limited liability company interest in Motiva.
53. "Trust" means the trust established by the Trust Agreement.
54. "Trust Agreement" means the Agreement and Declaration of Trust
approved by the States and attached hereto and made part hereof as
Appendix B to this Final Judgment.
III. DIVESTITURE
----------------
55. Defendants shall divest:
a. Either (1) the Equilon Interest to Shell no later than the
Merger Date, in a manner that receives the prior approval of
the States, or (2) no later than eight (8) months after the
Merger Date, in a manner that receives prior approval of the
States, 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 receives the prior approval of the
States; AND
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b. Either (1) the Motiva Interest to Shell and/or SRI no later
than the Merger Date, in a manner that receives the prior
approval of the States, or (2) no later than eight (8) months
after the Merger Date in a manner that receives prior approval
of the States, 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 receives the
prior approval of the States.
Such divestitures shall be accomplished by Defendants prior to or on
the Merger Date or, after the Merger Date by the Divestiture Trustee
pursuant to the provisions of Section IV of this Final Judgment or
as otherwise approved by the States.
56. Defendants shall not consummate the Merger unless and until
Texaco:
a. has either (1) divested the Equilon Interest pursuant to
Section III, Paragraph 55(a)(1) of this Final Judgment, or (2)
transferred TRMI to the Trust pursuant to Section IV of this
Final Judgment;
AND
b. has either (1) divested the Motiva Interest pursuant to
Section III, Paragraph 55(b)(1) of this Final Judgment, or (2)
transferred TRMI East to the Trust pursuant to Section IV of
this Final Judgment;
provided, however, that if Texaco has triggered the Change of
Control Provisions pursuant to either or both of the JV Agreements
no later than the Merger Date, then the transfer by Defendants 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 either 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 Section IV of this Final
Judgment.
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57. If the Trust is rescinded, unwound, dissolved, or otherwise
terminated at any time after the Merger but before Defendants have
complied with Section III of this Final Judgment, then Defendants
shall immediately upon such rescission, unwinding, dissolution, or
termination, hold TRMI and TRMI East separate and apart from
Defendants pursuant to the Order to Hold Separate attached hereto as
Appendix C.
58. 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 Defendants that has
been approved by the States, and to remedy the lessening of
competition resulting from the Merger as alleged in the States
Complaint.
IV. TRUST AND TRUST AGREEMENT
-----------------------------
If Defendants have not divested the Equilon Interest to Shell and/or the
Motiva Interest to Shell and/or SRI pursuant to the requirements of Section III
of this Final Judgment on or before the Merger Date:
59. Texaco shall, on or before the Merger Date: (a) enter into the Trust
Agreement, and (b) transfer or
cause to be transferred (1) TRMI to the Trust if the Equilon
Interest has not been divested to Shell, and/or (2) 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 Committees of Equilon and
Motiva.
60. Defendants shall agree to the appointment of Robert A. Falise as
Divestiture Trustee and enter into the Trust Agreement no later than
the Merger Date.
a. 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 Section III of this
Final Judgment and subject to the prior approval of the
States. After such transfer, the Divestiture
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Trustee shall have the sole and exclusive power and authority
to divest such assets or interests, subject to the prior
approval of the States, 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 Final Judgment in
consultation with the States, the Commission, and the
Commission's staff.
b. The Divestiture Trustee shall have eight (8) months from the
Merger Date to accomplish the divestitures required by Section
III of this Final Judgment, which shall be subject to the
prior approval of the States. 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 States. An extension
of time by the States under this subparagraph shall not
preclude the States from seeking relief available to them for
any failure by Defendants to divest the Equilon Interest or
TRMI and/or the Motiva Interest or TRMI East consistent with
the requirements of Section III of this Final Judgment.
c. If, on or prior to the Merger Date, Texaco has executed but
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 States have 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.
d. 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 prior approval of the States pursuant to
the terms of the agreement or agreements approved by the
States, 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 States and
have not been breached by Shell and/or SRI; or (2) Shell has
exercised its right to
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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.
e. Subject to Defendants' 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 (d) 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 (d) of this Paragraph. Each divestiture shall be
made only in a manner that receives prior approval of 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 States; provided,
however, if the Divestiture Trustee receives bona fide offers
from more than one acquiring entity, and if the States
determine to approve more than one such acquiring entity, the
Divestiture Trustee shall divest to the acquiring entity or
entities selected by Defendants from among those approved by
the States; provided further, however, that Defendants shall
select such entity or entities within five (5) days of
receiving notification of the States approval.
f. The Divestiture Trustee shall have full and complete access to
all personnel, books, records, documents, and facilities of
Defendants 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
Defendants' obligations under this Final Judgment. Defendants
or the Operating Trustees shall develop such financial or
other information as the Divestiture Trustee may reasonably
request and shall cooperate with the Divestiture Trustee.
Defendants shall take no action to interfere with or impede
the Divestiture Trustee's ability to perform his or her
responsibilities.
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g. The Divestiture Trustee shall serve, without bond or other
security, at the cost and expense of Defendants, on such
reasonable and customary terms and conditions as the States
and the Commission may set. The Divestiture Trustee shall have
the authority to employ, at the cost and expense of
Defendants, 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.
h. Defendants 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.
i. The Divestiture Trustee shall account for all monies derived
from the sale and all expenses incurred, subject to the
approval of the States. After approval by the States 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.
j. The Divestiture Trustee shall report in writing to the States,
through the state of California acting as the States' chair,
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 Final Judgment until
such time as the divestitures required by Section III of this
Final Judgment have been accomplished and Defendants have
notified the States, through the state of California acting as
the States' chair, that the divestitures have been
accomplished.
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k. If, for any reason, Robert A. Falise cannot serve or cannot
continue to serve as Divestiture Trustee, or fails to act
diligently, the States shall select a replacement Divestiture
Trustee, subject to the consent of Defendants, which consent
shall not be unreasonably withheld. If Defendants 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 States to Defendants of the
identity of any proposed replacement Divestiture Trustee,
Defendants 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.
l. The States may on their own initiative or at the request of
the Divestiture Trustee seek additional orders from this court
and issue directions as may be necessary or appropriate to
assure compliance with the requirements of this Final
Judgment.
