EXHIBIT (c)(2)
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of May 4, 1998,
Among
ATLANTIC RICHFIELD COMPANY,
VWK ACQUISITION CORP.
And
UNION TEXAS PETROLEUM HOLDINGS, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
The Offer and the Merger
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SECTION 1.01. The Offer................................. 2
SECTION 1.02. Company Actions........................... 4
SECTION 1.03. The Merger................................ 5
SECTION 1.04. Closing................................... 6
SECTION 1.05. Effective Time............................ 6
SECTION 1.06. Effects................................... 6
SECTION 1.07. Certificate of Incorporation and
By-laws.............................. 6
SECTION 1.08. Directors................................. 7
SECTION 1.09. Officers.................................. 7
ARTICLE II
Effect on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock................... 7
SECTION 2.02. Exchange of Certificates.................. 9
ARTICLE III
Representations and Warranties of the Company
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SECTION 3.01. Organization, Standing and Power.......... 11
SECTION 3.02. Company Subsidiaries; Equity Interests.... 12
SECTION 3.03. Capital Structure......................... 13
SECTION 3.04. Authority; Execution and Delivery;
Enforceability....................... 14
SECTION 3.05. No Conflicts; Consents.................... 15
SECTION 3.06. SEC Documents; Undisclosed Liabilities.... 17
SECTION 3.07. Information Supplied...................... 18
SECTION 3.08. Absence of Certain Changes or Events...... 19
SECTION 3.09. Taxes..................................... 21
SECTION 3.10. Absence of Changes in Benefit Plans....... 23
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments............................. 23
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SECTION 3.12. Litigation................................ 26
SECTION 3.13. Environmental Matters; Compliance with
Environmental Laws; Other
Applicable Laws.................. 26
SECTION 3.14. Title to Properties....................... 26
SECTION 3.15. Confidentiality and Other Agreements...... 27
SECTION 3.16. Brokers; Schedule of Fees and Expenses.... 27
SECTION 3.17. Opinion of Financial Advisor.............. 28
ARTICLE IV
Representations and Warranties of Parent and Sub
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SECTION 4.01. Organization, Standing and Power.......... 28
SECTION 4.02. Sub....................................... 28
SECTION 4.03. Authority; Execution and Delivery;
Enforceability....................... 28
SECTION 4.04. No Conflicts; Consents.................... 29
SECTION 4.05. Information Supplied...................... 30
SECTION 4.06. Brokers................................... 30
SECTION 4.07. Financing................................. 30
SECTION 4.08. Litigation................................ 30
SECTION 4.09. Interested Stockholder.................... 31
ARTICLE V
Covenants Relating to Conduct of Business
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SECTION 5.01. Conduct of Business....................... 31
SECTION 5.02. No Solicitation........................... 36
ARTICLE VI
Additional Agreements
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SECTION 6.01. Preparation of Proxy Statement;
Stockholders Meeting................. 40
SECTION 6.02. Access to Information; Confidentiality.... 41
SECTION 6.03. Reasonable Efforts; Notification.......... 41
SECTION 6.04. Stock Options............................. 42
SECTION 6.05. Benefit Plans............................. 43
SECTION 6.06. Indemnification........................... 46
SECTION 6.07. Fees and Expenses......................... 48
SECTION 6.08. Public Announcements...................... 49
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SECTION 6.09. Directors................................. 49
SECTION 6.10. Rights Agreement.......................... 51
SECTION 6.11. Stockholder Litigation.................... 51
SECTION 6.12. Performance by Sub........................ 51
SECTION 6.13. Dual Consolidated Losses.................. 51
ARTICLE VII
Conditions Precedent
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SECTION 7.01. Conditions to Each Party's Obligation To
Effect the Merger.................... 51
ARTICLE VIII
Termination, Amendment and Waiver
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SECTION 8.01. Termination............................... 52
SECTION 8.02. Effect of Termination..................... 54
SECTION 8.03. Amendment................................. 54
SECTION 8.04. Extension; Waiver......................... 54
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver.................. 55
ARTICLE IX
General Provisions
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SECTION 9.01. Nonsurvival of Representations and
Warranties........................... 55
SECTION 9.02. Notices................................... 55
SECTION 9.03. Definitions............................... 56
SECTION 9.04. Interpretation; Disclosure Letters........ 56
SECTION 9.05. Severability.............................. 57
SECTION 9.06. Counterparts.............................. 57
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries........................ 57
SECTION 9.08. Governing Law............................. 57
SECTION 9.09. Assignment................................ 57
SECTION 9.10. Enforcement............................... 58
EXHIBIT A- Conditions of the Offer
EXHIBIT B- Amendment to the Company Rights Agreement
SCHEDULE I- Definitions
AGREEMENT AND PLAN OF MERGER dated as of May 4, 1998, among
ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Parent"),
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VWK ACQUISITION CORP., a Delaware corporation ("Sub") and a
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wholly owned subsidiary of Parent, and UNION TEXAS PETROLEUM
HOLDINGS, INC., a Delaware corporation (the "Company").
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WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
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shares of common stock, par value $.05 per share, of the Company (the "Company
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Common Stock"), including the associated Company Rights (as defined in Section
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3.03), at a price per share of Company Common Stock (including the associated
Company Right) of $29.00, net to the seller in cash (such amount, or any greater
amount per share paid pursuant to the Offer, the "Offer Price"), upon the terms
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and subject to the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub into the Company, or (at
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the election of Parent) the Company into Sub, on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned directly or indirectly by Parent or the Company will be
converted into the right to receive the per share consideration paid pursuant to
the Offer;
WHEREAS simultaneously with the execution and delivery of this
Agreement Parent and KKR Partners II, L.P. and Petroleum Associates, L.P., each
a Delaware limited partnership (together, the "Principal Company Stockholder")
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are entering into an agreement (the "Company Stockholder Agreement" and together
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with this Agreement, the "Transaction Agreements") pursuant to which the
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Principal Company Stockholder has agreed to take specified actions in
furtherance of the Offer and the Merger; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
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SECTION 1.01. The Offer. (a) Subject to the conditions of this
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Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer within the meaning of the applicable rules and regulations of
the Securities and Exchange Commission (the "SEC"). The obligation of Sub to,
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and of Parent to cause Sub to, commence the Offer and accept for payment, and
pay for, any shares of Company Common Stock tendered pursuant to the Offer shall
be subject to the conditions set forth in Exhibit A (any of which may be waived
by Sub in its sole discretion, provided that, without the consent of the
Company, Sub may not, except as provided below, waive the Minimum Tender
Condition (as defined in Exhibit A)). The initial expiration date of the Offer
shall be the 20th business day following the commencement of the Offer
(determined using Rule 14d-1(e)(6) of the SEC). Sub expressly reserves the
right to modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not, except as provided in the next sentence, (i) reduce the
number of shares of Company Common Stock subject to the Offer, (ii) reduce the
price per share of Company Common Stock to be paid pursuant to the Offer, (iii)
modify or add to the conditions set forth in Exhibit A, (iv) extend the Offer,
(v) change the form of consideration payable in the Offer or (vi) otherwise
amend the Offer in any manner materially adverse to the holders of Company
Common Stock. Notwithstanding the foregoing, Sub may, without the consent of
the Company, (i) extend the Offer, if at the scheduled expiration date of the
Offer any of the conditions to Sub's obligation to purchase shares of Company
Common Stock are not satisfied, until such time as such conditions are satisfied
or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer, (iii) extend the Offer for any reason for a period of
not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence (a "Parent
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Extension Period"); provided that if Sub shall extend the Offer pursuant to
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this clause (iii), it shall waive during any Parent Extension Period all
conditions of the Offer set
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forth in Exhibit A other than the Minimum Tender Condition and the conditions
set forth in paragraphs (d) and (g) in Exhibit A; and (iv) if the option granted
pursuant to Section 4 of the Company Stockholder Agreement is then exercisable,
reduce the number of shares of Company Common Stock necessary to satisfy the
Minimum Tender Condition (as defined in Exhibit A) to that number of shares
which, together with the shares of Company Common Stock that may be purchased by
Parent upon exercise of the option granted pursuant to Section 4 of the Company
Stockholder Agreement, would represent at least a majority of the Fully Diluted
Shares (as defined in Exhibit A). If any of the conditions of the Offer set
forth in Exhibit A (other than the Minimum Tender Condition) is not satisfied on
any scheduled expiration date of the Offer, then, if requested by the Company,
Sub shall extend the Offer one or more times (the period of each such extension
to be determined by Sub) for up to 30 days in the aggregate for all such
extensions, provided that at the time of such extension any such condition is
reasonably capable of being satisfied and the Company has not received a Company
Takeover Proposal (as defined in Section 5.02(a)). On the terms and subject to
the conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, pay for all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer that Sub becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amend ments thereto, the "Offer Documents"). Each of Parent,
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Sub and the Company shall promptly correct any information pro vided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Parent and Sub
shall take all steps necessary to amend or supplement the Offer Documents and to
cause the Offer Documents as so amended or supplemented to be filed with the SEC
and to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
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(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to purchase any shares of Company Common Stock that
Sub becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company Board (as defined in
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Section 3.04(b)) has approved of and consented to the Offer, the Merger and the
other transactions contemplated by the Transaction Agreements (collectively, the
"Transactions").
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(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommen dations described in
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Section 3.04(b) and shall mail the Schedule 14D-9 to the stockholders of the
Company. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Sub shall hold in confidence the information
contained in any such labels, listings and files, shall use such information
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only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
(d) Prior to the expiration of the Offer, the Company (i) shall take
all actions necessary to cause all outstanding Company Stock Options (as defined
in Section 6.04(b)), whether or not otherwise vested pursuant to their terms, to
be fully vested and exercisable in full upon the consummation of the Offer
subject to compliance with applicable law, and (ii) shall, subject to compliance
with applicable law, make an offer to pay each holder of a Company Stock Option
that is not automatically subject to a cash payment upon consummation of the
Offer, promptly after the consummation of the Offer and in exchange for the
cancelation of such Company Stock Option, an amount in cash equal to (x)(1) the
excess, if any, of the Offer Price over the exercise price per share of Company
Common Stock subject to such Company Stock Option multiplied by (2) the number
of shares of Company Common Stock for which such Company Stock Option shall not
theretofore have been exercised, less (y) such amounts as may be required to be
deducted or withheld with respect thereto under the Code (as defined in Section
3.11) or under any provision of state, local or foreign tax law (the amount
determined in accordance with the foregoing clauses (x) and (y), the "Option
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Spread"). The payments made by the Company to holders of Company Stock Options
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pursuant to clause (ii) of the preceding sentence shall be made automatically
and promptly after the consummation of the Offer; provided, however, that such
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holders may request and receive in lieu of such payment and in exchange for
their Company Stock Options the number of shares of Company Common Stock equal
to the aggregate Option Spread for the shares of Company Common Stock for which
such holders' Company Stock Options are then exercisable divided by the Offer
Price. In addition, and subject to compliance with applicable law, the Company
may take any actions necessary to purchase Company Common Stock from those
officers of the Company and members of the Company Board as are designated in
the Company Disclosure Letter (as defined in Section 3.02(a)) by the Company
Board, and such purchase shall take place after the consummation of the Offer at
a price per share equal to the Offer Price.
SECTION 1.03. The Merger. On the terms and subject to the conditions
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set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
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the Effective Time (as defined in Section 1.05). At the Effective Time, the
separate corporate existence of Sub
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shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). Notwithstanding the foregoing, Parent may elect at
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any time prior to the Merger, instead of merging Sub into the Company as
provided above, to merge the Company with and into Sub, in which case Sub shall
be the Surviving Corporation; provided, however, that the Company shall not
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be deemed to have breached any of its representations, warranties or covenants
set forth in this Agreement solely by reason of such election. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing. At the election of Parent, any direct or indirect wholly
owned subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the Merger
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shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, New York 10019 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by law, waiver by all parties) of the
conditions set forth in Section 7.01, or as soon as practicable after all the
conditions set forth in Section 7.01 have been satisfied (or, to the extent
permitted by law, waived by the parties entitled to the benefits thereof), or at
such other place, time and date as shall be agreed in writing between Parent and
the Company. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date".
