<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 1999
REGISTRATION NO. 333-67447
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
KERR-MCGEE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 1311 73-0311467
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer Identification
of Incorporation or Industrial Classification Code Number)
Organization) Number)
</TABLE>
KERR-MCGEE CENTER
OKLAHOMA CITY, OKLAHOMA 73125
(405) 270-1313
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
RUSSELL G. HORNER, JR., ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
KERR-MCGEE CORPORATION
KERR-MCGEE CENTER
OKLAHOMA CITY, OKLAHOMA 73125
(405) 270-1313
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
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DAVID B. CHAPNICK ROBERT A. PROFUSEK
SIMPSON THACHER & BARTLETT JONES, DAY, REAVIS & POGUE
425 LEXINGTON AVENUE 599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10022
</TABLE>
Approximate date of commencement of proposed sale to the public:
AS SOON AS POSSIBLE AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
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PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS,
KERR-MCGEE LOGO SUBJECT TO COMPLETION, DATED JANUARY 11, 1999 ORYX LOGO
</TABLE>
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
TO THE STOCKHOLDERS OF KERR-MCGEE AND ORYX:
The Boards of Directors of Kerr-McGee Corporation and Oryx Energy Company have
unanimously approved a strategic combination which would create the fourth
largest independent oil and gas exploration and production company based in the
United States.
Upon completion of the merger, Oryx stockholders will receive 0.369 shares of
Kerr-McGee common stock for each share of Oryx common stock that they own,
representing approximately 45% of the common stock of the combined company.
Kerr-McGee stockholders will continue to own their existing shares of Kerr-McGee
common stock after the merger, which will represent approximately 55% of the
common stock of the combined company.
The merger will be tax-free to Kerr-McGee and Oryx stockholders for U.S. federal
income tax purposes except for taxes due on cash received by Oryx stockholders
for fractional shares. The merger will also be accounted for as a "pooling-of-
interests" transaction.
The combined company will retain the name Kerr-McGee Corporation, with executive
headquarters located in Oklahoma City, Oklahoma, and exploration and production
headquarters located in Houston, Texas. Five Oryx directors will join the nine
Kerr-McGee directors to form a fourteen-member board of directors for the
combined company. The Chief Executive Officer of the combined company will be
Luke R. Corbett, Kerr-McGee's current Chairman and Chief Executive Officer, and
the Chairman will be Robert L. Keiser, Oryx's current Chairman and Chief
Executive Officer.
The merger requires the approval of both the stockholders of Kerr-McGee and Oryx
and the satisfaction of certain other conditions described on page 62.
Kerr-McGee and Oryx have each scheduled special meetings of their stockholders
on February , 1999 to vote on these matters.
Regardless of the number of shares you own or whether you plan to attend a
meeting, it is important that your shares be represented and voted. You can vote
by using the enclosed proxy card or by attending the meeting. If your shares are
held in "street name" by your broker or other nominee, only they can vote your
shares. If you do not vote or you abstain, the effect will be a vote against the
merger. YOUR VOTE IS VERY IMPORTANT.
This document provides you with detailed information about the proposed merger.
We encourage you to read this entire document carefully. In addition, you may
obtain information about our companies from other documents that we each have
filed with the Securities and Exchange Commission.
<TABLE>
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- -------------------------------------------------------- --------------------------------------------------------
Luke R. Corbett Robert L. Keiser
Chairman and Chief Executive Officer Chairman and Chief Executive Officer
Kerr-McGee Corporation Oryx Energy Company
</TABLE>
FOR A DISCUSSION OF CERTAIN RISK FACTORS WHICH YOU SHOULD CONSIDER IN EVALUATING
THE MERGER, SEE "RISK FACTORS" BEGINNING ON PAGE 11.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED THE KERR-MCGEE COMMON STOCK TO BE ISSUED IN THE MERGER OR
DETERMINED WHETHER THIS JOINT PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED JANUARY , 1999, AND IS FIRST
BEING MAILED TO STOCKHOLDERS ON JANUARY , 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT DELIVER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
KERR-MCGEE LOGO
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that Kerr-McGee Corporation ("Kerr-McGee") will hold
a special meeting of its stockholders (the "Kerr-McGee Meeting") on [February
, 1999] at [TIME] at the Robert S. Kerr Auditorium, Kerr-McGee Center, 123
Robert S. Kerr Avenue, Oklahoma City, Oklahoma, for the following purpose:
To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of October 14, 1998 (the "Merger Agreement"), between
Kerr-McGee and Oryx Energy Company ("Oryx") pursuant to which, among other
things, (i) Oryx will be merged into Kerr-McGee, (ii) each share of Oryx
common stock outstanding immediately prior to the merger and the reverse
stock split contemplated by the Merger Agreement will be converted into
0.369 shares of Kerr-McGee common stock and (iii) the certificate of
incorporation and by-laws of Kerr-McGee, as the surviving corporation in
the merger, will be amended to read as set forth in Exhibits 1.5 and 1.6 to
the Merger Agreement.
A copy of the Merger Agreement, including such Exhibits, is attached as Appendix
A to the Joint Proxy Statement/Prospectus accompanying this Notice.
Kerr-McGee has established the close of business on January 13, 1999 as the
record date to determine the stockholders entitled to vote at the Kerr-McGee
Meeting or any postponement or adjournment thereof. No business other than the
proposal described in this notice will be considered at the Kerr-McGee Meeting
or any adjournment or postponement thereof. A list of stockholders entitled to
vote at the Kerr-McGee Meeting will be available for inspection by stockholders
of record during business hours at the principal executive offices of Kerr-McGee
during the ten-day period prior to the date of the Kerr-McGee Meeting and will
also be available at the Kerr-McGee Meeting.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO ADOPT THE
MERGER AGREEMENT, WHICH IS DESCRIBED IN DETAIL IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.
Your vote is important and we urge you to complete, sign, date and return
your proxy card as promptly as possible, whether or not you expect to attend the
Kerr-McGee Meeting. If you are unable to attend in person, your shares will be
voted at the Kerr-McGee Meeting if you return your proxy card. A return envelope
is enclosed for your convenience. If your shares are held in "street name" by
your broker or other nominee, only that holder can vote your shares. You should
follow the directions provided by them regarding how to instruct them to vote
your shares.
By Order of the Board of Directors
- ------------------------------------------------------
Russell G. Horner, Jr.
Secretary
Oklahoma City, Oklahoma
January __, 1999
<PAGE> 4
ORYX LOGO
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that Oryx Energy Company ("Oryx") will hold a
special meeting of its stockholders (the "Oryx Meeting") on [February , 1999]
at [TIME] at Room 882, Oryx Energy Center, 13155 Noel Road, Dallas, Texas, for
the following purpose:
To consider and vote upon a proposal to (a) adopt the Agreement and Plan of
Merger, dated as of October 14, 1998 (the "Merger Agreement"), between
Kerr-McGee Corporation ("Kerr-McGee") and Oryx, pursuant to which, among
other things, (i) Oryx will be merged into Kerr-McGee, (ii) each share of
Oryx common stock outstanding immediately prior to the merger and the
reverse stock split contemplated by the Merger Agreement will be converted
into 0.369 shares of Kerr-McGee common stock and (iii) the certificate of
incorporation and by-laws of Kerr-McGee, as the surviving corporation in
the merger, will be amended to read as set forth in Exhibits 1.5 and 1.6 to
the Merger Agreement, and (b) approve an amendment to the certificate of
incorporation of Oryx to effect such reverse stock split (the "Amendment").
A copy of the Merger Agreement, including such Exhibits, is attached as Appendix
A to the Joint Proxy Statement/Prospectus accompanying this Notice. A copy of
the Amendment is attached as Appendix B to the Joint Proxy Statement/Prospectus.
Oryx has established the close of business on January 13, 1999 as the
record date to determine the stockholders entitled to vote at the Oryx Meeting
or any postponement or adjournment thereof. No business other than the proposal
described in this notice will be considered at the Oryx Meeting or any
adjournment or postponement thereof. A list of stockholders entitled to vote at
the Oryx Meeting will be available for examination by stockholders of record
during business hours at the principal executive offices of Oryx during the
ten-day period prior to the Oryx Meeting and will also be available at the Oryx
Meeting.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO ADOPT THE
MERGER AGREEMENT AND APPROVE THE AMENDMENT OF THE ORYX CERTIFICATE OF
INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT IN CONNECTION WITH THE MERGER,
EACH OF WHICH IS DESCRIBED IN DETAIL IN THE ACCOMPANYING JOINT PROXY
STATEMENT/PROSPECTUS.
Your vote is important and we urge you to complete, sign, date and return
your proxy card as promptly as possible, whether or not you expect to attend the
Oryx Meeting. If you are unable to attend in person, your shares will be voted
at the Oryx Meeting if you return your proxy card. A return envelope is enclosed
for your convenience. If your shares are held in "street name" by your broker or
other nominee, only that holder can vote your shares. You should follow the
directions provided by them regarding how to instruct them to vote your shares.
By Order of the Board of Directors
- ------------------------------------------------------
William C. Lemmer
Secretary
Dallas, Texas
January __, 1999
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE
KERR-McGEE/ORYX MERGER.................. 1
SUMMARY................................. 3
SUMMARY SELECTED HISTORICAL AND
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION................... 7
RISK FACTORS............................ 10
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS.............. 13
THE PROPOSED MERGER..................... 14
General............................ 14
The Merger and Reverse Split....... 14
Amendment of Kerr-McGee's
Certificate of Incorporation and
By-Laws.......................... 14
Stock Option Agreements............ 15
Background of the Merger........... 16
Kerr-McGee's Reasons for Merger;
Recommendation of the Board of
Directors of Kerr-McGee.......... 19
Oryx's Reasons for Merger;
Recommendation of the Board of
Directors of Oryx................ 22
Opinion of Kerr-McGee's Financial
Advisor.......................... 23
Opinion of Oryx's Financial
Advisor.......................... 28
Accounting Treatment............... 34
Material United States Federal
Income Tax Consequences.......... 34
Regulatory Approvals............... 35
No Appraisal Rights................ 36
Federal Securities Laws
Consequences; Stock Transfer
Restriction...................... 36
THE KERR-McGEE SPECIAL MEETING.......... 37
Purpose, Time and Place............ 37
Record Date; Quorum; Vote
Required......................... 37
Proxies............................ 38
THE ORYX SPECIAL MEETING................ 38
Purpose, Time and Place............ 38
Record Date; Quorum; Vote
Required......................... 39
Proxies............................ 40
Voting Procedures for Oryx Capital
Accumulation Plan................ 40
COMPARATIVE PER SHARE INFORMATION....... 41
Comparative Per Share Financial
Data............................. 41
</TABLE>
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PAGE
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Comparative Market Price and
Dividend Information............. 42
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS.................... 43
DIRECTORS AND SENIOR MANAGEMENT OF THE
COMBINED COMPANY FOLLOWING THE MERGER... 51
Directors.......................... 51
Officers........................... 53
OTHER INFORMATION REGARDING DIRECTORS,
EXECUTIVE OFFICERS AND FIVE PERCENT
STOCKHOLDERS............................ 54
INTERESTS OF CERTAIN PERSONS IN THE
MERGER.................................. 54
Directors and Executive Officers... 54
Oryx's Change of Control
Arrangements..................... 55
Transition Agreement with Robert L.
Keiser........................... 56
Agreements with Certain Other Oryx
Executive Officers............... 56
Kerr-McGee's Change of Control
Arrangements..................... 57
Stock Options and Restricted Stock
Held by Oryx Directors and
Executive Officers............... 58
Stock Options Held by Kerr-McGee
Directors and Executive
Officers......................... 58
Ownership of Common Stock; Stock
Options.......................... 58
Director and Officer
Indemnification and Insurance.... 59
THE MERGER AGREEMENT.................... 60
General............................ 60
Closing; Effective Time; Surviving
Corporation...................... 60
</TABLE>
i
<PAGE> 6
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PAGE
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The Reverse Stock Split............ 60
Consideration to be Received in the
Merger........................... 60
Treatment of Oryx Stock Options.... 61
Exchange of Shares; Fractional
Shares........................... 61
Conditions to the Merger........... 62
Certain Representations and
Warranties....................... 63
Certain Covenants.................. 63
Other Acquisition Proposals........ 64
Employee Benefits Matters.......... 65
Indemnification and Insurance...... 65
Transition Management.............. 66
Termination........................ 66
Termination Fees and Expenses...... 67
Other Expenses..................... 68
Amendment; Extension and Waiver.... 68
THE STOCK OPTION AGREEMENTS............. 68
General............................ 68
Terms of the Options............... 68
Repurchase at the Option of the
Grantee.......................... 69
Registration Rights................ 69
Substitute Option.................. 69
Limitation of Profit............... 70
Effect of Stock Option
Agreements....................... 70
THE REVERSE STOCK SPLIT................. 71
General............................ 71
Reasons for the Reverse Split...... 71
Exchange of Shares and Elimination
of Fractional Share Interests.... 71
AMENDMENT AND RESTATEMENT OF
KERR-McGEE'S CERTIFICATE OF
INCORPORATION AND BY-LAWS AND COMPARISON
OF STOCKHOLDERS' RIGHTS................. 72
General............................ 72
Comparison of Stockholders'
Rights........................... 72
Discussion of Amendments........... 76
</TABLE>
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Rights Agreements.................. 78
DESCRIPTION OF THE COMBINED COMPANY'S
CAPITAL STOCK FOLLOWING THE MERGER...... 79
Authorized Capital Stock........... 79
Common Stock....................... 79
Preferred Stock.................... 80
Transfer Agent and Registrar....... 80
Stock Exchange Listing............. 80
Treatment of Oryx Convertible
Subordinated Debentures.......... 80
LEGAL MATTERS........................... 80
EXPERTS................................. 81
FUTURE STOCKHOLDER PROPOSALS............ 81
WHERE YOU CAN FIND MORE INFORMATION..... 82
LIST OF APPENDICES
Appendix A Merger Agreement
Exhibit 1.5 Form of Amended and Restated
Certificate of Incorporation
of the Combined Company
Exhibit 1.6 Form of Amended and Restated
By-Laws of the Combined
Company
Appendix B Form of Amendment to Oryx's
Certificate of Incorporation
Appendix C Opinion of Lehman Brothers
Inc.
Appendix D Opinion of Goldman, Sachs &
Co.
Appendix E Kerr-McGee Stock Option
Agreement
Appendix F Oryx Stock Option Agreement
</TABLE>
ii
<PAGE> 7
QUESTIONS AND ANSWERS
ABOUT THE KERR-MCGEE/ORYX MERGER
Q: WHY ARE THE TWO COMPANIES PROPOSING TO
MERGE?
A: The companies' operations, expertise and
assets will fit together well, particularly in the Gulf of Mexico and the
U.K. sector of the North Sea. Through a combination of increased efficiency
and reductions in overlapping costs, we expect that after the merger the
combined company will realize annual cost savings and benefits before taxes
in excess of $100 million.
The combined company will be the fourth largest independent oil and gas
exploration and production company based in the United States, the third
largest independent producer in the Gulf of Mexico, the largest U.S.-based
independent producer in the U.K. sector of the North Sea and the largest
holder of deepwater blocks in the Gulf of Mexico among the independents.
Due to the increased scope of its operations, we expect that the combined
company will operate more effectively than either company individually in
many areas, including exploration, development, production, engineering,
research and technology. Similarly, the combined company will have the
size, financial strength and expertise to pursue growth opportunities.
The combined company will own an extensive prospect inventory, including
high-potential prospects in core areas within the North Sea and the
deepwater Gulf of Mexico. We believe the combination of Oryx's exploration
and deepwater drilling and development expertise and Kerr-McGee's financial
strength and development and exploitation expertise will better enable the
combined company to optimize these properties and control finding and
development costs. This should result in enhanced profitability and
improved stockholder returns.
Because of these benefits, the combined company is expected to generate
higher 1999 earnings per share and cash flow per share in 1999 and
thereafter Kerr-McGee and Oryx would have generated in the absence of the
merger, excluding one-time costs associated with the merger. The
expectation of higher 1999 earnings per share for Kerr-McGee is based on an
assumed average crude oil price of $15 per barrel for 1999 and a natural
gas price of $2.25 per MmBTU that year. Current oil prices are below those
levels.
To review the reasons for the merger in greater detail, see pages 19
through 23.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Each Oryx stockholder will receive 0.369
shares of Kerr-McGee common stock for each share of Oryx common stock they
own as of the date of the merger. No fractional shares will be issued in
connection with the merger. Instead, Oryx stockholders will receive cash
for the market value of any fractional shares.
If you own shares of Kerr-McGee common stock as of the date of the merger,
you will continue to hold those shares after the merger.
Q: WHEN AND WHERE ARE THE SPECIAL MEETINGS?
A: Both the Kerr-McGee and the Oryx special
meetings are scheduled to take place on February __, 1999. The Kerr-McGee
special meeting will take place at [TIME] at the Robert S. Kerr Auditorium,
Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma. The
Oryx special meeting will take place at [TIME] at Room 882, Oryx Energy
Center, 13155 Noel Road, Dallas, Texas.
Q: WHEN DO YOU EXPECT THE MERGER TO BE
COMPLETED?
A: We expect to complete the merger promptly
after receiving stockholder approvals at the special meetings.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the
information contained in this document, please fill out and sign your proxy
card. Then mail your signed proxy card in the enclosed return envelope as
soon as possible so that your shares may be represented at the special
meeting. Your proxy card will instruct the persons named on the card to
vote your
<PAGE> 8
shares at the special meeting as you direct on the card. If you do not vote
or you abstain, the effect will be a vote against the merger. THE BOARDS OF
DIRECTORS OF BOTH KERR-MCGEE AND ORYX UNANIMOUSLY RECOMMEND THAT YOU VOTE
IN FAVOR OF THE PROPOSED MERGER.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY
BROKER, WILL MY BROKER VOTE MY SHARES FOR ME?
A: Your broker will vote your shares only if you
provide instructions on how to vote. You should follow the directions
provided by your broker to vote your shares.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED
MY SIGNED PROXY CARD OR CONSENT FORM?
A: You may change your vote at any time before
your proxy is voted at the special meeting. You can do this in one of three
ways. First, you can send a written notice stating that you would like to
revoke your proxy. Second, you can complete and submit a new proxy card. If
you choose either of these two methods, you must submit your notice of
revocation or your new proxy card to Kerr-McGee at 123 Robert S. Kerr
Avenue, Oklahoma City, Oklahoma 73102, Attention: Secretary (if you are a
Kerr-McGee stockholder), or to Oryx at P.O. Box 2880, Dallas, Texas
75221-2880 Attention: Secretary (if you are an Oryx stockholder). Third,
you can attend the Kerr-McGee special meeting or the Oryx special meeting
and vote in person. Simply attending the meeting, however, will not revoke
your proxy; you must vote at the meeting. If you have instructed a broker
to vote your shares, you must follow directions received from your broker
to change your vote.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, Oryx
stockholders will receive written instructions for exchanging their stock
certificates. Kerr-McGee stockholders will keep their existing
certificates.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE
MERGER?
A: The exchange of shares by Oryx stockholders
in the merger will be tax-free to Oryx stockholders for U.S. federal income
tax purposes, except for taxes due on cash received in lieu of fractional
shares. The merger will be tax-free to Kerr-McGee stockholders for U.S.
federal income tax purposes. To review the tax consequences to stockholders
in greater detail, see pages 34 through 35.
Q: WHAT WILL ORYX STOCKHOLDERS' TAX BASIS BE IN
THE KERR-MCGEE COMMON STOCK THEY RECEIVE IN THE MERGER?
A: The tax basis in the shares of Kerr-McGee
common stock each Oryx stockholder receives in the merger will equal the
current tax basis in such stockholder's Oryx common stock, reduced by the
amount of basis allocable to fractional shares for which such stockholder
receives a cash payment.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A: Kerr-McGee pays a regular quarterly
dividend of $.45 per share on its common stock. Kerr-McGee intends to
continue paying the regular quarterly dividend after the merger, although
all dividends are subject to approval and declaration by Kerr-McGee's Board
of Directors. Oryx currently does not pay dividends on its common stock.
WHO CAN HELP ANSWER MY QUESTIONS?
If you have more questions about the
merger, you should contact:
<TABLE>
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Kerr-McGee Stockholders: Oryx Stockholders:
Georgeson Company, Inc. ChaseMellon Shareholder Services, L.L.C.
Wall Street Plaza 450 West 33rd Street
New York, NY 10005 New York, NY 10001
(800) 223-2064 (212) 273-8084
</TABLE>
2
<PAGE> 9
SUMMARY
This summary, together with the preceding Question and Answer section,
highlights selected information from this document and may not contain all of
the information that is important to you. To better understand the merger and
related transactions and for a more complete description of the legal terms of
the merger and related transactions, you should read carefully this entire
document and the documents we have referred you to. See "Where You Can Find More
Information" on page 82.
THE COMPANIES
KERR-MCGEE CORPORATION
Principal Executive Office:
Kerr-McGee Center
Oklahoma City, Oklahoma 73125
(405) 270-1313
ORYX ENERGY COMPANY
Principal Executive Office:
13155 Noel Road
Dallas, Texas 75240-5067
(972) 715-4000
Internet address: www.oryx.com
Kerr-McGee is an energy and chemical company with worldwide operations. It
acquires leases and concessions and explores for, develops, produces and markets
crude oil and natural gas in the Gulf of Mexico, the U.K. sector of the North
Sea, Southeast Asia, and certain other areas. Kerr-McGee's chemical operations
produce and market titanium dioxide pigment and certain other inorganic industry
and specialty chemicals, heavy minerals and forest products. Kerr-McGee was
incorporated in Delaware in 1932.
Oryx engages in the crude oil and natural gas exploration and production
business. It has operations in six areas around the world: the onshore and
offshore United States, the U.K. sector of the North Sea, Ecuador, Kazakstan,
Australia and Algeria. Oryx's business in the United States is conducted through
Sun Energy Partners, L.P., of which Oryx is the managing general partner and
owns a 98% equity interest. Oryx was incorporated in Delaware in 1971.
---------------------------------------------------------------------
THE MERGER
WHAT ORYX STOCKHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 60)
Each Oryx stockholder will receive 0.369 shares of Kerr-McGee common stock
for each share of Oryx common stock owned on the date of the merger. Oryx
stockholders will not receive fractional shares. Instead, Oryx stockholders will
receive cash for the market value of any fractional shares.
WHAT KERR-MCGEE STOCKHOLDERS WILL RETAIN IN THE MERGER (SEE PAGE 60)
After the merger, the shares held by Kerr-McGee stockholders will represent
the same number of shares of the combined company.
DIRECTORS AND SENIOR MANAGEMENT OF KERR-MCGEE FOLLOWING THE MERGER (SEE PAGES 51
THROUGH 53)
Upon completion of the merger, the Board of Directors of the combined
company will consist of fourteen directors: the nine directors of Kerr-McGee and
five of the current directors of Oryx.
Luke R. Corbett, the current Chairman and Chief Executive Officer of
Kerr-McGee, will be Chief Executive Officer of the combined company and Robert
L. Keiser, the current Chairman and Chief Executive Officer of Oryx, will be
Chairman of the Board. The other senior executive officers of Kerr-McGee will
continue with the combined company in their current positions.
3
<PAGE> 10
REVERSE STOCK SPLIT (SEE PAGE )
Immediately before the merger Oryx will effect a reverse stock split in
which each share of Oryx common stock will become 0.369 shares of Oryx common
stock. In the merger, each share of Oryx common stock will be converted into the
right to receive one share of Kerr-McGee common stock. Oryx is effecting the
reverse stock split to ensure that the conversion price of Oryx's 7 1/2%
Convertible Subordinated Debentures due 2014 is adjusted so that the
debentureholders will be entitled to receive the same number of shares of
Kerr-McGee common stock regardless of whether they convert their debentures
before or after the merger.
AMENDMENTS TO KERR-MCGEE'S CERTIFICATE OF INCORPORATION AND BY-LAWS (SEE PAGES
77 THROUGH 79)
In connection with the merger, Kerr-McGee's certificate of incorporation
and by-laws will be amended to, among other things, incorporate certain
governance provisions currently contained in Oryx's certificate of incorporation
and by-laws.
The amendments will, among other things:
- provide for the classification of the combined company's Board of
Directors into three classes, with three-year terms of office;
- require a 75% vote of the stockholders to remove a director, and only for
cause;
- permit stockholders to take action only at a meeting of the stockholders;
- permit only the Chief Executive Officer or a majority of the Board of
Directors to call a special meeting of the stockholders;
- require a 75% vote of the stockholders to amend the foregoing provisions;
and
- increase the number of authorized shares of the combined company's common
stock from 150 million to 300 million.
VOTING
MATTERS TO BE VOTED ON (SEE PAGE )
At the Kerr-McGee meeting, Kerr-McGee stockholders will be asked to adopt
the merger agreement.
At the Oryx meeting, Oryx stockholders will be asked to adopt the merger
agreement and approve an amendment to the Oryx certificate of incorporation to
effect the reverse stock split contemplated by the merger agreement.
VOTES REQUIRED (SEE PAGES 38 AND 40)
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of both Oryx and Kerr-McGee, excluding shares owned by their
subsidiaries, is required for approval of the proposals.
RECORD DATE (SEE PAGES AND )
The record date for each special meeting is the close of business on
January 13, 1999.
OUR RECOMMENDATIONS
TO OUR STOCKHOLDERS
KERR-MCGEE (SEE PAGE 22)
Kerr-McGee's Board of Directors believes that the merger agreement and the
merger and other transactions contemplated thereby, including the amendments to
Kerr-McGee's certificate of incorporation and by-laws described on pages 77
through 79, are advisable and fair to and in the best interests of Kerr-McGee
and the Kerr-McGee stockholders. Accordingly, it has unanimously approved them
and unanimously recommends that Kerr-McGee stockholders vote FOR the proposal to
adopt the merger agreement.
ORYX (SEE PAGE 23)
Oryx's Board of Directors believes that the merger agreement and the
merger, the reverse stock split and the other transactions contemplated thereby
are advisable and fair to and in the best interests of Oryx and the Oryx
stockholders. Accordingly, it has unanimously approved them
4
<PAGE> 11
and unanimously recommends that Oryx stockholders vote FOR the proposal to adopt
the merger agreement and approve the amendment to the Oryx certificate of
incorporation to effect the reverse stock split.
OPINIONS OF FINANCIAL ADVISORS (SEE PAGES 24 THROUGH 34)
In deciding to approve the merger, the Board of Directors of Kerr-McGee
considered the opinion of Lehman Brothers Inc., its financial advisor, that, as
of the date of such opinion, the exchange ratio was fair to Kerr-McGee from a
financial point of view. The Board of Directors of Oryx considered the opinion
of Goldman, Sachs & Co., its financial advisor, that, as of the date of such
opinion, the exchange ratio was fair to Oryx's stockholders from a financial
point of view. These opinions are attached as Appendices C and D to this
document. We encourage you to read these opinions carefully, as well as the
descriptions of the analyses and assumptions on which such opinions were based
contained on pages 24 through 34.
THE MERGER AGREEMENT
The merger agreement is attached as Appendix A to this document. We
encourage you to read the merger agreement as it is the legal document that
governs the merger.
CONDITIONS TO THE MERGER (SEE PAGES 63 THROUGH 64)
The completion of the merger depends upon the satisfaction of a number of
customary conditions, including the following:
- approval by both the Kerr-McGee stockholders and the Oryx stockholders;
- the continued accuracy of each company's representations and warranties
and compliance by each company with its agreements contained in the
merger agreement;
- there being no law or court order that prohibits the merger;
- receipt of required regulatory approvals;
- receipt of letters from both Oryx's and Kerr-McGee's independent
accountants as to the appropriateness of "pooling-of-interests"
accounting treatment for the merger;
- receipt of legal opinions from counsel for each company as to the
qualification of the merger as a reorganization for tax purposes;
- completion of the Oryx reverse stock split; and
- no event having triggered either company's stockholders' rights plan.
TERMINATION OF THE MERGER AGREEMENT
(SEE PAGES 67 AND 68)
Kerr-McGee and Oryx can agree to terminate the merger agreement without
completing the merger, and either company can terminate the merger agreement on
its own without completing the merger under various circumstances, including if
any of the following occurs:
- the merger is not completed by June 30, 1999, other than due to a breach
of the merger agreement by the terminating party;
- a court or other governmental authority permanently prohibits the merger;
- the terminating company determines, under certain circumstances, to
accept a superior offer from a third party, provides the other party to
the merger agreement five days prior notice and complies with certain
additional requirements;
- the Board of Directors of the other party to the merger agreement changes
or fails to reconfirm its recommendation to its stockholders in favor of
the merger, or approves or recommends an alternative transaction to its
stockholders;
- the other party to the merger agreement delivers a notice that it intends
to accept a superior proposal;
- the other party to the merger agreement takes action with respect to its
stockholders' rights plan in connection with another transaction or its
stockholders' rights plan is triggered; or
5
<PAGE> 12
- the stockholders of either Kerr-McGee or Oryx fail to give the required
approvals.
TERMINATION FEES AND EXPENSES
(SEE PAGES 68 AND 69)
The merger agreement requires the payment by either company to the other of
a termination fee of $60 million, plus $5 million for expenses, after
termination of the merger agreement in any of the following circumstances:
- the company's Board of Directors changes or fails to reconfirm its
recommendation to its stockholders in favor of the merger, or approves or
recommends another acquisition proposal;
- the company accepts a superior proposal or provides notice that it
intends to do so;
- the company takes action with respect to its stockholders' rights plan in
connection with another transaction or its stockholders' rights plan is
triggered; or
- the company's stockholders fail to approve the merger after a competing
proposal has been publicly communicated, if the company enters into a
definitive agreement for another transaction within 12 months of such
termination and such other transaction is later consummated.
THE STOCK OPTION AGREEMENTS
(SEE PAGES 69 THOUGH 71)
In connection with the merger agreement, Kerr-McGee and Oryx each granted
the other an option to purchase 19.9% of its common stock. The per share
exercise prices were based on the market prices of the Kerr-McGee ($46.94) and
Oryx ($11.50) common stocks at the time the parties entered into the stock
option agreements.
The options are only exercisable if any of the events described above in
"Termination Fees and Expenses" occur. Once the option is exercisable, the
option holder has the right under certain circumstances to require the other
company to repurchase all or any portion of the option and any securities
purchased under the option. The total profit allowed under each of the option
agreements is $70 million, including any termination fee and expenses paid under
the merger agreement to the holder of the option. See "The Stock Option
Agreements -- Effect of Stock Option Agreements" on page 71 for a discussion of
the effect of the stock option agreements.
OTHER INFORMATION
ACCOUNTING TREATMENT (SEE PAGE 34)
The merger will be accounted for as a "pooling-of-interests", which means
that we will treat our companies as if they had always been combined for
accounting and financial purposes and the assets and liabilities of Kerr-McGee
and Oryx will be carried forward at their historical amounts.
NO APPRAISAL RIGHTS (SEE PAGE 36)
Both companies are incorporated under Delaware law. Under Delaware law,
neither Oryx stockholders nor Kerr-McGee stockholders have any right to an
appraisal of the value of their shares in connection with the merger.
COMPARATIVE PER SHARE MARKET PRICE
INFORMATION (SEE PAGES 42 AND 43)
Kerr-McGee's and Oryx's common stock are each listed on the New York Stock
Exchange. On October 14, 1998, the last full trading day on the New York Stock
Exchange prior to the public announcement of the proposed merger, Kerr-McGee
common stock closed at $46.94 per share and Oryx common stock closed at $11.50
per share. On January , 1999, Kerr-McGee common stock closed at $____ per
share and Oryx common stock closed at $____ per share.
6
<PAGE> 13
SUMMARY SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION
We are providing the following financial information to aid you in your
analysis of the financial aspects of the merger. This information is only a
summary and you should read it in conjunction with the historical financial
statements of Kerr-McGee and Oryx and the related notes contained in their
annual, quarterly and other reports and other information that Kerr-McGee and
Oryx have filed with the Securities and Exchange Commission. See "Where You Can
Find More Information" on page 82.
KERR-MCGEE HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- ------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------ ------ ------ ------ ------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales............................ $1,045 $1,043 $1,388 $1,566 $1,401 $1,272 $1,118
Income (loss) from
continuing operations(a)....... 19 126 161 164 (58) 35 36
Income from
discontinued operations(b)..... 277 23 33 56 27 55 41
Net income (loss)(a)............. 296 149 194 220 (31) 90 77
Diluted earnings (loss)
per common share --
Continuing operations(a)..... .40 2.62 3.36 3.30 (1.12) .67 .74
Discontinued operations(b)... 5.81 .47 .68 1.13 .52 1.07 .83
Net income(a)................ 6.21 3.09 4.04 4.43 (.60) 1.74 1.57
BALANCE SHEET DATA
Total assets(a).................. 3,731 2,958 3,096 3,124 3,213 3,696 3,506
Total debt....................... 900 511 579 663 735 993 859
Total debt less cash............. 649 435 396 542 648 911 765
Stockholders' equity(b).......... 1,657 1,413 1,440 1,367 1,416 1,543 1,512
Common shares outstanding
(thousands).................... 47,165 47,660 47,686 48,294 51,069 51,694 51,655
Cash dividends declared per
common share................... 1.35 1.35 1.80 1.64 1.55 1.52 1.52
</TABLE>
- -------------------------
(a) In 1995, as a result of the impairment of oil and gas assets related to the
adoption of Statement of Financial Accounting Standards No. 121, Kerr-McGee
recognized a noncash, pre-tax charge of $203 million ($123 million after
tax).
(b) In 1998, Kerr-McGee sold its coal operations. During 1995, Kerr-McGee
disposed of substantially all of its refining and marketing operations.
Therefore, results of coal and refining and marketing operations are
reported as discontinued operations.
7
<PAGE> 14
ORYX HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- ------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues........................ $ 614 $ 912 $ 1,213 $ 1,168 $ 1,014 $ 1,082 $1,080
Income (loss) from continuing
operations before
extraordinary charges and
cumulative effect of
accounting change............. (24) 131 172 163 158 (65) (93)
Extraordinary charges........... -- -- (2) -- (23) (12) (7)
Cumulative effect of accounting
change(a)..................... -- -- -- -- -- (948) --
Net income (loss)(a)............ (24) 131 170 163 135 (1,025) (100)
Diluted earnings (loss) per
common share.................. (.23) 1.24 1.62 1.55 1.54 (.68) (1.01)
BALANCE SHEET DATA
Total assets.................... 2,210 2,112 2,108 1,935 1,666 2,118 3,624
Total debt...................... 1,378 1,184 1,188 1,187 1,203 1,711 1,769
Total debt less cash............ 1,371 1,171 1,178 1,178 1,183 1,701 1,759
Stockholders' equity
(deficit)..................... 142 108 157 (37) (209) (347) 676
Common shares outstanding
(thousands)................... 106,234 105,623 105,982 104,983 104,455 98,946 96,932
Cash dividends declared per
common share.................. -- -- -- -- -- -- .40
</TABLE>
- -------------------------
(a) Effective January 1, 1994, Oryx adopted a new policy for determining the
ceiling test for its oil and gas properties. A one-time noncash charge of
$948 million after tax for the cumulative effect of the change was
recognized in 1994.
8
<PAGE> 15
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
Selected Unaudited Pro Forma Combined Financial Information. Kerr-McGee and
Oryx are providing the following unaudited pro forma financial information to
give you a picture of what the results of operations and financial position of
the combined company would have looked like, absent any operational or other
changes, had Kerr-McGee's and Oryx's businesses been combined for the periods
and at the dates indicated. This information is provided for illustrative
purposes only and does not show what their results of operations or financial
position would have been if the merger had actually occurred on the dates
assumed. This information also does not indicate what their future operating
results or consolidated financial position will be. The unaudited pro forma
combined income statement data does not include any of the synergies and cost
reductions expected to result from the merger. Please see "Unaudited Pro Forma
Combined Condensed Financial Statements" on page 43 for a more detailed
explanation of this analysis.
Pooling Accounting Treatment. The merger will be accounted for as a
pooling-of-interests, which means that we will treat our companies as if they
had always been combined for accounting and financial reporting purposes. For a
more detailed description of pooling-of-interests accounting, see "The Proposed
Merger -- Accounting Treatment" on page 34.
Periods Covered. The unaudited pro forma combined income statement data
combines Kerr-McGee's results for its fiscal year 1997 and for the nine months
ended September 30, 1998, with Oryx's results for its fiscal year 1997 and the
nine months ended September 30, 1998, giving effect to the merger as if it had
occurred as of January 1, 1997.
The unaudited pro forma balance sheet data combines Kerr-McGee's and Oryx's
balance sheets at September 30, 1998, giving effect to the merger as if it had
occurred as of September 30, 1998.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1998 DECEMBER 31, 1997
----------------- -----------------
(Millions of dollars, except
per share amounts)
<S> <C> <C>
INCOME STATEMENT DATA
Sales....................................................... $1,664 $2,605
Income (loss) from continuing operations.................... (20) 351
Net income.................................................. 258 382
Diluted earnings (loss) per common share --
Continuing operations..................................... (.23) 4.03
Net income................................................ 2.96 4.39
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1998
-------------------
(Millions of
dollars, except per
share amounts)
<S> <C>
BALANCE SHEET DATA
Total assets................................................ $ 6,015
Total debt.................................................. 2,278
Total debt less cash........................................ 2,020
Stockholders' equity........................................ 1,664
Common shares outstanding (thousands)....................... 86,365
Cash dividends declared per common share.................... .74
</TABLE>
9
<PAGE> 16
RISK FACTORS
In addition to the matters addressed in "Cautionary Statement Concerning
Forward-Looking Statements" on page 13 and the other information included in
this document, the Kerr-McGee and Oryx stockholders should consider the
following risk factors carefully in determining whether to approve the merger.
BENEFITS FROM INTEGRATION OF OPERATIONS MAY NOT BE ACHIEVED
The merger is expected to create a more competitive company. This requires
the integration of two companies that previously operated independently. The
workforce will have to be combined and reduced and offices consolidated. Some
employees will be required to relocate as part of this process. We expect that
the combined company will, as a result of its increased size and requirements,
be able to consolidate its purchasing and obtain more favorable prices from
suppliers. However, its ability to do so may be limited by changes in the
purchasing power or practices of its competitors and other market dynamics. No
assurance can be given that the companies will be able to integrate their
operations without encountering difficulties or experiencing the loss of key
employees or that the cost savings and synergies expected from such integration
will be realized.
SIGNIFICANT MERGER-RELATED CHARGES WILL BE INCURRED
Kerr-McGee and Oryx estimate that, as a result of the merger, the combined
company will incur consolidation and integration expenses of approximately $125
million. In addition, it is expected that Kerr-McGee and Oryx will incur
merger-related expenses of approximately $30 million, consisting of investment
banking, legal and accounting fees and financial printing and other related
charges. Kerr-McGee and Oryx expect to expense the anticipated $155 million
pre-tax charge relating to the above-referenced expenses before the end of 1999.
The foregoing amounts are preliminary and the actual amounts may be higher or
lower. Moreover, the combined company may incur additional unanticipated
expenses in connection with the integration of Kerr-McGee's and Oryx's
businesses.
EXCHANGE RATIO NOT AFFECTED BY CHANGES IN STOCK PRICES
The exchange ratio -- i.e. the number of shares of Kerr-McGee common stock
into which each share of Oryx common stock will be converted in the merger -- is
fixed. The market values of Kerr-McGee and Oryx common stock at the time of the
merger may vary significantly from their prices on the date the merger agreement
was executed, the date of this document or the date on which Kerr-McGee and Oryx
stockholders vote on the merger. Because the exchange ratio will not be adjusted
to reflect any changes in the market value of Kerr-McGee or Oryx common stock,
the market value of the Kerr-McGee common stock issued in the merger and the
Oryx common stock surrendered in the merger may be higher or lower than the
value of such shares on such dates.
VOTING INTERESTS OF KERR-MCGEE AND ORYX STOCKHOLDERS WILL BE SUBSTANTIALLY
DILUTED
Based on the exchange ratio and the capitalization of Kerr-McGee and Oryx
immediately following the reverse stock split and the merger, Kerr-McGee
stockholders will own securities representing approximately 55% of the voting
power of the combined company and Oryx stockholders will own securities
representing approximately 45% of the voting power of the combined company. This
will constitute a substantial dilution of the voting interest of both Kerr-McGee
and Oryx stockholders.
10
<PAGE> 17
VOLATILE PRODUCT PRICES AND MARKETS COULD ADVERSELY AFFECT RESULTS
The expectation of higher 1999 earnings per share for Kerr-McGee is based
on an assumed average crude oil price of $15 per barrel for 1999 and a natural
gas price of $2.25 per MmBTU that year. Current oil prices are below those
levels.
The combined company's results of operations will be highly dependent upon
the prices of and demand for oil and gas. Historically, the markets for oil and
gas have been volatile and are likely to continue to be volatile in the future.
Accordingly, the prices received by the combined company for its oil and gas
production are dependent upon numerous factors which will be beyond its control.
These factors include, but are not limited to, the level of ultimate consumer
product demand, governmental regulations and taxes, the price and availability
of alternative fuels, the level of imports and exports of oil and gas, and the
overall economic environment. Any significant decline in prices for oil and gas
could have a material adverse effect on the combined company's financial
condition, results of operations and quantities of reserves recoverable on an
economic basis. Should the industry experience significant price declines or
other adverse market conditions, the combined company may not be able to
generate sufficient cash flow from operations to meet its obligations and make
planned capital expenditures. In order to manage its exposure to price risks in
the sale of its oil and gas, the combined company may from time to time enter
into commodities futures or option contracts to hedge a portion of its crude oil
and natural gas sales volume, although Kerr-McGee does not currently do so. Any
such hedging activities may prevent the combined company from realizing the
benefits of price increases above the levels reflected in such hedges.
The combined company's results of operations also will be dependent on the
prices and demand for titanium dioxide pigment. Demand for pigments is generally
tied to regional economic conditions and the availability of imports and exports
in such areas, which are beyond the control of the combined company.
CONTINUED CAPITAL EXPENDITURES REQUIRED
If revenues of the combined company substantially decrease as a result of
lower oil and gas prices or otherwise, the combined company may have limited
ability to expend the capital necessary to replace its reserves or to maintain
production at current levels, resulting in a decrease in production over time.
Kerr-McGee and Oryx expect that the combined company will continue to make
capital expenditures for the acquisition, exploration and development of oil and
gas reserves. Historically, Kerr-McGee and Oryx have financed these expenditures
primarily with cash flow from operations and proceeds from debt and equity
financings, asset sales and sales of partial interests in foreign concessions.
Kerr-McGee and Oryx believe that, after considering the amount of the combined
company's debt (see "Unaudited Pro Forma Combined Condensed Financial
Statements" on page 43), the combined company will have sufficient cash flow
from operations, available drawings under its credit facilities and other debt
financings to fund capital expenditures. However, if the combined company's cash
flow from operations is not sufficient to satisfy its capital expenditure
requirements, there can be no assurance that additional debt or equity financing
or other sources of capital will be available to meet these requirements. If the
combined company is not able to fund its capital expenditures, its interests in
some of its properties may be reduced or forfeited.
ENVIRONMENTAL LIABILITIES AND REGULATION
The companies' current and former operations involve management of
regulated materials and are subject to various environmental laws and
regulations. These laws and regulations will obligate the combined company to
clean up various sites at which petroleum, chemicals, low-level radioactive
substances or other regulated materials have been disposed of or released. Some
of these sites have been designated Superfund sites by the U.S. Environmental
Protection Agency pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980. Each of the companies is also a party to
legal proceedings pending in various courts and agencies involving environmental
matters.