61. Defendants 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.
a. 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 Final Judgment in
consultation with the States, the Commission and the
Commission's staff.
b. 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
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fulfill such Operating Trustee's obligations, or to any other
relevant information, as such Operating Trustee may request,
including but not limited to all documents and records kept in
the normal course of business that relate to Defendants'
obligations under this Final Judgment. Defendants shall
develop such financial or other information as such Operating
Trustee may reasonably request and shall cooperate with such
Operating Trustee. Defendants shall take no action to
interfere with or impede the Operating Trustee's ability to
perform his or her responsibilities.
c. Each Operating Trustee shall serve, without bond or other
security, at the cost and expense of Defendants, on such
reasonable and customary terms and conditions as the States
and the Commission may set. Each Operating Trustee shall have
the authority to employ, at the cost and expense of
Defendants, such consultants, accountants, attorneys, and
other representatives and assistants as are reasonably
necessary to carry out each Operating Trustee's duties and
responsibilities.
d. Defendants 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.
e. The Operating Trustees shall account for all expenses
incurred, including fees for his or her services, subject to
the approval of the States.
f. Each Operating Trustee shall report in writing to the States,
through the state of California acting as the States' chair,
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 Final Judgment and the Trust
Agreement. The Operating Trustee shall serve until such time
as Defendants have complied with
16
their obligation to divest TRMI and/or TRMI East as required
by this Final Judgment and Defendants have notified the
States, through the State of California acting as the States'
chair, that the divestitures have been accomplished.
g. 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 either fails to act diligently, the States
shall select a replacement Operating Trustee, subject to the
consent of Defendants, which consent shall not be unreasonably
withheld. If Defendants 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 States, through the state of California acting
as the States' chair, to Defendants of the identity of any
proposed replacement Operating Trustee, Defendants 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.
h. The States may, on their own initiative or at the request of
either Operating Trustee, seek additional orders from the
court and issue directions as may be necessary or appropriate
to assure compliance with the requirements of this Final
Judgment.
//
62. Except as provided herein or in the Trust Agreement, neither the
Divestiture Trustee nor the Operating Trustee shall disclose any
Non-Public Equilon or Motiva Information to an employee of the
Defendants.
63. Defendants may require the Divestiture Trustee or Operating Trustee
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 States or the
Commission.
17
64. The purpose of this Section IV is to effectuate the divestitures
required by Section III of this Final Judgment and to maintain
operation of TRMI, TRMI East, Equilon and Motiva separate and apart
from Defendants' operations pending the required divestitures.
V. USE OF TEXACO BRAND/INDEMNITY
--------------------------------
65. Defendants shall offer to extend the license provided to Equilon and
Motiva, on terms and conditions comparable to those in existence as
of August 10, 2001, for the use of the Texaco brand for the
marketing of motor fuels in the States 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 the States where
Equilon and Motiva respectively are currently licensed to market
motor fuels.
66. For the purposes of this Section V, "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 an Order in this
matter 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.
67. If Equilon Waives and Releases the amounts set forth in Paragraph
66, Defendants shall further offer to extend the license set forth
in Paragraph 65 to Equilon until June 30, 2003 and shall offer to
extend the license on a nonexclusive basis for up to an additional
three years, until June 30, 2006, on terms and conditions comparable
to those in existence as of the date this Final Judgment is filed by
the States, for all retail outlets in the States for which Equilon
has executed agreements with such retail outlets on
18
or before the Brand License Date for the conversion of such retail
outlets to the Shell brand.
68. If Motiva Waives and Releases the amounts set forth in Paragraph 66,
Defendants shall further offer to extend the license set forth in
Paragraph 65 to Motiva on a nonexclusive basis for up to an
additional three years, until June 30, 2006, on terms and conditions
comparable to those in existence as of the date this Final Judgment
is filed by the States, for all retail outlets in the States 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.
69. If either Equilon or Motiva does not Waive and Release the amounts
set forth in Paragraph 66, Defendants 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 its 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 in the States, together 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 Defendants' option, either (a) vigorously defended the
litigation or arbitration or (b) afforded Defendants 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.
19
70. Defendants shall not enter into a Texaco Branded Relationship unless
either (1) such Relationship would not result in an increase in
Concentration Levels in the sale of gasoline in any Section of the
States, or (2) there are no sales of Chevron branded gasoline in
that Section of the States where the retail outlet covered by the
Relationship is located. Defendants shall notify the States of each
such Texaco Branded Relationship no later than sixty (60) days after
the execution of the agreement forming the Relationship, including
in the notification (1) a copy of such agreement, (2) the address
(street, city, county, state) of each retail outlet covered by the
Relationship in the States, and the most recent annual sales volume
(in gallons) at each retail outlet covered by the Relationship, (3)
the identity of the branded dealer or wholesale marketer that owns
or supplies the retail outlets covered by the Relationship, (4) the
identity of each Section of the States in which each such retail
outlet is located, (5) the changes in Concentration Levels that
Defendants believe will result from such agreement in each Section
of the States, 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 States 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
States obtained from New Image, NPD, Lundberg, or any other
independent third-party market surveyor, or conducted by Defendants,
together with all other data relied upon by Defendants as the basis
for their assessment of Concentration Levels or changes in
Concentration Levels. Provided, however, that Defendants may present
to the states statistical data and analyses relating to
Concentration Levels in any MSA in which the retail outlets are
located in lieu of statistical data and analysis in the Section of
the States. The state in which the retail outlet covered by the
Branded Texaco Relationship is located may review the data and
analyses and, in the sole discretion of that state, may accept the
analysis based on MSA data and relieve Defendants of their
obligation to provide an analysis of Concentration
20
Levels within the Section of the State. This Paragraph 70 shall
expire on June 30, 2007.
71. It shall not be a violation of this Final Judgment if Defendants
rescind any Texaco Branded Relationship that results in an increase
in Concentration Levels under the standards set forth in Paragraph
70 within thirty (30) days of being informed by the affected State
that the State believes such agreement would result in such an
increase or within thirty (30) days of an adverse award rendered by
the arbitrator and confirmed by the Court as set forth in Paragraph
72.
72. If Defendants do not rescind within thirty (30) days as set forth in
Paragraph 71, the States' exclusive remedy for alleged violations of
Paragraph 70 is outside, independent, binding arbitration.
