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AGREEMENT AND PLAN OF MERGER
dated as of
APRIL 4, 2005
among
UNOCAL CORPORATION,
CHEVRONTEXACO CORPORATION
and
BLUE MERGER SUB INC.
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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
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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)
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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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<PAGE>
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
10
<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
11
<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
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<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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<PAGE>
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
15
<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.
16
<PAGE>
(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
assessments, including, w
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