It is not possible for the companies to reliably estimate the amount and
timing of all future expenditures related to environmental matters because of:
- the difficulty of estimating clean up costs;
11
<PAGE> 18
- the uncertainty in quantifying liability under environmental laws that
impose joint and several liability on all potentially responsible
parties; and
- the continually changing nature of environmental laws and regulations.
Although management of each of the companies believes that it has
established appropriate reserves for clean up costs, due to these uncertainties
the combined company could be required to make additional reserves in the
future.
RISK RELATED TO THE ADOPTION OF THE EURO
On January 1, 1999, 11 of the 15 member countries of the European Union
implemented fixed conversion rates between their existing currencies and one
common currency -- the euro. The euro is traded on world currency exchanges and
may be used in business transactions. On January 1, 2002, new euro-denominated
bills and coins will be issued, and existing currencies will be completely
withdrawn from circulation by June 30 of that year.
The combined company will have two operations in the European Union. The
European oil and gas operations are centered on the U.K. section of the North
Sea. The U.K. is not one of the 11 participating member countries adopting the
euro and there are no significant euro related issues associated with these
operations.
Kerr-McGee's European titanium dioxide pigment manufacturing and marketing
operations are affected by the euro. In April 1998 Kerr-McGee acquired eighty
percent (80%) of the Bayer AG titanium dioxide operations in Germany and Belgium
through a joint venture with Bayer AG. The joint venture has contracted with
Bayer AG for supplies, accounting services and other administrative services.
Representations were obtained from Bayer AG officials that supporting systems
would be euro compliant by January 1, 1999 and that services rendered by Bayer
AG to the joint venture would not be disrupted as a result of the euro
conversion. Some of the services provided by Bayer AG have been converted to
euro compliant Kerr-McGee systems in 1998 and others will be converted in 1999.
In the second half of 1998, a multi-functional team was established to
review Kerr-McGee's ability to operate under the euro starting January 1, 1999.
All business related issues concerning the euro, including accounting, banking,
contracts, taxation and other legal matters, were reviewed in the second half of
1998, were modified where required or were determined to be euro compliant.
Kerr-McGee believes that the euro conversion will not have a material adverse
impact on our financial condition or results of operations.
CERTAIN OFFICERS MAY HAVE INTERESTS IN THE MERGER DIFFERING FROM STOCKHOLDERS
A number of officers of Kerr-McGee and Oryx, including some officers who
are also directors, have employment agreements, retention incentives and
compensation or benefit plans that provide them with interests in the merger
that may be different from, or in addition to, your interests. In addition, some
of the executive officers of Oryx will receive significant compensation when
their employment is terminated at the end of a transition period after the
merger. Other executive officers of Oryx as well as certain executive officers
of Kerr-McGee could receive significant compensation in certain circumstances if
their employment is voluntarily or involuntarily terminated following the
merger. See pages through for a detailed summary of these arrangements.
12
<PAGE> 19
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Kerr-McGee and Oryx have made certain forward-looking statements in this
document and in the documents referred to in this document which are subject to
risks and uncertainties. These statements are based on the beliefs and
assumptions of the management of the companies and on the information currently
available to such management. Forward-looking statements include information
concerning possible or assumed future results of Kerr-McGee, Oryx and the
combined company set forth under "Questions and Answers about the
Kerr-McGee/Oryx Merger", "Risk Factors", "The Proposed Merger -- Kerr-McGee's
Reasons for the Merger; Recommendation of the Board of Directors of Kerr-McGee",
"The Proposed Merger -- Oryx's Reasons for the Merger; Recommendation of the
Board of Directors of Oryx", "The Proposed Merger -- Opinion of Kerr-McGee's
Financial Advisor", "The Proposed Merger -- Opinion of Oryx's Financial
Advisor", "Comparative Per Share Information -- Comparative Market Price and
Dividend Information" and statements contained elsewhere in this document
concerning Kerr-McGee's and Oryx's plans for their and the combined company's
growth and future operations or financial position. These statements may be
preceded by, followed by, or otherwise include the words "believes", "expects",
"anticipates", "intends", "plans", "estimates" or similar expressions.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and stockholder values
of Kerr-McGee, Oryx and the combined company may differ materially from those
expressed in these forward-looking statements. Many of the factors that will
determine these results and values are beyond Kerr-McGee's and Oryx's ability to
control or predict. Stockholders of Kerr-McGee and Oryx are cautioned not to put
undue reliance on any forward-looking statements. Except for their ongoing
obligations to disclose material information as required by the federal
securities laws, Kerr-McGee and Oryx do not have any intention or obligation to
update forward-looking statements after they distribute this document, even if
new information, future events or other circumstances have made them incorrect
or misleading. For those statements, Kerr-McGee and Oryx claim the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
You should understand that various factors, in addition to those discussed
elsewhere in this document and in the documents referred to in this document,
could affect the future results of the combined company following the merger and
could cause results to differ materially from those expressed in such
forward-looking statements, including:
- materially adverse changes in general economic conditions or in the
markets served by Kerr-McGee and Oryx, including changes in the prices of
oil, natural gas, titanium dioxide pigments and other chemicals;
- the success of the combined company's oil and natural gas exploration,
development and production programs;
- uncertainties about estimates of reserves;
- the ability of Kerr-McGee and Oryx to successfully integrate their
operations;
- the financial resources of competitors;
- changes in laws and regulations, including environmental laws;
- the quality of future opportunities that may be presented to or pursued
by Kerr-McGee, Oryx or the combined company;
- the ability to generate cash flows or obtain financing to fund growth and
the cost of such financing;
- the ability to obtain regulatory approvals;
- the ability to respond to challenges in international markets, including
changes in currency exchange rates, political or economic conditions, and
trade and regulatory matters; and
- the ability to complete and integrate appropriate acquisitions, strategic
alliances and joint ventures.
13
<PAGE> 20
THE PROPOSED MERGER
GENERAL
Kerr-McGee and Oryx are furnishing this document to holders of common
stock, par value $1.00 per share, of Kerr-McGee and holders of common stock, par
value $1.00 per share, of Oryx in connection with the solicitation of proxies by
the Boards of Directors of Kerr-McGee and Oryx for use at special meetings of
their stockholders and at any adjournments or postponements thereof.
Kerr-McGee Special Meeting. At the special meeting of Kerr-McGee
stockholders, holders of Kerr-McGee common stock will be asked to vote upon a
proposal (the "Kerr-McGee Proposal") to adopt the Agreement and Plan of Merger,
dated as of October 14, 1998, pursuant to which the merger of Oryx into
Kerr-McGee will be effected. In the merger, among other things, the certificate
of incorporation and by-laws of Kerr-McGee will be amended and restated as
described below under "-- Amendment of Kerr-McGee's Certificate of Incorporation
and By-Laws" on page 14. The amendments to the certificate of incorporation and
by-laws are also described in more detail under "Amendment and Restatement of
Kerr-McGee's Certificate of Incorporation and By-Laws and Comparison of
Stockholders' Rights" on page 72. The affirmative vote of the holders of a
majority of the shares of Kerr-McGee common stock outstanding, excluding shares
held by subsidiaries, on January 13, 1999, the record date for the Kerr-McGee
meeting, is required to adopt the Kerr-McGee Proposal. See "The Kerr-McGee
Special Meeting" on page 37.
Oryx Special Meeting. At the special meeting of Oryx stockholders, holders
of Oryx common stock will be asked to vote upon a proposal (the "Oryx Proposal")
to adopt the merger agreement and approve an amendment to the certificate of
incorporation of Oryx providing for the reverse stock split of Oryx common stock
described below. The reverse stock split is described in more detail under "The
Reverse Stock Split" on page 71. The affirmative vote of the holders of a
majority of the shares of Oryx common stock outstanding, excluding shares held
by subsidiaries, on January 13, 1999, the record date for the Oryx meeting, is
required to adopt the Oryx Proposal. See "The Oryx Special Meeting" on page 38.
THE MERGER AND REVERSE SPLIT
The merger agreement provides, among other things, for (1) the filing of an
amendment to the certificate of incorporation of Oryx to effect a reverse split
of Oryx common stock (the "Reverse Split"), in which each share of Oryx common
stock outstanding immediately prior to the Reverse Split will be reclassified as
0.369 shares of Oryx common stock (the "Exchange Ratio"), immediately followed
by (2) the merger of Oryx into Kerr-McGee, with Kerr-McGee being the surviving
corporation. In the merger, each share of Oryx common stock outstanding after
giving effect to the Reverse Split will be converted into the right to receive
one share of Kerr-McGee common stock. The Reverse Split is being effected in
order to ensure that the conversion price of Oryx's 7 1/2% Convertible
Subordinated Debentures due 2014 is adjusted so that the debentureholders will
be entitled to receive the same number of shares of Kerr-McGee common stock
regardless of whether they convert their debentures before or after the merger.
The merger will become effective at the time of filing a certificate of merger
with the Secretary of State of Delaware or at such later time as is specified in
the certificate of merger (such time being herein referred to as the "Effective
Time"), which is expected to occur as soon as practicable following the approval
of the Kerr-McGee and Oryx stockholders. See "The Merger Agreement" on page 60.
AMENDMENT OF KERR-MCGEE'S CERTIFICATE OF INCORPORATION AND BY-LAWS
The merger agreement provides for the amendment and restatement of
Kerr-McGee's certificate of incorporation and by-laws in the merger as of the
Effective Time (as so amended and restated, the "Combined Company Charter" and
the "Combined Company By-Laws"). The amendments generally incorporate certain
governance provisions from the certificate of incorporation and by-laws of Oryx
as
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negotiated by the parties in connection with the merger (see "-- Background of
the Merger" on page 16) or reflect revisions in Delaware law. The amendments
will, among other things:
- provide for the classification of the Board of Directors of the combined
company into three staggered classes, with each class serving an
overlapping three-year term (which under Delaware law will result in the
combined company stockholders only being able to remove directors with
cause);
- require a 75% vote of the stockholders of the combined company to remove
a director for cause;
- require that the stockholders of the combined company take action only
pursuant to a meeting of the stockholders, and not by written consent;
- permit only the Chief Executive Officer and the Board of Directors of the
combined company to call a special meeting of the stockholders;
- require a 75% vote of the stockholders of the combined company to amend
the sections of the Combined Company Charter and Combined Company By-Laws
containing the foregoing provisions; and
- increase the authorized number of shares of Kerr-McGee common stock from
150 million to 300 million.
Forms of the Combined Company Charter and Combined Company By-Laws are
included as Exhibits 1.5 and 1.6 to the Merger Agreement, which is attached to
this document as Appendix A.
Certain of the amendments, such as the creation of a staggered board of
directors, the requirement of stockholder action by meeting only, the
restrictions on who may call special meetings of the stockholders, and the
requirement of a 75% stockholder vote to amend certain provisions, may have
certain anti-takeover effects. These amendments may discourage attempts by
others to acquire control of the combined company without negotiation with its
Board of Directors.
See "Amendment and Restatement of Kerr-McGee's Certificate of Incorporation
and By-Laws and Comparison of Stockholders' Rights" on page 72.
STOCK OPTION AGREEMENTS
As an inducement and condition to Oryx's entering into the merger
agreement, Kerr-McGee, as issuer, and Oryx, as grantee, entered into a Stock
Option Agreement (the "Kerr-McGee Option Agreement") whereby, among other
things, Kerr-McGee granted to Oryx an option to purchase 9,434,181 shares of
Kerr-McGee common stock, representing approximately 19.9% of the outstanding
shares of Kerr-McGee common stock, at a price per share equal to $46.94, the
closing price on the New York Stock Exchange immediately prior to the execution
of the merger agreement and the Option Agreements. As an inducement and
condition to Kerr-McGee's entering into the merger agreement, Oryx, as issuer,
and Kerr-McGee, as grantee, entered into a substantially identical stock option
agreement (the "Oryx Option Agreement," and together with the Kerr-McGee Option
Agreement, the "Option Agreements"), pursuant to which Oryx has granted to
Kerr-McGee an option to purchase 21,140,482 shares of Oryx common stock,
representing approximately 19.9% of the outstanding shares of Oryx, at a price
per share equal to $11.50, the closing price on the New York Stock Exchange
immediately prior to the execution of the merger agreement and the Option
Agreements.
The options become exercisable under certain circumstances, which generally
involve the termination of the merger agreement following:
- an adverse change in (or failure to reconfirm) the recommendation of a
party's Board of Directors to such party's stockholders to approve the
merger;
- the approval or recommendation by a party's Board of Directors of another
acquisition proposal;
- the triggering of a party's Rights Agreement;
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- the acceptance by a party of a superior proposal or notice that it
intends to do so; or
- the failure of a party's stockholders to approve the merger after a
competing proposal has been publicly communicated, if such party enters
into a definitive agreement for another transaction within 12 months of
such termination and such other transaction is later consummated.
The maximum profit under each Option Agreement is limited to $70 million,
including any termination fee and expenses paid pursuant to the merger
agreement. See "The Stock Option Agreements" beginning on page 68.
The Option Agreements were entered into in connection with the merger
agreement in order to increase the likelihood that the merger will be
consummated in accordance with the terms of the merger agreement. The Option
Agreements would have the effect of making an acquisition or other combination
of either company by or with a third party more costly because of the need in
any such transaction to acquire or account for the Option Shares that would be
issued under the applicable Option Agreement or to pay the price therefor.
Moreover, following consultation with each of their respective independent
accountants, the management of each of Kerr-McGee and Oryx believe that the
granting of the Options is likely to prohibit any other acquiror of either
company during the next two years from accounting for any such acquisition by
using the pooling-of-interests accounting method. Accordingly, the Option
Agreements may discourage a third party who might be interested in effecting
such an acquisition or combination from considering or proposing the transaction
or may cause such third party to offer to pay a lower price.
BACKGROUND OF THE MERGER
In the late summer of 1998, Kerr-McGee and Oryx were each pursuing a growth
strategy for their oil and gas exploration and production businesses. The
continuing decline in oil prices had depressed the oil and gas industry, causing
Luke R. Corbett, Kerr-McGee's Chairman and Chief Executive Officer, and other
members of Kerr-McGee's senior management to believe that Oryx might be willing
to consider a strategic combination. In August, 1998, Mr. Corbett telephoned
Robert L. Keiser, Oryx's Chairman and Chief Executive Officer, to propose
meeting to discuss a possible transaction. Mr. Keiser indicated an interest in
such a discussion, but informed Mr. Corbett that he wanted to discuss the matter
with Oryx's Board of Directors before pursuing it with Mr. Corbett.
At the regular meeting of the Oryx Board on September 3, 1998, Mr. Keiser
discussed with the Oryx Board his conversation with Mr. Corbett. The Oryx Board
authorized Mr. Keiser to follow-up on this contact.
Mr. Corbett and Mr. Keiser met on September 11, 1998 and discussed on a
preliminary basis the potential benefits and possible structure of a business
combination transaction involving the companies. Mr. Keiser indicated that he
intended to report the discussion to the Oryx Board and inform Mr. Corbett if
Oryx was interested in further discussions.
At Kerr-McGee's regularly scheduled Board of Directors meeting on September
15, Mr. Corbett reported the status of his contacts with Mr. Keiser and
indicated that it was possible that Oryx would be interested in entering into
discussions with respect to a strategic combination. At the meeting, among other
things, Kerr-McGee's senior management made presentations to the Kerr-McGee
Board of Directors regarding Kerr-McGee's business and plans, Oryx and the
opportunity for and potential benefits of a strategic combination, as well as
the material terms of the transaction that management recommended be considered.
The Kerr-McGee Board authorized senior management to pursue discussions with
Oryx and to report back regarding a potential transaction. After the Kerr-McGee
Board meeting, Mr. Corbett informed Mr. Keiser that the Kerr-McGee Board had
authorized Kerr-McGee to engage in further discussions with Oryx regarding a
strategic combination.
On September 18, the Oryx Board held a special meeting at which various
financial, structural and legal aspects of a possible business combination
transaction with Kerr-McGee were discussed. Each member of the Oryx Board
concurred that Oryx's senior management should continue to evaluate a
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possible transaction. Following the September 18 board meeting, Oryx retained
Goldman, Sachs & Co. as its financial advisor and Jones, Day, Reavis & Pogue as
its legal advisor to assist it in evaluating a possible transaction with
Kerr-McGee. Mr. Keiser informed Mr. Corbett that the Oryx Board had authorized
Oryx to engage in further discussions with Kerr-McGee regarding a strategic
combination.
During the week of September 21, representatives of Kerr-McGee and Oryx
began due diligence investigations and discussions with respect to each other,
including as to each other's business, financial condition, future prospects and
actual and contingent liabilities.
On September 24, Mr. Corbett and Mr. Keiser met to discuss the basic terms
of a possible transaction, including the form of the combination as an all-stock
merger and the initial composition of the board of directors and senior
management of the combined company.
On September 28, Simpson Thacher & Bartlett, counsel for Kerr-McGee,
delivered initial drafts of the merger agreement and Option Agreements to Oryx
and Jones Day. During the week of September 28, Kerr-McGee and Oryx and their
legal advisors continued due diligence discussions with each other.
On September 30 and October 1, the Oryx Board held a special meeting and
reviewed the strategic alternatives available to Oryx with the assistance of
Jones Day and Goldman Sachs. The presentations to and discussions by the Oryx
Board included, among other things,
(1) a review by senior management of Oryx's preliminary long-range
strategic plan,
(2) a presentation by Jones Day regarding the duties of directors,
(3) a review by Goldman Sachs of strategic alternatives available to
Oryx, and
(4) the results of Oryx's due diligence efforts to date.
The Oryx Board directed that Oryx's senior management and Oryx's legal and
financial advisors continue to explore a possible business combination
transaction with Kerr-McGee.
On October 2, members of Kerr-McGee's and Oryx's senior management and
their counsel had a telephone conference to discuss legal issues regarding the
form and other terms of the transaction and the status of due diligence efforts.
During the call, Oryx's representatives encouraged Kerr-McGee's representatives
to consider structuring the transaction as a merger of Kerr-McGee into Oryx
because, among other things, they believed that Oryx's certificate of
incorporation, including provisions therein for a classified board and certain
related corporate governance provisions that were not contained in Kerr-McGee's
certificate of incorporation, would provide greater protections to stockholders
of the combined company. Kerr-McGee believed that it was important that the
financial community not perceive the merger as an acquisition of Kerr-McGee by
Oryx and that Kerr-McGee continue as the surviving corporate entity.
Accordingly, Kerr-McGee's representatives proposed that Oryx merge into
Kerr-McGee. Kerr-McGee's representatives also noted that the parties
contemplated that the size of the board of directors of the combined company
would exceed eleven, but that Oryx's certificate of incorporation limits the
size of Oryx's board of directors to eleven and provides for a 75% supermajority
stockholder vote to amend such limitation. Kerr-McGee's certificate of
incorporation does not contain this limitation. It was agreed that Oryx would
merge into Kerr-McGee and that Kerr-McGee's certificate of incorporation would
be amended to include the specified corporate governance provisions from Oryx's
certificate of incorporation. See "Amendment and Restatement of Kerr-McGee's
Certificate of Incorporation and By-Laws and Comparison of Stockholders' Rights"
on page 72.
On October 4, Lehman Brothers Inc., who had been previously retained as
Kerr-McGee's financial advisor, and Goldman Sachs began meeting with each other
and with the companies to conduct financial due diligence discussions. On
October 5, Oryx's legal counsel provided Kerr-McGee with its initial comments
regarding the draft transaction documentation.
During the week of October 5, Kerr-McGee and Oryx and their advisors
continued due diligence reviews. On October 8, Lehman Brothers presented
Kerr-McGee's senior management with a preliminary financial analysis of the two
companies and the combination, reflecting the information generated in the due
diligence process.
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On October 10, the Oryx Board held a special meeting and received (1) an
updated report on the results of Oryx's due diligence investigations and (2) a
presentation by Goldman Sachs of its analysis of the strategic plans of Oryx and
Kerr-McGee, the impact a possible combination would have on these plans and the
potential financial benefits to Oryx's stockholders of a possible business
combination with Kerr-McGee based upon alternative assumptions as to exchange
ratios. In addition, the Oryx Board was advised of proposed changes to Oryx
benefit plans and arrangements designed, in general, to harmonize the benefit
arrangements of the two companies, which had been discussed by representatives
of the two companies. The Oryx Board directed that Oryx's senior management and
legal and financial advisors continue the discussions of a possible business
combination transaction with Kerr-McGee.
During a meeting between senior management of Kerr-McGee and Oryx and their
financial advisors on October 11, Oryx proposed an exchange ratio of 0.369
shares of Kerr-McGee common stock for each share of Oryx common stock.
Kerr-McGee subsequently proposed an exchange ratio of 0.33. The parties agreed
to discuss the appropriate exchange ratio further in connection with the other
terms of the transaction.
On October 12, the Kerr-McGee Board met to discuss the current status of
the transaction. Representatives of Lehman Brothers and Simpson Thacher
participated in the meeting. Kerr-McGee's senior management and Lehman Brothers
presented their analyses of the two companies and the potential financial terms
of a transaction including the matters set forth in "-- Opinion of Kerr-McGee's
Financial Advisor" on page 24, and Kerr-McGee's senior management presented
their views of the proposed combination, including the matters set forth under
"-- Kerr-McGee's Reasons for the Merger; Recommendation of the Board of
Directors of Kerr-McGee" on page 20. Kerr-McGee's senior management and Simpson
Thacher presented the current status of discussions and negotiations with Oryx
and Jones Day. Simpson Thacher also discussed the duties of the directors and
summarized the terms of the current drafts of the transaction documents. The
Kerr-McGee Board discussed the information presented, and directed Kerr-McGee's
senior management to complete the due diligence review of Oryx's business and
the negotiation of the business combination transaction.
Negotiations between Mr. Corbett and Mr. Keiser, and other members of
Kerr-McGee's and Oryx's senior management and the companies' legal and financial
advisors, continued on October 13 and 14, and during the afternoon of October 14
agreement was reached on the terms of the agreements, including the Exchange
Ratio, termination events and fees and related provisions in the merger
agreement and Option Agreements (see "The Merger Agreement -- Termination" on
page 66, "The Merger Agreement -- Termination Fees and Expenses" on page 67, and
"The Stock Option Agreements" on page 68) and initial composition of the board
of directors of the combined company for presentation to the companies' Boards
of Directors at special meetings held later that day.
At the October 14 Kerr-McGee Board meeting, members of Kerr-McGee's senior
management and representatives of Lehman Brothers and Simpson Thacher updated
their October 12 presentations, and Kerr-McGee's senior management reported the
final results of their due diligence review to the Board. In addition,
Kerr-McGee's senior management reviewed the matters related to the transaction
in which the Kerr-McGee Board or senior management had an interest which could
be said to be different from or in addition to the interests of Kerr-McGee
stockholders in general. See "Interests of Certain Persons in the Merger" on
page 54. Lehman Brothers then delivered its opinion that, as of the date of such
opinion and based upon and subject to certain matters stated therein, the
Exchange Ratio was fair from a financial point of view to Kerr-McGee. See
"-- Opinion of Kerr-McGee's Financial Advisor" on page 23. After discussion and
consideration, the Kerr-McGee Board unanimously approved the merger agreement
and the Option Agreements, and the merger and other transactions contemplated
thereby.
At the October 14 Oryx Board meeting, Oryx's senior management and
representatives of Goldman Sachs reported on the course of discussions with
Kerr-McGee and Jones Day discussed the duties of directors. In addition, Oryx's
management and Jones Day summarized the terms of the transaction documents and
the amendments to be made to Oryx's employee benefit plans and executive
severance
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arrangements. The Oryx Board was also informed of each of the matters related to
the transaction in which the Oryx Board and Oryx's senior management had an
interest which could be said to be different from or in addition to the
interests of Oryx stockholders in general. See "Interests of Certain Persons in
the Merger" on page 54. Representatives of Goldman Sachs then orally informed
the Oryx Board, which oral advice was subsequently confirmed in writing, that,
as of October 14, 1998, in the opinion of Goldman Sachs, the Exchange Ratio was
fair to Oryx stockholders from a financial point of view. See "-- Opinion of
Oryx's Financial Advisor" on page 28. Following discussion, the Oryx Board, by
unanimous vote, approved the merger agreement, the Option Agreements and the
other transactions contemplated thereby.
Following the approvals of the two companies' Board of Directors, the
merger agreement and Option Agreements were executed in the evening of October
14, 1998 and were publicly announced by the companies in the early morning of
October 15, 1998.
As described above, negotiations regarding the terms of the merger
agreement and the Option Agreements were conducted primarily by Mr. Corbett and
Mr. Keiser and other members of Kerr-McGee's and Oryx's senior management in
consultation with and at the direction of the companies' Boards of Directors and
with the advice and assistance of the companies' legal and financial advisors.
KERR-MCGEE'S REASONS FOR MERGER;
RECOMMENDATION OF THE BOARD OF DIRECTORS OF KERR-MCGEE
At a special meeting of the Kerr-McGee Board held on October 14, 1998, the
Kerr-McGee Board unanimously (1) determined that the merger agreement and the
Option Agreements, and the merger and other transactions contemplated thereby,
are advisable and are fair to and in the best interests of Kerr-McGee and its
stockholders, (2) approved the merger agreement and the Option Agreements, and
the merger and other transactions contemplated thereby, (3) recommended that the
stockholders of Kerr-McGee adopt the merger agreement and (4) directed that the
merger agreement be submitted for consideration by Kerr-McGee's stockholders at
the Kerr-McGee meeting.
Kerr-McGee's Reasons for the Merger. The Kerr-McGee Board believes that the
merger offers an excellent opportunity to build value for Kerr-McGee's
stockholders for the following reasons, among others:
- The merger furthers Kerr-McGee's strategy of growing its oil and gas
exploration and production business.
- The merger will enable the combined company to realize both corporate and
operational synergies. Transition teams have identified pre-tax synergies
in excess of $100 million annually. These synergies will be achieved
principally by reductions in general and administrative costs, including
consolidation of offices and reductions in staff, consolidation of
operations in the Gulf of Mexico and the U.K. sector of the North Sea,
reductions of exploration costs and the costs of financing Oryx's
operations.
- The merger will create a larger, more competitive company that will have
advantages of scale in many areas, including exploration, development,
production, engineering, research and technology. This will better enable
the combined company to enhance profitability and maximize returns to its
stockholders. The combined company will be the fourth largest independent
oil and gas exploration and production company based in the United
States, the third largest independent producer in the Gulf of Mexico, the
largest U.S.-based independent producer in the U.K. sector of the North
Sea and the largest holder of deepwater blocks in the Gulf of Mexico
among the independents.
- The combined company will have an enterprise value of approximately $6
billion and more than $1 billion in discretionary cash flow per year,
based on 1997 results. Moreover, the combined company will maintain
Kerr-McGee's strategic focus on its titanium dioxide chemical business,
which will provide a source of cash flow that is independent of the more
volatile oil and gas business. The financial strength of the combined
company will enable the company to better
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withstand cyclical price movements and help to maintain more consistent
exploration programs in low price environments, while preserving the
ability to service and retire debt and pay dividends.
- The combined company will have proved reserves of more than a billion
barrels of oil equivalent and combined production of about 300,000
barrels of oil equivalent per day. Nearly 85% of the reserves are located
in the United States or the United Kingdom.
- Oryx's extensive prospect inventory complements Kerr-McGee's existing
inventory and expands core areas within the North Sea and the deepwater
Gulf of Mexico. The combined company will have approximately 40 million
gross acres for exploration, including more than 230 blocks in the high-
potential deep water of the Gulf of Mexico.
- Oryx's exploration and deepwater drilling and development expertise
coupled with Kerr-McGee's development and exploitation expertise provides
the combined company with complementary skill sets that will better
enable the combined company to optimize its prospect inventory and
control finding and development costs.
- The combination of Kerr-McGee's relatively underleveraged capitalization
with Oryx's leveraged capitalization should enable the combined company
to continue with an investment-grade debt rating and lower the cost of
capital needed to finance an exploration program suitable for realizing
the inherent value of Oryx's assets.
- The merger is expected to be accretive to Kerr-McGee's earnings per share
(based on an assumed average 1999 crude oil price of $15 per barrel and a
natural gas price of $2.25 per MmBTU that year) and cash flow per share
beginning in 1999 and for the foreseeable future thereafter, excluding
one-time costs associated with the merger which are expected to be
approximately $155 million pre-tax.
Information and Factors Considered by the Kerr-McGee Board. The Kerr-McGee
Board made its determination after careful consideration of, and based on, a
number of factors, including, among other things, the factors described above
and the following additional material factors:
- the judgment, advice and analyses of Kerr-McGee's senior management,
including its favorable recommendation of the merger;
- the presentations by and discussions with Kerr-McGee's senior management
and representatives of Simpson Thacher and Lehman Brothers regarding the
terms of the merger agreement and the Option Agreements;
- the presentation and opinion of Lehman Brothers described below to the
effect that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the Exchange Ratio was fair from a
financial point of view to Kerr-McGee (see "-- Opinion of Kerr-McGee's
Financial Advisor" on page 23);
- the significant cost savings and operating efficiencies available as a
result of consummating the merger and the ability of the combined company
more effectively to exploit the existing assets of the two companies and
to pursue future opportunities;
- the Kerr-McGee Board's understanding of the current economic and market
conditions and trends, including in the oil and gas exploration and
production ("E&P") industry, the strategic options available to
Kerr-McGee, the likelihood of future consolidation in the E&P industry
and Kerr-McGee's ability to take advantage of available opportunities;
- current industry conditions, including the decline in oil prices, and the
challenges;
- expenses of combining the businesses of two major corporations of this
size, including the combination and relocation of headquarters and
operations and the risks that the companies would not be able to
integrate their operations, including combining and reducing the work
force, consolidating offices and relocating employees, without
encountering difficulties or experiencing the loss of key employees, or
that the companies would not realize the cost savings and synergies
expected from such integration, including those expected from the actions
specified above and from
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the combined company's anticipated ability to consolidate its purchasing
and obtain more favorable prices from suppliers;
- Kerr-McGee's and Oryx's strategic fit and compatible corporate cultures;
- the impact of the merger on the employees of Kerr-McGee and Oryx,
including relocations and reductions in force and the terms of employee
severance arrangements, and the potentially greater opportunities for
continuing employees in the surviving company;
- that, in light of the commodity nature of the companies' oil and gas
businesses, there would likely be no adverse impact on the companies'
customers;
- the terms of the merger agreement, including the conditions to closing of
the merger, the ability of each company under certain conditions to
consider unsolicited alternative business combination proposals, the
ability to terminate the agreement on certain conditions, and the
termination fees payable on certain termination events (see "The Merger
Agreement" on page 61, including "-- Conditions to the Merger" on page
63, "-- Other Acquisition Proposals" on page 65, "-- Termination" on page
67, and "-- Termination Fees and Expenses" on page 68);
- the reciprocal granting of the stock options under the Option Agreements,
the circumstances under which such stock options could be exercised and
the other terms and consequences of such options (see "The Stock Option
Agreements" on page 69, including "-- Effect of Stock Option Agreements"
on page 71);
- the parties' ability to consummate the merger;
- that the merger will be accomplished on a tax-free basis to the
stockholders for United States federal income tax purposes (except for
cash received by Oryx stockholders in lieu of fractional shares);
- that the merger will be accounted for as a pooling-of-interests
transaction that, among other things, will not require the recognition or
amortization of goodwill or any adjustments to the book values of Oryx's
assets;
- the current and historical market prices of the common stock of each
company;
- information concerning the financial performance and condition, business
operations, debt and capital levels, asset quality, personnel and
prospects of Kerr-McGee and Oryx, and each company's projected future
financial performance as a separate entity and on a combined basis;
- the increased leverage created by assuming the debt of Oryx in the merger
and the ability of the combined company to service and repay such debt;
- the governance structure and management of the combined company; and
- the interests of Kerr-McGee's and Oryx's management in the merger as
described in "Interests of Certain Persons in the Merger" on page 55.
In reaching its decision to approve the merger agreement and the Option
Agreements, and the merger and other transactions contemplated thereby, and to
recommend the adoption of the merger agreement to the Kerr-McGee stockholders,
the Kerr-McGee Board did not view any single factor as determinative, and did
not find it necessary or practicable to assign any relative or specific weights
to the various factors considered. Furthermore, individual directors may have
given differing weights to different factors.
The Kerr-McGee Board did not specifically adopt Lehman Brothers' opinion,
but did rely on it in reaching its conclusion that the merger is advisable and
fair to and in the best interests of Kerr-McGee and its stockholders and
considered it an important factor in determining whether to approve the merger
agreement and the Option Agreements.
Recommendation of the Kerr-McGee Board. The Kerr-McGee Board unanimously
recommends that the stockholders of Kerr-McGee vote "FOR" the Kerr-McGee
Proposal.
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ORYX'S REASONS FOR MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF ORYX
At a special meeting of the Oryx Board held on October 14, 1998, the Oryx
Board unanimously (1) determined that the merger agreement and the Option
Agreements, and the merger, the Reverse Split and the other transactions
contemplated thereby, are advisable and are fair to and in the best interests of
Oryx and its stockholders, (2) approved the merger agreement and the Option
Agreements, and the merger, the Reverse Split and the other transactions
contemplated thereby, (3) recommended that the stockholders of Oryx adopt the
merger agreement and approve the amendment to Oryx's certificate of
incorporation to effect the Reverse Split and (4) directed that the merger
agreement and the amendment to Oryx's certificate of incorporation to effect the
Reverse Split be submitted for consideration by Oryx's stockholders at the Oryx
meeting.
Oryx's Reasons for the Merger. The Oryx Board believes that the merger is
in the best interests of Oryx and its stockholders because they believe that the
long-term value to Oryx stockholders of an investment in the combined company
will more likely than not be superior to the long-term value of an investment in
Oryx as a stand-alone company. The decision of the Oryx Board to approve the
merger agreement and recommend its adoption by Oryx's stockholders was based
upon various factors, including, in addition to the factors mentioned in
"-- Background of the Merger" on page 17, the following:
- the judgment, advice and analyses of senior management of Oryx,
including, in addition to its favorable recommendation of the merger,
senior management's analysis of conditions in the oil and gas E&P
industry, the strategic options available to Oryx, including Oryx's
continued pursuit of its strategic plan as an independent company, the
likelihood of future consolidation in the E&P industry and the
constraints on Oryx's ability to take advantage of available
opportunities due to Oryx's present size and financial flexibility;
- the Exchange Ratio in relation to historical and market trading prices
for Oryx common stock and the underlying value of Oryx's net assets and
the Oryx Board's understanding, based on information furnished to it,
that, excluding reorganization expenses, the merger would be accretive to
the per share earnings and cash flow of the combined company in 1999 and
later years when compared to what they would have been for Oryx on a
stand-alone basis Oryx (see "Unaudited Pro Forma Combined Condensed
Financial Statements" on page 44);
- the Oryx Board's consideration of the business, operations, financial
position, prospects and personnel of Oryx and Kerr-McGee on a combined
basis, including potential cost-savings that the two companies could
achieve as a result of the merger and the ability of the combined company
more effectively to exploit the existing assets of the two companies and
to pursue future opportunities;
- the presentations by and discussions with senior executives of Oryx and
representatives of Jones Day and Goldman Sachs regarding the terms of the
merger agreement and the Option Agreements, including the conditions to
closing of the merger, the ability of each company under certain
conditions to consider unsolicited alternative business combination
proposals, the ability to terminate the agreement on certain conditions
and the termination fees payable on certain termination events (see "The
Merger Agreement" on page 61, including "-- Conditions to the Merger" on
page 63, "-- Other Acquisition Proposals" on page 65, "-- Termination" on
page 67, and "-- Termination Fees and Expenses" on page 68);
- the opinion of Goldman Sachs described below to the effect that, as of
the date of such opinion and based upon and subject to certain matters
stated therein, the Exchange Ratio was fair from a financial point of
view to the stockholders of Oryx (see "-- Opinion of Oryx's Financial
Advisor" on page 29);
- that the merger will be accomplished on a tax-free basis to the
stockholders for United States federal income tax purposes, except for
cash received by Oryx stockholders in lieu of fractional shares;
- that the merger will be accounted for as a pooling-of-interests
transaction that, among other things, will not require the recognition or
amortization of goodwill or any adjustments to the book values of Oryx's
assets; and
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- the interests of Kerr-McGee's and Oryx's management in the merger as
described in "Interests of Certain Persons in the Merger" on page 55.
In reaching its respective decisions to approve the merger and to recommend
the merger to the Oryx stockholders, the Oryx Board did not view any single
factor as determinative, and did not find it necessary or practicable to assign
any relative or specific weights to the various factors considered. Furthermore,
individual directors may have given differing weights to different factors.
Each of the factors listed above was believed by the Oryx Board to support
the decision to adopt the merger agreement, except that the fourth factor,
relating to the terms of the merger agreement and other documents, is merely
inherent in the merger transaction. The Oryx Board did not specifically adopt
Goldman Sachs's opinion, but did rely on it in reaching its conclusion that the
merger is advisable and fair to and in the best interests of Oryx and its
stockholders and considered it an important factor in determining whether to
approve the merger agreement and the Option Agreements.
The Oryx Board also considered the principal detriments of the merger to
Oryx, including that (1) the merger would be effected in difficult industry
conditions which, among other factors, have resulted in a substantial decrease
in the market price for Oryx common stock and (2) as a result of the merger, the
benefits of Oryx's long-term prospects will be shared by former stockholders of
Oryx and Kerr-McGee, rather than solely by Oryx's existing stockholders.
However, the Oryx Board determined that the foregoing detriments were inherent
in proceeding with the merger and were substantially offset by the potential
benefits of the merger summarized above, including the opportunity for Oryx's
stockholders to share in the benefits of the combined company's long-term
prospects.
Recommendation of the Oryx Board. The Oryx Board unanimously recommends
that the stockholders of Oryx vote "FOR" adoption of the Oryx Proposal.
OPINION OF KERR-MCGEE'S FINANCIAL ADVISOR
Kerr-McGee engaged Lehman Brothers to act as Kerr-McGee's financial advisor
in connection with the merger. Kerr-McGee instructed Lehman Brothers, in its
role as a financial advisor, to evaluate the fairness, from a financial point of
view, to Kerr-McGee of the Exchange Ratio, and to conduct such investigations as
Lehman Brothers deemed appropriate for such purposes. On October 14, 1998,
Lehman Brothers delivered its opinion to the Kerr-McGee Board to the effect that
as of such date and based upon and subject to certain matters stated therein,
from a financial point of view, the Exchange Ratio was fair to Kerr-McGee.
THE FULL TEXT OF THE WRITTEN OPINION OF LEHMAN BROTHERS IS INCLUDED AS
APPENDIX C TO THIS DOCUMENT, AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF
KERR-MCGEE COMMON STOCK MAY READ SUCH OPINION FOR A DISCUSSION OF THE
ASSUMPTIONS MADE, FACTORS CONSIDERED AND LIMITATIONS UPON THE REVIEW UNDERTAKEN
BY LEHMAN BROTHERS IN RENDERING ITS OPINION. THE FOLLOWING IS A SUMMARY OF
LEHMAN BROTHERS' OPINION AND THE METHODOLOGY LEHMAN BROTHERS USED TO RENDER ITS
FAIRNESS OPINION.
No limitations were imposed by Kerr-McGee on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
its opinion. The form and amount of the consideration to be paid by Kerr-McGee
in the merger was determined through arm's-length negotiations between the
parties. In arriving at its opinion, Lehman Brothers did not ascribe a specific
range of values to Kerr-McGee or Oryx but made its determination as to the
fairness of the Exchange Ratio on the basis of the financial and comparative
analyses described below. Lehman Brothers' opinion is for the use and benefit of
the Kerr-McGee Board and was rendered to the Kerr-McGee Board in connection with
its consideration of the merger. Lehman Brothers' opinion does not constitute a
recommendation to any holder of Kerr-McGee common stock as to how such holder
should vote with respect to the merger. Lehman Brothers was not requested to
opine as to, and its opinion does not address, Kerr-McGee's underlying business
decision to proceed with or effect the merger.
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In arriving at its opinion, Lehman Brothers reviewed and analyzed:
(1) the merger agreement and the specific terms of the merger,
including provisions therein relating to corporate governance and
management of Kerr-McGee following the merger;
(2) such publicly available information concerning Kerr-McGee and Oryx
that Lehman Brothers believed to be relevant to its analysis, including,
without limitation, each of the periodic reports and proxy statements filed
by Kerr-McGee and Oryx since January 1, 1998 (including the audited and
unaudited financial statements included in such reports and statements);
(3) financial and operating information with respect to the respective
businesses, operations and prospects of Kerr-McGee and Oryx as furnished to
Lehman Brothers by Kerr-McGee and Oryx, respectively, including financial
projections based on the respective business plans of Kerr-McGee and Oryx
and, in particular, (a) certain estimates of proved and non-proved
reserves, (b) projected annual production of such reserves in certain
domestic and international areas and (c) amounts and timing of the cost
savings and operating synergies expected to result from a combination of
the businesses of Kerr-McGee and Oryx;
(4) a trading history of Kerr-McGee common stock from September 30,
1997 to October 9, 1998, and a comparison of that trading history with
those of other companies that Lehman Brothers deemed relevant, including
Oryx;
(5) a trading history of the Oryx common stock from September 30, 1997
to October 9, 1998 and a comparison of that trading history with those of
other companies that Lehman Brothers deemed relevant, including Kerr-McGee;
(6) a comparison of the historical financial results and present
financial condition of Kerr-McGee with those of other companies that Lehman
Brothers deemed relevant;
(7) a comparison of the historical financial results and present
financial condition of Oryx with those of other companies that Lehman
Brothers deemed relevant;
(8) the potential pro forma impact of the merger on Kerr-McGee
(including the cost savings and operating synergies expected by the
management of Kerr-McGee to result from a combination of the businesses of
Kerr-McGee and Oryx); and
(9) a comparison of the financial terms of the merger with the
financial terms of certain other recent transactions that Lehman Brothers
deemed relevant.
In addition, Lehman Brothers (a) had discussions with the managements of
Kerr-McGee and Oryx concerning their respective businesses, operations,
financial condition, assets, reserves, production profiles, exploration program
and prospects and the cost savings, operating synergies and strategic benefits
expected by the management of each of Kerr-McGee and Oryx to result from a
combination of the businesses of Kerr-McGee and Oryx and (b) undertook such
other studies, analyses and investigations as Lehman Brothers deemed
appropriate.
In arriving at its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by Lehman
Brothers without assuming any responsibility for independent verification of
such information and further relied upon the assurances of the managements of
Kerr-McGee and Oryx that they were not aware of any facts or circumstances that
would make such information inaccurate or misleading. With respect to the
financial projections of Kerr-McGee, Oryx and the combined company (including
the cost savings and operating synergies expected to result from a combination
of the businesses of Kerr-McGee and Oryx), upon advice of the managements of
Kerr-McGee and Oryx, Lehman Brothers assumed that such projections had been
reasonably prepared on a basis reflecting the then best currently available
estimates and judgments of the managements of Kerr-McGee and Oryx, as the case
may be, as to the future financial performance of Kerr-McGee, Oryx and
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the combined company, and that each of Kerr-McGee and Oryx would perform, and
the combined company will perform, substantially in accordance with such
projections. In arriving at its opinion, Lehman Brothers did not conduct a
physical inspection of the properties and facilities of Kerr-McGee or Oryx and
did not make or obtain from third parties any evaluations or appraisals of the
assets or liabilities of Kerr-McGee or Oryx. With the permission of Kerr-McGee,
Lehman Brothers assumed that the merger will qualify for pooling-of-interests
accounting treatment. Lehman Brothers' opinion necessarily is based upon market,
economic and other conditions as they existed on, and could be evaluated as of,
the date of its opinion letter.
