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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MARCH 20, 2001
BY AND AMONG
HUNTWAY REFINING COMPANY,
VALERO REFINING AND MARKETING COMPANY
AND
HAC COMPANY
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TABLE OF CONTENTS
ARTICLE 1 THE MERGER......................................................................................1
SECTION 1.01 The Merger...............................................................1
SECTION 1.02 Closing of the Merger....................................................2
SECTION 1.03 Organizational Documents.................................................2
SECTION 1.04 Directors and Officers...................................................2
ARTICLE 2 CONVERSION OF SECURITIES AND RELATED MATTERS....................................................2
SECTION 2.01 Conversion of Capital Stock..............................................2
SECTION 2.02 Exchange of Certificates for Merger
Consideration..........................................................................3
SECTION 2.03 Target Stock Options.....................................................5
SECTION 2.04 [Intentionally Omitted]..................................................6
SECTION 2.05 Further Assurances.......................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TARGET........................................................6
SECTION 3.01 Corporate Existence and Power............................................6
SECTION 3.02 Corporate Authorization..................................................7
SECTION 3.03 Governmental Authorization...............................................7
SECTION 3.04 Non-Contravention........................................................7
SECTION 3.05 Capitalization...........................................................7
SECTION 3.06 Subsidiaries.............................................................8
SECTION 3.07 Target SEC Documents.....................................................9
SECTION 3.08 Financial Statements; Liabilities........................................9
SECTION 3.09 Information to Be Supplied..............................................10
SECTION 3.10 Absence of Certain Changes..............................................10
SECTION 3.11 Litigation..............................................................10
SECTION 3.12 Taxes...................................................................11
SECTION 3.13 Compliance with Laws; Licenses, Permits
and Registrations.......................................................11
SECTION 3.14 Contracts...............................................................11
SECTION 3.15 Employee Benefit Plans..................................................12
SECTION 3.16 Transactions with Affiliates............................................13
SECTION 3.17 Intellectual Property...................................................13
SECTION 3.18 Environmental Matters...................................................13
SECTION 3.19 Real Estate.............................................................14
SECTION 3.20 Required Vote; Board Approval...........................................15
SECTION 3.21 Finders' Fees; Opinion of Financial Advisor.............................15
SECTION 3.22 Employee Matters........................................................15
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SECTION 3.23 Personal Property.......................................................16
SECTION 3.24 Insurance...............................................................16
SECTION 3.25 Target Credit Documents.................................................16
SECTION 3.26 Section 203 of the DGCL Not Applicable..................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER .......................................................16
SECTION 4.01 Corporate Existence and Power...........................................16
SECTION 4.02 Corporate Authorization; Approvals......................................17
SECTION 4.03 Governmental Authorization..............................................17
SECTION 4.04 Non-Contravention.......................................................17
SECTION 4.05 BuyerSub................................................................18
SECTION 4.06 Information to Be Supplied..............................................18
SECTION 4.07 Finders' Fees...........................................................18
SECTION 4.08 Financing of Merger.....................................................18
SECTION 4.09 Solvency and Status.....................................................18
ARTICLE 5 COVENANTS OF TARGET............................................................................19
SECTION 5.01 Target Interim Operations...............................................19
SECTION 5.02 Stockholder Meeting.....................................................21
SECTION 5.03 Acquisition Proposals; Board Recommendation.............................21
ARTICLE 6 COVENANTS OF BUYER.............................................................................23
SECTION 6.01 Director and Officer Liability..........................................23
SECTION 6.02 Employee Benefits.......................................................24
SECTION 6.03 Title Policies..........................................................25
SECTION 6.04 Conduct of BuyerSub.....................................................25
ARTICLE 7 COVENANTS OF BUYER AND TARGET..................................................................25
SECTION 7.01 Reasonable Best Efforts.................................................25
SECTION 7.02 Certain Filings; Cooperation in Receipt
of Consents.............................................................25
SECTION 7.03 Public Announcements....................................................26
SECTION 7.04 Access to Information...................................................27
SECTION 7.05 Notices of Certain Events...............................................27
SECTION 7.06 Repayment/Purchase of Target Indebtedness...............................27
ARTICLE 8 CONDITIONS TO THE MERGER.......................................................................29
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SECTION 8.01 Conditions to the Obligations of Each Party.............................29
SECTION 8.02 Conditions to the Obligations of Target.................................30
SECTION 8.03 Conditions to the Obligations of Buyer and BuyerSub.....................31
ARTICLE 9 TERMINATION; AMENDMENTS AND WAIVERS............................................................32
SECTION 9.01 Termination.............................................................32
SECTION 9.02 Effect of Termination...................................................33
SECTION 9.03 Fees and Expenses.......................................................34
SECTION 9.04 Waivers and Amendments..................................................34
ARTICLE 10 DEFINITIONS....................................................................................35
SECTION 10.01 Certain Definitions....................................................35
ARTICLE 11 MISCELLANEOUS..................................................................................43
SECTION 11.01 Notices................................................................43
SECTION 11.02 Survival of Representations and Warranties after the
Effective Time.........................................................44
SECTION 11.03 Successors and Assigns.................................................44
SECTION 11.04 Governing Law..........................................................44
SECTION 11.05 Counterparts; Effectiveness; Third Party Beneficiaries.................44
SECTION 11.06 Jurisdiction...........................................................44
SECTION 11.07 Waiver of Jury Trial...................................................45
SECTION 11.08 Enforcement............................................................45
SECTION 11.09 Entire Agreement.......................................................45
SECTION 11.10 Severability...........................................................45
SECTION 11.11 Construction...........................................................45
SECTION 11.12 Headings...............................................................46
SECTION 11.13 Incorporation of Exhibits and Schedules................................46
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EXHIBITS
Exhibit A - Form of Option Exercise/Payment Direction
SCHEDULES
Target Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of March 20, 2001 (this "Agreement")
by and among Huntway Refining Company, a Delaware corporation (including its
predecessor as appropriate, "Target"), Valero Refining and Marketing Company, a
Delaware corporation ("Buyer"), and HAC Company, a Delaware corporation and a
wholly-owned subsidiary of Buyer ("BuyerSub"). Certain capitalized terms used
herein have the meanings set forth in Article 10.
RECITALS
This Agreement contemplates a transaction in which Target shall become a
wholly- owned Subsidiary of Buyer through a merger of BuyerSub with and into
Target, with Target continuing as the surviving corporation. The stockholders of
Target will receive cash in exchange for their capital stock in Target.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.01 The Merger.
(a) At the Effective Time, BuyerSub shall be merged (the "Merger") with and
into Target in accordance with the terms and conditions of this Agreement and
the DGCL, at which time the separate existence of BuyerSub shall cease and
Target shall continue its existence. In its capacity as the corporation
surviving the Merger, this Agreement sometimes refers to Target as the
"Surviving Corporation."
(b) As soon as practicable after satisfaction or, to the extent permitted
hereby, waiver of all conditions to the Merger set forth herein, Target shall
file a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware (the "Secretary") and make all other filings or
recordings required by Section 251 of the DGCL in connection with the Merger.
The "Effective Time" shall be the date and time that the Certificate of Merger
is filed with the Secretary unless a later date and/or time is otherwise agreed
upon by the parties and specified in the Certificate of Merger, in which case,
the Effective Time shall be the date and time so specified.
(c) From and after the Effective Time, the Merger shall have the effects
set forth in Section 259 of the DGCL.
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SECTION 1.02 CLOSING OF THE MERGER.
(a) The closing of the Merger (the "Closing") shall be held at the offices
of Kirkland & Ellis, 777 South Figueroa Street, Los Angeles, California (or such
other place as agreed by the parties) within five Business Days after
satisfaction or, to the extent permitted hereby, waiver of the conditions set
forth in Article 8 (other than conditions with respect to actions the respective
parties are to take at the Closing itself), unless the parties hereto agree on
another date.
(b) It is contemplated that at the Closing Buyer shall among other things
(i) fully satisfy and discharge any indebtedness of Target under the Bank of
America Loan Agreement and obtain and cause to become effective a back-up letter
of credit to certain letters of credit issued for the benefit of Target pursuant
to the Bank of America Loan Agreement as contemplated by Section 7.06(a), (ii)
fully satisfy and discharge all of the indebtedness of Target under the Boeing
Capital Loan Agreement as contemplated by Section 7.06(b), (iii) purchase all of
the Convertible Notes as contemplated by Section 7.06(c) and (iv) purchase all
of the Junior Subordinated Debentures as contemplated by Section 7.06(d). As a
result of the foregoing, it is also contemplated that at Closing all Liens
arising under the Target Credit Documents shall be terminated and released.
SECTION 1.03 ORGANIZATIONAL DOCUMENTS. At the Effective Time (i) the
certificate of incorporation of Target shall be amended to read in its entirety
as the certificate of incorporation of BuyerSub in effect immediately prior to
the Effective Time (except that the name of the Surviving Corporation shall be
the name of Target as specified in its certificate of incorporation in effect
immediately prior to the Effective Time) and as so amended shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law and (ii) the by-laws of BuyerSub in
effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
SECTION 1.04 DIRECTORS AND OFFICERS. From and after the Effective Time
(until successors are duly elected or appointed and qualified), the directors
and officers of BuyerSub immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation.
ARTICLE 2
CONVERSION OF SECURITIES AND RELATED MATTERS
SECTION 2.01 CONVERSION OF CAPITAL STOCK. At the Effective Time and by
virtue of the Merger and without any action on the part of Target, Buyer or
BuyerSub or their respective stockholders:
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(a) Each share of common stock, $0.01 par value per share, of BuyerSub
(each, a "BuyerSub Common Share") outstanding immediately prior to the Effective
Time shall be converted into and become one share of common stock of the
Surviving Corporation.
(b) Except as otherwise provided in Section 2.01(c) and Section 2.01(d),
each Target Common Share outstanding immediately prior to the Effective Time
shall be converted into cash in an amount equal to $1.90 (the "Merger
Consideration"). All such Target Common Shares, when so converted, shall no
longer be outstanding, shall automatically be canceled and retired and shall
cease to exist. Each holder of a stock certificate formerly representing Target
Common Shares shall cease to have any rights with respect thereto at the
Effective Time, except the right to receive, without interest, the applicable
Merger Consideration in accordance with this Agreement, except as otherwise
provided in Section 2.01(c) and Section 2.01(d).
(c) Each Target Common Share held by Target as treasury stock or owned by
Buyer or any Buyer Subsidiary immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist, and no payment
shall be made in respect thereof.
(d) Each Target Common Share as to which a written demand for appraisal is
filed in accordance with Section 262 of the DGCL at or prior to the Target
Stockholder Meeting and not withdrawn at or prior to the Target Stockholder
Meeting and which is not voted in favor of the Merger shall be converted into
the right to receive payment from the Surviving Corporation with respect thereto
in accordance with Section 262 of the DGCL and shall not be converted into or
represent a right to receive the Merger Consideration (a "Dissenting Share"),
unless and until the holder thereof shall have failed to perfect, or shall have
effectively withdrawn or lost the right to appraisal of and payment for such
Target Common Share under Section 262 of the DGCL, in which event and at such
time such Target Common Share shall be converted into the right to receive,
without interest, the Merger Consideration. Target shall give Buyer prompt
notice upon receipt by Target of any and all written demands for appraisal
rights, withdrawal of such demands and any other written communications
delivered to Target pursuant to Section 262 of the DGCL, and Target shall give
Buyer the opportunity, to the extent permitted by law, to participate in all
negotiations and proceedings with respect to such demands. Except with the prior
written consent of Buyer, Target shall not voluntarily make any payment with
respect to any demand for appraisal rights and shall not settle or offer to
settle any such demand. Each holder of Dissenting Shares who becomes entitled,
pursuant to the provisions of Section 262 of the DGCL, to payment for such
Dissenting Shares under the provisions of Section 262 of the DGCL shall receive
payment thereof from the Surviving Corporation and such Target Common Shares
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist.
SECTION 2.02 EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION.
(a) Exchange Agent. Promptly after the date hereof but in any event prior
to the Target Stockholder Meeting, Buyer shall appoint a bank or trust company
acceptable to Target (on terms acceptable to Target) as agent (the "Exchange
Agent") for the benefit of the holders of Target Common Shares, for the purpose
of exchanging for the Merger Consideration pursuant to this Article
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2 certificates ("Certificates") that immediately prior to the Effective Time
represent outstanding Target Common Shares. Buyer shall deliver to the Exchange
Agent upon the Closing the Merger Consideration to be paid in respect of Target
Common Shares converted into the Merger Consideration (that is, not including
any then Dissenting Shares) pursuant to this Article 2 (the "Exchange Fund"). In
addition, in the event that any then Dissenting Share thereafter ceases to be a
Dissenting Share and the underlying Target Common Share is thereupon converted
into the Merger Consideration, Buyer thereupon shall deliver immediately to the
Exchange Agent for inclusion in the Exchange Fund the appropriate Merger
Consideration. Except as contemplated by subsections (d), (e), (f) and (g) of
this Section, the Exchange Fund shall not be used for any other purpose. The
Buyer shall pay all charges and expenses of the Exchange Agent.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, but in any event not more than five Business Days after the date of the
Effective Time, Buyer shall send, or will cause the Exchange Agent to send, to
each holder of record of a Certificate or Certificates a letter of transmittal
and instructions (which shall be in customary form and specify that delivery
shall be effected, and risk of loss and title shall pass, only upon delivery of
Certificates to the Exchange Agent) for use in the exchange contemplated by this
Section. Upon surrender of a Certificate to the Exchange Agent, together with a
duly executed and completed letter of transmittal, the holder of such
Certificate shall be entitled to promptly receive in exchange therefor the
Merger Consideration as provided in this Article 2 in respect of the Target
Common Shares represented by such Certificate less such amounts, if any, as are
required to be deducted and withheld by the Surviving Corporation, Exchange
Agent or Buyer under the Code or any provision of state or local tax law. Until
surrendered as contemplated by this Section, each Certificate shall be deemed
upon and at any time after the Effective Time to represent only the right to
receive the appropriate Merger Consideration without interest as provided in
this Article 2, except for any Dissenting Share. If any Merger Consideration is
to be paid to a Person other than the Person in whose name the Certificate is
registered, it shall be a condition to such payment that in the judgment of the
Exchange Agent the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not payable. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Buyer, the posting by such Person of a bond, in such reasonable amount as Buyer
may direct, as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will deliver in exchange for
such lost, stolen or destroyed Certificate, the appropriate Merger Consideration
as contemplated by this Article 2.
