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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
By and Among
SHELL OIL COMPANY,
SHELL ND COMPANY
and
PENNZOIL-QUAKER STATE COMPANY
Dated as of March 25, 2002
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger ........................................................ 1
SECTION 1.02. Closing ........................................................... 2
SECTION 1.03. Effective Time..................................................... 2
SECTION 1.04. Effects of the Merger.............................................. 2
SECTION 1.05. Certificate of Incorporation and By-laws........................... 2
SECTION 1.06. Directors ......................................................... 3
SECTION 1.07. Officers .......................................................... 3
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. Conversion of Capital Stock........................................ 3
SECTION 2.02. Exchange of Certificates........................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the
Company......................................................... 7
SECTION 3.02. Representations and Warranties of Parent and Merger Sub............30
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business................................................33
SECTION 4.02. No Solicitation....................................................38
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Statement; Stockholders Meeting...........42
SECTION 5.02. Access to Information; Confidentiality; Transition Planning........43
SECTION 5.03. Commercially Reasonable Efforts; Notification......................44
SECTION 5.04. Company Stock Options..............................................45
SECTION 5.05. Indemnification, Exculpation and Insurance.........................46
SECTION 5.06. Fees and Expenses..................................................49
SECTION 5.07. Information Supplied...............................................50
SECTION 5.08. Benefits Matters...................................................51
SECTION 5.09. Public Announcements...............................................52
SECTION 5.10. Rights Agreement; Consequences if Rights Triggered.................53
SECTION 5.11. Stockholder Litigation.............................................53
SECTION 5.12. Director Resignations..............................................53
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger.........53
SECTION 6.02. Conditions to Obligations of Parent and Merger Sub.................54
SECTION 6.03. Conditions to Obligation of the Company............................56
SECTION 6.04. Frustration of Closing Conditions..................................57
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination .......................................................57
SECTION 7.02. Effect of Termination..............................................58
SECTION 7.03. Amendment .........................................................59
SECTION 7.04. Extension; Waiver..................................................59
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties......................59
SECTION 8.02. Notices ...........................................................60
SECTION 8.03. Definitions .......................................................61
SECTION 8.04. Interpretation.....................................................62
SECTION 8.05. Counterparts ......................................................63
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.....................63
SECTION 8.07. Governing Law......................................................63
SECTION 8.08. Assignment ........................................................63
SECTION 8.09. Enforcement .......................................................64
ANNEX I Index of Defined Terms
EXHIBIT A Restated Certificate of Incorporation of the Surviving
Corporation
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER dated
as of March 25, 2002, by and among SHELL OIL
COMPANY, a Delaware corporation ("PARENT"),
SHELL ND COMPANY, a Delaware corporation and
a wholly owned subsidiary of Parent ("MERGER
SUB"), and PENNZOIL-QUAKER STATE COMPANY, a
Delaware corporation (the "COMPANY").
WHEREAS the Board of Directors of each of the Company and Merger Sub
has approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Merger Sub with and into the Company
(the "MERGER"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$0.10 per share, of the Company (the "COMPANY COMMON STOCK") not owned by
Parent, Merger Sub or the Company, other than the Appraisal Shares (as defined
below), will be converted into the right to receive $22.00 in cash, without
interest (the "MERGER CONSIDERATION");
WHEREAS Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Merger Sub shall be merged with and into the
Company at the Effective Time (as defined below). At the Effective Time, the
separate corporate existence of Merger
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Sub shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and shall succeed to and assume all the rights and
obligations of Merger Sub in accordance with the DGCL.
SECTION 1.02. CLOSING. Upon the terms and subject to the conditions
set forth in this Agreement, the closing of the Merger (the "CLOSING") shall
take place at 11:00 a.m., New York time, on the second business day after the
satisfaction or waiver of the conditions set forth in Section 6.01 (other than
those that by their terms cannot be satisfied until the time of the Closing), at
the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York
10019, or at such other time, date or place agreed to in writing by Parent and
the Company; PROVIDED, HOWEVER, that if all the conditions set forth in Article
VI shall not have been satisfied or waived on such second business day, then the
Closing shall take place on the first business day on which all such conditions
shall have been satisfied or waived. The date on which the Closing occurs is
referred to in this Agreement as the "CLOSING DATE".
SECTION 1.03. EFFECTIVE TIME. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or after the
Closing Date, a certificate of merger or other appropriate documents (in any
such case, the "CERTIFICATE OF MERGER") shall be duly prepared and executed by
the parties in accordance with the relevant provisions of the DGCL and filed
with the Secretary of State of the State of Delaware. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such subsequent time or date as Parent and
the Company shall agree and specify in the Certificate of Merger. The time at
which the Merger becomes effective is referred to in this Agreement as the
"EFFECTIVE Time".
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BY-LAWS. (a) The
Restated Certificate of Incorporation of the Company shall be amended at the
Effective Time to read in the form of Exhibit A and, as so amended, such
Restated
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Certificate of Incorporation shall be the Restated Certificate of Incorporation
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Merger Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of
common stock of Merger Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(b) CANCELATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share
of Company Common Stock that is owned by the Company as treasury stock, or by
Parent or Merger Sub, immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to
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exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.01(b) and the Appraisal
Shares) shall be converted into the right to receive the Merger Consideration.
At the Effective Time all such shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares (a "CERTIFICATE") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration with respect to each such
share.
(d) APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to
the contrary, shares (the "APPRAISAL SHARES") of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
who is entitled to demand and properly demands appraisal of such shares pursuant
to, and who complies in all respects with, the provisions of Section 262 of the
DGCL ("SECTION 262") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.01(c), but instead such holder shall be
entitled to payment of the fair value of such shares in accordance with the
provisions of Section 262. At the Effective Time, all Appraisal Shares shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Section 262. Notwithstanding the foregoing, if
any such holder shall fail to perfect or otherwise shall waive, withdraw or lose
the right to appraisal under Section 262 or a court of competent jurisdiction
shall determine that such holder is not entitled to the relief provided by
Section 262, then the right of such holder to be paid the fair value of such
holder's Appraisal Shares under Section 262 shall cease and each such Appraisal
Share shall be deemed to have been converted at the Effective Time into, and
each such Appraisal Share shall have become, the right to receive the Merger
Consideration as provided
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in Section 2.01(c). The Company shall provide prompt notice to Parent of any
demands for appraisal of any shares of Company Common Stock, and Parent shall
have the right to participate in and direct all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company shall
not, without the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to the
Effective Time, Parent shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the "PAYING AGENT"), and, from
time to time after the Effective Time, Parent shall provide, or cause the
Surviving Corporation to provide, to the Paying Agent funds in amounts and at
the times necessary for the payment of the Merger Consideration pursuant to
Section 2.01(c) upon surrender of Certificates, it being understood that any and
all interest or income earned on funds made available to the Paying Agent
pursuant to this Agreement shall be turned over to Parent (such funds being
hereinafter referred to as the "EXCHANGE FUND").
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in customary form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of a Certificate in exchange for the Merger Consideration with respect
to each share of Company Common Stock formerly represented by such Certificate.
Upon surrender of a Certificate for cancelation to the Paying Agent or to such
other agent or agents as may be appointed by Parent, together with such letter
of transmittal, duly completed and validly executed, and such other documents as
may reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash
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into which the shares formerly represented by such Certificate shall have been
converted pursuant to Section 2.01(c), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the stock transfer books of the Company, the
proper amount of cash may be paid in exchange therefor to a person other than
the person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. No interest shall be paid or shall
accrue on the cash payable upon surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash paid upon
the surrender of a Certificate in accordance with the terms of this Article II
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock formerly represented by such Certificate.
At the close of business on the day on which the Effective Time occurs, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
transfer or any other reason, they shall be canceled and exchanged as provided
in this Article II.
(d) NO LIABILITY. None of Parent, Merger Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or became the property of any
Governmental Entity (as defined below)), any such Merger Consideration in
respect thereof shall, to
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the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(e) LOST CERTIFICATES. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, defaced or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against the Surviving Corporation with respect to such Certificate, the Paying
Agent shall pay in respect of such lost, stolen, defaced or destroyed
Certificate the Merger Consideration with respect to each share of Company
Common Stock formerly represented by such Certificate.
(f) WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the Paying
Agent shall be entitled to deduct and withhold any applicable taxes from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock. To the extent that amounts are so deducted and
withheld and paid over to the appropriate taxing authority by Parent, the
Surviving Corporation or the Paying Agent, such deducted and withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
stockholder in respect of which such deduction and withholding was made by
Parent, the Surviving Corporation or the Paying Agent.
(g) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth in the disclosure
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schedule (with specific reference to the Section or Subsection of this Agreement
to which the information stated in such disclosure relates) delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE"), the Company represents and warrants to Parent and Merger
Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and its
subsidiaries (as defined below) is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to jurisdictions
which recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to conduct its businesses as presently
conducted, other than such franchises, licenses, permits, authorizations and
approvals the lack of which, individually and in the aggregate, has not had and
could not reasonably be expected to have a Material Adverse Effect (as defined
below). Each of the Company and its subsidiaries is duly qualified or licensed
to do business in each jurisdiction where the nature of its business or the
ownership or leasing of its properties make such qualification or licensing
necessary, except where the failure to be so qualified or licensed individually
and in the aggregate has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company has delivered to Parent prior to the
execution of this Agreement true and complete copies of the Restated Certificate
of Incorporation of the Company, as amended to the date of this Agreement (as so
amended, the "COMPANY CHARTER"), and the By-laws of the Company, as amended to
the date of this Agreement (as so amended, the "COMPANY BY-LAWS"), and the
comparable charter and organizational documents of each Significant Subsidiary
(as defined below), in each case as amended to the date of this Agreement.
(b) SUBSIDIARIES. Exhibit 21 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001 on file with the Securities and
Exchange Commission (the "SEC") lists each material subsidiary of
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the Company and its jurisdiction of organization. All the outstanding shares of
capital stock of, or other equity interests in, each subsidiary of the Company
have been validly issued and are fully paid and nonassessable and, except as set
forth in such Exhibit 21, are owned by the Company, by another subsidiary of the
Company or by the Company and another subsidiary of the Company, free and clear
of all pledges, liens, charges, mortgages, encumbrances and security interests
of any kind or nature whatsoever (collectively, "LIENS"). Except for its
interests in its subsidiaries, the Company does not own, directly or indirectly,
any capital stock, membership interest, partnership interest, joint venture
interest or other equity interest in any person.
