AGREEMENT AND PLAN OF MERGER
dated as of
APRIL 4, 2005
among
UNOCAL CORPORATION,
CHEVRONTEXACO CORPORATION
and
BLUE MERGER SUB INC.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE
MERGER.......................................................1
Section
1.1 The
Merger................................................1
Section
1.2
Certificate of Incorporation and Bylaws of the
Surviving Corporation.....................................2
Section
1.3
Directors and Officers of the Surviving Corporation.......2
Section
1.4 Effect
on Capital Stock...................................2
Section
1.5
Election Procedures.......................................4
Section
1.6
Dissenting Shares.........................................6
Section
1.7 Stock
Options and Equity Awards...........................6
Section
1.8 Shares
Held by Company Affiliates.........................8
ARTICLE II EXCHANGE OF
CERTIFICATES.........................................8
Section
2.1
Surrender and Payment.....................................8
Section
2.2
Fractional Shares........................................10
Section
2.3 Lost
Certificates........................................11
Section
2.4
Withholding Rights.......................................11
ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE COMPANY...................11
Section
3.1
Corporate Existence and Power............................11
Section
3.2
Corporate Authorization..................................12
Section
3.3
Governmental Authorization...............................12
Section
3.4
Non-Contravention........................................13
Section
3.5
Capitalization...........................................13
Section
3.6
Subsidiaries.............................................14
Section
3.7
Commission Filings.......................................15
Section
3.8
Financial Statements.....................................16
Section
3.9
Disclosure Documents.....................................16
Section 3.10 Controls and
Procedures..................................16
Section
3.11 Absence of
Certain Changes...............................18
Section
3.12 No
Default...............................................19
Section
3.13 No
Undisclosed Material Liabilities......................19
Section
3.14
Litigation...............................................20
Section
3.15
Taxes....................................................20
Section
3.16 Employee
Benefit Plans; Employment.......................21
Section
3.17 Compliance
with Laws.....................................23
Section
3.18 Certain
Business Practices...............................23
Section
3.19
Environmental Matters....................................23
Section
3.20 Compliance
with Laws.....................................24
Section
3.21 Hydrocarbon
Contracts....................................25
Section
3.22 Material
Contracts.......................................25
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Section
3.23
Intellectual Property....................................25
Section
3.24
Confidentiality and Other Agreements.....................26
Section
3.25 Brokers;
Financial Advisors..............................26
Section
3.26 Opinion of
Financial Advisor.............................27
Section
3.27 Takeover
Statutes........................................27
Section
3.28 Stockholder
Rights Plan..................................27
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER
SUBSIDIARY......................................................27
Section
4.1
Corporate Existence and Power............................27
Section
4.2
Corporate Authorization..................................28
Section
4.3
Governmental Authorization...............................28
Section
4.4
Non-Contravention........................................28
Section
4.5
Capitalization...........................................29
Section
4.6
Commission Filings.......................................29
Section
4.7
Financial Statements.....................................30
Section
4.8
Disclosure Documents.....................................30
Section
4.9
Controls and Procedures..................................31
Section
4.10 Absence of
Certain Changes...............................32
Section
4.11 No
Undisclosed Material Liabilities......................33
Section
4.12
Litigation...............................................33
Section
4.13 Compliance
with Laws.....................................33
Section
4.14 Tax
Treatment............................................33
Section
4.15
Capitalization of Merger Subsidiary......................33
ARTICLE V COVENANTS OF THE
COMPANY........................................34
Section
5.1
Conduct of the Company...................................34
Section
5.2
Company Stockholder Meeting; Proxy Material..............37
Section
5.3
Resignation of Company Directors.........................39
Section
5.4 Other
Actions............................................39
ARTICLE VI COVENANTS OF
PARENT.............................................39
Section
6.1
Obligations of Merger Subsidiary.........................40
Section
6.2
Director and Officer Liability...........................40
Section
6.3 Form
S-4.................................................40
Section
6.4 Stock
Exchange Listing...................................40
Section
6.5
Employee Benefits........................................41
ARTICLE VII COVENANTS OF PARENT AND THE
COMPANY.............................42
Section
7.1 Best
Efforts.............................................43
Section
7.2
Certain Filings..........................................44
Section
7.3 Access
to Information....................................44
Section
7.4 Tax
Treatment............................................45
Section
7.5 Public
Announcements.....................................45
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Section
7.6
Further Assurances.......................................45
Section
7.7
Notices of Certain Events................................45
Section
7.8
Affiliates...............................................46
Section
7.9 No
Solicitation..........................................46
Section
7.10 Takeover
Statutes........................................48
Section
7.11 Section
16(b)............................................49
ARTICLE VIII CONDITIONS TO THE
MERGER........................................49
Section
8.1
Conditions to the Obligations of Each Party..............49
Section
8.2
Conditions to the Obligations of Parent and Merger
Subsidiary...............................................50
Section
8.3
Conditions to the Obligations of the Company.............51
ARTICLE IX
TERMINATION.....................................................52
Section
9.1
Termination..............................................52
Section
9.2 Effect
of Termination....................................53
ARTICLE X
MISCELLANEOUS...................................................53
Section
10.1
Notices..................................................53
Section
10.2
Non-Survival of Representations and Warranties...........54
Section
10.3 Amendments;
No Waivers...................................54
Section
10.4
Expenses.................................................54
Section
10.5 Company
Termination Fee..................................55
Section
10.6 Successors
and Assigns...................................55
Section
10.7 Governing
Law............................................56
Section
10.8
Enforcement; Jurisdiction................................56
Section
10.9 Waiver of
Jury Trial.....................................56
Section
10.10 Counterparts;
Effectiveness..............................56
Section
10.11 Entire
Agreement.........................................56
Section
10.12
Captions.................................................57
Section
10.13
Severability.............................................57
EXHIBITS
Exhibit A -- Form of Certificate of
Incorporation of Merger Subsidiary
Exhibit B -- Form of Affiliate's Rule 145
Letter
<PAGE>
DEFINED TERMS
SECTION
2005 Pro Rata
Bonus.......................................................6.5(e)
2006 Pro Rata
Bonus.......................................................6.5(e)
Acquisition
Proposal......................................................7.9(b)
Affected
Employees........................................................6.5(b)
Affected
Retirees.........................................................6.5(b)
Affiliate
Agreement.......................................................7.8(a)
Agreement...............................................................Preamble
Anti-Discrimination
Laws.................................................3.16(j)
Antitrust
Laws........................................................7.1(b)(ii)
Available Cash Election
Amount........................................1.4(a)(ii)
Book-Entry
Shares.........................................................2.1(a)
Cancelled
Shares..........................................................1.4(d)
Cash
Election.........................................................1.4(a)(ii)
Cash Election
Amount..................................................1.4(a)(ii)
Cash Election
Share...................................................1.4(a)(ii)
Cash
Fraction.........................................................1.4(a)(ii)
CERCLA...................................................................3.19(b)
Certificate...............................................................1.4(b)
Change in
Control.........................................................6.5(a)
Change in the Company
Recommendation......................................5.2(a)
Closing...................................................................1.1(d)
Closing
Date..............................................................1.1(d)
Code....................................................................Recitals
Commission................................................................1.7(c)
Common Shares
Trust.......................................................2.2(b)
Company.................................................................Preamble
Company
10-K..............................................................3.7(a)
Company
Award.............................................................1.7(b)
Company Award
Plans.......................................................1.7(b)
Company Balance
Sheet........................................................3.8
Company Balance Sheet
Date...................................................3.8
Company Benefit
Plans....................................................3.16(a)
Company
By-laws..............................................................3.1
Company Capital
Stock........................................................3.5
Company
Charter..............................................................3.1
Company Commission
Documents..............................................3.7(a)
Company Common
Stock.........................................................3.5
Company Disclosure
Schedules...........................................Article 3
Company Intellectual
Property............................................3.23(a)
Company Material Adverse
Effect..............................................3.1