(c) No Further Ownership Rights in Target Common Shares. The Merger
Consideration paid upon surrender of Certificates in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to the Target Common Shares represented thereby. As of the Effective
Time, the stock transfer books of Target shall be closed and there shall be no
further registration of transfers on the stock transfer books of Target.
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(d) Return of Merger Consideration. At any time after the first anniversary
of the date of the Closing, upon written demand by Buyer, the Exchange Agent
shall deliver to Buyer any portion of the Merger Consideration made available to
the Exchange Agent pursuant to this Section that then remains undistributed.
Holders of Certificates who have not complied with this Section prior to such
delivery to Buyer shall thereafter look only to Buyer for payment of the
appropriate Merger Consideration.
(e) No Liability. None of Buyer, the Surviving Corporation or the Exchange
Agent shall be liable to any Person in respect of any Target Common Shares for
any amounts paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any amounts remaining unclaimed by any holder
of Target Common Shares immediately prior to such time when such amounts would
otherwise escheat to or become the property of any Governmental Entity shall, to
the extent permitted by applicable law, become the property of Buyer, free and
clear of all claims or interest of any Person previously entitled thereto.
(f) Withholding Rights. Each of the Surviving Corporation, the Exchange
Agent and Buyer shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable hereunder to any Person such amounts, if any, it
is required to deduct and withhold with respect to the making of such payment
under any provision of Federal, state, local or foreign income tax law. To the
extent that the Surviving Corporation, the Exchange Agent or Buyer so withholds
any such amounts, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of Target Common Shares in
respect of which such deduction and withholding was made by the Surviving
Corporation, the Exchange Agent or Buyer, as the case may be.
(g) Investment of the Exchange Fund. The Exchange Agent shall invest any
and all cash included in the Exchange Fund only in an insured money market
account; provided that no loss thereon or thereof shall affect the amounts
payable by the Buyer to the holders of Target Common Shares pursuant to this
Article 2. Any interest and other income resulting from such investment shall
promptly be paid to Buyer, and Buyer shall replace promptly any portion of the
Exchange Fund which the Exchange Agent loses through such investment.
SECTION 2.03 TARGET STOCK OPTIONS.
(a) As soon as possible following the date of this Agreement and pursuant
to the terms of the respective Target Option Plan, the Board of Directors of
Target (and, if appropriate, any committee administering any Target Option Plan)
shall adopt such resolutions and/or take such other actions as may be required
or appropriate in its sole discretion to effect the provisions of this Section.
Each stock option to purchase Target Common Shares (each, a "Target Option")
outstanding under either Target Option Plan immediately prior to the Effective
Time, whether or not vested or exercisable, shall become fully vested and
exercisable at the Effective Time (other than any portion of a Target Option
held by a member of the board of directors of Target that failed to vest as
originally scheduled due to such member not meeting applicable attendance
requirements) and shall be deemed to constitute an option to acquire, on the
same terms and conditions (other than as expressly provided in this Section) as
were applicable under such Target Option immediately prior
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to the Effective Time, the same Merger Consideration as the holder of such
Target Option would have been entitled to receive pursuant to this Agreement had
such holder exercised such Target Option in full immediately prior to the
Effective Time, and the Buyer so acknowledges and agrees to the foregoing.
(b) At the Closing, Buyer shall pay to each holder of a then outstanding
Target Option who has theretofore delivered to the Chief Financial Officer of
Target an executed Option Exercise/Payment Direction an amount equal to the
excess of (x) the Merger Consideration multiplied by the number of Target Common
Shares purchasable pursuant to such Target Option immediately prior to the
Effective Time over (y) the aggregate exercise price for the Target Common
Shares purchasable pursuant to such Target Option immediately prior to the
Effective Time (in each case assuming such Target Option had been fully vested
and fully exercisable immediately prior to the Effective Time as contemplated by
the immediately preceding subsection), less any amounts as are required to be
deducted and withheld under the Code or any provision of state or local tax law
in connection with such payment (the "Option Spread Payment"). The Option Spread
Payment shall be paid by Buyer in cash by certified check or wire transfer of
immediately available funds as directed in the respective Option
Exercise/Payment Direction. After the execution and delivery hereof, Target
shall make available to each of its employees and other Persons who hold Target
Options the opportunity to enter into and deliver an Option Exercise/Payment
Direction.
SECTION 2.04 [INTENTIONALLY OMITTED]
SECTION 2.05 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Target or BuyerSub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of Target or BuyerSub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
Target acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TARGET
Except as disclosed in the Target Disclosure Schedule, Target represents
and warrants to Buyer that:
SECTION 3.01 CORPORATE EXISTENCE AND POWER. Target is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate power required to carry on its business as
now conducted. Target is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or be in good standing,
individually or in the aggregate, would not have a Target Material Adverse
Effect. Target has heretofore made available
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to Buyer true, correct and complete copies of its certificate of incorporation
and by-laws as currently in effect.
SECTION 3.02 CORPORATE AUTHORIZATION; APPROVALS. The execution, delivery
and performance by Target of this Agreement and the consummation by Target of
the transactions contemplated hereby are within the corporate powers of Target
and, except for the Target Stockholder Approval, have been duly authorized by
all necessary corporate action. Assuming that this Agreement constitutes the
valid and binding obligation of Buyer and BuyerSub and that the Guarantee
constitutes the valid and binding obligation of Valero Energy Corporation, this
Agreement constitutes a valid and binding agreement of Target, enforceable in
accordance with its terms.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Target of this Agreement and the consummation by Target of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Entity, other than the following: (a) the filing
of the Certificate of Merger in accordance with the DGCL; (b) compliance with
any applicable requirements of the HSR Act; and (c) compliance with any
applicable requirements of the Exchange Act.
SECTION 3.04 NON-CONTRAVENTION. The execution, delivery and performance by
Target of this Agreement and the consummation by Target of the transactions
contemplated hereby do not and will not (a) contravene or conflict with the
certificate of incorporation or by-laws of Target or the organization documents
of Target Subsidiary, (b) assuming that all of the consents, approvals and
filings contemplated by clauses (a) to and including (c) of Section 3.03 are
obtained and/or made and that Target Stockholder Approval occurs, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Target or
the Target Subsidiary (except that no representation or warranty is made with
respect to any antitrust statute, regulation, rule or other such restriction),
(c) give rise to a right of termination, cancellation or acceleration (with or
without due notice or lapse of time or both) of any material right or obligation
of Target or the Target Subsidiary or to a loss of any material benefit or
status to which Target or the Target Subsidiary is entitled under any provision
of any agreement, contract or other instrument binding upon Target or the Target
Subsidiary or any license, franchise, permit or other similar authorization held
by Target or the Target Subsidiary or (d) result in the creation or imposition
of any Lien on any material asset of Target or the Target Subsidiary.
SECTION 3.05 CAPITALIZATION.
(a) The authorized capital stock of Target consists of 75,000,000 Target
Common Shares and 1,000,000 Target Preferred Shares. As of the execution and
delivery hereof, (i) 15,004,771 Target Common Shares are issued and outstanding
and 8,500 Target Common Shares are held in treasury and (ii) no Target Preferred
Shares are issued and outstanding or held in treasury. As of the execution and
delivery hereof, (i) Target Options to acquire an aggregate of 4,549,000 Target
Common Shares are outstanding under the Target Option Plans, (ii) the
Convertible Notes
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are outstanding, which Notes are convertible into 14,500,000 Target Common
Shares as contemplated by the Convertible Notes Indenture and (iii) the Danesh
Options are outstanding, which Options are exercisable for an aggregate of
1,146,059 Target Common Shares. All outstanding shares of the capital stock of
Target have been duly authorized and are validly issued, fully paid and
non-assessable.
(b) As of the date hereof, except as described in Section 3.05(a), there
are no outstanding (i) shares of capital stock or other voting securities of
Target, (ii) securities of Target convertible into or exchangeable for shares of
capital stock or voting securities of Target, (iii) options or other rights to
acquire from Target, or obligations of Target to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Target. There are no outstanding obligations of
Target or the Target Subsidiary to repurchase, redeem or otherwise acquire any
Target Common Shares. Except for the Convertible Notes, the Danesh Options and
the Target Options, neither the Merger nor any other transaction contemplated
hereby will accelerate the vesting of or have any other effect under any options
or other rights relating to the acquisition of equity or other equity-related
securities of Target.
SECTION 3.06 SUBSIDIARIES.
(a) Target Subsidiary is the only Subsidiary of Target. 99.9 percent of the
ownership interest in the Target Subsidiary is directly owned by Target and 0.1
percent is owned by Huntway Managing Partners. Target is the sole general
partner of Target Subsidiary and Huntway Managing Partners is the sole limited
partner. Target Subsidiary does not have any employees and has not conducted any
business or operations since December 31, 1993, other than the sale of certain
of its assets from time to time.
(b) Target Subsidiary is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all limited partnership power required to carry on its business as now
conducted. Target Subsidiary is duly qualified to do business as a foreign
limited partnership and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or be in good standing, individually or in the aggregate, would not have a
Target Material Adverse Effect. Target Subsidiary has heretofore made available
to Buyer true, correct and complete copies of its certificate of limited
partnership and agreement of limited partnership as currently in effect.
(c) All of the outstanding ownership interests in the Target Subsidiary
have been duly authorized and are validly issued. All of the outstanding
ownership interest owned directly by Target in the Target Subsidiary is owned
free and clear of any Lien and free of any other limitation or restriction,
including any limitation or restriction on the right to vote, sell or otherwise
dispose of such ownership interest, other than any of such under the Securities
Act or any state securities laws or any Liens related to the Target Credit
Documents. There are no outstanding (i) securities of Target or the Target
Subsidiary convertible into or exchangeable or exercisable for voting securities
or ownership interests in the Target Subsidiary, (ii) options, warrants or other
rights to
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acquire from Target or the Target Subsidiary, or obligations of Target or the
Target Subsidiary to issue, any voting securities or other ownership interests
in, or any securities convertible into or exchangeable or exercisable for any
voting securities or ownership interests in, the Target Subsidiary or (iii)
obligations of Target or the Target Subsidiary to repurchase, redeem or
otherwise acquire any outstanding securities of the Target Subsidiary or any
ownership interests in the Target Subsidiary.
SECTION 3.07 TARGET SEC DOCUMENTS.
(a) Target has made available to Buyer the Target SEC Documents filed prior
to the date hereof. Target has filed all reports, filings and other documents
required to be filed by it since December 31, 1999 under (i) the Exchange Act
with the SEC and (ii) the rules, regulations and other requirements of the New
York Stock Exchange ("NYSE") with the NYSE. Target has not filed any
registration statement or other document under the Securities Act since December
31, 1999, and it has not been required to file any such registration statement
or document since December 31, 1999.
(b) As of its filing date, or as amended or supplemented prior to the date
hereof, each Target SEC Document filed prior to the date hereof complied in all
material respects with the applicable requirements of the Exchange Act.
(c) No Target SEC Document filed prior to the date hereof as of its filing
date, contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading; provided
that Section 3.09 shall be the sole and exclusive representation and warranty of
Target regarding the Proxy Statement.
SECTION 3.08 FINANCIAL STATEMENTS; LIABILITIES.
(a) The audited consolidated financial statements of Target included in the
Target 10-K and the unaudited consolidated financial statements of Target for
the twelve month period ended December 31, 2000, which unaudited financial
statements of Target have been prepared on a basis consistent with the Target
10-K other than for any exception as a result of a change in GAAP or applicable
law or regulation (collectively, including the notes thereto, the "Financial
Statements"), present fairly in all material respects and in conformity with
GAAP (except as may be indicated in the notes thereto) the consolidated
financial position of Target and the Target Subsidiary as of the dates thereof
and their consolidated results of operations and changes in financial position
for the respective periods then ended (subject to lack of footnote disclosure in
the case of the unaudited financial statements).
(b) Except as reflected or disclosed in the Financial Statements, there are
no material liabilities of Target or the Target Subsidiary of any kind
whatsoever, whether known or unknown, asserted or unasserted, accrued,
contingent, absolute, determined, determinable or otherwise, in each case, other
than:
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(i) liabilities incurred since December 31, 1999 in the Ordinary
Course of Business;
(ii) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby;
(iii) obligations of Target and the Target Subsidiary under the
agreements, contracts, leases and licenses to which either or both is a
party;
(iv) obligations of Target and the Target Subsidiary to comply with
all applicable laws; and
(v) liabilities with respect to any disclosure contained in (A) the
Phase I reports for the Benicia California, Wilmington California or
Coolidge Arizona facilities of Target or the Target Subsidiary or (B) the
Phase I or Phase II reports for the Vulcan Property, true and complete
copies of which reports have been made available to Buyer by Target.
(c) True, correct and complete copies of the reports and other
documentation prepared monthly by the management of Target and referred to by
management of Target as the "Financial Reporting Packages" (the "Financial
Reporting Packages") for the months beginning with January 2000 and ending with
December 2000, have been made available to Buyer.
SECTION 3.09 INFORMATION TO BE SUPPLIED. The information to be supplied by
Target expressly for inclusion in the Proxy Statement will, at the time of the
mailing thereof and at the time of the Target Stockholder Meeting, 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 are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act, except that no representation or
warranty is made by Target with respect to statements made based on information
supplied by Buyer specifically for inclusion therein.
SECTION 3.10 ABSENCE OF CERTAIN CHANGES. Since December 31, 2000, except as
otherwise expressly contemplated by this Agreement, Target and the Target
Subsidiary have conducted their business in the Ordinary Course of Business and
there has not been any material damage, destruction or other loss (not covered
by insurance) affecting the business or assets of Target or the Target
Subsidiary.