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SECTION 1.05. Effective Time. Prior to the Closing, Parent shall
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prepare, and on the Closing Date or as soon as practicable thereafter Parent
shall file with the Secretary of State for the State of Delaware, a certificate
of merger or other appropriate documents (in any such case, the "Certificate of
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Merger") executed in accordance with the relevant provisions of the DGCL and
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shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with such Secretary of State, or at such other time as Parent and the Company
shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
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SECTION 1.06. Effects. The Merger shall have the effects set forth
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in Section 259 of the DGCL.
SECTION 1.07. Certificate of Incorporation and By-laws. (a) The
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Restated Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective
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Time, shall be amended at the Effective Time so that the first paragraph of
Article Fourth of such Restated Certifi cate of Incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock which
the corporation shall have authority to issue is (i) 1,000 shares of Common
Stock, par value $0.01 per share and (ii) 1,750,000 shares of Preferred Stock,
par value $0.01 per share, all of which have been designated as 7.14% Series A
Cumulative Preferred Stock, par value $.01 per share.", and, as so amended, such
Certificate of Incorpora tion shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The By-laws of 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 1.08. Directors. The directors of Sub immediately prior to
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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 1.09. Officers. The officers of the Company immediately
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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
Effect on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
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virtue and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
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capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
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(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each share
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of Company Common Stock that is owned by the Company, Parent or Sub or any
wholly owned subsidiary of the Company, Parent or Sub shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.01(b)
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and 2.01(e), each issued share of Company Common Stock shall be converted into
the Offer Price. The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to as the "Merger
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Consideration". As of the Effective Time, all such shares of Company Common
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Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.02, without interest.
(d) Series A Preferred To Remain Outstanding. Each share of the
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Company's 7.14% Series A Cumulative Preferred Stock (the "Series A Preferred")
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outstanding at the Effective Time shall remain outstanding and be unaffected by
the Merger, except as provided in Section 2.01(e).
(e) Appraisal Rights. Notwithstanding anything in this Agreement to
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the contrary, shares ("Appraisal Shares") of Company Common Stock and Series A
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Preferred that are outstanding immediately prior to the Effective Time and
that are held by persons who are entitled to demand and properly demand
appraisal of such Appraisal Shares pursuant to, and who comply in all respects
with, Section 262 of the DGCL ("Section 262") shall not (i) be converted into
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the Merger Consideration as provided in Section 2.01(c), in the case of such
shares of the Company Common Stock, or (ii) remain outstanding, in the case of
such shares of the Series A Preferred, but rather the holders of Appraisal
Shares shall be entitled to payment of the fair market value of such Appraisal
Shares in accordance with Section 262; provided, however, that if any holder of
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Appraisal Shares shall fail to perfect or otherwise shall waive, withdraw or
lose the right to appraisal under Section 262, then the right of such holder to
be paid the fair value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be treated as if they had been converted as of the
Effective Time into the Merger Consideration, as
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provided in Section 2.01(c) in the case of the Company Common Stock, and shall
remain outstanding, as provided in Section 2.01(d) in the case of the Series A
Preferred. The Company shall serve prompt notice to Parent of any demands
received by the Company 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. The Company shall not, except with 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
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the Effective Time, Parent shall select a bank or trust company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration upon
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surrender of certificates representing Company Common Stock. Parent shall take
all steps necessary to enable and cause the Surviving Corporation to provide to
the Paying Agent immediately following the Effective Time all the cash necessary
to pay for the shares of Company Common Stock converted into the right to the
Merger Consideration pursuant to Section 2.01(c) (such cash being hereinafter
referred to as the "Exchange Fund").
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(b) Exchange Procedure. As soon as reasonably practicable after the
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Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") that immediately prior to the
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Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancelation to
the Paying Agent or to such other agent or agents as may be appointed by the
Parent, together with such letter of transmittal, duly 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
into which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the
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Company, payment may be made 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 the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01. No interest shall be paid or shall accrue on the cash payable
upon the surrender of any Certificate. If a mutilated Certificate is surrendered
to the Paying Agent or if the holder of a Certificate submits an affidavit to
the Paying Agent stating that the Certificate has been lost, destroyed or
wrongfully taken, such holder shall furnish an indemnity bond sufficient in the
judgment of the Parent to protect the Parent, the Surviving Corporation and the
Paying Agent from any loss which any of them may suffer.
(c) No Further Ownership Rights in Company Common Stock. The Merger
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Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time that may
have been declared or made by the Company on such shares in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation or the
Paying Agent for any reason, they shall be canceled and exchanged as provided in
this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
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that remains undistributed to the holders of Company Common Stock as provided in
this Section 2.02 for one year after the Effective Time shall be delivered to
Parent, upon demand, and any holder of Company Common Stock
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who has not theretofore complied with this Article II shall thereafter look only
to Parent for payment of its claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying
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Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Subject to the last sentence of Section
2.02(b), if any Certificate has not been surrendered prior to the date on which
the Merger Consideration in respect of such Certificate would otherwise escheat
to or become the property of any Governmental Entity (as defined in Section
3.05), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to 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.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
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cash included in the Exchange Fund, as directed by Parent, on a daily basis. If
for any reason (including losses) the Exchange Fund is inadequate to pay the
amounts to which holders of Company Common Stock shall be entitled under this
Section 2.02, Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Exchange Fund shall not be used except as provided in
this Agreement. Any interest and other income resulting from such investments
shall be paid to Parent.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
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entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law.
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows
except as set forth in the Filed Company SEC Documents (as defined in Section
3.08):
SECTION 3.01. Organization, Standing and Power. (a) Each of the
---------------------------------
Company and each Significant Company
11
Subsidiary (as defined below) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
full corporate power and authority and, to the Company's Knowledge, 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 or in the aggregate, would not have a Company Material Adverse
------------------------
Effect (as defined below). The Company and each Significant Company Subsidiary
- ------
is duly qualified to do business in each jurisdiction where the nature of its
business or their ownership or leasing of its properties make such qualification
necessary or the failure to so qualify would reasonably be expected to have a
Company Material Adverse Effect. The Company has made available to Parent 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 Company Subsidiary, in each case as amended
through the date of this Agreement. For purposes of this Agreement, a
"Significant Company Subsidiary" means any subsidiary of the Company that
------------------- ----------
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC. As used in this Agreement, "Company Material Adverse
------------------------
Effect" means (a) any materially adverse effect on the business, assets,
- ------
properties, financial condition or results of operations of the Company and the
Company Subsidiaries (as defined in Section 3.02) taken as a whole, or (b) any
prevention or material delay in the ability of the Company to consummate the
Offer, the Merger and the other Transactions, which has occurred or would
reasonably be expected to occur as a result of any change, effect, event,
occurrence or state of facts; provided, however, with respect to clauses (a) and
-------- -------
(b), other than any change, effect, event, occurrence or state of facts, to the
extent such change, effect, event, occurrence or state of facts is the result of
adverse changes in economic conditions, or of conditions or adverse changes in
or affecting the worldwide energy industry generally, including, but not limited
to, changes in markets and prices for oil, gas and other hydrocarbons or
hydrocarbon products.
SECTION 3.02. Company Subsidiaries; Equity Interests. The letter,
---------------------------------------
dated as of the date of this Agreement, from the Company to Parent and Sub (the
"Company
-------
12
Disclosure Letter") lists each Significant Company Subsidiary. All the
- -----------------
outstanding shares of capital stock of each Significant Company Subsidiary have
been validly issued and are fully paid and nonassessable and, except as set
forth in the Company Disclosure Letter, are owned by the Company, by another
subsidiary of the Company (a "Company Subsidiary") or by the Company and another
------------------
Company Subsidiary, free and clear of all pledges, liens, charges, mortgages,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens").
-----
SECTION 3.03. Capital Structure. The authorized capital stock of the
------------------
Company consists of 200,000,000 shares of Company Common Stock and 15,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
-----------------
Stock", and together with the Company Common Stock, the "Company Capital
- ----- ---------------
Stock"). At the close of business on (i) March 31, 1998, 85,248,101 shares of
Company Common Stock and 1,750,000 shares of Series A Preferred were issued and
outstanding, (ii) March 31, 1998, 2,581,182 shares of Company Common Stock were
held by the Company in its treasury, (iii) April 20, 1998, 6,033,471 shares of
Company Common Stock were subject to outstanding Company Stock Options and not
more than 4,250,475 additional shares of Company Common Stock were reserved for
issuance pursuant to the Company's 1994 Incentive Plan, as amended, for stock
options, SARs, and other awards of Company Common Stock which had not been
granted as of the date of this Agreement, (iv) March 31, 1998, 45,000,000 shares
of Company Common Stock were reserved for issuance in connection with the
rights (the "Company Rights") issued pursuant to the Company Rights Agreement
--------------
(as defined in Section 6.10) and (v) March 31, 1998, 100,000 shares of Company
Common Stock were reserved for issuance pursuant to the Company's Amended and
Restated Deferred Compensation Plan and 45,000 shares of Company Common Stock
were reserved for issuance pursuant to the defined contribution retirement plan
for employees of Virginia Indonesia Company. Except as set forth above and with
respect to the Company's Savings Plan for Salaried Employees, at the close of
business on May 1, 1998, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding. There are no
outstanding Company SARs (as defined in Section 6.04) 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
13
provision of the DGCL, the Company Charter, the Company By-laws or any Contract
(as defined in Section 3.05) 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 stockholders of the Company
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 Company Subsidiary is a
party or by which any of them is bound (i) obligating the Company or any Company
Subsidiary 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 of any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company or any Company Subsidiary 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 accruing to holders of Company Capital Stock.
As of the date of this Agreement, except as disclosed in the Company Disclosure
Letter and as contemplated by Section 1.02(d), there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
--------------------------------------------------
The Company has all requisite corporate power and authority to execute this
Agreement and to consummate the Transactions, subject to compliance with the HSR
Act (as defined in Section 3.05(a)) and the EC Regulations (as defined in
Section 3.05(a)). The execution and delivery by the Company of each Transaction
Agreement to which it is a party and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval (as defined in Section 3.04(c)). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation of each of the other
parties hereto, this Agreement constitutes a valid and binding agreement of the
14
Company, enforceable against the Company, except as the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(b) The Board of Directors of the Company (the "Company Board"), at a
-------------
meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement and the Company Stockholder Agreement, the Offer, the
Merger and the other Transactions, (ii) determining that the terms of the Offer,
the Merger and the other Transactions are fair to and in the best interests of
the Company and its stockholders, (iii) recommending that the holders of Company
Common Stock accept and tender their shares of Company Common Stock pursuant to
the Offer and (iv) recommending that the Company's stockholders adopt this
Agreement. Such resolutions are sufficient to render Section 203 of the DGCL
inapplicable (A) to Parent and Sub by reason of their entering into this
Agreement and the Company Stockholder Agreement or consummating any of the
Transactions and (B) to the Offer, the Merger and the other Transactions. To
the Company's Knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement and the Company Stockholder Agreement, the Offer, the Merger or any
other Transaction. Each of the Company's directors and principal executive
officers named in the Company Disclosure Letter either (x) has advised the
Company that such person intends to tender all shares of Company Common Stock
owned by such person pursuant to the Offer or (y) has been designated in the
Company Disclosure Letter pursuant to Section 1.02(d).
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the adoption of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "Company Stockholder Approval"). The affirmative vote
----------------------------
of any holders of Company Capital Stock is not necessary to approve any
Transaction Agreement other than this Agreement or to consummate the Offer or
any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) Except as disclosed in the
-----------------------
Company Disclosure Letter, the execution and delivery by the Company of this
Agreement do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof
15
and thereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a "Contract") to which the Company or any
--------
Company Subsidiary is a party or by or to which any of their respective
properties or assets is bound or subject, except for such conflicts, violations
or defaults (or rights of termination, cancelation or acceleration) as to which
requisite waivers or consents have been obtained or will be obtained prior to
acceptance for payment of shares of Company Common Stock by Sub pursuant to the
Offer or which would not in the aggregate have a Company Material Adverse
Effect; or (iii) subject to the filings and other matters referred to in the
following sentence, to the Knowledge of the Company, any judgment, order or
decree ("Judgment") or statute, law, ordinance, rule or regulation ("Applicable
-------- ----------
Law") applicable to the Company or any Company Subsidiary or their respective
- ---
properties or assets, including, without limitation, the Applicable Law of any
foreign country, except for such conflicts, violations or defaults which would
not in the aggregate have a Company Material Adverse Effect and would not
prevent or delay in any material respect the consummation of the Transactions.