In connection with rendering its opinion, Lehman Brothers performed certain
financial, comparative and other analyses as described below. The preparation of
a fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial and comparative analysis and the application
of those methods to the particular circumstances, and, therefore, such an
opinion is not readily susceptible to summary description. Furthermore, in
arriving at its fairness opinion, Lehman Brothers did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, Lehman Brothers believes that its analyses must be
considered as a whole and that considering any portion of such analyses and of
the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying the opinion. In
its analyses, Lehman Brothers made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond the control of Kerr-McGee or Oryx. Any estimates contained in
the analyses are not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or less favorable than
as set forth therein. In addition, analyses relating to the value of businesses
do not purport to be appraisals or to reflect the prices at which businesses
actually may be sold.
Valuation Analyses Used to Derive Implied Exchange Ratios. Lehman Brothers
prepared separate valuations of Kerr-McGee and Oryx before considering the pro
forma impact of any cost savings, operating synergies or strategic benefits
resulting from the merger. In determining valuation, Lehman Brothers used the
following methodologies: discounted cash flow analysis, comparable transactions
analysis, comparable company trading analysis and segment valuation analysis.
Each of these methodologies was used to generate a reference enterprise value
range for each of Kerr-McGee and Oryx. The enterprise value range for each
company was adjusted for appropriate on- and off-balance sheet assets and
liabilities to arrive at a common equity value range (in aggregate dollars and
dollars per common share) for each company. The per share equity value ranges
were then used to evaluate the Exchange Ratio. The implied exchange ratios
derived using the various valuation methodologies listed above all supported the
conclusion that the Exchange Ratio is fair to Kerr-McGee from a financial point
of view. These various valuation analyses are summarized below.
Discounted Cash Flow Analysis. Lehman Brothers prepared an after-tax cash
flow model for the period from October 1, 1998 through December 31, 2003 for
both Kerr-McGee and Oryx utilizing information and projections provided by both
companies. With respect to the Kerr-McGee discounted cash flow analysis, Lehman
Brothers used discount rates of 10% to 12% and terminal value multiples of
earnings before interest, taxes, depreciation, depletion, amortization and
exploration expenses ("EBITDE") of 4.5x to 5.5x. The discount rates were based
on Lehman Brothers' review of the financial terms of similar transactions in the
sector of international exploration and production companies with a focus in the
Gulf of Mexico and North Sea and in the sector of chemical companies with a
focus on the production and manufacture of industrial chemicals including, in
particular, titanium dioxide. The terminal value multiples were selected based
on the trading multiples of similar publicly traded companies and the multiples
of recent completed or proposed acquisitions of similar assets and companies.
With respect to the Oryx discounted cash flow analysis, Lehman Brothers used
discount rates of 10% to 12% and terminal EBITDE multiples of 4.0x to 6.0x. The
discount rates used were based on Lehman Brothers' review of the financial terms
of similar transactions in the sector of international exploration and
production companies with a focus in the Gulf of Mexico. The terminal value
multiples were selected based on current trading
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multiples of similar publicly traded companies and the multiples from recent
completed or proposed acquisitions of similar assets and companies.
This methodology yielded valuations for Kerr-McGee and Oryx that imply a
range of exchange ratios of 0.250 to 0.374 shares of Kerr-McGee common stock per
share of Oryx common stock. The Exchange Ratio of 0.369 falls within this range.
Comparable Transactions Analysis. Lehman Brothers reviewed certain publicly
available information on selected transactions which were announced or took
place from July 1996 to October 1998 including, but not limited to, British
Petroleum Company plc/Amoco Corporation, Atlantic Richfield Company/ Union Texas
Petroleum Holdings, Inc., Ocean Energy, Inc./United Meridian Corporation, Sonat
Inc./ Zilkha Energy Company, Pioneer Natural Resources Company/Chauvco Resources
Ltd., Burlington Resources Inc./Louisiana Land and Exploration Company, MESA
Inc./Parker & Parsley Petroleum Company, Gulf Canada Resources Limited/Clyde
Petroleum plc, Conoco Inc./TransTexas Gas Corporation Lobo Trend natural gas
properties, Noble Affiliates, Inc./Energy Development Corporation and Seagull
Energy Corporation/Global Natural Resources, Inc. For each transaction, relevant
transaction multiples were analyzed including the total purchase price (equity
purchase price plus assumed obligations) divided by (1) latest twelve month
("LTM") and projected 1998 EBITDE; (2) proved oil and natural gas reserves on a
barrel of equivalent ("BOE") basis and a thousand cubic feet equivalent ("Mcfe")
basis; and (3) the standardized measure of discounted future net after-tax cash
flows ("SEC-10 After-Tax Value"). The appropriate LTM and projected 1998 EBITDE
multiple ranges were determined to be 5.0x to 7.0x and 5.0x to 7.0x,
respectively. The appropriate proved reserve multiple ranges were determined to
be $6.00 to $8.00 per BOE and $1.00 to $1.20 per Mcfe, respectively. The
appropriate SEC-10 After-Tax Value multiple range was determined to be 1.5x to
2.0x.
This methodology yielded valuations for Kerr-McGee and Oryx that imply a
range of exchange ratios of 0.321 to 0.406 shares of Kerr-McGee common stock per
share of Oryx common stock. The Exchange Ratio of 0.369 falls within this range.
Because the market conditions, rationale and circumstances surrounding each
of the transactions analyzed were specific to each transaction and because of
the inherent differences between the businesses, operations and prospects of
Kerr-McGee and Oryx and the acquired businesses analyzed, Lehman Brothers
believed that it was inappropriate to, and therefore did not, rely solely on the
quantitative results of the analysis and, accordingly, also made qualitative
judgments concerning differences between the characteristics of these
transactions and the merger that would affect the acquisition values of Kerr-
McGee and Oryx and such acquired companies.
Comparable Company Trading Analysis. With respect to Kerr-McGee, Lehman
Brothers reviewed the public stock market trading multiples for selected large
capitalization domestic integrated and exploration and production companies
including Murphy Oil Corporation, Noble Affiliates, Inc., Occidental Petroleum
Corporation, Pennzoil Company and Unocal Corporation. Using publicly available
information, Lehman Brothers calculated and analyzed the adjusted capitalization
multiples of certain historical and projected financial criteria (such as
EBITDE, proved reserves, SEC-10 After-Tax Value and the standardized measure of
discounted future net pre-tax cash flows ("SEC-10 Pre-Tax Value")). The adjusted
capitalization of each company was obtained by adding its long-term debt to the
sum of the market value of its common equity, the value of its preferred stock
(market value if publicly traded, liquidation value if not) and the book value
of any minority interest minus its cash balance. The appropriate LTM, projected
1998 and projected 1999 EBITDE multiple ranges were determined to be 4.5x to
5.5x, 5.0x to 6.0x and 4.0x to 5.5x, respectively. Proved reserve multiple
ranges were determined to be $5.75 to $7.00 per BOE and $1.00 to $1.25 per Mcfe.
The appropriate SEC-10 After-Tax Value multiple ranges were determined to be
1.4x to 1.6x and the appropriate SEC-10 Pre-Tax Value multiple ranges were
determined to be 1.1x to 1.3x.
With respect to Oryx, Lehman Brothers reviewed the public stock market
trading multiples for selected large capitalization exploration and production
companies including Anadarko Petroleum
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Corporation, Apache Corporation, Burlington Resources Inc., Enron Oil & Gas
Company, Noble Affiliates, Inc., Ocean Energy, Inc., Pennzoil Company, Pioneer
Natural Resources Company, Union Pacific Resources Group Inc., Unocal
Corporation and Vastar Resources, Inc. Using publicly available information,
Lehman Brothers calculated and analyzed the common equity market value multiples
of certain historical and projected financial criteria (such as discretionary
cash flow ("DCF")) and the adjusted capitalization multiples of certain
historical and projected financial criteria (such as EBITDE, proved reserves,
SEC-10 After-Tax Value and SEC-10 Pre-Tax Value). The appropriate LTM, projected
1998 and projected 1999 DCF multiple ranges were determined to be 4.0x to 5.0x,
4.5x to 5.5x and 3.0x to 4.0x, respectively. The appropriate LTM, projected 1998
and projected 1999 EBITDE multiple ranges were determined to be 5.0x to 6.0x,
5.0x to 6.5x and 4.0x to 6.0x, respectively. Proved reserve multiple ranges were
determined to be $5.75 to $7.00 per BOE and $1.00 to $1.25 per Mcfe. The
appropriate SEC-10 After-Tax Value and SEC-10 Pre-Tax Value multiple ranges were
determined to be 1.4x to 1.6x and 1.1x to 1.3x, respectively.
This methodology yielded valuations for Kerr-McGee and Oryx that imply a
range of exchange ratios of 0.283 to 0.378 shares of Kerr-McGee common stock per
share of Oryx common stock. The Exchange Ratio of 0.369 falls within this range.
Because of the inherent differences between the businesses, operations and
prospects of Kerr-McGee and Oryx and the businesses, operations and prospects of
the companies included in the comparable company groups, Lehman Brothers
believed that it was inappropriate to, and therefore did not, rely solely on the
quantitative results of the analysis and, accordingly, also made qualitative
judgments concerning differences between the financial and operating
characteristics of Kerr-McGee and Oryx and companies in the comparable company
groups that would affect the public trading values of Kerr-McGee and Oryx and
such comparable companies.
Segment Valuation Analysis. Lehman Brothers performed a discounted cash
flow analysis, comparable transactions analysis and comparable company trading
analysis of the segmented operations of both Kerr-McGee and Oryx utilizing
information and projections provided by both companies. With respect to
Kerr-McGee, Lehman Brothers segmented Kerr-McGee's operations into exploration
and production and chemicals. The exploration and production operations were
further segmented geographically into domestic, North Sea and other
international. With respect to Oryx, Lehman Brothers segmented Oryx's operations
into the geographic segments of domestic, North Sea and other international. The
segment enterprise value ranges calculated were added together to calculate an
enterprise value range for each of Kerr-McGee and Oryx.
The segment valuation analysis resulted in an implied exchange ratio range
of 0.192 to 0.367 shares of Kerr-McGee common stock per share of Oryx common
stock. The Exchange Ratio of 0.369 is consistent with the upper end of this
range.
Historical common stock Trading Analysis. Lehman Brothers reviewed the
daily historical closing prices of Kerr-McGee common stock and Oryx common stock
for the period from September 30, 1997 to October 9, 1998. Lehman Brothers
analyzed the ratio of the October 9, 1998 closing share price for Kerr-McGee to
the corresponding closing share price of Oryx. In addition, Lehman Brothers
reviewed the ratio of the closing share prices for Kerr-McGee and Oryx based on
5-day, 10-day, 20-day, 30-day, 60-day, 90-day, 120-day, 180-day and one-year
averages, respectively, as of October 9, 1998. This analysis implied exchange
ratios ranging from 0.252 to 0.373 shares of Kerr-McGee common stock per share
of Oryx common stock. The Exchange Ratio of 0.369 falls within this range.
Contribution Analysis. Lehman Brothers analyzed the relative income
statement contributions of Kerr-McGee and Oryx to the combined company based on
1998 through 2000 projected financial data and assuming no cost savings or
operating synergies. This analysis indicated that Kerr-McGee was projected to
contribute approximately 70% to 77% of the combined company's net income and 53%
to 54% of the combined company's DCF. At the Exchange Ratio of 0.369 shares of
Kerr-McGee common stock per share of Oryx common stock, Kerr-McGee stockholders
will hold approximately 55% of the combined
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company's equity. Lehman Brothers noted that the primary shortcoming of
contribution analysis is that it treats all cash flow and earnings the same
regardless of capitalization, expected growth rates, upside potential or risk
profile.
Pro Forma Merger Consequences Analysis. Lehman Brothers also prepared a pro
forma merger model which incorporated Kerr-McGee's and Oryx's financial
projections for the years 1998 though 2000 as well as the companies' estimates
of future cost savings, operating synergies and strategic benefits expected to
result from the merger excluding one-time costs associated with the merger and
other non-recurring items. Lehman Brothers then compared the earnings and DCF
per share of Kerr-McGee on a stand-alone basis to the earnings and DCF per share
of the pro forma combined company. Lehman Brothers noted that the merger is
dilutive to Kerr-McGee's pro forma earnings per share in 1998 and accretive to
earnings per share in both 1999 and 2000. The merger is accretive to
Kerr-McGee's DCF per share in each of the years 1998 through 2000. For Oryx, the
merger is accretive to both earnings and DCF per share in 1998, 1999 and 2000.
The pro forma merger consequences analysis suggests that the Exchange Ratio is
fair to Kerr-McGee from a financial point of view.
Lehman Brothers is an internationally recognized investment banking firm
engaged in, among other things, the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive bids, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. The
Kerr-McGee Board selected Lehman Brothers because of its expertise, reputation
and familiarity with Kerr-McGee and because its investment banking professionals
have substantial experience in transactions comparable to the merger.
Lehman Brothers has previously rendered certain financial advisory and
investment banking services to Kerr-McGee, for which it has received customary
compensation. Pursuant to the terms of an engagement letter between Lehman
Brothers and Kerr-McGee, Kerr-McGee paid Lehman Brothers an initial financial
advisory fee of $150,000. In addition, Kerr-McGee has agreed to pay Lehman
Brothers a transaction fee of approximately $11.4 million upon successful
completion of the merger. In addition, Kerr-McGee has agreed to reimburse Lehman
Brothers for its reasonable expenses incurred in connection with its engagement,
and to indemnify Lehman Brothers and certain related persons against certain
liabilities in connection with its engagement, including certain liabilities
which may arise under federal securities laws. Lehman Brothers also has
performed various investment banking services for Oryx in the past and has
received customary fees for such services.
In the ordinary course of its business, Lehman Brothers actively trades in
the debt and equity securities of Kerr-McGee and Oryx for its own account and
for the accounts of its customers and, accordingly, may at any time hold a long
or short position in such securities.
OPINION OF ORYX'S FINANCIAL ADVISOR
On October 14, 1998, Goldman Sachs delivered its opinion, subsequently
confirmed in writing, to the Oryx Board that, as of such date, the Exchange
Ratio was fair from a financial point of view to the holders of Oryx common
stock.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED OCTOBER 14,
1998, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
APPENDIX D AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF ORYX COMMON STOCK
ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(1) the merger agreement;
(2) Annual Reports to Stockholders and Annual Reports on Form 10-K of
Oryx and Kerr-McGee for the five years ended December 31, 1997;
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(3) certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of Oryx and Kerr-McGee;
(4) certain other communications from Oryx and Kerr-McGee to their
respective stockholders;
(5) certain internal financial analyses and prospective information
for Oryx and Kerr-McGee prepared by their respective managements; and
(6) estimates of pre-tax cost savings and synergies expected to result
from the merger prepared jointly by the managements of Oryx and Kerr-McGee
(the "Synergies").
Goldman Sachs also held discussions with members of the senior managements
of Oryx and Kerr-McGee regarding the strategic rationale for, and the potential
benefits of, the transactions contemplated by the merger agreement and the past
and current business operations, financial condition and future prospects of
their respective companies. Goldman Sachs reviewed certain information provided
by Oryx and Kerr-McGee relating to their oil and gas reserves, including reserve
information for the year ended December 31, 1997, prepared by the respective
managements of Oryx and Kerr-McGee and a review of Oryx's reserves prepared by
an independent petroleum engineer, and discussed the reserve information with
the senior managements of Oryx and Kerr-McGee. In addition, Goldman Sachs
reviewed the reported price and trading activity for shares of Oryx common stock
and shares of Kerr-McGee common stock, compared certain financial and stock
market information for Oryx and Kerr-McGee with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the oil and gas
industry specifically and in other industries generally and performed such other
studies and analyses as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering its opinion. In that regard, Goldman
Sachs assumed with the consent of the Oryx Board that the internal prospective
financial information, including the Synergies, prepared by the managements of
Oryx and Kerr-McGee had been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the managements of Oryx and
Kerr-McGee. Goldman Sachs also assumed with the consent of the Oryx Board that
the merger will be accounted for as a pooling-of-interests under generally
accepted accounting principles. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and liabilities of Oryx or
Kerr-McGee or any of their subsidiaries and Goldman Sachs has not been furnished
with any such evaluation or appraisal. With respect to oil and gas reserve
information, Goldman Sachs is not expert in the evaluation of oil and gas
properties and, with the consent of the Oryx Board, relied without independent
verification solely on the reserve information and internal estimates prepared
by senior management of Oryx and Kerr-McGee. Goldman Sachs was not requested to
solicit, and did not solicit, interest from other parties with respect to an
acquisition of or other business combination with Oryx. The advisory services
and the opinion of Goldman Sachs expressed in its fairness opinion were provided
for the information and assistance of the Oryx Board in connection with its
consideration of the transaction contemplated by the merger agreement and such
opinion does not constitute a recommendation as to how any Oryx stockholder
should vote with respect to the merger.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its opinion to the Oryx Board.
Historical Exchange Ratio Analysis. Goldman Sachs reviewed the historical
trading prices for Oryx common stock and Kerr-McGee common stock. In addition,
Goldman Sachs compared the historical stock prices of Oryx common stock and
Kerr-McGee common stock on the basis of the respective closing prices per share
on October 12, 1998 and the respective average stock prices for the prior one
month, three months, six months, one year, two years, and three years. This
analysis indicated that implied exchange ratios ranged from 0.291 to 0.368 as
compared to the Exchange Ratio of 0.369 and that the implied exchange ratio as
of October 12, 1998 was 0.245.
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Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses of the
financial impact of the merger. The analyses were prepared using four different
sets of financial projections for 1999 and 2000. Three used internal business
plans for both companies prepared by their respective managements and three
different levels of oil and gas prices: Oryx management's price assumptions,
Goldman Sachs published research price assumptions, and the implied forward
prices. The fourth used the Independent Broker Estimate Services ("IBES") median
estimates. Goldman Sachs compared the earnings per share ("EPS") of each of the
Oryx common stock and the Kerr-McGee common stock, on a stand-alone basis, to
the EPS of the common stock of the combined company on a pro forma basis.
Goldman Sachs performed this analysis based on the Exchange Ratio of 0.369 and
Oryx and Kerr-McGee managements' estimate of $50 to $100 million in Synergies
realized in 1999 and $100 million of Synergies realized in 2000. Based on such
analyses, the merger would be moderately dilutive at $50 million of Synergies
and moderately accretive at $100 million of Synergies in 1999 and moderately
accretive in 2000 to holders of Kerr-McGee common stock, and significantly
accretive in both 1999 and 2000 for holders of Oryx common stock, in each case
on an EPS basis. Goldman Sachs also compared the discretionary cash flow per
share of Oryx and Kerr-McGee, on a stand-alone basis, to the discretionary cash
flow per share of the combined company on a pro forma basis. Based on these
analyses, the merger would be moderately accretive in 1999 and in 2000 to
holders of shares of Kerr-McGee common stock and slightly accretive to slightly
dilutive in 1999 and 2000 to holders of shares of Oryx common stock on a
discretionary cash flow basis per share.
In addition, Goldman Sachs performed an analysis to determine the breakeven
multiple of 1999 discretionary cash flow per share required, in combination with
the accretion or dilution on 1999 discretionary cash flow per share, to result
in the equivalent of the October 12, 1998 closing price for Kerr-McGee common
stock and Oryx common stock, and compared the breakeven multiple to the
multiples of 1999 discretionary cash flow based upon the stand-alone estimates
described above. This analysis indicated a breakeven multiple for Kerr-McGee
common stock which ranged from 3.1x to 3.9x 1999 discretionary cash flow per
share, and for Oryx common stock which ranged from 2.1x to 2.6x 1999
discretionary cash flow per share, compared to a current range of 3.3x to 4.2x
for Kerr-McGee and 2.1x to 2.7x for Oryx.
Credit Ratios of Oryx, Kerr-McGee and the Combined Company. Goldman Sachs
performed an analysis to determine estimated credit ratios for 1999 for each of
Oryx, Kerr-McGee and the combined company (except for the debt to enterprise
market value test, which was pro forma for December 31, 1998). This analysis
produced ratios of earnings before interest and tax ("EBIT") to interest expense
for Oryx of 1.9x, for Kerr-McGee of 5.4x and for the combined company of 3.8x.
The analysis produced ratios of net debt to cash flow, based on IBES median
estimates assuming pooling-of-interests accounting treatment and $100 million of
Synergies, of 2.7x for Oryx, 1.3x for Kerr-McGee and 1.9x for the combined
company. The analysis produced net debt to enterprise market values of 52% for
Oryx, 25% for Kerr-McGee and 37% for the combined company, based on the per
share closing price of Kerr-McGee common stock on October 12, 1998. The analysis
produced ratios of earnings before interest, tax, depreciation and exploration
("EBITDAX") to interest expense of 7.0x for Oryx, 14.1x for Kerr-McGee and 10.2x
for the combined company.
Present Value of Hypothetical Oryx Future Stock Price Analysis. Goldman
Sachs performed an analysis to determine the present value as of December 31,
1998 of a hypothetical future stock price for Oryx, calculated at a discount
rate of 12%, based upon management's strategic plan calculated at three
different levels of oil and gas prices: Oryx management's price assumptions,
Goldman Sachs published research price assumptions, and the implied forward
prices. This analysis indicated a range of present values for Oryx's
hypothetical future stock price at a discretionary cash flow multiple of 3.0x of
between $11.60 and $13.31 per share and at a discretionary cash flow multiple of
5.0x of between $19.40 and $22.18 per share.
Present Value of Hypothetical Pro-Forma Kerr-McGee Future Stock Price
Analysis. Goldman Sachs performed an analysis to determine the present value as
of December 31, 1998 of a hypothetical future stock price of Oryx, calculated at
a discount rate of 12%, assuming completion of the merger based upon each
management's strategic plan and giving effect to the Synergies, calculated at
three different levels of
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oil and gas prices: Oryx management's price assumptions, Goldman Sachs published
research price assumptions and the implied forward prices. This analysis
indicated a range of present values for Oryx's hypothetical post-merger future
stock price at a discretionary cash flow multiple of 4.0x of between $17.80 and
$19.70 per share and at a discretionary cash flow multiple of 6.0x of between
$26.80 and $29.50 per share.
Present Value of Oryx Strategic Plan. Goldman Sachs performed a present
value analysis of Oryx's internal financial forecasts using three different
levels of oil and gas prices: Oryx management's price assumptions, Goldman Sachs
published research price assumptions and the implied forward prices. The
analysis was performed by calculating the annual free cash flows for 1999-2002
and a terminal value for Oryx as of December 31, 2002 and discounting the
results back to December 31, 1998 using discount rates of 10% and 12%. The
terminal values were calculated using three methods (unlevered discretionary
cash flows at multiples of 4.5x to 5.5x, discretionary cash flows at multiples
of 2.5x to 4.0x and proved reserves at values from $4.50 to $6.00 per barrel).
Using Oryx management's oil price assumptions, the analysis produced a range of
$12.87 to $24.54; using Goldman Sachs published research price assumptions
produced a range of $14.74 to $25.75; and using the implied forward prices
produced a range of $11.12 to $21.38, compared to the implied price per share of
Oryx common stock in the merger of $17.44 (based on the per share closing price
for Kerr-McGee common stock on October 12, 1998).
Contribution Analysis. Goldman Sachs performed two contribution analyses.
In the first, Goldman Sachs reviewed certain historical and estimated future
operating and financial information for Oryx and Kerr-McGee based on each
company's strategic plans as prepared by its respective management using Oryx
management's assumptions concerning oil and gas prices. The analysis examined
proved reserves from 1997 (actual) through 2000 (estimated), SEC 10 After-Tax
Value as of December 31, 1997, and total production, unlevered discretionary
cash flow, discretionary cash flow and net income, in each case from 1998
(estimated) through 2000 (estimated). The analysis yielded a range of implied
exchange ratios from 0.131 to 0.431, with a mean of 0.313 and a median of 0.312,
compared to the Exchange Ratio of 0.369. Goldman Sachs also performed
contribution analyses using IBES estimates of discretionary cash flow and
earnings per share and Goldman Sachs published research estimates of unlevered
discretionary cash flow, discretionary cash flow and earnings per share, in each
case from 1988 (estimated) through 2000 (estimated). Compared to the Exchange
Ratio of 0.369, the contribution analysis yielded implied exchange ratios for
unlevered discretionary cash flow that ranged from 0.298 to 0.388 with a mean of
0.344 and a median of 0.345, for discretionary cash flow that ranged from 0.379
to 0.447 with a mean of 0.411 and a median of 0.409, and for earnings per share
that ranged from 0.161 to 0.314 with a mean of 0.232 and a median of 0.251.
Selected Transactions Analysis. Goldman Sachs analyzed certain information
relating to 15 selected transactions involving more than $1 billion in the E&P
industry since 1995 (YPF S.A./Maxus Energy Corp., Mobil Corporation/Ampolex
Ltd., Canadian Occidental Petroleum Inc./Wascana Energy Inc., Aera Energy
LLC/Mobil Corporation/Shell Oil Company, Conoco Inc./TransTexas Gas Corporation,
Parker & Parsley Petroleum Company/MESA Inc., Burlington Resources
Inc./Louisiana Land & Exploration Company, Texaco Inc./Monterey Resources, Inc.,
Sonat Inc./Zilkha Energy Company, Occidental Petroleum Corporation/(U.S.
Government-Elk Hills), Union Pacific Resources Group, Inc./Norcen Energy
Resources Ltd., Ocean Energy, Inc./United Meridian Corporation, Atlantic
Richfield Company/ Union Texas Petroleum Holdings, Inc., USX-Marathon
Group/Tarragon Oil & Gas Ltd., and British Petroleum Company plc/Amoco
Corporation, together, the "Selected Transactions"). Such analysis indicated
that for the Selected Transactions the transaction value per BOE ranged from
$3.92 to $12.47 per BOE with a mean of $6.50 and a median of $5.85, compared to
$4.97 per BOE for the merger. In addition, Goldman Sachs analyzed certain
information relating to nine selected merger transactions in the exploration and
production industry since 1995 (Barrett Resources Corporation/Plains Petroleum
Company, Seagull Energy Corporation/Global Natural Resources, Inc., Burlington
Resources Inc./ Louisiana Land & Exploration Company, Parker & Parsley Petroleum
Company/MESA Inc., Pioneer Natural Resources Company/Chauvco Resources Ltd.,
Chesapeake Energy Corporation/Hugoton Energy Corporation, Ocean Energy,
Inc./United Meridian Corporation, Devon Energy Corporation/Northstar
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Energy Corporation, and British Petroleum Company plc/Amoco Corporation,
together, the "Selected Mergers"). Such analysis indicated that for the Selected
Mergers (1) the premium to the price the day prior to announcement ranged from
7% to 26% with a mean of 18% and a median of 21%, (2) the premium to the prior
30-day average price ranged from 3% to 46% with a mean of 26% and a median of
26%, and (3) the percentage of the board of directors under the survivor's
control ranged from 50% to 100% with a mean of 71% and a median of 72%. Goldman
Sachs also analyzed certain information relating to five selected acquisitions
in the exploration and production industry since 1997 (USX-Marathon
Group/Tarragon Oil & Gas Ltd., Atlantic Richfield Company/Union Texas Petroleum
Holdings, Inc., Union Pacific Resources Group, Inc./Norcen Energy Resources
Ltd., Sonat Inc./Zilkha Energy Company, and Texaco Inc./Monterey Resources,
Inc.). Such analysis indicated that (a) the premium to the price the day prior
to announcement ranged from 25% to 45% with a mean of 36% and a median of 38%
and (b) the premium to the prior 30-day average price ranged from 32% to 53%
with a mean of 40% and a median of 37%. The premiums and survivor board control
percentages specified in the preceding sentences should be compared to the
premium to Oryx's share price of 51% the day prior to announcement of the
merger, the premium to Oryx's prior 30-day average price of 33% and the 64% of
positions on the combined company board of directors held by Kerr-McGee
directors.
Oryx Selected Companies Analysis. Goldman Sachs reviewed and compared
certain financial information relating to Oryx to corresponding financial
information, ratios and public market multiples for 11 publicly traded
corporations: Anadarko Petroleum Corporation, Apache Corporation, Burlington
Resources Inc., Enron Oil and Gas Company, Noble Affiliates Inc., Pioneer
National Resources Corporation, Santa Fe Energy Resources Inc., Seagull Energy
Corporation, Union Pacific Resources Group Inc., Unocal Corporation and Vastar
Resources Inc. (the "Oryx Selected Companies"). The Oryx Selected Companies were
chosen because they are publicly traded companies with operations that for
purposes of analysis may be considered similar to Oryx. Goldman Sachs calculated
and compared various financial multiples and ratios. The multiples of Oryx were
calculated using an implied transaction value of $17.44 per share based on a
0.369 Exchange Ratio and the per share closing price of Kerr-McGee common stock
at October 12, 1998 of $47.25. The multiples and ratios for Oryx and the
multiples for each of the Oryx Selected Companies were based on the most recent
publicly available information and estimates provided by Goldman Sachs published
research and IBES. With respect to the Oryx Selected Companies, Goldman Sachs
considered estimated calendar year 1999 price/earnings ("P/E") multiples that
ranged from 14.1x to 45.8x with a mean of 23.2x and a median of 18.8x compared
to 17.1x for Oryx; estimated calendar year 1999 equity value/discretionary cash
flow multiples that ranged from 2.2x to 12.3x with a mean of 4.5x and a median
of 4.0x, compared to 3.2x for Oryx; enterprise value as a multiple of unlevered
discretionary cash flow that ranged from 2.8x to 6.3x with a mean and median of
4.7x, compared to 4.8x for Oryx; and enterprise value per BOE that ranged from
$4.39 to $9.51 with a mean of $6.97 and a median of $6.92, compared to $4.97 for
Oryx.
Breakup/Segment Valuation for Oryx. Goldman Sachs performed separate
breakup analyses of the valuation of Oryx's business by geographical segments
based on Oryx management data. This analysis produced minimum values for Oryx's
geographical segments on a combined basis that ranged from $4.92 to $15.45 per
share and "improved structure" values ranging from $6.80 to $20.23 per share,
assuming that one segment of Oryx is sold through a sale of the company itself,
thereby triggering no gain on the sale.
Kerr-McGee Selected Companies Analysis. Goldman Sachs reviewed and compared
certain financial information relating to Kerr-McGee to corresponding financial
information, ratios and public market multiples for seventeen publicly traded
corporations: Amerada Hess Corporation, Anadarko Petroleum Corporation, Apache
Corporation, Burlington Resources Inc., Canadian Occidental Petroleum Ltd.,
Enron Oil and Gas Company, Murphy Oil Corporation, Noble Affiliates Inc.,
Occidental Petroleum Corporation, Oryx, Pennzoil Company, Pioneer National
Resources Corporation, Santa Fe Energy Resources Inc., Seagull Energy
Corporation, Union Pacific Resources Group Inc., Unocal Corporation and Vastar
Resources Inc. (the "Kerr-McGee Selected Companies"). The Kerr-McGee Selected
Companies were chosen because they are publicly-traded companies with operations
that for purposes of analysis may be considered similar to those of Kerr-McGee.
Goldman Sachs calculated and compared various financial
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multiples and ratios. The multiples of Kerr-McGee were calculated using a price
of $47.25 per share of Kerr-McGee common stock, the per share closing price of
the Kerr-McGee common stock on October 12, 1998. The multiples and ratios for
Kerr-McGee were based on Goldman Sachs published research estimates and the
multiples for each of the Kerr-McGee Selected Companies were based on the most
recent publicly available information and estimates provided by Goldman Sachs
published research and IBES. With respect to the Kerr-McGee Selected Companies,
Goldman Sachs considered estimated calendar year 1999 P/E multiples that ranged
from 11.3x to 45.8x with a mean of 21.1x and a median of 17.0x compared to 13.9x
for Kerr-McGee; estimated calendar year 1999 equity value/discretionary cash
flow multiples that ranged from 2.1x to 12.3x with a mean of 4.2x and a median
of 4.0x, compared to 4.2x for Kerr-McGee; and enterprise value as a multiple of
unlevered discretionary cash flow that ranged from 2.8x to 7.6x with a mean of
5.2x and a median of 5.3x compared to 4.3x for Kerr-McGee.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs's opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
Oryx or Kerr-McGee or the merger. The analyses were prepared solely for purposes
of Goldman Sachs' providing its opinion to the Oryx Board as to the fairness
from a financial point of view of the Exchange Ratio and do not purport to be
appraisals or necessarily reflect the prices at which business or securities
actually may be sold. Analyses based upon forecasts of future results are not
necessarily indicative of actual future results, which may be significantly more
or less favorable than suggested by such analyses. Because such analyses are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of the parties or their respective advisors, none of Oryx,
Kerr-McGee, Goldman Sachs or any other person assumes responsibility if future
results are materially different from those forecast. As described above,
Goldman Sachs's opinion to the Oryx Board was one of many factors taken into
consideration by the Oryx Board in making its determination to approve the
merger agreement. The foregoing summary describes material financial analyses
used by Goldman Sachs in connection with providing its opinion to the Oryx Board
on October 14, 1998, but does not purport to be a complete description of the
analysis performed by Goldman Sachs in connection with such opinion and is
qualified by reference to the written opinion of Goldman Sachs set forth in
Appendix D hereto.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Oryx selected Goldman
Sachs as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
merger.
Goldman Sachs has provided certain investment banking services to Oryx from
time to time, including having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
merger agreement. Goldman Sachs also provided certain investment banking
services to Kerr-McGee from time to time, including acting as co-managing
underwriter of a public offering of $150 million 6 5/8% Notes due 2007 and a
public offering of $150 million 7 1/8% Debentures due 2027, both on October 16,
1997. Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions in and hold securities, including derivative
securities, of Oryx or Kerr-McGee for its own account and for the accounts of
customers. Goldman Sachs may provide investment banking services to Kerr-McGee
and its subsidiaries in the future.
Pursuant to a letter agreement dated September 21, 1998 (the "Goldman Sachs
Engagement Letter"), Oryx engaged Goldman Sachs to act as its financial advisor
in connection with a potential transaction involving Kerr-McGee or a third
party. Pursuant to the terms of the Goldman Sachs Engagement Letter, Oryx has
agreed to pay Goldman Sachs upon consummation of the merger a
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transaction fee equal to 0.38% of the aggregate consideration paid in the
transaction, based on the five-day average of the last sales prices of shares of
Kerr-McGee common stock for the five trading days prior to the closing of the
merger, plus the principal amount of all indebtedness for borrowed money as set
forth on the most recent consolidated balance sheet of Oryx prior to the
consummation of the merger (which would be equal to approximately $11.5 million
based on the five-day average of the last sales prices of shares of Kerr-McGee
common stock for the five trading days prior to November 17, 1998 of $42.24 and
total principal amount of indebtedness as of September 30, 1998 of approximately
$1.4 billion). Oryx has agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including attorney's fees and disbursements plus any
sales, use or similar taxes, and to indemnify Goldman Sachs against certain
liabilities, including certain liabilities under the federal securities laws.
ACCOUNTING TREATMENT
The merger will be accounted for as a "pooling-of-interests" in accordance
with generally accepted accounting principles. The companies have conditioned
the merger on the receipt of letters from their independent accountants as to
the ability of Kerr-McGee and Oryx to enter into a merger to be accounted for as
a pooling-of-interests and of an opinion from Kerr-McGee's independent
accountants as to the appropriateness of accounting for the merger as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
recorded assets and liabilities of Kerr-McGee and Oryx will be carried forward
to the combined company's consolidated financial statements at their historical
amounts, the consolidated earnings of the combined company will include the
earnings of Kerr-McGee and Oryx for the entire fiscal year in which the merger
occurs and for all prior years presented, and the reported retained earnings of
Kerr-McGee and Oryx for prior periods will be combined and restated as
consolidated retained earnings of the combined company. See "Unaudited Pro Forma
Combined Condensed Financial Statements" on page 44.
Pooling-of-interests accounting treatment requires the sharing of rights
and risks among the affiliates of each of the parties to a business combination.
Accordingly, sales of stock by affiliates cannot occur in the period commencing
30 days prior to the consummation of the merger and ending on the date on which
the combined company publicly announces financial results covering at least 30
days of combined operations. To ensure that such pooling requirements are
satisfied, each of Kerr-McGee and Oryx has agreed in the merger agreement to use
its reasonable best efforts to obtain written agreements from its affiliates
relating to these trading restrictions, among other things.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General. The following discusses the material United States federal income
tax consequences of the Reverse Split and the merger to United States persons
who hold shares of Oryx common stock as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended. It does not
discuss the tax consequences that might be relevant to Oryx stockholders
entitled to special treatment under United States federal income tax law,
including, without limitation, dealers in securities, tax-exempt entities,
banks, insurance companies, persons that hold Oryx common stock as part of a
straddle, a hedge against currency risk or a constructive sale or conversion
transaction and foreign persons. It also does not discuss tax consequences that
might be relevant to Oryx stockholders who acquired shares of Oryx common stock
or Kerr-McGee common stock through the exercise or cancellation of employee
stock options or as compensation through other means. This discussion also does
not describe any tax consequences arising out of the tax laws of any state,
local or foreign jurisdiction.
Consummation of the merger is conditioned upon, among other things, the
receipt of opinions of Simpson Thacher and Jones Day, each dated as of the date
of the merger, to the effect that, on the basis of the facts, representations
and assumptions set forth in such opinions, (1) the merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code and (2) Kerr-McGee and Oryx will each be a
party to the reorganization within the
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meaning of Section 368(b) of the Internal Revenue Code. This conclusion is based
on the Internal Revenue Code, regulations promulgated thereunder and rulings in
effect as of the date hereof, current administrative rulings and practice and
judicial precedent, all of which are subject to change, and certain
representations as to factual matters to be made by, among others, Kerr-McGee
and Oryx.
Subject to the foregoing, in the opinion of Simpson Thacher and Jones Day,
the following are the material United States federal income tax consequences of
the Reverse Split and the merger:
(1) no gain or loss will be recognized by the stockholders of Oryx
upon the reclassification of their shares as a result of the Reverse Split
or with respect to the shares of Oryx common stock exchanged for Kerr-McGee
common stock in the merger, except for cash received in lieu of fractional
shares;
(2) no gain or loss will be recognized by Kerr-McGee or Oryx as a
result of the merger;
(3) the aggregate tax basis of the shares of Kerr-McGee common stock
received by an Oryx stockholder will be equal to such stockholder's
aggregate tax basis in the Oryx common stock reclassified in the Reverse
Split, reduced by the amount of basis properly allocated to fractional
shares for which cash was received;
(4) a holder's holding period with respect to the shares of Kerr-McGee
common stock received pursuant to the merger will include the holding
period of the Oryx common stock reclassified in the Reverse Split and
exchanged therefor; and
(5) the receipt of cash in lieu of fractional shares of stock by a
stockholder of Oryx will result in taxable gain or loss to such stockholder
for United States federal income tax purposes based on the difference
between the amount of cash received by such stockholder and such
stockholder's adjusted tax basis allocated to such fractional share as set
forth above. Such gain or loss will constitute capital gain or loss if such
stockholder's Oryx common stock is a capital asset within the meaning of
Section 1221 of the Internal Revenue Code on the date of the Reverse Split
and the merger and will constitute long-term capital gain or loss, if the
holder's holding period is greater than 12 months as of the date of the
Reverse Split and the merger. For noncorporate holders, any such long-term
capital gain generally will be taxed at a maximum rate of 20%. The
deductibility of capital losses is subject to limitations.
Kerr-McGee Stockholders. No gain or loss will be recognized as a result of
the merger by stockholders of Kerr-McGee with respect to the shares of
Kerr-McGee common stock they hold.
Backup Withholding. Certain noncorporate holders of Oryx common stock may
be subject to backup withholding at a 31% rate on cash payments received in lieu
of fractional shares. Backup withholding will not apply, however, to a
stockholder who (1) furnishes a correct taxpayer identification number and
certifies that he or she is not subject to backup withholding on the substitute
Form W-9 (or successor form) included in the letter of transmittal to be
delivered to Oryx stockholders following consummation of the merger, (2)
provides a certification of foreign status on Form W-8 (or successor form) or
(3) is otherwise exempt from backup withholding.
BECAUSE OF THE COMPLEXITY OF THE TAX LAWS, AND BECAUSE THE TAX CONSEQUENCES
TO ANY PARTICULAR ORYX STOCKHOLDER MAY BE AFFECTED BY MATTERS NOT DISCUSSED
HEREIN, EACH ORYX STOCKHOLDER IS URGED TO CONSULT A PERSONAL TAX ADVISOR
CONCERNING THE APPLICABILITY OF ANY FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE REVERSE SPLIT AND THE MERGER.
REGULATORY APPROVALS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the merger may not be consummated until notifications
have been given and certain information has been furnished to the
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FTC and the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") and specified waiting period requirements have been
satisfied. Kerr-McGee and Oryx filed notification and report forms under the HSR
Act with the FTC and the Antitrust Division on November 5, 1998. The HSR Act
waiting period expired 30 days after the filing date of such notification and
report forms on December 5, 1998. Nevertheless, the FTC and the Antitrust
Division retain the authority to challenge the merger on antitrust grounds. In
addition, each state in which Kerr-McGee or Oryx operates may also seek to
review the merger. It is possible that some of these authorities may seek to
challenge the merger.
Kerr-McGee and Oryx each conduct business outside the United States.
Although the merger does not require notification to or approval of regulatory
authorities outside the United States, those regulatory authorities could seek
to challenge the merger. Neither Kerr-McGee nor Oryx expects the consummation of
the merger to be delayed by any such challenge.
NO APPRAISAL RIGHTS
Holders of Oryx common stock are not entitled to dissenters' appraisal
rights under Delaware law in connection with the merger because the Oryx common
stock was listed on the New York Stock Exchange on the record date for the Oryx
meeting and the shares of Kerr-McGee common stock that such holders will be
entitled to receive in the merger will be listed on the New York Stock Exchange
at the Effective Time of the merger. Holders of Kerr-McGee common stock are not
entitled to dissenters' appraisal rights under Delaware law in connection with
the merger because the Kerr-McGee common stock was listed on the New York Stock
Exchange on the record date for the Kerr-McGee meeting.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTION
All shares of Kerr-McGee common stock received by Oryx stockholders in the
merger will be freely transferable, except that shares of Kerr-McGee common
stock received by persons who are deemed to be "affiliates" of Oryx under the
Securities Act of 1933, as amended (the "Securities Act"), at the time of the
Oryx meeting may be resold by them only in transactions permitted by Rule 145 or
otherwise permitted under the Securities Act. Persons who may be deemed to be
affiliates of Oryx for such purposes generally include individuals or entities
that control, or are controlled by or are under common control with Oryx and may
include certain officers, directors and principal stockholders of Oryx. The
merger agreement requires Oryx to provide Kerr-McGee with a letter identifying
such persons and to use its reasonable best efforts to cause each of such
affiliates to execute a written agreement to the effect that such persons will
not offer or sell or otherwise dispose of any of the shares of Kerr-McGee common
stock issued to such persons in the merger in violation of the Securities Act or
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder. Affiliates of Kerr-McGee and Oryx will also be subject to trading
restrictions imposed by the pooling-of-interests accounting rules. See
"-- Accounting Treatment" on page 34.