SECTION 3.11 LITIGATION. There is no action, suit, investigation,
arbitration, grievance or proceeding pending against, or to the Knowledge of
Target threatened against, Target or the Target Subsidiary or any of their
respective assets or properties that could reasonably be expected, individually
or in the aggregate, to result in a Target Material Adverse Effect and, to the
Knowledge of Target, there are no existing facts or circumstances (including any
claims or demands) that could reasonably be expected to result in any of the
foregoing. There are no material orders,
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judgments, injunctions or decrees of any Governmental Entity with respect to
which Target or the Target Subsidiary, or their respective assets, have been
named or are a party.
SECTION 3.12 TAXES. (i) All income tax returns, statements, reports and
forms (collectively, the "Target Returns") required to be filed with any taxing
authority by, or with respect to, Target and the Target Subsidiary have been
filed in accordance with all applicable laws; (ii) Target and the Target
Subsidiary have timely paid all taxes shown as due and payable on the Target
Returns that have been so filed and, as of the time of filing, the Target
Returns correctly reflected in all material respects the facts regarding the
income, business, assets, operations, activities and the status of Target and
the Target Subsidiary, other than with respect to taxes for which adequate
reserves are reflected on the books and records of Target; and (iii) neither
Target nor the Target Subsidiary has been a member of an affiliated,
consolidated, combined or unitary group other than one of which Target was the
common parent. To the Knowledge of Target: (i) no deficiencies for any taxes
have been asserted by any Governmental Entity against Target or Target
Subsidiary that remain unsettled at the date hereof; (ii) no requests for
waivers of the time to assess any such taxes have been granted; and (iii) no tax
returns of Target or Target Subsidiary are currently being audited by any
applicable taxing authority or threatened with any such audit. All payments for
withholding taxes, unemployment insurance and other amounts required to be
withheld and deposited or paid to any taxing authorities have been so deposited
or paid by Target or Target Subsidiary, as applicable. Target (i) has not made
or entered into, and does not own any asset subject to, a consent filed pursuant
to Section 341(f) of the Code or a "safe harbor lease" subject to Section
168(f)(8) of the Internal Revenue Code of 1954, as amended before the Tax Reform
Act of 1984, (ii) is not required to include in income any amount for an
adjustment pursuant to Section 481 of the Code and (iii) is neither a party to
nor obligated under any agreement or other arrangement providing for the payment
of any amount that would be an "excess parachute payment" under Section 280G of
the Code or subject to tax under Section 4999 of the Code for which Buyer,
BuyerSub or the Surviving Corporation would have withholding liability. Neither
Target nor the Target Subsidiary is contesting the payment of any income or
other taxes.
SECTION 3.13 COMPLIANCE WITH LAWS; LICENSES, PERMITS AND REGISTRATIONS.
(a) Neither Target nor the Target Subsidiary is in violation of, or has
violated, any applicable provision of any law, statute, ordinance, regulation,
judgment, injunction, order or consent decree, except where the violation
individually would not result in a cost to Target of more than $100,000 and the
violations in the aggregate would not have a Target Material Adverse Effect.
(b) Both the Target and the Target Subsidiary have all material permits,
licenses, approvals, authorizations of and registrations with and under all
Federal, state, local and foreign laws, and from all Governmental Entities,
required by Target and the Target Subsidiary to carry on their respective
businesses as currently conducted.
SECTION 3.14 CONTRACTS. Each material lease, license, contract, agreement
or obligation to which Target or the Target Subsidiary is a party or by which
either of them or any of their properties is bound is in all material respects
valid, binding and in full force and effect, and
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neither Target nor Target Subsidiary is in material violation or breach
thereunder. Neither Target nor the Target Subsidiary is a party to any agreement
that expressly and materially limits the ability of Target or the Target
Subsidiary to compete in or conduct any line of business or compete with any
person or in any geographic area or during any period of time. Target has made
available to Buyer true, correct and complete copies of all Target Credit
Documents and all of its material leases, subleases, employment agreements,
consulting agreements, hedging contracts, crude oil purchase contracts,
licenses, contracts and agreements.
SECTION 3.15 EMPLOYEE BENEFIT PLANS.
(a) The section of the Target Disclosure Schedule corresponding to this
Section 3.15(a) contains an accurate and complete list of each Target Employee
Plan.
(b) Each Target Employee Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a determination from the IRS
that such Target Employee Plan is qualified under Section 401(a) of the Code.
(c) Neither Target nor Target Subsidiary maintains, contributes to or has
any liability under or with respect to any "defined benefit plan" (as defined in
Section 3(35) of ERISA), or any "multiemployer plan" (as defined in Section
3(37) of ERISA). No asset of Target or the Target Subsidiary is subject to any
lien under ERISA or the Code. There are no pending or threatened actions, suits,
investigations or claims with respect to any Target Employee Plan (other than
routine claims for benefits) which could result in liability to Buyer or
BuyerSub.
(d) In all material respects, (i) each of the Target Employee Plans has
been maintained, funded and administered, in both form and operation, in
compliance with its terms and in compliance with the applicable provisions of
ERISA, the Code and any other applicable laws, and (ii) all filings required for
the Target Employee Plans and all contributions to the Target Employee Plans
have been timely made. Target and the Target Subsidiary have complied with the
health care continuation requirements of Part 6 of Subtitle B of Title I of
ERISA and Section 4980B of the Code ("COBRA"), and Target and the Target
Subsidiary have no obligations under any Target Employee Plan or otherwise to
provide health, medical, dental or disability benefits to former employees of
Target or the Target Subsidiary or any other person, except as specifically
required by COBRA.
(e) With respect to each Target Employee Plan, Target has made available to
Buyer true, complete and correct copies of, to the extent applicable: (i) the
current plan documents and summary plan descriptions, (ii) annual reports (Form
5500 series) filed with the IRS (with applicable attachments) for the previous
two years, (iii) financial statements for the previous two years and (iv) the
most recent determination letter received from the IRS.
(f) On and after January 1, 1994, none of Target, Target Subsidiary, any
Affiliate of Target or Target Subsidiary, nor to the Knowledge of Target, any
plan fiduciary of any Target Employee Plan, has engaged in any transaction in
violation of Section 406(a) or (b) of ERISA or any "prohibited transaction" (as
defined in Section 4975(c)(1) of the Code) which would subject Target,
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Buyer, BuyerSub or the Surviving Corporation to any material taxes, penalties or
other liabilities resulting from such prohibited transaction and, to the
Knowledge of Target, no condition exists that would subject any of Target,
Buyer, BuyerSub or the Surviving Corporation to any material excise penalty tax
or fine related to any Target Employee Plan.
SECTION 3.16 TRANSACTIONS WITH AFFILIATES. Since December 31, 1999, there
have been no transactions, agreements, arrangements or understandings between
Target or the Target Subsidiary and any other Person that would be required to
be disclosed under Item 404 of Regulation S-K under the Securities Act.
SECTION 3.17 INTELLECTUAL PROPERTY. Neither Target nor the Target
Subsidiary owns any registration of any patent, trademark, service mark, trade
name, copyright, trade secret or other intellectual property, other than the
service mark "H" and the domain names "huntway.com" and "huntway.net" in the
case of Target. Each of Target and Target Subsidiary owns or has adequate rights
to use all of the intellectual property (i) used by it in its business and (ii)
necessary for the conduct of its business in the Ordinary Course of Business.
Subject to such exceptions as would be de minimis in the aggregate, to the
Knowledge of Target, (i) neither Target nor the Target Subsidiary has infringed
upon the intellectual property rights of any other Person nor (ii) has any other
Person infringed upon the intellectual property rights of Target or the Target
Subsidiary.
SECTION 3.18 ENVIRONMENTAL MATTERS. (i) To the Knowledge of Target, Target
and the Target Subsidiary are in compliance with all Environmental Requirements,
except for any noncompliance that would be de minimis in the aggregate; (ii) to
the Knowledge of Target, Target and Target Subsidiary have obtained and are in
compliance with all permits, licenses and other authorizations that are required
pursuant to Environmental Requirements for the occupation of their facilities
and the operation of their businesses and are in compliance with all other
limitations, conditions, standards, prohibitions and timetables imposed by
Environmental Requirements, except for any failure to obtain or any
noncompliance that would be de minimis in the aggregate; (iii) neither Target
nor Target Subsidiary has received any written notice, report or other
information regarding any material violation by Target or the Target Subsidiary
of, or liabilities of Target or the Target Subsidiary under, Environmental
Requirements, other than any written notice, report or other information with
respect to a violation or liability that has been remedied or satisfied; (iv) to
the Knowledge of Target, neither Target nor Target Subsidiary has received
written notice of any past or present circumstances that, if continued, are
reasonably likely to materially interfere with or prevent in any material manner
compliance in the operation of their businesses with any Environmental
Requirements; (v) to the Knowledge of Target, neither Target nor Target
Subsidiary has handled or disposed of any Hazardous Substance in violation of
any Environmental Requirements, arranged for the disposal of any Hazardous
Substance in violation of Environmental Requirements or exposed any employee or
individual to any Hazardous Substance or condition in violation of Environmental
Requirements, except for any exceptions that would be de minimis in the
aggregate; and (vi) to the Knowledge of Target, neither Target nor Target
Subsidiary is a party to any written agreements, including but not limited to
indemnity or clean up agreements, relating to or arising out of Environmental
Requirements, with any third parties that are reasonably likely to give rise to
a material claim against Target or the Target Subsidiary.
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SECTION 3.19 REAL ESTATE.
(a) The section of the Target Disclosure Schedule corresponding to this
Section 3.19(a) sets forth the address of all real property owned by Target or
the Target Subsidiary and used in the operation of the business of Target or the
Target Subsidiary as of the date hereof (the "Owned Real Property"). Target or
the Target Subsidiary, as applicable, holds good and marketable title to the
Owned Real Property, free and clear of all Liens except for any Permitted Liens
and any Liens with respect to the Target Credit Documents.
(b) The section of the Target Disclosure Schedule corresponding to this
Section 3.19(b) sets forth the address of all real property in which Target or
the Target Subsidiary holds a leasehold or subleasehold estate (the "Leased Real
Property"; the leases or subleases for such Leased Real Property being referred
to as the "Leases"). With respect to each of the Leases: (i) such Lease is
legal, valid, binding, enforceable and in full force and effect; (ii) to the
Knowledge of Target, neither Target, the Target Subsidiary nor any other party
to the Lease is in breach or default under such Lease; (iii) Target or the
Target Subsidiary, as applicable, holds good and marketable title to the
leasehold interest thereunder; and (iv) neither Target nor Target Subsidiary
has, except for any Lien under the Target Credit Documents, assigned, subleased,
mortgaged, deeded in trust or otherwise transferred or encumbered such Lease, or
any interest therein.
(c) Neither Target nor Target Subsidiary has received any written notice to
the effect that (i) any betterment assessments have been levied against, or
condemnation or re-zoning proceedings are pending or threatened with respect to,
any of the Owned Real Property or the Leased Real Property (collectively, the
"Target Real Properties") or the Vulcan Property, or (ii) any zoning, building
or similar law or regulation is or will be violated in any material respect by
the continued maintenance, operation or use of any buildings or other
improvements on any of the Target Real Properties or the Vulcan Property. There
are no outstanding abatement proceedings or appeals with respect to the
assessment of any Owned Real Property for the purposes of real property taxes
and, to the Knowledge of Target, there are no outstanding abatement proceedings
or appeals with respect to the assessment of any Leased Real Property for the
purposes of real property taxes; and neither Target nor Target Subsidiary is a
party to any agreement with any Governmental Entity with respect to such
assessments or tax rates on any Target Real Properties. To the Knowledge of
Target, each of Target and the Target Subsidiary has all material rights of
ingress, egress, docking, terminalling and other access necessary to operate its
facilities and to move its inventory, product and supplies on, off, through and
over the Target Real Properties in substantially the same manner in which it
currently operates and moves such inventory, product and supplies.
(d) Target has delivered to Buyer true, correct and complete copies of that
certain preliminary title report dated February 20, 2001 and known as Order No.
1052644-KF for the Owned Real Property (the "Title Report"), with copies of all
exception documents referenced therein, and those certain preliminary title
reports dated September 19, 2000 and known as Order No. 201053712-X55 and dated
March 9, 2001 and known as Order No. 11053217-X55 for the Vulcan Property
(collectively, the "Vulcan Title Report"), with copies of all exception
documents
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referenced therein, which title reports were prepared by Chicago Title Insurance
Company (the "Title Company"). In addition, Target has delivered to Buyer a
true, correct and complete copy of that certain draft survey of the Vulcan
Property dated March 14, 2001, prepared by Pacific Land Consultants, Inc. and
known as Job No. 01045 (the "Survey").
SECTION 3.20 REQUIRED VOTE; BOARD APPROVAL.
(a) The only vote of the holders of any class or series of capital stock of
Target required by law, rule or regulation to approve this Agreement, the Merger
and/or any of the other transactions contemplated hereby is the affirmative vote
of the holders of a majority of the outstanding Target Common Shares on the
applicable record date in favor of the adoption of this Agreement (the "Target
Stockholder Approval").
(b) The board of directors of Target has (i) determined that this Agreement
and the transactions contemplated hereby, including the Merger, are advisable
and in the best interests of Target and its stockholders, (ii) approved this
Agreement and the transactions contemplated hereby and (iii) subject to Section
5.03, resolved to recommend to such stockholders that they vote in favor of
adopting and approving this Agreement and the Merger in accordance with the
terms hereof.
SECTION 3.21 FINDERS' FEES; OPINION OF FINANCIAL ADVISOR.
(a) Except for Simmons & Company International (the "Financial Advisor"),
there is no investment banker, broker, finder or other such intermediary which
has been retained by, or is authorized to act on behalf of, Target or the Target
Subsidiary with respect to the transactions contemplated by this Agreement.
Target has made available to Buyer a true and correct copy of the engagement
letter between Target and the Financial Advisor.
(b) Target has received the opinion of the Financial Advisor, dated as of
the date hereof, to the effect that, as of such date, the Merger Consideration
to be received by holders of Target Common Shares is fair to such holders (other
than, if applicable, Buyer and any Buyer Subsidiary) from a financial point of
view.