Company Material
Contracts..................................................3.22
Company Pension
Plan.....................................................3.16(e)
Company Phantom Stock
Option..............................................1.7(a)
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Company Preferred
Stock......................................................3.5
Company Proxy
Statement...................................................3.9(a)
Company
Recommendation....................................................5.2(f)
Company
Rights...............................................................3.5
Company Rights
Agreement.....................................................3.5
Company
Securities...........................................................3.5
Company Stock
Option......................................................1.7(a)
Company Stock Option
Plans................................................1.7(a)
Company Stockholder
Approval..............................................3.2(a)
Company Stockholder
Meeting...............................................5.2(f)
Company Subsidiary
Securities.............................................3.6(b)
Confidentiality
Agreement....................................................7.3
DGCL......................................................................1.1(a)
Dissenting
Share.............................................................1.6
EC Merger
Regulation.........................................................3.3
Effective
Time............................................................1.1(b)
Electing
Stockholder......................................................2.1(a)
Election
Deadline.........................................................1.5(b)
Election
Form.............................................................1.5(a)
Election Form Record
Date.................................................1.5(a)
End
Date...............................................................9.1(b)(i)
Environmental
Laws.......................................................3.19(b)
ERISA....................................................................3.16(a)
ERISA
Affiliate..........................................................3.16(d)
Excess
Shares.............................................................2.2(a)
Exchange
Act.................................................................3.3
Exchange
Agent............................................................2.1(a)
Exchange
Ratio.......................................................1.4(a)(iii)
Financial
Advisor...........................................................3.25
Foreign Company Benefit
Plan.............................................3.16(a)
Form
S-4..................................................................4.8(a)
GAAP.........................................................................3.8
Hazardous
Substance......................................................3.19(b)
HSR
Act......................................................................3.3
Hydrocarbon
Contract.....................................................3.21(a)
Hydrocarbons.............................................................3.21(a)
Indemnitees...............................................................6.2(a)
Intellectual
Property....................................................3.23(a)
knowledge................................................................3.10(e)
Lien.........................................................................3.4
Mailing
Date..............................................................1.5(a)
Merger....................................................................1.1(a)
Merger
Consideration......................................................1.4(a)
Merger
Subsidiary.......................................................Preamble
Mixed Consideration Election
Share.....................................1.4(a)(i)
Mixed
Election.........................................................1.4(a)(i)
<PAGE>
Mixed Election Stock Exchange
Ratio....................................1.4(a)(i)
No Election
Shares........................................................1.5(b)
NYSE......................................................................2.2(a)
Parent..................................................................Preamble
Parent
10-K...............................................................4.6(a)
Parent Balance
Sheet.........................................................4.7
Parent Balance Sheet
Date....................................................4.7
Parent Commission
Documents...............................................4.6(a)
Parent Common
Stock..........................................................4.5
Parent Disclosure
Schedules...........................................Article IV
Parent Material Adverse
Effect...............................................4.1
Parent
Securities............................................................4.5
Per Share Cash
Amount..................................................1.4(a)(i)
Per Share Cash Election
Consideration.................................1.4(a)(ii)
Per Share Mixed
Consideration..........................................1.4(a)(i)
Person....................................................................2.1(c)
RCRA.....................................................................3.19(b)
Release..................................................................3.19(b)
RFG
Patents..............................................................3.23(a)
Sarbanes-Oxley
Act.......................................................3.10(a)
Securities
Act...............................................................3.3
Significant
Subsidiaries..................................................3.6(a)
Stock Award Exchange
Ratio................................................1.7(a)
Stock
Consideration..................................................1.4(a)(iii)
Stock
Election.......................................................1.4(a)(iii)
Stock Election
Share.................................................1.4(a)(iii)
Subsidiary................................................................3.6(a)
Substantial
Detriment.....................................................7.1(c)
Superior
Proposal.........................................................7.9(b)
Surviving
Corporation.....................................................1.1(a)
Tax
Returns.................................................................3.15
Taxes.......................................................................3.15
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT
AND PLAN OF MERGER (this "AGREEMENT") dated as of April 4,
2005 by and among UNOCAL CORPORATION, a
Delaware corporation (the "COMPANY"),
CHEVRONTEXACO CORPORATION, a Delaware
corporation ("PARENT"), and BLUE MERGER
SUB INC., a newly formed Delaware
corporation and a direct wholly-owned
subsidiary of Parent ("MERGER
SUBSIDIARY").
W I T N E
S S E T H:
WHEREAS, the
respective Boards of Directors of Parent, Merger Subsidiary
and the Company have each approved this
Agreement and the transactions
contemplated hereby, including the merger
of the Company with and into Merger
Subsidiary (the "MERGER"), upon the terms
and subject to the conditions set
forth herein;
WHEREAS, the
Board of Directors of the Company deems it advisable and in
the best interest of the Company and its
stockholders that the Company enter
into the Merger to advance the strategic
business interests of the Company by
putting under common ownership, and
permitting the coordination of activities
conducted by, Company subsidiaries and
subsidiaries of Parent, and otherwise
participating in growth opportunities of
Parent, its subsidiaries and
affiliates; and
WHEREAS, for
United States federal income tax purposes, it is intended that
the Merger will qualify as a reorganization
within the meaning of Section 368 of
the Internal Revenue Code of 1986, as
amended, and the rules and regulations
promulgated thereunder (the "CODE");
NOW, THEREFORE,
in consideration of the promises and the respective
representations, warranties, covenants, and
agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1
THE MERGER.
(a) Upon the
terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as
defined below), the Company shall be merged
(the "MERGER") with and into Merger
Subsidiary in accordance with the
requirements of the General Corporation Law
of the State of Delaware (the
"DGCL"), whereupon the separate existence
of the Company shall cease, and Merger
Subsidiary shall be the surviving
corporation in the Merger (the "SURVIVING
CORPORATION").
(b) On the
Closing Date, immediately after the Closing, the Company will
file a certificate of merger with the
Secretary of State of the State of
Delaware and make all other filings or
recordings required by the DGCL in
connection with the Merger. The Merger
shall become effective at such time as
the certificate of merger is duly filed
with the Secretary of State
1
<PAGE>
of the State of Delaware or at such later
time as Parent and the Company may
agree and is specified in the certificate
of merger (the "EFFECTIVE TIME").
(c) From and
after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers
and franchises and be subject to all
of the restrictions, disabilities and
duties of the Company and Merger
Subsidiary, all as provided under the
DGCL.
(d) The closing
of the Merger (the "CLOSING") shall take place (i) at the
offices of Pillsbury Winthrop Shaw Pittman
LLP, 50 Fremont Street, San
Francisco, California, as soon as
practicable on the day on which the last to be
fulfilled or waived of the conditions set
forth in Article 8 (other than those
conditions that by their nature are to be
fulfilled at the Closing, but subject
to the fulfillment or waiver of such
conditions) shall be fulfilled or waived in
accordance with this Agreement, or (ii) at
such other place and time as the
Company and Parent may agree in writing
(the "CLOSING DATE").
Section 1.2
CERTIFICATE OF
INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.
(a) At the
Effective Time, the certificate of incorporation of the
Surviving Corporation, shall be the
certificate of incorporation of Merger
Subsidiary as set forth in EXHIBIT A,
except for Article FIRST thereof which
shall be amended to read as follows: "The
name of this corporation is Unocal
Corporation."
(b) The by-laws
of Merger Subsidiary, as in effect immediately prior to the
Effective Time, shall be the by-laws of the
Surviving Corporation until
thereafter amended or changed as provided
therein or by the DGCL.
Section 1.3
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION. The
directors of Merger Subsidiary immediately
prior to the Effective Time shall be
the initial directors of the Surviving
Corporation, each to hold office in
accordance with the certificate of
incorporation and by-laws of the Surviving
Corporation, and the officers of Merger
Subsidiary immediately prior to the
Effective Time shall be the initial
officers of the Surviving Corporation, in
each case until their respective successors
are duly elected or appointed and
qualified or until their earlier death,
resignation or removal.
Section 1.4
EFFECT ON CAPITAL
STOCK.