To the Knowledge of the Company, no consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with,
-------
any Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
------------ ------
required to be obtained or made by or with respect to the Company or any Company
Subsidiary in connection with the execution, delivery and performance of any
Transaction Agreement to which it is a party or the consummation of the
Transactions, other than (i) compliance with and filings under (A) the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and (B) the
--- ---
rules and regulations of the Council of the European Communities (the "European
--------
Council") and of the Commission of the European Communities (the "European
-------- ---------- --------
Commission"), including, without limitation, Council Regulation (EEC) No 4064/89
- ----------
of 21 December 1989 on the control of concentration between undertakings (as
amended) (OJ L 257/14, 21.9.90) and Commission Regulation (EC)
16
No 447/98 of 1 March 1998 on the notifications, time limits and hearings
provided for Council Regulation (EEC) No 4064/89 on the control of
concentrations between undertakings (OJ L 61/1/, 2.3.98) (the "EC Regulations")
-- -----------
and the rules and regulations of any Governmental Entity to which a reference is
made pursuant to the EC Regulations, (ii) the filing with the SEC of (A) the
Schedule 14D-9, (B) a proxy or information statement relating to the approval
and adoption of this Agreement and the Merger by the Company's stockholders (the
"Proxy Statement"), (C) any information statement (the "Information Statement")
----- --------- ----------- ---------
required under Rule 14f-1 in connection with the Offer and (D) such reports and
statements under Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement and
-------- ---
the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions, (iii) 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 the other jurisdictions in which the Company is qualified to do
business, (iv) compliance with and such filings as may be required under
applicable U.S. Federal, state or local environmental laws, (v) such filings as
may be required in connection with any taxes, (vi) filings under any applicable
state takeover law, (vii) where the failure to obtain such consent, approval or
authorization, or to make such filing or notification, would not in the
aggregate have a Company Material Adverse Effect and (viii) such other items (A)
required solely by reason of the participation of Parent (as opposed to any
third party) in the Transactions or (B) as are set forth in the Company
Disclosure Letter.
(b) The Company and the Company Board have taken all action necessary
to (i) render the Company Rights inapplicable to this Agreement, the Company
Stockholder Agreement, the Offer, the Merger and the other Transactions and (ii)
ensure that (A) neither Parent nor any of its affiliates or associates is or
will become an "Acquiring Person" (as defined in the Company Rights Agreement)
by reason of this Agreement or the Company Stockholder Agreement, the Offer, the
Merger or any of the other Transactions, (B) a "Distribution Date" (as defined
in the Company Rights Agreement) shall not occur by reason of this Agreement or
the Company Stockholder Agreement, the Offer, the Merger or any of the other
Transactions and (C) the Company Rights shall expire immediately prior to the
consummation of the Offer.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. The Company
---------------------------------------
has filed all reports, schedules, forms, statements and other documents required
to be filed
17
by the Company with the SEC since January 1, 1996, pursuant to Sections 13(a)
and 15(d) of the Exchange Act (the "Company SEC Documents"). As
---------------------
of its respective date, each Company SEC Document complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as the case may be, and the rules and
--------------
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, and did not contain any untrue statement of a material fact or omit 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 extent that information contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 Company 10-K"), has been revised or superseded by a Company SEC Document
- ------------------
filed prior to the date of this Agreement, and except as disclosed in the
Company Disclosure Letter, as of the date of this Agreement, the 1997 Company
10-K does not 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 were
made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form 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 the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Company SEC Documents, as of the
date of this Agreement neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto and
that, individually or in the aggregate, would reasonably be expected to have a
Company Material Adverse Effect. None of the Company Subsidiaries is, or has at
any time since January 1, 1996, been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
18
SECTION 3.07. Information Supplied. None of the information supplied
---------------------
or to be supplied by the Company for inclusion or incorporation by reference in
(i) Offer Documents, the Schedule 14D-9 or any Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or, unless promptly
corrected, at the time of the Company Stockholders Meeting (as defined in
Section 6.01) or, unless promptly corrected, at the time of any action by
written consent in lieu of a meeting pursuant to Section 228 of the DGCL with
respect to this Agreement and the Merger, as applicable, 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. The Schedule 14D-
9, the Information Statement and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 3.08. Absence of Certain Changes or Events. Except as
-------------------------------------
contemplated by or expressly permitted in this Agreement and as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
agreement (the "Filed Company SEC Documents") or in the Company Disclosure
---------------------------
Letter, since December 31, 1997, the Company has conducted its business only in
the ordinary course, and during such period there has not been:
(i) any change (which would reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect) in the Company's
interest (as of December 31, 1997) in any oil and gas exploration license,
lease, area of mutual interest agreement, concession agreement, production
sharing contract, operating service agreement or other agreement or
arrangement evidencing an interest in hydrocarbons (an "Oil and Gas
-----------
Interest"), or in any corporation, partnership or joint venture arrangement
--------
which holds an Oil and Gas Interest, including, without limitation, the
imposition of any Lien on any Oil and
19
Gas Interest other than (A) the terms and conditions of all leases,
contracts for sale, purchase, exchange, refining or processing of
hydrocarbons, unitization and pooling designations, declarations, orders
and agreements, gas balancing or deferred production agreements, processing
agreements and plant agreements, pipeline, gathering and transportation
agreements, (B) easements, rights of way, servitudes, permits, surface
leases and other rights with respect to surface obligations, (C) Liens for
taxes or assessments not yet delinquent or being protested in good faith by
appropriate action brought in the normal course, and (D) materialmen's,
mechanic's, repairman's, employee's, contractor's, operator's and other
similar Liens or charges, in all cases arising in the ordinary course of
business and which were not made in violation of Section 5.01
(collectively, "Permitted Encumbrances");
----------------------
(ii) any acquisition of, or any ongoing negotiations to acquire, any
Oil and Gas Interest, or any interest in a corporation, partnership or
joint venture arrangement which holds an Oil and Gas Interest, that,
individually or in the aggregate, involves or would involve a required
commitment by the Company to make an investment or expenditure in excess of
$10,000,000;
(iii) any change in the Company's petrochemical business (as in
existence on December 31, 1997), including, without limitation, the
Company's interest in the Geismar, Louisiana, olefins plant and the
Company's role as operator thereof (the Company's petrochemical business
being collectively referred to herein as the "Petrochemicals Interests"),
------------------------
the acquisition or building of new petrochemicals capacity or expansion of
existing petrochemicals capacity, or disposition of (including by way of a
contribution of assets or otherwise), all or any portion of the
Petrochemical Interests or the alteration or amendment of any contracts
relating to any Petrochemicals Interests but excluding, in each case, any
change that would not reasonably be expected to have a Company Material
Adverse Effect;
(iv) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock (other than regular quarterly cash dividends not in
excess of $.05 per share of Company Common Stock with usual record and
payment dates and in accordance with the Company's present dividend policy
and regular
20
quarterly cash dividends with respect to the Series A Preferred), or any
repurchase for value by the Company of any Company Capital Stock;
(v) any split, combination or reclassification of any Company Capital
Stock 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
Company Capital Stock;
(vi) (A) any granting by the Company or any Company Subsidiary to any
director or executive officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect as of December 31, 1997, (B) any granting by the
Company or any Company Subsidiary to any such director or executive officer
of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of
December 31, 1997, or (C) any entry by the Company or any Company
Subsidiary into any employment, severance or termination agreement with any
such director or executive officer;
(vii) any change in accounting methods, principles or practices by the
Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar
as may have been required by a change in GAAP; or
(viii) unless Parent has otherwise agreed pursuant to Section 5.01(a),
any action taken by the Company or any Company Subsidiary that would be
prohibited after the date of this Agreement by Section 5.01(a) hereof,
other than any of clauses (iv), (v), (xi), and (xvii) (insofar as clause
(xvii) relates to clauses (iv), (v) and (xi)) of Section 5.01(a).
SECTION 3.09. Taxes. (a) Each of the Company, each Company
------
Subsidiary and each affiliated, combined, consolidated or unitary group of which
the Company or any Company Subsidiary is or has been a member (a "Company
-------
Affiliated Group") has timely filed, or has caused to be timely filed on its
- ----------------
behalf, all Tax Returns required to be filed by it, and all such Tax Returns are
true, complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns would not, individually or in the
aggregate, have a Company Material
21
Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed
by the Company, any Company Subsidiary or any Company Affiliated Group, have
been timely paid, except to the extent that any failure to pay would not,
individually or in the aggregate, have and would not reasonably be expected to
have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and the Company Subsidiaries (including by virtue of being or having
been a member of a Company Affiliated Group) for all Taxable periods and
portions thereof through the date of such financial statements. No deficiency
with respect to any Taxes has been proposed, asserted or assessed against the
Company or any Company Subsidiary, and no requests for waivers of the time to
assess any such Taxes are pending, except to the extent any such deficiency or
request for waiver, individually or in the aggregate, would not have and would
not reasonably be expected to have a Company Material Adverse Effect. There is
no audit, examination, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company, any Company
Subsidiary or any Company Affiliated Group which matter would, individually or
in the aggregate, have or would reasonably be expected to have a Company
Material Adverse Effect.
(c) The Company and each Company Subsidiary have complied with all
rules and regulations relating to the withholding of Taxes, except to the extent
failure to comply would not, individually or in the aggregate, have and would
not reasonably be expected to have a Company Material Adverse Effect.
(d) For purposes of this Agreement:
"Taxes" shall include all forms of taxes, levies, imposts, duties,
-----
charges or withholdings, whenever created or imposed, and whether of the United
States or elsewhere, and whether imposed by a local, municipal, governmental,
state, foreign, Federal or other Governmental Entity, or in connection with any
agreement with respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
"Tax Return" shall mean all Federal, state, local, provincial and
----------
foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
22
SECTION 3.10. Absence of Changes in Benefit Plans. Except as
------------------------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, from December 31, 1997 to the date of this Agreement, there has not been
any adoption or amendment in any material respect by the Company or any Company
Subsidiary of any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, welfare, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any Company
Subsidiary except any such plan, arrangement or understanding the Company has
adopted as required by law (collectively, "Company Benefit Plans"). Except as
---------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, to the Knowledge of the Company, as of the date of this Agreement
there are not any employment, consulting, indemnification severance or
termination agreements or arrangements between the Company or any Company
Subsidiary and any current or former employee, officer or director of the
Company or any Company Subsidiary.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) The
--------------------------------------------
Company Disclosure Letter contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Company
----- -------
Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of
- -------------
ERISA) and all other Company Benefit Plans maintained, or contributed to, by the
Company or any Company Subsidiary for the benefit of any current or former
employees, officers or directors of the Company or any Company Subsidiary. The
Company has used its best efforts to make available to Parent true, complete and
correct copies in all material respects of (i) each Company Benefit Plan (or, in
the case of any unwritten Company Benefit Plan, a description thereof), (ii) the
most recent annual report on Form 5500 and Schedule B thereto (including any
related actuarial valuation report) filed with the Internal Revenue Service with
respect to each Company Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each Company Benefit Plan for which
such summary plan description is required and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter, all Company
Pension Plans intended to be qualified
23
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") have been the subject of determination letters from the Internal Revenue
Service to the effect that such Company Pension Plans are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor, to the Knowledge of
the Company, has revocation been threatened, nor has any such Company Pension
Plan 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. The Company has made available
to Parent true, complete and correct copies of the determination letters
referred to herein.