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, par value $1.00 per share (together with the Company Common
Stock, the "COMPANY CAPITAL STOCK"). At the close of business on March 18, 2002,
(i) 79,863,932 shares of Company Common Stock were issued and outstanding, (ii)
34,259 shares of Company Common Stock were held by the Company in its treasury,
(iii) 9,253,640 shares of Company Common Stock were subject to outstanding
Company Stock Options (as defined below), and 1,599,226 additional shares of
Company Common Stock were reserved for issuance, pursuant to the Company's 1998
Incentive Plan, 2001 Incentive Plan, 1998 Stock Option Plan and 2000 Stock
Option Plan and any other plan pursuant to which any outstanding options to
purchase Company Common Stock were or may be granted (such plans, collectively,
the "COMPANY STOCK PLANS"), (iv) 793,126 shares of Company Common Stock were
subject to outstanding conditional and restricted stock awards issued under the
Company Stock Plans ("STOCK UNITS"), (v) 63,756 phantom shares of Company Common
Stock under the Savings and Investment Excess Benefit Plan and 3,198 phantom
shares of Company Common Stock under the Non-Employee Director Deferred
Compensation Plan and (vi) 1,000,000 shares of Series A Junior Participating
Preferred Stock of the Company (the "COMPANY SERIES A PREFERRED STOCK") were
reserved for issuance in connection with the rights (the "COMPANY Rights")
issued pursuant to the Rights Agreement dated as of December 18, 1998 (as
amended from time to time, the "COMPANY RIGHTS AGREEMENT"),
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between the Company and The Chase Manhattan Bank, as Rights Agent. During the
period from March 18, 2002 to the date of this Agreement, (x) there have been no
issuances by the Company of shares of capital stock of, or other equity or
voting interests in, the Company other than issuances of shares of Company
Common Stock pursuant to the exercise of Company Stock Options outstanding on
such date as required by their terms as in effect on the date of this Agreement
and (y) there have been no issuances by the Company of options, warrants or
other rights to acquire shares of capital stock or other equity or voting
interests from the Company. As soon as practicable after the execution of this
Agreement, the Company will deliver to Parent a true and complete list, as of
the close of business on March 18, 2002, of all outstanding options to purchase
Company Common Stock granted under the Company Stock Plans (collectively, the
"COMPANY STOCK OPTIONS"), the number of shares subject to each such Company
Stock Option, the grant dates and exercise prices of each such Company Stock
Option and the names of the holder thereof. As of the close of business on March
18, 2002, there were outstanding Company Stock Options to purchase 8,266,002
shares of Company Common Stock with exercise prices on a per share basis lower
than the Merger Consideration, and the weighted average exercise price of such
Company Stock Options was equal to $13.65. Except as set forth above, at the
close of business on March 18, 2002, no shares of capital stock or other voting
securities of the Company were issued, reserved for issuance or outstanding.
There are no outstanding stock appreciation rights linked to the price of
Company Common Stock and granted under any Company Stock Plan that were not
granted in tandem with a related Company Stock Option. All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company Charter,
the Company By-laws or any Contract (as defined below) to which the Company is a
party or otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of
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Company Capital Stock may vote ("VOTING COMPANY DEBT"). Except as set forth
above, as of the date of this Agreement, there are not any options, warrants,
rights, convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound (i) obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or any
subsidiary of the Company or any Voting Company Debt, (ii) obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into any
such option, warrant, call, right, security, commitment, Contract, arrangement
or undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of Company Capital Stock. As of the date of this Agreement,
there are not any outstanding contractual obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries. A complete and correct
copy of the Company Rights Agreement was filed as Exhibit 1 to the Current
Report on Form 8-K of the Company filed on December 18, 1998 (File No.
001-14501). Section 3.01(c) of the Company Disclosure Schedule sets forth a
complete list of amendments to, actions with respect to, and determinations
under, the Company Rights Agreement, true and complete copies of which have been
delivered to Parent prior to the execution of this Agreement.
(d) AUTHORITY; NONCONTRAVENTION. (i) The Company has all requisite
corporate power and authority to execute and deliver this Agreement and,
subject, in the case of the consummation of the Merger, to obtaining the Company
Stockholder Approval (as defined below), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and
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no other corporate proceedings on the part of the Company are necessary to
approve this Agreement or to consummate the transactions contemplated hereby,
subject, in the case of the consummation of the Merger, to obtaining the Company
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, fraudulent transfer, reorganization, moratorium or other
similar laws relating to creditors' rights and general principles of equity. The
Board of Directors of the Company, at a meeting duly called and held at which
directors of the Company constituting a quorum were present, duly and
unanimously adopted resolutions (i) approving and declaring advisable this
Agreement, the Merger and the other transactions contemplated hereby, (ii)
declaring that it is in the best interests of the Company's stockholders that
the Company enter into this Agreement and consummate the Merger on the terms and
subject to the conditions set forth in this Agreement, (iii) declaring that the
consideration to be paid to the Company's stockholders in the Merger is fair to
such stockholders, (iv) directing that this Agreement be submitted to a vote at
a meeting of the Company's stockholders and (v) recommending that the Company's
stockholders adopt this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and compliance with
the provisions hereof do not and will not conflict with, or result in any
violation or breach of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of, or result in, termination, cancelation
or acceleration of any obligation or the loss of a material benefit under, or
result in the creation of any Lien in or upon any of the properties or assets of
the Company or any of its subsidiaries under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of (i) the Company Charter or Company By-laws or the certificate of
incorporation or by-laws (or similar organizational documents) of any subsidiary
of the Company, (ii) any loan or credit agreement, bond, debenture, note,
mortgage, indenture, guarantee, lease or other contract, commitment, agreement,
instrument, arrangement, understanding, obligation, undertaking, permit,
concession, franchise or
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license, whether oral or written (each, including all amendments thereto, a
"CONTRACT"), to which the Company or any of its subsidiaries is a party or any
of their respective properties or assets is subject or otherwise under which the
Company or any of its subsidiaries have rights or benefits or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment,
order or decree, in each case applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, breaches, defaults,
rights, losses, Liens or entitlements that individually and in the aggregate
have not had and could not reasonably be expected to have a Material Adverse
Effect. No consent, approval, order or authorization of, or registration,
declaration or filing with, any domestic or foreign (whether national, federal,
state, provincial, local or otherwise) government or any court, administrative
agency or commission or other governmental or regulatory authority or agency,
domestic, foreign or supranational (a "GOVERNMENTAL ENTITY"), or termination or
expiration of any waiting period under applicable law, is required by or with
respect to the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby or compliance with the
provisions hereof, except for (1) compliance with and filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and all other applicable antitrust laws, (2) the filing with the SEC of a
proxy statement relating to the adoption by the Company's stockholders of this
Agreement (as amended or supplemented from time to time, the "PROXY STATEMENT")
and such reports under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as may be required in connection with this Agreement, the
Merger and the other transactions contemplated hereby, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company or any of its subsidiaries is qualified to do business, (4) any filings
required under the International Investment and Trade in Services Survey Act,
(5) any filings, approvals or consents
<Page>
14
required under the New Jersey Industrial Site Recovery Act, the Connecticut
Transfer Act and the Indiana Responsible Property Transfer Law, (6) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as are set forth in Section 3.01(d)(i) of the Company Disclosure
Schedule and (7) such consents, approvals, orders and authorizations of, and
registrations, declarations and filings with, foreign Governmental Entities the
failure of which to be obtained or made has not had and could not reasonably be
expected to have a Material Adverse Effect.
(ii) The Company and the Board of Directors of the Company have taken all
action necessary to (i) render the Company Rights inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby and (ii)
ensure that (A) neither of Parent nor Merger Sub nor any of their respective
affiliates or associates is or will become an "Acquiring Person" (as defined in
the Company Rights Agreement) by reason of this Agreement, the Merger or any
other transaction contemplated hereby, (B) a "Distribution Date" (as defined in
the Company Rights Agreement) shall not occur by reason of this Agreement, the
Merger or any other transaction contemplated hereby and (C) the Company Rights
shall expire immediately prior to the Effective Time.
(e) SEC DOCUMENTS. (i) The Company has filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed with the
SEC by the Company since January 1, 2000 (together with all information
incorporated therein by reference, the "SEC DOCUMENTS"). No subsidiary of the
Company is required to file any form, report, schedule, statement or other
document with the SEC. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933
(the "SECURITIES ACT") or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents at the time they were filed contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the
<Page>
15
extent that information contained in any SEC Document filed and publicly
available prior to the date of this Agreement (a "FILED SEC DOCUMENT") has been
revised or superseded by a later filed Filed SEC Document, none of the SEC
Documents contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(ii) The financial statements (including the related notes) of the Company
included in the SEC Documents comply as to form, as of their respective dates of
filing, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments). Except as set forth in the
Filed SEC Documents or incurred in the ordinary course of business since the
date of the most recent balance sheet included in the Filed SEC Documents, as of
the date of this Agreement, the Company and its subsidiaries have no material
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), required by GAAP to be set forth on a consolidated balance sheet
or in the notes thereto.
(iii) There are no agreements between the Company and Devon Energy
Corporation, a Delaware corporation (as successor to Pennzoil Company, a
Delaware corporation) (the "FORMER PARENT"), except the agreements listed as
exhibits to the Company's registration statement on Form S-4 filed with the SEC
on August 14, 1998. There is no suit, claim, action, investigation or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its subsidiaries or any of their
<Page>
16
respective assets by the Former Parent or any of its subsidiaries, or against or
affecting the Former Parent or any of its subsidiaries or any of their
respective assets by the Company or any of its subsidiaries, for indemnification
under such agreements or otherwise.
(f) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2001 and
prior to the date of this Agreement, there has not been any state of facts,
change, development, effect, condition or occurrence that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect. Since December 31, 2001, except as disclosed in the Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course of business consistent with past practice
and there has not been (i) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of the Company's or any of its subsidiaries' capital stock or
other equity or voting interests, except for dividends by a wholly owned
subsidiary of the Company to its parent and except for the regular quarterly
cash dividend with respect to the Company Common Stock in the amount of $0.025
per share in accordance with the Company's past dividend policy, (ii) any
purchase, redemption or other acquisition of any shares of capital stock of, or
other equity or voting interests in, the Company or any of its subsidiaries or
any options, warrants, calls or rights to acquire such shares or other
interests, (iii) prior to the date of this Agreement, any split, combination or
reclassification of any of the Company's or any of its subsidiaries' capital
stock or other equity or voting interests or any issuance or the authorization
of any issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of, or other equity or voting interests
in, the Company or any of its subsidiaries, (iv) (x) any granting by the Company
or any of its subsidiaries to any current or former director, officer or
employee of any increase in compensation, bonus or other benefits or any such
granting of any type of compensation or benefits to any current or former
director, officer or employee not previously receiving or entitled to receive
such type of compensation or benefit, except for increases of cash compensation
in the ordinary course of business
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17
consistent with past practice or as was expressly required under any employment
agreements disclosed in the Filed SEC Documents, (y) any granting to any current
or former director, officer or employee of the right to receive any severance or
termination pay, or increases therein, or (z) any entry by the Company or any of
its subsidiaries into, or any amendment of, any Company Benefit Plan (as defined
below), (v) any payment of any benefit or the grant or amendment of any award
(including in respect of stock options, Stock Units, stock appreciation rights,
performance units, restricted stock or other stock-based or stock-related awards
or the removal or modification of any restrictions in any Company Benefit
Agreement or Company Benefit Plan or awards made thereunder) except in the
ordinary course of business consistent with past practice or as expressly
required under any Company Benefit Agreement or Company Benefit Plan existing on
such date and disclosed in the Filed SEC Documents, (vi) any damage, destruction
or loss, whether or not covered by insurance, that individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect, (vii) any material change in financial or tax accounting methods,
principles or practices by the Company or any of its subsidiaries, except
insofar as may have been required by a change in GAAP or applicable law or
regulations, (viii) any material election with respect to taxes by the Company
or any of its subsidiaries or any settlement or compromise of any material tax
liability or refund other than consistent with past practice or (ix) any
revaluation by the Company or any of its subsidiaries of any assets that are
material to the Company and its subsidiaries, taken as a whole.
(g) LITIGATION. Except as set forth in the Filed SEC Documents, there
is no suit, claim, action, investigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its subsidiaries or any of their respective assets that individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect (and the Company is not aware of any basis for any such suit, claim,
action, investigation or proceeding), nor is there any statute, law, ordinance,
rule, regulation, judgment, order or decree of any Governmental Entity or
arbitrator outstanding against, or investigation,
<Page>
18
proceeding, notice of violation, order of forfeiture or complaint by any
Governmental Entity involving, the Company or any of its subsidiaries that
individually or in the aggregate has had or could reasonably be expected to have
a Material Adverse Effect.