(a) At the
Effective Time, subject to the other provisions of Articles 1
and 2, each share of Company Common Stock
issued and outstanding immediately
prior to the Effective Time (other than
shares of Company Common Stock owned by
Parent, Merger Subsidiary or the Company or
any of their respective wholly-owned
subsidiaries and except for any Dissenting
Shares), together with the Company
Rights attached thereto or associated
therewith, shall, by virtue of this
Agreement and without any action on the
part of the holder thereof, be converted
into and shall thereafter represent the
right to receive the following
consideration (collectively, the "MERGER
CONSIDERATION"):
(i) Each share of Company Common Stock with respect to which an
election to
receive a combination of stock and cash (a "MIXED ELECTION")
has been
effectively made and not revoked or lost pursuant to Section
2.1
(each, a "MIXED
CONSIDERATION
2
<PAGE>
ELECTION SHARE")
and each No Election Share (as that term is defined in
Section 1.5(b)
hereof) shall be converted into the right to receive the
combination
(which combination shall hereinafter be referred to as the "PER
SHARE MIXED
CONSIDERATION") of (x) $16.25 in cash (the "PER SHARE CASH
AMOUNT") and (y)
0.7725 of a share of validly issued, fully paid and
non-assessable
shares of Parent Common Stock (the "MIXED ELECTION STOCK
EXCHANGE
RATIO"), subject to adjustment in accordance with Section
1.4(c);
(ii) Each share of Company Common Stock with respect to which
an
election to
receive cash (a "CASH ELECTION") has been effectively made and
not revoked or
lost pursuant to Section 2.1 (each, a "CASH ELECTION SHARE")
shall be
converted (provided that the Available Cash Election Amount (as
defined below)
equals or exceeds the Cash Election Amount (as defined
below)) into the
right to receive $65.00 in cash without interest (the "PER
SHARE CASH
ELECTION CONSIDERATION"); IF, HOWEVER, (A) the product of the
number of Cash
Election Shares and the Per Share Cash Election
Consideration
(such product being the "CASH ELECTION AMOUNT") exceeds (B)
the difference
between (x) the product of the Per Share Cash Amount and the
total number of
shares of Company Common Stock (other than the Cancelled
Shares) issued
and outstanding immediately prior to the Effective Time
minus (y) the
product of the number of Mixed Consideration Election Shares
(provided that
No Election Shares shall be deemed to be Mixed Consideration
Election Shares
for purposes of this Section 1.4(a)(ii)) and the Per Share
Cash Amount
(such difference being the "AVAILABLE CASH ELECTION AMOUNT"),
then each Cash
Election Share shall be converted into a right to receive
(1) an amount of
cash (without interest) equal to the product of (p) the
Per Share Cash
Election Consideration and (q) a fraction, the numerator of
which shall be
the Available Cash Election Amount and the denominator of
which shall be
the Cash Election Amount (such fraction being the "CASH
FRACTION") and
(2) a number of validly issued, fully paid and
non-assessable
shares of Parent Common Stock equal to the product of (r)
the Exchange Ratio and
(s) one (1) minus the Cash Fraction;
(iii) Each share of Company Common Stock with respect to which
an
election to
receive stock consideration (a "STOCK ELECTION") is properly
made and not
revoked or lost pursuant to Section 2.1 (each, a "STOCK
ELECTION SHARE")
shall be converted (provided that the Cash Election Amount
equals or
exceeds the Available Cash Election Amount), into the right to
receive 1.03
shares (the "EXCHANGE RATIO") of validly issued, fully paid
and
non-assessable shares of Parent Common Stock, subject to adjustment
in
accordance with
Section 1.4(c) (together with any cash in lieu of
fractional
shares of Parent Common Stock to be paid pursuant to Section
2.2, the "STOCK
CONSIDERATION"); PROVIDED HOWEVER, if the Available Cash
Election Amount
exceeds the Cash Election Amount, then each Stock Election
Share shall be
converted into the right to receive (1) an amount of cash
(without
interest) equal to the amount of such excess divided by the
number
of Stock
Election Shares and (2) a number of validly issued, fully paid
and
non-assessable
shares of Parent Common stock equal to the product of (x)
the Exchange
Ratio and (y) a fraction, the numerator of which shall be the
Per Share Cash
Election Consideration minus the amount calculated in clause
(1) of this
paragraph and the denominator of which shall be the Per Share
Cash Election
Consideration.
3
<PAGE>
(b) From and
after the Effective Time, all of the shares of Company Common
Stock, and associated Company Rights,
converted into the Merger Consideration
pursuant to this Article 1 shall no longer
be outstanding and shall
automatically be cancelled and retired and
shall cease to exist, and each holder
of a certificate (each a "CERTIFICATE")
previously representing any such shares
of Company Common Stock shall thereafter
cease to have any rights with respect
to such securities, except the right to
receive (i) the Merger Consideration,
(ii) any dividends and other distributions
in accordance with Section 2.1(f),
and (iii) any cash to be paid in lieu of
any fractional share of Parent Common
Stock in accordance with Section 2.2.
(c) If at any
time during the period between the date of this Agreement and
the Effective Time, any change in the
outstanding shares of capital stock of
Parent or the Company shall occur by reason
of any reclassification,
recapitalization, stock split or
combination, exchange or readjustment of
shares, or any stock dividend thereon with
a record date during such period, the
Merger Consideration, the Per Share Cash
Amount, the Mixed Election Stock
Exchange Ratio, the Exchange Ratio and any
other similarly dependent items, as
the case may be, shall be appropriately
adjusted to provide the holders of
shares of Company Common Stock the same
economic effect as contemplated by this
Agreement prior to such event.
(d) At the
Effective Time, (1) all shares of Company Common Stock that are
owned by Parent, Merger Subsidiary or the
Company (the "CANCELLED SHARES") shall
be cancelled and retired and shall cease to
exist and no stock of Parent, cash
or other consideration shall be delivered
in exchange therefor and (2) each
share of Company Common Stock held by any
direct or indirect wholly-owned
Subsidiary of Parent (other than Merger
Subsidiary) or the Company, in each
case, immediately prior to the Effective
Time, shall be converted into the right
to receive the Per Share Stock
Consideration. The Per Share Stock Consideration
paid pursuant to this Section 1.4(d) shall
not be subject to, and will not be
deemed to be Stock Election Shares or
otherwise taken into account in
calculating, adjustments under the proviso
to Section 1.4(a)(iii). For the
avoidance of doubt, this Section 1.4(d)
shall not apply to shares of Company
Common Stock held in trust or otherwise set
aside from shares held in the
Company's treasury pursuant to a Company
Benefit Plan (as such term is defined
in Section 3.16) other than a Company Stock
Option Plan or a Company Award Plan.
(e) Each issued
and outstanding share of common stock, par value $0.01 per
share of Merger Subsidiary issued and
outstanding immediately prior to the
Effective Time shall remain outstanding as
one fully paid and non-assessable
share of common stock, par value $0.01 per
share, of the Surviving Corporation.
Section 1.5
ELECTION
PROCEDURES.
(a) An election
form and other appropriate and customary transmittal
materials (which shall specify that
delivery shall be effected, and risk of loss
and title to the Certificates theretofore
representing shares of Company Common
Stock shall pass, only upon proper delivery
of such Certificates to the Exchange
Agent) in such form as Parent shall specify
and as shall be reasonably
acceptable to the Company (the "ELECTION
FORM") shall be mailed together with
the Proxy Statement or at such other time
as the Company and Parent may agree
(the "MAILING DATE") to each holder of
record of Company Common Stock as of the
close of business
4
<PAGE>
on the record date for notice of the
Company Stockholder Meeting (the "ELECTION
FORM RECORD DATE").
(b) Each
Election Form shall permit the holder (or the beneficial owner
through appropriate and customary
documentation and instructions), other than
any holder of Dissenting Shares, to specify
(i) the number of shares of such
holder's Company Common Stock with respect
to which such holder elects to
receive the Per Share Mixed Consideration,
(ii) the number of shares of such
holder's Company Common Stock with respect
to which such holder elects to
receive the Per Share Stock Consideration,
(iii) the number of shares of such
holder's Company Common Stock with respect
to which such holder elects to
receive the Per Share Cash Consideration,
or (iv) that such holder makes no
election with respect to such holder's
Company Common Stock ("NO ELECTION
SHARES"). Any Company Common Stock with
respect to which the Exchange Agent has
not received an effective, properly
completed Election Form on or before 5:00
p.m., New York time, on the twentieth
(20th) day following the Mailing Date (or
such other time and date as the Company and
Parent shall agree) (the "ELECTION
DEADLINE") (other than any shares of
Company Common Stock that constitute
Dissenting Shares as of such time) shall
also be deemed to be No Election
Shares.
(c) Parent shall
make available one or more Election Forms as may
reasonably be requested from time to time
by all Persons who become holders (or
beneficial owners) of Company Common Stock
between the Election Form Record Date
and the close of business on the Business
Day prior to the Election Deadline,
and the Company shall provide to the
Exchange Agent all information reasonably
necessary for it to perform as specified
herein.
(d) Any such
election shall have been properly made only if the Exchange
Agent shall have actually received a
properly completed Election Form by the
Election Deadline. An Election Form shall
be deemed properly completed only if
accompanied by one or more Certificates (or
customary affidavits and, if
required by Parent or the Surviving
Corporation, the posting by such Person of a
bond, in such reasonable amount as the
Surviving Corporation may direct, as
indemnity against any claim that may be
made against it with respect to such
Certificate) representing all shares of
Company Common Stock covered by such
Election Form, together with duly executed
transmittal materials included in the
Election Form. Any Election Form may be
revoked or changed by the Person
submitting such Election Form, by written
notice received by the Exchange Agent
prior to the Election Deadline. In the
event an Election Form is revoked prior
to the Election Deadline, the shares of
Company Common Stock represented by such
Election Form shall become No Election
Shares and Parent shall cause the
Certificates representing such shares of
Company Common Stock to be promptly
returned without charge to the Person
submitting the Election Form upon written
request to that effect from the holder who
submitted the Election Form, except
to the extent (if any) a subsequent
election is properly made with respect to
any or all of such shares of Company Common
Stock. Subject to the terms of this
Agreement and of the Election Form, the
Exchange Agent shall have reasonable
discretion to determine whether any
election, revocation or change has been
properly or timely made and to disregard
immaterial defects in the Election
Forms, and any good faith decisions of the
Exchange Agent regarding such matters
shall be binding and conclusive. None of
Parent, Company or the Exchange Agent
shall be under any obligation to notify any
Person of any defect in an Election
Form.