(c) Except as disclosed in the Company Disclosure Letter with respect
to ENSTAR Corporation, no Company Pension Plan, other than any Company Pension
Plan that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA (a "Company Multiemployer Pension Plan"), had, as of the respective last
annual valuation date for each such Company Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Parent. None of the Company
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), whether or not waived. None
of the Company, any Company Subsidiary, any officer of the Company or any
Company Subsidiary 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 subject the Company, any
Company Subsidiary or any officer of the Company or any Company Subsidiary 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. None of such Company
Benefit Plans and trusts has been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of ERISA) for which the
disclosure requirements of Section 4043.1 et seq., promulgated by the Pension
-- ---
Benefit Guaranty Corporation, have not been waived with respect to any Company
Benefit Plan during the last five years. Neither the Company nor any Company
Subsidiary has incurred a "complete withdrawal" or a "partial withdrawal" (as
such terms are defined in Sections 4203 and 4205, respectively, of ERISA) since
the
24
effective date of such Sections 4203 and 4205 with respect to any of the
Multiemployer Pension Plan.
(d) Except as disclosed in the Company Disclosure Letter, to the
Knowledge of the Company, each Company Benefit Plan complies in all material
respects with and has been administered, operated and maintained in all material
respects in compliance with all applicable provisions of ERISA, the Code and
other applicable laws.
(e) With respect to each Company Benefit Plan, no action, suit,
grievance, claim, arbitration or other manner of litigation with respect to the
assets of such Plan (other than routine claims for benefits made in the ordinary
course of plan administration for which plan administrator review procedures
have not been exhausted) is pending, or to the Company's Knowledge, threatened
or imminent against or with respect to the Company Benefit Plans or any Company
Benefit Plan sponsor or fiduciary (as defined in Section 3(21) of ERISA).
(f) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, except as disclosed in the Company Disclosure Letter, (i)
no such Company Benefit Plan is unfunded or funded through a "welfare benefits
fund" (as such term is defined in Section 419(e) of the Code), (ii) each such
Company Benefit Plan that is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code), complies with the applicable requirements of
Section 4980B(f) of the Code and (iii) each such Company Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended or
terminated without material liability to the Company and the Company Subsidiary
on or at any time after the Effective Time except as otherwise provided in this
Agreement.
(g) Other than payments that may be made to the persons listed in the
Company Disclosure Letter (the "Primary Company Executives"), any amount that
--------------------------
could be received (whether in cash or property or the vesting of property) as a
result of the Offer, the Merger or any other Transaction by any employee,
officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently in
effect would not be characterized as an "excess parachute payment" (as defined
in Section 280G(b)(1) of the Code). Set forth in the Company Disclosure Letter
is (i) the estimated maximum amount that could be paid to each Primary Company
Executive
25
as a result of the Offer, the Merger and the other Transactions under
all employment, severance and termination agreements, other compensation
arrangements and Company Benefit Plans currently in effect and (ii) the "base
amount" (as defined in Section 280G(b)(3) of the Code) for each Primary Company
Executive calculated as of the date of this Agreement.
SECTION 3.12. Litigation. Except as disclosed in the Filed Company
-----------
SEC Documents, there is no suit, action or proceeding not disclosed in the
Company Disclosure Letter pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect, nor is there any Judgment outstanding
against the Company or any Company Subsidiary that has had or would reasonably
be expected to have a Company Material Adverse Effect.
SECTION 3.13. Environmental Matters; Compliance with Laws. (a)
-------------------------------------------
Except as disclosed in the Filed Company SEC Documents, there are no claims,
investigations or administrative actions not disclosed in the Company Disclosure
Letter pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any Company Subsidiary arising from or related to the
harmful effects of, or the removal or remediation of, hazardous substances or
pollutants that has had or would be reasonably expected to have a Company
Material Adverse Effect.
(b) Except as disclosed in the Filed Company SEC Documents or in the
Company Disclosure Letter, to the Knowledge of the Company, the Company and the
Company Subsidiaries are in compliance with all Applicable Laws, except for
instances of noncompliance that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
This Section 3.13 does not relate to matters with respect to Taxes, which are
the subject of Section 3.09.
SECTION 3.14. Title to Properties. Except as set forth in the
--------------------
Company Disclosure Letter, as of the date of this Agreement, each of the Company
and each of the Significant Company Subsidiaries has good title to, or valid
leasehold or other ownership interests or rights in, all its properties and
assets except:
(i) for such interest or rights as are no longer used or useful in the
conduct of its businesses or as
26
have been disposed of in the ordinary course of business, and
(ii) for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate, do not and will
not interfere with its ability to conduct its business as currently
conducted to the extent that such interference would not reasonably be
expected to have a Company Material Adverse Effect.
As of the date of this Agreement, none of the Company and the Significant
Company Subsidiaries' properties and assets are subject to any Liens (other than
Permitted Encumbrances) that, in the aggregate, interfere with the ability of
the Company and the Company Subsidiaries to conduct business as currently
conducted to an extent that have had or would reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.15. Confidentiality and Other Agreements. (a) The Company
-------------------------------------
has no confidentiality agreement or standstill agreement with any third party
with respect to a Company Takeover Proposal by such third party (each, a
"Company Confidentiality Agreement") in effect as of the date of this Agreement
- ----------------------------------
that has not been provided to Parent or Sub, other than those Company
Confidentiality Agreements that are prohibited by their terms from being
disclosed to Parent or Sub.
(b) Except as set forth in the Company Disclosure Letter, none of the
Company or any of its subsidiaries is subject to any noncompetition or similar
agreement that prohibits or restricts the Company or any of its affiliates from
engaging in any business or other activities.
SECTION 3.16. Brokers; Schedule of Fees and Expenses. No broker,
---------------------------------------
investment banker, financial advisor or other person, other than Salomon
Brothers Inc, Smith Barney Inc. and Petrie Parkman & Co., Inc. (the "Financial
---------
Advisors"), 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 Offer, the Merger or any of the other
Transactions based upon arrangements made by or on behalf of the Company or any
Company Subsidiary or affiliate of the Company. The estimated fees and expenses
incurred and to be incurred by the Company in connection with the Offer, the
Merger and the other Transactions (including the fees of the Financial Advisors
and the fees of the Company's legal counsel) are set forth in the Company
Disclosure Letter.
27
The Company has furnished to Parent a true and complete copy of all agreements
between the Company and the Financial Advisors relating to the Offer, the Merger
and the other Transactions.
SECTION 3.17. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of each of the Financial Advisors, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Offer and the Merger by the holders of the shares of Company Common Stock is
fair to the Company's stockholders from a financial point of view, a signed copy
of which opinion has been delivered to Parent.
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.01. Organization, Standing and Power. (a) Each of Parent
---------------------------------
and Sub is duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its businesses as presently conducted.
SECTION 4.02. Sub. (a) Since the date of its incorporation, Sub has
----
not carried on any business or conducted any operations other than the execution
of the Transaction Agreements to which it is a party, the performance of its
obligations hereunder and thereunder and matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Parent free and clear of any
Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
--------------------------------------------------
Each of Parent and Sub has all requisite corporate power and authority to
execute each Transaction Agreement to which it is a party and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of each
Transaction Agreement to which it is a party and the consummation by it of the
Transactions have been duly authorized by all necessary corporate action as the
part of Parent and Sub. Parent, as sole stockholder of Sub, has approved and
adopted this Agreement. Each of Parent and
28
Sub has duly executed and delivered each Transaction Agreement to which it is a
party, and each Transaction Agreement to which it is a party constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
SECTION 4.04. No Conflicts; Consents. The execution and delivery by
-----------------------
each of Parent and Sub of each Transaction Agreement to which it is a party, do
not, and the consummation of the Offer, the Merger and the other Transactions
and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien 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 any of its subsidiaries, (ii) any Contract
to which Parent or any of its subsidiaries is a party or by or to which any of
their respective properties or assets is bound or subject or (iii) subject to
the filings and other matters referred to in the following sentence, any
Judgment or Applicable Law applicable to Parent or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii) above, any such items that, individually or in the aggregate, have not
had and could not reasonably be expected to prevent or materially delay the
ability of Parent to consummate the Offer, the Merger and the other Transactions
(a "Parent Material Adverse Effect"). No Consent of, or registration,
------------------------------
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Parent or any of its subsidiaries in connection
with the execution, delivery and performance of any Transaction Agreement to
which Parent or Sub is a party or the consummation of the Transactions, other
than (i) compliance with and filings under (A) the HSR Act and (B) the EC
Regulations and the rules and regulations of any Governmental Entity to which a
reference is made pursuant to the EC Regulations, (ii) the filing with the SEC
of (A) the Offer Documents and (B) such reports and statements under Sections 13
and 16 of the Exchange Act as may be required in connection with this Agreement
and the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) compliance with and such filings as may
be required under applicable environmental laws, (v) such filings as may be
required in connection with the taxes described in Section 6.09, (vi) filings
under any applicable state takeover law and
29
(vii) such other items (A) required solely by reason of the participation of the
Company (as opposed to any third party) in the Transactions, (B) that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect or (C) as are set forth in the
letter, dated as of the date of this Agreement, from Parent to Sub.
SECTION 4.05. Information Supplied. None of the information supplied
---------------------
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) Offer Documents, the Schedule 14D-9 or the Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting (if applicable), 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. The Offer Documents
will comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 4.06. Brokers. 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 Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Offer, the Merger and the other Transactions based upon arrangements
made by or on behalf of Parent.
SECTION 4.07. Financing. Parent and Sub have funds available
----------
sufficient to consummate the Offer and the Merger on the terms contemplated by
this Agreement, and, at the expiration of the Offer and the Effective Time,
Parent and Sub will have available all of the funds necessary for the
acquisition of all shares of Common Stock pursuant to the Offer and the Merger,
as the case may be, and to perform their respective obligations under this
Agreement.
30
SECTION 4.08. Litigation. As of the date hereof, to the knowledge of
-----------
Parent, no person has filed any action or suit against Parent with respect to
this Agreement and the Transactions.
SECTION 4.09. Interested Stockholder. Immediately prior to the
----------------------
execution and delivery of this Agreement and the Company Stockholder Agreement,
neither Parent nor Sub was an "interested stockholder" of the Company, as such
term is defined in Section 203(c)(5) of the DGCL.