(h) COMPLIANCE WITH LAWS. Except with respect to Environmental Laws
(as defined below), ERISA (as defined below) and taxes, which are the subject of
Sections 3.01(j), 3.01(k) and 3.01(l), respectively: (i) the Company and its
subsidiaries and their relevant personnel and operations are, and have been, in
compliance with all statutes, laws, ordinances, rules, regulations, judgments,
orders and decrees of any Governmental Entity applicable to their businesses or
operations, except for instances of noncompliance that individually and in the
aggregate have not had and could not reasonably be expected to have a Material
Adverse Effect; (ii) none of the Company and its subsidiaries have received a
notice or other written communication alleging or relating to a possible
violation of any statute, law, ordinance, rule, regulation, judgment, order or
decree of any Governmental Entity applicable to its businesses or operations,
except for notices or other written communications alleging or relating to
possible violations that individually and in the aggregate have not had and
could not reasonably be expected to have a Material Adverse Effect; (iii) the
Company and its subsidiaries have in effect all material permits, licenses,
variances, exemptions, authorizations, franchises, orders and approvals of all
Governmental Entities (collectively, "PERMITS"), necessary or advisable for them
to own, lease or operate their properties and assets and to carry on their
businesses as now conducted; (iv) there has occurred no violation of, default
(with or without notice or lapse of time or both) under, or event giving to
others any right of termination, amendment or cancelation of, with or without
notice or lapse of time or both, any such Permit, except for any such
violations, defaults or events that individually and in the aggregate have not
had and could not reasonably be expected to have a Material Adverse Effect; and
(v) neither this Agreement nor the Merger, in each case in and of itself, could
reasonably be expected to cause the revocation or cancelation of any such
Permit.
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19
(i) ABSENCE OF CHANGES IN COMPANY BENEFIT PLANS; EMPLOYMENT
AGREEMENTS. Except as disclosed in the Filed SEC Documents, since December 31,
2001, none of the Company or any of its subsidiaries has terminated, adopted,
amended or agreed to terminate, adopt or amend in any material respect any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock appreciation, restricted stock, stock
option, phantom stock, performance, retirement, thrift, savings, stock bonus,
cafeteria, paid time-off, perquisite, fringe benefit, vacation, severance,
disability, death benefit, hospitalization, medical, welfare benefit or other
plan, program, policy, arrangement or understanding (whether or not legally
binding) providing benefits to any of the current or former directors, officers
or employees of the Company or any of its subsidiaries (collectively, "COMPANY
BENEFIT PLANS") or changed or agreed to any change in any actuarial or other
assumption used to calculate funding obligations with respect to any Company
Pension Plan (as defined below) or any change in the timing or manner in which
contributions to any Company Pension Plan are made or the basis on which such
contributions are determined. Except as disclosed in the Filed SEC Documents,
there exist no employment, benefits acceleration, tax protection,
indemnification, deferred compensation, severance or termination agreements or
arrangements between the Company or any of its subsidiaries, on the one hand,
and any current or former director, officer or employee of the Company or any of
its subsidiaries, on the other hand (PROVIDED that with respect to employees of
the Company or any of its subsidiaries this provision shall include only
material agreements or arrangements) (collectively, "COMPANY BENEFIT
AGREEMENTS"), and no Company Benefit Agreement or Company Benefit Plan provides
benefits that are contingent, or the terms of which are materially altered, upon
the occurrence of a transaction involving the Company or its subsidiaries of the
nature contemplated by this Agreement.
(j) ENVIRONMENTAL MATTERS. Except for such matters that individually
and in the aggregate have not had and could not reasonably be expected to have a
Material Adverse Effect: (i) each of the Company and its subsidiaries possesses
all Environmental Permits (as defined below) necessary to conduct its businesses
and
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20
operations as currently conducted; (ii) each of the Company and its subsidiaries
is, and has been, in compliance with all applicable Environmental Laws and all
applicable Environmental Permits, and none of the Company or its subsidiaries
has received any (A) written communication from any Governmental Entity or other
person that alleges that the Company or any of its subsidiaries has violated or
is liable under any Environmental Law or (B) written request for information
pursuant to applicable Environmental Laws concerning the disposal of Hazardous
Materials (as defined below) or compliance with Environmental Laws; (iii) there
are no Environmental Claims (as defined below) pending or, to the knowledge of
the Company, threatened (A) against the Company or any of its subsidiaries or
(B) against any person whose liability for any Environmental Claim the Company
or any of its subsidiaries has retained or assumed, either contractually or by
operation of law, and none of the Company or its subsidiaries has contractually
retained or assumed any liabilities or obligations that could reasonably be
expected to provide the basis for any Environmental Claim; and (iv) to the
knowledge of the Company, there have been no Releases (as defined below) of any
Hazardous Materials that could reasonably be expected to form the basis of any
Environmental Claim.
For the purposes of this Agreement: (A) "ENVIRONMENTAL CLAIMS" means,
in respect of any person, (i) any and all administrative, regulatory or judicial
actions, orders, decrees, suits, demands, directives, claims, Liens,
investigations, proceedings or notices of noncompliance, liability or violation
by any Governmental Entity or other person alleging liability arising out of,
based on or related to (x) the presence, Release of, or exposure to, any
Hazardous Materials at any location, whether or not owned, operated, leased or
managed by the Company or any of its subsidiaries, or (y) circumstances forming
the basis of any violation or alleged violation of, or liability under, any
Environmental Law or Environmental Permit; or (ii) any and all claims by any
third party seeking damages (including natural resource damages), contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the presence or Release of, or exposure to, any Hazardous Material;
(B) "ENVIRONMENTAL LAWS" means all laws, rules,
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21
regulations, orders, decrees, common law, judgments or binding agreements, in
each case issued, promulgated by, or entered into with, any Governmental Entity
relating in any way to pollution or protection of the environment (including
ambient air, surface water, groundwater, soils or subsurface strata), the
preservation or reclamation of natural resources or protection of human health
as it relates to the environment; (C) "ENVIRONMENTAL PERMITS" means all permits,
licenses, registrations, waivers, exemptions and other authorizations required
under applicable Environmental Laws; (D) "HAZARDOUS MATERIALS" means (x) all
hazardous, toxic, explosive or radioactive substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing material, and (y) all other substances, materials, chemicals
or wastes of any nature, in each case, that is prohibited, limited or regulated
pursuant to any Environmental Law; and (E) "RELEASE" means any actual or
threatened release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through
the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata) or within any building, structure, facility or fixture.
(k) ERISA COMPLIANCE. (i) Section 3.01(k)(i) of the Company Disclosure
Schedule contains a true and complete list of all "employee welfare benefit
plans" (as defined in Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), "employee pension benefit plans" (as defined
in Section 3(2) of ERISA) (together, "COMPANY PENSION PLANS") and all other
Company Benefit Plans maintained or contributed to by the Company or any of its
subsidiaries or any person or entity that, together with the Company or any of
its subsidiaries, is treated as a single employer (a "COMMONLY CONTROLLED
ENTITY") under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended (the "CODE"), for the benefit of any current or former
director, officer or employee of the Company or any of its subsidiaries. As soon
as reasonably practicable after the execution of this Agreement, the Company
will provide to Parent true and complete copies of (1) each Company Benefit Plan
and all amendments thereto that are not included in the most recent restated
plan instrument, (2) the most recent annual report
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22
on Form 5500 required to be filed with the Internal Revenue Service (the "IRS")
with respect to each Company Benefit Plan (if any such report was required)
including, if applicable, Schedule B thereto, (3) the most recent summary plan
description for each Company Benefit Plan for which such summary plan
description is required, together with summary descriptions of any amendments
not included in the most recent summary plan description, which amendments have
been approved by the person in the Company having the authority to adopt plan
amendments, whether or not such amendments have been previously reduced to
writing, (4) each trust agreement and group annuity contract relating to any
Company Benefit Plan and (5) the most recent favorable determination letters
with respect to each Company Pension Plan together with any correspondence from
the IRS concerning the qualification of a Company Pension Plan received after
the date of said most recent determination letter. Each Company Benefit Plan has
been administered in accordance with its terms, except where the failure so to
be administered individually and in the aggregate has not had and could not
reasonably be expected to have a Material Adverse Effect. The Company and its
subsidiaries and all the Company Benefit Plans are, and have been, in compliance
with all applicable provisions of ERISA, the Code and all other laws applicable
to the Company Benefit Plans, except for instances of possible noncompliance
that individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect. All Company Pension Plans that are
intended to be qualified under Section 401(a) of the Code have received
unqualified favorable determination letters from the IRS, to the effect that
such Company Pension Plans are qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code, and all terms and
conditions of such determination letters have been timely complied with. No such
determination letter has been revoked nor, to the knowledge of the Company, has
revocation been threatened, and, to the knowledge of the Company, no event has
occurred, and no condition exists, which could reasonably be expected to result
in the revocation of any determination letter. No Company Pension Plan has been
amended since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification or
materially increase its costs or its funding. Except as, individually and in
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23
the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect, there is no pending or, to the knowledge of the
Company, threatened litigation relating to the Company Benefit Plans.
(ii) Except as, individually and in the aggregate, has not had and could
not reasonably be expected to have a Material Adverse Effect, neither the
Company nor any Commonly Controlled Entity has maintained, contributed to or
been obligated to contribute to any Company Pension Plan (other than a
multiemployer plan within the meaning of Section 3(37) of ERISA) with respect to
which the Company or any Commonly Controlled Entity has unfunded liabilities
based upon the assumptions utilized in the audited financial statements of the
Company included in the Filed SEC Documents under any Company Benefit Plan
subject to ERISA. Neither the Company nor any of its subsidiaries, nor to the
knowledge of the Company, any officer of the Company or any of its subsidiaries
or any of the Company Benefit Plans which are subject to ERISA, including the
Company Pension Plans, any trusts created thereunder or any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such term
is defined in Section 406 of ERISA or Section 4975 of the Code) or any other
breach of fiduciary responsibility that could reasonably be expected to subject
the Company, any of its subsidiaries or any officer of the Company or any of its
subsidiaries to the tax or penalty on prohibited transactions imposed by such
Section 4975 or to any liability under Section 502(i) or 502(1) of ERISA, except
for any such tax, penalty or liability that individually and in the aggregate
has not had and could not reasonably be expected to have a Material Adverse
Effect. Except as, individually and in the aggregate, has not had and could not
reasonably be expected to have a Material Adverse Effect, all contributions and
premiums required to be made under the terms of any Company Benefit Plan as of
the date hereof have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Filed SEC
Documents.
(iii) Except as, individually and in the aggregate, has not had and could
not reasonably be expected to have a Material Adverse Effect, each Company
Benefit Plan that is a welfare benefit plan ("WELFARE PLAN"), to the extent
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24
applicable, complies in all material respects with the applicable requirements
of Section 4980B(f) of the Code. With respect to any Welfare Plan, there are no
conditions, understandings, agreements or undertakings, written or oral, that
would prevent any such plan (including any such plan covering retirees or other
former employees) from being amended or terminated without liability to the
Company or any of its subsidiaries on or after the Effective Time, except for
such liabilities that, individually and in the aggregate, have not had and could
not reasonably be expected to have a Material Adverse Effect. Except as set
forth in the Filed SEC Documents, neither the Company nor any of its
subsidiaries has any obligations for retiree health and life benefits under any
Company Benefit Plan or Company Benefit Agreement.
(iv) To the knowledge of the Company, the deduction of any amount payable
pursuant to the terms of the Company Benefit Plans or Company Benefit Agreements
(including by reason of the transactions contemplated hereby) will not be
subject to disallowance under Section 162(m) of the Code.
(v) The consummation of the Merger or any other transaction contemplated
hereby will not (x) entitle any employee, officer or director of the Company or
any of its subsidiaries to severance pay, (y) accelerate the time of payment or
vesting or trigger any payment or funding (whether through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Company Benefit
Plans or Company Benefit Agreements or (z) result in any breach or violation of,
or any default under, any of the Company Benefit Plans or Company Benefit
Agreements. The Rabbi Trust Agreement, dated as of January 1, 2002, by and
between the Company and JP Morgan Chase Bank has been terminated in accordance
with its terms and neither the Company nor any of its subsidiaries is required
to fund in any trust or similar arrangement any severance, termination,
retention, incentive pay, welfare or non-qualified retirement benefits.