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Section 1.6
DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, with respect to each share
of Company Common Stock as to which
the holder thereof shall have properly
complied with the provisions of section
262 of the DGCL as to appraisal rights
(each, a "DISSENTING SHARE"), if any,
such holder shall be entitled to payment,
solely from the Surviving Corporation,
of the appraisal value of the Dissenting
Shares to the extent permitted by and
in accordance with the provisions of
section 262 of the DGCL; provided, however,
that (i) if any holder of Dissenting
Shares, under the circumstances permitted
by and in accordance with the DGCL,
affirmatively withdraws his demand for
appraisal of such Dissenting Shares, (ii)
if any holder of Dissenting Shares
fails to establish his entitlement to
appraisal rights as provided in the DGCL
or (iii) if any holder of Dissenting Shares
takes or fails to take any action
the consequence of which is that such
holder is not entitled to payment for his
shares under the DGCL, such holder or
holders (as the case may be) shall forfeit
the right to appraisal of such shares of
Company Common Stock and such shares of
Company Common Stock shall thereupon cease
to constitute Dissenting Shares and
if such forfeiture shall occur following
the Election Deadline, each such share
of Company Common Stock shall thereafter be
deemed to have been converted into
and to have become, as of the Effective
Time, the right to receive, without
interest thereon, the Per Share Stock
Consideration; provided that Parent shall
be entitled to convert each such share into
the right to receive the Per Share
Cash Consideration or a combination of the
Per Share Cash Consideration and Per
Share Stock Consideration if (x) Parent
shall have received an opinion from
McDermott Will & Emery LLP and (y) the
Company shall have received an opinion
from Wachtell, Lipton, Rosen & Katz, in
each case, to the effect that the Merger
will not fail to satisfy the continuity of
interest requirement under Section
368 of the Code as a result thereof. The
Company shall give Parent prompt notice
of any demands received by the Company for
appraisal of shares of Company Common
Stock, and Parent shall have the right to
participate in all negotiations and
proceedings with respect to such demands.
The Company shall not settle, make any
payments with respect to, or offer to
settle, any claim with respect to
Dissenting Shares without the written
consent of Parent.
Section 1.7
STOCK OPTIONS AND
EQUITY AWARDS.
(a) The Board of
Directors of the Company shall take such action as is
necessary so that at the Effective Time,
each outstanding option to purchase
shares of Company Common Stock (a "COMPANY
STOCK OPTION") and each phantom
option to receive cash measured by an
increase in value of Company Common Stock
over a specified base or exercise price (a
"COMPANY PHANTOM STOCK OPTION")
granted under the Company's plans or
agreements identified in Section 3.16(a) of
the Company Disclosure Schedules as being,
to the Company's knowledge, the only
employee benefit plans or agreements
(including nonemployee director plans) as
to which shares of Company Common Stock may
be issued upon exercise of an option
(collectively the "COMPANY STOCK OPTION
PLANS"), whether or not vested, shall
cease to represent a right to acquire
shares of Company Common Stock or a
Company Phantom Stock Option with respect
to Company Common Stock, and shall
thereafter constitute an option to acquire
or to be a phantom option with
respect to, as the case may be, on the same
terms and conditions as were
applicable under such Company Stock Option
or Company Phantom Stock Option, as
applicable, pursuant to the relevant
Company Stock Option Plan under which it
was issued and the agreement evidencing the
grant thereof prior to the Effective
Time, including any provisions for
acceleration (as such terms and conditions
have been interpreted and applied by the
Company in accordance with its past
practice), the number (rounded down to the
nearest whole
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number) of shares of Parent Common Stock
determined by multiplying (x) the
number of shares of Company Common Stock
subject to such Company Stock Option or
Company Phantom Stock Option immediately
prior to the Effective Time by (y) the
Stock Award Exchange Ratio. The exercise
price or base price per share of Parent
Common Stock subject to any such Company
Stock Option or Company Phantom Stock
Option at and after the Effective Time
shall be an amount (rounded up to the
nearest one hundredth of a cent) equal to
(A) the exercise price or base price
per share of Company Common Stock subject
to such Company Stock Option or
Company Phantom Stock Option prior to the
Effective Time divided by (B) the
Stock Award Exchange Ratio. In addition,
prior to the Effective Time, the
Company shall make any amendments to the
terms of such Company Stock Option
Plans that are necessary to give effect to
the transactions contemplated by this
Section 1.7. For purposes of this Section
1.7, the "STOCK AWARD EXCHANGE RATIO"
shall mean the sum of (i) the Mixed
Election Stock Exchange Ratio plus (ii) the
fraction resulting from dividing the Per
Share Cash Amount by the closing price
per share of the Parent Common Stock on the
NYSE on the last trading day
immediately preceding the Closing Date.
(b) At the
Effective Time each right, award or account, contingent or
accrued, to receive shares of Company
Common Stock or benefits measured in whole
or in part by the value of a number of
shares of Company Common Stock, and each
award of any kind consisting of shares of
Company Common Stock, outstanding as
of the Effective Time other than a Company
Stock Option or a Company Phantom
Stock Option (a "COMPANY AWARD") granted
under any employee incentive or benefit
plan, program or agreement or nonemployee
director plan maintained by the
Company or any Subsidiary on or prior to
the date hereof that provides for
grants of equity-based awards or
equity-based accounts and which are identified
on Schedule 3.16 (collectively the "COMPANY
AWARD PLANS") whether or not vested,
shall cease to represent a right, award or
account with respect Company Common
Stock and shall thereafter constitute a
right, award or account, on the same
terms and conditions as were applicable
under such Company Award pursuant to the
relevant Company Award Plan under which it
was issued and the agreement,
including any provisions for acceleration
(as such terms and conditions have
been interpreted and applied by the Company
in accordance with its past
practice), with respect to the number
(rounded to the nearest whole number) of
shares of Parent Common Stock determined by
multiplying (x) the number of shares
of Company Common Stock subject to such
Company Award immediately prior to the
Effective Time by (y) the Stock Award
Exchange Ratio, PROVIDED that in the case
of any performance shares outstanding as of
the Effective Time, such performance
shares shall be paid at the Effective Time
at 100% of target, except that the
2005 performance share awards shall be paid
at the Effective Time at between
100% and 150% of target, as determined in
good faith by the Company's Management
Development and Compensation Committee
pursuant to the terms of the plan and the
underlying award agreement. The other terms
and conditions of each Company
Award, and the plans or agreements under
which they were issued, shall continue
to apply in accordance with their terms and
conditions, including any provisions
for acceleration (as such terms and
conditions have been interpreted and applied
by the Company in accordance with its past
practice). The Company represents and
warrants that to the Company's knowledge
there are as of the date hereof no
Company Awards or Company Stock Options
other than those reflected in Schedule
3.5.
(c) (i) Parent
shall take all corporate action necessary to assume as of
the Effective Time the Company's
obligations under the Company Stock Options and
Company Awards and
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reserve for issuance a sufficient number of
shares of Parent Common Stock for
delivery pursuant to the terms set forth in
this Section 1.7. (ii) As soon as
practicable after the Effective Time and in
any event no later than five days
after the Effective Time, Parent shall file
with the U.S. Securities and
Exchange Commission (the "COMMISSION") a
registration statement on an
appropriate form or a post-effective
amendment to a previously filed
registration statement under the Securities
Act with respect to the Parent
Common Stock subject to options and other
equity-based awards described in this
Section 1.7 and shall use its reasonable
best efforts to maintain the current
status of the prospectus contained therein,
as well as comply with any
applicable state securities or "blue sky"
laws, for so long as such options or
other equity-based awards remain
outstanding.
Section 1.8
SHARES HELD BY COMPANY AFFILIATES. Anything to the contrary
herein notwithstanding, no shares of Parent
Common Stock (or certificates
therefor) shall be issued in exchange for
any Certificate to any "affiliate" of
the Company (identified pursuant to Section
7.8) until such Person shall have
delivered to Parent duly executed letters
as contemplated by Section 7.8. Such
Persons shall be subject to the
restrictions described in such letters, and such
shares (or certificates therefor) shall
bear a legend describing such
restrictions.
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1
SURRENDER AND PAYMENT.
(a) Prior to the
Effective Time, Parent shall appoint Mellon Investor
Services LLC or such other exchange agent
reasonably acceptable to the Company
(the "EXCHANGE AGENT") for the purpose of
exchanging Certificates representing
shares of Company Common Stock and
non-certificated shares represented by book
entry ("BOOK-ENTRY SHARES") for the Merger
Consideration. Parent will make
available to the Exchange Agent, as needed,
the Merger Consideration to be
delivered in respect of the shares of
Company Common Stock. Promptly after the
Effective Time, Parent will send, or will
cause the Exchange Agent to send, to
each holder of record of shares of Company
Common Stock as of the Effective Time
(other than any holder which has previously
and properly surrendered all of its
Certificates(s) to the Exchange Agent in
accordance with Section 1.5 (each, an
"ELECTING STOCKHOLDER")), a letter of
transmittal for use in such exchange
(which shall specify that the delivery
shall be effected, and risk of loss and
title shall pass, only upon proper delivery
of the Certificates to the Exchange
Agent) in such form as the Company and
Parent may reasonably agree, for use in
effecting delivery of shares of Company
Common Stock to the Exchange Agent.
Exchange of any Book-Entry Shares shall be
effected in accordance with Parent's
customary procedures with respect to
securities represented by book entry.