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business. (a) Except for matters set forth
--------------------
in the Company Disclosure Letter or otherwise contemplated by the Transaction
Agreements, unless Parent shall otherwise agree, from the date of this Agreement
to the Effective Time or earlier termination of this Agreement, the Company
shall, and shall cause each Company Subsidiary to, conduct its business in the
usual, regular and ordinary course consistent with past practice except as
required to comply with changes in applicable law occurring after the date
hereof (subject to the express restrictions set forth below in this Section
5.01, including, without limitation, the restrictions of clauses (iv) and (v)
below) and, to the extent consistent therewith, use all commercially reasonable
efforts to preserve intact its current business organization and keep available
the services of its current officers and employees to maintain its goodwill and
ongoing business. In addition, and without limiting the generality of the
foregoing, except for matters set forth in the Company Disclosure Letter or
otherwise contemplated by the Transaction Agreements, unless Parent shall
otherwise agree, and except as required to comply with changes in applicable law
occurring after the date hereof, from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any Company
Subsidiary to, do any of the following without the prior written consent of
Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (other than regular
quarterly cash dividends not in excess of $.05 per share of Company Common
Stock with usual record and payment dates and in accordance with the
Company's present dividend policy and regular quarterly cash dividends with
respect to
31
the Series A Preferred), other than dividends and distributions by a direct
or indirect wholly owned subsidiary of the Company to its parent, (B)
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 (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, voting securities or convertible or
exchangeable securities or (D) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units, other than the
issuance of Company Common Stock (and associated Company Rights) upon the
exercise of Company Stock Options outstanding on the date of this Agreement
or under the Company's Savings Plan for Salaried Employees, Deferred
Compensation Plan or the defined contribution retirement plan for employees
of Virginia Indonesia Company, and in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) enter into, or amend, any material technical contract, long-term
drilling rig contract, agreement to sell, purchase or share seismic and
other geological or geophysical data, or any material contract for the
purchase or sale of oil, gas, LPG, LNG, ethylene, propylene or other
hydrocarbon or petrochemical products, other than in the ordinary course of
business consistent with past practice;
(v) (A) enter into, or amend, or negotiate to enter into or amend, any
farm-out or farm-in arrangement, area of mutual interest agreement,
exploration license, lease, concession agreement, production sharing
contract, operating service agreement or similar agreement or arrangement
evidencing an interest in hydrocarbons, or participate in any bidding
group, bidding round or public hearing with respect thereto, (B) acquire,
or negotiate to
32
acquire, any interest in a corporation, partnership or joint venture
arrangement which holds an oil and gas interest of the type described in
the foregoing clause (A), (C) sell, transfer, assign, relinquish or
terminate (other than relinquishments or terminations required by the terms
of existing agreements) or negotiate to take any such action with respect
to, the Company's interest (as of the date of this Agreement) in any oil
and gas exploration license, lease, area of mutual interest agreement,
concession agreement, production sharing contract, operating service
agreement or other agreement or arrangement evidencing an interest in
hydrocarbons, or in the equity or debt securities of any corporation,
partnership or joint venture arrangement which holds such an interest,
including, without limitation, the imposition of any Lien (other than
Permitted Encumbrances) on any of the foregoing, (D) give, or negotiate to
give, any approvals relating to development plans, work plans, budgets or
capital expenditure commitments in connection with any oil and gas
interests of the type described in the foregoing clause (C), other than
expenditures in the existing capital expenditure budget disclosed in the
Company Disclosure Letter, or (E) make any change in the Petrochemical
Interests, including, without limitation, the imposition of any Lien (other
than Permitted Encumbrances) thereon, or enter into any agreements or
negotiations to acquire or build new petrochemicals capacity or expand
existing petrochemicals capacity, or dispose of (including, by way of a
contribution of assets or otherwise), all or any portion of the
Petrochemical Interests, or to alter or amend, in any material respect, any
contracts relating to the Petrochemical Interests, other than in the
ordinary course of business consistent with past practice;
(vi) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and the Company Subsidiaries taken as a whole;
(vii) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except in the ordinary
course of business consistent with prior practice or to the extent required
under employment agreements in effect as of
33
the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (B) grant to any employee, officer or director
of the Company or any Company Subsidiary any increase in severance or
termination pay, except to the extent required under any agreement in
effect as of December 31, 1997, (C) enter into any employment, consulting,
indemnification, severance or termination agreement with any such employee,
officer or director, (D) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or Company Benefit
Plan or (E) take any action to accelerate any rights or benefits, or make
any material determinations not in the ordinary course of business
consistent with prior practice, under any collective bargaining agreement
or Company Benefit Plan;
(viii) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP or by operation of law;
(ix) sell, lease, license or otherwise dispose of or subject to any
Lien any properties or assets, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(x) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, 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 or trade obligations incurred in the ordinary course of business
consistent with past practice, or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than to or in
the Company or any direct or indirect wholly owned subsidiary of the
Company;
(xi) make or agree to make any new capital expenditure or expenditures
(other than expenditures in the existing capital expenditure budget
disclosed in the Company Disclosure Letter) that, individually, is
34
in excess of $1,500,000 or, in the aggregate, are in excess of $5,000,000;
(xii) make any material Tax election or settle or compromise any
material Tax liability or refund, consent to any extension or waiver of the
statute of limitations period applicable to any Tax claim or action, if any
such election, settlement, compromise, consent or other action would have
the effect of increasing the Tax liability or reducing any net operating
loss, foreign tax credit, net capital loss or any other credit or tax
attribute of the Company or any of the Company Subsidiaries (including,
without limitation, deductions and credits related to alternative minimum
Taxes);
(xiii) enter into any hedging agreement or other financial agreement
or arrangement designed to protect the Company against fluctuations in
commodities prices or currency exchange rates, except agreements or
arrangements entered into in the ordinary course of business consistent
with past practice;
(xiv) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms or the terms of this Agreement, of liabilities reflected
or reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Filed Company SEC Documents or incurred in the ordinary course of business
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any Company Subsidiary is a party;
(xv) make any material change (including failing to renew) in the
amount or nature of the insurance policies covering the Company and the
Company Subsidiaries, other than pursuant to the terms of such existing
policies as of the date of this Agreement;
(xvi) enter into any agreements in connection with, or negotiate to
give any approvals to, the amendment, extension, modification or waiver of
any of
35
the terms and conditions (as in effect on the date of this Agreement) of the
Indonesian Participating Units issued by Unimar Company, or any guarantee or
"keep well" or other agreement to maintain any financial condition with respect
thereto; or
(xvii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) The Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, take any action that would, or that would
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in any Transaction Agreement to which it is a
party that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 5.02, any
condition to the Offer set forth in Exhibit A, or any condition to the Merger
set forth in Article VII, not being satisfied.
(c) The Company shall promptly advise Parent orally and in writing of
any change or event having, or which, insofar as can reasonably be foreseen,
would have, a Company Material Adverse Effect.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall
----------------
it permit any Company Subsidiary to, nor shall it authorize any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any Company Subsidiary (collectively, "Company
-------
Representatives") to, and will use its reasonable best efforts to ensure that
- ---------------
none of the Company Representatives shall, (i) solicit, initiate or encourage
the submission of, any Company Takeover Proposal, (ii) enter into any agreement
with respect to any Company Takeover Proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, a Company Takeover Proposal; provided,
--------
however, that, at any time during the period following the execution of the
- -------
Agreement and prior to the consummation of the Offer (the "Applicable Period"),
-----------------
the Company may, in response to a Company Superior Proposal (as defined in
Section 5.02(b), including the determination by the Company Board set forth in
such definition) that was not solicited by the Company or any Company
Representative and that did not otherwise result from a breach or a deemed
breach of this Section 5.02(a), and subject to providing prior written notice of
its
36
decision to take such action to Parent (the "Company Notice") and compliance
--------------
with Section 5.02(c), for a period of no more than ten business days following
delivery of the Company Notice (which period shall be extended to the end of the
48-hour period following the receipt by Parent of the notice from the Company
that it is prepared to accept a Company Superior Proposal referred to in Section
5.02(b)), (x) furnish information with respect to the Company to any
person making a Company Superior Proposal pursuant to a customary
confidentiality agreement as determined by the Company after consultation with
its outside counsel, and (y) participate in discussions or negotiations
regarding such Company Superior Proposal. Without limiting the fore going, it is
agreed that any action that is in violation of or inconsistent with the
restrictions set forth in the preceding sentence by any executive officer of the
Company or any Company Subsidiary or any Company Representative or affiliate of
the Company, whether or not such person is purporting to act on behalf of the
Company or any Company Subsidiary or otherwise, shall be deemed to be a breach
of this Section 5.02(a) by the Company. For purposes of this Agreement, "Company
-------
Takeover Proposal" means any inquiry, proposal or offer from any person relating
- -------- --------
to any direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or the assets of the Company and the
Company Subsidiaries taken as a whole, or 15% or more of any class of equity
securities of the Company or any Significant Company Subsidiary, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the Company
or any Company Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any Company Subsidiary, other than the transactions contemplated by
this Agreement. The Company shall be permitted to deliver only one Company
Notice with respect to each person making a Company Superior Proposal.
(b) Except as expressly permitted by this Section 5.02, neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by the Company Board or any such committee of this Agreement, the
Offer or the Merger, (ii) approve or cause the Company to enter into any letter
of intent, agreement in principle or any legally binding acquisition agreement
or similar agreement (any such legally binding agreement, a "Company Acquisition
-------------------
Agreement") relating to any Company Takeover Proposal or (iii) approve or
- ---------
recommend, or propose to publicly approve or recommend, any Company
37
Takeover Proposal. Notwithstanding the foregoing, if the Company has received a
Company Superior Proposal and if Sub has not accepted for payment any shares of
Company Common Stock tendered pursuant to the Offer, the Company Board may
(subject to this and the following sentences) terminate this Agreement, but only
at a time that is during the Applicable Period and is more than 48 hours
following Parent's receipt of written notice advising Parent that the
Company Board is prepared to accept such Company Superior Proposal, specifying
the material terms and conditions of such Company Superior Proposal and
identifying the person making such Company Superior Proposal; provided, however,
-------- -------
that (x) at the time of such termination, such Proposal continues to be a
Company Superior Proposal, taking into account any amendment of the terms of the
Offer or the Merger by Parent or any proposal by Parent to amend the terms of
this Agreement, the Offer or the Merger or any other Company Takeover Proposal
made by Parent (a "New Parent Proposal"), and (y) concurrently with or
--- ------ --------
immediately after such termination, the Company Board shall cause the Company to
enter into a Company Acquisition Agreement with respect to such Company Superior
Proposal. For purposes of this Agreement, a "Company Superior Proposal" means
------- -------- --------
any proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction,
for consideration consisting of cash and/or securities, more than 50% of the
outstanding shares of Company Common Stock or all or substantially all the
assets of the Company and otherwise on terms which the Company Board determines
in its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation) (x) is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other aspects of the
proposal and the third party making such proposal, and (y) provides greater
value to the holders of Company Common Stock (specifically taking into account
the expected value of the consideration to be received by the holders of Company
Common Stock on the date such consideration is expected to be received by such
holders) than the cash consideration to be received by such stockholder pursuant
to the Offer and the Merger, as the Offer and the Merger may be amended from
time to time, or the value to the holders of Company Common Stock to be provided
by any New Parent Proposal (specifically taking into account the expected value
of the consideration expected to be received in the Offer, the Merger or any New
Parent Proposal by the holders of Company Common Stock on the date such
consideration is expected to be received by such holders).
38
(c) In addition to the obligations of the Company set forth in
Sections 5.02(a) and 5.02(b), the Company promptly shall advise Parent orally
and in writing of any Company Takeover Proposal or any inquiry or request for
information with respect to or that could reasonably be expected to lead to any
Company Takeover Proposal, the identity of the person making any such Company
Takeover Proposal or inquiry or request for information and the material terms
of any such Company Takeover Proposal or inquiry or request for information. The
Company shall (i) keep Parent fully informed of the status including any change
to the material terms of any such Company Takeover Proposal or inquiry or
request for information and (ii) provide to Parent as soon as practicable after
receipt or delivery thereof with copies of all correspondence and other written
material sent or provided to the Company or any Company Representative or any
affiliate of the Company from any third party in connection with any Company
Takeover Proposal or inquiry or request for information or sent or sent or
provided by the Company or any Company Representative or any affiliate of the
Company to any third party in connection with any Company Takeover Proposal or
inquiry or request for information; provided, however, that the Company shall
-------- -------
not be required to provide any nonpublic information specified in this clause
(ii) regarding the business or financial condition or prospects of such third
party if the Company is prohibited from disclosing such information pursuant to
a legally binding confidentiality agreement.
(d) Nothing contained in this Section 5.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Company Board,
after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
-------- -------
neither the Company nor its Board nor any committee thereof shall withdraw or
modify, or propose publicly to withdraw or modify, its position with respect to
this Agreement or in connection with the Offer or the Merger, or approve or
recommend, or propose publicly to approve or recommend, a Company Takeover
Proposal.
39
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
-----------------------------------------------------
(a) If the approval and adoption of this Agreement by the Company's
stockholders is required by law, the Company shall, at Parent's request, as soon
as practicable following the expiration of the Offer, prepare and file with the
SEC the Proxy Statement in preliminary form, and the Company shall use its best
efforts to respond as promptly as practicable to any comments of the SEC with
respect thereto. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. If at any time
prior to receipt of the Company Stockholder Approval there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects. The Company
shall use its best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) If the approval and adoption of this Agreement by the Company's
stockholders is required by law, the Company shall, if requested by Parent and
as soon as practicable following the expiration of the Offer, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
-------
Stockholders Meeting") for the purpose of seeking the Company Stockholder
- --------------------
Approval. The Company shall, through the Company Board, recommend to its
stockholders that they give the Company Stockholder Approval. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 6.01(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Company Takeover Proposal. Notwithstanding the foregoing, if Sub
or any other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of each class of Company Capital Stock, the parties shall, at the request
of Parent, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration
40
of the Offer without a stockholders meeting in accordance with Section 253 of
the DGCL.
(c) Subject to any restrictions imposed by Applicable Law, Parent
shall cause all shares of Common Stock purchased pursuant to the Offer and all
other shares of Common Stock owned by Sub or any other subsidiary of Parent to
be voted to adopt and approve this Agreement and the Merger at the Company
Stockholders Meeting or, at the election of Parent, shall consent in writing to
adoption and approval of this Agreement and the Merger pursuant to Section 228
of the DGCL.