(vi) The information set forth on Section 3.01(k)(vi) of the Company
Disclosure Schedule is true and correct in all material respects.
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25
(vii) Except as, individually and in the aggregate, have not had and could
not reasonably be expected to have a Material Adverse Effect, to the knowledge
of the Company, (a) all employee benefit plans established or maintained by
non-United States subsidiaries of the Company ("FOREIGN EMPLOYEE PLANS") are in
compliance with applicable foreign law, (b) as of December 31, 2001, there are
no unfunded or unaccrued liabilities with respect to Foreign Employee Plans in
excess of the amount reflected in the most recent audited financial statements
contained in the Filed SEC Documents, (c) any such Foreign Employee Plan
required to be registered under applicable law has been registered and has been
maintained in good standing with all applicable regulatory authorities, (d) such
Foreign Employee Plan is, wherever possible under applicable law or practice,
approved by the relevant governmental or taxation authority, such as to enable
the Foreign Benefit Plan, its beneficiaries and assets to enjoy the most
favorable taxation status possible and the Company is not aware of any ground on
which such approval may be withdrawn to any extent and (e) such Foreign Employee
Plan may be terminated without material liability to the Company or any of its
subsidiaries.
(viii) The aggregate funding status as of December 31, 2001 of Company
Pension Plans that are defined benefit pension plans is disclosed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001
on file with the SEC and such disclosure is true and correct in all material
respects.
(l) TAXES. (i) Each of the Company and its subsidiaries has timely
filed or caused to be filed all tax returns required to be filed by it and all
such tax returns are complete and accurate, except for such failures to timely
file or cause to be filed and such incompleteness or inaccuracies that
individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect. Each of the Company and its
subsidiaries has timely paid or caused to be paid all taxes due with respect to
the taxable periods covered by such tax returns and all other taxes otherwise
due, and its most recent financial statements included in the Filed SEC
Documents reflect an adequate reserve (including any reserve for deferred taxes)
for all taxes not yet due but
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26
that are payable for periods or portions thereof accrued through the date of
such financial statements, except for such failures to pay or reserve that
individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect.
(ii) There is no deficiency, audit examination, refund litigation,
proposed adjustment or matter in controversy with any taxing authority with
respect to any taxes of the Company or any of its subsidiaries whether or
not with respect to a tax return filed by the Company or any of its
subsidiaries, except for such deficiencies, audit examinations, refund
litigation, proposed adjustments or matters in controversy that
individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect. No issues relating to taxes
were raised by the relevant taxing authority in any completed audit or
examination, that could reasonably be expected to have a material effect on
the Company or any of its subsidiaries in a later taxable period. The
Federal income tax returns of the Company and each of its subsidiaries have
been examined by and settled with the IRS for all years through December
31, 1993. The relevant statute of limitations is closed with respect to all
United States Federal income tax returns of the Company and its
subsidiaries for all years through December 31, 1993. All assessments for
taxes due and owing by the Company or any of its subsidiaries with respect
to completed and settled examinations or concluded litigation have been
timely paid.
(iii) No material Liens for taxes exist with respect to any of the
assets or properties of the Company or any of its subsidiaries except for
statutory Liens for taxes not yet due or payable.
(iv) Other than the agreements listed in Section 3.01(l)(iv) of the
Company Disclosure Schedule and the Tax Separation Agreement dated as of
December 2, 1998 by and between the Company and the Former Parent, copies
of which have been provided to Parent prior to the execution of this
Agreement, neither the Company nor any of its subsidiaries is a party to or
bound by
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27
any written or oral (A) tax sharing agreement or similar agreement,
arrangement or practice (including any liability for taxes of any other
person under Treasury Regulation 1.1502-6 or comparable provision of
foreign, state or local law) or (B) tax indemnity obligation or similar
agreement, arrangement or practice (including any liability for taxes of
any other person under Treasury Regulation 1.1502-6 or comparable provision
of foreign, state or local law) that could reasonably be expected to entail
a material tax liability, in each case except for any agreement or
liability solely among the Company and its subsidiaries.
(v) Neither the Company nor any of its subsidiaries shall be required
to include in a taxable period ending after the Effective Time taxable
income attributable to income that accrued in a prior taxable period but
was not recognized in any prior taxable period as a result of the
installment method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or
comparable provisions of state, local or foreign tax law, or for any other
reason, except for such inclusions of taxable income that individually and
in the aggregate have not had and could not reasonably be expected to have
a Material Adverse Effect.
(vi) There is no currently effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any taxes and no power of attorney with respect to any taxes
has been executed or filed with any taxing authority by or on behalf of the
Company or any of its subsidiaries.
(vii) The Company and each of its subsidiaries have complied in all
respects with all applicable laws, rules and regulations relating to the
payment and withholding of taxes (including, without limitation,
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the
Code or similar provisions under any state, local or foreign laws) and
have, within the time and the manner prescribed by
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28
law, withheld from and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws,
except for such failures to comply or withhold and pay over that
individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect.
(viii) Neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code in the two-year period ending on the date of this Agreement (or
will constitute such a corporation in the two-year period ending on the
Closing Date). The transaction by which the Company was separated from its
Former Parent in a distribution of stock intended to qualify for tax-free
treatment under Section 355 of the Code (the "SPIN-OFF") was consummated
more than two years prior to the date of this Agreement. There was no
agreement, understanding, arrangement, or substantial negotiations
concerning the Merger at the time of the consummation of the Spin-Off or
within six months thereafter.
(ix) As used in this Agreement, (A) "TAXES" shall mean all (x) forms
of taxation imposed by any Federal, state, local, foreign or other
governmental authority, including income, franchise, property, sales, use,
excise, employment, unemployment, payroll, social security, estimated,
value added, ad valorem, transfer, recapture, stamp, alternative minimum,
withholding and other taxes of any kind, including any interest, penalties
and additions thereto, (y) liability for the payment of any amounts of the
type described in clause (x) as a result of being a member of an
affiliated, consolidated, combined, unitary or aggregate group and (z)
liability for the payment of any amounts as a result of being a party to
any tax sharing agreement or as a result of an express or implied
obligation to indemnify any other person with respect to the payment of any
amounts of the type described in clause (x) or (y); and (B) "TAX RETURN"
shall mean any return, declaration, report, document,
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claim for refund, estimate, information return or other statement or
information required to be filed or supplied to any taxing authority or
jurisdiction with respect to taxes, including any schedule or attachment
thereto, and including any amendment thereof.
(m) STATE TAKEOVER STATUTES. The approval by the Board of Directors of
the Company of this Agreement, the Merger and the other transactions
contemplated hereby referred to in Section 3.01(d) constitutes approval of this
Agreement, the Merger and the other transactions contemplated hereby for
purposes of Section 203 of the DGCL and represents the only action necessary to
ensure that the restrictions contained in Section 203(a) of the DGCL do not and
will not apply to the performance of this Agreement, the consummation of the
Merger or the other transactions contemplated hereby. No other state takeover or
similar statute or regulation is applicable to this Agreement, the Merger or the
other transactions contemplated hereby.
(n) VOTING REQUIREMENTS. The affirmative vote at the Stockholders
Meeting or any adjournment or postponement thereof of the holders of a majority
of the outstanding shares of Company Common Stock in favor of adopting this
Agreement (the "Company Stockholder Approval") is the only vote of the holders
of any class or series of the Company's capital stock necessary to approve or
adopt this Agreement or the Merger. The affirmative vote of the holders of any
of the Company Common Stock is not necessary to approve any transaction
contemplated hereby other than the consummation of the Merger.
(o) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other person, other than Morgan Stanley & Co.
Incorporated, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Company or any of its subsidiaries. The
Company has delivered to Parent prior to the execution of this Agreement true
and complete copies of all agreements under which any such fees or expenses are
payable and all indemnification and other agreements
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30
related to the engagement of the persons to whom such fees are payable. The fees
and expenses of any accountant, broker, financial advisor, consultant, legal
counsel or other person retained by or on behalf of the Company in connection
with this Agreement or the transactions contemplated hereby incurred or to be
incurred by the Company in connection with this Agreement and the transactions
contemplated hereby will not exceed the fees and expenses set forth in Section
3.01(o) of the Company Disclosure Schedule.
(p) OPINION OF FINANCIAL ADVISORS. The Company has received the
opinion of Morgan Stanley & Co. Incorporated, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received by the
holders of Company Common Stock pursuant to this Agreement is fair from a
financial point of view to such holders, a signed copy of which opinion has been
disclosed to Parent prior to the execution of this Agreement.
(q) INTELLECTUAL PROPERTY. The Company and its subsidiaries own, or
are validly licensed or otherwise have the right to use, all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, copyrights and other proprietary intellectual
property rights and computer programs (collectively, "INTELLECTUAL PROPERTY
RIGHTS") which are material to the conduct of the business of the Company and
its subsidiaries taken as a whole. No material claims are pending or, to the
knowledge of the Company, threatened that the Company or any of its subsidiaries
is infringing or otherwise adversely affecting the rights of any person with
regard to any Intellectual Property Right. To the knowledge of the Company, no
person is infringing in any material respect the rights of the Company or any of
its subsidiaries with respect to any Intellectual Property Right.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB. Parent and Merger Sub, jointly and severally, represent and warrant to the
Company as follows:
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(a) ORGANIZATION. Each of Parent and Merger Sub is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized and has all requisite corporate power and authority to
carry on its business as now being conducted.
(b) AUTHORITY; NONCONTRAVENTION. Each of Parent and Merger Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by each of Parent and Merger Sub and the consummation
by Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub and no other corporate proceedings on the part of Parent and Merger Sub are
necessary to approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and Merger Sub and constitutes a valid and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, subject to applicable bankruptcy, fraudulent transfer,
reorganization, moratorium or other similar laws relating to creditors' rights
and general principles of equity. Parent, as sole stockholder of Merger Sub, has
adopted this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or the loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any Lien in or upon any of the
properties or assets of Parent or any of its subsidiaries under, any provision
of (i) the charter or organizational documents of Parent or Merger Sub, (ii) any
Contract to which Parent or any of its subsidiaries is a party or any of their
respective properties or assets is subject or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or decree, in
each case applicable to Parent or Merger Sub
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32
or their respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, breaches, defaults, rights,
losses or Liens that individually and in the aggregate could not reasonably be
expected to prevent or materially impede or delay the consummation of the
Merger. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, or termination or
expiration of any waiting period under applicable law, is required by or with
respect to Parent or Merger Sub in connection with the execution and delivery of
this Agreement by Parent and Merger Sub or the consummation by Parent and Merger
Sub of the transactions contemplated hereby or compliance with the provisions
hereof, except for (1) compliance with and filings under the HSR Act and all
other applicable antitrust laws, (2) the filing with, or furnishing to, the SEC
of such reports under the Exchange Act as may be required in connection with
this Agreement, the Merger and the other transactions contemplated hereby, (3)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and appropriate documents with the relevant authorities of other
states in which the Company or any of its subsidiaries is qualified to do
business, (4) any filings required under the International Investment and Trade
in Services Survey Act, (5) such consents, approvals, orders and authorizations
of, and registrations, declarations and filings with, foreign Governmental
Entities the failure of which to be obtained or made individually and in the
aggregate could not reasonably be expected to prevent or materially impede or
delay the consummation of the Merger and (6) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) listed in
Section 3.01(d)(i) of the Company Disclosure Schedule, (B) required to be listed
in Section 3.01(d)(i) of the Company Disclosure Schedule that are not so listed
or (C) the failure of which to be obtained or made individually and in the
aggregate could not reasonably be expected to prevent or materially impede or
delay the consummation of the Merger.
(c) INTERIM OPERATIONS OF MERGER SUB. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has engaged
in no business other than in connection with the transactions contemplated
hereby.