Defendants shall agree to such arbitration, and the issue shall be
settled by arbitration in accordance with the terms of this Final
Judgment and the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") or any successor rules ("AAA rules")
thereto. Provided, however, that:
a. If there is a conflict between the terms of this Final
Judgment and the AAA rules, the terms of this Final Judgment
shall control.
b. All arbitrations shall be conducted by a single arbitrator who
is to be appointed by two nominators. The nominators shall not
serve as arbitrators. The state(s) initiating the arbitration
shall select one nominator and the Defendants shall select the
other nominator. The nominators are not required to select an
arbitrator from the list of arbitrators maintained by AAA.
c. If the arbitrator selected cannot serve, for whatever reason,
a replacement arbitrator shall be selected pursuant to the
process set forth in Paragraph 72(b).
d. If the nominators cannot agree upon a choice for arbitrator
within twenty (20) days of their selection, they shall confer
with the state(s) and the Defendants. The state(s) and the
Defendants may direct the nominators to continue the process
set forth in Paragraph 72(b) or select successor nominators to
continue the process set forth in Paragraph 72(b). Under
either approach, the original or successor nominators shall
have twenty (20) additional days to choose an arbitrator. If
an
21
arbitrator has not been chosen within sixty days of the
arbitration filing because of the nominators' inability to
reach a mutual selection, the matter will automatically be
submitted to the AAA for selection of an arbitrator in
accordance with R-13 or similar successor provision of the AAA
rules. AAA shall select an arbitrator within 15 days of
submission of the matter to AAA.
e. The state(s) initiating the arbitration shall select the
location of the arbitration hearing and all conferences
requiring a personal appearance by representatives of the
parties.
f. Sections E-2 through E-4, and E-6 through E-10 of the
Expedited Procedures or similar successor provisions shall
apply to the arbitration process.
g. The state(s) and the Defendants shall be entitled to call
witnesses and ask questions on cross-examination of all
witnesses called by the adverse party during the arbitration.
Evidence may be submitted by affidavit or declaration,
however, the witness providing such affidavit or declaration
must, at the request of the adverse party, submit to
cross-examination during the hearing. Witnesses for each party
shall also submit to questions from the arbitrator.
//
h. Only the parties to the arbitration and the arbitrator are
entitled to attend the entire hearing. All witnesses shall be
excluded from the proceedings prior to and after their
testimony, unless such witnesses are employed by one of the
parties to the arbitration.
i. Each side shall have an equal amount of time during the
hearing to present evidence and arguments in support of their
respective positions.
73. Judgment upon the award rendered by the arbitrator may be entered in
the Court. The award of the arbitrator, after confirmation by the
Court pursuant to the Federal Arbitration Act, 9 U.S.C. ss.1, et
seq. or succeeding statutory provisions, shall be final and binding
upon the parties. In the arbitration, Defendants 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 States.
22
74. The Defendants will cover the costs of the arbitration (including
filing fees, arbitrators fees, AAA expenses) but not the costs and
fees incurred by the states bringing and litigating such arbitration
action. Defendants shall reimburse the filing fees incurred by the
state(s) initiating the arbitration no later than thirty (30) days
after such request for reimbursement of the fees has been tendered
to Defendants. Provided, however, if the states prevail in the
arbitration action, the prevailing states shall be awarded and
Defendants shall reimburse such states the reasonable costs and fees
incurred in bringing such arbitration action attributable to the
issue on which such states prevailed.
75. The purpose of this Section V is to ensure that Defendants pay any
penalty not Waived and Released, due to Equilon or Motiva for
switching to another brand that is incurred by any Texaco dealer or
wholesale marketer with respect to any outlet that does not
terminate its Texaco brand relationship prior to the Brand License
Date but does not become a Shell branded outlet or is not otherwise
fully compensated for such penalty, to provide Equilon and Motiva
with sufficient time to convert to the Shell brand any retail
outlets that they agree to so convert, to prevent Shell, Equilon and
Motiva from
//
diminishing the viability and competitiveness of the Texaco brand,
and to remedy the lessening of competition alleged in the States'
complaint.
VI. GENERAL AVIATION BUSINESS
-----------------------------
76. No later than ten (10) days after the Merger Date, Defendants 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
Defendants to comply with any provision of the Aviation Fuel
Divestiture Agreement shall constitute a failure to comply with this
Final Judgment; provided, however, that if Defendants 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, Defendants shall divest
Texaco's Domestic General Aviation Business Assets, at no minimum
price, to an
23
acquirer or acquirers that receive the prior approval of the States
in a manner that receives the prior approval of the States 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 States in a manner
that receives the prior approval of the States pursuant to a
Substitute Aviation Fuel Divestiture Agreement shall not preclude
the States from seeking civil penalties or any other relief
available pursuant to any statute enforced by the States, for any
failure by the Defendants to comply with their obligation to divest
Texaco's Overlap General Aviation Business Assets to Avfuel pursuant
to the Aviation Fuel Divestiture Agreement.
77. If Defendants 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 its Decision and
Order final, it determines that Avfuel is not acceptable as the
acquirer of Texaco's Overlap General Aviation Business Assets or
that the Aviation Fuels Divestiture Agreement is not an acceptable
manner of divestiture, and the Commission so notifies Defendants,
Defendants rescission thereafter shall not be a violation of this
Final Judgment.
78. If the Aviation Fuel Divestiture Agreement with Avfuel is rescinded
pursuant to Paragraph 77 of this Final Judgment, then Defendants
shall within four 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 States
and in a manner that receives the prior approval of the States,
pursuant to a Substitute Aviation Fuel Divestiture Agreement.
79. On or before the date of consummation of the Substitute Aviation
Fuel Divestiture Agreement, Defendants shall assign to the acquirer
all General Aviation Business Agreements used in or relating to
Texaco's Domestic General Aviation Business; provided, however,
should Defendants fail to obtain any such assignments, Defendants
shall, subject to the prior approval of the States, substitute
alternative agreements or arrangements sufficient to enable the
acquirer approved by the States to operate
24
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.
80. Defendants 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
the States' 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.
81. For a period of six (6) months after the date of consummation of the
Substitute Aviation Fuel Divestiture Agreement, Defendants 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.
82. For a period of twelve 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, Defendants 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.
83. 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 Defendants, and to
remedy the lessening of competition alleged in the States'
Complaint.
84. If Defendants have divested neither: (1) Texaco's Overlap General
Aviation Business Assets to Avfuel as required by Paragraph 76 of
this Final Judgment, nor (2) Texaco's
25
Domestic General Aviation Business as required by Paragraph 78 of
this Final Judgment within four (4) months of the Merger Date, the
States, in conjunction with the Commission, may appoint a trustee to
divest Texaco's Domestic General Aviation Business Assets. In the
event that the States bring an action pursuant to any statute
enforced by the States, Defendants 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 States from seeking civil penalties or any other relief
available to them, including a court-appointed trustee, pursuant to
any statute enforced by the States, for any failure by the
Defendants to comply with this Final Judgment.