SECTION 6.02. Access to Information; Confidentiality. The Company
---------------------------------------
shall, and shall cause each of its subsidiaries to, afford to Parent, and to
Parent's directors, officers, employees, accountants, counsel, financial
advisers, financing sources and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, subject to legally binding confidentiality restrictions with third
parties. All nonpublic information exchanged pursuant to this Section 6.02
shall be subject to the confidentiality agreement dated as of April 25, 1998
between the Company and Parent (the "Confidentiality Agreement").
-------------------------
SECTION 6.03. Reasonable Efforts; Notification. (a) Upon the terms
---------------------------------
and subject to the conditions set forth in this Agreement, each of the parties
shall use all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) 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, (ii) the obtaining
41
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the Company Stockholder Agreement
or the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements. In connection with and without limiting
the foregoing, the Company and the Company Board shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to any Transaction or this Agreement or the
Company Stockholder Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to this Agreement or the Company
Stockholder Agreement, take all action necessary to ensure that the Offer, the
Merger and the other Transactions may be consummated as promptly as practicable
on the terms contemplated by the Transaction Agreements and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other Transactions. Nothing in this Agreement shall be deemed to require any
party to waive any substantial rights or agree to any substantial limitation on
its operations or to take any action that would result in any of the
consequences referred to in paragraph (a) of Exhibit A.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in any Transaction Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; 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 any Transaction Agreement.
SECTION 6.04. Stock Options. (a) Prior to the consummation of the
--------------
Offer, the Company Board (or, if appropriate, any committee administering the
Company Stock Plans) shall have adopted such resolutions or taken such other
actions as are required to ensure that all Company Stock Options and all Company
SARs heretofore granted under any Company Stock Plan that are outstanding at the
Effective
42
Time shall not give the holder thereof the right to receive any capital stock of
Parent, the Company or the Surviving Corporation after the Effective Time or to
receive from Parent, the Company or the Surviving Corporation any consideration
other than an amount of cash equal to the Option Spread.
(b) In this Agreement:
"Company Stock Option" means any option to purchase Company Common
--------------------
Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
-----------
of Company Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the plans providing for the grant of
-------------------
Company Stock Options or any other issuance of Company Capital Stock and
listed in the Company Disclosure Letter.
SECTION 6.05. Benefit Plans. (a) Parent shall cause the Surviving
--------------
Corporation to (i) maintain for a period of one year after the Effective Time
the Company Benefit Plans (other than plans providing for the issuance of
Company Capital Stock or based on the value of Company Capital Stock) in effect
on the date of this Agreement or (ii) make available to employees of the Company
and the Company Subsidiaries (including employees transferred to employment with
Parent or other subsidiaries of Parent) the employee benefit plans of Parent and
its subsidiaries that are provided to similarly situated employees of Parent and
its subsidiaries.
(b) Following the Effective Time, Parent shall cause the Company and
its subsidiaries to honor (subject to this Section 6.05 and Section 6.06) all
obligations under any contracts, agreements and commitments of the Company and
its subsidiaries prior to the date hereof (or as established or amended in
accordance with or permitted by this Agreement) the existence of which does not
constitute a violation of the terms of this Agreement, which apply to any
current or former employee, or current or former director of the parties hereto
or any of their subsidiaries; provided, however, that this undertaking is not
-------- -------
intended to prevent the Company or any subsidiary of the Company from enforcing
such contracts, agreements and commitments in accordance with their terms,
including, any reserved right to amend, modify, suspend, revoke or terminate any
such contract, agreement or commitment.
43
(c) Nothing herein shall be construed as giving any employee of the
Company or any Company Subsidiary any right to continued employment following
the Effective Time.
(d) Parent agrees that for purposes of any of the Company Benefit
Plans conferring rights on a current or former employee, officer or director as
a result of a change of control of the Company, the consummation of the Merger
shall be deemed to constitute a "Change of Control" (as that term is defined in
such Company Benefit Plans).
(e) If any employee or officer of the Company or any of the Company
Subsidiaries becomes a participant in any employee benefit plan, program,
practice or policy of Parent or any subsidiary of Parent or the Surviving
Corporation, such employee or officer shall be given credit thereunder for all
service prior to the Effective Time with the Company and the Company
Subsidiaries or any predecessor employer (to the extent such credit was given by
the Company) for purposes of eligibility and vesting (but not for benefit
accrual purposes), except to the extent that crediting such service would result
in duplication of benefits.
(f) For a period of two years from the consummation of the Offer, if
any segment or business of the Company or the Company Subsidiaries (a "Segment")
-------
is sold or otherwise disposed of, Parent agrees, and shall cause the Surviving
Corporation to agree, to provide, or cause the buyer of or other successor to
such Segment to provide, each employee whose employment is involuntarily
terminated after such sale or other disposition with severance benefits which
are no less favorable than the severance benefits to which such employee would
have been entitled had such employee's employment instead then been
involuntarily terminated by the Company or the Company Subsidiaries, pursuant to
the Company Benefit Plans existing as of the date hereof, but only to the extent
that the obligations of the Company and the Company Subsidiaries under the
Company Benefit Plans have not been discharged prior to such involuntary
termination of employment. For the purposes of this Section 6.05(f) the term
"involuntarily terminated" shall be used as such term is used in the relevant
Company Benefit Plans.
(g) On or before 90 days after the Closing Date, Parent shall (i)
notify each management employee who is a participant in the Company's Executive
Severance Plan (a "Participant") as to whether Parent intends to continue the
employment of such Participant or to terminate the employment of such
Participant, (ii) with respect to each Participant whose employment Parent
intends to terminate, notify such Participant of the effective date of such
44
termination and the details of the terms and conditions of such Participant's
employment intended by Parent to be applicable prior to the date of such
termination, and (iii) with respect to each Participant to whom Parent intends
to offer continued employment, notify such Participant of any desired changes
Parent would make in the terms and conditions of such Participant's employment.
(h) Parent shall maintain, or shall cause the Surviving Corporation or
its successors to maintain, with respect to employees and former employees (and
their eligible dependents) of the Company and the Company Subsidiaries who are
participating in the Company's retiree medical plan as of the Effective Time or
who should be eligible to participate in the Company's retiree medical plan if
they retired as of the later of (i) the Effective Time or (ii) in the case of an
employee who is involuntarily terminated for purposes of any Company severance
plan (as currently in effect), as of the end of the salary continuation period
under such severance plan, retiree medical coverage that is consistent with the
retiree medical coverage provided to similarly situated employees and former
employees of the Parent and its subsidiaries at such time.
(i) Without regard to whether the Company's Salaried Employees'
Pension Plan (the "CSEPP") or the Company's Supplemental Retirement Plan II (the
-----
"SERP") are continued following the Effective Time, Parent shall cause the
----
benefits provided by Section 1.01(30)(C) of the CSEPP and Paragraphs (iv), (v)
and (vi) of Article V of the SERP (pertaining to additional service credit under
such plans for certain participants who are involuntarily terminated), with
respect to employees of the Company as of the Effective Time who are
involuntarily terminated from employment with Parent or any subsidiary of Parent
within two years after the Effective Time, to be continued for a period of not
less than two years following the Effective Time.
(j) At Parent's election, the Company shall amend the CSEPP and
Savings Plan for Salaried Employees to cause all employees of the Company and
the Company Subsidiaries to become 100% vested in their accrued benefits under
such plans as of the Effective Time. In all cases, any employee of the Company
or a Company Subsidiary who is a participant in the CSEPP or the Savings Plan
for Salaried Employees as of the Effective Time shall become 100% vested in his
or her accrued benefits under such plans if and when such employee is
involuntarily terminated within two years of the Effective Time.
45
SECTION 6.06. Indemnification. (a) Parent shall, to the fullest
----------------
extent permitted by law, cause the Surviving Corporation to honor all the
Company's obligations to indemnify (including any obligations to advance funds
for expenses) the current or former directors or officers of the Company and the
Company Subsidiaries for acts or omissions by such directors and officers
occurring at or prior to the Effective Time to the extent that such obligations
of the Company exist on the date of this Agreement, whether pursuant to the
Company Charter, the Company By-laws, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Company Charter, the
Company By-laws and such individual indemnity agreements 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.
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
--------
however, that Parent shall not be obligated to make annual premium payments for
- -------
such insurance to the extent such premiums exceed 300% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 300% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all,
---------------
or can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium;
provided further, if such insurance coverage cannot be obtained at all, Parent
- -------- -------
shall purchase all available extended reporting periods with respect to pre-
existing insurance in an amount which, together with all other insurance
purchased pursuant to this Section 6.06(b), does not exceed the Maximum Premium.
The Company represents to Parent that the Maximum Premium is $1,899,000. Parent
agrees, and will cause the Company, not to take any action that would have the
effect of limiting the aggregate amount of insurance coverage required to be
maintained for the individuals referred to in this Section 6.06(b).
46
(c) From and after the consummation of the Offer, to the full extent
permitted by the law, Parent shall, and shall cause the Company (or any
successor to the Company) to, indemnify, defend and hold harmless the present
officers and directors of the Company and its subsidiaries (each an "Indemnified
-----------
Party") against all losses, claims, damages, liabilities, fees and expenses
- -----
(including attorneys' fees and disbursements), judgments, fines and amounts paid
in settlement (collectively, "Losses") arising out of actions or omissions
occurring at or prior to the Effective Time in connection with this Agreement,
the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions; provided, however, that an Indemnified Party shall not be entitled
-------- -------
to indemnification under this Section 6.06(c) for Losses arising out of actions
or omissions by the Indemnified Party constituting (i) a breach of this
Agreement or the Company Stockholder Agreement, (ii) criminal conduct or (iii)
any violation of federal, state or foreign securities laws. In order to be
entitled to indemnification under this Section 6.06(c), an Indemnified Party
must give Parent and the Company prompt written notice of any third party claim
which may give rise to any indemnity obligation under this Section 6.06(c), and
Parent and the Company shall have the right to assume the defense of any such
claim through counsel of their own choosing, subject to such counsel's
reasonable judgment that separate defenses that would create a conflict of
interest on the part of such counsel are not available. If Parent and the
Company do not assume any such defense, they shall be liable for all reasonable
costs and expenses of defending such claim incurred by the Indemnified Party,
including reasonable fees and disbursements of counsel and shall advance such
reasonable costs and expenses to the Indemnified Party; provided, however, that
-------- -------
such advance shall be made only after receiving an undertaking from the
Indemnified Party that such advance shall be repaid if it is determined that
such Indemnified Party is not entitled to indemnification therefor. Neither
Parent nor the Company shall be liable under this Section 6.06(c) for any Losses
resulting from any settlement, compromise or offer to settle or compromise any
such claim or litigation or other action, without the prior written consent of
Parent and the Company.
(d) The Company shall not, and Parent shall not permit the Company to,
amend or repeal any provision of the certificate of incorporation or by-laws of
the Company after the consummation of the Offer if such action would adversely
affect the rights of individuals who on or prior to the consummation of the
Offer were entitled to advances, indemnification or exculpation thereunder, for
actions or omissions by such individuals prior to the Effective Time.
47
The individuals referred to in the preceding sentence shall include any
individuals serving as directors or officers of any subsidiaries of the Company
at the Company's request, it being acknowledged by the parties hereto that each
director or officer of the Company who is currently serving as a director or
officer of a subsidiary of the Company is doing so at such request of the
Company.
(e) In the event the Surviving Corporation or any successor to the
Surviving Corporation (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 its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successors of the Surviving Corporation honor the
obligations of the Company set forth in this Section 6.06.
SECTION 6.07. Fees and Expenses. (a) Except as provided below, all
-----------------
fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $85,000,000 if:
(i) the Company terminates this Agreement pursuant to Section 8.01(d);
(ii) (A) after the date of this Agreement and prior to the termination
of this Agreement, any person makes a Company Takeover Proposal, (B) the
Offer shall have remained open until the scheduled expiration date
immediately following the date such Company Takeover Proposal is made, (C)
the Minimum Tender Condition is not satisfied at the expiration of the
Offer, (D) this Agreement is terminated pursuant to Section 8.01(b)(iii)
and (E) within 12 months of the date of termination of this Agreement, the
Company executes a legally binding agreement or an agreement in principle
pursuant to which any person, entity or group (other than Parent, Sub or
any of their affiliates), in one transaction or a series of transactions,
will acquire more than 50% of the outstanding Company Common Stock or
assets of the Company through any open market purchases, merger,
consolidation, tender or exchange offer, recapitalization, reorganization
or other business combination (an "Acquisition Event"); or
-----------------
48
(iii) (A) after the date of this Agreement and prior to the
termination of this Agreement, any person makes a Company Takeover
Proposal, (B) this Agreement is terminated pursuant to Section 8.01(b)(iii)
as a result of the failure of any condition set forth in paragraph (f) or
(g) of Exhibit A, and (C) an Acquisition Event occurs within 12 months of
the date of termination of this Agreement.