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(d) CAPITAL RESOURCES. On or prior to the Closing Date, Parent will
have sufficient cash to provide for payment of the Merger Consideration.
(e) PRIOR DISCUSSIONS. There was no agreement, understanding,
arrangement, or substantial negotiations concerning the Merger at the time of
the consummation of the Spin-Off or within six months thereafter.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY THE
COMPANY. Except as set forth in the Company Disclosure Schedule (with specific
reference to the subsection of this Section 4.01(a) to which the information
stated in such disclosure relates), as consented to in writing by Parent (such
consent not to be unreasonably withheld, conditioned or delayed) or as
specifically contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice, including as to levels of capital expenditures
and advertising expenditures, and, to the extent consistent therewith, use their
commercially reasonable efforts to preserve their assets and technology, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
franchisees, distributors and others having business dealings with them. Without
limiting the generality of the foregoing, except as set forth in the Company
Disclosure Schedule (with specific reference to the subsection of this Section
4.01(a) to which the information stated in such disclosure relates), as
consented to in writing by Parent (such consent not to be unreasonably withheld,
conditioned or delayed) or as specifically contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries to:
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34
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
its capital stock or other equity or voting interests except for (A)
dividends by a direct or indirect wholly owned subsidiary of the Company to
its parent and (B) regular quarterly cash dividends with respect to the
Company Common Stock, not in excess of $0.025 per share, with usual
declaration, record and payment dates and in accordance with the Company's
past dividend policy, (y) purchase, redeem or otherwise acquire any shares
of capital stock of, or other equity or voting interests in, the Company or
its subsidiaries or any options, warrants, calls or rights to acquire any
such shares or other interests or (z) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or other equity or voting interests;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other equity or voting interests or any securities
convertible into, or exchangeable for, or any options, warrants, calls or
rights to acquire, any such shares, interests or securities or any stock
appreciation rights or other rights that are linked to the price of Company
Common Stock (other than the issuance of shares of Company Common Stock
(and associated Company Rights) upon the exercise of Company Stock Options
in accordance with the terms of such Company Stock Options as in effect on
the date of this Agreement;
(iii) amend its certificate of incorporation or by-laws (or similar
organizational documents);
(iv) directly or indirectly acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing all or a substantial portion of the
assets of, or by any other manner, any assets constituting a business or
any corporation, partnership, joint venture, association, limited liability
company or other entity or division thereof, or any direct or indirect
interest in any of the foregoing, or (B) any
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assets that are material, individually or in the aggregate, to the Company
and its subsidiaries, taken as a whole, other than purchases of inventory
in the ordinary course of business consistent with past practice;
(v) directly or indirectly sell, lease, license, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose
of any properties or assets or any interest therein that are material,
individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole, except sales of inventory and obsolete assets in the
ordinary course of business consistent with past practice;
(vi) (x) repurchase or incur any indebtedness or guarantee any
indebtedness of another person or issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowings incurred in the ordinary course of business
consistent with past practice, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than the
Company or any direct or indirect wholly owned subsidiary of the Company;
(vii) make or agree to make (x) any capital expenditures that, taken
together with all other capital expenditures made or agreed to be made,
would exceed $80 million in 2002 or any future fiscal year or (y)
advertising expenditures in excess of the amounts set forth in Section
4.01(a)(vii)(y) of the Company Disclosure Schedule;
(viii) pay, discharge, settle or satisfy any material claims
(including any claims of stockholders), liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or
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satisfaction in the ordinary course of business consistent with past
practice or as required by their terms as in effect on the date of this
Agreement of claims, liabilities or obligations reflected or reserved
against in the most recent audited financial statements (or the notes
thereto) of the Company included in the Filed SEC Documents (for amounts
not materially in excess of such reserves) or incurred since the date of
such financial statements in the ordinary course of business consistent
with past practice, or waive, release, grant or transfer any right of
material value, other than in the ordinary course of business consistent
with past practice, or waive any material benefits of, or agree to modify
in any adverse respect, or fail to enforce, or consent to any matter with
respect to which its consent is required under, any confidentiality,
standstill or similar agreement to which the Company or any of its
subsidiaries is a party;
(ix) except as required to comply with applicable law or any provision
of any Company Benefit Agreement, Company Benefit Plan or other Contract as
in effect on the date of this Agreement, (A) take any action to fund or in
any other way secure the payment of compensation or benefits under any
Company Benefit Agreement, Company Benefit Plan or other Contract, (B) take
any action to accelerate eligibility for benefits or the vesting or payment
of any compensation or benefit under any Company Benefit Agreement, Company
Benefit Plan or other Contract, (C) increase the compensation of any
current or former director, officer or other employee of the Company or any
of its subsidiaries except for normal increases in the ordinary course of
business consistent with past practice and that, in the aggregate, do not
result in a material increase in benefits or compensation expense to the
Company or (D) establish or amend any Company Benefit Agreement or Company
Benefit Plan;
(x) take any action that would or could reasonably be expected to
result in (A) any representation and warranty of the Company set forth in
this Agreement that is qualified as to materiality becoming untrue, (B) any
such representation and
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warranty that is not so qualified becoming untrue in any material respect
or (C) any condition to the Merger set forth in Article VI not being
satisfied; or
(xi) authorize any of, or commit, resolve or agree to take any of, the
foregoing actions.
(b) CERTAIN TAX MATTERS. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, (i) timely file all material tax returns ("POST-SIGNING
RETURNS") required to be filed by each such entity; (ii) timely pay all material
taxes due and payable in respect of such Post-Signing Returns that are so filed;
(iii) accrue a reserve in the books and records and financial statements of any
such entity in accordance with past practice for all material taxes payable by
such entity for which no Post-Signing Return is due prior to the Effective Time;
(iv) promptly notify Parent of any suit, claim, action, investigation,
proceeding or audit (collectively, "ACTIONS") initiated against or with respect
to the Company or any of its subsidiaries in respect of any material tax and not
settle or compromise any Action against or with respect to the Company or any of
its subsidiaries in respect of any material tax without Parent's consent; and
(v) not make any material tax election or settle or compromise any material tax
liability, other than in connection with currently pending proceedings or other
than in the ordinary course of business consistent with past practice.
(c) ADVICE OF CHANGES; FILINGS. The Company shall (i) confer with
Parent on a regular and frequent basis to report on operational matters and
other matters reasonably requested by Parent and (ii) promptly advise Parent
orally and in writing of any state of facts, change, development, effect,
condition or occurrence that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect. The Company and Parent
shall each promptly provide the other copies of all filings made by such party
with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby, other than the portions of such filings that
include confidential
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information not directly related to the transactions contemplated hereby.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, nor shall it
permit any of its subsidiaries to, or authorize or permit any director, officer
or employee of the Company or any of its subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the Company or any of
its subsidiaries (collectively, the "REPRESENTATIVES") to, directly or
indirectly, (i) solicit, initiate or encourage, or take any other action
knowingly to facilitate, any Takeover Proposal (as defined below) or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, any
Takeover Proposal; PROVIDED, HOWEVER, that, at any time prior to obtaining the
Company Stockholder Approval, the Board of Directors of the Company may, in
response to a bona fide Takeover Proposal that the Board of Directors of the
Company determines in good faith constitutes or is reasonably likely to lead to
a Superior Proposal (as defined below), and which did not result from a breach
of this Section 4.02, and subject to compliance with Section 4.02(c) and (d),
(x) furnish information with respect to the Company and its subsidiaries to the
person making such Takeover Proposal (and its representatives) pursuant to a
customary confidentiality agreement (which confidentiality agreement contains
terms that are in no material respect less favorable to the Company than the
terms of the Confidentiality Agreement dated March 8, 2002, between Equilon
Enterprises LLC (dba Shell Oil Products US), a Delaware limited liability
company and a subsidiary of Parent, and the Company (as it may be amended from
time to time, the "CONFIDENTIALITY AGREEMENT") (PROVIDED that such
confidentiality agreement need not contain any "standstill" or similar
covenant)); PROVIDED that all such information is provided on a prior or
substantially concurrent basis to Parent, and (y) participate in discussions or
negotiations with the person making such Takeover Proposal (and its
representatives) regarding such Takeover Proposal. Without limiting the
foregoing, it is agreed that any violation of the restrictions set forth in the
preceding sentence by any Representative or affiliate of the Company or any of
its subsidiaries, whether or not such person is purporting to act on behalf of
the Company
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or any of its subsidiaries or otherwise, shall be deemed to be a breach of this
Section 4.02(a) by the Company. The Company has, and has caused each of its
subsidiaries and each of the Representatives to have, (i) terminated all
discussions or negotiations with all third parties regarding any Takeover
Proposal and (ii) requested the prompt return of all confidential information
relating to the Company or any of its subsidiaries previously furnished to any
such third parties.
The term "TAKEOVER PROPOSAL" means any inquiry, proposal or offer from
any person (other than Parent) relating to, or that is reasonably likely to lead
to, any direct or indirect acquisition, in one transaction or a series of
transactions, including by way of any merger, consolidation, tender offer,
exchange offer, binding share exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar transaction, of (A) assets or
businesses that constitute or represent 15% or more of the revenues, income from
continuing operations, net income or total assets of the Company and its
subsidiaries, taken as a whole, or (B) 15% or more of the outstanding shares of
Company Common Stock or capital stock of, or other equity or voting interests
in, any of the Company's subsidiaries directly or indirectly holding the assets
or businesses referred to in clause (A) above.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent or Merger
Sub) or propose publicly to withdraw (or modify in a manner adverse to Parent or
Merger Sub) the recommendation or declaration of advisability by such Board of
Directors of the Company or any such committee of this Agreement or the Merger,
or recommend, or propose publicly to recommend, the approval or adoption of any
Takeover Proposal (each such action being referred to herein as an "ADVERSE
RECOMMENDATION"), unless the Board of Directors of the Company determines in
good faith, based on such matters as it deems appropriate, after consulting with
legal counsel, that the failure to take such action would be reasonably likely
to result in a breach of its fiduciary duties under applicable law, (ii) adopt
or approve, or propose publicly to adopt or approve, any Takeover Proposal, or
withdraw its approval of
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the Merger, or propose publicly to withdraw its approval of the Merger, (iii)
cause or permit the Company to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement or other
agreement (each, an "ACQUISITION AGREEMENT") constituting or related to, or
which is intended to or is reasonably likely to lead to, any Takeover Proposal
(other than a confidentiality agreement referred to in Section 4.02(a)) or (iv)
agree or resolve to take any of the actions prohibited by clauses (i), (ii) or
(iii) of this sentence. Notwithstanding anything in this Section 4.02 to the
contrary, at any time prior to obtaining the Company Stockholder Approval, the
Board of Directors of the Company may, in response to a Superior Proposal (as
defined below) that did not result from a breach of Section 4.02(a), cause the
Company to terminate this Agreement pursuant to Section 7.01(f) and concurrently
enter into an Acquisition Agreement; PROVIDED, HOWEVER, that the Company shall
not terminate this Agreement pursuant to Section 7.01(f), and any purported
termination pursuant to Section 7.01(f) shall be void and of no force or effect,
unless the Company shall have complied with all the provisions of this Section
4.02, including the notification provisions in this Section 4.02, and with all
applicable requirements of Sections 5.06(b) (including the payment of the
Termination Fee (as defined below) prior to or concurrently with such
termination); and PROVIDED FURTHER, HOWEVER, that the Company shall not exercise
its right to terminate this Agreement pursuant to Section 7.01(f) until after
the fifth business day following Parent's receipt of written notice (a "NOTICE
OF SUPERIOR PROPOSAL") from the Company advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of the Superior Proposal, identifying the person
making such Superior Proposal and stating that the Board of Directors of the
Company intends to exercise its right to terminate this Agreement pursuant to
Section 7.01(f) (it being understood and agreed that, prior to any such
termination taking effect, any amendment to the price or any other material term
of a Superior Proposal shall require a new Notice of Superior Proposal and a new
five business day period).