(b) Each holder
of shares of Company Common Stock that have been converted
into a right to receive the Merger
Consideration, upon (i) with respect to any
Electing Stockholder, completion of the
calculations required by Section 1.4(a)
or (ii) with respect to any holder that is
not an Electing Stockholder,
surrender to the Exchange Agent of a
Certificate, together with a properly
completed letter of transmittal, will be
entitled to receive (A) one or more
shares of Parent Common Stock (which shall
be in non-certificated book-entry
form unless a physical
8
<PAGE>
certificate is requested) representing, in
the aggregate, the whole number of
shares of Parent Common Stock, if any, that
such holder has the right to receive
pursuant to Section 1.4 and (B) a check in
the amount equal to the cash portion
of the Merger Consideration, if any, that
such holder has the right to receive
pursuant to Section 1.4 and this Article 2,
including cash payable in lieu of
fractional shares pursuant to Section 2.2
and dividends and other
distributions pursuant to Section 2.1(f).
No interest shall be paid or accrued
on any Merger Consideration, cash in lieu
of fractional shares or on any unpaid
dividends and distributions payable to
holders of Certificates. Until so
surrendered, each such Certificate shall,
after the Effective Time, represent
for all purposes only the right to receive
such Merger Consideration.
(c) If any
portion of the Merger Consideration is to be registered in the
name of a Person other than the Person in
whose name the applicable surrendered
Certificate is registered, it shall be a
condition to the registration thereof
that the surrendered Certificate shall be
properly endorsed or otherwise be in
proper form for transfer and that the
Person requesting such delivery of the
Merger Consideration shall pay to the
Exchange Agent any transfer or other
similar Taxes required as a result of such
registration in the name of 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. For purposes of this Agreement,
"PERSON" means an individual, a
corporation, a limited liability company, a
partnership, an association, a trust
or any other entity or organization,
including a government or political
subdivision or any agency or
instrumentality thereof.
(d) After the
Effective Time, there shall be no further registration of
transfers of shares of Company Common
Stock. If, after the Effective Time,
Certificates are presented to the Exchange
Agent, the Surviving Corporation or
the Parent, they shall be canceled and
exchanged for the consideration provided
for, and in accordance with the procedures
set forth, in this Article 2.
(e) Any portion
of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.1(a) that
remains unclaimed by the holders of shares
of Company Common Stock one year after the
Effective Time shall be returned to
Parent, upon demand, and any such holder
who has not exchanged his shares of
Company Common Stock for the Merger
Consideration in accordance with this
Section 2.1 prior to that time shall
thereafter look only to Parent for delivery
of the Merger Consideration in respect of
such holder's shares. Notwithstanding
the foregoing, Parent shall not be liable
to any holder of shares for any Merger
Consideration delivered to a public
official pursuant to applicable abandoned
property laws. Any Merger Consideration
remaining unclaimed by holders of shares
of Company Common Stock three years after
the Effective Time (or such earlier
date immediately prior to such time as such
amounts would otherwise escheat to
or become property of any governmental
entity) shall, to the extent permitted by
applicable law, become the property of
Parent free and clear of any claims or
interest of any Person previously entitled
thereto.
(f) No dividends
or other distributions with respect to shares of Parent
Common Stock issued in the Merger shall be
paid to the holder of any
unsurrendered Certificates or Book-Entry
Shares until such Certificates or
Book-Entry Shares are surrendered as
provided in this Section 2.1. Following
such surrender, there shall be paid,
without interest, to the record holder of
the shares of Parent Common Stock issued in
exchange therefor (i) at the time of
such
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<PAGE>
surrender, all dividends and other
distributions payable in respect of such
shares of Parent Common Stock with a record
date after the Effective Time and a
payment date on or prior to the date of
such surrender and not previously paid
and (ii) at the appropriate payment date,
the dividends or other distributions
payable with respect to such shares of
Parent Common Stock with a record date
after the Effective Time but with a payment
date subsequent to such surrender.
For purposes of dividends or other
distributions in respect of shares of Parent
Common Stock, all shares of Parent Common
Stock to be issued pursuant to the
Merger shall be entitled to dividends
pursuant to the immediately preceding
sentence as if issued and outstanding as of
the Effective Time.
(g) Any portion
of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 2.1 to pay for
Shares for which appraisal rights shall
have been perfected shall be returned to
Parent, upon demand.
Section 2.2
FRACTIONAL SHARES.
(a) No
fractional shares of Parent Common Stock shall be issued in the
Merger, but in lieu thereof each holder of
shares of Company Common Stock
otherwise entitled to a fractional share of
Parent Common Stock will be entitled
to receive, from the Exchange Agent in
accordance with the provisions of this
Section 2.2, a cash payment in lieu of such
fractional shares of Parent Common
Stock representing such holder's
proportionate interest, if any, in the proceeds
from the sale by the Exchange Agent in one
or more transactions of shares of
Parent Common Stock equal to the excess of
(x) the aggregate number of shares of
Parent Common Stock to be delivered to the
Exchange Agent by Parent pursuant to
Section 2.1(a) over (y) the aggregate
number of whole shares of Parent Common
Stock to be distributed to the holders of
Certificates pursuant to Section
2.1(b) (such excess being herein called the
"EXCESS SHARES"). The parties
acknowledge that payment of the cash
consideration in lieu of issuing fractional
shares was not separately bargained-for
consideration but merely represents a
mechanical rounding off for purposes of
avoiding the expense and inconvenience
to Parent that would otherwise be caused by
the issuance of fractional shares.
As soon as practicable after the Effective
Time, the Exchange Agent, as agent
for the holders of the Certificates
representing shares of Company Common Stock,
shall sell the Excess Shares at then
prevailing prices on the New York Stock
Exchange ("NYSE") in the manner provided in
the following paragraph.
(b) The sale of
the Excess Shares by the Exchange Agent, as agent for the
holders that would otherwise receive
fractional shares, shall be executed on the
NYSE through one or more member firms of
the NYSE and shall be executed in round
lots to the extent practicable. The
compensation payable to the Exchange Agent
and the expenses incurred by the Exchange
Agent, in each case, in connection
with such sale or sales of the Excess
Shares, and all related commissions,
transfer taxes and other out-of-pocket
transaction costs, will be paid by the
Surviving Corporation out of its own funds
and will not be paid directly or
indirectly by Parent. Until the proceeds of
such sale or sales have been
distributed to the holders of shares of
Company Common Stock, the Exchange Agent
shall hold such proceeds in trust for the
holders of shares of Company Common
Stock (the "COMMON SHARES TRUST"). The
Exchange Agent shall determine the
portion of the Common Shares Trust to which
each holder of shares of Company
Common Stock shall be entitled, if any, by
multiplying the amount of the
aggregate proceeds comprising the Common
Shares Trust by a fraction, the
numerator of which is the
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<PAGE>
amount of the fractional share interest to
which such holder of shares of
Company Common Stock would otherwise be
entitled and the denominator of which is
the aggregate amount of fractional share
interests to which all holders of
shares of Company Common Stock would
otherwise be entitled.
(c) As soon as
practicable after the determination of the amount of cash,
if any, to be paid to holders of shares of
Company Common Stock in lieu of any
fractional shares of Parent Common Stock,
the Exchange Agent shall make
available such amounts to such holders of
shares of Company Common Stock without
interest, subject to and in accordance with
Section 2.1.
Section 2.3 LOST
CERTIFICATES. 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
Parent or the Surviving Corporation, the
posting by such Person of a bond, in
such reasonable amount as the Surviving
Corporation may direct, as indemnity
against any claim that may be made against
it with respect to such Certificate,
the Exchange Agent will issue in exchange
for such lost, stolen or destroyed
Certificate the Merger Consideration to be
paid in respect of the shares of
Company Common Stock represented by such
Certificate as contemplated by this
Article 2.
Section 2.4
WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and
withhold from the consideration otherwise
payable to any Person pursuant to Articles
1 and 2 such amounts as it is
required to deduct and withhold with
respect to the making of such payment under
any provision of federal, state, local or
foreign tax law. To the extent that
amounts are so deducted or withheld by the
Surviving Corporation or Parent, as
the case may be, and paid over to the
applicable governmental entity, such
deducted or withheld amounts shall be
treated for all purposes of this Agreement
as having been paid to the holder of the
shares of Company Common Stock in
respect of which such deduction and
withholding was made by the Surviving
Corporation or Parent, as the case may
be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company
represents and warrants to Parent that, except as disclosed in
the Company Commission Documents (as
hereinafter defined) filed or furnished
prior to the date hereof or in the
correspondingly numbered section of the
disclosure schedules delivered by the
Company to Parent simultaneously with the
execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULES") (it being
agreed that disclosure of any item in any
section of the Company Disclosure
Schedules shall be deemed disclosure with
respect to any other section of this
Agreement to which the relevance of such
item is reasonably apparent):
Section 3.1
CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in
good standing under the laws of the
State of Delaware and has all corporate
powers and all governmental franchises,
licenses, permits, authorizations, consents
and approvals required to enable it
to own, lease or otherwise hold its
properties and assets and to carry on its
business as now conducted, except for those
the absence of which
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<PAGE>
would not, individually or in the
aggregate, be reasonably likely to have a
Company Material Adverse Effect (as defined
below). The Company 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 or the
ownership or leasing of its properties make
such qualification necessary, except for
those jurisdictions where the failure
to be so qualified would not, individually
or in the aggregate, be reasonably
likely to have a Company Material Adverse
Effect. For purposes of this
Agreement, "COMPANY MATERIAL ADVERSE
EFFECT" means a material adverse effect on
the financial condition, business,
liabilities, assets or continuing results of
operations of the Company and its
Subsidiaries, taken as a whole, except to the
extent resulting from (x) any changes in
general United States or global
economic conditions, or (y) any changes
affecting the oil and gas industry in
general (including changes to commodity
prices). The Company has heretofore made
available to Parent true and complete
copies of the Certificate of Incorporation
of the Company, as amended to the date of
this Agreement (as so amended, the
"COMPANY CHARTER"), and the By-laws of the
Company, as amended to the date of
this Agreement (as so amended, the "COMPANY
BY-LAWS").