This Joint Proxy Statement/Prospectus does not cover any resales of the
Kerr-McGee common stock to be received by the stockholders of Oryx upon
consummation of the merger, and no person is authorized to make any use of this
document in connection with any such resale.
36
<PAGE> 43
THE KERR-MCGEE SPECIAL MEETING
PURPOSE, TIME AND PLACE
This document is being furnished to stockholders of Kerr-McGee in
connection with the solicitation of proxies by Kerr-McGee from holders of
Kerr-McGee common stock for use at the Kerr-McGee meeting to be held on
February __, 1999 at [TIME], at the Robert S. Kerr Auditorium, Kerr-McGee
Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma, and at any
adjournments or postponements thereof. At the Kerr-McGee meeting, holders of
Kerr-McGee common stock will be asked to consider and vote upon the Kerr-McGee
Proposal to adopt the merger agreement.
THE BOARD OF DIRECTORS OF KERR-MCGEE HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE MERGER AND OTHER TRANSACTIONS CONTEMPLATED THEREBY ARE
ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF KERR-MCGEE AND ITS
STOCKHOLDERS, APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS A VOTE
FOR THE KERR-MCGEE PROPOSAL.
RECORD DATE; QUORUM; VOTE REQUIRED
Record Date. Kerr-McGee has established the close of business on January
13, 1999 as the record date to determine the holders of Kerr-McGee common stock
entitled to notice of, and to vote at, the Kerr-McGee meeting. Only holders of
record of Kerr-McGee common stock at the close of business on the record date
will be entitled to notice of, and to vote at, the Kerr-McGee meeting. At the
close of business on the record date, ________ shares of Kerr-McGee common stock
were outstanding and were held by approximately ____ holders of record. The
Kerr-McGee common stock constitutes the only outstanding class of voting
securities of Kerr-McGee. Each share of Kerr-McGee common stock is entitled to
one vote on the Kerr-McGee Proposal. Votes may be cast at the Kerr-McGee meeting
in person or by proxy.
Quorum. The presence at the Kerr-McGee meeting of the holders of a majority
of the shares of Kerr-McGee common stock, either in person or by proxy, is
necessary to constitute a quorum to transact business at the Kerr-McGee meeting.
In the event that a quorum is not present at the Kerr-McGee meeting, it is
expected that such meeting will be adjourned or postponed in order to solicit
additional proxies.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining the presence or absence of a quorum at the Kerr-McGee
meeting. Broker non-votes are shares held by brokers or nominees that are
represented at a meeting but with respect to which the broker or nominee is not
empowered to vote on a particular matter.
Vote Required. Approval of the Kerr-McGee Proposal requires the affirmative
vote by the holders of a majority of the outstanding shares of Kerr-McGee common
stock, excluding shares held by subsidiaries, as of the record date. Abstentions
may be specified with respect to the Kerr-McGee Proposal by properly marking the
"ABSTAIN" box on the proxy for such proposal. Abstentions, broker non-votes and
failures to vote will have the effect of votes cast against the Kerr-McGee
Proposal.
Voting Power of Kerr-McGee Directors and Executive Officers. As of the
close of business on the record date and excluding shares underlying stock
options, Kerr-McGee's directors and executive officers and their affiliates may
be deemed to be the beneficial owners of, and had the power to vote, ________
outstanding shares of Kerr-McGee common stock, representing approximately ____%
of the then outstanding shares of Kerr-McGee common stock. Kerr-McGee believes
that each of its directors and executive officers intends to vote for approval
of the Kerr-McGee Proposal.
37
<PAGE> 44
PROXIES
Shares of Kerr-McGee common stock represented by properly executed proxies
received in time for the Kerr-McGee meeting will be voted at the Kerr-McGee
meeting in the manner specified on such proxies. Proxies that are properly
executed but which do not contain voting instructions will be voted FOR the
Kerr-McGee Proposal. No other matter other than the Kerr-McGee Proposal may be
brought before the Kerr-McGee meeting.
In the event that a quorum is not present at the time the Kerr-McGee
meeting is convened, or if for any other reason Kerr-McGee believes that
additional time should be allowed for the solicitation of proxies, Kerr-McGee
may adjourn the Kerr-McGee meeting with or without a vote of the stockholders.
If Kerr-McGee proposes to adjourn the Kerr-McGee meeting by a vote of the
stockholders, the persons named in the enclosed form of proxy will vote all
shares of Kerr-McGee common stock for which they have voting authority in favor
of an adjournment.
The grant of a proxy on the enclosed Kerr-McGee proxy card does not
preclude a stockholder from voting in person at the Kerr-McGee meeting. A
stockholder may revoke a proxy at any time prior to its exercise by (1)
delivering, prior to the Kerr-McGee meeting, to Kerr-McGee's Secretary a written
notice of revocation bearing a later date or time than the revoked proxy; (2)
completing and submitting a new later-dated proxy card; or (3) attending the
Kerr-McGee meeting and voting in person. Attendance at the Kerr-McGee meeting
will not by itself constitute revocation of a proxy -- a stockholder must vote
in person at the meeting. If a broker has been instructed to vote a
stockholder's shares, the stockholder must follow directions received from the
broker in order to change the stockholder's vote.
Kerr-McGee will bear the cost of solicitation of proxies from its
stockholders, except that Kerr-McGee and Oryx will share equally the cost of
printing this document and filing it with the Securities and Exchange
Commission. In addition to solicitation by mail, the directors, officers and
employees of Kerr-McGee and its subsidiaries may solicit proxies from Kerr-McGee
stockholders by telephone, fax, telegram or in person. Arrangements will also be
made with brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of stock held
of record by such persons, and Kerr-McGee will reimburse such custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
connection therewith.
In addition, Kerr-McGee has retained Georgeson Company, Inc. to assist
Kerr-McGee in the solicitation of proxies from stockholders in connection with
the Kerr-McGee meeting. Georgeson will receive a fee of $15,000 as compensation
for its services and reimbursement of its out-of-pocket expenses in connection
therewith. Kerr-McGee has agreed to indemnify Georgeson against certain
liabilities arising out of or in connection with its engagement.
THE ORYX SPECIAL MEETING
PURPOSE, TIME AND PLACE
This document is being furnished to stockholders of Oryx in connection with
the solicitation of proxies by Oryx from holders of Oryx common stock for use at
the Oryx meeting to be held on February __, 1999 at [TIME], at Room 882, Oryx
Energy Center, 13155 Noel Road, Dallas, Texas, and at any adjournments or
postponements thereof. At the Oryx meeting, holders of Oryx common stock will be
asked to consider and vote upon the Oryx Proposal to adopt the merger agreement
and to approve an amendment to the certificate of incorporation of Oryx to
effect the Reverse Split, the text of which is attached as Appendix B to this
document.
THE BOARD OF DIRECTORS OF ORYX HAS UNANIMOUSLY DETERMINED THAT THE MERGER
AGREEMENT AND THE MERGER, THE REVERSE SPLIT AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY ARE ADVISABLE AND FAIR TO AND
38
<PAGE> 45
IN THE BEST INTERESTS OF ORYX AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER
AGREEMENT AND THE REVERSE SPLIT, AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE ORYX
PROPOSAL.
RECORD DATE; QUORUM; VOTE REQUIRED
Record Date. Oryx has established the close of business on January 13, 1999
as the record date to determine the holders of Oryx common stock entitled to
notice of, and to vote at, the Oryx meeting. Only holders of record of Oryx
common stock at the close of business on the record date will be entitled to
notice of, and to vote at, the Oryx meeting. At the close of business on the
record date, ________ shares of Oryx common stock were outstanding and entitled
to vote at the Oryx meeting, and were held by approximately ____ holders of
record. In addition, there were 3,001,876 outstanding shares of Oryx common
stock held by a subsidiary of Oryx. Under Delaware law, these shares are not
entitled to be voted at the Oryx meeting. The Oryx common stock constitutes the
only outstanding class of voting securities of Oryx. Each share of Oryx common
stock is entitled to one vote on the Oryx Proposal. Votes may be cast at the
Oryx meeting in person or by proxy.
Quorum. The presence at the Oryx meeting of the holders of a majority of
the shares of Oryx common stock, either in person or by proxy, is necessary to
constitute a quorum to transact business at the Oryx meeting. In the event that
a quorum is not present at the Oryx meeting, it is expected that such meeting
will be adjourned or postponed in order to solicit additional proxies.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining the presence or absence of a quorum at the Oryx meeting.
Broker non-votes are shares held by brokers or nominees that are represented at
a meeting but with respect to which the broker or nominee is not empowered to
vote on a particular matter.
Vote Required. Approval of the Oryx Proposal requires the affirmative vote
by the holders of a majority of the outstanding shares of Oryx common stock,
excluding shares held by subsidiaries, as of the record date. Abstentions may be
specified with respect to the Oryx Proposal by properly marking the "ABSTAIN"
box on the proxy for such proposal. Abstentions, broker non-votes and failures
to vote will have the effect of votes cast against the Oryx Proposal.
Voting Power of Oryx Directors and Executive Officers. As of the close of
business on the record date and excluding shares underlying stock options,
Oryx's directors and executive officers and their affiliates may be deemed to be
the beneficial owners of, and had the power to vote, ________ outstanding shares
of Oryx common stock, representing approximately ____% of the then outstanding
shares of Oryx common stock. Oryx believes that each of its directors and
executive officers intends to vote for approval of the Oryx Proposal.
Confidential Voting Policy. Oryx has a confidential voting policy which
provides that all votes will be kept confidential and will not be disclosed to
Oryx, its affiliates, directors, officers or employees except when disclosure is
expressly requested by a stockholder, which may include written comment on proxy
cards, in the case of a contested proxy solicitation or in the event disclosure
is required by law. As part of the policy, Oryx will employ an independent
tabulator to receive and tabulate the proxies and will appoint one or more
independent inspectors of election to act at the Oryx meeting and to make a
written report thereof.
Prior to the Oryx meeting, the tabulator and inspectors will sign an oath
to perform their duties in an impartial manner and according to the best of
their ability. The inspectors will determine the number of shares outstanding
and the voting power of each, determine the shares represented at the Oryx
meeting and the validity of proxies and ballots, count all votes and ballots and
perform certain other duties as required by law.
39
<PAGE> 46
PROXIES
Shares of Oryx common stock represented by properly executed proxies
received in time for the Oryx meeting will be voted at the Oryx meeting in the
manner specified on such proxies. Proxies that are properly executed but which
do not contain voting instructions will be voted FOR the Oryx Proposal. No other
matter other than the Oryx Proposal will be brought before the Oryx meeting.
In the event that a quorum is not present at the time the Oryx meeting is
convened, or if for any other reason Oryx believes that additional time should
be allowed for the solicitation of proxies, Oryx may adjourn the Oryx meeting
with or without a vote of the stockholders. If Oryx proposes to adjourn the Oryx
meeting by a vote of the stockholders, the persons named in the enclosed form of
proxy will vote all shares of Oryx common stock for which they have voting
authority in favor of an adjournment.
The grant of a proxy on the enclosed Oryx proxy card does not preclude a
stockholder from voting in person at the Oryx meeting. A stockholder may revoke
a proxy at any time prior to its exercise by (1) delivering, prior to the Oryx
meeting, to the Secretary of Oryx a written notice of revocation bearing a later
date or time than the revoked proxy; (2) completing and submitting a new
later-dated proxy card; or (3) attending the Oryx meeting and voting in person.
Attendance at the Oryx meeting will not by itself constitute revocation of a
proxy -- a stockholder must vote in person at the meeting. If a broker has been
instructed to vote a stockholder's shares, the stockholder must follow
directions received from the broker in order to change the stockholder's vote.
Oryx will bear the cost of solicitation of proxies from its stockholders,
except that Kerr-McGee and Oryx will share equally the cost of printing this
document, mailing it and filing it with the Securities and Exchange Commission.
In addition to solicitation by mail, the directors, officers and employees of
Oryx and its subsidiaries may solicit proxies from Oryx stockholders by
telephone, fax, telegram or in person. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and Oryx will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in connection therewith.
In addition, Oryx has retained ChaseMellon Shareholder Services, L.L.C. to
assist Oryx in the solicitation of proxies from stockholders in connection with
the Oryx meeting. ChaseMellon will receive a fee of $8,500 as compensation for
its services and reimbursement of its out-of-pocket expenses in connection
therewith. Oryx has agreed to indemnify ChaseMellon against certain liabilities
arising out of or in connection with its engagement.
VOTING PROCEDURES FOR ORYX CAPITAL ACCUMULATION PLAN
The enclosed proxy card allows participants in the Oryx Energy Company
Capital Accumulation Plan ("CAP") to give voting instructions to the CAP
trustees. If a properly signed and returned proxy card does not specify how the
shares are to be voted with respect to any of the items to be voted on, shares
held in CAP will be voted, in accordance with the terms of CAP, by the CAP
trustee in the same proportion as the shares for which instructions have been
received from other participants in the same fund. Unallocated shares of Oryx
common stock in Fund L of CAP will be voted in the same proportion as the
allocated shares. IF A PLAN PARTICIPANT DOES NOT WISH TO ASSUME THE
RESPONSIBILITY OF GIVING VOTING INSTRUCTIONS WITH RESPECT TO UNALLOCATED SHARES,
SUCH PARTICIPANT MAY AVOID THIS RESPONSIBILITY BY NOT SIGNING AND RETURNING A
PROXY CARD.
40
<PAGE> 47
COMPARATIVE PER SHARE INFORMATION
COMPARATIVE PER SHARE FINANCIAL DATA
The following table sets forth certain historical, pro forma combined and
equivalent pro forma combined per share data of Kerr-McGee and Oryx. The pro
forma comparative per share data, which is derived from the unaudited pro forma
combined condensed financial statements and notes thereto beginning on page 44
of this document, does not purport to represent what the financial position or
results of operations of Kerr-McGee, Oryx or the combined company would actually
have been had the merger occurred at the beginning of the relevant periods or to
project Kerr-McGee's, Oryx's or the combined company's financial position or
results of operations for any future date or period. The data set forth below
should be read in conjunction with the pro forma financial statements and the
separate historical financial statements and notes thereto of Kerr-McGee and
Oryx, which are included elsewhere in, or incorporated by reference into, this
document.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, ------------------------
1998 1997 1996 1995
------------- ------ ------ ------
<S> <C> <C> <C> <C>
HISTORICAL KERR-MCGEE
Diluted earnings (loss) per common share from
continuing operations(a)......................... $ .40 $ 3.36 $ 3.30 $(1.12)
Diluted earnings (loss) per common share(a)......... 6.21 4.04 4.43 (.60)
Cash dividends declared per common share............ 1.35 1.80 1.64 1.55
Book value per common share(b)...................... 35.13 30.20 28.31 27.73
HISTORICAL ORYX
Diluted earnings (loss) per common share(a)......... (.23) 1.62 1.55 1.54
Cash dividends declared per common share............ -- -- -- --
Book value (deficit) per common share(b)............ 1.34 1.48 (.35) (2.00)
PRO FORMA COMBINED PER KERR-MCGEE SHARE
Diluted earnings (loss) per common share from
continuing operations(c)......................... (.23) 4.03 4.05 1.23
Diluted earnings per common share(c)................ 2.96 4.39 4.69 1.27
Cash dividends declared per common share(d)(f)...... .74 .99 .92 .90
Book value per common share......................... 19.27 16.18
EQUIVALENT PRO FORMA COMBINED PER ORYX SHARE(E)
Diluted earnings (loss) per common share from
continuing operations............................ (.08) 1.49 1.49 .45
Diluted earnings per common share................... 1.09 1.62 1.73 .47
Cash dividends declared per common share(f)......... .27 .37 .34 .33
Book value per common share......................... 7.11 5.97
</TABLE>
- -------------------------
(a) Based upon the weighted average number of shares of common stock and common
stock equivalents of Kerr-McGee and Oryx outstanding for each period.
(b) Computed by dividing stockholders' equity by the number of shares of common
stock outstanding at the end of each period.
(c) Based upon the weighted average number of shares of common stock and common
stock equivalents outstanding of Kerr-McGee and Oryx for each period at the
Exchange Ratio of 0.369 shares of Kerr-McGee common stock for each share of
Oryx common stock.
(d) Calculated based upon the historical cash dividends declared by Kerr-McGee
and Oryx.
(e) Calculated by multiplying the Pro Forma Combined per Kerr-McGee Share data
by the Exchange Ratio of 0.369 shares.
(f) The current Kerr-McGee quarterly cash dividend is $.45 per share. Under the
dividend policy in effect, the pro forma quarterly dividend per share of
Kerr-McGee common stock is $.45. The pro forma equivalent quarterly
dividend per share of Oryx common stock is $.17, computed by applying the
Exchange Ratio of 0.369 to the Kerr-McGee quarterly dividend.
41
<PAGE> 48
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION
Kerr-McGee. The shares of Kerr-McGee common stock are listed for trading on
the New York Stock Exchange under the symbol "KMG." The following table sets
forth the quarterly high and low market prices of Kerr-McGee common stock as
reported by the New York Stock Exchange and dividends declared, in each case
based on published financial sources. Kerr-McGee intends to continue paying its
regular quarterly dividend of $.45 per share after the merger, although all
dividends are subject to approval and declaration by the Kerr-McGee Board. As a
result, the total amount of the quarterly cash dividend payment after the merger
would increase from $22 million to $39 million.
<TABLE>
<CAPTION>
KERR-MCGEE COMMON STOCK
------------------------------------------
DIVIDENDS
DECLARED
HIGH LOW PER SHARE
---------- ---------- ----------
<S> <C> <C> <C>
1997
First Quarter.......................................... $75 $61 7/8 $ .45
Second Quarter......................................... 67 1/4 55 1/2 .45
Third Quarter.......................................... 69 15/16 59 13/16 .45
Fourth Quarter......................................... 71 1/2 60 1/8 .45
1998
First Quarter.......................................... 73 3/16 55 7/8 .45
Second Quarter......................................... 70 1/4 56 5/8 .45
Third Quarter.......................................... 60 1/2 38 .45
Fourth Quarter......................................... 47 9/16 36 3/16 .45
1999
First Quarter (through January __, 1999)............... $ [] $ [] $
</TABLE>
Oryx. The shares of Oryx common stock are listed for trading on the New
York Stock Exchange under the symbol "ORX." The following table sets forth the
quarterly high and low market prices of Oryx common stock as reported by the New
York Stock Exchange, in each case based on published financial sources. No
dividends were paid to holders of the Oryx common stock during the indicated
periods.
<TABLE>
<CAPTION>
ORYX COMMON STOCK
-------------------
HIGH LOW
---- ---
<S> <C> <C>
1997
First Quarter.......................................... $27 1/8 $18 1/2
Second Quarter......................................... 23 3/4 17 1/4
Third Quarter.......................................... 28 1/4 20 3/8
Fourth Quarter......................................... 30 11/16 22
1998
First Quarter.......................................... 27 7/16 21 13/16
Second Quarter......................................... 27 1/2 20 3/4
Third Quarter.......................................... 22 3/4 10 9/16
Fourth Quarter......................................... 15 3/4 11
1999
First Quarter (through January __, 1999)............... $ [] $ []
</TABLE>
42
<PAGE> 49
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger using the pooling-of-interests method of accounting,
after giving effect to the pro forma adjustments described in the accompanying
notes. These unaudited pro forma combined condensed financial statements have
been prepared from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of Kerr-McGee and Oryx,
which are incorporated by reference in this document.
The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial
position that would have occurred had the merger been consummated at the dates
indicated, nor is it necessarily indicative of future operating results or
financial position of the merged companies.
The Unaudited Pro Forma Combined Condensed Balance Sheet gives effect to
the merger as if it had occurred on September 30, 1998, combining the balance
sheets of Kerr-McGee and Oryx at September 30, 1998. The Unaudited Pro Forma
Combined Condensed Statements of Income give effect to the merger as if it had
occurred at the beginning of the earliest period presented, combining the
results of Kerr-McGee and Oryx for each year in the three-year period ended
December 31, 1997, and for the nine-month period ended September 30, 1998.
As a result of the merger, Kerr-McGee and Oryx expect the combined company
to incur cash and non-cash pre-tax charges to operations currently estimated to
be approximately $155 million. This estimate includes (1) an anticipated
one-time pre-tax charge of approximately $30 million for direct incremental
merger-related transaction costs which will be recorded in the quarter in which
the merger is consummated and (2) certain other one-time transition costs,
currently estimated at $125 million (pre-tax) that Kerr-McGee and Oryx expect
the combined company to incur in connection with integrating the operations of
Kerr-McGee and Oryx. The transition costs consist principally of costs
associated with the elimination and consolidation of duplicate facilities,
employee severance and other costs resulting from the merger. The exact timing,
nature and amount of these transition costs are subject to change; however, the
companies expect that the majority of these transition costs will be recorded
upon consummation of the merger. The estimated $155 million of anticipated costs
attributable to the merger have been reflected as current and noncurrent accrued
liabilities and the $111 million after-tax estimated cost of the anticipated
charge has been reflected as a reduction in retained earnings in the Unaudited
Pro Forma Combined Condensed Balance Sheet as of September 30, 1998. See note
(g) of Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
The unaudited pro forma combined condensed financial statements do not
reflect any of the recurring cost savings synergies or future cost avoidance
expected to result from the merger. These amounts are estimated to be in excess
of $100 million annually on a pre-tax basis. These synergies will be achieved
principally by reduced general and administrative costs, reduced exploration
costs, consolidation of operations in the Gulf of Mexico and the U.K. sector of
the North Sea and reductions in the cost of financing Oryx's operations.
43
<PAGE> 50
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
KERR-MCGEE ORYX RECLASSIFICATIONS(i) ADJUSTMENTS COMBINED
---------- ----- -------------------- ----------- ---------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales................................ $1,045 $ 630 $(11) $ $1,664
------ ----- ---- ---- ------
Costs and Expenses
Costs and operating expenses....... 598 167 6 10(d)(e) 781
General and administrative
expenses........................ 102 40 25 (8)(d) 159
Depreciation and depletion......... 206 225 (4) 427
Exploration, including dry holes
and amortization of undeveloped
leases.......................... 57 95 8(f) 160
Production taxes................... 42 (42) --
Taxes, other than income taxes..... 15 -- 30 45
Interest and debt expense.......... 43 86 (15) 114
Interest capitalized............... -- (15) 15 --
Provision for restructuring........ -- 25 (25) --
------ ----- ---- ---- ------
Total Costs and Expenses... 1,021 665 (10) 10 1,686
------ ----- ---- ---- ------
24 (35) (1) (10) (22)
Other Income......................... (2) -- 16 14
------ ----- ---- ---- ------
Income (Loss) from Continuing
Operations before Income Taxes..... 22 (35) 15 (10) (8)
Provision (Benefit) for Income
Taxes.............................. 3 (13) 17 5(e)(h) 12
Remeasurement of Foreign Deferred
Income Taxes....................... -- 2 (2) --
------ ----- ---- ---- ------
Income (Loss) from Continuing
Operations......................... $ 19 $ (24) $ -- $(15) $ (20)
====== ===== ==== ==== ======
Earnings (Loss) per Common Share from
Continuing Operations --
Basic.............................. $ .40 $(.23) $ (.23)
Diluted............................ .40 (.23) (.23)
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial
Statements.
44
<PAGE> 51
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
KERR-MCGEE ORYX RECLASSIFICATIONS(i) ADJUSTMENTS COMBINED
---------- ------ -------------------- ----------- ---------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales................................ $1,388 $1,197 $ 20 $ $2,605
------ ------ ---- ---- ------
Costs and Expenses
Costs and operating expenses....... 739 255 5 14 (d)(e) 1,013
General and administrative
expenses........................ 136 58 (1)(d) 193
Depreciation and depletion......... 239 311 (4) 546
Exploration, including dry holes
and amortization of undeveloped
leases.......................... 65 80 6 (d)(f) 151
Production taxes................... 161 (161) --
Taxes, other than income taxes..... 20 -- 82 102
Interest and debt expense.......... 47 111 (16) 142
Interest capitalized............... -- (16) 16 --
------ ------ ---- ---- ------
Total Costs and Expenses... 1,246 960 (78) 19 2,147
------ ------ ---- ---- ------
142 237 98 (19) 458
Other Income......................... 90 -- (16) 74
------ ------ ---- ---- ------
Income from Continuing Operations
before Income Taxes................ 232 237 82 (19) 532
Provision for Income Taxes........... 71 68 79 (37)(e)(h) 181
Remeasurement of Foreign Deferred
Income Taxes....................... -- (3) 3 --
------ ------ ---- ---- ------
Income from Continuing Operations.... $ 161 $ 172 $ -- $ 18 $ 351
====== ====== ==== ==== ======
Earnings per Common Share from
Continuing Operations --
Basic........................... $ 3.38 $ 1.63 $ 4.04
Diluted......................... 3.36 1.62 4.03
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial
Statements.
45
<PAGE> 52
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
KERR-MCGEE ORYX RECLASSIFICATIONS(i) ADJUSTMENTS COMBINED
---------- ------ -------------------- ----------- ---------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales................................ $1,566 $1,147 $ 27 $ $2,740
------ ------ ---- ---- ------
Costs and Expenses
Costs and operating expenses....... 804 239 10 7(d)(e) 1,060
General and administrative
expenses........................ 197 58 (1)(d) 254
Depreciation and depletion......... 267 276 (8) 535
Asset impairment................... 25 -- 25
Exploration, including dry holes
and amortization of undeveloped
leases.......................... 74 56 2(d)(f) 132
Production taxes................... 160 (160) --
Taxes, other than income taxes..... 30 -- 81 111
Interest and debt expense.......... 52 110 (17) 145
Interest capitalized............... -- (17) 17 --
------ ------ ---- ---- ------
Total Costs and Expenses...... 1,449 882 (77) 8 2,262
------ ------ ---- ---- ------
117 265 104 (8) 478
Other Income......................... 132 -- (21) 111
------ ------ ---- ---- ------
Income from Continuing Operations
before Income Taxes................ 249 265 83 (8) 589
Provision for Income Taxes........... 85 96 89 (39)(e)(h) 231
Remeasurement of Foreign Deferred
Income Taxes....................... -- 6 (6) --
------ ------ ---- ---- ------
Income from Continuing Operations.... $ 164 $ 163 $ -- $ 31 $ 358
====== ====== ==== ==== ======
Earnings per Common Share from
Continuing Operations --
Basic........................... $ 3.32 $ 1.56 $ 4.07
Diluted......................... 3.30 1.55 4.05
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial
Statements.
46
<PAGE> 53
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
KERR-MCGEE ORYX RECLASSIFICATIONS(i) ADJUSTMENTS COMBINED
---------- ------ -------------------- ----------- ---------
(Millions of dollars, except per share amounts)
<S> <C> <C> <C> <C> <C>
Sales............................... $1,401 $1,129 $(111) $ $2,419
------ ------ ----- ---- ------
Costs and Expenses
Costs and operating expenses...... 745 330 17 1(d)(e) 1,093
General and administrative
expenses....................... 147 64 25 (17)(d) 219
Depreciation and depletion........ 275 276 (15) 536
Asset impairment.................. 204 -- 204
Exploration, including dry holes
and amortization of undeveloped
leases......................... 80 59 139
Production taxes.................. 105 (105) --
Taxes, other than income taxes.... 29 -- 81 110
Interest and debt expense......... 60 144 (10) 194
Interest capitalized.............. -- (10) 10 --
Provision for restructuring....... -- 25 (25) --
------ ------ ----- ---- ------
Total Costs and
Expenses................ 1,540 993 (22) (16) 2,495
------ ------ ----- ---- ------
(139) 136 (89) 16 (76)
Other Income........................ 29 -- 115 144
------ ------ ----- ---- ------
Income (Loss) from Continuing
Operations before Income Taxes.... (110) 136 26 16 68
Provision (Benefit) for Income
Taxes............................. (52) (22) 26 6(h) (42)
------ ------ ----- ---- ------
Income (Loss) from Continuing
Operations........................ $ (58) $ 158 $ -- $ 10 $ 110
====== ====== ===== ==== ======
Earnings (Loss) per Common Share
from Continuing Operations --
Basic.......................... $(1.12) $ 1.54 $ 1.23
Diluted........................ (1.12) 1.54 1.23
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial
Statements.
47
<PAGE> 54
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
KERR-MCGEE ORYX RECLASSIFICATIONS(i) ADJUSTMENTS COMBINED
---------- ------ -------------------- ----------- ---------
(Millions of dollars, except per share amount)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash.............................. $ 251 $ 7 $ $ $ 258
Accounts receivable, net of
allowance for doubtful
accounts....................... 276 147 423
Accounts receivable and other
current assets................. 170 (170) --
Inventories....................... 235 1 236
Deposits and prepaid expenses..... 37 14 51
------ ------ ---- ---- ------
Total Current Assets...... 799 177 (8) 968
------ ------ ---- ---- ------
Property, Plant and Equipment....... 4,884 5,991 (20)(g) 10,855
Less: Accumulated Depreciation and
Depletion......................... 2,326 4,016 (122) 20(f) 6,240
------ ------ ---- ---- ------
2,558 1,975 122 (40) 4,615
------ ------ ---- ---- ------
Investments and Other Assets........ 374 58 432
------ ------ ---- ---- ------
Total Assets............ $3,731 $2,210 $114 $(40) $6,015
====== ====== ==== ==== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable.................. $ 241 $ 117 $ $ $ 358
Long-term debt due within one
year........................... 7 119 126
Other current liabilities......... 308 210 16 60(g)(h) 594
------ ------ ---- ---- ------
Total Current
Liabilities............. 556 446 16 60 1,078
------ ------ ---- ---- ------
Long-Term Debt...................... 893 1,259 2,152
------ ------ ---- ---- ------
Deferred Credits and Reserves
Income taxes...................... 237 231 (24) (58)(e)(h) 386
Other............................. 388 132 122 93 (d)(e)(g) 735
------ ------ ---- ---- ------
Total Deferred Credits and
Reserves................ 625 363 98 35 1,121
------ ------ ---- ---- ------
Stockholders' Equity
Common stock, $1.00 par value..... 54 124 (85)(c) 93
Capital in excess of par value.... 349 1,821 (854)(c) 1,316
Preferred stock purchase rights... 1 -- 1
Accumulated other comprehensive
income......................... 1 -- 1
Retained earnings (deficit)....... 1,688 (772) (135)(i) 781
Common stock in treasury, at
cost........................... (388) (939) 939(c) (388)
Loan to ESOP...................... (92) 92 --
Deferred compensation............. (48) (92) (140)
------ ------ ---- ---- ------
Total Stockholders'
Equity.................. 1,657 142 -- (135) 1,664
------ ------ ---- ---- ------
Total Liabilities and
Stockholders'
Equity............... $3,731 $2,210 $114 $(40) $6,015
====== ====== ==== ==== ======
</TABLE>
See accompanying Notes to the Unaudited Pro Forma Combined Condensed Financial
Statements.
48
<PAGE> 55
NOTES TO THE UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
(a) The unaudited pro forma combined condensed financial statements reflect the
conversion of each outstanding share of Oryx common stock into 0.369 shares
of Kerr-McGee common stock, as provided in the merger agreement. The
combined condensed financial statements are presented as if the companies
were combined during all the periods included herein.
(b) The "successful efforts" method of accounting for oil and gas exploration
and production activities has been followed by both Kerr-McGee and Oryx in
preparation of the unaudited pro forma combined condensed balance sheet.
(c) Reflects the adjustment to common stock, capital in excess of par value and
treasury stock for the effects of recording the merger using the
pooling-of-interests accounting method and the cancellation of treasury
stock held by Oryx. At September 30, 1998, there were approximately 106
million shares of Oryx common stock outstanding, which will result in the
issuance of approximately 39 million additional Kerr-McGee shares at the
effective date of the merger. The additional Kerr-McGee shares were
determined based on the 0.369 Exchange Ratio. The pro forma adjustments are
as follows:
<TABLE>
<CAPTION>
COMMON CAPITAL IN EXCESS TREASURY
STOCK OF PAR VALUE STOCK
------ ----------------- --------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Oryx shares issued................................. $(124) $ 124 $ --
Additional Kerr-McGee shares issued in the
merger........................................... 39 (39) --
Cancellation of Oryx treasury stock................ -- (939) 939
----- ----- ----
Pro forma adjustments.............................. $ (85) $(854) $939
===== ===== ====
</TABLE>
(d) Financial Accounting Standards (FAS) No. 106, "Accounting for
Postretirement Benefits Other Than Pensions," allowed for recognition of
the postretirement transition obligation either immediately in net income
as a change in accounting principle in the period of adoption or on a
delayed basis as a component of net periodic postretirement benefit cost.
Kerr-McGee adopted FAS 106 in 1992 and elected immediate recognition of its
transition obligation. Oryx adopted the statement at the beginning of 1993
and elected to delay recognition of its transition obligation, amortizing
the amount on a straight-line basis over 20 years. Had Oryx elected
immediate recognition of its transition obligation, pre-tax income for the
nine months ended September 30, 1998, would have been $9 million higher.
Pre-tax income would have been higher by $3 million in 1997, $4 million in
1996 and $19 million in 1995. At September 30, 1998, retained earnings and
deferred taxes would have been lower by $17 million and $9 million, while
other deferred credits would have been higher by $26 million. These amounts
are shown as pro forma adjustments in order to conform Oryx to the method
followed by Kerr-McGee.
(e) Kerr-McGee and Oryx use different methods to recognize Petroleum Revenue
Tax (PRT) for U.K. operations. Kerr-McGee estimates the total PRT to be
payable over the life of a field and charges this amount to income tax
expense on a unit-of-production basis. Oryx uses the flow-through method,
which recognizes PRT as a production tax in total costs and expenses as
amounts become currently payable. Had Oryx provided for PRT using the
life-of the-field method, net income would have been $8 million lower for
the nine months ended September 30, 1998, $31 million higher for 1997 and
$36 million higher for 1996. There would have been no change in the amount
recognized in 1995. Retained earnings at September 30, 1998, would have
been $20 million higher, and deferred income taxes would have been $20
million lower.
Oryx reduces the amount of its estimated dismantlement and removal costs by
the amount of PRT expected to be recovered when the field is abandoned.
(Under the life-of-field method, this amount is included in the estimate of
total PRT payable over the field life). Had Oryx provided for
49
<PAGE> 56
dismantlement costs similar to Kerr-McGee, operating expense would have
been $11 million higher for the first nine months of 1998, and $15 million,
$9 million and $2 million higher for the years ended 1997, 1996 and 1995,
respectively. At September 30, 1998, other deferred credits would have been
higher by $20 million, while retained earnings and deferred income taxes
would have been lower by $14 million and $6 million, respectively.
These amounts are shown as pro forma adjustments.
(f) Kerr-McGee and Oryx use different methods to provide for nonproducing
leasehold cost impairment. Kerr-McGee capitalizes undeveloped acreage costs
and amortizes the costs at rates that provide full amortization upon
abandonment/expiration of unproductive leases. Oryx also capitalizes
undeveloped acreage but recognizes abandonment of unproductive leaseholds
when the lease expires or when circumstances indicate. Had Oryx amortized
nonproducing leasehold cost similar to Kerr-McGee, exploration expense
would have been higher by $8 million for the first nine months of 1998, $7
million in 1997, $3 million in 1996 and $1 million in 1995. At September
30, 1998, accumulated depreciation and depletion would have been $20
million higher, retained earnings $13 million lower and deferred taxes $7
million lower. These amounts are shown as pro forma adjustments.
(g) Reflects the estimated direct costs associated with the merger which
approximate $155 million before income taxes. These costs primarily consist
of $30 million for professional services, registration and other regulatory
costs. Severance costs and related charges for employee benefits are
estimated at approximately $90 million. The remaining charges are for
anticipated write-offs for duplicate facilities and office lease
cancellations.
These nonrecurring costs, which are subject to change, will be charged to
operations in the quarter in which the merger is consummated. Excluding
additional retirement benefits, it is expected that substantially all of
the cash costs related to this transaction will be paid within one year
after the merger is consummated.
The after-tax merger costs are expected to be $111 million. The tax effect
is computed by applying the Federal statutory rate of 35% to $125 million,
the total merger costs less $30 million of anticipated nondeductible
expenses.
(h) Reflects the income tax effects of the adjustments are discussed above.
(i) Reflects the retained earnings adjustments for the pro forma adjustments
are as follows:
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS)
---------------------
<S> <C>
Direct merger-related costs, Note(g)........................ $(111)
Post-retirement transition obligation, Note(d).............. (17)
PRT and related effect on dismantlement obligations,
Note(e)................................................... 6
Non-producing leasehold impairment, Note(f)................. (13)
-----
$(135)
=====
</TABLE>
(j) Certain reclassification entries are necessary to adjust Oryx's and
Kerr-McGee's condensed balance sheets and statements of income to be
consistent with the presentation expected to be used after the merger is
consummated. The following entries are reflected in the reclassification
columns:
- the reclassification of Oryx's dismantlement provision and reserves in
depreciation and depletion and accumulated depreciation and depletion to
Kerr-McGee's presentation;
- the reclassification of Oryx's other income to Kerr-McGee's presentation;
- the reclassification of Oryx's production taxes to Kerr-McGee's
presentation;
- the reclassification of Kerr-McGee's U.K. royalties to Oryx's
presentation;
- the reclassification of Oryx's capitalized interest to Kerr-McGee's
presentation;
- and the reclassification of Oryx's remeasurement of foreign deferred
taxes to Kerr-McGee's presentation.
50
<PAGE> 57
DIRECTORS AND SENIOR MANAGEMENT OF
THE COMBINED COMPANY FOLLOWING THE MERGER
DIRECTORS
The merger agreement provides that, following the merger, the Board of
Directors of the combined company will be classified into three classes with
three-year terms of office, initially consisting of the nine current directors
of Kerr-McGee, Robert L. Keiser (Oryx's Chairman and Chief Executive Officer)
and the four other Oryx directors listed below. The following table lists the
persons expected to serve as directors of the combined company, including their
ages, initial terms, and current and recent business experience.
<TABLE>
<CAPTION>
NAME, AGE INITIAL TERM
AND CURRENT AFFILIATION EXPIRES CURRENT AND RECENT BUSINESS EXPERIENCE
- ----------------------- ------------ --------------------------------------
<S> <C> <C>
William E. Bradford, 64 2001 Chairman of Halliburton Company, a provider
Oryx Director of energy and energy services, since 1998;
Chairman and Chief Executive Officer of
Dresser Industries, Inc., now merged with
Halliburton Company, from 1996 to 1998;
President and Chief Executive Officer from
1992 to 1995; President and Chief Executive
Officer of Dresser-Rand Company, a provider
of energy services, from 1988 to 1992.
Director, Ultramar/Diamond Shamrock, Inc.
Luke R. Corbett, 51 2001 Chairman of the Board and Chief Executive
Kerr-McGee Director Officer of Kerr-McGee since February 1997;
President and Chief Operating Officer from
May 1995 through January 1997; Group Vice
President from 1992 to May 1995. Director,
Devon Energy Corporation, OGE Energy Corp and
BOK Financial Corp.
Sylvia A. Earle, 63 2000 Chair of Deep Ocean Exploration and Research,
Oryx Director Inc. since 1992; Explorer-in-Residence for
the National Geographic Society since 1998;
Chair of the Sea Change Trust and Caribbean
Marine Research Center, a non-profit
scientific research organization from 1993 to
1995; Advisor to the Administrator from 1992
to 1993 and Chief Scientist from 1990 to 1992
of the National Oceanic and Atmospheric
Administration.
David G. Genever-Watling, 53 2001 Managing Director of a private investment
Oryx Director firm since 1997; President and Chief
Executive Officer of General Electric
Industrial and Power Systems from 1992 to
1995; Senior Vice President from 1990 to
1992.
Martin C. Jischke, 57 2000 President of Iowa State University since
Kerr-McGee Director 1991. Director, Bankers Trust Corporation.
Robert L. Keiser, 56 2000 Chairman of the Board and Chief Executive
Oryx Director Officer of Oryx since 1994; President and
Chief Operating Officer from 1992 to 1994.
</TABLE>
51
<PAGE> 58
<TABLE>
<CAPTION>
NAME, AGE INITIAL TERM
AND CURRENT AFFILIATION EXPIRES CURRENT AND RECENT BUSINESS EXPERIENCE
- ----------------------- ------------ --------------------------------------
<S> <C> <C>
Tom J. McDaniel, 60 1999 Vice Chairman of Kerr-McGee since February
Kerr-McGee Director 1997; Senior Vice President and Corporate
Secretary from 1989 through January 1997.
Director, Devon Energy Corporation and UMB
Oklahoma Bank.
William C. Morris, 60 2001 Chairman of the Board and President of J. &
Kerr-McGee Director W. Seligman & Co., Inc., an investment firm;
Chairman of the Board of Tri-Continental
Corporation and Chairman of the Boards of the
companies in the Seligman family of
investment companies, all since December
1988. Chairman of the Board of Carbo
Ceramics, Inc. since 1987.
John J. Murphy, 67 1999 Managing Director of a private investment
Kerr-McGee Director firm since January 1997; Chairman of the
Board of Dresser Industries, Inc. from 1983
to November 1996; Chief Executive Officer
from 1983 to 1995. Director, Carbo Ceramics,
Inc.; PepsiCo Inc. and W. R. Grace & Co.
Leroy C. Richie, 57 2000 President of Intrepid World Communications
Kerr-McGee Director since September 1998; Vice President and
General Counsel for Automotive Legal Affairs,
Chrysler Corporation, 1990 to 1997.
Richard M. Rompala, 52 2000 Chairman of the Board, President and Chief
Kerr-McGee Director Executive Officer of The Valspar Corporation,
a manufacturer of paints and related
coatings, since February 1998; President and
Chief Executive Officer from 1995 to January
1998; President in 1994; Group Vice President
of PPG Industries, a manufacturer of glass,
industrial paints and chemicals, from 1987 to
1994. Director, Olin Corporation.
Matthew R. Simmons, 55 1999 President of Simmons & Company International,
Kerr-McGee Director a specialized investment banking firm that
exclusively serves the worldwide energy
service industry, since 1974.
Farah M. Walters, 54 2001 President and Chief Executive Officer of
Kerr-McGee Director University Hospitals of Cleveland since 1992.
Director, LTV Corporation and Geon Company.
Ian L. White-Thomson, 62 1999 Chairman of U.S. Borax, Inc., a provider of
Oryx Director borax and borate technology, since 1996;
President and Chief Executive Officer since
1988; Chief Executive Officer, Rio Tinto
Borax Ltd. since 1995. Director, 3D Systems
Corp. and KCET Community Television of
Southern California.
</TABLE>
If any of the four additional directors from Oryx are not serving on the
Oryx Board immediately prior to the merger or are otherwise unable to serve on
the Board of Directors of the combined company, Oryx will be entitled to
nominate substitute nominees, provided the substitutes are not and have not been
employees of Oryx and are serving on the Oryx Board immediately prior to the
merger. If any of the
52
<PAGE> 59
Kerr-McGee directors listed above are not serving as directors of Kerr-McGee
prior to the merger, their successors will become directors of the combined
company in their places.
OFFICERS
The merger agreement provides that Robert L. Keiser will be appointed
Chairman of the Board of the combined company following the merger and Luke R.