SECTION 3.22 EMPLOYEE MATTERS. There are no material labor-related disputes
of any kind asserted against Target in connection with its operations pending
before or, to the Knowledge of Target, threatened before, any federal, state or
local court or agency. There is no unfair labor practice charge or complaint
against Target actually pending or, to the Knowledge of Target, threatened,
before the National Labor Relations Board. There is no labor strike, slowdown or
stoppage actually pending or, to the Knowledge of Target, threatened against
Target. Target has not experienced any material labor disputes or any material
work stoppage due to labor disagreements within the past three years. No attempt
to organize Target employees has resulted in an election within the past three
years or, to the Knowledge of Target, is threatened against Target. Target is
not now, nor at any time within the past three years has Target been, subject to
any
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collective bargaining agreement, contract, letter of understanding or other
similar arrangement with any labor union or organization.
SECTION 3.23 PERSONAL PROPERTY. Each of Target and Target Subsidiary, as
applicable, has good and valid title or a valid right to use all material
tangible personal property, equipment and fixtures held by Target or the Target
Subsidiary ("Personal Property"), free and clear of all Liens except Permitted
Liens and any Liens related to the Target Credit Documents. Except for
exceptions related to the Coolidge, Arizona facility of the Target Subsidiary,
to the Knowledge of Target, the Personal Property is in good operating condition
and repair in accordance with normal and customary industry practices for items
of comparable age and use, ordinary wear and tear excepted. All product and
supply inventory held by Target is of a quality usable or salable (as
applicable) in the Ordinary Course of Business.
SECTION 3.24 INSURANCE. Target has heretofore made available to Buyer a
complete list as of the date hereof of all insurance policies maintained by
Target or Target Subsidiary and has made available to Buyer true, correct and
complete copies of all such policies, together with all riders and amendments
thereto. As of the date hereof, all such policies are in full force and effect
and all premiums due thereon prior to the date hereof have been paid. Target and
the Target Subsidiary have complied in all material respects with the terms of
such policies.
SECTION 3.25 TARGET CREDIT DOCUMENTS. The Target Disclosure Schedule sets
forth the outstanding principal balance due, owing and unpaid under each of the
Target Credit Documents, if any, and the interest rates payable on such
balances, in each case as of the date hereof. The Target Disclosure Schedule
also identifies each letter of credit and its amount issued pursuant to the
Target Credit Documents or otherwise as of the date hereof.
SECTION 3.26 SECTION 203 OF THE DGCL NOT APPLICABLE. The Board of Directors
of Target has approved this Agreement, and such approval is sufficient to render
inapplicable to this Agreement and the transactions contemplated by this
Agreement the provisions of Section 203 of the DGCL. To the Knowledge of Target,
no other state takeover statute or similar statute or regulation applies or
purports to apply to this Agreement or the transactions contemplated by this
Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
BUYER
Buyer represents and warrants to Target that:
SECTION 4.01 CORPORATE EXISTENCE AND POWER. Each of Buyer and BuyerSub is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate power required
to carry on its business as now conducted. Buyer is duly qualified to do
business as a foreign corporation and is in good standing
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in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified or be in good standing, individually or in the
aggregate, would not have a Buyer Material Adverse Effect. Each of Buyer and
BuyerSub has heretofore made available to Target true and complete copies of its
certificate of incorporation, by-laws and/or other organizational documents as
currently in effect.
SECTION 4.02 CORPORATE AUTHORIZATION; APPROVALS. The execution, delivery
and performance by Buyer and BuyerSub of this Agreement and the consummation by
Buyer and BuyerSub of the transactions contemplated hereby are within the
corporate powers of Buyer and BuyerSub and have been duly authorized by all
necessary corporate action (including the approval of the board of directors of
each of Buyer and BuyerSub and of Buyer in its capacity as the sole stockholder
of BuyerSub). Assuming that this Agreement constitutes the valid and binding
obligation of Target, this Agreement constitutes a valid and binding agreement
of each of Buyer and BuyerSub, enforceable in accordance with its terms. No vote
of the holders of any of the outstanding capital stock or any other security of
Buyer under the laws of the state of its incorporation or any other applicable
law or regulation, including of any securities exchange or market or pursuant to
the terms of the certificate of incorporation, bylaws or other organizational
document of Buyer, is necessary to approve this Agreement or the transactions
contemplated hereby.
SECTION 4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer and BuyerSub of this Agreement and the consummation by
Buyer and BuyerSub of the transactions contemplated hereby require no action by
or in respect of, or filing with, any Governmental Entity, other than the
following: (a) the filing of the Certificate of Merger in accordance with the
DGCL; (b) compliance with any applicable requirements of the HSR Act; and (c)
compliance with any applicable requirements of the Exchange Act.
SECTION 4.04 NON-CONTRAVENTION. The execution, delivery and performance by
Buyer and BuyerSub of this Agreement and the consummation by Buyer and BuyerSub
of the transactions contemplated hereby do not and will not (a) contravene or
conflict with the certificate of incorporation or by-laws of Valero Energy
Corporation, Buyer or BuyerSub, (b) assuming that all of the consents, approvals
and filings contemplated by clauses (a) to and including (c) of Section 4.03 are
obtained and/or made, contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Valero Energy Corporation or any Subsidiary
thereof, including Buyer and BuyerSub (except that no representation or warranty
is made with respect to any antitrust statute, regulation, rule or other such
restriction), (c) give rise to a right of termination, cancellation or
acceleration (with or without due notice or lapse of time or both) of any
material right or obligation of Valero Energy Corporation or any Subsidiary
thereof, including Buyer and BuyerSub, or to a loss of any material benefit or
status to which Valero Energy Corporation or any Subsidiary thereof, including
Buyer and BuyerSub, is entitled under any provision of any agreement, contract
or other instrument binding upon Valero Energy Corporation or any Subsidiary
thereof, including Buyer and BuyerSub, or any license, franchise, permit or
other similar authorization held by Valero Energy Corporation or any Subsidiary
thereof, including Buyer and BuyerSub, or (d) result in the creation or
imposition of any Lien on any material asset of Valero Energy Corporation or any
Subsidiary thereof, including Buyer and
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BuyerSub, other than, in the case of each of (b), (c) and (d), any such items
that would not, individually or in the aggregate, (x) have a Buyer Material
Adverse Effect or (y) prevent or impair the ability of Valero Energy
Corporation, Buyer or BuyerSub to consummate the transactions contemplated by
this Agreement.
SECTION 4.05 BUYERSUB. Since the date of its incorporation, BuyerSub has
not engaged in any activities other than in connection with or as contemplated
by this Agreement. All of the issued and outstanding shares of capital stock of
BuyerSub have been duly authorized and are validly issued, fully paid and
nonassessable. Buyer holds of record and owns beneficially all of the
outstanding shares of each class of capital stock of BuyerSub. There are no
outstanding options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require the
BuyerSub to issue, sell or otherwise cause to become outstanding stock
appreciation, phantom stock, profit participation or similar rights with respect
to the BuyerSub.
SECTION 4.06 INFORMATION TO BE SUPPLIED. The information to be supplied by
Buyer expressly for inclusion in the Proxy Statement will at the time of the
mailing thereof and at the time of the Target Stockholder Meeting 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 are made, not
misleading.
SECTION 4.07 FINDERS' FEES. Except as indicated in Section 3.21(a), there
is no investment banker, broker, finder or other intermediary who might be
entitled to any fee or commission from Buyer or any of its Affiliates with
respect to the consummation of the transactions contemplated by this Agreement.
SECTION 4.08 FINANCING OF MERGER. Buyer has the ability to fully finance
the transactions contemplated by this Agreement (including all of the
transactions contemplated by Section 7.06 and the required payments with respect
to the Danesh Options and the Target Options) and to fund the working capital
needs of the Surviving Corporation after the Merger, out of its available cash,
including cash of Target at Closing, liquid short-term investments, including
liquid short-term investments of Target at Closing, and/or committed revolving
credit facilities without any third-party consent or approval.
SECTION 4.09 SOLVENCY AND STATUS. Buyer is a solvent corporation and will
not be rendered insolvent as a result of the consummation of the transactions
contemplated by this Agreement. Buyer has a positive net worth and currently is
able to and does pay its liabilities as they mature. BuyerSub was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.
BuyerSub has no assets other than cash, has conducted no business or operations,
has incurred no liabilities or obligations, other than expenses related to its
incorporation and its continuing corporate existence and obligations under this
Agreement, and has not had any employees.
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ARTICLE 5
COVENANTS OF TARGET
Target agrees that:
SECTION 5.01 TARGET INTERIM OPERATIONS. Except as set forth in the Target
Disclosure Schedule or as otherwise expressly contemplated or permitted hereby
(including as contemplated by Section 7.06 and below in this Section), without
the prior written consent of Buyer (which consent shall not be unreasonably
delayed or withheld), from the date hereof until the Effective Time, Target
shall, and shall cause the Target Subsidiary to, conduct its business in all
material respects in the Ordinary Course of Business and shall use commercially
reasonable efforts to (i) preserve intact its present business organization and
goodwill and keep available the services of its officers and key employees; (ii)
maintain in effect all material foreign, Federal, state and local licenses,
approvals and authorizations, including all material licenses and permits that
are required for Target or the Target Subsidiary to carry on its business; (iii)
confer on a regular basis with one or more representatives of Buyer to report on
material operational matters and any proposals to engage in material
transactions not disclosed on the Target Disclosure Schedule; (iv) promptly
notify Buyer of any material emergency or other material change in the business,
financial condition, results of operations or prospects of Target; (v) provide
Buyer with copies of (A) monthly financial statements of Target prepared on a
basis consistent (other than as may be required by GAAP or applicable law) with
the similar financial statements provided or made available to Buyer prior to
the date hereof and (B) the corresponding Financial Reporting Packages; (vi)
maintain and repair all of its material assets and properties in a manner
consistent with past practices; and (vii) promptly deliver to Buyer true,
correct and complete copies of any report, statement or schedule filed with the
SEC by Target subsequent to the date of this Agreement. Without limiting the
generality of the foregoing, except as set forth in the Target Disclosure
Schedule or as otherwise expressly contemplated or permitted by this Agreement
(including as contemplated by Section 7.06), from the date hereof until the
Effective Time, without the prior written consent of Buyer (which consent shall
not be unreasonably delayed or withheld), Target shall not, nor shall it permit
the Target Subsidiary to:
(a) amend its certificate of incorporation or by-laws;
(b) split, combine or reclassify any shares of capital stock of Target or
the Target Subsidiary or declare or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
any Target Common Shares or redeem, repurchase or otherwise acquire or offer to
redeem, repurchase or otherwise acquire any Target equity or equity related
securities or any equity or equity related securities of the Target Subsidiary;
(c) issue, deliver or sell or authorize the issuance, delivery or sale of,
any shares of Target capital stock of any class or series or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such capital stock or any such convertible or exchangeable
securities, other than in connection with the issuance of Target Common Shares
upon
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the exercise of any Target Options or Danesh Options and the issuance of Target
Common Shares upon the conversion of any Convertible Note;
(d) amend in any material respect any term of any outstanding security of
Target or the Target Subsidiary in any manner adverse to Buyer;
(e) other than in connection with transactions permitted by subsection (f)
below, incur any capital expenditures or any obligations or liabilities in
respect thereof, except for (i) repair and maintenance capital expenditures or
any obligations or liabilities in respect thereof in the Ordinary Course of
Business, (ii) other capital expenditures or any obligations or liabilities in
respect thereof contemplated by the capital expenditure budget for 2001 for
Target and the Target Subsidiary (the "Target Budget"), other than any capital
expenditures specifically identified on the Target Budget as being prohibited
without the prior written consent of Buyer (a true, correct and complete copy of
the Target Budget is included in or attached to the Target Disclosure Schedule)
or (iii) other capital expenditures or any obligations or liabilities in respect
thereof incurred in the Ordinary Course of Business of Target or the Target
Subsidiary and which, in the aggregate, do not exceed $100,000;
(f) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or a series of related transactions any equity
interests of any Person or any business or division of any Person or acquire in
one transaction or a series of related transactions any assets having a cost in
excess of $50,000 (other than inventory purchased by Target in the Ordinary
Course of Business and any capital expenditure permitted under subsection (e)
above in this Section);
(g) sell, lease, encumber or otherwise dispose of any material assets,
other than (i) sales in the Ordinary Course of Business and (ii) dispositions of
assets related to discontinued operations of Target or the Target Subsidiary;
(h) incur (which shall be deemed to include entering into new or amended
credit agreements, lines of credit or similar arrangements) any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of Target or the
Target Subsidiary or guarantee any debt securities of others, except in the
Ordinary Course of Business (which shall include borrowings and the issuance of
letters of credit under the existing credit facilities of Target within the
borrowing capacity thereunder as of the date hereof and the issuance of
additional debt securities as contemplated by Section 307(a) of the Junior
Subordinated Indenture);
(i) except in the Ordinary Course of Business, amend, modify or terminate
any material contract, agreement or arrangement of Target or the Target
Subsidiary or otherwise waive, release or assign any material rights, claims or
benefits of Target or the Target Subsidiary thereunder;
(j) (i) except as required or contemplated by (x) law, (y) an agreement
existing on the date hereof and made available to Buyer as contemplated by
Section 3.14 or (z) a policy or
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arrangement described in the section of the Target Disclosure Schedule
corresponding to this Section, increase the amount of compensation of any
director, officer or employee or make any increase in or commitment to increase
any employee health, welfare or retirement benefits, (ii) except as required by
(x) law, (y) an agreement existing on the date hereof and made available to
Buyer as contemplated by Section 3.14 or (z) a policy or arrangement described
in the section of the Target Disclosure Schedule corresponding to this Section,
grant any new severance or termination pay or rights to any director, officer or
employee of Target or the Target Subsidiary, (iii) adopt any additional Target
Employee Plan or, except in the Ordinary Course of Business or as required by
law, make any contribution to any existing such plan or (iv) except as may be
required by law, amend in any material respect any Target Employee Plan;
(k) change the Target (x) methods of accounting in effect at December 31,
2000, except as required by changes in GAAP or by Regulation S-X of the Exchange
Act, as concurred in by its independent public accountants, or (y) fiscal year;
(l) declare or pay or agree to declare or pay any dividends on any Target
Common Shares or any other capital stock of Target;
(m) cause to be issued under the Bank of America Loan Agreement or
otherwise any new letter of credit or extend or renew any existing letter of
credit for the benefit of Target or the Target Subsidiary, in either case with a
maturity date after August 31, 2001; or
(n) agree, resolve or commit to do any of the foregoing.