Section 3.2
CORPORATE
AUTHORIZATION.
(a) The
execution, delivery and performance by the Company of this
Agreement and the consummation by the
Company of the transactions contemplated
hereby are within the Company's corporate
powers and, except for any required
approval by the Company's stockholders (the
"COMPANY STOCKHOLDER APPROVAL") in
connection with the consummation of the
Merger, have been duly authorized by all
necessary corporate action. The affirmative
vote of holders of a majority of the
outstanding shares of Company Common Stock
in favor of the approval and adoption
of this Agreement and the Merger is the
only vote of the holders of any of the
Company's capital stock necessary in
connection with consummation of the Merger.
Assuming due authorization, execution and
delivery of this Agreement by Parent
and Merger Subsidiary this Agreement
constitutes a valid and binding agreement
of the Company enforceable against the
Company in accordance with its terms,
subject to bankruptcy, insolvency,
fraudulent transfer, reorganization,
moratorium and similar laws of general
applicability relating to or affecting
creditors' rights, and to general equity
principles.
(b) The
Company's Board of Directors, at a meeting duly called and held
on
or prior to the date hereof, has (i)
determined that this Agreement and the
transactions contemplated hereby (including
the Merger) are fair to and in the
best interests of the Company's
stockholders, (ii) approved and adopted this
Agreement and the transactions contemplated
hereby (including the Merger), and
(iii) resolved (subject to Section 5.2) to
recommend the approval and adoption
of this Agreement and the Merger by its
stockholders.
Section 3.3
GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this
Agreement and the consummation by the Company
of the transactions contemplated hereby
require no action by or in respect of,
or filing with, any governmental body,
agency, official or authority other than
(a) the filing of a certificate of merger
in accordance with the DGCL, (b)
compliance with any applicable requirements
of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the
"HSR ACT"), (c) compliance with any
applicable requirements of Council
Regulation (EC) No. 139/2004 of 20 January
2004 on the control of concentrations
between undertakings (published in the
Official Journal of the European Union
on
12
<PAGE>
January 29, 2004 at L 24/1) (the "EC MERGER
REGULATION"), (d) compliance with
any applicable requirements of laws, rules
and regulations in other foreign
jurisdictions governing antitrust or merger
control matters, (e) compliance with
any applicable requirements of the
Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT"), (f)
compliance with any applicable requirements
of the Securities Act of 1933, as
amended, and the rules and regulations
promulgated thereunder (the "SECURITIES
ACT"); (g) the appropriate filings and
approvals under the rules of the NYSE;
and (h) other actions or filings which if
not taken or made would not,
individually or in the aggregate, be
reasonably likely to have a Company
Material Adverse Effect.
Section 3.4
NON-CONTRAVENTION. The execution, delivery and performance by
the Company of this Agreement and the
consummation by the Company of the
transactions contemplated hereby do not and
will not, assuming compliance with
the matters referred to in Sections 3.2 and
3.3, (a) contravene or conflict with
the Company Charter or the Company By-Laws
or the organizational documents of
any Company Subsidiary, (b) 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 the
Company or any of its Subsidiaries,
(c) constitute a default (or an event which
with notice or the passage of time
would become a default) under or give rise
to a material right of termination,
cancellation or acceleration of any right
or obligation of the Company or any of
its Subsidiaries or to a loss of any
material benefit to which the Company or
any of its Subsidiaries is entitled under
any provision of any agreement,
contract or other instrument binding upon
the Company or any of its Subsidiaries
or any license, franchise, permit or other
similar authorization held by the
Company or any of its Subsidiaries, or (d)
result in the creation or imposition
of any Lien on any asset of the Company or
any of its Subsidiaries, except for
such contraventions, conflicts or
violations referred to in clause (b) or
defaults, rights of termination,
cancellation or acceleration, or losses or
Liens referred to in clause (c) or (d) that
would not, individually or in the
aggregate, be reasonably likely to have a
Company Material Adverse Effect. For
purposes of this Agreement, "LIEN" means,
with respect to any asset, any
mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in
respect of such asset other than any such
mortgage, lien, pledge, charge,
security interest or encumbrance (i) for
Taxes (as defined in Section 3.15) not
yet due or being contested in good faith
(and for which adequate accruals or
reserves have been established on the
Parent Balance Sheet or the Company
Balance Sheet, as the case may be) or (ii)
which is a carriers', warehousemen's,
mechanics', materialmen's, repairmen's or
other like lien arising in the
ordinary course of business.
Section 3.5
CAPITALIZATION. The authorized capital stock of the Company
consists of 750,000,000 shares of common
stock, par value $1.00 per share (the
"COMPANY COMMON STOCK") and 100,000,000
shares of preferred stock, par value
$0.10 per share (the "COMPANY PREFERRED
STOCK", and together with the Company
Common Stock, the "COMPANY CAPITAL STOCK").
As of March 31, 2005, there were
outstanding (i) 271,654,896 shares of
Company Common Stock, (ii) no shares of
Series B Junior Participating Preferred
Stock (all of which are reserved for
issuance in accordance with the Rights
Agreement (as amended, the "COMPANY
RIGHTS AGREEMENT") dated as of January 5,
2000, as amended, between the Company
and Mellon Investor Services LLC (formerly
known as ChaseMellon Shareholder
Services, L.L.C.), as Rights Agent,
pursuant to which the Company has issued
rights to purchase Series B Junior
Participating Preferred Stock ("COMPANY
RIGHTS")) and no other shares of capital
stock or other voting securities of the
Company were then outstanding. All
outstanding shares of Company
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Capital Stock have been duly authorized,
validly issued, and are fully paid and
nonassessable. As of March 31, 2005, there
were outstanding (A) Company Awards
(other than shares of restricted stock or
other awards included in the number of
shares of Company Common Stock outstanding
set forth above) with respect to
983,963 shares of Company Common Stock and
(B) Company Stock Options to purchase
6,278,458 shares of Company Common Stock.
Except as set forth in this Section
3.5 and except for changes since the close
of business on March 31, 2005
resulting from the exercise of employee
stock options outstanding on such date,
or the payment or redemption of other
stock-based awards outstanding on such
date or other securities issued as
permitted by Section 5.1, there are
outstanding (a) no shares of capital stock
or other voting securities of the
Company, (b) no Company Awards and (c)
except for the Company Rights, (1) no
options, warrants or other rights to
acquire from the Company any capital stock,
voting securities or securities convertible
into or exchangeable for capital
stock or voting securities of the Company,
and (2) no preemptive or similar
rights, subscription or other rights,
convertible securities, agreements,
arrangements or commitments of any
character, relating to the capital stock of
the Company, obligating the Company to
issue, transfer or sell any capital
stock, voting securities or securities
convertible into or exchangeable for
capital stock or voting securities of the
Company or obligating the Company to
grant, extend or enter into any such
option, warrant, subscription or other
right, convertible security, agreement,
arrangement or commitment (the items in
the foregoing subclauses (a), (b) and (c)
being referred to collectively as
"COMPANY SECURITIES"). Except as required
by the terms of any Company Stock
Options or Company Awards as permitted by
Section 5.1(e), there are no
outstanding obligations of the Company or
any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company
Securities.
Section 3.6
SUBSIDIARIES.
(a) Each
Subsidiary of the Company is duly organized, validly existing
and
in good standing under the laws of its
jurisdiction of organization, has all
powers and all governmental licenses,
authorizations, consents and approvals
required to carry on its business as now
conducted, except for those the absence
of which would not, individually or in the
aggregate, be reasonably likely to
have a Company Material Adverse Effect. For
purposes of this Agreement, the term
"SUBSIDIARY" when used with respect to any
Person means any other Person,
whether incorporated or unincorporated, of
which (i) more than fifty percent of
the voting securities or other ownership
interests or (ii) securities or other
interests having by their terms ordinary
voting power to elect more than fifty
percent of the board of directors or others
performing similar functions with
respect to such corporation or other
organization, is directly owned or
controlled by such Person or by any one or
more of its Subsidiaries. Each
Subsidiary of the Company is duly qualified
to do business 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 for those jurisdictions where
failure to be so qualified would not,
individually or in the aggregate, be
reasonably likely to have a Company
Material Adverse Effect. All "significant
subsidiaries," as such term is defined
in Section 1-02 of Regulation S-X under the
Exchange Act of the Company and all
entities listed on Exhibit 21 to the
Company 10-K (collectively, "SIGNIFICANT
SUBSIDIARIES") and their respective
jurisdictions of incorporation are
identified in Section 3.6(a) of the Company
Disclosure Schedules.