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The term "SUPERIOR PROPOSAL" means any bona fide binding offer made by
a third party in respect of a transaction that if consummated would result in
such third party (or in the case of a direct merger between such third party and
the Company or one of its subsidiaries, the stockholders of such third party)
acquiring, directly or indirectly, all or substantially all of the voting power
of the Company Common Stock or all or substantially all the assets of the
Company and its subsidiaries, taken as a whole, which transaction the Board of
Directors of the Company determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized reputation)
(taking into account the person making the offer, the consideration offered, the
likelihood of consummation (including the legal, financial and regulatory
aspects of the offer) as well as any other factors deemed relevant by the Board
of Directors of the Company) to be more favorable from a financial point of view
to the stockholders of the Company than the Merger, taking into account any
changes to the terms of this Agreement offered by Parent in response to such
Superior Proposal or otherwise.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 4.02, the Company promptly shall advise Parent
orally and in writing of any request for information that the Company reasonably
believes could lead to or contemplates a Takeover Proposal or of any Takeover
Proposal, or any inquiry the Company reasonably believes could lead to any
Takeover Proposal, the material terms and conditions of such request, Takeover
Proposal or inquiry (including any subsequent amendment or other modification to
such terms and conditions) and the identity of the person making any such
request, Takeover Proposal or inquiry. The Company shall keep Parent informed in
all material respects of the status and details (including material amendments
or proposed amendments) of any such request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this Agreement
shall prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
(ii) making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of
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Directors of the Company, after consultation with outside counsel, failure to
make such disclosure would be inconsistent with applicable law; PROVIDED,
HOWEVER, that in no event shall the Company or its Board of Directors or any
committee thereof take, or agree or resolve to take, any action prohibited by
Section 4.02(b)(i) or 4.02(b)(ii). Notwithstanding anything in this Section
4.02(d) or the second sentence of Section 4.02(b), but subject always to Section
7.01(f), the Company Board may not take any action that would result in the
Company's stockholders no longer being legally capable under the DGCL of validly
adopting this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS
MEETING. (a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare and file with the SEC the Proxy Statement
in preliminary form and the Company shall use its commercially reasonable
efforts to respond as promptly as practicable to any comments of the SEC with
respect thereto, to prepare and file with the SEC the definitive Proxy Statement
and to cause the definitive Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable following the date of this Agreement.
The Company shall promptly notify Parent upon the receipt of any comments from
the SEC or its staff or any request from the SEC or its staff for amendments or
supplements to the Proxy Statement and shall provide Parent with copies of all
correspondence between the Company and its representatives, on the one hand, and
the SEC and its staff, on the other hand. Parent shall promptly provide any
information or responses to comments or other assistance reasonably requested in
connection with the foregoing. Prior to filing or mailing the Proxy Statement
(or any amendment or supplement thereto) or responding to any comments of the
SEC with respect thereto, the Company (i) shall provide Parent an opportunity to
review and comment on such document or response, (ii) shall give reasonable
consideration to all comments proposed by Parent and (iii) shall not file or
mail any such document or
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submit any response to the SEC to which Parent reasonably objects.
(b) The Company shall, as promptly as practicable following the date
of this Agreement, establish a record date (which will be as promptly as
reasonably practicable following the date of this Agreement) for, duly call,
give notice of, convene and hold a meeting of its stockholders (the
"STOCKHOLDERS MEETING") for the purpose of obtaining the Company Stockholder
Approval. Except as expressly permitted pursuant to Section 4.02(b), the Company
shall, through its Board of Directors, recommend to its stockholders that they
adopt this Agreement, and shall include such recommendation in the Proxy
Statement. Without limiting the generality of the foregoing, the Company agrees
that its obligations pursuant to this Section 5.01(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company or any other person of any Takeover Proposal.
SECTION 5.02. ACCESS TO INFORMATION; CONFIDENTIALITY; TRANSITION
PLANNING. (a) The Company shall, and shall cause each of its subsidiaries to,
afford to Parent, its subsidiaries and affiliates and to their respective
officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives, access at reasonable times and during normal
business hours during the period prior to the Effective Time or the termination
of this Agreement in a manner which does not unreasonably interfere with the
business and operations of the Company to all their respective properties,
assets, books, contracts, commitments, directors, officers, employees,
attorneys, accountants, auditors, other advisors and representatives and
records, and, during such period, the Company shall, and shall cause each of its
subsidiaries to, make available to Parent on a prompt basis (i) access to each
report, schedule, form, statement and other document filed or received by it
during such period pursuant to the requirements of any law and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request (including the work papers of Arthur Andersen LLP if
reasonably available).
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(b) The Company and Parent shall, and shall cause each of their
respective subsidiaries to, reasonably cooperate to obtain an orderly transition
and integration process in connection with the Merger in order to minimize the
disruption to, and preserve the value of, the business of the Surviving
Corporation and its subsidiaries during the period from and after the Effective
Time.
(c) Notwithstanding Sections 5.02(a) and (b), the Company shall not be
required to provide such portions of documents or information (i) relating to
pricing or other matters that are highly sensitive if providing such portions of
documents or information, as determined by the Company's counsel, might
reasonably result in antitrust difficulties for the Company; or (ii) which the
Company is prohibited from disclosing by a confidentiality agreement with a
third party if the Company has used commercially reasonable efforts to obtain
the consent of such third party to such disclosure. If any material is withheld
by the Company pursuant to this Section 5.02(c), the Company shall inform Parent
as to the general nature of what is being withheld.
SECTION 5.03. COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION. (a) Upon
the terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use its commercially reasonable efforts to take, or cause to
be taken, all actions that are necessary, proper or advisable to consummate and
make effective the Merger and the other transactions contemplated hereby,
including using its commercially reasonable efforts to accomplish the following
as promptly as reasonably practicable following the date of this Agreement: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity and (iii) the obtaining of all necessary
consents, approvals or waivers from third parties. In connection with and
without limiting the foregoing, the Company and its Board of
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Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to this Agreement, the Merger or any of the other
transactions contemplated hereby, use its commercially reasonable efforts to
ensure that the Merger and the other transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Merger and the other transactions contemplated hereby.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.02(a) would
not be satisfied; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate such that the condition set forth in Section
6.03(a) would not be satisfied; PROVIDED, HOWEVER, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.04. COMPANY STOCK OPTIONS. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such other actions (if any) as may be required to:
(i) provide that each Company Stock Option outstanding immediately
prior to the Effective Time (whether vested or unvested) shall be converted
at the Effective Time into the right to receive an amount of cash equal to
(A) the excess, if any, of (1) the Merger Consideration over (2) the
exercise price per share of Company Common Stock subject to such Company
Stock Option, multiplied by (B) the number of shares
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of Company Common Stock for which such Company Stock Option shall not
theretofore have been exercised;
(ii) provide that each Stock Unit outstanding immediately prior to the
Effective Time shall be converted at the Effective Time into the right to
receive an amount of cash equal to the product of (A) the Merger
Consideration and (B) the number of shares of Company Common Stock subject
to the Stock Unit; and
(iii) make such other changes to the Company Stock Plans as the
Company and Parent may agree are appropriate to give effect to the Merger.
(b) All amounts payable pursuant to Section 5.04(a) shall be subject
to any required withholding of taxes or proof of eligibility of exemption
therefrom, and shall be paid as soon as practicable following the Effective
Time, without interest.
(c) The Company shall use its commercially reasonable efforts to take
all actions determined to be necessary to effectuate the provisions of this
Section 5.04 as mutually agreed by Parent and the Company. Prior to the
Effective Time, the Board of Directors of the Company (or, if appropriate, any
committee administering the Company Stock Plans) shall take or cause to be taken
such actions as are required to cause (i) the Company Stock Plans to terminate
as of the Effective Time and (ii) the provisions in any other Company Benefit
Plan providing for the issuance, transfer or grant of any capital stock of the
Company or any interest on or following the Effective Time in respect of any
capital stock of the Company to be deleted as of the Effective Time.
SECTION 5.05. INDEMNIFICATION, EXCULPATION AND INSURANCE. (a) To the
extent, if any, not provided by a right of indemnification or other agreement or
policy existing as of the date of this Agreement, from and after the Effective
Time, Parent shall, to the fullest extent that the Company would have been
permitted to do so prior to the Effective Time by applicable law, indemnify,
defend and hold harmless each person who is now, or has been at any time prior
to the date hereof, an officer or director of the Company or any of its
subsidiaries, or who becomes
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an officer or director of the Company or any of its subsidiaries in the ordinary
course of business prior to the Effective Time (each an "INDEMNIFIED PARTY" and,
collectively, the "INDEMNIFIED PARTIES"), against all losses, expenses
(including reasonable attorney's fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next succeeding sentence, amounts
paid in settlement, to the extent arising out of actions or omissions occurring
at or prior to the Effective Time (and whether asserted or claimed prior to, at
or after the Effective Time) in connection with such person's duties as a
director or officer of the Company or any of its subsidiaries, including in
respect of this Agreement, the Merger and the other transactions contemplated
hereby ("INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, that an Indemnified Party
shall not be entitled to indemnification under this Section 5.05(a) for any such
loss, expense, claim, damage, liability or amount paid in settlement arising out
of actions or omissions by the Indemnified Party determined by a court of
competent jurisdiction to constitute (i) a breach of this Agreement, (ii)
criminal conduct or (iii) any violation of federal, state or foreign securities
laws. In the event of any such loss, expense, claim, damage, liability or amount
paid in settlement (whether or not arising before the Effective Time), Parent
shall pay or cause to be paid the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent, promptly after statements therefor are received and
otherwise reimburse such Indemnified Party upon request for documented expenses
reasonably incurred; PROVIDED, HOWEVER, that Parent shall not be liable for any
settlement effected without its written prior consent (which consent shall not
be unreasonably withheld or delayed). In the event any Indemnified Party is
required to bring any action against Parent to enforce rights or to collect
money due under this Agreement and such action results in a final,
non-appealable judgment in favor of such Indemnified Party, Parent shall
reimburse such Indemnified Party for all of its reasonable expenses in bringing
and pursuing such action. Each Indemnified Party shall be entitled to the
advancement of expenses to the full extent contemplated in this Section 5.05(a)
in connection with any such action; PROVIDED, HOWEVER, that any person to whom
expenses are advanced provides an undertaking to repay such advances if
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it is ultimately determined that such person is not entitled to indemnification.
(b) Each of Parent and Merger Sub agree that all rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time existing as of the date of this Agreement in
favor of the current or former directors or officers of the Company and its
subsidiaries as provided in their respective certificates of incorporation or
by-laws (or similar organizational documents) and any indemnification agreements
disclosed in the Filed SEC Documents shall survive the Merger and shall continue
in full force and effect in accordance with their terms from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions.
(c) For six years after the Effective Time, unless Parent agrees in
writing to guarantee the indemnification obligations set forth in Section
5.05(b), Parent shall cause to be maintained in effect the Company's current
directors' and officers' liability insurance covering each person currently
covered by the Company's directors' and officers' liability insurance policy for
acts or omissions occurring prior to the Effective Time on terms with respect to
such coverage and amounts no less favorable in any material respect to such
directors and officers than those of such policy as in effect on the date of
this Agreement; PROVIDED that Parent may substitute therefor policies of a
reputable insurance company the material terms of which, including coverage and
amount, are no less favorable in any material respect to such directors and
officers than the insurance coverage otherwise required under this Section
5.05(c); PROVIDED, HOWEVER, that in no event shall Parent be required to pay
aggregate annual premiums for insurance under this Section 5.05(c) in excess of
$632,952 (the "MAXIMUM PREMIUM"), which the Company represents and warrants is
equal to 200% of the annual premiums paid as of the date hereof by the Company
for such insurance; PROVIDED that, if such premium exceeds the Maximum Premium,
Parent shall nevertheless be obligated to provide the most advantageous coverage
as may be obtained for such Maximum Premium.