SECTION 5.02 STOCKHOLDER MEETING. Target shall cause the Target Stockholder
Meeting to be duly called and held as soon as reasonably practicable for the
purpose of obtaining the Target Stockholder Approval. Target shall set the date
for the Target Stockholder Meeting. Except in the event of the occurrence of a
Superior Proposal and during such time as there remains a Superior Proposal or
as otherwise required in order to satisfy the fiduciary duties of the Target
board of directors under applicable law, (i) the board of directors of Target
shall recommend approval and adoption by its stockholders of this Agreement (the
"Target Recommendation"), (ii) the board of directors of Target shall not amend,
modify, withdraw, condition or qualify the Target Recommendation and (iii)
Target shall use its reasonable best efforts to solicit the Target Stockholder
Approval.
SECTION 5.03 ACQUISITION PROPOSALS; BOARD RECOMMENDATION.
(a) Target agrees that after the date hereof it shall not, nor shall it
permit the Target Subsidiary to, nor shall it authorize or knowingly permit any
officer, director, employee, investment banker, attorney, accountant, agent or
other advisor or representative of Target or the Target Subsidiary, directly or
indirectly, to (i) solicit, initiate or knowingly facilitate or encourage the
submission of any Acquisition Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or take any other action knowingly to facilitate any inquiries or the making
of any proposal that constitutes, or reasonably
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could be expected to lead to, any Acquisition Proposal, (iii) grant any waiver
or release under any standstill or similar agreement with respect to any class
of equity securities of Target or (iv) enter into any agreement with respect to
any Acquisition Proposal, other than in the manner contemplated by Section
5.03(c); provided, however, that Target may take any action described in the
foregoing clauses (i), (ii), (iii) or (iv) in respect of any Person, but only
if: (x) such Person delivers an Acquisition Proposal that, in the good faith
judgment of the Target board of directors, either is a Superior Proposal or
could reasonably be expected to lead to the delivery to Target of a Superior
Proposal within 75 days of delivery to Target of such Acquisition Proposal or if
otherwise required in order to satisfy the fiduciary duties of the Target board
of directors as such duties would exist under applicable law in the absence of
this Section 5.03; and (y) prior to Target taking such action in respect of such
Person, such Person shall have entered into a confidentiality agreement with
Target in form and substance substantially similar to the Confidentiality
Agreement; provided further that Target shall not enter into any binding
agreement (other than such a confidentiality agreement) with respect to any such
Acquisition Proposal without first complying with Section 5.03(c) and
terminating this Agreement pursuant to Section 9.01(c)(ii). Buyer acknowledges
that prior to the date of this Agreement, Target has solicited or caused to be
solicited by the Financial Advisor indications of interest and proposals for an
Acquisition Proposal. If, subsequent to the execution and delivery of this
Agreement and prior to the termination of this Agreement in accordance with its
terms, Target receives an inquiry or proposal from any Person relating to an
Acquisition Proposal, Target shall advise Buyer of the receipt of such inquiry
or proposal (and any change or modification thereto) promptly upon such receipt.
Target shall also advise Buyer of the material terms and conditions of such
inquiry or proposal and any subsequent change or modification thereto, but
Target shall not be required to disclose the identity or source of such inquiry
or proposal or any agent or representative acting on behalf of such Person.
(b) Unless the board of directors of Target has previously amended,
modified, withdrawn, conditioned or qualified or is concurrently therewith
amending, modifying, withdrawing, conditioning or qualifying the Target
Recommendation in accordance with Section 5.02, the board of directors of Target
shall not recommend any Acquisition Proposal to the Target stockholders.
Notwithstanding the foregoing, nothing contained in this Section 5.03 or
elsewhere in this Agreement shall prevent the board of directors of Target from
complying with Rule 14e-2 under the Exchange Act with respect to any Acquisition
Proposal or making any disclosure required by applicable law or stock exchange
rule or regulation.
(c) Pursuant to the terms of Section 9.01(c)(ii), Target may terminate this
Agreement in the event of a Superior Proposal or if otherwise required in order
to satisfy the fiduciary duties of the Target board of directors as such duties
would exist under applicable law in the absence of this Section 5.03; provided
that Target may not exercise its right to so terminate under Section 9.01(c)(ii)
and may not enter into a binding agreement (other than a confidentiality
agreement as contemplated by clause (y) in the first sentence contained in
Section 5.03(a)) with respect to such Superior Proposal, unless prior to or
concurrent with such termination Target shall have paid to Buyer the Termination
Fee as contemplated by Section 9.03.
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ARTICLE 6
COVENANTS OF BUYER AND BUYERSUB
Buyer and BuyerSub agree that:
SECTION 6.01 DIRECTOR AND OFFICER LIABILITY.
(a) For the period of six years from and after the Effective Time, Buyer
and the Surviving Corporation jointly and severally shall indemnify, to the
fullest extent permitted by law, the present and former directors and officers
of Target and the Target Subsidiary (the "Indemnified Parties") in respect of
actions taken or failures to take action prior to and including the Effective
Time in connection with their duties as directors or officers of Target or the
Target Subsidiary (including the transactions contemplated hereby); provided
that, in the event any claim is asserted or made within such six-year period,
all rights to indemnification in respect of such claim shall continue until
final disposition of such claim. In the event any Indemnified Party becomes
involved in any such capacity in any action, proceeding or investigation in
connection with any such action or failure to take action, including the
transactions contemplated hereby, Buyer and the Surviving Corporation jointly
and severally, to the fullest extent permitted by law, will periodically advance
expenses to such Indemnified Party for his legal and other out-of-pocket
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. From and after the Effective Time, Buyer and the Surviving
Corporation jointly and severally shall indemnify each Indemnified Party against
any and all expenses, including attorneys fees, which are incurred by such
Indemnified Party in connection with any action brought by such Indemnified
Party for indemnification or advance of expenses as contemplated by this Section
or under the organizational documents of Target or under any indemnification
agreement between such Indemnified Party and the Target, regardless of whether
such Indemnified Party ultimately is determined to be entitled to such
indemnification or advance of expenses.
(b) For six years after the Effective Time, Buyer or the Surviving
Corporation shall maintain in effect director and officer liability insurance
and excess director and officer liability insurance covering the Persons who are
currently covered by the existing director and officer liability insurance and
the existing excess director and officer liability insurance of Target with
respect to actions taken or failures to take action prior to or including the
Effective Time, on terms and conditions no less favorable to such Persons than
those in effect on the date hereof under the existing director and officer
liability insurance and the existing excess director and officer liability
insurance of Target.
(c) Buyer shall cause the Surviving Corporation to perform the
indemnification agreements entered into, in August 2000, by Target with the
members of the Special Committee of the board of directors of Target, true,
complete and correct copies of which have been made available to Buyer.
(d) If Buyer or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or
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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
and assigns of Buyer or the Surviving Corporation, as the case may be, honor the
indemnification obligations set forth in this Section.
(e) The obligations of the Surviving Corporation and Buyer under this
Section shall not be terminated or modified in such a manner as to adversely
affect any Person to whom this Section applies without the prior written consent
of such affected Person.
SECTION 6.02 EMPLOYEE BENEFITS.
(a) During the period commencing on the date of the Effective Time and
ending on the first anniversary thereof, Buyer shall provide (or shall cause the
Surviving Corporation to provide) employees of the Surviving Corporation or the
Target Subsidiary with compensation and benefits that are no less favorable in
the aggregate than those currently provided by Target and the Target Subsidiary
to such employees; provided that the defined benefit pension plan of Buyer (the
"Buyer Pension Plan") shall be deemed to be a comparable substitute for the
Money Purchase Pension Plan of Target for all purposes hereunder. Buyer has made
available to Target a true, correct and complete copy of the Buyer Pension Plan.
For purposes of any employee benefit plan, program or arrangement maintained for
any of such employees by Buyer or the Surviving Corporation, Buyer shall
recognize (or cause to be recognized) service with Target and the Target
Subsidiary and any predecessor entities (and any other service credited by
Target or the Target Subsidiary under similar benefit plans) for all purposes
(including, without limitation, for vesting, eligibility to participate,
severance and benefit accrual); provided that, with respect to the Money
Purchase Pension Plan of Target, benefits under such plan shall be frozen as of
the Effective Time and, with respect to the defined benefit pension plan of
Buyer, past service with Target and/or the Target Subsidiary shall count for
vesting purposes only. Benefits under the Buyer Pension Plan for the employees
of Target and the Target Subsidiary will begin accruing as of the Effective Time
only. Except as expressly provided in this Agreement, vesting schedules under
Target Employee Plans, including, without limitation, the Profit Sharing and Tax
Deferred Savings Plan (401(k) Plan) and Money Purchase Pension Plan of Target,
shall not be accelerated or otherwise affected by the transactions contemplated
hereby and amounts held by employees of Target in its Profit Sharing and Tax
Deferred Savings Plan (401(k) Plan) and Money Purchase Pension Plan that are
unvested as of the Effective Time shall vest in accordance with the vesting
schedule provided under such Plans. To the extent that Buyer establishes or
causes to be established any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) for employees of the Surviving Corporation or the Target
Subsidiary, such plan or plans shall waive all limitations as to preexisting
conditions and all waiting or elimination periods and service requirements
applicable to such employees, except to the extent preexisting conditions
limitations, waiting or elimination periods or service requirements were in
effect immediately prior to the Effective Time with respect to such employees
under comparable employee welfare benefit plans maintained by Target immediately
prior to the Effective Time.
(b) From and after the Effective Time, Buyer shall honor and perform, and
shall cause the Surviving Corporation to honor and perform, in accordance with
their respective terms,
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the written severance, change in control and termination programs, policies,
agreements (including any change in control, termination, severance agreements
or employment agreements containing such type of provisions) and plans of Target
or the Target Subsidiary identified on the Target Disclosure Schedule, true,
correct and complete copies of which have been made available to Buyer.
SECTION 6.03 TITLE POLICIES. The cost of the Title Policy, the Title Report
and the survey with respect to the Benicia, California facility of Target shall
be promptly paid when due by Buyer or, if paid by Target, promptly reimbursed by
Buyer upon request of Target.
SECTION 6.04 CONDUCT OF BUYERSUB. Buyer will take all action necessary to
cause BuyerSub to perform its obligations under this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement.
ARTICLE 7
COVENANTS OF BUYER AND TARGET
The parties hereto agree that:
SECTION 7.01 REASONABLE BEST EFFORTS.
(a) Subject to the terms and conditions hereof, each party will use
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement as promptly as practicable, provided that nothing in this Section
shall require Target to take any action which would be inconsistent with the
fiduciary duties of its board of directors as such duties would exist under
applicable law in the absence of this Section.
(b) In connection with and without limiting the foregoing, Buyer and Target
shall (i) take all action reasonably necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the Merger,
this Agreement or any of the other transactions contemplated hereby and (ii) if
any state takeover statute or similar statute or regulation becomes applicable
to the Merger, this Agreement or any of the other transactions contemplated
hereby, take all action reasonably necessary to ensure that the Merger and the
other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize or eliminate the effect of such statute or regulation on the Merger and
the other transactions contemplated by this Agreement.
SECTION 7.02 CERTAIN FILINGS; COOPERATION IN RECEIPT OF CONSENTS.
(a) Promptly after the date hereof, Target shall prepare in cooperation
with Buyer and, after review and approval (which shall not be unreasonably
withheld or delayed) by Buyer, shall file with the SEC as contemplated by the
Exchange Act the Proxy Statement. Target shall mail the Proxy Statement to its
stockholders as promptly as reasonably practicable in compliance with the
Exchange Act and, if necessary, after the Proxy Statement shall have been so
mailed, promptly
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circulate amended, supplemental or supplemented proxy material, and, if required
in connection therewith, resolicit proxies.
(b) No amendment or supplement to the Proxy Statement will be made by
Target without the prior approval of Buyer, which approval will not be
unreasonably withheld or delayed. Each party will advise the other party
promptly after it receives notice thereof of any request by the SEC for
amendment of the Proxy Statement or comments of the SEC thereon and responses
thereto or requests by the SEC for additional information. If at any time prior
to the Effective Time, Target or Buyer discovers any information relating to
either party, or any of their respective Affiliates, officers or directors, that
should be set forth in an amendment or supplement to the Proxy Statement, so
that such document would not include any misstatement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and
the parties shall jointly prepare an appropriate amendment or supplement
describing such information which shall be promptly filed with the SEC and, to
the extent required by law or regulation, disseminated to the stockholders of
Target.
(c) Target and Buyer shall cooperate with one another in (i) determining
whether any action by or in respect of, or filing with, any Governmental Entity
is required in connection with the consummation of the transactions contemplated
hereby and (ii) seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
and seeking promptly to obtain any such actions, consents, approvals or waivers.
Without limiting the generality of the foregoing, each of Buyer and Target shall
file any Notification and Report Forms and related material that it may be
required to file in connection with the transactions contemplated by this
Agreement with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the HSR Act, shall each use its
diligent efforts to obtain an early termination of the applicable waiting
period, and shall each make any further filings pursuant thereto that may be
necessary, proper or advisable. Each party shall permit the other party to
review any communication given by it to, and consult with each other in advance
of any meeting or conference with, any Governmental Entity and to the extent
permitted by the applicable Governmental Entity give the other party the
opportunity to attend and participate in such meetings and conferences, in each
case in connection with the transactions contemplated hereby.
SECTION 7.03 PUBLIC ANNOUNCEMENTS. No party shall issue any press release
or make any public announcement or disclosure relating to the subject matter of
this Agreement without the prior written approval of the other parties (for
purposes of which, approval by the Buyer shall be deemed to include approval by
BuyerSub), which approval shall not be unreasonably withheld or delayed, unless
such disclosure is required by applicable law or governmental, stock exchange or
securities market rule or regulation or by order of a court of competent
jurisdiction (in which case prior to making such disclosure the party which
proposes to make such disclosure shall give written notice to the other parties,
describing in reasonable detail the proposed content of such disclosure, and
shall provide each other party a reasonable opportunity to review and comment
upon the form and substance of such disclosure).