Corbett will continue as Chief Executive Officer. Set forth below is a table of
the persons expected to serve as senior executive officers of the combined
company immediately following the merger, together with their ages, current
positions, and recent business experience.
<TABLE>
<CAPTION>
POSITION IN
NAME, AGE COMBINED COMPANY CURRENT POSITIONS AND RECENT BUSINESS EXPERIENCE
- --------- ---------------- ------------------------------------------------
<S> <C> <C>
Robert L. Keiser, 56 Chairman of the Board Chairman of the Board and Chief Executive
Officer of Oryx since 1994; President and Chief
Operating Officer from 1992 to 1994.
Luke R. Corbett, 51 Chief Executive Officer Chairman of the Board and Chief Executive
Officer of Kerr-McGee since February 1997;
President and Chief Operating Officer from May
1995 through January 1997; Group Vice President
from 1992 to May 1995. Director, Devon Energy
Corporation, OGE Energy Corp. and BOK Financial
Corp.
Tom J. McDaniel, 60 Vice Chairman Vice Chairman of the Board of Kerr-McGee since
February 1997. Senior Vice President and
Corporate Secretary from 1989 through January
1997. Director, Devon Energy Corporation and UMB
Oklahoma Bank.
John C. Linehan, 59 Executive Vice President and Executive Vice President of Kerr-McGee since
Chief Financial Officer 1997. Chief Financial Officer since 1987. Senior
Vice President from 1987 to 1997. Director,
BancFirst Oklahoma City.
Kenneth W. Crouch, 55 Senior Vice President Senior Vice President of Kerr-McGee since 1996.
Senior Vice President, Exploration, Kerr-McGee
Oil & Gas Corporation since 1996. Senior Vice
President, North America and International
Exploration, Exploration and Production Division
during 1996. Vice President, Gulf of Mexico and
International Exploration, Exploration and
Production Division from 1995 to 1996. Vice
President and Managing Director of Exploration
for North Sea Operations, Exploration and
Production Division from 1993 to 1995.
Russell G. Horner, Jr., 59 Senior Vice President, Senior Vice President and Corporate Secretary of
General Counsel and Kerr-McGee since 1997. General Counsel since
Corporate Secretary 1986. Vice President from 1986 to 1997.
</TABLE>
53
<PAGE> 60
<TABLE>
<CAPTION>
POSITION IN
NAME, AGE COMBINED COMPANY CURRENT POSITIONS AND RECENT BUSINESS EXPERIENCE
- --------- ---------------- ------------------------------------------------
<S> <C> <C>
Michael G. Webb, 51 Senior Vice President Senior Vice President of Kerr-McGee since 1993.
Senior Vice President, Exploration, Exploration
and Production Division from 1993 to 1996. Vice
President, Exploration from 1992 to 1993.
W. Peter Woodward, 50 Senior Vice President Senior Vice President of Kerr-McGee since June
1997. Senior Vice President of Kerr-McGee
Chemical Corporation since June 1997. Senior
Vice President, Chemical Marketing of Kerr-McGee
Chemical Corporation from May 1996 through May
1997. Director, Pigment Business Management of
Kerr-McGee Chemical Corporation from 1993
through April 1996.
</TABLE>
OTHER INFORMATION REGARDING DIRECTORS, EXECUTIVE OFFICERS
AND FIVE PERCENT STOCKHOLDERS
Information concerning directors and officers of Kerr-McGee, executive
compensation and ownership of Kerr-McGee common stock by management and
principal stockholders is contained in Kerr-McGee's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 and is incorporated herein by
reference.
Information concerning directors and officers of Oryx, executive
compensation and ownership of Oryx common stock by management and principal
stockholders is contained in Oryx's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 and is incorporated herein by reference.
See "Where You Can Find More Information" on page 83.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the respective recommendations of the Kerr-McGee Board of
Directors and the Oryx Board of Directors with respect to the merger,
stockholders of Kerr-McGee and Oryx should be aware that certain officers of
Kerr-McGee and Oryx, including some officers who are also directors, have
certain interests in the merger that are different from, or in addition to, the
interests of stockholders of Kerr-McGee and Oryx in general.
DIRECTORS AND EXECUTIVE OFFICERS
Two executive officers of Kerr-McGee, Luke R. Corbett and Tom J. McDaniel,
were also members of Kerr-McGee's nine-person Board of Directors when the Board
approved the merger and will remain as directors and executive officers of the
combined company. Three executive officers of Oryx, Robert L. Keiser, Jerry W.
Box and Edward W. Moneypenny, were also members of Oryx's ten-person Board of
Directors when the Oryx Board approved the merger. Mr. Keiser will become a
director and the Chairman of the Board of Kerr-McGee after the merger, Mr. Box
has elected to retire and Mr. Moneypenny has chosen to seek other employment
opportunities. Four other directors of Oryx, William E. Bradford, Sylvia A.
Earle, David G. Genever-Watling and Ian L. White-Thomson, will join the
Kerr-McGee Board following the merger.
54
<PAGE> 61
ORYX'S CHANGE OF CONTROL ARRANGEMENTS
Special Executive Severance Plan. The Oryx Energy Company Amended and
Restated Special Executive Severance Plan (the "Executive Severance Plan")
provides severance benefits to certain executive officers in the event of their
"termination of employment" within two years of a "corporate change." The merger
will be considered a "corporate change" for purposes of the Executive Severance
Plan.
Under the Executive Severance Plan, each executive officer covered by the
plan whose employment is terminated following a corporate change other than for
"just cause" (as defined in individual agreements between Oryx and the executive
officer) or who voluntarily terminates employment as the result of a
determination by the officer that the officer is unable to effectively discharge
the officer's duties as a result of the corporate change is entitled to a
payment of an amount equal to the officer's final annual compensation multiplied
by the lesser of (a) three years or (b) the number of full and fractional years
remaining until the officer reaches age 65. Final annual compensation is the sum
of final annualized base salary, plus the product of such base salary multiplied
by the guideline target incentive (bonus) percentage, all as applicable just
prior to the corporate change or at the time of termination of employment,
whichever is more favorable to the officer. The terms of the Executive Severance
Plan further provide that if any payments made or benefits provided to the
officer upon or after a corporate change, whether or not made or provided under
the Executive Severance Plan, would cause the officer to be subject to an excise
tax because the payments are parachute payments (as defined in the Internal
Revenue Code), then the officer would be entitled to an excise tax premium in a
sufficient amount to make the officer whole with respect to any additional tax
that would not have been payable except due to the payments constituting
"parachute payments." The executive officers would also be entitled to
supplemental benefits such as the continuation of health, life and disability
insurance, the cost of which would not be significant in relation to the
aggregate payments and to the reimbursement of all legal fees and expenses
relating to determining validity of or enforcing the severance arrangements.
On October 14, 1998, Oryx amended its Executive Severance Plan to modify
the definition of "termination of employment" to include resignation by the
executive officer as a result of certain actions taken by the combined company,
such as a change in duties inconsistent with the officer's previous duties or
relocation without the officer's written consent, a reduction in the officer's
base annual salary or bonus compensation in effect immediately prior to the
merger and a failure by the combined company to continue to provide the officer
with the opportunity to participate in employee benefit plans and compensation
programs on terms no less favorable than those in effect with respect to the
officer immediately prior to the merger. Oryx also amended the Executive
Severance Plan to (1) provide for a cash lump sum payment of benefits under the
plan rather than 36 monthly installments, (2) modify the provisions regarding
the payment of fees and expenses incurred as a result of any litigation,
arbitration or similar proceeding, whether instituted by Kerr-McGee (as
successor to Oryx) or the officer, with respect to the interpretation or
enforcement of any provision under the Executive Severance Plan, and (3) provide
severance benefits if the employment of the executive officer is terminated
within 90 days prior to a corporate change without "just cause" or by the
executive officer for "good reason". Each executive officer covered by the
Executive Severance Plan executed an amendment to such officer's severance
agreement incorporating the preceding amendments to the Executive Severance
Plan.
The payments under the Executive Severance Plan to Oryx's five most highly
compensated executive officers would be approximately $2,846,000 for Robert L.
Keiser, $1,697,000 for Jerry W. Box, $1,431,000 for Edward W. Moneypenny,
$851,000 for William C. Lemmer, and $802,000 for Marion E. Anglin, and would be
approximately $4,206,000 in the aggregate for the other executive officers of
Oryx eligible under the Executive Severance Plan.
Involuntary Termination Program. On October 14, 1998, with certain limited
transitional exceptions, Oryx discontinued its current non-executive employee
severance plans, the Involuntary Termination Program and Special Employee
Severance Plan, and adopted a new plan, the 1998-99 Involuntary
55
<PAGE> 62
Termination Program (the "New Termination Plan"). Eligible employees under the
New Termination Plan consist of all regular employees selected by Oryx for
participation in the New Termination Plan and do not include (1) employees on
final leave or vacation not expected to return to active employment, (2)
seasonal employees, (3) temporary employees, (4) employees who have another
continuing severance arrangement with Oryx (e.g., the Executive Severance Plan),
(5) employees covered by a collective bargaining agreement unless an agreement
with the employees' bargaining agent provides for coverage, and (6) employees
who are nonresident aliens with respect to the United States. Eligible employees
under the New Termination Plan will receive benefits in the event of involuntary
termination through no fault of the employee during the period beginning October
14, 1998 and, in general, ending on December 31, 1999 due to (a) permanent
closing or relocation of an employer's facility or operation, (b) elimination of
a position or group of positions or (c) restructuring of an organizational unit
resulting in a restaffing of the unit. No benefits will be provided to an
employee who is offered and declines a position that is "comparable" (as defined
in the New Termination Plan) to the employee's current position. Two levels of
severance pay benefits will be provided in a lump sum cash payment under the New
Termination Plan. For those who sign a waiver and release of employment claims,
the benefit is a lump sum calculated by multiplying final weekly base pay by a
number of weeks of base pay (not to exceed 104) equal to the sum of (1) three
weeks, plus three weeks for each year of service, with a minimum of 18 weeks and
a maximum of 78 weeks, plus (2) one week for each $10,000 of annual base pay.
For those who do not sign a waiver and release, the benefit is a lump sum
calculated by multiplying final weekly base pay by a number of weeks of base pay
equal to one week for each year of service, with a minimum of 6 weeks and a
maximum of 12 weeks. Benefits and payments under the New Termination Plan are
limited to an amount that, when added to other payments and benefits provided to
the employee on account of a change of control, will not result in a "parachute
payment". Eligible employees will also be entitled to supplemental benefits such
as the continuation of insurance, the cost of which will not be significant in
relation to the aggregate payments.
Executive Retirement and Pension Plans. Oryx's retirement and pension plans
provide enhanced benefits for certain retirement age participants who terminate
employment during 1998 or 1999 under an outplacement program. Under the enhanced
benefit, an eligible participant receives credit for additional years of age and
service for purposes of calculating the participant's retirement benefit. On
October 14, 1998, Oryx amended the plans' outplacement provisions to increase
the additional age and service credit from two years to three years in order to
harmonize the terms of Oryx's and Kerr-McGee's retirement and pension plans,
thereby increasing participants' benefits in the event they are eligible for the
outplacement provisions.
TRANSITION AGREEMENT WITH ROBERT L. KEISER
Pursuant to an employment letter agreement with Kerr-McGee dated October
14, 1998, Robert L. Keiser will be employed by Kerr-McGee following the merger
as Chairman of the Board with responsibilities to be defined during the
transition period. He will be paid approximately $48,000 per month and will be
entitled to participate in all benefit plans that are maintained for the benefit
of Oryx employees in which he was entitled to participate as of October 14,
1998. His employment will continue until March 1, 2000, unless he or Kerr-McGee
decides that his employment should be terminated earlier. Upon the termination
of his employment, Mr. Keiser will resign his positions as an executive officer
and a director of Kerr-McGee.
Mr. Keiser is currently a participant in Oryx's Executive Severance Plan.
Upon the ultimate termination of his employment, Kerr-McGee has agreed to pay
Mr. Keiser the benefits contemplated by the Executive Severance Plan.
AGREEMENTS WITH CERTAIN OTHER ORYX EXECUTIVE OFFICERS
Executive Officers to be Relocated. Kerr-McGee has entered into letter
agreements dated October 16, 1998 with certain Oryx executive officers who are
participants in Oryx's Executive Severance Plan,
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pursuant to which such officers will be relocated from Dallas, Texas and will be
employed by Kerr-McGee following the merger. In the letter agreements, the
individuals agree that they would not make a determination that, as a result of
the merger, their relocations and their employment with Kerr-McGee in the
positions that they were offered would cause them to be unable to effectively
discharge their present duties or the duties of the position they occupied prior
to the merger, thereby triggering any payments under the Executive Severance
Plan, and Kerr-McGee acknowledged that any subsequent relocation or change in
their position with Kerr-McGee within the two-year period following the merger
will be subject to the individuals' rights under the Executive Severance Plan.
Executive Officers to be Employed Until September 1, 1999. Kerr-McGee has
entered into employment letter agreements, dated October 16, 1998, with Jerry W.
Box, Edward W. Moneypenny, William C. Lemmer, Marion E. Anglin and certain other
Oryx executive officers, pursuant to which such individuals will be employed by
Kerr-McGee during a transition period following the merger with responsibilities
to be defined. They will be paid employees of Kerr-McGee with monthly salaries
of $30,415 for Mr. Box, $26,500 for Mr. Moneypenny, $17,502 for Mr. Lemmer,
$16,750 for Mr. Anglin and $43,050 in the aggregate for such other Oryx
executives officers, and will be entitled to participate in benefit plans that
are maintained for the benefit of Oryx employees. Their employment will continue
until September 1, 1999, unless Kerr-McGee decides that their employment should
be terminated earlier. Upon the termination of their employment, they will
resign their positions as executive officers of Kerr-McGee. The individuals are
currently participants in the Executive Severance Plan. Upon the ultimate
termination of their employment, Kerr-McGee will pay them the benefits
contemplated by the Executive Severance Plan.
KERR-MCGEE CHANGE OF CONTROL ARRANGEMENTS
Kerr-McGee Change of Control Agreements. Kerr-McGee has previously agreed
to provide certain executive officers with benefits in the event of a "change in
control" of Kerr-McGee. Approval of the merger by the Kerr-McGee stockholders
will constitute a "change of control" for purposes of such agreements.
Therefore, if, within two years following such approval the officer's employment
is terminated by Kerr-McGee for any reason other than death, disability or
"cause" (e.g., willful and gross misconduct or felony conviction), or by the
officer for "good reason" (e.g., assignment to duties inconsistent with the
officer's previous duties, removal of the officer from current positions within
Kerr-McGee, reduction of pay or benefits, or relocation of the officer without
the officer's consent), such officer will be entitled to receive a maximum lump
sum cash payment equal to three times the officer's annual base salary. If the
payment made to the officer would cause the officer to be subject to an excise
tax because the payment is a "parachute payment" (as defined in the Internal
Revenue Code), then the payment shall be reduced to the extent necessary so that
no portion thereof is subject to the excise tax, but only if such reduction
would increase the net after tax benefit received by the officer. In addition,
upon such termination, the officer will be entitled to receive amounts that such
officer would otherwise have been entitled to receive under Kerr-McGee's
Supplemental Executive Retirement Plan (SERP). Generally, the SERP benefit at
retirement is calculated by determining the officer's final average monthly
compensation multiplied by a percentage based upon years of Kerr-McGee service
minus the sum of the anticipated monthly amounts payable to the officer as a
primary social security benefit and monthly amounts payable under Kerr-McGee's
qualified and nonqualified defined benefit plans. The SERP provisions establish
a minimum benefit for officers who were participants before May 3, 1994,
regardless of their years of Kerr-McGee service. The percentage of final average
monthly compensation used to determine the SERP benefit prior to offsets, ranges
from 40% to 70% depending on when the officer became a participant in the SERP,
the age at which the officer retires and the reason for the retirement. That
monthly amount is in the form of a monthly income for life, payable in an
actuarially equivalent tax-equalized cash lump sum. The agreements also provide
for the acceleration of stock options upon a change in control.
In the event of such person's termination of employment within the two-year
period for one of the reasons described above, the payments under the Kerr-McGee
change of control agreements to Kerr-McGee's five most highly compensated
executive officers would be approximately $1,980,000 for Luke R. Corbett,
$930,000 for Tom J. McDaniel, $930,000 for John C. Linehan, $810,000 for Russell
G. Horner,
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Jr. and $720,000 for Kenneth W. Crouch, and would be approximately $1,818,000 in
the aggregate for the other eligible executive officers of Kerr-McGee.
STOCK OPTIONS AND RESTRICTED STOCK HELD BY ORYX DIRECTORS AND EXECUTIVE OFFICERS
Under the merger agreement, all stock options issued under Oryx stock
option plans will be converted based on the Exchange Ratio into similar options
with respect to shares of Kerr-McGee common stock. In accordance with the terms
of the applicable stock option agreements and restricted stock agreements, stock
options held by Oryx directors and executive officers with respect to an
aggregate of 261,077 shares of Kerr-McGee common stock (on a pro forma basis
after giving effect to the Reverse Split and the merger) will become exercisable
at the time of the merger and restrictions on 68,088 shares of Kerr-McGee common
stock (on a pro forma basis after giving effect to the Reverse Split and the
merger) that constitute "restricted" stock held by Oryx directors and executive
officers will lapse at the time of the merger, including certain of the options
and all of the restricted stock held as of October 31, 1998 by the five most
highly compensated executive officers of Oryx, as indicated in the following
table:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
KERR-MCGEE SHARES KERR-MCGEE SHARES
WHICH WILL BE VALUE OF OF RESTRICTED STOCK
SUBJECT TO OPTIONS FOR WHICH FOR WHICH
ACCELERATED EXERCISABILITY WILL RESTRICTIONS WILL
NAME ORYX OPTIONS BE ACCELERATED LAPSE
- ---- ----------------- ------------------- -------------------
<S> <C> <C> <C>
Robert L. Keiser............................... 93,529 $0 26,053
Jerry W. Box................................... 41,205 0 3,296
Edward W. Moneypenny........................... 29,520 0 3,124
William C. Lemmer.............................. 12,915 0 1,456
Marion E. Anglin............................... 9,249 0 222
All executive officers and directors as a
group........................................ 261,077 0 68,088
</TABLE>
STOCK OPTIONS HELD BY KERR-MCGEE DIRECTORS AND EXECUTIVE OFFICERS
In accordance with the terms of the applicable Kerr-McGee change of control
agreements, stock options held by Kerr-McGee directors and executive officers
with respect to an aggregate of 240,339 shares of Kerr-McGee common stock will
become exercisable at the time of the merger, including all of the options held
as of October 31, 1998 by the five most highly compensated executive officers of
Kerr-McGee, as indicated in the following table:
<TABLE>
<CAPTION>
NUMBER OF
KERR-MCGEE SHARES
WHICH WILL BE VALUE OF
SUBJECT TO OPTIONS FOR WHICH
ACCELERATED EXERCISABILITY WILL
NAME KERR-MCGEE OPTIONS BE ACCELERATED
- ---- ------------------ -------------------
<S> <C> <C>
Luke R. Corbett............................................. 100,668 $0
Tom J. McDaniel............................................. 29,334 0
John C. Linehan............................................. 31,667 0
Russell G. Horner, Jr....................................... 19,668 0
Kenneth W. Crouch........................................... 17,000 0
All executive officers and directors as a group............. 240,339 0
</TABLE>
OWNERSHIP OF COMMON STOCK; STOCK OPTIONS
As of October 31, 1998, directors and executive officers of Oryx
beneficially owned an aggregate of 383,364 shares of Oryx common stock, as well
as options to purchase 1,742,592 shares of Oryx common stock exercisable within
60 days.
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<PAGE> 65
As of October 31, 1998, directors and executive officers of Kerr-McGee
beneficially owned an aggregate of 165,945 shares of Kerr-McGee common stock, as
well as options to purchase 338,394 shares of Kerr-McGee common stock
exercisable within 60 days.
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
The merger agreement provides that following the merger, the combined
company will indemnify, hold harmless and provide advancement of expenses to all
past and present directors, officers and employees of Kerr-McGee, Oryx and their
respective subsidiaries for acts and omissions occurring at or prior to the
merger, to the extent those individuals were protected under Kerr-McGee's or
Oryx's or their respective subsidiaries' certificates of incorporation, by-laws
or other indemnification agreements in existence at the time the merger
agreement was signed. The merger agreement also provides that Kerr-McGee will
maintain the current or equivalent policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by Kerr-McGee,
Oryx and their respective subsidiaries for six years after the merger, but
Kerr-McGee will not be required to expend in any one year an amount in excess of
200% of the annual premiums currently paid by Kerr-McGee and Oryx for such
insurance. See "The Merger Agreement -- Indemnification and Insurance" on page
66.
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<PAGE> 66
THE MERGER AGREEMENT
GENERAL
The merger agreement contemplates the merger of Oryx into Kerr-McGee, with
Kerr-McGee continuing as the surviving corporation. This section of the document
describes material provisions of the merger agreement. Because the description
of the merger agreement contained in this document is a summary, it does not
contain all the information that may be important to you. You should read
carefully the entire copy of the merger agreement attached as Appendix A to this
document before you decide how to vote.
CLOSING; EFFECTIVE TIME; SURVIVING CORPORATION
Closing. Unless the parties agree otherwise, the closing of the merger (the
"Closing") will take place on the second business day after the date on which
all closing conditions have been satisfied or waived or such other time as
agreed to in writing by Kerr-McGee and Oryx. The Closing is expected to take
place shortly after the approval of the stockholders of both companies at the
Meetings. The actual time and date of the Closing is referred to as the "Closing
Date."
Effective Time. At the Closing, Kerr-McGee and Oryx will file a certificate
of merger in accordance with the relevant provisions of the Delaware General
Corporation Law and make all other filings or recordings required under Delaware
law. The merger will become effective at such time as the certificate of merger
is duly filed with the Delaware Secretary of State or at such subsequent time as
Kerr-McGee and Oryx agree and as specified in the certificate of merger.
Surviving Corporation. Kerr-McGee will be the surviving corporation. In the
merger, the certificate of incorporation of Kerr-McGee as in effect immediately
prior to the Effective Time will be amended and restated as of the Effective
Time to read as set forth in Exhibit 1.5 of Appendix A to this document. The
merger agreement also provides that in the merger the bylaws of Kerr-McGee will
be amended and restated as of the Effective Time to read as set forth in Exhibit
1.6 of Appendix A to this document. See "Amendment and Restatement of
Kerr-McGee's Certificate of Incorporation and By-Laws and Comparison of
Stockholders' Rights" on page 73. The initial directors and senior executive
officers of Kerr-McGee following the merger will be as described in "Directors
and Senior Management of the Combined Company Following the merger" on page 51.
THE REVERSE STOCK SPLIT
Immediately prior to the merger, Oryx will amend its certificate of
incorporation to effect the Reverse Split, in which each share of Oryx common
stock will be reclassified as 0.369 shares of Oryx common stock, with cash being
paid in lieu of fractional shares. See "The Reverse Stock Split" on page 72.
CONSIDERATION TO BE RECEIVED IN THE MERGER
At the Effective Time, by virtue of the merger and without any action on
the part of any holder of shares of Oryx common stock, (a) each share of Oryx
common stock outstanding immediately prior to the Effective Time and after
giving effect to the Reverse Split (excluding shares owned by Kerr-McGee or held
by Oryx, which shares will be canceled) will be converted into the right to
receive one share of Kerr-McGee common stock, (b) each share of Oryx common
stock owned or held by Kerr-McGee or Oryx including treasury stock, will cease
to be outstanding and will be canceled and retired, and (c) each share of
Kerr-McGee common stock outstanding immediately prior to the Effective Time will
remain outstanding following the merger and will continue to represent one share
of the combined company.
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TREATMENT OF ORYX STOCK OPTIONS
Each outstanding and unexercised option or right to purchase a share of
Oryx common stock issued under Oryx's employee benefit plans (the "Oryx Stock
Options") will be converted at the time of the Reverse Split into an option to
or right to purchase 0.369 shares of Oryx common stock. At the Effective Time,
each Oryx Stock Option will be assumed by Kerr-McGee and converted into an
option or a right to purchase one share of Kerr-McGee common stock for each
share of Oryx common stock. Such new option or right will otherwise have the
same terms and conditions that were applicable to the Oryx Stock Options
immediately prior to the Effective Time. Because the terms of certain Oryx Stock
Options will result in those options becoming exercisable immediately upon a
change in control such as the merger, the options to acquire Kerr-McGee common
stock into which such Oryx Stock Options will be converted will likewise be
exercisable immediately at the Effective Time.
For a further discussion of the treatment of Oryx Stock Options and other
stock-based employee benefit plans under the merger agreement, see "-- Employee
Benefits Matters" on page 66, and "Interests of Certain Persons in the merger"
on page 55.
EXCHANGE OF SHARES; FRACTIONAL SHARES
Exchange Agent. Prior to the merger, Kerr-McGee will appoint an exchange
agent reasonably acceptable to Oryx to effect the exchange of certificates
representing shares of Oryx common stock for certificates representing shares of
Kerr-McGee common stock and cash to be paid in lieu of fractional shares. From
time to time as needed, Kerr-McGee will deposit, in trust for the holders of
Oryx common stock, certificates representing Kerr-McGee common stock and cash
with the exchange agent for conversion of shares as described under
"-- Consideration to be Received in the Merger" on page 61.
Exchange of Shares. As soon as reasonably practicable after the Effective
Time, the exchange agent will mail to each holder of certificates of Oryx common
stock a letter of transmittal and instructions explaining how to surrender such
certificates to the exchange agent.
Oryx stockholders who surrender their stock certificates to the exchange
agent, together with a properly completed and signed letter of transmittal and
any other documents required by the instructions to the letter of transmittal,
will receive Kerr-McGee common stock certificates representing such number of
shares as such holders are entitled in accordance with the Exchange Ratio, with
cash being paid in lieu of fractional shares. Holders of unexchanged Oryx stock
certificates will not receive any dividends or other distributions made by
Kerr-McGee after the merger until their stock certificates are surrendered. Upon
surrender, however, subject to applicable laws, such holders will receive all
dividends and distributions made on the related shares of Kerr-McGee common
stock subsequent to the merger, without interest, together with cash in lieu of
fractional shares. Any shares of Kerr-McGee common stock to be issued in the
merger or funds set aside by the combined company to pay cash in lieu of
fractional shares in connection with the merger or to pay dividends or other
distributions on shares of Kerr-McGee common stock to be issued in the merger
that are not claimed three years after the merger (or at such earlier time as
such funds would by law become property of a governmental entity) will become
property of the combined company to the extent permitted under applicable law.
ORYX STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY CARD
AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT EXCEPT WITH A SIGNED LETTER OF
TRANSMITTAL (OR ANY OTHER DOCUMENTS THAT MAY BE REQUIRED BY THE EXCHANGE AGENT,
AS PROVIDED IN THE INSTRUCTIONS THAT WILL ACCOMPANY THE LETTER OF TRANSMITTAL),
WHICH WILL BE PROVIDED TO ORYX STOCKHOLDERS FOLLOWING THE MERGER.
Fractional Shares. No fractional shares of Kerr-McGee common stock will be
issued to holders of Oryx common stock. In lieu of such fractional shares, each
holder of shares of Oryx common stock exchanged pursuant to the merger who would
otherwise have been entitled to receive a fraction of a share (after taking into
account all certificates delivered by such holder) will receive cash (without
interest) in an amount equal to the product of (1) such fractional part of a
share multiplied by (2) the closing price for a share of Kerr-McGee common stock
on the New York Stock Exchange on the trading day following the date on which
the Effective Time occurs.
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<PAGE> 68
Kerr-McGee Stockholders. STOCKHOLDERS OF KERR-MCGEE WILL NOT BE REQUIRED TO
EXCHANGE THEIR KERR-MCGEE STOCK CERTIFICATES. THESE STOCK CERTIFICATES WILL,
AFTER THE MERGER, AUTOMATICALLY REPRESENT CERTIFICATES FOR SHARES OF THE
COMBINED COMPANY.
CONDITIONS TO THE MERGER
Conditions to Each Company's Obligation to Effect the Merger. The
obligations of each company to effect the merger are subject to the following
(unless waived by both companies):
(1) the approval by the Kerr-McGee stockholders of the Kerr-McGee
Proposal and by the Oryx stockholders of the Oryx Proposal;
(2) the absence of any law, order, injunction or other legal restraint
or prohibition enjoining or preventing the consummation of the merger;
(3) the expiration or early termination of the waiting period under
the HSR Act;
(4) the receipt of all material consents and approvals from, and
making of all material filings with and notices to, any governmental entity
required to consummate the merger and other transactions contemplated by
the merger agreement;
(5) the approval of the shares of Kerr-McGee common stock to be issued
in or reserved for issuance in connection with the merger for listing on
the New York Stock Exchange, subject to official notice of issuance;
(6) the effectiveness of the registration statement on Form S-4 of
which this document is a part (the "Registration Statement") and the
Securities and Exchange Commission not having issued a stop order
suspending the effectiveness, or initiated or threatened any proceedings
for such purpose;
(7) the receipt of letters from Oryx's independent accountants stating
that Oryx is an entity eligible to engage in a pooling-of-interests
transaction, and the receipt of letters from Kerr-McGee's independent
accountants stating that accounting for the merger as a
pooling-of-interests is appropriate; and
(8) the completion of the Reverse Split.
Additional Conditions to Obligations of Kerr-McGee. The obligations of
Kerr-McGee to effect the merger are further subject to the following additional
conditions (unless waived by Kerr-McGee):
(1) the representations and warranties of Oryx set forth in the merger
agreement being true and correct both as of the date of the merger
agreement and as of the Closing Date (except to the extent in either case
that such representations and warranties speak as of another date);
(2) compliance by Oryx with its agreements and covenants under the
merger agreement;
(3) the receipt by Kerr-McGee of a written opinion of Simpson Thacher
that (a) the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code and (b) Kerr-McGee and Oryx will each be a party to the reorganization
within the meaning of Section 368(b) of the Internal Revenue Code; and
(4) the absence of any triggering of Oryx's Rights Agreement dated as
of September 11, 1990.
Additional Conditions to Obligations of Oryx. The obligations of Oryx to
effect the merger are further subject to the following additional conditions
(unless waived by Oryx):
(1) the representations and warranties of Kerr-McGee set forth in the
merger agreement being true and correct both as of the date of the merger
agreement and as of the Closing Date (except to the extent in either case
that such representations and warranties speak as of another date);
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<PAGE> 69
(2) compliance by Kerr-McGee with its agreements and covenants under
the merger agreement;
(3) the receipt by Oryx of a written opinion of Jones Day that (a) the
merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and (b)
Kerr-McGee and Oryx will each be a party to the reorganization within the
meaning of Section 368(b) of the Internal Revenue Code; and
(4) the absence of any triggering of Kerr-McGee's Rights Agreement
dated as of July 9, 1996.
CERTAIN REPRESENTATIONS AND WARRANTIES
The merger agreement contains certain substantially identical
representations and warranties, subject to certain qualifications, made by
Kerr-McGee and Oryx to each other as to, among other things: their organization
and the organization of their subsidiaries; their capital structures; corporate
authorization to enter into and consummate the contemplated transactions and
consents and filings needed in connection therewith; accuracy of recent reports
filed with the Securities and Exchange Commission; accuracy of financial
statements and information supplied for use in the Registration Statement;
required board and stockholder approvals; the absence of litigation; compliance
with laws; the absence of certain changes or events; environmental matters;
intellectual property; amendments of the Rights Agreements to permit the
contemplated transactions; broker's and finder's fees; opinions of financial
advisors; accounting matters; taxes; certain contracts; employee benefits and
labor matters; and ownership of the other company's stock.
CERTAIN COVENANTS
Operating Covenants. The merger agreement provides that until the Effective
Time Kerr-McGee and Oryx will carry on their businesses in the ordinary course
consistent with past practice, and will use all reasonable efforts to preserve
intact their present lines of business, maintain their rights and franchises and
preserve their relationships with customers, suppliers and others having
business dealings with them. Subject to certain exceptions, the merger agreement
places specific restrictions on the ability of each of Kerr-McGee and Oryx to
(a) enter into any new material lines of business or incur or commit any capital
expenditures or liabilities in connection with such capital expenditures outside
the ordinary course of business, (b) pay dividends beyond current levels or make
other distributions in respect of any of its capital stock, or change its share
capital, including, among other things, a stock split, combination, or
reclassification and the repurchase or redemption of its stock, (c) issue its
securities, (d) amend its certificate of incorporation or bylaws, (e) acquire
other entities, businesses or (other than in the ordinary course) assets, except
that Kerr-McGee is permitted to make acquisitions for cash or debt in existing
or related lines of business which the Kerr-McGee Board deems in its best
interests, (f) dispose of assets outside the ordinary course, (g) make loans,
advances, capital contributions or investments in any other person other than in
the ordinary course or incur additional indebtedness other than in the ordinary
course, (h) take actions that would prevent or impede the merger from qualifying
as a pooling-of-interests for accounting purposes and as a reorganization under
Section 368 of the Internal Revenue Code, (i) increase the compensation of
directors and executive officers other than in the ordinary course or as
required by an existing agreement, or otherwise increase employee benefits, (j)
make changes in its accounting methods (except as required by GAAP), change its
fiscal year or make any material tax election other than in the ordinary course
consistent with past practice, (k) enter into any agreement or arrangement that
would limit or restrict such party or, after the Effective Time, the combined
company from engaging or competing in any line of business or geographic area,
and (l) amend, modify or waive any provision of its Rights Agreement or take any
action to redeem such rights or render them inapplicable to any transaction,
other than to permit the transactions contemplated by the merger agreement and
the Option Agreements.
The merger agreement contains additional agreements relating to, among
other things, the preparation, filing, and distribution of this document and
Kerr-McGee's filing of the Registration Statement, the recommendation of the
merger by each company's Board of Directors, convening and holding the
Kerr-McGee meeting and the Oryx meeting within 45 days of the effectiveness of
the
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Registration Statement, access to information and cooperation regarding certain
filings with governmental and other agencies and organizations, public
announcements, the delivery of the letters from each company's independent
accountants and mutual notification of certain matters. In addition, the merger
agreement contains a general covenant requiring each company to use its
reasonable best efforts to effect the consummation of the merger.
Affiliate Agreements. Each of Kerr-McGee and Oryx has agreed to provide the
other party not less than 45 days prior to the Effective Time a letter
identifying all persons who, in the opinion of Kerr-McGee or Oryx, as the case
may be, may be deemed an affiliate of such party for purposes of Rule 145 under
the Securities Act or for purposes of the applicable Securities and Exchange
Commission accounting releases with respect to pooling-of-interest accounting
treatment. Each of Kerr-McGee and Oryx has further agreed to use its reasonable
best efforts to deliver to the other party, not less than 30 days prior to the
Effective Time, a letter from each such affiliate agreeing, among other things,
to abide by certain transfer restrictions pursuant to Rule 145 and the
accounting releases. Kerr-McGee has agreed to use its best reasonable efforts to
publish, no later than 90 days after the end of the first full month following
the merger, certain combined sales and net income figures of the surviving
corporation.
Listing of the Kerr-McGee Common Stock. Kerr-McGee has agreed to use its
best reasonable efforts to cause the shares of Kerr-McGee common stock to be
issued in or reserved for issuance in connection with the merger to be listed on
the New York Stock Exchange.
OTHER ACQUISITION PROPOSALS
Pursuant to the merger agreement, each of Kerr-McGee and Oryx has agreed
that it will not (except as described below), directly or indirectly, initiate,
solicit or knowingly facilitate (including by way of furnishing information) any
inquiries or the making of any proposal or offer with respect to an Acquisition
Proposal (as defined below), have any discussion with or provide any
confidential information or data to any person relating to an Acquisition
Proposal, engage in any negotiations concerning an Acquisition Proposal,
knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal or accept an Acquisition Proposal.
"Acquisition Proposal", with respect to a party, means a proposal or offer
for a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving it or any of its subsidiaries, or any purchase or sale of the
consolidated assets (including stock of subsidiaries and majority owned
affiliates) of such party and its subsidiaries, taken as a whole, having an
aggregate value equal to 10% or more of the consolidated asset value of such
party, or any purchase or sale of, or tender or exchange offer for, 10% or more
of the equity securities of such party.
Notwithstanding the foregoing, each of Kerr-McGee and Oryx or its
respective Board of Directors is permitted under the merger agreement, subject
in certain cases to the other company's right to terminate the merger agreement
and/or receive a termination fee (see "-- Termination Fees and Expenses" on page
68) to: (a) comply with Rule 14d-9 and Rule 14e-2 under the Exchange Act with
regard to an Acquisition Proposal, which rules require a target company to
publicly respond to a tender offer, (b) to the extent required by its fiduciary
duties, recommend or approve of an Acquisition Proposal to its stockholders or
effect an adverse change in its recommendation of the merger and other
transactions contemplated by the merger agreement, or (c) engage in any
discussions or negotiations with, or provide any information to, any person in
response to an unsolicited bona fide written Acquisition Proposal, if and only
to the extent that: (1) its stockholders have not approved merger; (2) its Board
of Directors determines that such Acquisition Proposal constitutes a Superior
Proposal (as defined below); and (3) prior to providing any information or data
to any person in connection with an Acquisition Proposal, its Board of Directors
receives from such person an executed confidentiality agreement containing
confidentiality terms at least as favorable to it as those previously entered
into by Kerr-McGee and Oryx.
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<PAGE> 71
"Superior Proposal" means with respect to Kerr-McGee or Oryx, as the case
may be, a written proposal made by a person other than either such party which
(a) is for (1) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving such party as a result of which such party's stockholders prior to
such transaction in the aggregate cease to own at least 50% of the voting
securities of the ultimate parent entity surviving or resulting from such
transaction or (2) a sale, lease, exchange, transfer or other disposition of at
least 50% of the assets of such party and its subsidiaries, taken as a whole,
and (b) is otherwise on terms which the Board of Directors of such party
determines (after consultation with its financial advisors and outside counsel),
taking into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal, (1) would, if
consummated, result in a transaction that is more favorable to its stockholders
(in their capacities as stockholders), from a financial point of view, than the
merger and (2) is reasonably likely to be completed.
Each company agrees to promptly inform the other of any Acquisition
Proposals or any communications which could reasonably be expected to lead to an
Acquisition Proposal, and to keep the other company updated regarding any
developments with respect thereto. In addition, each of Kerr-McGee and Oryx has
the right under certain circumstances to terminate the merger agreement in order
to accept a Superior Proposal, subject to the payment of a termination fee and
expenses. See "-- Termination Fees and Expenses" on page 68.
EMPLOYEE BENEFITS MATTERS
Pursuant to the merger agreement, from the Effective Time until December
31, 1999, the combined company will provide compensation and employee benefits
to the present and former employees and directors of Oryx and its subsidiaries
that are in the aggregate substantially comparable to those provided to such
persons as of October 14, 1998, the date of the merger agreement. Following the
merger, the combined company will honor all employment, change-in-control,
severance, termination, consulting and unfunded retirement or benefit agreements
disclosed by Oryx in the merger agreement, subject to the combined company's
rights to amend, modify, suspend, revoke or terminate any such agreements.
Notwithstanding the foregoing, the combined company will maintain any Oryx
defined benefit pension plans without amendment through December 31, 1999, other
than amendments required by law. Until December 31, 1999, no individual who was
an Oryx employee immediately prior to the Effective Time will be terminated
without two weeks prior written notice. None of the preceding provisions will
apply to employees or former employees covered by any collective bargaining
agreements.
In addition, Oryx agreed to terminate its Executive Variable Incentive
Plan, its Variable Incentive Plan and its 1997 Long-Term Incentive Plan
effective on or prior to December 31, 1998, except that variable incentive
awards with respect to 1998 may be paid during 1999 and outstanding awards under
the Long-Term Incentive Plan will remain in effect.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that following the merger, Kerr-McGee will
indemnify and hold harmless, and provide advancement of expenses to, all past
and present directors, officers and employees of Kerr-McGee, Oryx and their
subsidiaries to the same extent such persons are indemnified or have the right
to advancement of expenses pursuant to Kerr-McGee's, Oryx's or such subsidiary's
certificate of incorporation, by-laws or other indemnification agreements as of
October 14, 1998, for acts or omissions occurring at or prior to the merger
including for acts or omissions occurring in connection with the approval of the
merger agreement and the merger and other transactions contemplated thereby.
Following the merger, Kerr-McGee will maintain for a period of six years
the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by Kerr-McGee, Oryx and their
subsidiaries (or policies of at least the same coverage and amounts containing
terms and conditions which are, in the aggregate, no less advantageous to the
insured) with respect to claims arising
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<PAGE> 72
from facts or events that occurred on or before the merger. In no event will the
combined company or any successor be required to spend in any one year an amount
more than 200% of the annual premiums currently paid by Kerr-McGee and Oryx for
such insurance, and if the annual premiums of such insurance coverage exceed
such amount, the combined company will be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
TRANSITION MANAGEMENT
Following the execution of the merger agreement, Kerr-McGee and Oryx
created a special transition management task force comprised of Luke R. Corbett,
Robert L. Keiser and Tom J. McDaniel to examine alternatives regarding the
manner to best organize the business of the combined company. This task force
also oversees any communications with the employees of Kerr-McGee and Oryx and
their respective subsidiaries regarding the merger.
TERMINATION
The merger agreement provides that prior to the Effective Time, the merger
agreement may be terminated:
(a) by mutual written consent of Kerr-McGee and Oryx;
(b) by either Kerr-McGee or Oryx if:
(1) the merger is not consummated by June 30, 1999, so long as the
party seeking to terminate did not prevent consummation by failing to
fulfill any of its obligations under the merger agreement;
(2) any court or other governmental authority issues a
non-appealable final order, decree or ruling which prohibits the merger
or has adopted a law, rule or regulation which makes the merger illegal
or otherwise prohibits the merger, so long as the party seeking
termination has used its reasonable best efforts to prevent such action;
(3) at any time prior to its required stockholders approval, and
upon five business days' prior notice to the other party (which notice
will entitle the other party to terminate the merger agreement and
receive a termination fee and expenses), its Board of Directors decides
to accept a Superior Proposal; provided, among other things, that (a)
the financing for such proposal is committed for the full amount
required, (b) the terminating party has complied with its obligations
described under "-- Other Acquisition Proposals" on page 65, (c) the
terminating party negotiates in good faith with the non-terminating
party during the five business day period if the non-terminating party
so requests in connection with a revised proposal by it in response to
the Superior Proposal, (d) the Board of Directors of the terminating
party determines after such five business day period that the Superior
Proposal remains superior to the revised merger terms, if any, proposed
by the non-terminating party, (e) immediately following such termination
of the merger agreement, the terminating party enters into definitive
and binding documentation with respect to such Superior Proposal, and
(f) the terminating party pays the required termination fee and expenses
to the non-terminating party;
(4) the stockholders of Kerr-McGee fail to approve the Kerr-McGee
Proposal or the stockholders of Oryx fail to approve the Oryx Proposal;
(5) the Board of Directors of the other party, prior to the other
party's required stockholders' approval, approves or recommends another
Acquisition Proposal (or resolves to do so), or adversely modifies (or
resolves to do so) or fails to reconfirm its recommendation regarding
the merger;
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<PAGE> 73
(6) the other party delivers notice that it intends to terminate
the merger agreement to accept a Superior Proposal;
(7) the other party takes action with respect to its Rights
Agreement in connection with another transaction; or
(8) the other party's Rights Agreement is triggered.