(b) Except for
directors' qualifying shares, all of the outstanding capital
stock of, or other ownership interests in,
each Significant Subsidiary of the
Company is owned by the
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Company, directly or indirectly, free and
clear of any material Lien and free of
any other material limitation or
restriction (including any restriction on the
right to vote, sell or otherwise dispose of
such capital stock or other
ownership interests). There are no
outstanding (i) securities of the Company or
any of its Significant Subsidiaries
convertible into or exchangeable for shares
of capital stock or other voting securities
or ownership interests in any
Significant Subsidiary of the Company or
(ii) options, warrants or other rights
to acquire from the Company or any of its
Significant Subsidiaries any capital
stock, voting securities or other ownership
interests in, or any securities
convertible into or exchangeable for any
capital stock, voting securities or
ownership interests in, any Significant
Subsidiary of the Company, and no
preemptive or similar rights, subscription
or other rights, convertible
securities, agreements, arrangements or
commitments of any character, relating
to the capital stock of any Significant
Subsidiary of the Company, obligating
the Company or any of its Significant
Subsidiaries to issue, transfer or sell,
any capital stock, voting securities or
other ownership interests in, or any
securities convertible into or exchangeable
for any capital stock, voting
securities or ownership interests in, any
Significant Subsidiary of the Company
or obligating the Company or any
Significant Subsidiary of the Company to grant,
extend or enter into any such option,
warrant, subscription or other right,
convertible security, agreement,
arrangement or commitment (the items in the
foregoing subclauses 3.6(b)(i) and (ii)
being referred to collectively as
"COMPANY SUBSIDIARY SECURITIES"). There are
no outstanding obligations of the
Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire
any outstanding Company Subsidiary
Securities. No Subsidiary of the Company is,
or since January 1, 2003 has been, subject
to any requirement to file periodic
reports under the Exchange Act.
Section 3.7
COMMISSION
FILINGS.
(a) The Company
has made available to Parent (i) its annual reports on Form
10-K for its fiscal years ended December
31, 2003 and 2004, (ii) its quarterly
reports on Form 10-Q for its fiscal
quarters ended after December 31, 2004,
(iii) its proxy or information statements
relating to meetings of, or actions
taken without a meeting by, the
stockholders of the Company held since December
31, 2003, and (iv) all of its other
reports, statements, schedules and
registration statements filed with the
Commission since December 31, 2003 (the
documents referred to in this Section
3.7(a) being referred to collectively as
the "COMPANY COMMISSION DOCUMENTS"). The
Company's annual report on Form 10-K
for its fiscal year ended December 31, 2004
is referred to herein as the
"COMPANY 10-K."
(b) As of its
filing date, each Company Commission Document complied as to
form in all material respects with the
applicable requirements of the Exchange
Act, the Securities Act and the
Sarbanes-Oxley Act of 2002 and the rules and
regulations thereunder.
(c) As of its
filing date, each Company Commission Document filed pursuant
to the Exchange Act did not contain any
untrue statement of a material fact or
omit 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.
(d) Each
registration statement, as amended or supplemented, if
applicable,
filed by the Company since January 1, 2003
pursuant to the Securities Act as of
the date such statement or amendment became
effective did not contain any untrue
statement of a material fact or omit to
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<PAGE>
state any material fact required to be
stated therein or necessary to make the
statements therein not misleading.
(e) The Company
has timely filed with or furnished to the Commission all
forms, reports, schedules, registration
statements, proxy statements and other
documents required to be filed with or
furnished to the Commission by the
Company since January 1, 2003.
Section 3.8
FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited consolidated
interim financial statements of the
Company (including any related notes and
schedules) included in its annual
reports on Form 10-K and the quarterly
reports on Form 10-Q referred to in
Section 3.7 present fairly, in all material
respects, the consolidated financial
position of the Company and its
consolidated Subsidiaries as of the dates
thereof and the consolidated results of
their operations and their cash flows
for the periods then ended (subject to
normal year-end adjustments and the
absence of notes in the case of any
unaudited interim financial statements), in
each case in conformity with United States
generally accepted accounting
principles ("GAAP") applied on a consistent
basis (except as may be indicated in
the notes thereto). For purposes of this
Agreement, "COMPANY BALANCE SHEET"
means the consolidated balance sheet of the
Company as of December 31, 2004 set
forth in the Company 10-K and "COMPANY
BALANCE SHEET DATE" means December 31,
2004.
Section 3.9
DISCLOSURE
DOCUMENTS.
(a) Neither the
proxy statement of the Company (the "COMPANY PROXY
STATEMENT") to be filed with the Commission
in connection with the Merger, nor
any amendment or supplement thereto, will,
at the date the Company Proxy
Statement or any such amendment or
supplement is first mailed to stockholders of
the Company or at the time such
stockholders vote on the adoption and approval
of this Agreement and the transactions
contemplated hereby, contain any untrue
statement of a material fact or omit to
state any material fact necessary in
order to make the statements therein, in
light of the circumstances under which
they were made, not misleading. The Company
Proxy Statement, including all
amendments or supplements thereto, will,
when filed, comply as to form in all
material respects with the requirements of
the Exchange Act. Notwithstanding the
foregoing, no representation or warranty is
made by the Company in this Section
3.9 with respect to statements made or
incorporated by reference therein based
on information supplied by Parent or Merger
Subsidiary for inclusion or
incorporation by reference in the Company
Proxy Statement.
(b) None of the
information supplied or to be supplied by the Company for
inclusion or incorporation by reference in
the Form S-4 (as defined in Section
4.8(a)) or any amendment or supplement
thereto will, at the time the Form S-4 or
any such amendment or supplement becomes
effective under the Securities Act or
at the Effective Time, as the case may be,
contain any untrue statement of a
material fact or omit to state a material
fact required to be included in order
to make the statements therein, in light of
the circumstances under which they
were made, not misleading.
Section 3.10
CONTROLS AND
PROCEDURES.
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(a) Each of the
principal executive officer and the principal financial
officer of the Company (or each former
principal executive officer and former
principal financial officer of the Company,
as applicable) has made all
certifications required under Sections 302
and 906 of the Sarbanes-Oxley Act of
2002 and the related rules and regulations
promulgated thereunder and under the
Exchange Act (collectively, the
"SARBANES-OXLEY ACT") with respect to Company
Commission Documents, and the Company has
delivered to Parent a summary of any
disclosure made by management to the
Company's auditors and audit committee
since January 1, 2003 referred to in such
certifications. For purposes of the
preceding sentence, "principal executive
officer" and "principal financial
officer" shall have the meanings given to
such terms in the Sarbanes-Oxley Act.
(b) The Company
has (i) designed and maintained disclosure controls and
procedures (as defined in Rule 13a-15(e)
under the Exchange Act) to ensure that
material information required to be
disclosed by the Company in the reports it
files or furnishes under the Exchange Act
is communicated to its management by
others within those entities as appropriate
to allow timely decisions regarding
required disclosure, (ii) disclosed, based
on its most recent evaluation, to its
auditors and the audit committee of its
Board of Directors (A) any significant
deficiencies or material weaknesses in the
design or operation of internal
controls over financial reporting which
could adversely affect its ability to
record, process, summarize and report
financial data and (B) any fraud, whether
or not material, that involves management
or other employees who have a
significant role in its internal controls
over financial reporting and (iii)
identified for the Company's auditors any
material weaknesses in internal
controls. The Company has provided to
Parent true and correct copies of any of
the foregoing disclosures to the auditors
or audit committee that have been made
in writing from January 1, 2003 through the
date hereof, and will promptly
provide to Parent true and correct copies
of any such disclosure that is made
after the date hereof.
(c) The Company
has designed and maintains a system of internal controls
over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act)
sufficient to provide reasonable assurance
concerning the reliability of
financial reporting and the preparation of
financial statements for external
purposes in accordance with GAAP, including
reasonable assurance (i) that
transactions are executed in accordance
with management's general or specific
authorizations and recorded as necessary to
permit preparation of financial
statements in conformity with GAAP and to
maintain asset accountability and (ii)
regarding prevention or timely detection of
any unauthorized acquisition, use or
disposition of assets that could have a
material effect on the Company's
financial statements. The Company's
management, with the participation of the
Company's principal executive and financial
officers, has completed an
assessment of the effectiveness of the
Company's internal controls over
financial reporting in compliance with the
requirements of Section 404 of the
Sarbanes-Oxley Act for the year ended
December 31, 2004, and such assessment
concluded that such internal controls were
effective using the framework
specified in the Company 10-K.
(d) No personal
loan or other extension of credit by the Company or any
Subsidiary to any of its or their executive
officers or directors has been made
or modified (other than as permitted by
Section 13 of the Exchange Act and
Section 402 of the Sarbanes-Oxley Act)
since July 31, 2002.