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(d) If Parent or the Surviving Corporation or any of their successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of Parent or the Surviving Corporation, as the
case may be, shall assume the obligations of Parent or the Surviving
Corporation, as applicable, set forth in this Section 5.05.
(e) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under applicable
law, agreement or otherwise. The provisions of this Section 5.05 shall survive
the consummation of the Merger and expressly are intended to benefit each of the
Indemnified Parties, their heirs and representatives.
SECTION 5.06. FEES AND EXPENSES. (a) All fees and expenses incurred in
connection with this Agreement, the Merger and the other transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated, except that Parent and the Company
shall share equally all fees and expenses incident to the filing and
distribution of the Proxy Statement (including all SEC and other filing fees and
all printing and mailing expenses associated with the Proxy Statement) and all
fees and expenses incident to filings under the HSR Act and other applicable
antitrust laws (including all fees and expenses of experts).
(b) In the event that (i) (A) a Takeover Proposal shall have been made
to the Company or its stockholders or any person has announced an intention
(whether or not conditional and whether or not withdrawn) to make a Takeover
Proposal, (B) thereafter this Agreement is terminated by either Parent or the
Company pursuant to 7.01(b)(iii) or 7.01(d) and (C) within 15 months after such
termination, the Company or any of its subsidiaries enters into any Acquisition
Agreement with respect to, or consummates, any Takeover Proposal (solely for
purposes of this Section 5.06(b)(i)(C), the term "Takeover Proposal" shall have
the meaning set forth in the definition of
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Takeover Proposal contained in Section 4.02(a) except that all references to 15%
shall be deemed references to 50%), (ii) this Agreement is terminated by the
Company pursuant to Section 7.01(f) or (iii) this Agreement is terminated by
Parent pursuant to Section 7.01(c), then the Company shall pay Parent a fee
equal to $65 million (the "TERMINATION FEE") by wire transfer of same day funds
to an account designated by Parent (x) in the case of a termination by the
Company pursuant to Section 7.01(f), concurrently with such termination, (y) in
the case of a termination by Parent pursuant to Section 7.01(c), within two
business days after such termination and (z) in the case of a payment as a
result of any event referred to in Section 5.06(b)(i)(C), upon the first to
occur of such events.
The Company acknowledges that the agreements contained in Section
5.06(b) are an integral part of the transactions contemplated hereby, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amounts due pursuant to
Section 5.06(b) and, in order to obtain such payment, Parent commences a suit
that results in a judgment against the Company, the Company shall pay to Parent
interest on the amount set forth in Section 5.06(b) from and including the date
payment of such amount was due to but excluding the date of actual payment at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made, together with reasonable legal fees and expenses incurred in
connection with such suit.
SECTION 5.07. INFORMATION SUPPLIED. (a) The Company agrees that none
of the information included or incorporated by reference in the Proxy Statement
will, at the date it is filed with the SEC or mailed to the Company's
stockholders or at the time of the Stockholders Meeting, or at the time of any
amendment or supplement thereof, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no covenant is made by the Company
with respect to statements made in the Proxy Statement based on information
supplied by Parent or Merger Sub specifically for inclusion or incorporation by
reference therein. The Company agrees that the Proxy
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Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder.
(b) Parent and Merger Sub agree that none of the information supplied
or to be supplied by Parent or Merger Sub specifically for inclusion in the
Proxy Statement will (except to the extent revised or superseded by amendments
or supplements contemplated hereby), at the date the Proxy Statement is filed
with the SEC or mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
SECTION 5.08. BENEFITS MATTERS. (a) For purposes hereof, "AFFECTED
EMPLOYEES" shall mean those individuals who are employees of the Company and its
subsidiaries (including those employees who are on vacation, leave of absence,
disability or maternity leave) as of the Effective Time.
(b) Parent shall, and shall cause the Surviving Corporation to, give
the Affected Employees credit for purposes of eligibility to participate and
vesting under any employee welfare benefit plans, including, without limitation,
such plans as defined in Section 3(1) of ERISA, maintained by Parent, the
Surviving Corporation and their respective subsidiaries, for the Affected
Employees' service with the Company and its subsidiaries to the same extent
recognized by the Company and its subsidiaries immediately prior to the
Effective Time in any Company Benefit Plan in which such Affected Employee
participates immediately prior to the Effective Time.
(c) Parent shall cause the Surviving Corporation to (i) waive or
continue to waive any preexisting-condition exclusions to coverage, any
evidence-of-insurability requirements, and any waiting-period requirements, with
respect to participation and coverage requirements applicable to the Affected
Employees under any employee welfare benefit plans in which such employees may
be eligible to participate after the Effective Time to the
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extent waived under the applicable Company Benefit Plans immediately prior to
the Effective Time; PROVIDED THAT, with respect to participation in any employee
welfare benefit plan of Parent after the Effective Time, the Affected Employee
must enroll within thirty-one days of first eligibility and (ii) provide or
continue to provide each Affected Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in the calendar year in which the
Effective Time occurs in satisfying any applicable deductible or out-of-pocket
requirements under any such welfare benefit plans in which the Affected
Employees are eligible to participate after the Effective Time; PROVIDED THAT,
with respect to participation in any employee welfare benefit plan of Parent
after the Effective Time, the Affected Employee must enroll within thirty-one
days of first eligibility.
(d) Parent currently intends to cause the Surviving Corporation to
provide benefits to each current employee of the Company and its subsidiaries
that are no less favorable in the aggregate to such employees than the benefits
provided to similarly situated employees of Parent and its subsidiaries (it
being understood that employees of Parent's retail franchise service station
business are similarly situated to Jiffy Lube employees), excluding equity or
equity-based programs. Except as otherwise provided by this Section 5.08,
nothing herein shall be construed as (i) guaranteeing any Affected Employee the
right to continued employment following the Effective Time or (ii) limiting
Parent's right to amend, modify or terminate any Company Benefit Plan, Company
Benefit Agreement or any other plan or arrangement in which Affected Employees
are eligible to participate following the Effective Time.
SECTION 5.09. PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing, and give each other a reasonable
opportunity to review and comment upon, any press release or other public
statements with respect to this Agreement, the Merger and the other transactions
contemplated hereby. The parties agree that the initial press release to be
issued with respect to the transactions contemplated hereby shall be in the form
heretofore agreed to by the parties.
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SECTION 5.10. RIGHTS AGREEMENT; CONSEQUENCES IF RIGHTS TRIGGERED. The
Board of Directors of the Company shall take all action requested by Parent in
order to render the Company Rights inapplicable to the Merger and the other
transactions contemplated hereby. Except as approved in writing by Parent, the
Board of Directors of the Company shall not (i) amend the Company Rights
Agreement, (ii) redeem the Company Rights or (iii) take any action with respect
to, or make any determination under, the Company Rights Agreement.
SECTION 5.11. STOCKHOLDER LITIGATION. The Company agrees that it shall
not settle or offer to settle any litigation commenced prior to, on or after the
date hereof against the Company or any of its directors or executive officers by
any stockholder of the Company relating to this Agreement, the Merger, any other
transaction contemplated hereby or otherwise, without the prior written consent
of Parent (not to be unreasonably withheld).
SECTION 5.12. DIRECTOR RESIGNATIONS. On the Closing Date, the Company
shall cause to be delivered to Parent duly executed resignations, effective as
of the Effective Time, of each member of the Board of Directors of the Company
and shall take such other action as is necessary to accomplish the foregoing.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The obligation of each party to effect the Merger is subject to the
satisfaction or waiver by such party on or prior to the Closing Date of the
following conditions:
(a) COMPANY STOCKHOLDER APPROVAL. The Company Stockholder Approval
shall have been obtained.
(b) ANTITRUST. Any waiting period (and any extension thereof)
applicable to the Merger under the
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HSR Act shall have been terminated or shall have expired.
(c) NO INJUNCTIONS OR LEGAL RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order or decree issued
by any court of competent jurisdiction or other legal restraint or
prohibition (collectively, "LEGAL RESTRAINTS") that has the effect of
preventing the consummation of the Merger shall be in effect, except for
Legal Restraints of jurisdictions other than the United States that,
individually and in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect or a material adverse effect on
the business of Parent or any of its affiliates (including, following the
Effective Time, the Surviving Corporation and its subsidiaries).
SECTION 6.02. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained herein that are qualified as to
materiality shall be true and correct and those not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date with the same effect as though
made as of the Closing Date (except that the accuracy of representations
and warranties that by their terms speak as of a specified date will be
determined as of such date). Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer or the chief
financial officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the Company by
the
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chief executive officer or the chief financial officer of the Company to
such effect.
(c) LEGAL RESTRAINTS. No Legal Restraint that has any of the
effects referred to in clause (ii), (iii) or (iv) of Section 6.02(e) shall
be in effect.
(d) CONSENTS. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent or the Company or
their applicable subsidiaries shall have obtained (i) all consents,
approvals, authorizations, qualifications and orders of all Governmental
Entities (including any in connection with Environmental Laws) legally
required in connection with this Agreement and the transactions
contemplated hereby and (ii) all other consents, approvals, authorizations
and qualifications of third parties required in connection with this
Agreement and the transactions contemplated hereby, except in the case of
clauses (i) and (ii) for those the failure of which to be obtained
individually and in the aggregate have not had and could not reasonably be
expected to have a Material Adverse Effect.
(e) NO LITIGATION. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity based on any
applicable non-competition, antitrust or pre-merger notification laws (i)
challenging the acquisition by Parent or any of its affiliates of any
Company Common Stock, seeking to restrain or prohibit the consummation of
the Merger or any other transaction contemplated hereby or seeking to
obtain from the Company, or Parent or any of its affiliates, any damages
that are material in relation to the Company and its subsidiaries taken as
a whole, (ii) seeking to prohibit or limit the ownership or operation by
the Company, or Parent or any of its affiliates, or any of their respective
subsidiaries of any portion of the business or assets of the Company,
Parent or any of its affiliates, or any of their respective subsidiaries,
or to compel the Company, or Parent or any of its affiliates, or any of
their respective subsidiaries to dispose of or hold
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separate any portion of the business or assets of the Company, Parent or
any of its affiliates, or any of their respective subsidiaries, in each
case that is material in relation to the Company and its subsidiaries taken
as a whole, as a result of the Merger or any other transaction contemplated
hereby, (iii) seeking to impose limitations on the ability of Parent or any
of its affiliates to acquire or hold, or exercise full rights of ownership
of, any shares of common stock of the Surviving Corporation, including the
right to vote the common stock of the Surviving Corporation on all matters
properly presented to the stockholders of the Surviving Corporation, (iv)
seeking to prohibit Parent or any of its affiliates from effectively
controlling in any material respect the business or operations of the
Company and its subsidiaries or (v) which otherwise is reasonably likely to
have a Material Adverse Effect.
(f) ABSENCE OF MATERIAL ADVERSE EFFECT. Since December 31, 2001,
there shall not have been any state of facts, change, development, effect,
condition or occurrence that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect.
SECTION 6.03. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation
of the Company to effect the Merger is further subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained herein that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Parent and Merger Sub contained herein that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date with the same
effect as though made as of the Closing Date, except that the accuracy of
representations and warranties that by their terms speak as of a specified
date will be determined as of such date. The Company shall have received a
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certificate signed on behalf of Parent by an executive officer of Parent to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGER SUB. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent to such effect.