TERMINATION FEES AND EXPENSES
The merger agreement provides for the payment by either party to the other
of a termination fee of $60 million, plus $5 million for expenses, if the merger
agreement is terminated in the following circumstances:
Payment of a Termination Fee by Kerr-McGee. Kerr-McGee will pay Oryx a
termination fee if the merger agreement is terminated:
(1) by Oryx due to an adverse change in or failure to reconfirm the
recommendation of the Kerr-McGee Board, or due to the approval or
recommendation by the Kerr-McGee Board of another Acquisition Proposal, or
due to the trigger of or action taken with respect to Kerr-McGee's Rights
Agreement;
(2) by Kerr-McGee in order to accept a Superior Proposal or by Oryx
following notice from Kerr-McGee that it intends to do so; or
(3) by either party due to the failure of Kerr-McGee's stockholders to
approve the Kerr-McGee Proposal, if (x) prior to the termination of the
merger agreement Oryx was entitled to terminate the merger agreement and
receive a termination fee under any of the circumstances set forth above
(other than due to a trigger of Kerr-McGee's Rights Agreement), or (y)
prior to the stockholder vote another Acquisition Proposal for Kerr-McGee
had been publicly communicated, and Kerr-McGee enters into a definitive
agreement with respect to an Acquisition Proposal with the entity who made
such prior proposal, or enters into a definitive agreement with any entity
with respect to any other Acquisition Proposal involving 25% or more of
Kerr-McGee's stock or assets, in each case within twelve months of the
termination of the merger agreement, and such other transaction is
ultimately consummated.
Payment of a Termination Fee by Oryx. Oryx will pay Kerr-McGee a
termination fee if the merger agreement is terminated:
(1) by Kerr-McGee due to an adverse change in or failure to reconfirm
the recommendation of the Oryx Board, or due to the approval or
recommendation by the Oryx Board of another Acquisition Proposal, or due to
the trigger of or action taken with respect to Oryx's Rights Agreement;
(2) by Oryx in order to accept a Superior Proposal or by Kerr-McGee
following notice from Oryx that it intends to do so; or
(3) by either party due to the failure of Oryx's stockholders to
approve the Oryx Proposal, if (x) prior to the termination of the merger
agreement Kerr-McGee was entitled to terminate the merger agreement and
receive a termination fee under any of the circumstances set forth above
(other than due to a trigger of Oryx's Rights Agreement), or (y) prior to
the stockholder vote another Acquisition Proposal for Oryx had been
publicly communicated, and Oryx enters into a definitive agreement with
respect to an Acquisition Proposal with the entity who made such prior
proposal, or enters into a definitive agreement with any entity with
respect to any other Acquisition Proposal involving 25% or more of Oryx's
stock or assets, in each case within twelve months of the termination of
the merger agreement, and such other transaction is ultimately consummated.
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<PAGE> 74
OTHER EXPENSES
The merger agreement provides that whether or not the merger is
consummated, all out-of-pocket expenses incurred in connection with the merger
agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses, except (a) if the merger is consummated, the combined
company will pay any and all property or transfer taxes imposed on Oryx or its
subsidiaries, (b) Kerr-McGee and Oryx will share equally the Securities Exchange
Commission filing fee and printer's fees in connection with this document and
(c) if applicable, as described above in "-- Termination Fees and Expenses" on
page 68.
AMENDMENT; EXTENSION AND WAIVER
Kerr-McGee and Oryx may amend the merger agreement by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the merger by the
stockholders of Kerr-McGee and Oryx, but, after any such approval, the parties
will make no amendment which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. At any time prior to the Effective Time, either party to
the merger agreement may, to the extent legally allowed, (1) extend the time for
the performance of any of the obligations or other acts of the other party
thereto, (2) waive any inaccuracies in the representations and warranties of the
other party contained therein or in any document delivered pursuant thereto and
(3) waive compliance by the other party with any of the agreements or conditions
contained therein.
THE STOCK OPTION AGREEMENTS
GENERAL
As an inducement and condition to entering into the merger agreement,
Kerr-McGee and Oryx (each an "Issuer") granted to each other identical options
to purchase shares of their common stock (the "Options") equal to approximately
19.9% of their currently outstanding shares pursuant to substantially identical
Option Agreements. Because the description of the Option Agreements contained in
this document is a summary, it does not contain all the information that may be
important to you. You should read carefully the entire copies of the Option
Agreements attached as Appendices E and F to this document before you decide how
to vote.
TERMS OF THE OPTIONS
Number of Shares and Exercise Price. Under the Kerr-McGee Option Agreement,
Kerr-McGee has granted to Oryx an option to purchase 9,434,181 shares of
Kerr-McGee common stock at a price per share equal to $46.94 (the "Kerr-McGee
Exercise Price"), the closing price for Kerr-McGee common stock on the New York
Stock Exchange immediately prior to the execution of the Option Agreements.
Under the Oryx Option Agreement, Oryx has granted to Kerr-McGee an option to
purchase 21,140,482 shares of Oryx common stock at a price per share equal to
$11.50 (the "Oryx Exercise Price" and, together with the Kerr-McGee Exercise
Price, the "Exercise Prices"), the closing price for Oryx common stock on the
New York Stock Exchange immediately prior to execution of the Option Agreements.
The number and type of securities subject to each Option and the Exercise
Price therefor will be adjusted for any change in or distribution in respect of
the Issuer's common stock by reason of a reclassification, recapitalization,
stock split, split-up, combination, exchange of shares, stock dividend, dividend
payable in any other securities, or any similar event so as to fully preserve
the economic benefits provided under the Option Agreements. The number of shares
of Issuer's common stock subject to the Option will also be adjusted in the
event the Issuer issues additional shares of its common stock such that
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<PAGE> 75
the number of shares of Issuer's common stock subject to the Option, together
with shares previously purchased pursuant thereto, represents 19.9% of the
Issuer's common stock then issued and outstanding, without giving effect to
shares subject to or issuable pursuant to the Option.
Exercise Rights. Each party holding an Option (a "Grantee") may exercise
its Option in the event that the merger agreement is terminated under
circumstances which entitle the Grantee to receive a termination fee, as
described above in "The Merger Agreement -- Termination Fees and Expenses" on
page 68 (each such circumstance, a "Purchase Event"). These circumstances
generally involve: (1) an adverse change in, or failure to reconfirm, the
recommendation of a party's Board of Directors to such party's stockholders to
approve the merger; (2) the approval or recommendation by a party's Board of
Directors of another Acquisition Proposal; (3) the triggering of a party's
Rights Agreement; (4) the acceptance by a party of a Superior Proposal, or
notice that it intends to do so; or (5) the failure of a party's stockholders to
approve the merger after a competing proposal has been publicly communicated, if
such party enters into a definitive agreement for a transaction within 12 months
of such termination and such transaction is later consummated.
Expiration. To the extent an Option has not been exercised, it will expire
upon the earliest of (1) the merger, (2) twelve months after the first Purchase
Event and (3) the termination of the merger agreement prior to a Purchase Event.
REPURCHASE AT THE OPTION OF THE GRANTEE
Pursuant to each Option Agreement, the Grantee thereunder has the right to
require the Issuer to repurchase the Option and any shares of the Issuer's
common stock purchased by the Grantee pursuant to the Option (the "Option
Shares") for a period of twelve months after the occurrence of a Purchase Event
followed by the consummation of an alternative transaction pursuant to an
Acquisition Proposal (a "Repurchase Event"). See "The Merger Agreement -- Other
Acquisition Proposals" on page 65.
Repurchase Price. The price per share the Issuer will pay upon a Repurchase
Event is equal to (1) the higher of (x) the highest price offered in a tender
offer or exchange offer or paid or to be paid by a third party in connection
with an Acquisition Proposal for shares of the Issuer's common stock and (y) the
highest closing price of the Issuer's common stock for the 60 prior business
days, minus (2) in the case of repurchase of the Option, the Exercise Price.
REGISTRATION RIGHTS
Pursuant to each Option Agreement, the Grantee thereunder has the right to
require the Issuer to file up to two registration statements under the
Securities Act in order to permit the sale or other disposition of any Option
Shares. In addition, if the Issuer files a registration statement for other
shares of its common stock, the Issuer will allow Grantee to participate in such
registration, subject to certain limitations. In connection with any
registration described above, the Issuer and Grantee will provide to each other
and any underwriter of the offering customary representations, warranties,
covenants, indemnifications and contributions.
SUBSTITUTE OPTION
If the Issuer under an Option Agreement enters into an agreement to (1)
consolidate with or merge into any person in a transaction in which it is not
the surviving corporation or in which its common stock represents less than 50%
of the voting securities of the surviving corporation or (2) sell all or
substantially all of its assets, the Option shall be converted into an option
for shares of, at the election of the Grantee, either the surviving or acquiring
entity (a "Substitute Option"). The terms of the Substitute Option would be
substantially identical to the terms of the Option, except that the Substitute
Option would be immediately exercisable and subject to immediate repurchase by
the Issuer at the election of the Grantee, in each case at the price specified
in the applicable Option Agreement.
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<PAGE> 76
LIMITATION OF PROFIT
Each Grantee's total profit under the applicable Option Agreement may not
exceed $70 million. The total profit under each Option Agreement is the sum of
(1) all termination fees and expenses received under the merger agreement (see
"The Merger Agreement -- Termination Fees and Expenses" on page 68), (2) any net
cash proceeds from the transfer of the Option, and (3) any net cash proceeds of
the sale of the Option Shares to a third party.
EFFECT OF STOCK OPTION AGREEMENTS
The Option Agreements are intended to increase the likelihood that the
merger will be consummated in accordance with the terms of the merger agreement.
The Option Agreements would have the effect of making an acquisition or other
combination of either company by or with a third party more costly because of
the need in any such transaction to acquire or account for the Option Shares
that would be issued under the applicable Option Agreement or to pay the price
therefor. Moreover, following consultation with each of their respective
independent accountants, the management of each of Kerr-McGee and Oryx believe
that the granting of the Options is likely to prohibit any other acquiror of
either company during the next two years from accounting for any such
acquisition by using the pooling-of-interests accounting method. Accordingly,
the Option Agreements may discourage a third party who might be interested in
effecting such an acquisition or combination from considering or proposing the
transaction or may cause such third party to offer to pay a lower price.
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<PAGE> 77
THE REVERSE STOCK SPLIT
GENERAL
In connection with the merger, the Oryx Board has approved a resolution
authorizing an amendment to the certificate of incorporation of Oryx to effect a
reverse stock split of the outstanding shares of Oryx common stock, subject to
the approval of the Oryx stockholders. As a result of this Reverse Split,
immediately prior to the merger each outstanding share of Oryx common stock
would be reclassified into 0.369 shares of Oryx common stock, with cash being
paid in lieu of fractional shares. The Reverse Split would only be effected in
connection with the merger; if the merger is not consummated, the Reverse Split
will not occur. The text of the amendment to Oryx's certificate of incorporation
to effect the Reverse Split is attached to this document as Appendix B. If the
Oryx Proposal is approved and the other conditions to the merger are met, the
certificate of amendment will be filed, and the Reverse Split will be effected,
immediately prior to the Effective Time of the merger.
REASONS FOR THE REVERSE SPLIT
Through the Reverse Split and the merger, each Oryx stockholder will
effectively receive 0.369 shares of Kerr-McGee common stock for each share of
Oryx common stock such stockholder currently owns. The Reverse Split is being
effected in order to ensure that the Exchange Ratio (which typically is achieved
directly in a merger, rather than in an immediately preceding transaction like a
reverse stock split) results in a corresponding increase in the conversion price
of the convertible debentures so that the debentureholders will be entitled to
receive the same number of shares of Kerr-McGee common stock regardless of
whether they convert their debentures before or after the merger.
EXCHANGE OF SHARES AND ELIMINATION OF FRACTIONAL SHARE INTERESTS
Exchange of Shares. Because the Reverse Split will occur immediately prior
to the merger, stockholders of Oryx will not automatically receive new stock
certificates in connection with the Reverse Split. Instead, the effect of the
Reverse Split will be taken into account when issuing stock certificates
representing shares of Kerr-McGee common stock upon surrender of stock
certificates representing shares of Oryx common stock following the merger. See
"The Merger Agreement -- Exchange of Shares; Fractional Shares" on page 62.
Elimination of Fractional Shares. No fractional shares of Oryx common stock
or Kerr-McGee common stock will be issued in the Reverse Split or the merger.
Oryx stockholders will be entitled to receive cash in lieu of any such
fractional shares, as described above in "The Merger Agreement -- Exchange of
Shares; Fractional Shares" on page 62.
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AMENDMENT AND RESTATEMENT OF
KERR-MCGEE'S CERTIFICATE OF INCORPORATION AND BY-LAWS
AND COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
Kerr-McGee is incorporated under the laws of Delaware and, accordingly, the
rights of the Kerr-McGee stockholders are governed by the certificate of
incorporation of Kerr-McGee (the "Kerr-McGee Charter"), the by-laws of
Kerr-McGee (the "Kerr-McGee By-Laws") and the laws of the state of Delaware.
Oryx is also incorporated under the laws of Delaware and, accordingly, the
rights of the Oryx stockholders are governed by the certificate of incorporation
of Oryx (the "Oryx Charter"), the by-laws of Oryx (the "Oryx By-Laws") and the
laws of the state of Delaware.
In the merger, Oryx will merge into Kerr-McGee, stockholders of Oryx will
become stockholders of Kerr-McGee and the Kerr-McGee Charter and Kerr-McGee
By-Laws will be amended and restated to read as set forth in Exhibits 1.5 and
1.6 to the merger agreement, which is attached as Appendix A to this document.
Accordingly, following the merger, the rights of the Kerr-McGee stockholders and
of the Oryx stockholders who become Kerr-McGee stockholders in the merger will
be governed by the Combined Company Charter, the Combined Company By-Laws and
the laws of the state of Delaware.
The changes to the Kerr-McGee Charter and the Kerr-McGee By-Laws which will
result in the Combined Company Charter and Combined Company By-Laws generally
incorporate certain governance provisions from the Oryx Charter and the Oryx
By-Laws as negotiated by the parties in connection with the merger (see "The
Proposed Merger -- Background of the Merger" on page 17) or reflect revisions in
Delaware law.
COMPARISON OF STOCKHOLDERS' RIGHTS
Set forth on the following pages is a summary comparison of material
differences among the rights of a Kerr-McGee stockholder under the current
Kerr-McGee Charter and Kerr-McGee By-Laws (left column), the rights of an Oryx
stockholder under the current Oryx Charter and the Oryx By-Laws (right column),
and the rights of a stockholder of the combined company following the merger
under the Combined Company Charter and Combined Company By-Laws (middle column).
The summary set forth below highlights the material distinctions among the
governing documents of Kerr-McGee, Oryx and the combined company and is not
intended to provide a comprehensive summary of each of such company's governing
documents. The form of Combined Company Charter and Combined Company By-Laws are
included as Exhibits 1.5 and 1.6, respectively, to the merger agreement, which
is attached as Appendix A to this document. Copies of the Kerr-McGee Charter and
Kerr-McGee By-Laws, and the Oryx Charter and Oryx By-Laws, will be sent to
Kerr-McGee and Oryx stockholders upon request. See "Where You Can Find More
Information" on page 83.
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CURRENT KERR-MCGEE COMBINED COMPANY CURRENT ORYX
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL STOCK
Authorized
- --------------------------------------------------------------------------------------------------------------
150,000,000 shares of Kerr-McGee 300,000,000 shares of Kerr-McGee 250,000,000 shares of Oryx common
common stock common stock stock
40,000,000 shares of preferred 40,000,000 shares of preferred 7,740,606 shares of cumulative
stock, no par value stock, no par value preference stock, par value
$1.00 per share
15,000,000 shares of preferred
stock, par value $1.00 per
share
- --------------------------------------------------------------------------------------------------------------
Preemptive Rights
- --------------------------------------------------------------------------------------------------------------
None. None. None.
</TABLE>
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
STOCKHOLDER ACTION
Annual Meetings
- --------------------------------------------------------------------------------------------------------------
To be held within 150 days of the To be held within 150 days of the As set by the Board of Directors.
end of each fiscal year, as set by end of each fiscal year, as set by
the Board of Directors. the Board of Directors.
- --------------------------------------------------------------------------------------------------------------
Special Meetings
- --------------------------------------------------------------------------------------------------------------
Can be called only by the Chairman, Can be called only by the Chief Can be called only by the Board of
a majority of the directors or the Executive Officer or the Board of Directors or a 20% stockholder who
holders of a majority of the voting Directors. was also such on Nov. 1, 1988 and
capital stock. was a 20% stockholder of Sun
Company, Inc. on July 6, 1988.
- --------------------------------------------------------------------------------------------------------------
Action by Written Consent
- --------------------------------------------------------------------------------------------------------------
Can be taken by the holders of the Prohibited. Prohibited.
requisite percentage of all voting
capital stock.
- --------------------------------------------------------------------------------------------------------------
Advance Notice of Director
Nominations and Other Proposals
- --------------------------------------------------------------------------------------------------------------
For an annual meeting, a For an annual meeting, a For an annual meeting, a
stockholder must give notice of stockholder must give notice of stockholder must give notice of
nominations or proposals to the nominations or proposals to the nominations or proposals to the
Secretary between 70 and 90 days Secretary between 70 and 90 days Secretary between 60 and 90 days
before the one-year anniversary of before the one-year anniversary of before the one-year anniversary of
the previous annual meeting. the previous annual meeting. the previous annual meeting.
For a special meeting at which For a special meeting at which
directors are to be elected, a directors are to be elected, a
stockholder must give notice of stockholder must give notice of
nominations to the Secretary nominations to the Secretary
between 90 days and 70 days before between 90 days and 70 days before
the meeting, or 10 days after the the meeting, or 10 days after the
delivery of notice of the meeting, delivery of notice of the meeting,
if later. if later.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 80
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
CURRENT KERR-MCGEE COMBINED COMPANY CURRENT ORYX
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BOARD OF DIRECTORS
Classification
- --------------------------------------------------------------------------------------------------------------
All directors are elected annually. Directors are divided into three Directors are divided into three
classes. Each class serves a classes. Each class serves a
three-year term and is as nearly three-year term and is as nearly
equal in size as possible. One equal in size as possible. One
class is elected at each annual class is elected at each annual
meeting of stockholders. meeting of stockholders.
(Additional directors elected
pursuant to the terms of any future
preferred stock of the combined
company may be governed by
different provisions.)
- --------------------------------------------------------------------------------------------------------------
Cumulative Voting for Directors
- --------------------------------------------------------------------------------------------------------------
No. No. No.
- --------------------------------------------------------------------------------------------------------------
Number of Directors
- --------------------------------------------------------------------------------------------------------------
3 to 20, as fixed by the Board of Minimum of 3 (no maximum), as fixed 5 to 11, as fixed by the Board of
Directors from time to time by the Board of Directors from time Directors from time to time
(currently 9). to time (initially 14 following the (currently 10).
merger).
- --------------------------------------------------------------------------------------------------------------
Removal
- --------------------------------------------------------------------------------------------------------------
Directors may be removed, with or Directors may only be removed for Directors may only be removed for
without cause, by a majority cause, and only by a 75% cause, and only by a majority
stockholder vote. stockholder vote. stockholder vote.
- --------------------------------------------------------------------------------------------------------------
Vacancies
- --------------------------------------------------------------------------------------------------------------
Filled by the vote of a majority of Filled only by the vote of a Filled only by the vote of a
the remaining directors. majority of the remaining majority of the remaining
directors. directors.
- --------------------------------------------------------------------------------------------------------------
Qualifications
- --------------------------------------------------------------------------------------------------------------
Anyone 64 or older must have Anyone 64 or older must have No specific requirements.
previously served on the Kerr-McGee previously served on either the
Board to be qualified for election. Kerr- McGee Board or the Oryx Board
Anyone 70 or older or who has to be qualified for election.
retired as an employee is not Anyone 70 or older or who has
eligible for re-election. retired as an employee is not
eligible for continued service.
- --------------------------------------------------------------------------------------------------------------
Special Meetings of the Board
- --------------------------------------------------------------------------------------------------------------
Can be called by the Chairman of Can be called by the Chief Can be called by the Chairman,
the Board or any two directors. Executive Officer or a majority of certain executive officers, or a
the directors. majority of the directors.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 81
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
CURRENT KERR-MCGEE COMBINED COMPANY CURRENT ORYX
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRANSACTIONS WITH INTERESTED STOCKHOLDERS
Extraordinary Transactions and Securities Issuances
- ------------------------------------------------------------------------------------------------------------------------
Generally prohibits certain transactions between the company and any 10%
stockholder (or any company affiliate who has been a 10% stockholder within Generally prohibits certain
preceding two years) unless either: transactions between company and any
10% stockholder (excluding 10%
i) approved by majority vote of the other stockholders or stockholders on Nov. 1, 1988 who also
were 10% stockholders of Sun Company,
ii) approved by a majority of unaffiliated directors elected prior to the Inc. on July 6, 1988) unless:
interested stockholder becoming such or nominated by such directors and,
if the transaction involves any payments to the other stockholders for i) approved by 75% vote of the other
their shares, such payments must satisfy minimum fair price requirements stockholders or
and certain other conditions must be met.
ii) 2/3 of directors elected prior to
Prohibited transactions include: the interested stockholder becoming
such approve either the interested
- mergers and consolidations stockholder becoming such or the
- transfers of company assets with a fair market value greater than $10 prohibited transaction or
million
- liquidation or dissolution iii) any payments to the other
- issuances of securities with a fair market value greater than $10 million stockholders for their shares are
- recapitalizations and similar transactions which increase the percentage no less than the highest per share
price paid by the interested
ownership by the interested stockholder stockholder
Prohibited transactions include:
- mergers and consolidations
- transfers of assets with a fair
market value greater than 10% of
company's total assets
- securities issuances other than on a
pro rata basis to all stockholders
- recapitalizations which increase the
voting power of an interested
stockholder
- ------------------------------------------------------------------------------------------------------------------------
Repurchase of Securities
- ------------------------------------------------------------------------------------------------------------------------
Generally prohibits repurchases of any common stock held for less than two Generally prohibits repurchases of any
years by any 5% stockholder (or any company affiliate who has been a 5% common stock held for less than two
stockholder within preceding two years) unless: years by any 5% stockholder (excluding
i) at a price not in excess of fair market value; or a 5% holder on Nov. 1, 1988 who was
also a 5% holder of the common stock of
ii) approved by majority vote of the other stockholders; or Sun Company, Inc. on July 6, 1988)
unless:
iii) pursuant to a tender offer made to all stockholders or in open-market
purchases at prevailing prices i) at a price not in excess of fair
market value; or
ii) approved by majority vote of other
stockholders; or
iii) pursuant to a tender offer made to
all stockholders or in open-market
purchases not
privately-negotiated; or
iv) pursuant to optional or mandatory
redemption provisions.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 82
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CURRENT KERR-MCGEE COMBINED COMPANY CURRENT ORYX
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AMENDMENTS
Charter
- -------------------------------------------------------------------------------------------------------------------------
Requires majority stockholder Requires majority stockholder Requires majority stockholder
approval, except that: approval, except that: approval, except that:
i) majority approval of disinterested i) majority approval of disinterested i) 75% approval of disinterested
stockholders required for stockholders required for stockholders required for
amendment of provisions described amendment of provisions described amendment of provisions described
on the previous page regarding on the previous page regarding on the previous page regarding
transactions with interested transactions with interested transactions with interested
stockholders. stockholders; and stockholders.; and
ii) 75% stockholder approval required ii) 75% stockholder approval required
for amendment of provisions for amendment of provisions
described on the previous page described on the previous page
regarding: regarding:
- classification, number and - classification and number of
removal of directors and filling directors, and filling of
of director vacancies director vacancies
- ability of board of directors to - this limitation on charter
amend by-laws (see below) amendments
- special meetings of and written
consent by stockholders
- these limitations on charter
amendments
- -------------------------------------------------------------------------------------------------------------------------
By-Laws
- -------------------------------------------------------------------------------------------------------------------------
Can be amended by majority vote of the Can be amended by majority vote of the Can be amended by majority vote of the
Board of Directors or by majority Board of Directors. Can also be Board of Directors or by majority
stockholder vote. amended by majority stockholder vote, stockholder vote.
except a 75% stockholder vote is
required for amendment of provisions
regarding:
- classification, number and removal
of directors and filling of director
vacancies
- special meetings of stockholders
- advance notice of nominations or
proposals made at annual meetings of
stockholders
- these limitations on by-law
amendments
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISCUSSION OF AMENDMENTS
General
The changes to the Kerr-McGee Charter and the Kerr-McGee By-Laws
highlighted above generally incorporate certain governance provisions from the
current Oryx Charter and Oryx By-Laws as negotiated by the parties in connection
with the merger agreement (see "The Proposed Merger -- Background of the Merger"
on page 17). Other changes to the Kerr-McGee Charter and the Kerr-McGee By-Laws,
which are not highlighted above, generally reflect changes in Delaware law since
the amended provisions were last amended or revise the documents in technical
manners not material to the stockholders. In addition, certain indemnification
provisions were added to the Combined Company Charter to parallel those
contained in the current Kerr-McGee By-Laws and retained in the Combined Company
By-Laws.
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<PAGE> 83
Increase in Authorized Shares
The increase in the authorized number of shares of Kerr-McGee common stock
is intended to ensure that, following the issuance of shares in the merger, the
combined company retains approximately the same ratio of shares available for
issuance to shares outstanding as Kerr-McGee had before the merger. The
Kerr-McGee Board believes that maintaining the availability of shares for
issuance is advisable to provide the combined company with flexibility to take
advantage of opportunities to issue common stock to obtain capital, as
consideration for possible acquisitions and for other corporate purposes.
Kerr-McGee currently has no plans, understandings, agreements or arrangements
concerning the issuance of additional shares of Kerr-McGee common stock, other
than in connection with the merger, employee benefit plans and the Kerr-McGee
Rights Agreement. If any plans, understandings, agreements or arrangements are
made concerning the issuance of additional shares, holders of the Kerr-McGee
common stock outstanding at that time may or may not be given the opportunity to
vote upon the issuance of the shares, depending on the nature of the
transaction, the law applicable thereto, the policy of the New York Stock
Exchange and the judgement of the Kerr-McGee Board as to whether the
stockholders should vote on the issuance.
Anti-Takeover Considerations
General. Certain of the amendments made to the Kerr-McGee Charter and
Kerr-McGee By-Laws, such as the creation of a staggered board of directors, the
requirement of stockholder action by meeting only, the restrictions on who may
call special meetings of the stockholders, and the requirement of a 75%
stockholder vote to amend certain provisions, may have certain anti-takeover
effects. These amendments may discourage attempts by others to acquire control
of the combined company without negotiation with its Board of Directors. This
would enhance the Board's ability to attempt to promote the interests of all of
the combined company's stockholders. However, to the extent that these
provisions make the combined company a less attractive takeover candidate, they
may not always be in the best interests of the combined company or its
stockholders. None of these amendments is the result of any specific effort to
accumulate securities of the combined company or to obtain control by means of
merger, tender offer, solicitation in opposition to management or otherwise.
Classified Board and Removal of Directors. The provisions providing for the
classification of the Board of Directors, which parallel the provisions in the
Oryx Charter and Oryx By-Laws, will have the effect of making it more difficult
to change the overall composition of the combined company's Board of Directors.
At least two stockholders' meetings will be required for stockholders to effect
a change in a majority of the combined company's Board of Directors, as is
currently the case with the Oryx Board.
Under Delaware law, unless the certificate of incorporation provides
otherwise, directors may be removed at any time with or without cause by the
holders of a majority of the shares then entitled to vote at an election of
directors, unless the board of directors is classified. The amendment
instituting a classified board of directors will eliminate the stockholders'
right to remove a director without cause, as is the case with the Oryx Board. In
addition, the Combined Company Charter requires a 75% stockholder vote to remove
a director with cause.
Although there has been no problem in the past with the continuity or
stability of the Kerr-McGee Board, the Kerr-McGee Board believes that the longer
time required to elect a majority of the combined company's Board of Directors
and the higher stockholder vote requirement to remove a director with cause will
help assure continuity and stability in the management of the business and
affairs of the combined company in the future.
Stockholder Meetings. The limitation of parties authorized to call a
special meeting of the stockholders and the requirement that stockholder action
be taken only pursuant to a meeting, which parallel provisions in the Oryx
Charter and Oryx By-Laws, are intended to ensure that any action taken by the
stockholders is not taken precipitously, and is only taken after giving
opportunity for reasoned discussion among the stockholders and the management
and directors of the combined company.
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<PAGE> 84
Supermajority Amendment Provisions. The amendments to require a vote of 75%
of the stockholders to amend certain provisions of the Combined Company Charter
and Combined Company By-Laws, many of which parallel similar stockholder vote
requirements in the Oryx Charter and the Oryx By-Laws, are intended to prevent a
large minority of the stockholders of the combined company from being adversely
affected by the amendment of key governance provisions.
RIGHTS AGREEMENTS
Kerr-McGee before the Merger. Kerr-McGee has adopted the Kerr-McGee Rights
Agreement, which provides for the issuance of a right (a "Kerr-McGee Right") to
the holder of each share of Kerr-McGee common stock. Upon any person or group
acquiring 15% or more of the outstanding Kerr-McGee common stock (a "Kerr-McGee
Acquiring Person"), each Kerr-McGee Right will entitle the holder (other than
the Kerr-McGee Acquiring Person) to purchase additional shares of Kerr-McGee
common stock (or, in certain cases, other securities of Kerr-McGee or cash or
other property) having a current market value of two times the exercise price of
$215. Alternatively, prior to a Kerr-McGee Acquiring Person acquiring 50% or
more of the outstanding Kerr-McGee common stock, the Kerr-McGee Board may elect
to issue a share of Kerr-McGee common stock in exchange for each Kerr-McGee
Right (other than Kerr-McGee Rights held by the Acquiring Person). In addition,
if Kerr-McGee is acquired in a merger or other business combination or 50% or
more of its assets or earning power is sold, each Kerr-McGee Right will entitle
the holder to purchase, at the exercise price, common stock of the acquiror
having a current market value of two times the exercise price. Prior to there
being a Kerr-McGee Acquiring Person, Kerr-McGee can redeem the Kerr-McGee Rights
in whole, but not in part, for $0.01 per Kerr-McGee Right, or may amend the
Kerr-McGee Rights Agreement in any way without the consent of the holders of the
Kerr-McGee Rights. In connection with the merger agreement, Kerr-McGee amended
the Kerr-McGee Rights Agreement to provide that it will not be triggered by
reason of the approval, execution or delivery of the merger agreement or the
Kerr-McGee Option Agreement, or the consummation of the merger or other
transactions contemplated thereby.
Oryx. Oryx has adopted the Oryx Rights Agreement, which provides for the
issuance of a right (an "Oryx Right") to the holder of each share of Oryx common
stock. Upon any person or group acquiring 20% or more of the outstanding Oryx
common stock (an "Oryx Acquiring Person"), or any person or group (an "Oryx
Adverse Person") acquiring a percentage of outstanding Oryx common stock (not
less than 10%) determined by the Oryx Board to apply to such person or group (an
"Ownership Limitation"), each Oryx Right will entitle the holder (other than the
Oryx Acquiring Person or Oryx Adverse Person) to purchase additional shares of
Oryx common stock (or, in certain cases, other securities of Oryx or cash or
other property) having a current market value of two times the exercise price of
$150 (or, in the case of an Oryx Adverse Person, such number of shares
multiplied by the Ownership Limitation divided by 20%). Alternatively, prior to
an Oryx Acquiring Person or Oryx Adverse Person acquiring 50% or more of the
outstanding Oryx common stock, the Oryx Board may elect to issue in exchange for
each Oryx Right (other than Oryx Rights held by the Oryx Acquiring Person or
Oryx Adverse Person) one-half of the number of shares of Oryx common stock for
which such Oryx Right is then exercisable. In addition, if Oryx is acquired in a
merger or other business combination or 50% or more of its assets or earning
power is sold, each Oryx Right will entitle the holder to purchase, at the
exercise price, common stock of the acquiror having a current market value of
two times the exercise price. Prior to there being an Oryx Acquiring Person or
Oryx Adverse Person, Oryx can redeem the Oryx Rights in whole, but not in part,
for $0.01 per Oryx Right, or may amend the Oryx Rights Agreement in any way
without the consent of the holders of the Oryx Rights. However, if there is a
change in a majority of the Oryx Board as a result of a proxy solicitation by a
person seeking to become an Oryx Acquiring Person or Oryx Adverse Person or to
acquire Oryx or 50% or more of its assets or earnings power, then any redemption
or amendment requires the concurrence of a majority of the Oryx directors
unaffiliated with such person who were directors prior to September 11, 1990 or
who were nominated by such directors. In connection with the merger agreement,
Oryx amended the Oryx Rights Agreement to provide that it will not be triggered
by reason of
78
<PAGE> 85
the approval, execution or delivery of the merger agreement or the Oryx Option
Agreement, or the consummation of the merger or other transactions contemplated
thereby.
Combined Company. The combined company will retain the Kerr-McGee Rights
Agreement.
DESCRIPTION OF THE COMBINED COMPANY'S
CAPITAL STOCK FOLLOWING THE MERGER
The summary of the terms of the capital stock of the combined company set
forth below is qualified by reference to the forms of the Combined Company
Charter and the Combined Company By-Laws included as Exhibits 1.5 and 1.6 to the
merger agreement, which is attached as Appendix A hereto. The following
discussion is of the capital stock of the combined company following the merger,
and unless otherwise indicated reflects the changes to the current Kerr-McGee
Charter and Kerr-McGee By-Laws that will be effected in the merger. See
"Amendment and Restatement of Kerr-McGee's Certificate of Incorporation and
By-Laws and Comparison of Stockholders' Rights" on page 73.
AUTHORIZED CAPITAL STOCK
The combined company's authorized capital stock will consist of 300,000,000
shares of Kerr-McGee common stock, par value $1.00 per share, and 40,000 shares
of preferred stock, no par value per share.
COMMON STOCK
As of ______, 1999, ____ shares of Kerr-McGee common stock were
outstanding. In addition, ______ shares of Kerr-McGee common stock were held in
the treasury of Kerr-McGee, and ______ shares of Kerr-McGee common stock were
reserved for issuance pursuant to Kerr-McGee's employee benefit plans. As of
______, 1999, ______ shares of Oryx common stock were outstanding, ______ shares
of Oryx common stock were reserved for issuance pursuant to Oryx's employee
benefit plans, and ______ shares of Oryx common stock were reserved for issuance
upon conversion of Oryx's 7 1/2% Convertible Subordinated Debentures due 2014.
On a pro forma basis, assuming no change in the capital stock of Kerr-McGee and
Oryx as of ______, 1999, immediately following the merger ______ shares of
Kerr-McGee common stock will be outstanding, ________ shares of Kerr-McGee
common stock will be reserved for issuance pursuant to Kerr-McGee's employee
benefit plans, and ______ shares of Kerr-McGee common stock will be reserved for
issuance upon conversion of such convertible debentures, which will become
obligations of the combined company following the merger.
The holders of Kerr-McGee common stock are entitled to receive ratably,
from funds legally available for the payment thereof, dividends when and as
declared by resolution of the Kerr-McGee Board, subject to any preferential
dividend rights which may be granted to holders of any preferred stock
authorized and issued by the Kerr-McGee Board. In the event of liquidation, each
share of Kerr-McGee common stock is entitled to share pro rata in any
distribution of Kerr-McGee's assets after payment or providing for the payment
of liabilities and any liquidation preference of any preferred stock authorized
and issued by the Kerr-McGee Board. Each holder of Kerr-McGee common stock is
entitled to one vote for each share of Kerr-McGee common stock held of record on
the applicable record date on all matters submitted to a vote of stockholders,
including the election of directors.
Holders of Kerr-McGee common stock have no cumulative voting rights or
preemptive rights to purchase or subscribe for any stock or other securities,
and there are no conversion rights or redemption rights or sinking fund
provisions with respect to Kerr-McGee common stock. The outstanding shares of
Kerr-McGee common stock are, and the shares of Kerr-McGee common stock issued
pursuant to the merger will be, duly authorized, validly issued, fully paid and
nonassessable.
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<PAGE> 86
PREFERRED STOCK
As of ______, 199_, no shares of preferred stock were outstanding. One
million shares are designated Series B Junior Participating Preferred Stock and
reserved for issuance upon exercise of the rights distributed to the holders of
Kerr-McGee common stock pursuant to the Kerr-McGee Rights Agreement. For a
description of the Kerr-McGee Rights Agreement, see "Amendment and Restatement
of Kerr-McGee's Certificate of Incorporation and By-Laws and Comparison of
Stockholders' Rights -- Rights Agreements" on page 73.
The Kerr-McGee Board has the authority, without further stockholder
approval to create other series of preferred stock, to issue shares of preferred
stock in such series up to the maximum number of shares of the relevant class of
preferred stock authorized, and to determine the preferences, rights, privileges
and restrictions of any such series, including the dividend rights, voting
rights, rights and terms of redemption, liquidation preferences, the number of
shares constituting any such series and the designation of such series.
TRANSFER AGENT AND REGISTRAR
UMB Bank, N.A. is the transfer agent and registrar for the Kerr-McGee
common stock.
STOCK EXCHANGE LISTING
The Kerr-McGee common stock is listed on the New York Stock Exchange.
Kerr-McGee will cause the shares of Kerr-McGee common stock issuable in the
merger to be approved for listing on the New York Stock Exchange on or prior to
the merger, subject to official notice of issuance.
TREATMENT OF ORYX CONVERTIBLE SUBORDINATED DEBENTURES
Kerr-McGee and Oryx will take such steps as are necessary to ensure that
the holders of the Oryx 7 1/2% Convertible Subordinated Debentures due 2014
will, after the merger, have the right to convert the debentures into shares of
Kerr-McGee common stock on the terms and conditions set forth in the indenture
relating thereto, including modifying the conversion price specified therein to
reflect the Reverse Split. The merger does not constitute a "Risk Event" under
the indenture for these convertible debentures, and will not give the holders of
these convertible debentures the right to require Oryx to purchase the
convertible debentures.
LEGAL MATTERS
The validity of the Kerr-McGee common stock to be issued in connection with
the merger will be passed upon by Simpson Thacher & Bartlett, counsel to
Kerr-McGee. Certain tax matters relating to the merger will be passed upon by
Simpson Thacher & Bartlett, New York, New York, for Kerr-McGee and by Jones,
Day, Reavis & Pogue, New York, New York, for Oryx. See "The Proposed
Merger -- Material United States Federal Income Tax Consequences" on page 34.
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<PAGE> 87
EXPERTS
The financial statements of Kerr-McGee incorporated in this Joint Proxy
Statement/Prospectus by reference to its Current Report on Form 8-K filed on
November 13, 1998, restating its financial statements for 1997 and prior years
for discontinued operations, have been audited by Arthur Andersen LLP,
independent accountants, as indicated in their reports with respect thereto, and
are incorporated by reference herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
The financial statements of Oryx included in its Annual Report on Form 10-K
for the year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as indicated in their
reports thereto, and are incorporated by reference in this document in reliance
upon the authority of said firm as experts in accounting and auditing. With
respect to the unaudited interim financial information for the periods ended
March 31, 1998, June 30, 1998 and September 30, 1998, incorporated by reference
in this document, the independent accountants have reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports included in Oryx's
quarterly reports on Form 10-Q for the quarters ended March 31, 1998, June 30,
1998 and September 30, 1998, and incorporated by reference herein, state that
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act for their reports on the unaudited interim
financial information because those reports are not a "report" or a "part" of
the registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
Representatives of Arthur Andersen LLP are expected to be present at the
Kerr-McGee meeting and representatives of PricewaterhouseCoopers LLP are
expected to be present at the Oryx meeting, where they will have the opportunity
to make a statement if they desire to do so and will be available to respond to
appropriate questions.
FUTURE STOCKHOLDER PROPOSALS
Any Kerr-McGee stockholder who intends to submit a proposal for inclusion
in the proxy materials for the 1999 annual meeting of Kerr-McGee was required to
submit such proposal to the Secretary of Kerr-McGee by November 19, 1998. Under
Kerr-McGee's current by-laws, any Kerr-McGee stockholder who intends to submit a
proposal for consideration at the 1999 annual meeting of Kerr-McGee is required
to submit such proposal to the Secretary of Kerr-McGee by March 3, 1999, unless
the 1999 annual meeting of Kerr-McGee occurs prior to April 22, 1999 or later
than July 21, 1999, in which case such proposal must be submitted by the 70th
day prior to such meeting date or, if later, the 10th day following the
announcement of such meeting date.
Oryx expects to hold an annual meeting of stockholders in 1999 only if the
merger is not consummated. In the event of such a meeting, any Oryx stockholder
who intends to submit a proposal for inclusion in the proxy materials for the
1999 annual meeting of Oryx was required to submit such proposal to the
Secretary of Oryx by November 23, 1998. In the event of such a meeting, under
Oryx's current by-laws, any Oryx stockholder who intends to submit a proposal
for consideration at the 1999 annual meeting of Oryx is required to submit such
proposal to the Secretary of Oryx by March 8, 1999.
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<PAGE> 88
WHERE YOU CAN FIND MORE INFORMATION
Kerr-McGee and Oryx each file annual, quarterly and other reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any reports, statements or other information we file at
the Securities and Exchange Commission's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the public
reference rooms. Our Securities and Exchange Commission filings are also
available to the public from commercial document retrieval services and at the
web site maintained by the Securities and Exchange Commission at
"http://www.sec.gov."
Kerr-McGee has filed a Registration Statement on Form S-4 to register with
the Securities and Exchange Commission the Kerr-McGee common stock to be issued
to Oryx stockholders in the merger. This document is a part of that Registration
Statement and constitutes a prospectus of Kerr-McGee in addition to being a
proxy statement of Kerr-McGee and Oryx for the Kerr-McGee Meeting and the Oryx
meeting. As allowed by Securities and Exchange Commission rules, this document
does not contain all the information you can find in the Registration Statement
or the exhibits to the Registration Statement.
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this document, which means that we can disclose
important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference is deemed to be part of this document, except for any
information superseded by information in this document. This document
incorporates by reference the documents set forth below that we have previously
filed with the Securities and Exchange Commission. These documents contain
important information about our companies and their finances.
<TABLE>
<CAPTION>
KERR-MCGEE SEC FILINGS (FILE NO. 1-3939) PERIOD
- ---------------------------------------- ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Report on Form 10-Q Quarters ended March 31, 1998, June 30, 1998
and September 30, 1998
Current Reports on Form 8-K Filed on February 2, 1998, March 12, 1998,
March 18, 1998, April 15, 1998, June 9,
1998, October 20, 1998 and November 13,
1998
</TABLE>
<TABLE>
<CAPTION>
ORYX SEC FILINGS (FILE NO. 1-10053) PERIOD
- ----------------------------------- ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Report on Form 10-Q Quarters ended March 31, 1998, June 30, 1998
and September 30, 1998
Current Reports on Form 8-K Filed on October 21, 1998
</TABLE>
We are also incorporating by reference additional documents that we file
with the Securities and Exchange Commission between the date of this document
and the date of the meetings.