17
<PAGE>
(e) Since
January 1, 2003, (i) neither the Company nor any of its
Subsidiaries nor, to the Company's
knowledge, any director, officer, employee,
auditor, accountant or representative of
the Company or any of its Subsidiaries
has received any written complaint,
allegation, assertion, or claim that the
Company or any of its Subsidiaries has
engaged in improper or illegal accounting
or auditing practices or maintains improper
or inadequate internal accounting
controls and (ii) no attorney representing
the Company or any of its
Subsidiaries, whether or not employed by
the Company or any of its Subsidiaries,
has reported evidence of a material
violation of U.S. federal or state
securities laws, a material breach of
fiduciary duty or similar material
violation by the Company, any of its
Subsidiaries or any of their respective
officers, director, employees or agents to
any officer of the Company, the Board
of Directors of the Company or any member
or committee thereof. For purposes of
this Agreement, "KNOWLEDGE" of any Person
means the actual knowledge of any
officer (as such term is defined in Rule
16a-1(f) under the Exchange Act) of
such Person.
Section 3.11
ABSENCE OF CERTAIN
CHANGES. From the Company Balance Sheet
Date to the date hereof, the Company and
its Subsidiaries have conducted their
business in the ordinary course of
business, consistent with past practice, and
there has not been:
(a) any event, occurrence, change or development of a state of
circumstances or
facts which, individually or in the aggregate, has had, or
would be
reasonably likely to have, a Company Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or
other
distribution
with respect to any shares of capital stock of the Company
(other than the
Company's regular quarterly cash dividend and dividends or
distributions by
any direct or indirect wholly-owned Subsidiary to the
Company or any
wholly-owned Subsidiary of the Company, and except for
dividends or
distributions by other Subsidiaries of the Company for which
the portion of
such dividends or distributions not payable to a direct or
indirect
wholly-owned Subsidiary of the Company did not exceed
$10,000,000
in value in the
aggregate for all such dividends and distributions), or any
repurchase,
redemption or other acquisition by the Company or any of its
wholly-owned
Subsidiaries of any outstanding shares of capital stock or
other securities
of, or other ownership interests in, the Company or any of
its Significant
Subsidiaries (other than (i) any such repurchases prior to
the date hereof
pursuant to the Company's publicly announced stock buyback
program or,
after the date hereof, as permitted under Section 5.1(e) or
pursuant to the
terms of Company Stock Options and Company Awards, in each
case subject to
Section 7.4), and (ii) any such transaction solely among
the Company and
its wholly-owned Subsidiaries or solely among the Company's
wholly-owned
Subsidiaries;
(c) any amendment of any material term of any outstanding security
of
the Company or
any of its Significant Subsidiaries (other than wholly-owned
Subsidiaries);
(d) to the knowledge of the Company's Management Committee, any
transaction or
commitment made, or any contract, agreement or settlement
entered into, by
(or judgment, order or decree affecting) the Company or
any of its
Subsidiaries relating to its assets or business (including the
acquisition or
disposition of any assets) or any relinquishment by the
Company or any
of its Subsidiaries of any contract or other
18
<PAGE>
right, in either
case, material to the Company and its Subsidiaries taken
as a whole, other than
transactions, commitments, contracts, agreements or
settlements
(including without limitation settlements of litigation and tax
proceedings) in
the ordinary course of business consistent with past
practice, those
expressly permitted by this Agreement, or as agreed to in
writing by
Parent;
(e) any change in any method of financial accounting or
financial
accounting
practice (other than any change for tax purposes) by the
Company
or any of its
Subsidiaries, except for any such change which is not
material or
which is required by reason of a concurrent change in GAAP or
applicable
law;
(f) any (i) grant of any severance or termination pay to (or
amendment
to any such
existing arrangement with) any director, officer or employee of
the Company or
any of its Subsidiaries, other than in accordance with
existing plans
and policies, (ii) entering into of any employment, deferred
compensation or
other similar agreement (or any amendment to any such
existing
agreement) with any director, officer or employee of the
Company
or any of its
Subsidiaries, other than in accordance with existing plans
and policies,
(iii) increase in benefits payable under any existing
severance or
termination pay policies or employment agreements or (iv)
increase in (or
amendments to the terms of) compensation, bonus or other
benefits payable
to directors, officers or employees of the Company or any
of its
Subsidiaries, other than increases made in the ordinary course
of
business with
respect to employees other than executives; or
(g) any (i) Tax election made or changed, (ii) Tax audit settled,
or
(iii) amended
Tax Return filed, in each case, that is reasonably likely to
result in an
increase to a Tax liability, which increase is material to the
Company and its
Subsidiaries, taken as a whole.
Section 3.12
NO DEFAULT. Neither
the Company nor any of its Subsidiaries
is in default or violation (and no event
has occurred which, with notice or the
lapse of time or both, would constitute a
default or violation) of any term,
condition or provision of (i) its
certificate of incorporation, by-laws or the
comparable charter or organizational
documents, (ii) any loan or credit
agreement, note, bond, mortgage, indenture,
lease or other agreement,
instrument, permit, concession, franchise
or license to which the Company or any
of its Subsidiaries is now a party or by
which the Company or any of its
Subsidiaries or any of their respective
properties or assets is bound or (iii)
any permit, license, order, writ,
injunction, decree, statute, rule or
regulation applicable to the Company or any
of its Subsidiaries, except in the
case of (ii) and (iii) for defaults or
violations which in the aggregate would
not reasonably be expected to result in a
Company Material Adverse Effect.
Section 3.13
NO UNDISCLOSED
MATERIAL LIABILITIES. As of the date hereof,
there are no material liabilities of the
Company or any Subsidiary of the
Company of any kind whatsoever, whether
accrued, contingent, absolute,
determined, determinable or otherwise,
other than:
(a) liabilities disclosed or provided for in the Company Balance
Sheet
or in the notes
thereto;
19
<PAGE>
(b) liabilities incurred since the Company Balance Sheet Date in
the
ordinary course
of business consistent with past practice and which,
individually or
in the aggregate, would not be reasonably likely to have a
Company Material
Adverse Effect;
(c) liabilities disclosed in the Company Commission Documents
filed
prior to the
date of this Agreement;
(d) liabilities or obligations that have been discharged or paid
in
full in the
ordinary course of business; and
(e) liabilities under this Agreement.
Section 3.14
LITIGATION. There is
no action, suit, investigation or
proceeding pending against, or, to the
knowledge of the Company, threatened
against or affecting, the Company or any of
its Subsidiaries or any of their
respective properties or any of their
respective officers or directors before
any court or arbitrator or any governmental
body, agency or official except as
would not, individually or in the
aggregate, be reasonably likely to have a
Company Material Adverse Effect.
Section 3.15
TAXES. Except as set
forth in the Company Balance Sheet
(including the notes thereto) and except as
would not, individually or in the
aggregate, be reasonably likely to have a
Company Material Adverse Effect, (i)
all Company Tax Returns required to be
filed with any taxing authority by, or
with respect to, the Company and its
Subsidiaries have been filed in accordance
with all applicable laws; (ii) the Company
and its Subsidiaries have timely paid
all Taxes shown as due and payable on the
Company Tax Returns that have been so
filed, and, as of the time of filing, the
Company Tax Returns correctly
reflected the facts regarding the income,
business, assets, operations,
activities and the status of the Company
and its Subsidiaries (other than, in
the case of clause (i) or clause (ii)
hereof, with respect to Taxes and Tax
Returns for which the position has been
taken in good faith and for which
adequate reserves are reflected on the
Company Balance Sheet, as adjusted for
operations in the ordinary course of
business since the date of the Company
Balance Sheet); (iii) the Company and its
Subsidiaries have made provision for
all Taxes payable by the Company and its
Subsidiaries for which no Company Tax
Return has yet been filed; (iv) the
charges, accruals and reserves for Taxes
with respect to the Company and its
Subsidiaries reflected on the Company
Balance Sheet are adequate under GAAP to
cover the Tax liabilities accruing
through the date thereof; (v) there is no
action, suit, proceeding, audit or
claim now proposed or pending against or
with respect to the Company or any of
its Subsidiaries in respect of any Tax
where there is a reasonable possibility
of an adverse determination; (vi) to the
best of the Company's knowledge and
belief, neither the Company nor any of its
Subsidiaries is liable for any Tax
imposed on any entity other than such
Person, except as the result of the
application of Treas. Reg. section 1.1502-6
(and any comparable provision of the
tax laws of any state, local or foreign
jurisdiction) to the affiliated group of
which the Company or any of its
Subsidiaries is or was the common parent; and
(vii) neither the Company nor any Company
Subsidiary has constituted either a
"distributing corporation" or a "controlled
corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a
distribution of stock qualifying or
intended to qualify for tax-free treatment
under Section 355 of the Code in the
two years prior to the date of this
Agreement. For purposes of this Agreement,
"TAXES" shall mean any and all taxes,
charges, fees, levies or other
a