Any fee due under this Section 6.07(b) shall be paid by wire transfer
of same-day funds on the date of termination of this Agreement in the case of a
fee due under clause (i) of the preceding sentence, or on the date such
Acquisition Event is consummated in the case of a fee due under clause (ii) or
(iii) of the preceding sentence. The payment of a fee pursuant to the foregoing
clause (iii) as a result of any wilful breach by the Company of its
representations, warranties or covenants shall in no way limit any remedy
available to Parent or Sub for such breach, except that the receipt by Parent of
such fee shall be taken into account in calculating any damages suffered by
Parent or Sub as a result of such breach.
SECTION 6.08. Public Announcements. (a) Parent and Sub, on the one
---------------------
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
(b) The Company shall give prior notice (which to the extent
practicable shall be given in writing and on 24 hours' prior notice) to Parent
and Sub of any proposed press release or other public statement not relating to
the Offer, the Merger or any of the other Transactions, which notice shall
include the text of such press release or public statement.
SECTION 6.09. Directors. (a) Promptly upon the acceptance for
----------
payment of, and payment by Sub for, any shares of Common Stock pursuant to the
Offer, Sub shall be entitled to designate such number of directors on the
Company Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to at least that number
of directors, rounded up to the next whole number, which is the product of
49
(a) the total number of directors on the Company Board (giving effect
to the directors elected pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Sub plus the number of shares of Company
Common Stock otherwise owned by Sub or any other subsidiary of Parent bears to
(ii) the number of such shares outstanding, and the Company shall, at such time,
cause Sub's designees to be so elected; provided, however, that in the event
-------- -------
that Sub's designees are appointed or elected to the Company Board, until the
Effective Time the Company Board shall have at least three directors who are
Directors on the date of this Agreement and who are not officers of the Company
(the "Independent Directors"); and provided further that, in such event, if the
----------- --------- -------- -------
number of Independent Directors shall be reduced below three for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors shall designate three persons to fill such vacancies who shall not be
officers, stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company shall promptly,
at the option of Sub, use its best efforts to either increase the size of the
Company Board or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company Board as provided above.
(b) Following the election or appointment of Sub's designees pursuant
to this Section 6.09 and prior to the Effective Time, any amendment or
termination of this Agreement, extension for the performance or waiver of the
obligations of Parent or Sub or waiver of the Company's rights hereunder shall
require the concurrence of a majority of the Independent Directors.
50
SECTION 6.10. Rights Agreement. The Rights Agreement dated as of
-----------------
September 12, 1997, between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Company Rights Agreement"), has been amended as
------------------------
provided in Exhibit B. Except as approved in writing by Parent, neither the
Company nor the Company Board shall (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 6.11. Stockholder Litigation. The Company shall give Parent
-----------------------
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any Transaction;
provided, however, that no such settlement shall be agreed to without Parent's
- -------- -------
consent, which shall not be unreasonably withheld.
SECTION 6.12. Performance by Sub. Parent shall cause Sub to comply
-------------------
with each of its obligations hereunder and pursuant to the Offer, including,
without limitation, causing Sub to consummate the Offer and the Merger as
contemplated herein, and Parent hereby guarantees the performance by Sub of such
obligations.
SECTION 6.13. Dual Consolidated Losses. If the Company or any
-------------------------
Company Subsidiary has any dual consolidated loss that would be subject to
recapture under Treasury Regulation Section 1.1503-2(g)(2) as a result of the
Offer, the Merger or the other Transactions, the Company or such Company
Subsidiary shall use its best efforts in conjunction with Parent to file, prior
to the date that the Company becomes a member of Parent's consolidated group, a
request with the Internal Revenue Service to enter into a closing agreement
under Treasury Regulation Section 1.1503-2(g)(2)(iv)(B) to avoid such recapture.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger is subject
- -------
to the
51
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. If required by law, the Company shall have
---------------------
obtained the Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
----------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign antitrust
law (including, without limitation, the EC Regulations), the absence of which
would prohibit the consummation of the Merger, shall have been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
-------- -------
the parties shall have used all reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Purchase of Stock. Sub shall have previously accepted for
------------------
payment and paid for Company Common Stock pursuant to the Offer.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated at any
------------
time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before January 31,
1999 (the "Outside Date"), unless the failure to consummate the Merger
------------
is the result of a wilful and material breach of any Transaction
Agreement by the party seeking to terminate this Agreement; provided,
--------
however, that the passage of such period shall be tolled for any
-------
52
part thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the Merger;
(ii) if any Governmental Entity issues an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iii) if as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, the Offer shall have
terminated or expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the Offer;
(c) by Parent, if, prior to the consummation of the Offer (and other
than during any Parent Extension Period), the Company shall be in breach of
any of its representations and warranties or fail to perform in any
material respect any of its covenants and obligations contained in any
Transaction Agreement, which breach or failure to perform would give rise
to the failure of a condition set forth in Exhibit A (provided that Parent
--------
is not then in wilful and material breach of any representation, warranty
or covenant contained in any Transaction Agreement, and provided further,
-------- -------
that such breach or failure to perform is not capable of being cured by the
earlier of 15 days from the time it came to the Knowledge of the Company
and the then scheduled expiration date of the Offer);
(d) by the Company in accordance with Section 5.02(b); provided,
--------
however, that, in order for the termination of this Agreement pursuant to
-------
this clause (d) to be deemed effective, the Company shall have complied
with all provisions contained in Section 5.02(b), including the notice
provisions therein and with applicable requirements of Section 6.07,
including the payment of the fee pursuant to Section 6.07(b);
(e) by the Company, if, prior to the consummation of the Offer, the
Parent or Sub shall be in breach of any of their representations and
warranties or fail to perform in any material respect any of their
covenants and obligations contained herein (provided, that the
--------
53
Company is not then in wilful and material breach of any representation,
warranty or covenant contained in this Agreement and provided further, that
-------- -------
such breach or failure to perform is not capable of being cured by the
earlier of 15 days from the time it came to the knowledge of the Parent and
the then scheduled expiration date of the Offer);
(f) by the Company if the Offer has not been made in accordance with
Section 1.01; or
(g) by the Company if any event occurs which would result in the
condition set forth in paragraph (e) of Exhibit A not being satisfied, and
five business days have elapsed since such occurrence, unless Parent shall
have waived its right to terminate this Agreement in accordance with
Section 8.04 and its right not to consummate the Offer for the failure of
such condition resulting from such event.
SECTION 8.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than Section
3.16, Section 4.06, Section 6.02, Section 6.07, this Section 8.02 and Article IX
and except to the extent that such termination results from the wilful and
material breach by a party of any representa tion, warranty, covenant or
obligation set forth in any Transaction Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
----------
parties at any time before or after receipt of the Company Stockholder Approval;
provided, however, that after receipt of the Company Stockholder Approval, there
- -------- -------
shall be made no amendment that by law requires further approval by such
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.
SECTION 8.04. Extension; Waiver. Subject to the provisions of
------------------
Section 6.09(b), 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 contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 8.03, waive compliance
with any of the agreements or conditions contained in this
54
Agreement. 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 of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
---------------------------------------------------
Waiver. A termination of this Agreement pursuant to Section 8.01, an amendment
- -------
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
--------
other communications under this Agree ment 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):
(a) if to Parent or Sub, to
Atlantic Richfield Company
515 South Flower Street
Los Angeles, CA 90071
Attention: John R. Lucas, Esq.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Alan C. Stephenson, Esq.
55
(b) if to the Company, to
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Boulevard
Houston, TX 77056
Attention: Alan Crain, Jr. Esq.
with a copy to:
King & Spalding
1185 Avenue of the Americas
New York, NY 10036
Attention: Mark Zvonkovic, Esq.
SECTION 9.03. Definitions. For purposes of this Agreement:
------------
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.
"Knowledge of the Company" or "Company's Knowledge" means, when used
------------------------ -------------------
in any representation, covenant or warranty of the Company contained herein, the
actual knowledge of or what should reasonably have been known by any officer or
director of the Company.
A "person" means any individual, firm, corporation, partnership,
------
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount of the
----------
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. Interpretation; Disclosure Letter. When a reference is
----------------------------------
made in this Agreement to a Section, such reference shall be to a Section of
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
56
Agreement, they shall be deemed to be followed by the words "without
limitation". Any matter disclosed in any section of the Company Disclosure
Letter shall be deemed disclosed for all purposes and all sections of the
Company Disclosure Letter.
SECTION 9.05. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06. 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 9.07. Entire Agreement; No Third-Party Beneficiaries. The
-----------------------------------------------
Transaction Agreements, taken together, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the Transactions and (b) except for the provisions
of Article II, Section 6.04 and Section 6.06, are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 9.08. 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 9.09. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by opera tion of law or otherwise by any of the parties
without the prior written consent of the other parties, except that 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 formed solely for the purpose of engaging in the
57
transactions contemplated hereby, which has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby, but no such assignment shall relieve Sub of
any of its obligations under this Agreement. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of any Transaction 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 any Transaction Agreement and
to enforce specifically the terms and provisions of each Transaction Agreement
in any Delaware state court or any Federal court located in the State of
Delaware, 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 Delaware state court or any
Federal court located in the State of Delaware in the event any dispute arises
out of any Transaction Agreement or any Transaction, (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, (c) agrees that it will not bring any action
relating to any Transaction Agreement or any Transaction in any court other than
any Delaware state court or any Federal court sitting in the State of Delaware
and (d) waives any right to trial by jury with respect to any action related to
or arising out of any Transaction Agreement or any Transaction.