85. If a trustee is appointed by the States, the Commission, or a court
pursuant to Paragraph 84 of this Final Judgment, Defendants shall
consent to the following terms and conditions regarding the
trustee's powers, duties, authority, and responsibilities:
a. The States, acting in conjunction with the Commission, shall
select a trustee, subject to the consent of Defendants, which
consent shall not be unreasonably withheld. The trustee shall
be a person with experience and expertise in acquisitions and
divestitures. If Defendants have not opposed, in writing,
including the reasons for opposing, the selection of the
proposed trustee within ten (10) days after notice by the
States or the Commission to Defendants of the identity of any
proposed trustee, Defendants shall be deemed to have consented
to the selection of the proposed trustee.
b. Subject to the prior approval of the States, the trustee shall
have the exclusive power and authority to divest the Texaco
Domestic General Aviation Business Assets.
c. Within ten (10) days after appointment of the trustee,
Defendants shall execute a trust agreement that, subject to
the prior approval of the States 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.
26
d. 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 States. 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 States or the Commission, or, in the case
of a court-appointed trustee, by the court; provided, however,
the States and the Commission may extend this period only two
(2) times. The decision by the States or the Commission to
extend the time during which the trustee may accomplish the
divestiture shall not preclude the States from seeking civil
penalties or any other relief available to them, including a
court-appointed trustee, pursuant to any applicable federal or
state laws enforced by the States, for any failure by the
Defendants to comply with this Final Judgment.
//
e. 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. Defendants shall develop such financial
or other information as such trustee may request and shall
cooperate with the trustee. Defendants shall take no action to
interfere with or impede the trustee's accomplishment of the
divestiture. Any delays in divestiture caused by Defendants
shall extend the time for divestiture under this Paragraph in
an amount equal to the delay, as determined by the States or
the Commission or, for a court-appointed trustee, by the
court.
f. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that
is submitted to the States, subject to Defendants' 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 Section VI of this
Final Judgment, as applicable; provided, however, if the
trustee receives bona fide offers from more than one acquiring
entity, and if the States determine to approve more than one
such
27
acquiring entity, the trustee shall divest to the acquiring
entity or entities selected by Defendants from among those
approved by the States.
g. The trustee shall serve, without bond or other security, at
the cost and expense of Defendants, on such reasonable and
customary terms and conditions as the States, working in
conjunction with the Commission, or a court may set. The
trustee shall have the authority to employ, at the cost and
expense of Defendants, 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
States, 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 Defendants, 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.
h. Defendants 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.
i. 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 85(a) of this Final Judgment.
j. The States or, in the case of a court-appointed trustee, the
Court, may on its own initiative or at the request of the
trustee seek additional orders from the Court and
28
issue directions as may be necessary or appropriate to
accomplish the divestitures required by this Final Judgment.
k. The trustee shall have no obligation or authority to operate
or maintain the assets to be divested.
l. The trustee shall report in writing to Defendants and the
States every sixty (60) days concerning the trustee's efforts
to accomplish the divestitures.
VII. CALIFORNIA CRUDE OIL PRODUCTION
------------------------------------
86. Except as set forth in Paragraph 88, Defendants shall provide crude
oil to San Joaquin Valley Oil Company pursuant to the crude supply
agreement attached hereto as Confidential Appendix D to this Final
Judgment, which shall commence no later than one year after the
Merger Date. Subject to the consent of San Joaquin Valley Oil
Company, the attached crude supply agreement shall be fully
assignable to any successor of San Joaquin Valley Oil Company.
87. Except as set forth in Paragraph 88, Defendants shall provide crude
oil to Kern pursuant to the crude supply agreement attached hereto
as Confidential Appendix E to this Final Judgment. Subject to the
consent of Kern, the attached crude supply agreement shall be fully
assignable to any successor of Kern.
88. For the periods set forth in the agreements referenced in Paragraphs
86 and 87, Defendants shall not, without the prior approval of the
state of California, except as set forth in the agreements
referenced in Paragraphs 86 and 87, directly or indirectly, reduce
the volumes offered to the above-mentioned California crude oil
refiners, increase the price for crude oil supplied to such
refiners, or terminate the above-referenced agreements with the
refiners, except according to the terms of respective supply and
transport agreements entered into with the refiners. Any amendment
to the agreements relating to an increase in price, a decrease in
volume, or termination shall not be effective until approved by the
California State Attorney General's Office, provided, however, that
any such amendment shall be deemed approved unless the California
State Attorney General's Office notifies Defendants, within ninety
(90) days
29
of the receipt by that Office of actual notice of the amendment, of
that Office's intention to consider the amendment further. 1.
89. Starting one year after the Merger Date, Defendants shall not permit
Equiva to act as sales agent for any new California crude oil supply
agreements entered into by Defendants and shall not permit Equiva to
continue to administer any existing supply agreements for Texaco's
California crude oil. Provided, however, nothing herein shall be
interpreted as preventing (i) Defendants from entering into
transportation agreements, buy-sell agreements, or supply agreements
with Equiva that are intended for the internal use of Equilon
refineries either directly or through exchange except in the event
of refinery turnarounds, or (ii) Equiva from administering existing
transportation agreements, buy-sell agreements, or the delivery
component of existing supply agreements. For the purposes of this
Paragraph to "administer an existing supply agreement" means to
manage inventory; provide accounting and invoicing functions;
collect and use price and volume data, run tickets, marketing
information, and reconciliation reports; provide the verification of
credit worthiness, the procurement of the letters of credit, billing
and collects funds from crude oil purchasers; and collect and
transfer funds from sales in connection with in-kind royalty crude
taken by the U.S. Mineral Management Service, or other royalty
owners, administer Small Refiner Set Aside provisions of certain
Federal leases; and pays any severance and other production taxes to
state or local authorities.
VIII. ATTORNEYS FEES and COST REIMBURSEMENT
-------------------------------------------
90. Defendants shall pay to the States, within ten (10) business days of
entry of this Final Judgment, the sum of $1,419,882.33 for
reimbursement of fees and costs incurred by the States in this
matter for all work performed up to entry of this Final Judgment.
91. Defendants shall pay to the certain states identified herein up to,
but no more than, $500,000, in reimbursement of fees and costs
incurred by these states for work performed after entry of this
Final Judgment. The states' time shall be calculated at no greater
than the market rates used to calculate the States' fees under
Paragraph 90 of
30
this Section. The states that are eligible for reimbursement of
post-judgment fees and costs are the states of Texas, Florida,
California, Washington, Oregon, and any other state authorized by
these five states. The post-judgment work that is eligible for
reimbursement under this Paragraph must be directly related to
overseeing the Operating and Divestiture Trustees, monitoring the
divestiture so that it is accomplished in accordance with the terms
of this Final Judgment, or taking any and all actions involving
non-parties to this Final Judgment that these states, in their sole
discretion, feel are necessary and appropriate to ensure the terms
of this Final Judgment are fulfilled. The five states shall submit
one bill for reimbursement of post-judgment fees and costs within
thirty (30) days after all assets described in this Final Judgment
have been divested in accordance with the terms of this Final
Judgment. Defendants shall make prompt payment within ten (10)
business days after the States have submitted one final bill for
post-judgment fees and costs reimbursement. The aforementioned
conditions and limitations in this Paragraph do not apply to any
time and expenses incurred by the States in a Compliance Action, as
set forth in Section XIV, filed by the States against the Defendants
to enforce the terms of this Final Judgment. Reimbursement of time
and expenses incurred in Compliance Actions against the Defendants
shall be governed by the provisions set forth in Section XIV of this
Final Judgment.