Kerr-McGee has supplied all information contained or incorporated by
reference in this document relating to Kerr-McGee and Oryx has supplied all such
information relating to Oryx.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the
Securities and Exchange Commission. Documents incorporated by reference are
available from us without charge, excluding all exhibits unless we have
specifically incorporated by reference an exhibit in this document. Stockholders
may obtain documents
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<PAGE> 89
incorporated by reference in this document by requesting them in writing or by
telephone from the appropriate party at the following addresses:
<TABLE>
<CAPTION>
KERR-MCGEE CORPORATION ORYX ENERGY COMPANY
- ---------------------- -------------------
<S> <C>
[Name of stockholder service entity] [Name of stockholder service entity]
[Address] [Address]
[Telephone number] [Telephone number]
</TABLE>
If you would like to request documents from us, please do so by ________,
199__ in order to receive them before the meetings.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT TO VOTE ON THE KERR-MCGEE PROPOSAL AND THE ORYX
PROPOSAL. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS DATED
JANUARY __ , 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS
DOCUMENT IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE
MAILING OF THIS DOCUMENT TO STOCKHOLDERS OF KERR-MCGEE AND ORYX NOR THE ISSUANCE
OF KERR-MCGEE COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
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<PAGE> 90
APPENDIX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 14, 1998
BETWEEN
KERR-MCGEE CORPORATION
AND
ORYX ENERGY COMPANY
<PAGE> 91
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Article I
THE MERGER....................................................... A-1
1.1 The Merger....................................................... A-1
1.2 Closing.......................................................... A-2
1.3 Effective Time................................................... A-2
1.4 Effects of the Merger............................................ A-2
1.5 Certificate of Incorporation..................................... A-2
1.6 By-Laws.......................................................... A-2
1.7 Officers and Directors of Surviving Corporation.................. A-2
1.8 Reverse Stock Split.............................................. A-3
1.9 Effect of Merger on Capital Stock................................ A-3
1.10 Stock Options.................................................... A-3
1.11 Certain Adjustments.............................................. A-4
Article II
EXCHANGE OF CERTIFICATES......................................... A-4
2.1 Exchange Fund.................................................... A-4
2.2 Exchange and Distribution Procedures............................. A-4
2.3 Distributions with Respect to Unexchanged Shares................. A-5
2.4 No Further Ownership Rights in Oryx Common Stock................. A-5
2.5 No Fractional Shares............................................. A-5
2.6 Termination of Exchange Fund..................................... A-5
2.7 No Liability..................................................... A-6
2.8 Investment of the Exchange Fund.................................. A-6
2.9 Lost Certificates................................................ A-6
2.10 Withholding Rights............................................... A-6
2.11 Further Assurances............................................... A-6
2.12 Stock Transfer Books............................................. A-6
2.13 Affiliates....................................................... A-6
Article III
REPRESENTATIONS AND WARRANTIES................................... A-7
3.1 Representations and Warranties of Kerr-McGee..................... A-7
(a) Organization, Standing and Power; Subsidiaries.............. A-7
(b) Capital Structure........................................... A-7
(c) Authority; No Conflicts..................................... A-8
(d) Reports and Financial Statements............................ A-9
(e) Information Supplied........................................ A-10
(f) Board Approval.............................................. A-10
(g) Vote Required............................................... A-10
(h) Litigation; Compliance with Laws............................ A-11
(i) Absence of Certain Changes or Events........................ A-11
(j) Environmental Matters....................................... A-11
(k) Intellectual Property....................................... A-12
(l) Rights Agreement............................................ A-12
(m) Brokers or Finders.......................................... A-13
(n) Opinion of Kerr-McGee Financial Advisor..................... A-13
(o) Accounting Matters.......................................... A-13
(p) Taxes....................................................... A-13
(q) Certain Contracts........................................... A-13
(r) Employee Benefits........................................... A-13
(s) Labor Matters............................................... A-14
</TABLE>
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<TABLE>
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(t) Ownership of Oryx Common Stock.............................. A-14
3.2 Representations and Warranties of Oryx........................... A-14
(a) Organization, Standing and Power; Subsidiaries.............. A-15
(b) Capital Structure........................................... A-15
(c) Authority; No Conflicts..................................... A-16
(d) Reports and Financial Statements............................ A-17
(e) Information Supplied........................................ A-17
(f) Board Approval.............................................. A-18
(g) Vote Required............................................... A-18
(h) Litigation; Compliance with Laws............................ A-18
(i) Absence of Certain Changes or Events........................ A-19
(j) Environmental Matters....................................... A-19
(k) Intellectual Property....................................... A-19
(l) Rights Agreement............................................ A-19
(m) Brokers or Finders.......................................... A-19
(n) Opinion of Oryx Financial Advisor........................... A-20
(o) Accounting Matters.......................................... A-20
(p) Taxes....................................................... A-20
(q) Certain Contracts........................................... A-20
(r) Employee Benefits........................................... A-20
(s) Labor Matters............................................... A-21
(t) Ownership of Kerr-McGee Common Stock........................ A-21
(u) Devon Stock................................................. A-21
Article IV
COVENANTS RELATING TO CONDUCT OF BUSINESS........................ A-21
4.1 Covenants of Kerr-McGee.......................................... A-21
(a) Ordinary Course............................................. A-21
(b) Dividends; Changes in Capital Stock......................... A-22
(c) Issuance of Securities...................................... A-22
(d) Governing Documents......................................... A-22
(e) No Acquisitions............................................. A-22
(f) No Dispositions............................................. A-22
(g) Investments; Indebtedness................................... A-23
(h) Pooling; Tax-Free Qualification............................. A-23
(i) Compensation................................................ A-23
(j) Accounting Methods; Income Tax Elections.................... A-23
(k) Certain Agreements.......................................... A-23
(l) Rights Agreement............................................ A-23
4.2 Covenants of Oryx................................................ A-23
(a) Ordinary Course............................................. A-23
(b) Dividends; Changes in Capital Stock......................... A-24
(c) Issuance of Securities...................................... A-24
(d) Governing Documents......................................... A-24
(e) No Acquisitions............................................. A-24
(f) No Dispositions............................................. A-24
(g) Investments; Indebtedness................................... A-24
(h) Pooling; Tax-Free Qualification............................. A-25
(i) Compensation................................................ A-25
(j) Accounting Methods; Income Tax Elections.................... A-25
(k) Certain Agreements.......................................... A-25
(l) Rights Agreement............................................ A-25
4.3 Governmental Filings............................................. A-25
4.4 Control of Other Party's Business................................ A-25
</TABLE>
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<TABLE>
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Article V
ADDITIONAL AGREEMENTS............................................ A-26
5.1 Preparation of Proxy Statement; Stockholders Meetings............ A-26
5.2 Access to Information............................................ A-27
5.3 Reasonable Best Efforts.......................................... A-28
5.4 Acquisition Proposals............................................ A-29
5.5 Employee Benefits Matters........................................ A-30
5.6 Fees and Expenses................................................ A-32
5.7 Directors' and Officers' Indemnification and Insurance........... A-32
5.8 Public Announcements............................................. A-33
5.9 Accountant's Letters............................................. A-33
5.10 Listing of Shares of Company Common Stock........................ A-33
5.11 Affiliates....................................................... A-33
5.12 Oryx Partnership Name............................................ A-34
5.13 Reverse Stock Split.............................................. A-34
5.14 Transition Management............................................ A-34
Article VI
CONDITIONS PRECEDENT............................................. A-35
6.1 Conditions to Each Party's Obligation to Effect the Merger....... A-35
(a) Stockholder Approval........................................ A-35
(b) No Injunctions or Restraints, Illegality.................... A-35
(c) HSR Act..................................................... A-35
(d) Governmental and Regulatory Approvals....................... A-35
(e) NYSE Listing................................................ A-35
(f) Effectiveness of the Form S-4............................... A-35
(g) Pooling..................................................... A-35
(h) Reverse Split............................................... A-35
6.2 Additional Conditions to Obligations of Kerr-McGee............... A-36
(a) Representations and Warranties.............................. A-36
(b) Performance of Obligations of Oryx.......................... A-36
(c) Tax Opinion................................................. A-36
(d) Rights Agreement............................................ A-36
6.3 Additional Conditions to Obligations of Oryx..................... A-36
(a) Representations and Warranties.............................. A-36
(b) Performance of Obligations of Kerr-McGee.................... A-36
(c) Tax Opinion................................................. A-36
(d) Rights Agreement............................................ A-36
Article VII
TERMINATION AND AMENDMENT........................................ A-37
7.1 Termination...................................................... A-37
7.2 Effect of Termination............................................ A-38
7.3 Amendment........................................................ A-39
7.4 Extension; Waiver................................................ A-39
Article VIII
GENERAL PROVISIONS............................................... A-39
8.1 Non-Survival of Representations, Warranties and Agreements....... A-39
8.2 Notices.......................................................... A-39
8.3 Interpretation................................................... A-40
8.4 Counterparts..................................................... A-40
8.5 Entire Agreement; No Third Party Beneficiaries................... A-40
8.6 GOVERNING LAW.................................................... A-40
</TABLE>
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8.7 Severability..................................................... A-40
8.8 Assignment....................................................... A-41
8.9 Submission to Jurisdiction; Waivers.............................. A-41
8.10 Enforcement...................................................... A-41
8.11 Definitions...................................................... A-41
</TABLE>
LIST OF EXHIBITS
<TABLE>
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EXHIBIT TITLE
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<S> <C>
1.5 Form of Amended and Restated Certificate of Incorporation of
Surviving Corporation
1.6 Form of By-Laws of Surviving Corporation
1.7 Directors of Surviving Corporation
5.5(e) Actions with Respect to Certain Benefit Plans
5.11 Form of Affiliate Letter
</TABLE>
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AGREEMENT AND PLAN OF MERGER, dated as of October 14, 1998 (this
"Agreement"), between KERR-McGEE CORPORATION, a Delaware corporation
("Kerr-McGee"), and ORYX ENERGY COMPANY, a Delaware corporation ("Oryx").
WITNESSETH:
WHEREAS, the Boards of Directors of Oryx and Kerr-McGee deem it advisable
and in the best interests of each corporation and its respective stockholders
that Oryx and Kerr-McGee engage in a business combination as peer firms in a
merger of equals in order to advance the long-term strategic business interests
of Oryx and Kerr-McGee;
WHEREAS, the combination of Oryx and Kerr-McGee shall be effected by the
terms of this Agreement through a merger as outlined below (the "Merger");
WHEREAS, immediately prior to the Effective Time (as defined in Section
1.3), Oryx shall effect a reverse stock split (the "Reverse Split") of its
common stock, par value $1.00 per share ("Oryx Common Stock"), as set forth in
Section 1.8;
WHEREAS, the respective Boards of Directors of Oryx and Kerr-McGee have
approved the Merger, upon the terms and subject to the conditions set forth in
this Agreement, pursuant to which each share of Oryx Common Stock issued and
outstanding after giving effect to the Reverse Split and immediately prior to
the Effective Time, other than shares owned or held by Kerr-McGee or Oryx, will
be converted into the right to receive one share of common stock, par value
$1.00 per share, of the Surviving Corporation (as defined in Section 1.1)
("Company Common Stock") as set forth in Section 1.9, and each share of common
stock, par value $1.00 per share, of Kerr-McGee ("Kerr-McGee Common Stock")
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding as one share of Company Common Stock;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder;
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests transaction under United States
generally accepted accounting principles ("GAAP"); and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition of each party's willingness to enter into this Agreement, Oryx
and Kerr-McGee are entering into stock option agreements, dated as of the date
hereof (the "Stock Option Agreements"), pursuant to which, among other things,
Oryx is granting Kerr-McGee an option to purchase shares of Oryx Common Stock
(the "Oryx Stock Option Agreement") and Kerr-McGee is granting Oryx an option to
purchase shares of Kerr-McGee Common Stock (the "Kerr-McGee Stock Option
Agreement").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and the Stock Option Agreements, and intending to be legally bound
hereby, the parties hereto agree as follows:
Article I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Oryx shall be merged with and
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into Kerr-McGee at the Effective Time. Following the Merger, the separate
corporate existence of Oryx shall cease and Kerr-McGee shall continue as the
surviving corporation (the "Surviving Corporation").
1.2 Closing. Subject to the terms and conditions hereof, the closing of
the Merger and the transactions contemplated by this Agreement (the "Closing")
will take place on the second Business Day after the satisfaction or waiver
(subject to applicable law) of the conditions set forth in Article VI (other
than any such conditions which by their terms cannot be satisfied until the
Closing Date, which shall be required to be so satisfied or waived on the
Closing Date), unless another time or date is agreed to in writing by the
parties hereto (the actual time and date of the Closing being referred to herein
as the "Closing Date"). The Closing shall be held at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, unless
another place is agreed to in writing by the parties hereto.
1.3 Effective Time. At the Closing, the parties shall (i) file a
certificate of merger (the "Certificate of Merger") in such form as is required
by and executed in accordance with the relevant provisions of the DGCL and (ii)
make all other filings or recordings required under the DGCL. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Delaware Secretary of State or at such subsequent time as Kerr-McGee and
Oryx shall agree and as shall be specified in the Certificate of Merger (the
date and time the Merger becomes effective being the "Effective Time").
1.4 Effects of the Merger. At and after the Effective Time, the Merger
will have the effects set forth in the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of Oryx and Kerr-McGee shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of Oryx and
Kerr-McGee shall become the debts, liabilities and duties of the Surviving
Corporation.
1.5 Certificate of Incorporation. The certificate of incorporation of
Kerr-McGee, as in effect immediately prior to the Effective Time, shall be
amended and restated as of the Effective Time so as to read in its entirety in
the form set forth as Exhibit 1.5 and, as so amended and restated, shall be the
certificate of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law.
1.6 By-Laws. At the Effective Time, the by-laws in the form attached as
Exhibit 1.6 shall be the amended and restated by-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
1.7 Officers and Directors of Surviving Corporation. The officers of
Kerr-McGee as of the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or otherwise
ceasing to be an officer or until their respective successors are duly elected
and qualified, as the case may be. The directors of Kerr-McGee as of the
Effective Time shall be the directors of the Surviving Corporation for the
initial terms set forth on Exhibit 1.7 hereto, until the earlier of their
resignation or removal or otherwise ceasing to be a director or until their
respective successors are duly elected and qualified. The Surviving Corporation
will take all action necessary to (i) add to the Board of Directors of the
Surviving Corporation, effective the day following the Effective Time, Robert L.
Keiser and the four other persons indicated on Exhibit 1.7 hereto who are not
and have not been employees of Oryx or its Subsidiaries and who are serving on
the Oryx Board of Directors immediately prior to the Effective Time (or, if Mr.
Keiser or any such person listed on Exhibit 1.7 hereto shall not be so serving
on the Oryx Board of Directors immediately prior to the Effective Time or shall
otherwise be unable to serve on the Board of Directors of the Surviving
Corporation, Oryx shall be entitled to designate a substitute nominee from among
the Oryx serving directors as of the date hereof, provided that such substitute
nominee is not and has not been an employee of Oryx or its Subsidiaries and is
serving on the Oryx Board of Directors immediately prior to the Effective Time),
in each case for the initial terms set forth on Exhibit 1.7 hereto, and (ii)
cause to be appointed promptly following the Effective Time: Luke R. Corbett as
Chief Executive Officer of the Surviving Corporation and Robert L. Keiser as
Chairman of the Surviving Corporation.
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1.8 Reverse Stock Split. Immediately prior to the Effective Time, Oryx
shall effect the Reverse Split, pursuant to which each share of Oryx Common
Stock issued and outstanding immediately prior to the Reverse Split shall, by
virtue of the Reverse Split and without any action on the part of the holder
thereof, become 0.369 shares (the "Exchange Ratio") of Oryx Common Stock,
subject to Section 2.5.
1.9 Effect of Merger on Capital Stock.
(a) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Oryx Common Stock
issued and outstanding after giving effect to the Reverse Split and
immediately prior to the Effective Time (other than shares of Oryx Common
Stock owned by Kerr-McGee or held by Oryx, all of which shall be canceled
as provided in Section 1.9(c)) shall be converted into the right to receive
one share of Company Common Stock (together with any cash in lieu of
fractional shares to be paid pursuant to Section 2.5, the "Merger
Consideration").
(b) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Kerr-McGee Common
Stock issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one share of Company Common Stock.
(c) At the Effective Time by virtue of the Merger and without any
action on the part of the holder thereof, each share of Oryx Common Stock
issued and owned or held by Kerr-McGee or Oryx at the Effective Time shall
cease to be outstanding and shall be canceled and retired and no stock of
the Surviving Corporation or other consideration shall be delivered in
exchange therefor.
1.10 Stock Options.
(a) On or prior to the Reverse Split, Oryx will take all action
necessary such that each Oryx Stock Option (as defined in Section 3.2(b))
that was granted pursuant to the Oryx Stock Option Plans (as defined in
Section 3.2(b)) prior to the Reverse Split and which remains outstanding
immediately prior to the Effective Time shall cease to represent a right to
acquire shares of Oryx Common Stock and shall be converted, at the
Effective Time, into an option to acquire, on the same terms and conditions
as were applicable under the Oryx Stock Option, that number of shares of
Company Common Stock determined by multiplying the number of shares of Oryx
Common Stock subject to such Oryx Stock Option by the Exchange Ratio,
rounded, if necessary, to the nearest whole share of Company Common Stock,
at a price per share (rounded to the nearest one-hundredth of a cent) equal
to the per share exercise price specified in such Oryx Stock Option divided
by the Exchange Ratio; provided, however, that in the case of any Oryx
Stock Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the option price, the number
of shares subject to such option and the terms and conditions of exercise
of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code. On or prior to the Reverse
Split, Oryx will amend the Oryx Stock Options and the Oryx Stock Option
Plans to give effect to this Section 1.10 and Section 5.5 and to make such
changes in phraseology and form to give effect to the Reverse Split and the
Merger and to the substitution of the Surviving Corporation for Oryx and
Company Common Stock for Oryx Common Stock.
(b) As soon as practicable after the Effective Time, the Surviving
Corporation shall deliver to the holders of Oryx Stock Options appropriate
notices setting forth such holders' rights pursuant to the Oryx Stock
Option Plans (including, as applicable, that, by virtue of the Merger and
pursuant to the terms of the Oryx Stock Option Plans, the Oryx Stock
Options have become fully vested and exercisable) and the agreements
evidencing the grants of such Oryx Stock Options shall continue in effect
on the same terms and conditions (subject to the adjustments required by
this Section 1.10 after giving effect to the Reverse Split and the Merger
and the terms of the Oryx Stock Option Plans). To the extent permitted by
law, the Surviving Corporation shall comply with the terms of the Oryx
Stock Option Plans and shall take such reasonable steps as are necessary or
required by, and subject to the provisions of, such Oryx Stock Option
Plans, to have the Oryx Stock Options which
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qualified as incentive stock options prior to the Effective Time continue
to qualify as incentive stock options of the Surviving Corporation after
the Effective Time.
(c) The Surviving Corporation shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Company
Common Stock for delivery upon exercise of Oryx Stock Options in accordance
with this Section 1.10. Promptly after the Effective Time, the Surviving
Corporation shall file a registration statement on Form S-3 or Form S-8, as
the case may be (or any successor or other appropriate forms), with respect
to the shares of Company Common Stock subject to such options and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such options remain outstanding.
1.11 Certain Adjustments. If, between the date of this Agreement and the
Effective Time, the outstanding Kerr-McGee Common Stock or Oryx Common Stock
shall have been changed into a different number of shares or different class of
stock by reason of any reclassification, recapitalization, stock split,
split-up, combination or exchange of shares, or a stock dividend or dividend
payable in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred (in all cases, other than as
contemplated by Section 1.8), the Exchange Ratio shall be appropriately adjusted
to provide to the holders of Oryx Common Stock and Kerr-McGee Common Stock the
same economic effect as contemplated by this Agreement prior to such event.
Article II
EXCHANGE OF CERTIFICATES
2.1 Exchange Fund. Prior to the Effective Time, Kerr-McGee shall appoint a
commercial bank or trust company reasonably acceptable to Oryx having net
capital of not less than $100,000,000, or a subsidiary thereof, to act as
exchange agent hereunder for the purpose of exchanging certificates which
immediately prior to the Effective Time represented shares of Oryx Common Stock
("Certificates") for the Merger Consideration (the "Exchange Agent"). From time
to time as needed, the Surviving Corporation shall deposit with the Exchange
Agent, in trust for the benefit of holders of shares of Oryx Common Stock,
certificates representing the Company Common Stock issuable pursuant to Section
1.9(a) in exchange for shares of Oryx Common Stock outstanding immediately prior
to the Effective Time. The Surviving Corporation shall make available to the
Exchange Agent from time to time, as needed, cash sufficient to pay cash in lieu
of fractional shares pursuant to Section 2.5 and any dividends and other
distributions pursuant to Section 2.3. Any cash and certificates of Company
Common Stock deposited with the Exchange Agent shall hereinafter be referred to
as the "Exchange Fund".
2.2 Exchange and Distribution Procedures. (a) As soon as practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of a Certificate (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which letter shall be in customary form and have such other
provisions as the Surviving Corporation may reasonably specify and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) one or more
shares of Company Common Stock representing, in the aggregate, the whole number
of shares that such holder has the right to receive pursuant to Section 1.9(a)
(after taking into account all Certificates delivered by such holder) and (B)
any cash and other property that such holder has the right to receive pursuant
to the provisions of this Article II, including any cash in lieu of any
fractional shares pursuant to Section 2.5, and dividends and other distributions
pursuant to Section 2.3. No interest will be paid or will accrue on any cash or
other property
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payable pursuant to Section 2.3 or 2.5. In the event of a transfer of ownership
of Oryx Common Stock which is not registered in the transfer records of Oryx,
one or more shares of Company Common Stock evidencing, in the aggregate, the
proper number of shares of Company Common Stock, any cash in lieu of any
fractional shares pursuant to Section 2.5 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.3 may be
issued and paid with respect to such Oryx Common Stock to such a transferee if
the Certificate representing such shares of Oryx Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
2.3 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made with respect to shares of Company Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of Company Common Stock
that such holder would be entitled to receive upon surrender of such Certificate
until such holder shall surrender such Certificate in accordance with Section
2.2. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to such holder of shares of Company Common
Stock issuable in exchange therefor, without interest, (a) promptly after the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
shares of Company Common Stock, and (b) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of Company Common Stock.
2.4 No Further Ownership Rights in Oryx Common Stock. All shares of
Company Common Stock issued and cash and other property paid upon conversion of
shares of Oryx Common Stock in accordance with the terms of Article I and this
Article II (including pursuant to Section 2.3) shall be deemed to have been
issued or paid in full satisfaction of all rights pertaining to the shares of
Oryx Common Stock. Until surrendered as contemplated by this Article II, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration.
2.5 No Fractional Shares.
(a) No certificates or scrip or shares of Oryx Common Stock or Company
Common Stock representing fractional shares of Oryx Common Stock or Company
Common Stock shall be issued pursuant to Section 1.8, 1.9 or 2.2 and such
fractional share interests will not entitle the owner thereof to vote or to
have any rights of a shareholder of Oryx or the Surviving Corporation or a
holder of shares of Oryx Common Stock or Company Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Oryx Common Stock affected by the Reverse Split and converted
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Company Common Stock (after taking into account all
Certificates delivered by such holder pursuant to Section 2.2) shall
receive, in lieu thereof, cash (without interest) in an amount equal to the
product of (i) such fractional part of a share of Company Common Stock
multiplied by (ii) the closing price for a share of Company Common Stock on
the New York Stock Exchange, Inc. ("NYSE") Composite Transactions Tape on
the Business Day immediately following the date on which the Effective Time
occurs.
2.6 Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Certificates for six months after the
Effective Time shall be delivered to the Surviving Corporation or otherwise on
the instruction of the Surviving Corporation, and any holders of the
Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation for the Merger Consideration
with respect to the shares of Oryx Common Stock formerly represented thereby to
which such holders are entitled pursuant to Section 1.9, 2.2 and 2.5 and any
dividends or distributions with respect to shares of Company Common Stock to
which such holders are entitled pursuant to Section 2.3. Any such portion of the
Exchange Fund remaining unclaimed by holders of shares of Certificates three
years after the Effective Time (or such earlier date immediately
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prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity (as defined in Section 3.1(c)(iii)) shall, to the
extent permitted by law, become the property of the Surviving Corporation free
and clear of any claims or interest of any Person previously entitled thereto.
2.7 No Liability. None of Kerr-McGee, Oryx, the Surviving Corporation or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration from the Exchange Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
2.8 Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by the Surviving Corporation on a
daily basis. Any interest and other income resulting from such investments shall
promptly be paid to the Surviving Corporation.
2.9 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 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 deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect to the shares of Oryx Common Stock
formerly represented thereby and unpaid dividends and distributions on shares of
Company Common Stock deliverable in respect thereof pursuant to this Agreement.
2.10 Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Oryx Common Stock such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign tax law. To the extent that amounts are so withheld
by the Surviving Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Oryx Common Stock in respect of which such deduction and withholding was made by
the Surviving Corporation.
2.11 Further Assurances. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of Oryx and Kerr-McGee, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
Oryx or Kerr-McGee, any other actions and things to vest, perfect or confirm of
record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
2.12 Stock Transfer Books. The stock transfer books of Oryx shall be
closed immediately upon the Effective Time and there shall be no further
registration of transfers of shares of Oryx Common Stock thereafter on the
records of Oryx. On or after the Effective Time, any Certificates presented to
the Exchange Agent or the Surviving Corporation for any reason shall be
converted into the Merger Consideration with respect to the shares of Oryx
Common Stock formerly represented thereby and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section 2.3.
2.13 Affiliates. Notwithstanding anything to the contrary herein, no
shares of Company Common Stock or cash shall be delivered to a Person who may be
deemed an "affiliate" of Oryx in accordance with Section 5.11 hereof for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), or for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable rules and regulations of the Securities and Exchange
Commission (the "SEC") until such Person has executed and delivered an Affiliate
Agreement (as defined in Section 5.11) to the Surviving Corporation.
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Article III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Kerr-McGee. Except as set forth in
the Kerr-McGee Disclosure Schedule delivered by Kerr-McGee to Oryx prior to the
execution of this Agreement (the "Kerr-McGee Disclosure Schedule") (each section
of which qualifies the correspondingly numbered representation and warranty or
covenant to the extent specified therein), and except as disclosed in the
Kerr-McGee SEC Reports (as defined in Section 3.1(d)) filed with the SEC prior
to the date hereof, excluding the exhibits thereto (the "Current Kerr-McGee SEC
Reports"), Kerr-McGee represents and warrants to Oryx as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Kerr-McGee and each of its Subsidiaries (as defined in
Section 8.11) is a corporation or other legal entity duly organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation or organization, has the requisite power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would
not reasonably be expected to have a Material Adverse Effect on
Kerr-McGee, and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failure so to qualify or to be in
good standing would not reasonably be expected to have a Material
Adverse Effect on Kerr-McGee. The copies of the certificate of
incorporation and by-laws of Kerr-McGee which were previously furnished
or made available to Oryx are complete and correct copies of such
documents as in effect on the date of this Agreement.
(ii) Exhibit 21 to Kerr-McGee's Annual Report on Form 10-K for the
year ended December 31, 1997 includes all the Subsidiaries of Kerr-McGee
which as of the date of this Agreement are Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the SEC). All the outstanding
shares of capital stock of, or other equity interests in, each such
Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by Kerr-McGee, free
and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively
"Liens") and free of any other restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests). As of the date of this Agreement, neither
Kerr-McGee nor any of its Subsidiaries directly or indirectly owns any
equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any other Person that is or would
reasonably be expected to be material to Kerr-McGee and its Subsidiaries
taken as a whole.
(b) Capital Structure.
(i) As of September 30, 1998 (the "Kerr-McGee Measurement Date"),
the authorized capital stock of Kerr-McGee consisted of (A) 150,000,000
shares of Kerr-McGee Common Stock of which 47,407,948 shares were
outstanding, 6,768,990 shares were held in the treasury of Kerr-McGee
and 1,943,740 shares were reserved for issuance upon the exercise of the
Kerr-McGee Stock Options and (B) 40,000,000 shares of Preferred Stock,
no par value per share, of which no shares were outstanding and
1,000,000 shares of which have been designated Series B Junior
Participating Preferred Stock and reserved for issuance upon exercise of
the rights (the "Kerr-McGee Rights") distributed to the holders of
Kerr-McGee Common Stock pursuant to the Rights Agreement dated as of
July 9, 1996 between Kerr-McGee and Bank One Trust Company, N.A. (as
successor by merger to The Liberty National Bank & Trust Co. of Oklahoma
City), as Rights Agent (the "Kerr-McGee Rights Agreement"). Since the
Kerr-McGee Measurement Date to the date of this Agreement, there have
been no issuances of shares of the capital stock of
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Kerr-McGee or any other securities of Kerr-McGee other than issuances of
shares (and accompanying Kerr-McGee Rights) pursuant to options or
rights outstanding as of the Kerr-McGee Measurement Date under the
Benefit Plans (as defined in Section 8.11) of Kerr-McGee. All issued and
outstanding shares of the capital stock of Kerr-McGee are duly
authorized, validly issued, fully paid and nonassessable, and no class
of capital stock is entitled to preemptive rights. There were
outstanding as of the Kerr-McGee Measurement Date no options, warrants
or other rights to acquire capital stock from Kerr-McGee, directly or
indirectly, other than (x) the Kerr-McGee Rights and (y) options
representing in the aggregate the right to purchase 1,943,740 shares of
Kerr-McGee Common Stock (collectively, the "Kerr-McGee Stock Options")
under Kerr-McGee's 1984 Employee Stock Option Plan, 1987 Long Term
Incentive Plan, Performance Share Plan and 1998 Long Term Incentive Plan
(collectively, the "Kerr-McGee Stock Option Plans"). Section 3.1(b) of
the Kerr-McGee Disclosure Schedule sets forth a complete and correct
list, as of the Kerr-McGee Measurement Date, of the number of shares of
Kerr-McGee Common Stock subject to Kerr-McGee Stock Options or other
rights to purchase or receive Kerr-McGee Common Stock granted under the
Kerr-McGee Benefit Plans or otherwise, the dates of grant and the
exercise prices thereof. No options or warrants or other rights to
acquire capital stock from Kerr-McGee have been issued or granted since
the Kerr-McGee Measurement Date to the date of this Agreement, other
than pursuant to the Kerr-McGee Stock Option Agreement.
(ii) No bonds, debentures, notes or other indebtedness of
Kerr-McGee having the right to vote on any matters on which holders of
capital stock of Kerr-McGee may vote ("Kerr-McGee Voting Debt") are
issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.1(b) and as
contemplated by Section 1.9 and Section 1.10, as of the date of this
Agreement, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Kerr-McGee or any of its Subsidiaries is a party or by which any
of them is bound obligating Kerr-McGee or any of its Subsidiaries,
directly or indirectly, to issue, deliver or sell, or cause to be
issued, delivered or sold, shares of capital stock or other voting
securities of Kerr-McGee or any of its Subsidiaries or obligating
Kerr-McGee or any of its Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of this Agreement,
there are no outstanding obligations of Kerr-McGee or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Kerr-McGee or any of its Subsidiaries.
(c) Authority; No Conflicts.
(i) Kerr-McGee has all requisite corporate power and authority to
enter into this Agreement and the Stock Option Agreements and to
consummate the transactions contemplated hereby and thereby, subject, in
the case of the consummation of the Merger, to the adoption of this
Agreement by the stockholders of Kerr-McGee by the Required Kerr-McGee
Vote (as defined in Section 3.1(g)). The execution and delivery of this
Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Kerr-McGee, subject, in
the case of the consummation of the Merger, to the adoption of this
Agreement by the stockholders of Kerr-McGee by the Required Kerr-McGee
Vote. Each of this Agreement and the Stock Option Agreements has been
duly executed and delivered by Kerr-McGee and constitutes a valid and
binding agreement of Kerr-McGee, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
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(ii) The execution and delivery of this Agreement and the Stock
Option Agreements by Kerr-McGee does not or will not, as the case may
be, and the consummation by Kerr-McGee of the Merger and the other
transactions contemplated hereby and thereby will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, amendment, cancellation or acceleration of any obligation,
a right to require redemption or repurchase of or otherwise "put"
securities, or the loss of a material benefit, under, or the creation of
a lien, pledge, security interest, charge or other encumbrance on any
assets (any such conflict, violation, default, right of termination,
amendment, cancellation, acceleration, redemption or repurchase, "put"
right, loss or creation, a "Violation") pursuant to: (A) any provision
of the certificate of incorporation or by-laws of Kerr-McGee, or any
similar organizational documents of any material Subsidiary of
Kerr-McGee, or (B) except as would not reasonably be expected to have a
Material Adverse Effect on Kerr-McGee, subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan
or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Kerr-McGee or any Subsidiary of
Kerr-McGee or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national,
state, municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "Governmental Entity"), is required by
or with respect to Kerr-McGee or any Subsidiary of Kerr-McGee in
connection with the execution and delivery of this Agreement or the
Stock Option Agreements by Kerr-McGee or the consummation by Kerr-McGee
of the Merger and the other transactions contemplated hereby and
thereby, except for those required under or in relation to (A) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (B) state securities or "blue sky" laws (the "Blue Sky
Laws"), (C) the Securities Act, (D) the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (E) the DGCL with respect to the filing
of the Certificate of Merger, (F) rules and regulations of the NYSE, (G)
antitrust or other competition laws of other jurisdictions, and (H) such
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to make or obtain would not reasonably
be expected to have a Material Adverse Effect on Kerr-McGee. Consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to any of the foregoing clauses
(A) through (G) are hereinafter referred to as "Necessary Consents".
(d) Reports and Financial Statements.
(i) Kerr-McGee has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since January 1, 1997
(collectively, including all exhibits thereto, the "Kerr-McGee SEC
Reports"). Since such date, no Subsidiary of Kerr-McGee has been
required to file or has filed any form, report, registration statement,
prospectus or other document with the SEC. None of the Kerr-McGee SEC
Reports, as of their respective dates (and, if amended or superseded by
a filing prior to the date of this Agreement or the Closing Date, then
as of the date of such filing), contained or will contain any untrue
statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the financial statements (including the related
notes) included in the Kerr-McGee SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of Kerr-McGee and its Subsidiaries
as of the respective dates or for the respective periods set forth
therein, all in conformity with GAAP consistently applied during
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the periods involved except as otherwise noted therein, and subject, in
the case of the unaudited interim financial statements, to normal and
recurring year-end adjustments that have not been and are not expected
to be material in amount. All of such Kerr-McGee SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective Kerr-McGee SEC Report), complied as to form in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder.
(ii) Since December 31, 1997, Kerr-McGee and its Subsidiaries have
not incurred any liabilities that are of a nature that would be required
to be disclosed on a consolidated balance sheet of Kerr-McGee and its
Subsidiaries or the footnotes thereto prepared in conformity with GAAP,
other than (A) liabilities incurred in the ordinary course of business
or (B) liabilities that would not reasonably be expected to have a
Material Adverse Effect on Kerr-McGee.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
Kerr-McGee for inclusion or incorporation by reference in (A) the Form
S-4 (as defined in Section 5.1) will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented or at the time
it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading and (B) the Joint Proxy Statement/Prospectus (as defined in
Section 5.1) will, on the date it is first mailed to Oryx stockholders
or Kerr-McGee stockholders or at the time of the Oryx Stockholders
Meeting or the Kerr-McGee Stockholders Meeting (each as defined in
Section 5.1), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The portions of the Form S-4
and the Joint Proxy Statement/Prospectus supplied by Kerr-McGee (whether
by inclusion or by incorporation by reference therein) will comply as to
form in all material respects with the requirements of the Exchange Act
and the Securities Act and the rules and regulations of the SEC
thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.1(e), no representation or warranty is made by Kerr-McGee with respect
to statements made or incorporated by reference in the Form S-4 or the
Joint Proxy Statement/Prospectus based on information supplied by Oryx
for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Kerr-McGee, by
resolutions duly adopted by unanimous vote at a meeting duly called and
held and not subsequently rescinded or modified in any way (the "Kerr-McGee
Board Approval") (except as otherwise permitted following the date hereof
pursuant to Section 5.1 or 5.4), has duly (i) determined that this
Agreement and the Stock Option Agreements, and the Merger and the other
transactions contemplated hereby and thereby, are advisable and are fair to
and in the best interests of Kerr-McGee and its stockholders, (ii) approved
this Agreement and the Stock Option Agreements, and the Merger and the
other transactions contemplated hereby and thereby, (iii) recommended that
the stockholders of Kerr-McGee adopt this Agreement and (iv) directed that
this Agreement and the Merger be submitted for consideration by
Kerr-McGee's stockholders at the Kerr-McGee Stockholders Meeting. The
Kerr-McGee Board Approval constitutes approval of this Agreement and the
Kerr-McGee Stock Option Agreement, and the Merger and other transactions
contemplated hereby and thereby, for purposes of Section 203 of the DGCL
and Article Thirteenth of Kerr-McGee's Certificate of Incorporation. To the
knowledge of Kerr-McGee, except for Section 203 of the DGCL (which has been
rendered inapplicable), no state takeover statute is applicable to this
Agreement or the Kerr-McGee Stock Option Agreement or the Merger or the
other transactions contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Kerr-McGee Common Stock (excluding any shares
owned or held by Kerr-McGee or any of its
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Subsidiaries) (the "Required Kerr-McGee Vote") is the only vote of the
holders of any class or series of Kerr-McGee capital stock necessary to
adopt this Agreement (assuming that Oryx is not an "interested stockholder"
of Kerr-McGee under Section 203 of the DGCL immediately before the
execution and delivery of this Agreement).
(h) Litigation; Compliance with Laws.
(i) There is no suit, action or proceeding pending or, to the
knowledge of Kerr-McGee, threatened against or affecting Kerr-McGee or
any Subsidiary of Kerr-McGee having, or which would reasonably be
expected to have, a Material Adverse Effect on Kerr-McGee, nor is there
any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Kerr-McGee or any Subsidiary of
Kerr-McGee having, or which reasonably would be expected to have, a
Material Adverse Effect on Kerr-McGee.
(ii) Except as would not reasonably be expected to have a Material
Adverse Effect on Kerr-McGee, Kerr-McGee and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the
businesses of Kerr-McGee and its Subsidiaries, taken as a whole (the
"Kerr-McGee Permits"). Kerr-McGee and its Subsidiaries are in compliance
with the terms of the Kerr-McGee Permits, except where the failure so to
comply would not reasonably be expected to have a Material Adverse
Effect on Kerr-McGee. The businesses of Kerr-McGee and its Subsidiaries
are not being conducted in violation of, and Kerr-McGee and its
Subsidiaries have not received any notices of violations with respect
to, any law, ordinance or regulation of any Governmental Entity, except
for possible violations which would not reasonably be expected to have a
Material Adverse Effect on Kerr-McGee.
(i) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement and the Stock Option Agreements
or the transactions contemplated hereby and thereby and except as permitted
by Sections 4.1 and 5.5, since December 31, 1997, Kerr-McGee and its
Subsidiaries have conducted their business only in the ordinary course and
there has not been (i) any change, circumstance or event which has had, or
would reasonably be expected to have, a Material Adverse Effect on
Kerr-McGee or (ii) any action taken by Kerr-McGee or any of its
Subsidiaries during the period from December 31, 1997 through the date of
this Agreement that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach of Section
4.1.
(j) Environmental Matters. Except as would not reasonably be expected
to have a Material Adverse Effect on Kerr-McGee: (i) the operations of
Kerr-McGee and its Subsidiaries have been and are in compliance with all
Environmental Laws and with all licenses required by Environmental Laws (as
defined below), (ii) there are no pending or, to the knowledge of
Kerr-McGee, threatened actions, suits, claims, investigations or other
proceedings (collectively, "Actions") under or pursuant to Environmental
Laws against Kerr-McGee or its Subsidiaries or involving any real property
currently or, to the knowledge of Kerr-McGee, formerly owned, operated or
leased by Kerr-McGee or its Subsidiaries, (iii) Kerr-McGee and its
Subsidiaries are not subject to any Environmental Liabilities (as defined
below), and, to the knowledge of Kerr-McGee, no facts, circumstances or
conditions relating to, arising from, associated with or attributable to
any real property currently or formerly owned, operated or leased by
Kerr-McGee or its Subsidiaries or operations thereon would reasonably be
expected to result in Environmental Liabilities and (iv) all real property
owned and, to the knowledge of Kerr-McGee, all real property operated or
leased by Kerr-McGee or its Subsidiaries is free of contamination from
Hazardous Material (as defined below) that would have an adverse effect on
human health or the environment.
As used in this Agreement, "Environmental Laws" means any and all
federal, foreign, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and
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bases of liability regulating, relating to or imposing liability or
standards of conduct concerning pollution, Hazardous Materials or
protection of human health or safety as relating to the environment or the
workplace, or the protection of the environment, as currently in effect and
includes the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. sec.sec. 9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. sec.sec. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. sec.sec. 6901, et seq., the Clean
Water Act, 33 U.S.C. sec.sec. 1251, et seq., the Clean Air Act, 33 U.S.C.
sec.sec. 2601, et seq., the Toxic Substances Control Act, 15 U.S.C.
sec.sec. 2601, et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C., sec.sec. 136, et seq., Occupational Safety and Health Act 29
U.S.C. sec.sec. 651, et seq. and the Oil Pollution Act of 1990, 33 U.S.C.
sec.sec. 2701, et seq., as such laws have been amended or supplemented, and
the regulations promulgated pursuant thereto, and all analogous state or
local statutes. As used in this Agreement, "Environmental Liabilities" with
respect to any person means any and all liabilities of or relating to such
person or any of its Subsidiaries (including any entity which is, in whole
or in part, a predecessor of such person or any of such Subsidiaries),
whether vested or unvested, contingent or fixed, actual or potential, known
or unknown, which (i) arise under or relate to matters covered by
Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date. As used in this Agreement,
"Hazardous Materials" means any hazardous or toxic substances, materials or
wastes, defined, listed, classified or regulated as such in or under any
Environmental Laws which includes petroleum, petroleum products, friable
asbestos, urea formaldehyde and polychlorinated biphenyls and any other
substance that could result in liability under any Environmental Laws.
(k) Intellectual Property. Except as would not reasonably be expected
to have a Material Adverse Effect on Kerr-McGee: (a) Kerr-McGee and each of
its Subsidiaries owns, or is licensed to use (in each case, free and clear
of any Liens), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted; (b) the
use of any Intellectual Property by Kerr-McGee and its Subsidiaries does
not infringe on or otherwise violate the rights of any Person and is in
accordance with any applicable license pursuant to which Kerr-McGee or any
Subsidiary acquired the right to use any Intellectual Property; (c) to the
knowledge of Kerr-McGee, no Person is challenging, infringing on or
otherwise violating any right of Kerr-McGee or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to Kerr-McGee
or its Subsidiaries; and (d) neither Kerr-McGee nor any of its Subsidiaries
has received any written notice of any pending claim with respect to any
Intellectual Property used by Kerr-McGee and its Subsidiaries and to its
knowledge no Intellectual Property owned and/or licensed by Kerr-McGee or
its Subsidiaries is being used or enforced in a manner that would result in
the abandonment, cancellation or unenforceability of such Intellectual
Property. For purposes of this Agreement, "Intellectual Property" shall
mean trademarks, service marks, brand names, certification marks, trade
dress and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension,
modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without
limitation, divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or
not, in any jurisdiction; registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; any
similar intellectual property or proprietary rights; and any claims or
causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
(l) Rights Agreement. The Board of Directors of Kerr-McGee has
approved an amendment to the Kerr-McGee Rights Agreement to the effect that
neither Oryx nor any of its affiliates shall become an "Acquiring Person",
and that no "Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Kerr-McGee Rights Agreement) will occur, by reason of
the approval,
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execution or delivery of this Agreement or the Kerr-McGee Stock Option
Agreement or the consummation of the Merger or the other transactions
contemplated hereby or thereby, and will cause the trustee under the
Kerr-McGee Rights Agreement to execute such amendment as soon as possible
after the execution hereof.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any
of the transactions contemplated by this Agreement or the Stock Option
Agreements based upon arrangements made by or on behalf of Kerr-McGee,
except Lehman Brothers Inc. (the "Kerr-McGee Financial Advisor"), whose
fees and expenses will be paid by Kerr-McGee in accordance with
Kerr-McGee's agreement with such firm, a copy of which has been provided to
Oryx.