58
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
ATLANTIC RICHFIELD COMPANY,
by
/s/ Terry G. Dallas
-----------------------
Name: Terry G. Dallas
Title:Senior Vice
President and
Treasurer
VWK ACQUISITION CORP.,
by
/s/ Terry G. Dallas
----------------------
Name: Terry G. Dallas
Title:President
UNION TEXAS PETROLEUM
HOLDINGS, INC.,
by
/s/ John L. Whitmire
--------------------
Name:John L. Whitmire
Title:Chairman and Chief
Executive Officer
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Company Common Stock which would represent at
least a majority of the Fully Diluted Shares (the "Minimum Tender Condition"),
------------------------
(ii) any waiting period under the HSR Act applicable to the purchase of shares
of Company Common Stock pursuant to the Offer shall have expired or been
terminated and (iii) any waiting or other period under the EC Regulations
applicable to the Offer or the Merger, or the exercise by Parent or Sub of full
ownership and voting rights with respect to such shares of Company Common Stock
acquired pursuant to the Offer and the Merger, shall have expired or been
terminated, and the European Commission shall have taken all such action as
shall be required so that Parent and Sub may consummate the Offer and the Merger
and exercise full ownership and voting rights with respect to the shares of
Company Common Stock to be acquired pursuant to the Offer and the Merger. The
term "Fully Diluted Shares" means all outstanding securities entitled generally
--------------------
to vote in the election of directors of the Company on a fully diluted basis,
after giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities, other than
potential dilution attributable to the Rights. Furthermore, notwithstanding any
other term of the Offer or this Agreement, Sub shall not be required to commence
the Offer, accept for payment or, subject as aforesaid, to pay for any shares of
Company Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer, with the consent of the Company or if, at any time
on or after the date of this Agreement and before the acceptance of such shares
for payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity in any of the significant
geographical regions in which the Company or any of the Company
Subsidiaries operates or by or before the European Commission (i)
challenging the acquisition by Parent or Sub of any Company Common
Stock, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or any other Transaction, or
seeking to obtain from the Company, Parent or Sub any damages in connection
with the Offer, the Merger or this Agreement that are material in relation
to the Company and its subsidiaries taken as whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, or
to compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, as a result
of the Offer, the Merger or any of the other Transaction, (iii) seeking to
impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
including the right to vote the Company Common Stock purchased by it on all
matters properly presented to the stockholders of the Company, (iv) seeking
to prohibit Parent or any of its subsidiaries from effectively controlling
in any material respect the business or operations of the Company and the
Company Subsidiaries in connection with the Offer, the Merger or this
Agreement, or (v) which otherwise is reasonably likely to have a Company
Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued in any of the significant geographical
regions in which the Company or any of the Company Subsidiaries operates or
by the European Council or the European Commission with respect to, or
shall be deemed applicable to, or any consent or approval shall be withheld
with respect to, (i) Parent, the Company or any of their respective
subsidiaries or (ii) the Offer, the Merger or any of the other
Transactions, by any Governmental Entity that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
paragraph (a) above;
(c) since the date of this Agreement, there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or would be reasonably expected to have a Company
Material Adverse Effect, and if a Company Material Adverse Effect has
occurred, it shall be continuing;
2
(d) there shall be any temporary, preliminary or permanent restraining
order or injunction or other legal restraint or prohibition by any
Governmental Entity that prevents or makes illegal the consummation of the
Offer, the Merger or any of the other Transactions;
(e) there shall have occurred and continued for at least three
calendar days: (i) a general suspension of trading in, or limitation on
prices for, securities on the New York Stock Exchange, any national
securities exchange or the NASDAQ National Market System (excluding
suspensions or limitations resulting from physical damage or interference
with such exchanges not related to market conditions); (ii) a decline of at
least 30% in the Dow Jones Industrial Index; (iii) a declaration of a
banking moratorium or suspension of payments in respect of banks in the
United States; (iv) a mandatory limitation by the United States Government
or a change in the general financial, banking or capital markets which
materially and adversely affects the ability of major financial
institutions in the United States to extend credit; (v) a commencement of
war, armed hostilities or other major national or international crisis
directly involving the United States (other than an action involving
personnel of the United Nations) or (vi) in the case of any of the
foregoing existing on the date of this Agreement, a material acceleration
or worsening thereof;
(f) any representation and warranty of the Company or any other party
(other than Parent and Sub) in this Agreement or the Company Stockholder
Agreement shall not be true and correct in all material respects (provided
that any representation or warranty of the Company or any other party
(other than Parent and Sub) contained herein or therein that is qualified
by a materiality standard or a Material Adverse Effect qualification shall
not be further qualified hereby) as of the date of this Agreement and
(except with respect to Section 3.14 and to the extent such representations
or warranties expressly relate to an earlier date) as of the scheduled or
extended expiration of the Offer;
(g) the Company shall have failed to comply with the provisions of
Section 5.01(a)(v) of this Agreement, or the Company or any other party
(other than Parent and Sub) shall have failed to comply with any agreement
or covenant in any material respect of the Company or any other party
(other than Parent and Sub) to be
3
performed or complied with by any of them under this Agreement or the
Company Stockholder Agreement; or
(h) there shall have been issued, delivered, sold or granted any
Company Common Stock pursuant to the Company Rights Agreement; or
(i) this Agreement shall have been terminated in accordance with its
terms;
which in the sole judgment of Sub or Parent, in the case of any such condition,
and regardless of the circumstances giving rise to any such condition (including
any action or inaction by Parent or any of its affiliates), makes it
inadvisable, to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub or Parent regardless of the circumstances giving rise
to such condi tion or may be waived by Sub and Parent in whole or in part at
any time and from time to time in their sole discretion. The failure by Parent,
Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circum stances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
4
EXHIBIT B
AMENDMENT TO RIGHTS AGREEMENT BETWEEN
UNION TEXAS PETROLEUM HOLDINGS, INC. AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK
THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is made as of
this third day of May, 1998 by and between Union Texas Petroleum Holdings, Inc.,
a Delaware corporation (the "Company"), and First Chicago Trust Company of New
York, a New York corporation, as rights agent (the "Rights Agent"). Capitalized
terms used but not defined herein shall have the meanings give to such terms in
the Merger Agreement (as defined below).
WHEREAS, the Corporation is entering into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger Agreement")
among the Company, Atlantic Richfield Company, a Delaware corporation
("Parent"), and VWK Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("the Sub"), providing for transactions (collectively, the
"Merger") pursuant to which, among other things, the Company will become a
wholly-owned subsidiary of Parent and the former stockholders of the Company
will receive the Merger Consideration;
WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement dated as of September 12, 1997 (the "Rights Agreement"); and
WHEREAS, the parties desire to amend the Rights Agreement in
connection with the execution and delivery of the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. The definition of "Acquiring Person" set forth in Section 1
of the Rights Agreement is hereby amended by adding the following sentence to
the end of that definition:
Notwithstanding the foregoing, no Person shall be or become
an Acquiring Person by reason of (i) the execution and delivery
of the Agreement and Plan of Merger dated as of May 4, 1998 among
the Company, Atlantic Richfield Company, a Delaware corporation
("Parent"), and , a Delaware corporation ("Sub"), (the "Merger
Agreement") or the execution of any amendment thereto, (ii) the
purchase of Common Stock by Parent or Sub pursuant to (A) the
Offer or (B) Section 4 of the Stockholder Agreement dated May 4,
1998 among Parent, KKR Partners II, L.P., a Delaware limited
partnership, and Petroleum Associates, L.P., a Delaware limited
partnership (the "Stockholder Agreement") or (iii) the
consummation of the other Transactions.
2. Section 7(a)(i) of the Rights Agreement shall be amended to
read in its entirety as follows:
(i) the earlier of (1) the consummation of the Offer (as
defined in the Merger Agreement) or (2) the Close of
Business on September 30, 2007.
3. The definition of "Stock Acquisition Date" included in
Section 1 of the Rights Agreement shall be
2
amended by adding the following sentence to the end of such definition:
Notwithstanding anything else set forth in this Agreement, a
Stock Acquisition Date shall not be deemed to have occurred by
reason of (i) the public announcement, public disclosure,
execution and delivery or amendment of the Merger Agreement, (ii)
the public announcement, public disclosure, execution and
delivery or amendment of the Stockholder Agreement, (iii) the
purchase of Common Stock by Parent or Sub pursuant to (A) Section
4 of the Stockholder Agreement or (B) the consummation of the
Offer or (iv) the consummation of any of the other Transactions.
4. Section 3(a) of the Rights Agreement shall be amended by
adding the following sentence to the end thereof:
Notwithstanding anything else set forth in this Agreement,
no Distribution Date shall be deemed to have occurred by reason
of (i) the execution and delivery or amendment of the Merger
Agreement, (ii) the execution and delivery or amendment of the
Stockholder Agreement, (iii) the purchase of Common Stock by
Parent or Sub pursuant to (A) Section 4 of the Stockholder
Agreement or (B) the consummation of the Offer or (iv) the
consummation of any of the other Transactions.
5. The first paragraph of Section 13(c) of the Rights Agreement
shall be amended to read in its entirety as follows:
The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) (other than any
such transaction contemplated by the Merger Agreement or the
Stockholder Agreement) unless the Principal Party shall have a
sufficient number of authorized shares of its
3
Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal
Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Section 13(a)
and (b) shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not
result in a default by the Principal Party under this Agreement as the
same shall have been assumed by the Principal Party pursuant to
Sections 13(a) and (b) hereof and further providing that, as soon as
practicable after executing such agreement pursuant to this Section
13, the Principal Party will:
6. The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms.
7. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State. This Amendment may be executed in any
number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument. If any term, provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions,
4
covenants and restrictions of this Amendment shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties herein have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.,
by /s/ John L. Whitmire
-----------------------
Name: John L. Whitmire
Title: Chairman of the Board and
Chief Executive Officer
Attest: /s/ A.R. Crain, Jr.
------------------------------
Name: A.R. Crain, Jr.
Title: Vice President and
General Counsel
FIRST CHICAGO TRUST COMPANY OF NEW
YORK, RIGHTS AGENT,
5
by /s/ John Piskaldo
----------------------------
Name: John Piskaldo
Title: Assistant Vice President
Attest: /s/ illegible
-----------------
Name:
Title:
6
SCHEDULE I
Definitions
-----------
Term Defined in Section
- ---- ------------------
"Acquisition Event" 6.07(b)
"affiliate" 9.03
"Applicable Law" 3.05(a)
"Applicable Period" 5.02(a)
"Appraisal Shares" 2.01(e)
"Certificate of Merger" 1.05
"Certificates" 2.02(b)
"Closing" 1.04
"Closing Date" 1.04
"Code" 3.11(b)
"Company" Recitals
"Company Acquisition Agreement" 5.02(b)
"Company Affiliated Group" 3.09(a)
"Company Benefit Plans" 3.10
"Company Board" 3.04(b)
"Company By-Laws" 3.01
"Company Capital Stock" 3.03
"Company Charter" 3.01
"Company Common Stock" Recitals
"Company Confidentiality Agreement" 3.15(a)
"Company Disclosure Letter" 3.02(a)
"Company Material Adverse Effect" 3.01
"Company Multiemployer Pension Plan" 3.11(c)
"Company Notice" 5.02(a)
"Company Pension Plans" 3.11(a)
"Company Preferred Stock" 3.03
"Company Representatives" 5.02(a)
"Company Rights" 3.03
"Company Rights Agreement" 3.03
"Company SAR" 6.04(b)
"Company SEC Documents" 3.06
"Company Stockholder Agreement" Recitals
"Company Stockholder Approval" 3.04(c)
"Company Stockholder Meeting" 6.01(b)
"Company Stock Option" 6.04(b)
"Company Stock Plans" 6.04(b)
"Company Subsidiary" 3.02(a)
"Company Superior Proposal" 5.02(b)
"Company Takeover Proposal" 5.02(a)
"Company's Knowledge 9.03
"Confidentiality Agreement" 6.02(b)
"Contract" 3.05(a)
"Consent" 3.05(a)
"CSEPP" 6.05(i)
"DGCL" 1.03
"EC Regulations" 3.05(a)
"Effective Time" 1.05
2
"ERISA" 3.11(a)
"European Commission" 3.05(a)
"Exchange Act" 3.05(a)
"Exchange Fund" 2.02(a)
"Filed Company SEC Documents" 3.08
"Financial Advisors" 3.16
"Fully Diluted Shares" Exhibit A
"GAAP" 3.06
"Governmental Entity" 3.05(a)
"HSR Act" 3.05(a)
"Indemnified Party" 6.06(a)
"Independent Directors" 6.10
"Information Statement" 3.05(a)
"Judgment" 3.05(a)
"Knowledge" 9.03
"Liens" 3.02(a)
"Losses" 6.06(c)
"Maximum Premium" 6.06(b)
"Merger" Recitals
"Merger Consideration" 2.01(c)
"Minimum Trade Condition" Exhibit A
"New Parent Proposal" 5.02(b)
"1997 Company 10-K" 3.06
"Offer" Recitals
"Offer Documents" 1.01(b)
"Oil and Gas Interest" 3.08
"Offer Price" Recitals
"Option Spread 1.02(d)
"Outside Date" 8.01(b)
"Parent" Recitals
"Parent Extension Period" 1.01(a)
"Parent Material Adverse Effect" 4.04
"Participant" 6.05(g)
"Paying Agent" 2.02(a)
"Permitted Encumbrances" 3.02
"person" 9.03
"Petrochemicals Interests" 3.08
"Primary Company Executives" 3.11(g)
"Principal Company Stockholder" Recitals
"Proxy Statement" 3.05(a)
"SEC" 1.01(a)
"Section 262" 2.01(e)
"Securities Act" 3.06
"SERP" 6.05(i)
"Schedule 14D-9" 1.02(b)
"Segment" 6.05(f)
"Series A Preferred" 2.01(d)
"Significant Company Subsidiary" 3.01
"Sub" Recitals
"subsidiary" 9.03
"Surviving Corporation" 1.03
3
"Taxes" 3.09(f)
"Tax Return" 3.01(f)
"Transaction Agreements" Recitals
"Transactions" 1.02(a)
"Voting Company Debt" 3.03