92. Defendants shall pay the amount as specified in Paragraphs 90 and
91, above, to the state of California and once such payments are
made, the California Attorney General shall be solely responsible
for reimbursing the States for their share of the fees and costs
reimbursement.
93. Arizona's portion of the fees and costs shall be deposited into the
Antitrust Revolving Fund for use consistent with the laws governing
that fund.
94. Alaska's portion of the fees and costs award shall be "designated
program receipts" under Alaska Stat. ss. 37.05.146(b)(3) and shall
be used by the Alaska Attorney General for purposes of consumer
protection and antitrust investigations, enforcement, and education.
31
95. Florida's portion of the fees and costs award shall be deposited
into the Legal Affairs Revolving Trust Fund and shall be used in
accordance with Fla. Stat.ss.16.53(2).
96. Hawaii's portion of the fees and costs award shall be deposited into
the Hawaii Attorney General Antitrust Trust Fund for use consistent
with the laws governing that fund.
97. Idaho's portion of the fees and costs award shall be deposited
pursuant to Idaho Code ss. 48-114 for use in accordance with that
section.
98. Nevada's portion of the fees and costs award shall be deposited into
the Attorney General's Special Fund pursuant to Nev. Rev.
Stat.ss.598A.260.
99. New Mexico's portion of the fees and costs award shall be deposited
into the New Mexico Attorney General Consumer Protection Fund for
use consistent with the laws governing that fund.
100. Oregon's portion of the fees and costs award shall be deposited into
the Oregon Attorney General Consumer Protection and Education
Account and shall be used in accordance with the terms of Or. Rev.
Stat.ss.180.095.
101. Texas's portion of the fees and costs shall be awarded to the
Antitrust Section of the Texas Office of the Attorney General
pursuant toss.15.05(d) of the Texas Free Enterprise and Antitrust
Act of 1983, Tex. Bus. & Comm. Codess.ss.15.01 et seq.
102. Utah's portion of the fees and costs award shall be deposited
pursuant to Utah Code Ann.ss.76-10-922 into the Antitrust Revolving
Account for use in accordance with the provisions of that Section.
103. Washington's portion of the fees and costs award shall be deposited
into the Washington Attorney General Antitrust Revolving Fund.
104. If one or more states bring a Compliance Action pursuant to Section
XIV that results in a court order against the Defendants to enforce
this Final Judgment, such states shall be awarded and Defendants
shall reimburse such states the reasonable costs and fees incurred
in bringing such enforcement action pursuant to 15 U.S.C.ss. 26.
IX. OTHER RELIEF
----------------
32
105. Any action or inaction on the part of Defendants shall not violate
this Final Judgment, if the action or failure to act arises as a
result of:
a. The action or failure to act of the Commission,
b. Defendants' compliance with any order of the Commission,
c. The Defendants' failure to act while waiting for a decision of
the Commission, or
d. Defendants' compliance with the order of any court.
106. The States shall not take any action that results in Defendants
violating any order of the Commission or a court.
X. REACQUISITION OF ASSETS - APPROVAL AND NOTIFICATION
------------------------------------------------------
107. Defendants shall not reacquire any interest in the Equilon or Motiva
joint ventures if the States have disapproved such reacquisition
within sixty (60) days after notice of such reacquisition has been
provided to the States, through the state of California acting as
chair.
108. Defendants shall provide written notification to the States through
the state of California acting as chair, of their intention to
acquire within a twelve month period, assets from Equilon or Motiva
located in one or more of the States if such transaction (a) has a
value of $15 million dollars or more, (b) relates to the acquisition
or lease of five or more retail gasoline outlets within an MSA, or,
(c) relates to an acquisition or lease of (i) retail gasoline
outlets outside an MSA (ii) that results in five or more retail
gasoline outlets, outside an MSA, supplied gasoline by Defendants
and selling gasoline under the Chevron brand, the Texaco brand, or
under any brand that contains the Chevron or Texaco name within a
25-mile distance of each other; provided however that the limitation
in (c)(ii) of this Paragraph shall not apply to any acquisition or
leases in the state of Alaska. Written notification shall include a
reasonable description of the transaction, including, but not
limited to, the value of the transaction, the location of assets
within the affected state(s), and the expected closure date of the
transaction. Defendants shall not close the transaction that is the
subject of the notification until thirty (30) days after the States'
receipt of the notice or thirty (30) days after the Defendants'
substantial compliance of any civil investigative demand
33
issued by a state that seeks additional information about the
transaction, whichever is the later date. Provided, however, that
Defendants may close the transaction if no such investigative demand
is issued within thirty (30) days after receipt of notice and,
further, in any event, the Defendants may close the transaction no
later than 120 days from the date of notice.
//
//
XI. COMPLIANCE REPORTS
----------------------
109. Within sixty (60) days after the date this Final Judgment becomes
final and every sixty (60) days thereafter until Defendants have
fully complied with the provisions of Sections III through X of this
Final Judgment, Defendants shall submit to the States, through the
state of California acting as the States' chair, 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. Defendants 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 Final Judgment, including the identity of all parties
contacted. Defendants 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.
XII. PRIVILEGES, ACCESS TO INFORMATION
--------------------------------------
110. For the purposes of determining or securing compliance with this
Final Judgment, and subject to any legally recognized privilege,
upon written request and on reasonable notice to Defendants made to
its principal office, Defendants shall permit any duly authorized
representatives of the States:
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
34
control of Defendants relating to any matters contained in
this Final Judgment; and
b. Upon five (5) days' notice to Defendants and without restraint
or interference from Defendants, to interview officers or
employees of Defendants who may have counsel present,
regarding such matters.
//
XIII. CONFIDENTIALITY, USE, DISSEMINATION,
------------------------------------------
RETURN/DESTRUCTION OF DOCUMENTS
-------------------------------
111. All documents, including all copies, whether in hard copy or
electronic format, that have been produced by the Defendants to the
States and will be produced pursuant to this Final Judgment, and
that Defendants designate in good faith as confidential, shall
remain confidential and shall be used and disseminated only to the
extent allowed under Oregon Revised Statute 646.836, attached hereto
as Appendix F to this Final Judgment and incorporated herein by this
reference.