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SECTION 7.04 ACCESS TO INFORMATION. From the date hereof until the
Effective Time and subject to applicable law, Target shall (i) give to Buyer,
its counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of Target and
the Target Subsidiary, (ii) furnish or make available to Buyer, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request
and (iii) instruct the employees, counsel, financial advisors, auditors and
other authorized representatives of Target and the Target Subsidiary to
cooperate with the reasonable requests of Buyer in its investigation. Any
investigation pursuant to this Section shall be conducted at reasonable times in
such manner as not to interfere unreasonably with the conduct of the business of
Target. Buyer will hold, and will cause its respective officers, employees,
counsel, financial advisors, auditors and other authorized representatives to
hold, any nonpublic information obtained in any such investigation in confidence
in accordance with the Confidentiality Agreement.
SECTION 7.05 NOTICES OF CERTAIN EVENTS. Target and Buyer shall promptly
notify the other of the following: (i) any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any notice
or other communication from any Governmental Entity in connection with the
transactions contemplated by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to the Knowledge of Target or to the
knowledge of Buyer, as the case may be, threatened against, relating to or
involving or otherwise affecting Buyer or any of its Subsidiaries (including
BuyerSub), on the one hand, or Target or the Target Subsidiary, on the other
hand, which relate to the consummation of the transactions contemplated by this
Agreement; and (iv) any action, event or occurrence that would constitute a
breach of any representation, warranty, covenant or agreement of such party set
forth in this Agreement, provided that no such notification pursuant to clause
(iv) shall affect or be deemed to modify any representation or warranty made by
the party giving such notice.
SECTION 7.06 REPAYMENT/PURCHASE OF TARGET INDEBTEDNESS.
(a) Bank of America Loan Agreement. Promptly following the execution and
delivery of this Agreement, Buyer shall obtain a commitment (which shall be
unconditional except for the occurrence of the Closing and other customary terms
and conditions) for a back-up letter of credit from a financial institution
acceptable to Bank of America (which back-up letter of credit shall be in a form
acceptable to Bank of America) with respect to the letters of credit outstanding
pursuant to the Bank of America Loan Agreement at the Closing, other than any
such letter of credit that is in connection with the Closing cancelled or
released to the satisfaction of Bank of America. Buyer shall thereupon deliver
to Target and Bank of America true and correct copies of such commitment. In
addition, promptly following the execution and delivery of this Agreement,
Target and Buyer shall use their reasonable best efforts to cause Bank of
America to enter into an agreement and/or instrument with Target in a form
reasonably satisfactory to Target and Buyer that provides, subject to the
back-up letter of credit contemplated by this subsection becoming effective at
the Closing and to the payment at the Closing of any indebtedness and other
amounts then outstanding or payable
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under the Bank of America Loan Agreement, for (i) Bank of America to take all
actions necessary and appropriate to cause the Collateral Agent to release and
terminate all Liens with respect to the Bank of America Loan Agreement and to
join in the termination of the Collateral Documents at the Closing, (ii) the
termination of the Bank of America Loan Agreement and the surrender for
cancellation of any note issued thereunder upon the Closing and (iii) Bank of
America to join in all actions necessary and appropriate to cause the
termination of the Intercreditor Agreement and the Collateral Documents at the
Closing (the "B of A Agreement"). Subject to the performance of the B of A
Agreement, Buyer shall cause the back-up letter of credit contemplated by this
subsection to become effective upon the Closing and at the Closing shall fully
satisfy and discharge or cause to be satisfied or discharged any and all of the
indebtedness and other amounts outstanding or payable under the Bank of America
Loan Agreement.
(b) Boeing Capital Loan Agreement. Promptly following the execution and
delivery of this Agreement, Target and Buyer shall use their reasonable best
efforts to cause Boeing Capital to enter into an agreement and/or instrument
with Target in a form reasonably satisfactory to Target and Buyer (i) that
permits the payment by Buyer at the Closing of all indebtedness and other
amounts then outstanding or payable under the Boeing Capital Loan Agreement,
without any prepayment premium or penalty, other than such as would be required
under the express terms of the Boeing Capital Loan Agreement as a result of a
prepayment in full of all indebtedness thereunder on the applicable first
permitted prepayment date thereunder, and (ii) that provides, subject to the
payment at the Closing of all indebtedness and other amounts then outstanding or
payable under the Boeing Capital Loan Agreement, for (x) Boeing Capital to take
all actions necessary and appropriate to cause the Collateral Agent to release
and terminate all Liens with respect to the Boeing Capital Loan Agreement and to
join in the termination of the Collateral Documents at the Closing, (y) the
termination of the Boeing Capital Loan Agreement and the surrender for
cancellation of the notes issued thereunder upon the Closing and (z) Boeing
Capital to join in all actions necessary and appropriate to cause the
termination of the Intercreditor Agreement and the Collateral Documents at the
Closing (the "BC Agreement"). Subject to the performance of the BC Agreement,
Buyer shall at the Closing fully satisfy and discharge or cause to be satisfied
or discharged all of the indebtedness and other amounts outstanding or payable
under the Boeing Capital Loan Agreement.
(c) Convertible Notes. Promptly following the execution and delivery of
this Agreement, Target and Buyer shall use their reasonable best efforts to
cause each holder of a Convertible Note to enter into an agreement and/or
instrument with Target in a form reasonably satisfactory to Target and Buyer (i)
that permits Buyer to purchase such Convertible Note at or immediately prior to
the Closing for cash in an amount equal to the sum of (x) the amount that would
have been payable in the Merger for the Target Common Shares underlying such
Convertible Note had such Convertible Note been fully converted into Target
Common Shares immediately prior to the Closing and (y) any accrued and unpaid
interest on such Convertible Note as of the Closing, but not including any
prepayment premium or penalty, and (ii) that provides, subject to such payment
at the Closing, for (u) the termination of the Exchange and Purchase Agreement
upon the Closing, (v) the due transfer of the underlying Convertible Note to
Buyer upon the Closing, (w) the termination of the Convertible Notes Indenture
(which agreement shall constitute a written consent contemplated by Section 9.02
of the Convertible Notes Indenture), (x) the amendment of the
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Convertible Notes Indenture to terminate and waive Article 4, other than
Sections 4.01, 4.02 and 4.04(c) thereof, and Article 5 of such Indenture
(including with respect to the Merger) at the Closing and until such time as the
Convertible Notes Indenture is terminated in accordance with its terms (which
agreement shall constitute a written consent contemplated by Section 9.02 of the
Convertible Notes Indenture), (y) the Collateral Agent to release and terminate
all Liens related to the Convertible Notes and to join in the termination of the
Collateral Documents at the Closing and (z) such Convertible Note holder to join
in all actions necessary and appropriate to cause the termination of the
Intercreditor Agreement and the Collateral Documents at the Closing (a "CN
Agreement"). Subject to the performance of the respective CN Agreement, Buyer
shall at Closing make or cause to be made any and all payments contemplated by
this Section with respect to the Convertible Notes that are the subject of such
CN Agreement.
(d) Junior Subordinated Debentures. Promptly following the execution and
delivery of this Agreement, Target and Buyer shall use their reasonable best
efforts to cause each holder of a Junior Subordinated Debenture to enter into an
agreement and/or instrument with Target in a form reasonably satisfactory to
Target and Buyer (i) that permits Buyer to purchase such Junior Subordinated
Debenture at or immediately prior to the Closing for cash in an amount equal to
the total principal and accrued and unpaid interest thereon as of the Closing,
but not including any prepayment penalty or premium, and (ii) that provides,
subject to such payment at the Closing, for (x) the termination of the Junior
Subordinated Indenture (which agreement shall constitute a consent contemplated
by Section 802 of the Junior Subordinated Indenture), (y) the due transfer of
the underlying Junior Subordinated Debenture to Buyer upon the Closing and (z)
the amendment of the Junior Subordinated Indenture to terminate and waive
Article 4, other than Sections 401, 402 and 403 thereof, of such Indenture
(including with respect to the Merger) at the Closing and until such time as the
Junior Subordinated Indenture is terminated in accordance with its terms (which
agreement shall constitute a consent contemplated by Section 802 of the Junior
Subordinated Indenture) (a "JD Agreement"). Subject to the performance of the
respective JD Agreement, Buyer shall at Closing make or cause to be made any and
all payments contemplated by this Section with respect to the Junior
Subordinated Debentures that are the subject of such JD Agreement.
(e) Fees and Expenses. At Closing Buyer shall pay or cause to be paid all
then unpaid fees and expenses under the Intercreditor Agreement and the
Collateral Accounts Agreement due and payable by Target.
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of Target, Buyer and BuyerSub to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) The Target Stockholder Approval shall have been obtained.
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(b) Any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated.
(c) No law or regulation that makes consummation of the Merger illegal or
otherwise prohibited shall exist and no judgment, injunction, order or decree of
any Governmental Entity having competent jurisdiction shall enjoin Target, Buyer
or BuyerSub from consummating the Merger.
(d) Any consents, waivers and agreements related to documents other than
the Target Credit Documents and identified in the section of the Target
Disclosure Schedule corresponding to Section 3.04 as being conditions to the
Closing, shall have been obtained.
(e) Bank of America shall have entered into the B of A Agreement and such
Agreement shall be performed by Bank of America in connection with the Closing.
Boeing Capital shall have entered into the BC Agreement and such Agreement shall
be performed by Boeing Capital in connection with the Closing. Each of the
holders of the Convertible Notes outstanding immediately prior to the Closing
shall have entered into a CN Agreement and such Agreement shall be performed by
each such holder in connection with the Closing. Each of the holders of Junior
Subordinated Debentures outstanding immediately prior to the Closing shall have
entered into a JD Agreement and such Agreement shall be performed by each such
holder in connection with the Closing.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF TARGET. The obligations of
Target to consummate the Merger are subject to the satisfaction of the following
further conditions:
(a) Buyer and BuyerSub each shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the time of the filing of the Certificate of Merger.
(b) The representations and warranties of Buyer and BuyerSub contained in
Article 4 of this Agreement (which for these purposes shall exclude all
qualifications or exceptions relating to "materiality" and/or Buyer Material
Adverse Effect) shall be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date or (ii) as to all other representations and warranties, as of
the date of this Agreement and as of the time of filing the Certificate of
Merger, subject to exceptions the aggregate effect of which shall not have had
or be reasonably likely to have a Buyer Material Adverse Effect.
(c) Target shall have received a certificate of Buyer signed by the Chief
Executive Officer, President, Chief Financial Officer or Senior Vice President
of Buyer to the foregoing effect.
(d) Buyer and BuyerSub shall have delivered such other documents and
instruments as Target may reasonably request.
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SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF BUYER AND BUYERSUB. The
obligations of Buyer and BuyerSub to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) Target shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the filing
of the Certificate of Merger.
(b) The representations and warranties of Target contained in Article 3 of
this Agreement (which for these purposes shall exclude all qualifications or
exceptions relating to "materiality" and/or Target Material Adverse Effect)
shall be true and correct, in each case (i) as of the date referred to in any
representation or warranty which addresses matters as of a particular date or
(ii) as to all other representations and warranties, as of the date of this
Agreement and as of the time of filing the Certificate of Merger, subject to
exceptions for the effect of actions taken by Target that are permitted under
this Agreement and to other exceptions the aggregate effect of which shall not
have had or be reasonably likely to have a Target Material Adverse Effect.
(c) Buyer shall have received a certificate of Target signed by the Chief
Executive Officer, President or Chief Financial Officer of Target to the
foregoing effect.
(d) The Collateral Agent shall have released and terminated all Liens under
or related to the Target Credit Documents.
(e) The Intercreditor Agreement shall have been terminated in accordance
with the terms thereof.
(f) The Collateral Accounts Agreement shall have been terminated in
accordance with its terms.
(g) The Lockbox Agreement shall have been terminated in accordance with its
terms.
(h) [INTENTIONALLY OMITTED]
(i) Buyer or its designee shall at the Closing acquire for no consideration
the interest in the Target Subsidiary not owned by Target, free and clear of all
Liens.
(j) Immediately prior to the Effective Time, Buyer shall have received from
each Person who is a director of Target his written resignation, effective as of
the Effective Time.
(k) Immediately prior to the Effective Time, Buyer shall have received from
each person who is an officer of Target or Target Subsidiary and who has been
identified to Target by Buyer for such purpose in writing at least five Business
Days prior to the Closing, his written resignation, effective as of immediately
after the Effective Time.
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(l) The Title Company or another title insurance company of substantially
equivalent reputation shall have issued an ALTA standard owner's form policy of
title insurance with extended coverage in the amount of $25 million or more with
respect to the Owned Real Property, showing title to the Owned Real Property
vested in Target subject only to Permitted Liens (the "Title Policy").
(m) Target shall have acquired the Vulcan Property as contemplated by the
Vulcan Property Purchase Agreement; provided however that this closing condition
shall be deemed to be satisfied if (x) a long-term lease has been entered into
by Target relating to that portion of the Vulcan Property defined as the
"Refinery Land" in the Vulcan Property Purchase Agreement or a long-term
extension of the existing lease with respect to that portion of the Vulcan
Property defined as the "Refinery Land" in the Vulcan Property Purchase
Agreement has been entered into by Target, in either case upon terms that are
reasonably satisfactory to Buyer or (y) an amendment to the Vulcan Property
Purchase Agreement reasonably satisfactory to Buyer has been entered into by
Target which provides that if the closing of the sale of the Vulcan Property to
Target under the Vulcan Property Purchase Agreement has not occurred on or prior
to a date no later than September 30, 2001, the owner of the Vulcan Property
shall promptly subdivide the Vulcan Property and sell to Target at least that
portion of the Vulcan Property on which the Wilmington refinery of Target is
situated. Buyer shall promptly cooperate with Target in negotiating a long-term
lease and/or an extension of the term of the lease with respect to the Vulcan
Property and/or an amendment to the Vulcan Property Purchase Agreement as
contemplated by this subsection with the owner of the Vulcan Property upon the
request of Target.