SECTION 6.04. FRUSTRATION OF CLOSING CONDITIONS. None of the Company,
Parent and Merger Sub may rely on the failure of any condition set forth in
Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such failure
was caused by such party's failure to use its commercially reasonable efforts to
consummate the Merger and the other transactions contemplated hereby, as
required by and subject to Section 5.03.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. TERMINATION. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the Effective
Time, whether before or after the Company Stockholder Approval has been
obtained:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company: (i) if the Merger shall not have
been consummated by the first anniversary of the date of this Agreement;
PROVIDED, HOWEVER, that the right to terminate this Agreement pursuant to
this Section 7.01(b)(i) shall not be available to any party whose breach of
this Agreement has been a principal reason the Merger has not been
consummated by such date; (ii) if any Legal Restraint of the type referred
to in Section 6.01(c) shall be in effect and shall have become final and
nonappealable; or (iii) if, upon a vote at a duly held meeting
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(including an adjourned or postponed meeting) to obtain the Company
Stockholder Approval, the Company Stockholder Approval shall not have been
obtained.
(c) by Parent in the event an Adverse Recommendation has occurred;
(d) by Parent (i) if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement, which
breach (A) would give rise to the failure of a condition set forth in
Section 6.02(a) or 6.02(b), and (B) has not been or is incapable of being
cured by the Company within 20 business days after its receipt of written
notice thereof from Parent or (ii) if any Legal Restraint of the type
referred to in Section 6.02(c) shall be in effect and shall have become
final and nonappealable;
(e) by the Company if Parent shall have breached any of its
representations, warranties or covenants contained in this Agreement, which
breach (i) would give rise to the failure of a condition set forth in
Section 6.03(a) or 6.03(b), and (ii) has not been or is incapable of being
cured by Parent within 20 business days after its receipt of written notice
thereof from the Company; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Merger Sub or the Company, other than the
first sentence of Section 3.01(o), Section 5.06, this Section 7.02 and Article
VIII; PROVIDED, HOWEVER, that no such termination shall relieve any party hereto
from any liability or damages resulting from a wilful breach by such party of
any of its representations, warranties or covenants set forth in this Agreement
and all rights and remedies of such non-breaching party under this Agreement in
the case of any such breach, at law or in equity, shall be preserved. The
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Confidentiality Agreement shall survive any termination of this Agreement and
shall apply to all information and material delivered by any party hereunder, in
each case in accordance with its terms.
SECTION 7.03. AMENDMENT. This Agreement may be amended by the parties
hereto at any time, whether before or after the Company Stockholder Approval has
been obtained; PROVIDED, HOWEVER, that after the Company Stockholder Approval
has been obtained, there shall be made no amendment that by law requires further
approval by stockholders without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
SECTION 7.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained herein or in
any document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein; PROVIDED, HOWEVER, that after the
Company Stockholder Approval has been obtained, there shall be made no waiver
that by law requires further approval by stockholders without the further
approval of such stockholders. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure or delay by any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights nor shall any single or partial exercise
by any party to this Agreement of any of its rights under this Agreement
preclude any other or further exercise of such rights or any other rights under
this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in
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60
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
SECTION 8.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed given
upon receipt by the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to Parent or Merger Sub, to:
Shell Oil Company
P.O. Box 2463
Houston, Texas 77252-2463
Attention: Associate General Counsel - Corporate
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
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61
if to the Company, to:
Pennzoil-Quaker State Company
Pennzoil Place, P.O. Box 2967
Houston, TX 77252-2967
Attention: General Counsel
with a copy to:
Baker Botts L.L.P.
910 Louisiana
One Shell Plaza
Houston, TX 77002
Attention: Darrell W. Taylor, Esq.
SECTION 8.03. DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "MATERIAL ADVERSE EFFECT" shall mean any state of facts, change,
development, effect, condition or occurrence that has been or could
reasonably be expected to (i) be material and adverse to the (a) business,
(b) assets, (c) properties, (d) financial condition or (e) results of
operations of the Company and its subsidiaries, taken as a whole; (ii)
directly or indirectly, prevent or materially impede or delay the
consummation of the Merger; or (iii) materially increase the cost to Parent
of consummating the Merger or subject Parent or any of its affiliates to
any criminal or material civil liability; PROVIDED, HOWEVER, that any state
of facts, change, development, effect, condition or occurrence relating to
the economy in general or relating to the lubricant, base oil
manufacturing, car care products or fast oil change center industries
generally, and not specifically relating to the Company or its
subsidiaries, and any matter set forth in the first sentence of Section
3.01(f) of the Company Disclosure
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62
Schedule, shall not constitute a "Material Adverse Effect". For purposes of
analyzing whether any state of facts, change, development, effect,
condition or occurrence constitutes a "Material Adverse Effect" under this
definition, the parties agree that (x) Parent will be deemed to have no
knowledge of any state of facts, change, development, effect, condition or
occurrence that is not disclosed in the first sentence of Section 3.01(f)
of the Company Disclosure Schedule and (y) each of the terms contained in
(a) through (e) of clause (i) above are intended to be separate and
distinct;
(c) "PERSON" means an individual, corporation, partnership, joint
venture, association, trust, limited liability company, Governmental
Entity, unincorporated organization or other entity;
(d) a "SIGNIFICANT SUBSIDIARY" of any person means any subsidiary of
such person that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC; and
(e) a "SUBSIDIARY" of any person means another person of which 50% or
more of any class of capital stock, voting securities, other voting
ownership or voting partnership interests (or, if there are no such voting
interests, 50% or more of the equity interests) are owned or controlled,
directly or indirectly, by such first person. For the avoidance of doubt,
Excel Paralubes and Red River Terminals, L.L.C. shall be deemed to be
subsidiaries of the Company.
SECTION 8.04. INTERPRETATION. When a reference is made in this
Agreement to a Section, Subsection or Schedule, such reference shall be to a
Section or Subsection of, or a Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this
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63
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The term "or" is not exclusive. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Any agreement or instrument defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement or instrument as from time to time amended, modified or supplemented,
except as otherwise specified herein. References to a person are also to its
permitted successors and assigns.
SECTION 8.05. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement, except that the Confidentiality
Agreement will continue in accordance with its terms, and (b) except for the
provisions of Section 5.05, is not intended to confer upon any person other than
the parties hereto (and their respective successors and assigns) any rights or
remedies.
SECTION 8.07. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned or delegated, in
whole or in part (except by operation of law), by any of the parties hereto
without the prior written consent of the other parties hereto, except that
Merger Sub may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Parent or to any direct or
indirect wholly owned subsidiary of Parent, but no such assignment shall relieve
Merger Sub of any of its
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64
obligations under this Agreement. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by,
the parties hereto and their respective successors and assigns.
SECTION 8.09. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated hereby, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or the transactions contemplated hereby in any
court other than a court of the United States located in the State of Delaware
or a Delaware state court.
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65
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
SHELL OIL COMPANY,
by /s/ R. J. ROUTS
--------------------------------
Name: R. J. Routs
Title: Attorney in Fact
SHELL ND COMPANY,
by /s/ LISA A. DAVIS
--------------------------------
Name: Lisa A. Davis
Title: President
PENNZOIL-QUAKER STATE COMPANY,
by /s/ JAMES J. POSTL
--------------------------------
Name: James J. Postl
Title: President and
Chief Executive Officer
<Page>
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
----------------------
<Table>
<Caption>
Term Section
- ---- -------
Acquisition Agreement.................. 4.02(b)
Actions................................ 4.01(b)
Adverse Recommendation................. 4.02(b)
Affected Employees..................... 5.08(a)
affiliate.............................. 8.03(a)
Amendment.............................. Recitals
Appraisal Shares....................... 2.01(d)
Certificate............................ 2.01(c)
Certificate of Merger.................. 1.03
Closing................................ 1.02
Closing Date........................... 1.02
Code................................... 3.01(k)
Commonly Controlled
Entity................................ 3.01(k)
Company................................ Preamble
Company Benefit
Agreements............................ 3.01(i)
Company Benefit Plans.................. 3.01(i)
Company By-laws........................ 3.01(a)
Company Charter........................ 3.01(a)
Company Capital Stock.................. 3.01(c)
Company Common Stock................... Recitals
Company Disclosure
Schedule.............................. 3.01
Company Pension Plans.................. 3.01(k)
Company Rights......................... 3.01(c)
Company Rights
Agreement............................. 3.01(c)
Company Series A
Preferred Stock....................... 3.01(c)
Company Stockholder
Approval.............................. 3.01(n)
Company Stock Options.................. 3.01(c)
Company Stock Plans.................... 3.01(c)
Confidentiality
Agreement............................. 4.02(a)
Contract............................... 3.01(d)
DGCL................................... 1.01
Effective Time......................... 1.03
Environmental Claims................... 3.01(j)
Environmental Laws..................... 3.01(j)
Environmental Permits.................. 3.01(j)
ERISA.................................. 3.01(k)
Exchange Act........................... 3.01(d)
Exchange Fund ......................... 2.02(a)
Filed SEC Document..................... 3.01(e)
Foreign Employee Plans......... ....... 3.01(k)
Former Parent.......................... 3.01(e)
GAAP................................... 3.01(e)
Governmental Entity.................... 3.01(d)
Hazardous Materials.................... 3.01(j)
HSR Act................................ 3.01(d)
IRS.................................... 3.01(k)
Legal Restraints....................... 6.01(c)
Liens.................................. 3.01(b)
Material Adverse
Effect................................ 8.03(b)
Maximum Premium........................ 5.05(a)
Merger ................................ Recitals
Merger Consideration................... Recitals
Merger Sub............................. Preamble
Non-U.S. Employees..................... 5.08(e)
Notice of Superior
Proposal.............................. 4.02(b)
Parent................................. Preamble
Paying Agent........................... 2.02(a)
Permits................................ 3.01(h)
person................................. 8.03(c)
Post-Signing Returns................... 4.01(b)
Proxy Statement........................ 3.01(d)
Release................................ 3.01(j)
Representatives........................ 4.02(a)
SEC.................................... 3.01(b)
SEC Documents.......................... 3.01(e)
Section 262............................ 2.01(d)
Securities Act......................... 3.01(e)
Significant
Subsidiary............................ 8.03(d)
Spin-Off............................... 3.01(l)
Stockholders Meeting................... 5.01(b)
Stock Unit............................. 3.01(c)
subsidiary............................. 8.03(e)
Superior Proposal...................... 4.02(b)
Surviving Corporation.................. 1.01
Takeover Proposal...................... 4.02(a)
taxes.................................. 3.01(l)
</Table>
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<Table>
<Caption>
Term Section
- ---- -------
tax return............................. 3.01(l)
Termination Fee........................ 5.06(b)
Voting Company Debt.................... 3.01(c)
Welfare Plan........................... 3.01(k)
</Table>
<Page>
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
FIRST: The name of the corporation (hereinafter called the
"corporation") is PENNZOIL-QUAKER STATE COMPANY.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 2711
Centerville Road, Suite 400, City of Wilmington 19808, County of New Castle; and
the name of the registered agent of the corporation in the State of Delaware at
such address is Corporation Service Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the corporation are as follows:
1. To engage in the manufacturing and marketing of lubricants and car
care products and the franchising, ownership and operation of fast oil change
centers.
2. To conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation
shall have authority to issue is 1,000. The par value of each of such shares is
one dollar. All such shares are of one class and are shares of Common Stock.
FIFTH: The corporation is to have perpetual existence.
SIXTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
Section 279 of Title
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8 of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
SEVENTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of directors" shall be deemed to have
the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of directors
need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the corporation;
PROVIDED, HOWEVER, that any provision for the classification of directors
of the corporation for staggered terms pursuant to the provisions of
subsection (d) of Section 141 of the General Corporation Law of the State
of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by
the stockholders entitled to vote of the corporation unless provisions for
such
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3
classification shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except
as the provisions of paragraph (2) of subsection (b) of Section 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
PROVIDED, that no share of any such class which is otherwise denied voting
power shall entitle the holder thereof to vote upon the increase or
decrease in the number of authorized shares of said class.
EIGHTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.
NINTH: The corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
person.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
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rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.