112. All documents, including all copies, whether in hard copy or
electronic format, received by the States from the Defendants during
their investigation of the Merger or in carrying out their
responsibilities under this Final Judgment to ensure compliance with
this Final Judgment shall, at the option and cost of Defendants be
returned to the Defendants or destroyed within six (6) months after
the States have discharged their responsibilities to ensure the
divestiture relief is accomplished in accordance with this Final
Judgment. Provided, however, that a state shall return the
aforementioned documents to the Defendants if the laws of that state
do not authorize destruction of the aforementioned documents. If the
aforementioned documents are destroyed rather than returned to the
Defendants, each State shall certify its destruction of such
materials.
XIV. STATE COMPLIANCE ACTIONS
-----------------------------
113. Subject to the conditions and prohibitions of Section IX and XV of
this Final Judgment, the States, individually, collectively, or in
any combination thereof, are authorized to take actions that they
deem necessary and appropriate and are related to
35
their right to review information produced pursuant to Sections XI
and XII and/or initiate Compliance Actions against the Defendants to
(a) address violations of this Final Judgment that affects their
state(s), (b) ensure Defendants are performing their obligations
that affect their state(s), and (c) ensure the relief provided by
this Final Judgment that affects their state(s) is being
accomplished. Any state may initiate a Compliance Action unless such
Compliance Action would require Defendants to take action that is
contrary to or inconsistent with (a) the conditions and prohibitions
set out in Section IX, or (b) an action approved by the States as
described in Section XV.
XV. STATE'S WITHDRAWAL FROM FINAL JUDGMENT
------------------------------------------
114. Given the unique nature of the issues and the procedural posture
presented by this Merger, one or more states may depart from a
decision made by the States relating to (a) approval of the
acquirer(s) of the Equilon interest, the Motiva interest, or
Texaco's Domestic General Aviation Business Assets, (b) the manner
in which the divestitures are accomplished, (c) an extension of time
for the trustees to accomplish the sale of such interests and
assets, (d) approval of a successor trustee, or (e) approval of any
modification of the Trust Agreement, and may withdraw from this
Final Judgment within sixty (60) days of any states' decision
relating to (a)-(e). Upon withdrawal, nothing set forth in this
Final Judgment shall be interpreted to prevent such state from
bringing suit to challenge Defendants' conduct under state or
federal antitrust laws, notwithstanding any action taken by the
remaining states. A state withdrawing from this Final Judgment shall
provide written notification of its withdrawal to the States, the
Defendants and the Court. The state must withdraw from this Final
Judgment before it can bring suit to challenge this Merger or
Defendants' conduct arising from this Merger. Upon withdrawal from
the Final Judgment, the withdrawing state shall forfeit all rights
and privileges under this Final Judgment, except for the rights
provided under Paragraph 115. Provided, however, that nothing
contained in this Paragraph or Section XV shall require the States
to withdraw from this Final Judgment in order to exercise their
rights under Section XIV.
36
115. Defendants shall be barred from raising or relying upon the defenses
of laches, statute of limitations, or any other defense based solely
on the passage of time other than as set out in Paragraph 114 of
this Final Judgment against any state that exercises its
//
37
option to withdraw from this Final Judgment and take action in
accordance with this Section XV.
XVI. CHANGE OF DEFENDANTS
-------------------------
116. Defendants shall notify the States at least thirty (30) days prior
to any proposed change in the corporate Defendants 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 Final Judgment.
XVII. RETENTION OF JURISDICTION
-------------------------------
117. The Court shall retain jurisdiction over the parties for the purpose
of enabling any of the parties to this Final Judgment to apply to
this Court at any time for such further orders and directions as may
be necessary or appropriate for the construction, implementation,
enforcement, or modification of any of the provisions in this Final
Judgment, and for the punishment of any violations of this Final
Judgment.
XVIII. TERMINATION
------------------
118. This Final Judgment shall expire ten (10) years after the date of
its entry.
XIX. WAIVER
-----------
119. Defendants waive, release, and forever discharge any and all claims
Defendants have or may have against the States arising from any
conduct the States engage in to ensure the divestiture relief is
accomplished in accordance with this Final Judgment.
XX. NOTICES
-----------
120. Any notices required by this Final Judgment shall be delivered to
the parties at the following addresses:
a. For Defendants:
38
1. Chevron and Chevron Texaco: Terry Calvani, Esq.,
Pillsbury Winthrop LLP, 1133 Connecticut Avenue, NW,
Washington, D.C. 20036; and Mr. Harvey D. Hinman, Vice
President & General Counsel, Chevron Corporation, 575
Market Street, San Francisco, CA 94105.
2. For Texaco: Marc G. Schildkraut, Esq., Howrey Simon
Arnold & White, 1299 Pennsylvania Avenue, NW, Washington
D.C. 20004-2402; and Ms. Leocadie L. Robertson, General
Counsel, Texaco Inc., 2000 Westchester Avenue, White
Plains, New York 10650.
b. For Plaintiff States: Ms. Margaret E. Spencer, Deputy Attorney
General, Office of the Attorney General, 300 South Spring
Street, Los Angeles, California 90013.
XXI. PUBLIC INTEREST
--------------------
121. This proceeding and prompt entry of this Final Judgment is in the
public interest.
Presented by:
DATED this ----- day of ---------- 2001.
-------------------------------------
UNITED STATES DISTRICT JUDGE
Presented by:
BILL LOCKYER, Attorney General
of the State of California
-------------------------------------
By: Margaret E. Spencer
Deputy Attorney General
300 South Spring Street
Los Angeles, CA 90013
(213) 897-2685
Attorneys for Plaintiff State of California, and
Appearing as Local Counsel for Plaintiff States
PILLSBURY WINTHROP, LLP
39
-------------------------------------
By: John M. Grenfell
50 Fremont Street
San Francisco, CA 94105
(415) 983-1200
Attorneys for Defendant Chevron Corporation
HOWREY SIMON ARNOLD & WHITE, LLP
- -------------------------------------
By: Marc Schildkraut
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2402
(202) 783-0800
Attorneys for Defendant Texaco Inc.
40
ORDER TO HOLD SEPARATE
----------------------
The State attorneys general of Alaska, Arizona, California, Florida,
Hawaii, Idaho, Nevada, New Mexico, Texas, Oregon, Utah and Washington ("the
States") initiated an investigation of the proposed merger (the "Merger") of
Defendants Chevron Corporation ("Chevron") and Texaco Inc. ("Texaco").