(n) If Target has acquired the Vulcan Property on or before the Closing,
the Title Company or another title insurance company of substantially equivalent
reputation shall have issued an ALTA standard owner's form policy of title
insurance with extended coverage in the amount of $10 million or more with
respect to the Vulcan Property, showing title to the Vulcan Property vested in
Target subject only to Permitted Liens (the "Vulcan Title Policy").
(o) Target shall deliver such other documents and instruments as Buyer may
reasonably request.
ARTICLE 9
TERMINATION; AMENDMENTS AND WAIVERS
SECTION 9.01 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Target Stockholder
Approval shall have been obtained:
(a) By mutual written agreement of Buyer and Target;
(b) By either Buyer or Target by written notice by the terminating party to
the other party, if:
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(i) the Merger shall not have been consummated on or before July 31,
2001 (the "End Date"); provided that the right to terminate this Agreement
under this Section 9.01(b)(i) shall not be available to any party whose
breach of any provision of this Agreement has resulted in the failure of
the Merger to occur on or before the End Date;
(ii) there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Entity having competent jurisdiction
enjoining Target, Buyer or BuyerSub from consummating the Merger shall have
been entered and shall have become final and nonappealable and, prior to
such termination, the parties shall have used reasonable best efforts to
resist, resolve or lift, as applicable, such law, regulation, judgment,
injunction, order or decree; or
(iii) at the Target Stockholder Meeting (including any adjournment or
postponement thereof), the Target Stockholder Approval shall not have been
obtained;
(c) By Target (i) if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Buyer or BuyerSub set forth in
this Agreement shall have occurred which would cause the applicable condition
set forth in Section 8.02 not to be satisfied, and such condition shall be
incapable of being satisfied by the End Date or (ii) in the event that the
Target board of directors has authorized Target, subject to compliance with the
provisions of Section 5.03(c), to enter into a definitive agreement with respect
to a Superior Proposal; and
(d) By Buyer if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of Target set forth in this
Agreement shall have occurred which would cause the applicable condition set
forth in Section 8.03 not to be satisfied, and such condition shall be incapable
of being satisfied by the End Date.
SECTION 9.02 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 9.01, there shall be no liability or obligation on the part
of Buyer, Target, BuyerSub or any of their respective officers, directors,
stockholders, agents or Affiliates, except for any liability of a party then in
breach and except as set forth in Section 9.03, which shall be the sole and
exclusive remedy of the parties hereto in the event of such termination;
provided that the provisions of this Section 9.02, Sections 9.03 and 11.01
through 11.07, the final sentence of Section 7.04, Section 6.03 (to the extent
applicable) and Article X of this Agreement shall remain in full force and
effect and survive any termination of this Agreement.
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SECTION 9.03 FEES AND EXPENSES.
(a) Except as set forth in this Section or as expressly provided otherwise
herein, all fees and expenses incurred in connection herewith and the
transactions contemplated hereby (including HSR Act filing fees, if any) shall
be paid by the party incurring such expenses, whether or not the Merger is
consummated.
(b) If this Agreement is terminated (x) by Target pursuant to either (i)
Section 9.01(c)(ii) or (ii) Section 9.01(b)(iii) and if within 180 days of such
termination under Section 9.01(b)(iii) Target shall consummate an Acquisition
Proposal with another Person, (y) by Buyer pursuant to Section 9.01(b)(iii) and
if within 180 days of such termination under Section 9.01(b)(iii) Target shall
consummate an Acquisition Proposal with another Person or (z) by Target or Buyer
pursuant to Section 9.01(b)(iii) and if (A) one or more Target Insiders fails to
vote any of his Individually-Owned Target Common Shares outstanding on the
record date for the Target Stockholder Meeting in favor of approval of this
Agreement, (B) Target Stockholder Approval would have been obtained but for such
failure and (C) this Agreement is not terminable by Target pursuant to Section
9.01(c)(i), then in any of the foregoing cases Target shall pay to Buyer a
termination fee equal to $1.75 million (the "Termination Fee").
(c) Any Termination Fee payable pursuant to Section 9.03(b) shall be paid
by wire transfer of immediately available funds to Buyer prior to or concurrent
with the termination of this Agreement; provided that any Termination Fee
payable pursuant to Section 9.03(b) as a result of Target consummating an
Acquisition Proposal with another Person as contemplated within clauses (x) and
(y) of Section 9.03(b) shall be paid no later than simultaneously with the
consummation of such Acquisition Proposal by wire transfer of immediately
available funds to Buyer.
SECTION 9.04 WAIVERS AND AMENDMENTS. Target, Buyer and BuyerSub may
mutually amend any provision of this Agreement at any time prior to the
Effective Time with the prior authorization of their respective boards of
directors, subject to the provisions of Section 251(d) of the DGCL. No amendment
of any provision of this Agreement shall be valid and binding unless the same
shall be in writing and signed by all of the parties hereto. No provision of
this Agreement may be waived except by an instrument in writing signed by the
party against whom the waiver is to be effective. No waiver by any party of any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.
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ARTICLE 10
DEFINITIONS
SECTION 10.01 CERTAIN DEFINITIONS.
(a) As used herein, the following terms have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or indication of
interest in, (i) a merger, consolidation, stock exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving Target or the Target Subsidiary, or (ii) any purchase of a
majority or more of the assets of Target and the Target Subsidiary taken as a
whole or of a majority of the Target Common Shares or the ownership interest in
the Target Subsidiary, other than the transactions contemplated by this
Agreement.
"Affiliate" has the meaning set forth in Rule 501(b) under the Securities
Act of 1933.
"Bank of America" means Bank of America, N.A.
"Bank of America Loan Agreement" means the Business Loan Agreement dated as
of October 29, 1999 by and between Bank of America and Target, as amended.
"Boeing Capital" means Boeing Capital Corporation.
"Boeing Capital Loan Agreement" means the Loan Agreement dated as of
January 20, 1999 by and between Boeing Capital and Target, as amended.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banks are authorized by law to close in Los Angeles, California.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Accounts Agreement" means the Second Amended and Restated
Collateral Accounts Security Agreement dated as of October 29, 1999 by and among
Target, Target Subsidiary, Collateral Agent and Bank of America, as agent of the
Collateral Agent.
"Collateral Documents" shall have the meaning set forth in the
Intercreditor Agreement and shall include without limitation the Collateral
Accounts Agreement.
"Collateral Agent" means United States Trust Company of New York, as
collateral agent under the Collateral Accounts Agreement.
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"Confidentiality Agreement" means the letter agreement by and between
Valero Energy Corporation and Target dated September 27, 2000.
"Convertible Notes" means the Senior Subordinated Secured Convertible Notes
due 2007 of Target and issued on October 15, 1997.
"Convertible Notes Indenture" means the Indenture dated as of October 15,
1997 with respect to the Convertible Notes, as amended.
"Danesh Options" means (i) that certain Option Agreement dated as of March
13, 1996 by and between the Andre Danesh 1997 IRRV Trust (as assignee of Andre
Danesh) and Target with respect to 546,059 Target Common Shares and (ii) that
certain Option Agreement dated as of December 30, 1996 by and between the Andre
Danesh 1997 IRRV Trust (as assignee of Andre Danesh) and Target with respect to
600,000 Target Common Shares.
"DGCL" means the General Corporation Law of the State of Delaware, as
amended.
"Environmental Requirements" means all applicable and legally binding
Federal, state and local statutes, regulations, codes, rules, ordinances,
standards or law, or any legally binding judgment, order, writ, notice, decree,
permit, license, approval or injunction, enacted and in effect on or prior to
the date hereof relating to pollution or protection of human health or the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata and all those relating to the generation, manufacture,
processing, distribution, transportation, treatment, storage, disposal, release
or threatened release, or cleanup of any Hazardous Substances, including,
without limitation, the Clean Air Act, the Toxic Substance Control Act, the
Clean Water Act, the Oil Pollution Act of 1990, CERCLA, the Resource
Conservation and Recovery Act and the Occupational Safety and Health Act of
1970, as amended and in effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange and Purchase Agreement" means the Exchange and Purchase Agreement
dated as of October 31, 1997 by and among Target and the investors in the
Convertible Notes, as amended.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means any Federal, state or local governmental
authority, any transgovernmental authority or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
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"Guarantee" means the Guarantee of Valero Energy Corporation immediately
following the signature page to this Agreement.
"Hazardous Substances" means any substances defined, regulated or listed as
hazardous, dangerous or toxic, or potentially hazardous, dangerous or toxic, or
defined as waste, pollutants or contaminants under the Environmental
Requirements, including, without limitation, any substance within the meaning of
Section 101 (14) of CERCLA, 42 U.S.C. Section 9601, et seq., or defined or
listed as "hazardous waste," "hazardous substances," "hazardous materials,"
"toxic substances," "oil," "contaminant" or "pollutant" under any other
Environmental Requirements.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Huntway Managing Partners" means Huntway Managing Partners, L.P.
"Individually-Owned Target Common Shares" means Target Common Shares
outstanding on the record date for the Target Stockholders Meeting and then held
of record in the name of a Target Insider or then held by a bank, broker or
other such entity in the name of a Target Insider. For purposes of
clarification, and notwithstanding the prior sentence, Target Common Shares
beneficially owned by a Target Insider as a result of such Target Insider being
an officer of a corporation, a partner in a partnership, a member in a limited
liability company, attorney-in-fact, executor, administrator, trustee, guardian
or otherwise acting in a fiduciary or representative capacity shall not be
Individually-Owned Target Common Shares.
"Intercreditor Agreement" means the Second Amended and Restated
Intercreditor and Collateral Trust Agreement dated as of October 29, 1999 by and
among Bank of America, Boeing Capital, the holders of the Convertible Notes,
State Street Bank and Trust Company, as Trustee under the Convertible Note
Indenture, and the Collateral Agent.
"IRS" means the United States Internal Revenue Service.
"Junior Subordinated Debentures" means the Junior Subordinated Debentures
due 2005 of Target issued on December 12, 1996 and the securities issued
pursuant to Section 307 of the Junior Subordinated Indenture in payment of
interest accrued thereon.
"Junior Subordinated Indenture" means the Indenture dated as of December
12, 1996 with respect to the Junior Subordinated Debentures, as amended.
"Knowledge of Target" means the actual knowledge, without special
investigation but after review of Article 3 with counsel to Target, of Warren J.
Nelson, the President and Chief Executive Officer, Earl G. Fleisher, the Chief
Financial Officer, Stephen P. Piatek, the General Counsel and Vice President,
Environmental, Terry Stringer, the Executive Vice President, Supply, Planning
and Distribution, Len Nawrocki, the Executive Vice President, Asphalt Sales,
Bill Darnell,
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Vice President and General Manager of the Benicia Refinery, Guy Young, Benicia
Refinery Manager, and Mike Miller, Wilmington Refinery Manager, of Target.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Lockbox Agreement" means that certain Third Party Agreement Relating to
Lockbox Services (With Activation) entered into as of February 16, 2000 by and
among Bank of America, Target, the Target Subsidiary and the Collateral Agent.
"Material Adverse Effect" means with respect to any Person any material
adverse change in the business, financial condition, operations or results of
operations of such Person and its Subsidiaries, taken as a whole; provided,
however, that the following shall be excluded from the definition of "Material
Adverse Effect" and from the determination of whether a Material Adverse Effect
has occurred: (i) effects of conditions or events that are generally applicable
to the asphalt, light-end product or refinery industry, including effects of
changes in the price of crude oil and product prices, or effects of conditions
or events affecting capital, financial, banking or currency markets, (ii) the
impact of seasonality on the business, financial condition, operations or
results of operations (including any effect of adverse weather conditions),
(iii) effects of conditions or events that are generally applicable to crude oil
price hedging strategies, including effects of changes in the price of crude
oil, (iv) effects of conditions or events such as expiration and non-recurrence
of hedging activities or related to the failure to enter into hedging
arrangements, (v) changes in laws and regulations (including common law, rules
and regulations or the interpretation thereof) or applicable accounting
regulations and principles to the extent that such changes are pending or
proposed as of the date hereof and (vi) any change in the relationship of a
Person and its Subsidiaries with their respective employees, customers and
suppliers, which change results from the announcement of the transactions
described in this Agreement or the performance of this Agreement and the
covenants set forth herein. "Buyer Material Adverse Effect" means a Material
Adverse Effect with respect to Buyer. "Target Material Adverse Effect" means a
Material Adverse Effect with respect to Target.
"Ordinary Course of Business" means the ordinary course of business of
Target or Target Subsidiary (as applicable) consistent with past custom and
practice.
"Option Exercise/Payment Direction" shall mean a notice of exercise and
payment direction in the form of Exhibit A attached hereto.