Defendants were furnished with copies of the Complaint that the States intend to
file in this matter alleging violations of Section 7 of the Clayton Act, as
amended, 15 U.S.C. ss. 18, and the antitrust and unfair competition laws in
several of the States. Defendants agree that the Court has jurisdiction over
this matter as set forth in the aforesaid Complaint, consent to entry of this
Order to Hold Separate and Maintain Assets ("Hold Separate Order") without trial
or adjudication of any issue of fact or law alleged in the Complaint, have
waived notice or presentation of this Hold Separate Order, and represent that
they can and will fulfill their obligations set forth in this Hold Separate
Order. As such, Defendants agree to be bound by the provisions of this Hold
Separate Order and that there is no just reason for delay in its entry.
Entry of this Hold Separate Order does not constitute evidence against
or an admission by Defendants 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. Defendants have waived service of summons. This
Hold Separate Order is subject to the provisions and conditions of the Final
Judgment, including the provisions in Section IX governing potential conflicts
between State and Federal enforcement.
The Court now hereby makes the following jurisdictional findings and
issues this Order to Hold Separate and Maintain Assets:
1. Respondent Chevron is a corporation organized, existing and doing
business
234
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 Court has jurisdiction over the subject matter of this
proceeding and over Defendants, and the proceeding is in the public
interest.
I. DEFINITIONS
--------------
The Court hereby ORDERS the following definitions shall apply:
4. "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.
5. "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.
6. "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,
235
Michigan 48108.
7. "Aviation Fuel" means Aviation Gasoline and Jet Fuel.
8. "Aviation Fuel Divestiture Agreement" means all agreements entered
into between Defendants 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 as Confidential Appendix A to the Final
Judgment.
9. "Aviation Overlap State" means each of the following states:
Alabama, Alaska, Arizona, California, Florida, Georgia, Idaho,
Louisiana, Mississippi, Nevada, Oregon, Tennessee, Utah, and
Washington.
10. "Commission" means the Federal Trade Commission.
11. "Disclose" means to convey by any means or otherwise make available
information to any person or persons.
12. "Divestiture Trustee" means a trustee appointed pursuant to Section
IV of the Final Judgment with the obligation to divest TRMI and/or
TRMI East.
13. "Equilon" means Equilon Enterprises LLC, a joint venture formed
pursuant to the Equilon LLC Agreement.
14. "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.
15. "Equilon LLC Agreement" means the Limited Liability Company
Agreement of
236
Equilon Enterprises LLC dated as of January 15, 1998 among certain
subsidiaries of Shell and Texaco, as amended.
16. "Final Judgment" means the judgment entered by the United States
District, Court for the Central District of California in "State of
California, et al. v. Chevron Corporation, a Delaware corporation
and Texaco Inc., a Delaware corporation" as submitted by the parties
concurrently with the filing of the complaint in said action on or
about September 7, 2001, and as it may be modified by the Court.
17. "Held Separate Business" means all of Defendants' interests and
assets comprising the Trust, as defined and described in the Final
Judgment, immediately before rescission of the Trust, including but
not limited to TRMI and TRMI East to the extent they are assets of
the Trust at such time.
18. "Hold Separate Operating Trustees" means the same person as each of
the Operating Trustees or any replacement Operating Trustees.
19. "Hold Separate Divestiture Trustee" means the same person as the
Divestiture Trustee or any replacement Divestiture Trustee.
20. "Hold Separate Agreement" means the agreement between and among
Defendants and the Hold Separate Operating Trustees and the Hold
Separate Divestiture Trustee to effectuate the divestitures required
by Section III of the Final Judgment, substantially similar to the
Trust Agreement, and subject to the prior approval of the States.
21. "Hold Separate Period" means, if the Trust is rescinded, unwound,
dissolved, or otherwise terminated at a time after the Merger but
before Defendants have complied with Section III of the Final
Judgment, the period beginning on the
237
Rescission Date and lasting until the business day after the
divestitures required by the Final Judgment in this matter have been
accomplished and Defendants have so notified the States.
22. "JV Agreements" means the Equilon LLC Agreement and the Motiva LLC
Agreement.
23. "Merger" means any merger between Defendants, including the proposed
merger contemplated by the Agreement and Plan of Merger dated
October 15, 2000, as amended, among Defendants and Keepep Inc.
24. "Motiva" means Motiva Enterprises LLC, a joint venture formed
pursuant to the Motiva LLC Agreement.
25. "Motiva Interest" means all of the ownership interests in Motiva
owned directly or indirectly by Texaco, including the interest owned
by TRMI East.
26. "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.
27. "Non-Public Equilon Or Motiva Information" means any information not
in the public domain relating to Equilon or Motiva.
28. "Operating Trustee" means each trustee appointed pursuant to Section
IV of the Final Judgment with the obligation to manage TRMI and/or
TRMI East pursuant to the Final Judgment.
29. "Rescission Date" means the date on which the Trust was rescinded,
unwound, dissolved, or otherwise terminated, if such rescission,
unwinding, dissolution, or termination occurs.
238
30. "Defendants" means Chevron and Texaco, individually and
collectively, and any successors.
31. "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.
32. "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.
33. "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.
34. "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.
35. "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,
239
but excluding the assets and agreements set forth in Schedule 2.3(c)
of the Aviation Fuel Divestiture Agreement.
36. "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.
37. "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.
38. "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.
39. "Trust" means the trust established by the Trust Agreement as
required by the Final Judgment.
40. "Trust Agreement" means the Agreement and Declaration of Trust
approved by the Commission and attached as an Appendix to the Final
Judgment.
II. HELD SEPARATE BUSINESS
--------------------------
The Court further ORDERS that:
240
41. During the Hold Separate Period, Defendants 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 extent that Defendants must exercise
direction and control over the Held Separate Business to assure
compliance with this Hold Separate Order, or with the Final Judgment
issued in this matter, and except as otherwise provided in this Hold
Separate Order or the Final Judgment, and shall vest the Held
Separate Business with all rights, powers, and authority necessary
to conduct its business.
42. 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 Defendants have
complied with Section III of the Final Judgment, to: (i) preserve
the Held Separate Business, including TRMI and TRMI East, as viable,
competitive, and ongoing businesses independent of Defendants until
the divestitures required by the Final Judgment have been
accomplished; (ii) prevent interim harm to competition pending the
relevant divestitures; and (iii) help remedy any anticompetitive
effects of the proposed Merger.
43. 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,
Defendants shall agree to the appointment of Robert A. Falise
as Hold Separate
241
Divestiture Trustee and enter into an agreement substantially
similar to the Trust Agreement, subject to the prior approval
of the States, 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 Section III of the Final Judgment
and subject to the prior approval of the States as set forth
in such Final Judgment. 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 States as set forth in such Final
Judgment, 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 States, the Commission, and 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 the Final Judgment to accomplish the
divestitures required by Section III of the Final Judgment,
which shall be subject to the prior approval of the States as
set forth in the Final Judgment. 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
242
extended by the States. An extension of time by the States
under this subparagraph shall not preclude the States from
seeking any relief available to them for any failure by
Defendants to divest the Equilon Interest or TRMI and/or the
Motiva Interest or TRMI East consistent with the requirements
of Section III of the Final Judgment.
3. If, on or prior to the Rescission Date, Defendants 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 Defendants 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 States' prior
approval as set forth in the Final Judgment.
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
States, pursuant to the terms of the applicable agreement or
agreements approved by the States, if either (a) Defendants
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 States 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.
243
5. Subject to Defendants' 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 (1) TRMI, if the Hold Separate Divestiture
Trustee has not divested the Equilon Interest pursuant to
subparagraph d of this paragraph, and/or (2) TRMI East, if the
Hold Separate Divestiture Trustee has not divested all or part
of the Motiva Interest pursuant to subparagraph d of this
paragraph. Each divestiture shall be made only in a manner
that receives the prior approval of 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 States; provided, however, if the Hold
Separate Divestiture Trustee receives bona fide offers from
more than one acquiring entity, and if the States determine to
approve more than one such acquiring entity, the Hold Separate
Divestiture Trustee shall divest to the acquiring entity or
entities selected by Defendants from among those approved by
the States; provided further, however, that Defendants shall
select such entity within five (5) days of receiving
notification of the States' approval.
6. The Hold Separate Divestiture Trustee shall have full and
complete access to all personnel, books, records, documents,
and facilities of Defendants, 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
244
limited to all documents and records kept in the normal course
of business that relate to Defendants' obligations under this
Hold Separate Order and the Final Judgment. Defendants 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.
Defendants 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 Defendants,
on such reasonable and customary terms and conditions as the
States may set. The Hold Separate Divestiture Trustee shall
have the authority to employ, at the cost and expense of
Defendants, 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. Defendants 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,
245
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 States. After approval by the
States 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 States 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 Final Judgment until such
time as the divestitures required by Section III of the Final
Judgment have been accomplished and Defendants have notified
the States 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 States, in conjunction with the
Commission, shall select a replacement Hold Separate
Divestiture Trustee, subject to the consent of Defendants,
which consent shall not be unreasonably withheld. If
Defendants have not opposed, in writing, including the reasons
for opposing, the selection of any replacement Hold Separate
Divestiture Trustee within ten (10) days
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after notice by the States and/or the Commission to Defendants
of the identity of any proposed replacement Hold Separate
Divestiture Trustee, Defendants 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 States may on their own initiative or at the request of
the Hold Separate Divestiture Trustee seek additional orders
from the court and issue directions as may be necessary or
appropriate to assure compliance with the requirements of this
Hold Separate Order or the Final Judgment.
13. No later than two (2) business days after the Rescission Date,
Defendants 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
States, 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
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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 Final Judgment in
consultation with the States, the Commission, and 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 Defendants' obligations under this
Hold Separate Order and the Final Judgment. Defendants 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.
Defendants shall take no action to interfere with or impede
the Hold Separate Operating Trustees' ability to perform his
or her responsibilities.
16. The Hold Separate Operating Trustees shall serve, without bond
or other security, at the cost and expense of Defendants, on
such reasonable and customary terms and conditions as the
States may set. Each Hold Separate
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Operating Trustee shall have the authority to employ, at the
cost and expense of Defendants, 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. Defendants 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 States.
19. Each Hold Separate Operating Trustee shall report in writing
to the States 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 Final Judgment, and the Hold
Separate Agreement. The Hold Separate Operating Trustees shall
serve until such time as Defendants have complied with their
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obligation to divest TRMI and/or TRMI East as required by this
Hold Separate Order and the Final Judgment, and Defendants
have notified the States 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 States shall select a replacement Hold
Separate Operating Trustee, subject to the consent of
Defendants, which consent shall not be unreasonably withheld.
If Defendants 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 States and/or the Commission to Defendants of the
identity of any proposed replacement Hold Separate Operating
Trustee, Defendants 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.
21. The States may on their own initiative or at the request of
either Hold Separate Operating Trustee seek additional orders
from the court and issue directions as may be necessary or
appropriate to assure compliance with the requirements of this
Hold Separate Order or the Final Judgment.
22. Except as provided herein or in the Hold Separate Agreement,
neither the
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Hold Separate Divestiture Trustee nor the Hold Separate
Operating Trustees shall disclose any Non-Public Equilon or
Motiva Information to an employee of Defendants.
23. Defendants 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 States and/or the Commission.
24. The purpose of this Section II is to effectuate the
divestitures required by Section III of the Final Judgment and
to maintain operation of TRMI, TRMI East, Equilon and Motiva
separate and apart from Defendants' operations pending the
required divestitures.
III. GENERAL AVIATION ASSETS
----------------------------
44. Pending divestiture of Texaco's Overlap General Aviation Business
Assets (or Texaco's Domestic General Aviation Business Assets, as
appropriate) pursuant to Section VI of the Final Judgment,
Defendants 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.
IV. EMPLOYEE NOTICE
-------------------
45. Defendants shall, within ten (10) days of the Rescission Date,
circulate to all
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of Defendants' employees a copy of this Hold Separate Order and
shall post a notice accessible to all employees informing employees
of Defendants' obligations pursuant to this Hold Separate Order.
V. COMPLIANCE REPORTS
---------------------
46. Within thirty (30) days after the Rescission Date and every sixty
(60) days thereafter until Defendants have fully complied with
Sections III and IV of the Final Judgment, Defendants shall submit
to the States 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. Defendants 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. Defendants 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.
47. Within thirty (30) days after this Hold Separate Order is final, and
every sixty (60) days thereafter until Defendants have fully
complied with Sections II and III of this Hold Separate Order,
Defendants shall submit to the States 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.
48. With the agreement of the States, Defendants may submit one
compliance
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report to the States, at sixty (60) day intervals, including the
information required by Section V of this Hold Separate Order, and
Section XI of the Final Judgment, which will, if it includes all
required information, be considered a timely filing of each of the
compliance reports required by these provisions.
49. 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
Defendants made to its principal office, Defendants shall permit any
duly authorized representatives of the States:
1. 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
Defendants relating to any matters contained in this Hold
Separate Order; and
2. Upon five business days' notice to Defendants and without
restraint or interference from Defendants, to interview
officers or employees of Defendants who may have counsel
present, regarding such matters.