"Permitted Liens" means with respect to real property of Target or the
Target Subsidiary the following: (i) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the Ordinary Course of
Business, liens arising under original purchase price conditional sales
contracts, purchase money liens and equipments leases with third parties entered
into in the Ordinary Course of Business, liens for taxes and other governmental
charges which are not due and payable or which may thereafter be paid without
penalty or which are being contested in good faith, and liens relating to
environmental or safety conditions; (ii) imperfections of title,
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restrictions or encumbrances, including easements, covenants, conditions and
rights-of-way, which imperfections of title, restrictions or encumbrances do
not, individually or in the aggregate, materially adversely impair the continued
use and operation of the assets to which they relate in the operation of the
business of Target and the Target Subsidiary; (iii) the exceptions identified on
the Title Report (as may be amended prior to the Closing with the prior written
consent of Buyer and Target) and the Vulcan Title Report (as may be amended
prior to the Closing with the prior written consent of Buyer and Target), other
than exceptions with respect to Security Pacific National Bank; (iv) conditions
shown on the Survey (as may be amended prior to the Closing with the prior
written consent of Buyer and Target) and conditions that would be shown on an
accurate survey or upon a personal inspection of the Owned Real Property; (v)
existing leases, licenses and similar agreements made available to Buyer as
contemplated by Section 3.14 and the rights of lessors and sublessors
thereunder; (vi) zoning, building and other land use laws imposed by any
governmental authority with appropriate jurisdiction that are not violated by
the current use or occupancy of the real property to which they relate or the
operation of the business of Target or the Target Subsidiary thereon; and (vii)
with respect to the Benicia refinery of Target, any encroachments or the like on
or with the property of Buyer or any of its Affiliates. "Permitted Liens" means
with respect to personal property of Target or the Target Subsidiary the
following: (i) mechanics', carriers', workmen's, repairmen's or other like liens
arising or incurred in the ordinary course of business, liens arising under
original purchase price conditional sales contracts, purchase money liens and
equipments leases with third parties entered into in the Ordinary Course of
Business, liens for taxes and other governmental charges which are not due and
payable or which may thereafter be paid without penalty or which are being
contested in good faith, and liens relating to environmental or safety
conditions; (ii) imperfections of title, restrictions or encumbrances, including
covenants and conditions, which imperfections of title, restrictions or
encumbrances do not, individually or in the aggregate, materially adversely
impair the continued use and operation of the assets to which they relate in the
operation of the business of Target or the Target Subsidiary; (iii) liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like nature;
(iv) liens securing reimbursement obligations with respect to letters of credit
which encumber only documents and other property relating to such letters of
credit and the products and proceeds thereof; (v) liens incurred or deposits
made in the Ordinary Course of Business in connection with workers'
compensation, unemployment insurance and other types of social security; (vi)
any interest or title of a lessor or sublessor in the property subject to any
capital lease obligation or operating lease made available to Buyer after the
date hereof or as contemplated by Section 3.14; (vii) leases or subleases
granted to others not interfering in any material respect with the business of
Target and the Target Subsidiary; (viii) liens in favor of custom and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (ix) existing leases, licenses and
similar agreements made available to Buyer after the date hereof or as
contemplated by Section 3.14; and (x) zoning, building, fire, health,
environmental and pollution control laws, ordinances, rules and safety
regulations and other similar restrictions that are not violated by the current
use of the property to which they relate.
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"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including any Governmental Entity.
"Proxy Statement" means the proxy statement relating to the Target
Stockholder Meeting together with any amendments or supplements thereto,
including any information required to be provided to the stockholders of Target
pursuant to the DGCL.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership or association, or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
general partner of such partnership or association or a majority of the voting
interests or the equity ownership of the limited liability company or other
business entity. "Buyer Subsidiary" means a Subsidiary of Buyer and "Target
Subsidiary" means Sunbelt Refining Company, L.P., a Delaware limited
partnership, the sole Subsidiary of Target.
"Superior Proposal" means a written Acquisition Proposal not solicited in
violation of Section 5.03(a) that is on terms that a majority of the board of
directors of Target determines in good faith would or is reasonably likely to
result in a transaction, if consummated, that is more favorable to the Target
stockholders (taking into account, among other things, all legal, financial,
financing contingency, regulatory and other aspects of the proposal and the
identity of the offeror) than the transactions contemplated hereby.
"Target Common Share" means one share of Common Stock of Target, $0.01 par
value per share.
"Target Credit Documents" means the (i) Bank of America Loan Agreement and
any note thereunder, (ii) Boeing Capital Loan Agreement and all notes
thereunder, (iii) Convertible Notes Indenture, (iv) Convertible Notes, (v)
Exchange and Purchase Agreement, (vi) Junior
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Subordinated Indenture, (vii) Junior Subordinated Debentures, (viii)
Intercreditor Agreement, (ix) Collateral Documents and (x) Lockbox Agreement.
"Target Disclosure Schedule" means the schedule entitled "Target Disclosure
Schedule" heretofore delivered by the Target and initialed by the parties for
identification, which schedule is arranged in sections corresponding to the
lettered and numbered subsections contained in Section 3, Section 5.01 and
Section 8.03.
"Target Employee Plan" means each material "employee benefit plan" (as such
term is defined in Section 3(3) of ERISA) and each other employee benefit plan,
program or arrangement maintained, sponsored or contributed to by Target or any
of its Affiliates on behalf of any employee or former employee of Target or the
Target Subsidiary.
"Target Insiders" means (x) the directors of Target, (y) the executive
officers (as such term is defined under the Exchange Act) of Target and (z) the
General Counsel and Vice President, Environmental, of Target , in each case on
the record date with respect to the Target Stockholder Meeting.
"Target Option Plans" means the 1998 Stock Incentive Plan and the 1996
Huntway Employee Incentive Option Plan, in each case as amended prior to the
date hereof.
"Target Preferred Share" means one share of Preferred Stock of Target,
$0.01 par value per share.
"Target SEC Documents" means (i) the Target's annual reports on Form 10-K
for its fiscal years ended December 31, 1999 and December 31, 1998
(collectively, the "Target 10-K"), (ii) the Target's quarterly reports on Form
10-Q (the "Target 10-Q") for its fiscal quarters ended March 31, 2000, June 30,
2000 and September 30, 2000, (iii) the proxy or information statements of Target
dated after or used after December 31, 1998 and (iv) all other reports, filings,
registration statements and other documents filed by Target with the SEC after
December 31, 1998 pursuant to the Exchange Act, in each case together with all
schedules and exhibits thereto and as subsequently amended.
"Target Stockholder Meeting" means the meeting at which the record holders
of Target Common Shares shall actually vote with respect to the adoption of this
Agreement.
"Vulcan Property" means that certain real estate contemplated to be
purchased (as opposed to leased or subleased) by Target which is the subject of
the Vulcan Property Purchase Agreement.
"Vulcan Property Purchase Agreement" means that certain Purchase and Sale
Agreement and Joint Escrow Instructions dated February 1, 2001 by and between
Calmat Co. and Target.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Agreement Introductory Paragraph
B of A Agreement 7.06(a)
BC Agreement 7.06(b)
Buyer Introductory Paragraph
BuyerSub Introductory Paragraph
BuyerSub Common Share 2.01(a)
Buyer Material Adverse Effect 10.01(a)
Buyer Pension Plan 6.02(a)
Buyer Subsidiary 10.01(a)
Certificate of Merger 1.01(b)
Certificates 2.02(a)
Closing 1.02(a)
CN Agreement 7.06(c)
COBRA 3.15(d)
Dissenting Share 2.01(d)
Effective Time 1.01(b)
End Date 9.01(b)(i)
Exchange Agent 2.02(a)
Exchange Fund 2.02(a)
Financial Advisor 3.21(a)
Financial Reporting Package 3.08(c)
Financial Statements 3.08(a)
Guarantor Signature Page
Indemnified Parties 6.01(a)
JD Agreement 7.06(d)
Leased Real Property 3.19(b)
Leases 3.19(b)
Merger 1.01(a)
Merger Consideration 2.01(b)
NYSE 3.07(a)
Option Spread Payment 2.03(b)
Owned Real Property 3.19(a)
Personal Property 3.23
Secretary 1.01(b)
Survey 3.19(d)
Surviving Corporation 1.01(a)
Target Introductory Paragraph
Target Budget 5.01(e)
Target Option 2.03(a)
Target Recommendation 5.02
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Target Real Properties 3.19(c)
Target Returns 3.12
Target Stockholder Approval 3.20(a)
Target Subsidiary 10.01(a)
Termination Fee 9.03(b)
Title Company 3.19(d)
Title Policy 8.03(m)
Title Report 3.19(d)
Vulcan Title Policy 8.03(o)
Vulcan Title Report 3.19(d)
ARTICLE 11
MISCELLANEOUS
SECTION 11.01 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile or similar writing)
and shall be given,
if to Buyer or BuyerSub, to:
Valero Refining and Marketing Company
One Valero Place
San Antonio, TX 78212
Attention: Michael S. Ciskowski
Facsimile: (210) 370-2270
with a copy to:
Valero Energy Corporation
One Valero Place
San Antonio, TX 78212
Attention: Martin Loeber
Facsimile: (210) 370-2988
if to Target, to:
Huntway Refining Company
25129 The Old Road, Suite 322
Newhall, CA 91381
Attention: President and Chief Executive Officer
Facsimile: (661) 286-1588
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with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Donald E. Batterson
Facsimile: (312) 861-2200
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.02 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AFTER THE
EFFECTIVE TIME. The representations and warranties contained herein and in any
certificate, instrument or other writing delivered pursuant hereto shall not
survive the Effective Time or, except as expressly contemplated by Section 9.02,
the termination of this Agreement.
SECTION 11.03 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto. Any
purported transfer or assignment in violation hereof shall be null and void.
SECTION 11.04 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
SECTION 11.05 COUNTERPARTS; EFFECTIVENESS; THIRD PARTY BENEFICIARIES. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except as set forth in Sections 2.01, 2.03, 6.01 and 6.02, no
provision of this Agreement is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION 11.06 JURISDICTION. Each of Target, Buyer and BuyerSub irrevocably
agrees that any legal action or proceeding with respect to this Agreement or for
recognition and enforcement of any judgment in respect hereof brought by another
party hereto or its successors or assigns may be brought and determined in the
Chancery or other Courts of the State of Delaware, and each of Target, Buyer and
BuyerSub hereby irrevocably submits with regard to any such action
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or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Target, Buyer and BuyerSub hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in any such court (whether through service of notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of judgment
or otherwise) and (c) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
SECTION 11.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 11.08 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 11.09 ENTIRE AGREEMENT. This Agreement (together with the exhibits
and schedules hereto) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, among the parties with respect to the
subject matter hereof; provided that this Agreement shall not supersede or in
any way modify the terms of the Confidentiality Agreement, which Agreement shall
remain in full force and effect.
SECTION 11.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 11.11 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereun der, unless the context otherwise requires. The
word "including" shall mean "including without limitation" unless the context
otherwise requires. As used in this Agreement (including any
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amendments hereto), the masculine, feminine or neuter gender and the singular or
plural number shall be deemed to include the others whenever the context so
requires.
SECTION 11.12 HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.13 INCORPORATION OF EXHIBITS AND SCHEDULES. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
HUNTWAY REFINING COMPANY
By: /s/ Warren J. Nelson
----------------------------------------
Its: President and Chief Executive Officer
---------------------------------------
VALERO REFINING AND MARKETING
COMPANY
By: /s/ Michael S. Ciskowski
----------------------------------------
Its: Senior Vice President
---------------------------------------
HAC COMPANY
By: /s/ Michael S. Ciskowski
----------------------------------------
Its: Senior Vice President
---------------------------------------
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GUARANTEE
Capitalized terms used in this Guarantee shall have the meanings ascribed
to them in the foregoing Agreement and Plan of Merger (the "Agreement").
The undersigned, Valero Energy Corporation ("Guarantor"), as an inducement
to Target to enter into and perform the Agreement, hereby unconditionally and
irrevocably guarantees the punctual performance and/or punctual payment as the
case may be (as, when and to the extent due) of all covenants and obligations
owed by Buyer or BuyerSub under or by virtue of the Agreement and any side
letter entered into by Buyer or BuyerSub in connection with the Agreement, and
agrees to pay any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by Target (or other holders of such rights) in enforcing
any rights under this Guarantee. The obligations of Guarantor under this
Guarantee are independent of the covenants and obligations of Buyer and BuyerSub
under the Agreement and under any side letter entered into by Buyer and BuyerSub
in connection with the Agreement and a separate action or actions may be brought
and prosecuted against Guarantor to enforce this Guarantee. By entering into
this Guarantee, Guarantor waives any and all rights and remedies to require that
any action be brought and concluded first against Buyer and/or BuyerSub for
failure to perform. This Guarantee shall not be avoided, released or affected by
any amendment or variation of the Agreement or of any side letter entered into
by Buyer or BuyerSub in connection with the Agreement occurring after the date
hereof, with or without notice to Guarantor. The liability of Guarantor under
this Guarantee shall be irrevocable, absolute and unconditional.
Guarantor hereby represents and warrants to Target as of the date hereof
and as of the Closing Date:
(a) Guarantor is a corporation duly incorporated and validly existing
under the laws of the state of Delaware.
(b) Buyer and BuyerSub are wholly-owned subsidiaries of Guarantor.
(c) This Guarantee has been duly authorized, executed and delivered by
Guarantor.
(d) This Guarantee is the legal, valid and binding obligation of
Guarantor enforceable against Guarantor in accordance with its terms.
(e) All consents, approvals, authorizations and orders necessary for
the execution, delivery and performance of this Guarantee and the
consummation of the transactions contemplated hereby have been obtained on
the part of Guarantor.
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(f) The execution, delivery and performance of this Guarantee do not
and will not (i) contravene or conflict with the certificate of
incorporation or by-laws of Valero Energy Corporation, (ii) contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Valero Energy Corporation or any Subsidiary thereof, (iii)
constitute a default under or give rise to a right of termination,
cancellation or acceleration (with or without due notice or lapse of time
or both) of any right or obligation of Valero Energy Corporation or any
Subsidiary thereof, or to a loss of any benefit or status to which Valero
Energy Corporation or any Subsidiary thereof, is entitled under any
provision of any agreement, contract or other instrument binding upon
Valero Energy Corporation or any Subsidiary thereof, or any license,
franchise, permit or other similar authorization held by Valero Energy
Corporation or any Subsidiary thereof or (iv) result in the creation or
imposition of any Lien on any material asset of Valero Energy Corporation
or any Subsidiary thereof, other than, in the case of each of (ii), (iii)
and (iv), any such items that would not, individually or in the aggregate,
have a material adverse effect on Valero Energy Corporation and its
Subsidiaries taken as a whole or prevent or impair the ability of Valero
Energy Corporation to enter into this Guarantee.
(g) The audited consolidated financial statements of Valero Energy
Corporation and its Subsidiaries as of and for the fiscal year ended
December 31, 2000, true, correct and complete copies of which financial
statements have been made available to Target by Valero Energy Corporation,
present fairly in all material respects and in conformity with GAAP (except
as may be indicated in the notes thereto) the consolidated financial
position of Valero Energy Corporation and its Subsidiaries as of the date
thereof and their consolidated results of operations and changes in
financial position for the period then ended.
VALERO ENERGY CORPORATION
By: /s/ Michael S. Ciskowski
----------------------------------
Its: Senior Vice President
---------------------------------
Dated: March 20, 2001
---------------------------------