(n) Opinion of Kerr-McGee Financial Advisor. Kerr-McGee has received
the opinion of the Kerr-McGee Financial Advisor, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to Kerr-McGee, a copy of which opinion will
be made available to Oryx.
(o) Accounting Matters. Neither Kerr-McGee nor any of its affiliates
has taken or agreed to take any action that would prevent Kerr-McGee from
accounting for the Merger as a "pooling of interests". At or prior to the
date hereof, Kerr-McGee has received a letter from its independent public
accountants addressed to Kerr-McGee, with a copy to Oryx, to the effect
that, based upon representations provided by Kerr-McGee and Oryx and a
poolability letter from the independent public accountants of Oryx,
accounting for the Merger as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable SEC rules and regulations is
appropriate if the Merger is consummated and closed as contemplated by this
Agreement.
(p) Taxes. Each of Kerr-McGee and its Subsidiaries has filed all Tax
Returns required to have been filed (or extensions have been duly obtained)
and has paid all Taxes required to have been paid by it, except where
failure to file such Tax Returns or pay such Taxes would not reasonably be
expected to have a Material Adverse Effect on Kerr-McGee. For purposes of
this Agreement: (i) "Tax" (and, with correlative meaning, "Taxes") means
any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add on minimum, ad valorem, transfer or excise tax, or any
other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty,
imposed by any governmental authority and (ii) "Tax Return" means any
return, report or similar statement required to be filed with respect to
any Tax (including any attached schedules), including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
(q) Certain Contracts. As of the date hereof, except as set forth in
the Current Kerr-McGee SEC Reports, neither Kerr-McGee nor any of its
Subsidiaries is a party to or bound by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or (ii)
any non-competition agreement or any other agreement or arrangement that
limits or otherwise restricts Kerr-McGee or any of its Subsidiaries or any
of their respective affiliates or any successor thereto or that would,
after the Effective Time, to the knowledge of Kerr-McGee, limit or restrict
the Surviving Corporation or any of its Subsidiaries or any of their
respective affiliates or any successor thereto from engaging or competing
in any line of business or in any geographic area.
(r) Employee Benefits.
(i) Except as set forth in Section 3.1(r) of the Kerr-McGee
Disclosure Schedule (together, the "Kerr-McGee Plans"), Kerr-McGee has
no material Benefit Plans. Copies or descriptions of the Kerr-McGee
Plans have been made available to Oryx.
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(ii) Each Kerr-McGee Plan has been administered and is in
compliance with the terms of such plan and all applicable laws, rules
and regulations where the failure thereof would result in liability that
would be reasonably expected to have a Material Adverse Effect on
Kerr-McGee.
(iii) Each Kerr-McGee Plan intended to be qualified has received a
favorable determination from the Internal Revenue Service and to
Kerr-McGee's knowledge, nothing has occurred since that would adversely
affect such qualification.
(iv) Except as would not be reasonably expected to have a Material
Adverse Effect on Kerr-McGee: (x) no "reportable event" (as such term is
used in section 4043 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (other than those events for which the
30-day notice has been waived pursuant to the regulations) is pending
with respect to any Kerr-McGee Plan, and (ii) no "accumulated funding
deficiency" (as such term is used in section 412 or 4971 of the Code)
has occurred during the last 5 years with respect to any Kerr-McGee
Plan.
(v) No litigation or administrative or other proceeding involving
any Kerr-McGee Plans has occurred or, to the Kerr-McGee's knowledge, is
threatened where an adverse determination would result in liability that
would be reasonably expected to have a Material Adverse Effect on
Kerr-McGee.
(vi) Kerr-McGee has not contributed to any "multiemployer plan"
(within the meaning of section 3(37) of ERISA) and neither Kerr-McGee
nor any member of its "Controlled Group" (defined as any organization
which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o)) has incurred any
withdrawal liability which remains unsatisfied in an amount which would
result in liability that has had or would be reasonably expected to have
a Material Adverse Effect on Kerr-McGee.
(vii) No Kerr-McGee Plan or multiemployer plan to which the
Kerr-McGee contributed has been terminated where such termination has
resulted in liability under Title IV of ERISA that has had or would be
reasonably expected to have a Material Adverse Effect on Kerr-McGee.
(s) Labor Matters. Neither Kerr-McGee nor any of its Subsidiaries: (i)
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is any such contract or agreement presently being
negotiated, nor is there, nor has there been in the last five years, a
representation question respecting any of the employees of Kerr-McGee or
its Subsidiaries, and, to the knowledge of Kerr-McGee, there are no
campaigns being conducted to solicit cards from employees of Kerr-McGee or
its Subsidiaries to authorize representation by any labor organization;
(ii) is a party to, or bound by, any consent decree with, or citation by,
any governmental agency relating to employees or employment practices which
would reasonably be expected to have a Material Adverse Effect on
Kerr-McGee; or (iii) is the subject of any proceeding asserting that it has
committed an unfair labor practice or is seeking to compel it to bargain
with any labor union or labor organization nor, as of the date of this
Agreement, is there pending or, to the knowledge of Kerr-McGee, threatened,
any labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving Kerr-McGee or any of its Subsidiaries which, with respect to any
event described in this clause (iii), would reasonably be expected to have
a Material Adverse Effect on Kerr-McGee.
(t) Ownership of Oryx Common Stock. Neither Kerr-McGee nor any of its
Subsidiaries beneficially owns, directly or indirectly, any Oryx Common
Stock other than pursuant to the Oryx Stock Option Agreement.
3.2 Representations and Warranties of Oryx. Except as set forth in the Oryx
Disclosure Schedule delivered by Oryx to Kerr-McGee prior to the execution of
this Agreement (the "Oryx Disclosure
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Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), and
except as disclosed in the Oryx SEC Reports (as defined in Section 3.2(d)) filed
with the SEC prior to the date hereof, excluding the exhibits thereto (the
"Current Oryx SEC Reports"), Oryx represents and warrants to Kerr-McGee as
follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Oryx and each of its Subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
the requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except
where the failure to be so organized, existing and in good standing or
to have such power and authority would not reasonably be expected to
have a Material Adverse Effect on Oryx, and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the
failure so to qualify or to be in good standing would not reasonably be
expected to have a Material Adverse Effect on Oryx. The copies of the
certificate of incorporation and by-laws of Oryx which were previously
furnished or made available to Kerr-McGee are complete and correct
copies of such documents as in effect on the date of this Agreement.
(ii) Exhibit 21 to Oryx's Annual Report on Form 10-K for the year
ended December 31, 1997 includes all the Subsidiaries of Oryx which as
of the date of this Agreement are Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares
of capital stock of, or other equity interests in, each such Significant
Subsidiary have been validly issued and are fully paid and nonassessable
and are owned directly or indirectly by Oryx, free and clear of all
Liens and free of any other restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests). Neither Oryx nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any other
Person that is or would reasonably be expected to be material to Oryx
and its Subsidiaries taken as a whole.
(b) Capital Structure.
(i) As of October 8, 1998 (the "Oryx Measurement Date"), the
authorized capital stock of Oryx consisted of (A) 250,000,000 shares of
Oryx Common Stock, of which 106,233,579 shares were outstanding,
17,468,095 shares were held in the treasury of Oryx, 3,001,876 shares
were held by a Subsidiary of Oryx, 5,111,438 shares were reserved for
issuance upon the conversion of Oryx's 7 1/2% Convertible Subordinated
Debentures due May 15, 2014 (the "Oryx Debentures") and 7,135,302 shares
were reserved for issuance upon the exercise of the Oryx Stock Options
or available for grant of other rights to purchase or receive Oryx
Common Stock granted under the Oryx Plans (as defined below), (B)
7,740,606 shares of Cumulative Preference Stock, par value $1.00 per
share, none of which were outstanding and 120,000 shares of which have
been designated Series A Junior Cumulative Preference Stock and reserved
for issuance upon exercise of the rights (the "Oryx Rights") distributed
to the holders of Oryx Common Stock pursuant to the Rights Agreement
dated as of September 11, 1990, between Oryx and Chase Manhattan Bank
(as successor by merger to Manufacturers Hanover Trust Company), as
Rights Agent, as amended (the "Oryx Rights Agreement"), and (C)
15,000,000 shares of Preferred Stock, par value $1.00 per share, none of
which were outstanding, designated or reserved for issuance. Since the
Oryx Measurement Date to the date of this Agreement, there have been no
issuances of shares of the capital stock of Oryx or any other securities
of Oryx other than issuances of shares (and accompanying Oryx Rights)
pursuant to options or rights outstanding as of the Oryx Measurement
Date under the Benefit Plans of Oryx. All issued and outstanding shares
of the capital stock of Oryx are duly authorized, validly issued, fully
paid and nonassessable, and no class of capital stock is entitled to
preemptive rights. There were outstanding as of the Oryx
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Measurement Date no options, warrants or other rights to acquire capital
stock, directly or indirectly, from Oryx other than (x) the Oryx Rights,
(y) options representing in the aggregate the right to purchase no more
than 2,659,709 shares of Oryx Common Stock (collectively, the "Oryx
Stock Options") under Oryx's Long-Term Incentive Plan, 1992 Long-Term
Incentive Plan and 1997 Long-Term Incentive Plan (collectively, the
"Oryx Stock Option Plans") and (z) the Oryx Debentures. Section 3.2(b)
of the Oryx Disclosure Schedule sets forth a complete and correct list,
as of the Oryx Measurement Date, of the number of shares of Oryx Common
Stock subject to Oryx Stock Options or other rights to purchase or
receive Oryx Common Stock granted under the Oryx Benefit Plans or
otherwise, the dates of grant and the exercise prices thereof. No
options or warrants or other rights to acquire capital stock from Oryx
have been issued or granted since the Oryx Measurement Date to the date
of this Agreement, other than pursuant to the Oryx Stock Option
Agreement.
(ii) No bonds, debentures, notes or other indebtedness of Oryx
having the right to vote on any matters on which holders of capital
stock may vote ("Oryx Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2(b), as of
the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of
any kind to which Oryx or any of its Subsidiaries is a party or by which
any of them is bound obligating Oryx or any of its Subsidiaries,
directly or indirectly, to issue, deliver or sell, or cause to be
issued, delivered or sold, shares of capital stock or other voting
securities of Oryx or any of its Subsidiaries or obligating Oryx or any
of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this Agreement, there are
no outstanding obligations of Oryx or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of
Oryx or any of its Subsidiaries.
(iv) No action, consent or approval by any holder of Oryx Stock
Options or Oryx Debentures is required in connection with the actions
described in Sections 1.10(a) and 5.13.
(c) Authority; No Conflicts.
(i) Oryx has all requisite corporate power and authority to enter
into this Agreement and the Stock Option Agreements and to consummate
the transactions contemplated hereby and thereby, subject, in the case
of the consummation of the Reverse Split and the Merger, to the approval
of the Reverse Split and the adoption of this Agreement by the
stockholders of Oryx by the Required Oryx Vote (as defined in Section
3.2(g)). The execution and delivery of this Agreement and the Stock
Option Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of Oryx, subject, in the case of the consummation of
the Reverse Split and the Merger, to the approval of the Reverse Split
and the adoption of this Agreement by the stockholders of Oryx by the
Required Oryx Vote. Each of this Agreement and the Stock Option
Agreements has been duly executed and delivered by Oryx and constitutes
a valid and binding agreement of Oryx, enforceable against it in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally or by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement and the Stock
Option Agreements by Oryx does not or will not, as the case may be, and
the consummation by Oryx of the Merger and the other transactions
contemplated hereby and thereby will not, result in a Violation of or
pursuant to: (A) any provision of the certificate of incorporation or
by-laws of Oryx, or any similar organizational documents of any material
Subsidiary of Oryx, or (B) except as would not reasonably be expected to
have a Material Adverse Effect on Oryx, subject to obtaining or
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making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan
or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Oryx or any Subsidiary of Oryx or their
respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Oryx or any Subsidiary of Oryx in
connection with the execution and delivery of this Agreement or the
Stock Option Agreements by Oryx or the consummation by Oryx of the
Merger and the other transactions contemplated hereby and thereby,
except the Necessary Consents and such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain would not reasonably be expected to have a
Material Adverse Effect on Oryx.
(d) Reports and Financial Statements.
(i) Each of Oryx and Sun Energy Partners, L.P. ("Oryx Partnership")
has filed all required registration statements, prospectuses, reports,
schedules, forms, statements and other documents required to be filed by
it with the SEC since January 1, 1997 (collectively, including all
exhibits thereto, the "Oryx SEC Reports"). Since such date, no other
Subsidiary of Oryx has been required to file or has filed any form,
report, registration statement, prospectus or other document with the
SEC. None of the Oryx SEC Reports, as of their respective dates (and, if
amended or superseded by a filing prior to the date of this Agreement or
the Closing Date, then as of the date of such filing), contained or will
contain any untrue statement of a material fact or omitted or will omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. Each of the financial statements
(including the related notes) included in the Oryx SEC Reports presents
fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of Oryx or Oryx
Partnership, as the case may be, and its Subsidiaries as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of the
unaudited interim financial statements, to normal and recurring year-end
adjustments that have not been and are not expected to be material in
amount. All of such Oryx SEC Reports, as of their respective dates (and
as of the date of any amendment to the respective Oryx SEC Report),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder.
(ii) Since December 31, 1997, Oryx and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required to
be disclosed on a consolidated balance sheet of Oryx or Oryx
Partnership, as the case may be, and its Subsidiaries or the footnotes
thereto prepared in conformity with GAAP, other than (A) liabilities
incurred in the ordinary course of business or (B) liabilities that
would not reasonably be expected to have a Material Adverse Effect on
Oryx.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by Oryx for
inclusion or incorporation by reference in (A) the Form S-4 will, at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) the Joint Proxy
Statement/Prospectus will, on the date it is first mailed to Oryx
stockholders or Kerr-McGee stockholders or at the time of the Oryx
Stockholders Meeting or the Kerr-McGee Stockholders Meeting, contain any
untrue statement of a material fact or omit to state
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any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The portions of the Form S-4 and the
Joint Proxy Statement/Prospectus supplied by Oryx (whether by inclusion
or by incorporation by reference therein) will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
3.2(e), no representation or warranty is made by Oryx with respect to
statements made or incorporated by reference in the Form S-4 or the
Joint Proxy Statement/Prospectus based on information supplied by Kerr-
McGee for inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Oryx, by resolutions
duly adopted by unanimous vote at a meeting duly called and held and not
subsequently rescinded or modified in any way (the "Oryx Board Approval")
(except as otherwise permitted following the date hereof pursuant to
Section 5.1 or 5.4), has duly (i) determined that this Agreement and the
Stock Option Agreements, and the Merger and other transactions contemplated
hereby and thereby, are advisable and are fair to and in the best interests
of Oryx and its stockholders, (ii) approved this Agreement and the Stock
Option Agreements, and the Merger and other transactions contemplated
hereby and thereby, (iii) recommended that the stockholders of Oryx adopt
this Agreement and (iv) directed that this Agreement and the Merger be
submitted for consideration by Oryx's stockholders at the Oryx Stockholders
Meeting. The Oryx Board Approval constitutes approval of this Agreement and
the Oryx Stock Option Agreement, and the Merger and other transactions
contemplated hereby and thereby, for purposes of Section 203 of the DGCL
and Article Sixth of Oryx's Certificate of Incorporation. To the knowledge
of Oryx, except for Section 203 of the DGCL (which has been rendered
inapplicable), no state takeover statute is applicable to this Agreement or
the Oryx Stock Option Agreement, or the Merger or the other transactions
contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Oryx Common Stock (excluding any shares owned
or held by Oryx or any of its Subsidiaries) (the "Required Oryx Vote") is
the only vote of the holders of any class or series of Oryx capital stock
necessary to adopt this Agreement and approve the Reverse Split (assuming
that Kerr-McGee is not an "interested stockholder" of Oryx under Section
203 of the DGCL immediately before the execution and delivery of this
Agreement).
(h) Litigation; Compliance with Laws.
(i) There is no suit, action or proceeding pending or, to the
knowledge of Oryx, threatened against or affecting Oryx or any
Subsidiary of Oryx having, or which would reasonably be expected to
have, a Material Adverse Effect on Oryx, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Oryx or any Subsidiary of Oryx having, or
which reasonably would be expected to have, a Material Adverse Effect on
Oryx.
(ii) Except as would not reasonably be expected to have a Material
Adverse Effect on Oryx, Oryx and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all
Governmental Entities which are necessary for the operation of the
businesses of Oryx and its Subsidiaries, taken as a whole (the "Oryx
Permits"). Oryx and its Subsidiaries are in compliance with the terms of
the Oryx Permits, except where the failure so to comply would not
reasonably be expected to have a Material Adverse Effect on Oryx. The
businesses of Oryx and its Subsidiaries are not being conducted in
violation of, and Oryx and its Subsidiaries have not received any
notices of violations with respect to, any law, ordinance or regulation
of any Governmental Entity, except for possible violations which would
not reasonably be expected to have a Material Adverse Effect on Oryx.
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(i) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement and the Stock Option Agreements
or the transactions contemplated hereby and thereby and except as permitted
by Sections 4.2 and 5.5, since December 31, 1997, Oryx and its Subsidiaries
have conducted their business only in the ordinary course and there has not
been (i) any change, circumstance or event which has had, or would
reasonably be expected to have, a Material Adverse Effect on Oryx or (ii)
any action taken by Oryx or any of its Subsidiaries during the period from
December 31, 1997 through the date of this Agreement that, if taken during
the period from the date of this Agreement through the Effective Time,
would constitute a breach of Section 4.2.
(j) Environmental Matters. Except as would not reasonably be expected
to have a Material Adverse Effect on Oryx: (i) the operations of Oryx and
its Subsidiaries have been and are in compliance with all Environmental
Laws and with all licenses required by Environmental Laws (ii) there are no
pending or, to the knowledge of Oryx, threatened Actions under or pursuant
to Environmental Laws against Oryx or its Subsidiaries or involving any
real property currently or, to the knowledge of Oryx, formerly owned,
operated or leased by Oryx or its Subsidiaries, (iii) Oryx and its
Subsidiaries are not subject to any Environmental Liabilities and, to the
knowledge of Oryx, no facts, circumstances or conditions relating to,
arising from, associated with or attributable to any real property
currently or formerly owned, operated or leased by Oryx or its Subsidiaries
or operations thereon would reasonably be expected to result in
Environmental Liabilities and (iv) all real property owned and, to the
knowledge of Oryx, all real property operated or leased by Oryx or its
Subsidiaries is free of contamination from Hazardous Material that would
have an adverse effect on human health or the environment.
(k) Intellectual Property. Except as would not reasonably be expected
to have a Material Adverse Effect on Oryx: (a) Oryx and each of its
Subsidiaries owns, or is licensed to use (in each case, free and clear of
any Liens), all Intellectual Property used in or necessary for the conduct
of its business as currently conducted; (b) the use of any Intellectual
Property by Oryx and its Subsidiaries does not infringe on or otherwise
violate the rights of any Person and is in accordance with any applicable
license pursuant to which Oryx or any Subsidiary acquired the right to use
any Intellectual Property; (c) to the knowledge of Oryx, no Person is
challenging, infringing on or otherwise violating any right of Oryx or any
of its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Oryx or its Subsidiaries; and (d) neither Oryx nor any
of its Subsidiaries has received any written notice of any pending claim
with respect to any Intellectual Property used by Oryx and its Subsidiaries
and to its knowledge no Intellectual Property owned and/or licensed by Oryx
or its Subsidiaries is being used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of such Intellectual
Property.
(l) Rights Agreement. The Board of Directors of Oryx has approved an
amendment to the Oryx Rights Agreement to the effect that neither
Kerr-McGee nor any of its affiliates shall become an "Acquiring Person" or
an "Adverse Person", and that no "Shares Acquisition Date", "Distribution
Date" or "Triggering Event" (as such terms are defined in the Oryx Rights
Agreement) or any event otherwise specified in Section 11(a)(ii) or 13 of
the Rights Agreement will occur, by reason of the approval, execution or
delivery of this Agreement or the Oryx Stock Option Agreement or the
consummation of the Merger or the other transactions contemplated hereby or
thereby, and will cause the trustee under the Oryx Rights Agreement to
execute such amendment as soon as possible after the execution hereof.
(m) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any
of the transactions contemplated by this Agreement or the Stock Option
Agreements based upon arrangements made by or on behalf of Oryx except
Goldman, Sachs & Co. (the "Oryx Financial Advisor"), whose fees and
expenses will be paid by Oryx in accordance with Oryx's agreement with such
firm, a copy of which has been provided to Kerr-McGee.
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(n) Opinion of Oryx Financial Advisor. Oryx has received the opinion
of the Oryx Financial Advisor, dated the date of this Agreement, to the
effect that, as of such date, the Exchange Ratio is fair, from a financial
point of view, to the holders of Oryx Common Stock, a copy of which opinion
will be made available to Kerr-McGee.
(o) Accounting Matters. Neither Oryx nor any of its affiliates has
taken or agreed to take any action that would prevent Kerr-McGee from
accounting for the Merger as a "pooling of interests". At or prior to the
date hereof, Oryx has received a letter from its independent public
accountants addressed to Oryx, with a copy to Kerr-McGee and Kerr-McGee's
independent public accountants, stating that Oryx qualifies as a "combining
company" in accordance with the criteria set forth in Opinion 16 of the
Accounting Principles Board and accordingly is a poolable entity.
(p) Taxes. Each of Oryx and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions have been duly obtained) and has
paid all Taxes required to have been paid by it, except where failure to
file such Tax Returns or pay such Taxes would not reasonably be expected to
have a Material Adverse Effect on Oryx.
(q) Certain Contracts. As of the date hereof, except as set forth in
the Current Oryx SEC Reports, neither Oryx nor any of its Subsidiaries is a
party to or bound by (i) any "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) or (ii) any non-
competition agreement or any other agreement or arrangement that limits or
otherwise restricts Oryx or any of its Subsidiaries or any of their
respective affiliates or any successor thereto or that would, after the
Effective Time, to the knowledge of Oryx, limit or restrict the Surviving
Corporation or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, from engaging or competing in any line
of business or in any geographic area.
(r) Employee Benefits.
(i) Except as set forth in Section 3.2(r) of the Oryx Disclosure
Schedule (together, the "Oryx Plans"), Oryx has no material Benefit
Plans. Copies or descriptions of the Oryx Plans have been made available
to Kerr-McGee.
(ii) Each Oryx Plan has been administered and is in compliance with
the terms of such plan and all applicable laws, rules and regulations
where the failure thereof would result in liability that would be
reasonably expected to have a Material Adverse Effect on Oryx.
(iii) Each Oryx Plan intended to be qualified has received a
favorable determination from the Internal Revenue Service and to Oryx's
knowledge, nothing has occurred since that would adversely affect such
qualification.
(iv) Except as would not be reasonably expected to have a Material
Adverse Effect on Oryx: (x) no "reportable event" (as such term is used
in section 4043 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (other than those events for which the 30-day
notice has been waived pursuant to the regulations) is pending with
respect to any Oryx Plan, and (ii) no "accumulated funding deficiency"
(as such term is used in section 412 or 4971 of the Code) has occurred
during the last 5 years with respect to any Oryx Plan.
(v) No litigation or administrative or other proceeding involving
any Oryx Plans has occurred or, to the Oryx's knowledge, is threatened
where an adverse determination would result in liability that would be
reasonably expected to have a Material Adverse Effect on Oryx.
(vi) Oryx has not contributed to any "multiemployer plan" (within
the meaning of section 3(37) of ERISA) and neither Oryx nor any member
of its Controlled Group has incurred any withdrawal liability which
remains unsatisfied in an amount which would result in
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liability that has had or would be reasonably expected to have a
Material Adverse Effect on Oryx.
(vii) No Oryx Plan or multiemployer plan to which the Oryx
contributed has been terminated where such termination has resulted in
liability under Title IV of ERISA that has had or would be reasonably
expected to have a Material Adverse Effect on Oryx.
(s) Labor Matters. Neither Oryx nor any of its Subsidiaries: (i) is a
party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is any such contract or agreement presently being
negotiated, nor is there, nor has there been in the last five years, a
representation question respecting any of the employees of Oryx or its
Subsidiaries, and, to the knowledge of Oryx, there are no campaigns being
conducted to solicit cards from employees of Oryx or its Subsidiaries to
authorize representation by any labor organization; (ii) is a party to, or
bound by, any consent decree with, or citation by, any governmental agency
relating to employees or employment practices which would reasonably be
expected to have a Material Adverse Effect on Oryx; or (iii) is the subject
of any proceeding asserting that it has committed an unfair labor practice
or is seeking to compel it to bargain with any labor union or labor
organization nor, as of the date of this Agreement, is there pending or, to
the knowledge of Oryx, threatened, any labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving Oryx or any of its Subsidiaries
which, with respect to any event described in this clause (iii), would
reasonably be expected to have a Material Adverse Effect on Oryx.
(t) Ownership of Kerr-McGee Common Stock. Neither Oryx nor any of its
Subsidiaries beneficially owns, directly or indirectly, any Kerr-McGee
Common Stock other than pursuant to the Kerr-McGee Stock Option Agreement.
(u) Devon Stock. Neither Oryx nor any of its Subsidiaries beneficially
owns, directly or indirectly, or has any rights with respect to the
acquisition of beneficial ownership of, any common stock, par value $0.10
per share, of Devon Energy Corporation (an Oklahoma corporation) or any
other securities having voting power under ordinary circumstances with
respect to election of directors of Devon Energy Corporation.
Article IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Kerr-McGee. During the period from the date of this
Agreement and continuing until the Effective Time, Kerr-McGee agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or the Kerr-McGee Disclosure Schedule or as required by a
Governmental Entity of competent jurisdiction or to the extent that Oryx shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed):
(a) Ordinary Course.
(i) Kerr-McGee and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and
shall use all reasonable efforts to preserve intact their present lines
of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business
dealings with them to the end that their ongoing businesses shall not be
impaired in any material respect at the Effective Time; provided,
however, that no action by Kerr-McGee or its Subsidiaries with respect
to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a)(i) unless such
action would constitute a breach of one or more of such other
provisions.
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(ii) Other than in connection with acquisitions permitted by
Section 4.1(e), Kerr-McGee shall not, and shall not permit any of its
Subsidiaries to, (A) enter into any new material line of business or (B)
incur or commit to any capital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities in connection therewith incurred or committed
to in the ordinary course of business consistent with past practice.
(b) Dividends; Changes in Capital Stock. Kerr-McGee shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of
any of its capital stock, except (A) the declaration and payment of regular
quarterly cash dividends not in excess of $0.45 per share of Kerr-McGee
Common Stock with usual record and payment dates for such dividends in
accordance with past dividend practice, and (B) for dividends by wholly
owned Subsidiaries of Kerr-McGee, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares
of its capital stock, except for any such transaction by a wholly owned
Subsidiary of Kerr-McGee which remains a wholly owned Subsidiary after
consummation of such transaction or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into
or exercisable for any shares of its capital stock.
(c) Issuance of Securities. Kerr-McGee shall not, and shall not permit
any of its Subsidiaries to, issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock of any
class, any Kerr-McGee Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such
shares or Kerr-McGee Voting Debt, or enter into or modify any agreement
with respect to any of the foregoing, other than (i) the issuance of
Kerr-McGee Common Stock (and the associated Kerr-McGee Rights) upon the
exercise of Kerr-McGee Stock Options or in connection with other
stock-based benefit plans outstanding on the date hereof, in each case in
accordance with their present terms, or as otherwise approved by the Kerr-
McGee Board of Directors in connection with Benefit Plans, (ii) the
granting of Kerr-McGee Stock Options in the ordinary course of business
consistent with past practice or as otherwise approved by the Kerr-McGee
Board of Directors, (iii) issuances by a wholly owned Subsidiary of
Kerr-McGee of capital stock to such Subsidiary's parent, Kerr-McGee or
another wholly owned Subsidiary of Kerr-McGee, or (iv) issuances in
accordance with the Kerr-McGee Rights Agreement.
(d) Governing Documents. Except to the extent required to comply with
its obligations hereunder, Kerr-McGee shall not amend or propose to so
amend its certificate of incorporation or by-laws.
(e) No Acquisitions. Other than acquisitions for cash or debt (other
than debt convertible into or exchangeable for equity securities)
principally in existing or related lines of business of Kerr-McGee which
the Kerr-McGee Board of Directors determines to be in the best interests of
Kerr-McGee, Kerr-McGee shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other
than the acquisition of assets used in the operations of the business of
Kerr-McGee and its Subsidiaries in the ordinary course).
(f) No Dispositions. Other than as may be required by or in
conformance with law or regulation in order to permit or facilitate the
consummation of the transactions contemplated hereby (subject to Section
5.3(a)), Kerr-McGee shall not, and shall not permit any of its Subsidiaries
to, sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (including capital
stock of Subsidiaries), other than dispositions in the ordinary course of
business consistent with past practice, and dispositions of minority
interests in joint ventures which the Kerr-McGee Board of Directors
determines to be in the best interests of Kerr-McGee.
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(g) Investments; Indebtedness. Kerr-McGee shall not, and shall not
permit any of its Subsidiaries to, other than in connection with actions
permitted by Section 4.1(e), (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other than (x) by
Kerr-McGee or a Subsidiary of Kerr-McGee to or in Kerr-McGee or any wholly
owned Subsidiary of Kerr-McGee, (y) pursuant to any contract or other legal
obligation of Kerr-McGee or any of its Subsidiaries existing at the date of
this Agreement or (z) in the ordinary course of business consistent with
past practice or (ii) create, incur, assume or suffer to exist any
indebtedness, issuances of debt securities, guarantees, loans or advances
not in existence as of the date of this Agreement except pursuant to the
credit facilities, indentures and other arrangements in existence on the
date of this Agreement or in the ordinary course of business consistent
with past practice, in each case as such credit facilities, indentures and
other arrangements may be amended, extended, modified, refunded, renewed or
refinanced after the date of this Agreement.
(h) Pooling; Tax-Free Qualification. Kerr-McGee shall use its
reasonable best efforts not to, and shall use its reasonable best efforts
not to permit any of its Subsidiaries to, take any action (including any
action otherwise permitted by this Section 4.1) that would prevent or
impede the Merger from qualifying as a "pooling of interests" for
accounting purposes or as a "reorganization" under Section 368 of the Code.
(i) Compensation. Other than as contemplated by Section 4.1(c) or as
otherwise approved by the Kerr-McGee Board of Directors, Kerr-McGee shall
not increase the amount or change the nature of compensation of any
director or executive officer except in the ordinary course of business
consistent with past practice or as required by an existing agreement, make
any increase in or commitment to increase any employee benefits, issue any
additional Kerr-McGee Stock Options, adopt or make any commitment to adopt
any additional employee benefit plan or make any contribution, other than
regularly scheduled contributions, to any Kerr-McGee Benefit Plan.
(j) Accounting Methods; Income Tax Elections. Kerr-McGee shall not
change its methods of accounting in effect at December 31, 1997, except as
required by changes in GAAP as concurred in by Kerr-McGee's independent
public accountants. Kerr-McGee shall not (i) change its fiscal year or (ii)
make any material tax election, other than in the ordinary course of
business consistent with past practice.
(k) Certain Agreements. Kerr-McGee shall not, and shall not permit any
of its Subsidiaries to, enter into any agreement, arrangement or commitment
(i) to take any of the foregoing prohibited actions or (ii) that limits or
otherwise restricts Kerr-McGee or any of its Subsidiaries or any of their
respective affiliates or any successor thereto or that could, after the
Effective Time, limit or restrict Kerr-McGee or any of its Subsidiaries or
any of their respective affiliates (including the Surviving Corporation and
its Subsidiaries) or any successor thereto, from engaging or competing in
any line of business or in any geographic area.
(l) Rights Agreement. Kerr-McGee shall not amend, modify or waive any
provision of the Kerr-McGee Rights Agreement, and shall not take any action
to redeem the Kerr-McGee Rights or render the Kerr-McGee Rights
inapplicable to any transaction (other than the transactions contemplated
hereby and by the Kerr-McGee Stock Option Agreement).
4.2 Covenants of Oryx. During the period from the date of this Agreement
and continuing until the Effective Time, Oryx agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or the Oryx Disclosure Schedule or as required by a Governmental
Entity of competent jurisdiction or to the extent that Kerr-McGee shall
otherwise consent in writing, which consent shall not be unreasonably withheld
or delayed):
(a) Ordinary Course.
(i) Oryx and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore
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conducted, and shall use all reasonable efforts to preserve intact their
present lines of business, maintain their rights and franchises and
preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their ongoing businesses
shall not be impaired in any material respect at the Effective Time;
provided, however, that no action by Oryx or its Subsidiaries with
respect to matters specifically addressed by any other provision of this
Section 4.2 shall be deemed a breach of this Section 4.2(a)(i) unless
such action would constitute a breach of one or more of such other
provisions.
(ii) Oryx shall not, and shall not permit any of its Subsidiaries
to, (A) enter into any new material line of business or (B) incur or
commit to any capital expenditures or any obligations or liabilities in
connection therewith other than capital expenditures and obligations or
liabilities in connection therewith incurred or committed to in the
ordinary course of business consistent with past practice.
(b) Dividends; Changes in Capital Stock. Oryx shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except for dividends by wholly owned Subsidiaries of Oryx,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock, except for any
such transaction by a wholly owned Subsidiary of Oryx which remains a
wholly owned Subsidiary after consummation of such transaction, or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its
capital stock.
(c) Issuance of Securities. Oryx shall not, and shall not permit any
of its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any
class, any Oryx Voting Debt or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such
shares or Oryx Voting Debt, or enter into or modify any agreement with
respect to any of the foregoing, other than (i) the issuance of Oryx Common
Stock (and the associated Oryx Rights) upon the exercise of Oryx Stock
Options or in connection with other stock-based benefits plans outstanding
on the date hereof, in each case in accordance with their present terms,
(ii) issuances by a wholly owned Subsidiary of Oryx of capital stock to
such Subsidiary's parent, Oryx or another wholly owned Subsidiary of Oryx,
(iii) issuances upon the conversion of any of the Oryx Debentures in
accordance with their terms, or (iv) issuances in accordance with the Oryx
Rights Agreement.
(d) Governing Documents. Except to the extent required to comply with
its obligations hereunder, Oryx shall not amend or propose to so amend its
certificate of incorporation or by-laws.
(e) No Acquisitions. Oryx shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets (other
than the acquisition of assets used in the operations of the business of
Oryx and its Subsidiaries in the ordinary course).
(f) No Dispositions. Other than as may be required by or in
conformance with law or regulation in order to permit or facilitate the
consummation of the transactions contemplated hereby (subject to Section
5.3(a)), Oryx shall not, and shall not permit any of its Subsidiaries to,
sell, lease, encumber or otherwise dispose of, or agree to sell, lease,
encumber or otherwise dispose of, any of its assets (including capital
stock of Subsidiaries of Oryx) other than dispositions in the ordinary
course of business consistent with past practice.
(g) Investments; Indebtedness. Oryx shall not, and shall not permit
any of its Subsidiaries to, (i) make any loans, advances or capital
contributions to, or investments in, any other Person, other
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than (x) by Oryx or a Subsidiary of Oryx to or in Oryx or any wholly owned
Subsidiary of Oryx, (y) pursuant to any contract or other legal obligation
of Oryx or any of its Subsidiaries existing at the date of this Agreement
or (z) in the ordinary course of business consistent with past practice or
(ii) create, incur, assume or suffer to exist any indebtedness, issuances
of debt securities, guarantees, loans or advances not in existence as of
the date of this Agreement except pursuant to the credit facilities,
indentures and other arrangements in existence on the date of this
Agreement or in the ordinary course of business consistent with past
practice, in each case as such credit facilities, indentures and other
arrangements may be amended, extended, modified, refunded, renewed or
refinanced after the date of this Agreement.
(h) Pooling; Tax-Free Qualification. Oryx shall use its reasonable
best efforts not to, and shall use its reasonable best efforts not to
permit any of its Subsidiaries to, take any action (including any action
otherwise permitted by this Section 4.2) that would prevent or impede the
Merger from qualifying as a "pooling of interests" for accounting purposes
or as a "reorganization" under Section 368 of the Code.
(i) Compensation. Oryx shall not increase the amount of compensation
of any director or executive officer except in the ordinary course of
business consistent with past practice or as required by an existing
agreement, make any increase in or commitment to increase any employee
benefits, issue any additional Oryx Stock Options, adopt or make any
commitment to adopt any additional employee benefit plan or make any
contribution, other than regularly scheduled contributions, to any Oryx
Benefit Plan.
(j) Accounting Methods; Income Tax Elections. Oryx shall not change
its methods of accounting in effect at December 31, 1997, except as
required by changes in GAAP as concurred in by Oryx's independent public
accountants. Oryx shall not (i) change its fiscal year or (ii) make any
material tax election, other than in the ordinary course of business
consistent with past practice.
(k) Certain Agreements. Oryx shall not, and shall not permit any of
its Subsidiaries to, enter into any agreement, arrangement or commitment
(i) to take any of the foregoing prohibited actions or (ii) that limits or
otherwise restricts Oryx or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that could, after the
Effective Time, limit or restrict Kerr-McGee or any of its Subsidiaries or
any of their respective affiliates (including the Surviving Corporation and
its Subsidiaries) or any successor thereto, from engaging or competing in
any line of business or in any geographic area.
(l) Rights Agreement. Oryx shall not amend, modify or waive any
provision of the Oryx Rights Agreement, and shall not take any action to
redeem the Oryx Rights or render the Oryx Rights inapplicable to any
transaction (other than the transactions contemplated hereby and by the
Oryx Stock Option Agreement) or to designate or change the "Ownership
Limitation" (as defined in the Oryx Rights Agreement) with respect to any
Person.
4.3 Governmental Filings. Each party shall (a) confer on a regular and
frequent basis with the other and (b) report (to the extent permitted by law or
regulation or any applicable confidentiality agreement) on operational matters.
Oryx and Kerr-McGee shall file all reports required to be filed by each of them
with the SEC and all other Governmental Entities between the date of this
Agreement and the Effective Time and shall (to the extent permitted by law and
regulation and any applicable confidentiality agreement) deliver to the other
party copies of all such reports, announcements and publications promptly after
the same are filed.
4.4 Control of Other Party's Business. Nothing contained in this Agreement
shall give Oryx, directly or indirectly, the right to control or direct
Kerr-McGee's operations prior to the Effective Time. Nothing contained in this
Agreement shall give Kerr-McGee, directly or indirectly, the right to control or
direct Oryx's operations prior to the Effective Time. Prior to the Effective
Time, each of Oryx and Kerr-McGee
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shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its respective operations.
Article V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date hereof,
Kerr-McGee and Oryx shall prepare and file with the SEC proxy materials
which shall constitute the Joint Proxy Statement/ Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and Kerr-McGee shall prepare and file a
registration statement on Form S-4 with respect to the issuance of Company
Common Stock in the Merger (the "Form S-4"). The Joint Proxy
Statement/Prospectus will be included in and will constitute a part of the
Form S-4 as Kerr-McGee's prospectus. The Form S-4 and the Joint Proxy
Statement/Prospectus shall comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act and
the rules and regulations thereunder. Each of Kerr-McGee and Oryx shall use
reasonable best efforts to have the Form S-4 declared effective by the SEC
as promptly as reasonably practicable after filing with the SEC and to keep
the Form S-4 effective as long as is necessary to consummate the Merger and
the other transactions contemplated hereby. Kerr-McGee and Oryx shall, as
promptly as practicable after receipt thereof, provide the other party
copies of any written comments, and advise the other party of any oral
comments, with respect to the Joint Proxy Statement/Prospectus received
from the SEC. Kerr-McGee will provide Oryx with a reasonable opportunity to
review and comment on any amendment or supplement to the Form S-4 prior to
filing such with the SEC, and will provide Oryx with a copy of all such
filings made with the SEC. Notwithstanding any other provision herein to
the contrary, no amendment or supplement (including by incorporation by
reference) to the Joint Proxy Statement/Prospectus or the Form S-4 shall be
made without the approval of both parties, which approval shall not be
unreasonably withheld or delayed; provided, that with respect to documents
filed by a party which are incorporated by reference in the Form S-4 or
Joint Proxy Statement/Prospectus, this right of approval shall apply only
with respect to information relating to the other party or its business,
financial condition or results of operations, or this Agreement, the Stock
Option Agreements or the transactions contemplated hereby or thereby.
Kerr-McGee will use reasonable best efforts to cause the Joint Proxy
Statements/ Prospectus to be mailed to Kerr-McGee stockholders, and Oryx
will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to Oryx's stockholders, in each case as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Kerr-McGee shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to
be taken under any applicable state securities laws in connection with the
issuance of shares of Company Common Stock in the Merger and Oryx shall
furnish all information concerning Oryx and the holders of Oryx Common
Stock as may be reasonably requested in connection with any such action.
Each party will advise the other party, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, the issuance
of any stop order, the suspension of the qualification of the Company
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or the Form S-4. If at any time prior to the
Effective Time any information relating to Kerr-McGee or Oryx, or any of
their respective affiliates, officers or directors, should be discovered by
Kerr-McGee or Oryx which should be set forth in an amendment or supplement
to any of the Form S-4 or the Joint Proxy Statement/ Prospectus so that any
of such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
the party which discovers such information shall promptly notify the other
party hereto and, to the extent required by law, rule or regulation, an
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appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the stockholders of
Kerr-McGee and Oryx.
(b) Oryx shall, as promptly as reasonably practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Oryx Stockholders Meeting") (which
meeting the parties intend to be held on the same date as the Kerr-McGee
Stockholders Meeting and which shall be held no later than 45 days
following the declaration of effectiveness of the Form S-4) for the purpose
of obtaining the Required Oryx Vote with respect to this Agreement and the
Reverse Split and the Merger (which Oryx shall seek to present as a single,
unitary proposal) and shall take all lawful action to solicit the adoption
of this Agreement and approval of the Reverse Split by the Required Oryx
Vote. Unless otherwise required by their fiduciary duties, the Board of
Directors of Oryx shall (i) recommend adoption of this Agreement and
approval of the Reverse Split by the stockholders of Oryx to the effect as
set forth in Section 3.2(f), and (ii) not withdraw, modify or materially
qualify in any manner adverse to Kerr-McGee such recommendation or take any
action or make any statement in connection with the Oryx Stockholders
Meeting materially inconsistent with such recommendation (collectively, an
"Adverse Change in the Oryx Recommendation"); provided the foregoing shall
not prohibit accurate disclosure of factual information regarding the
business, financial condition or results of operations of Kerr-McGee or
Oryx or the fact that an Acquisition Proposal (as defined in Section 5.4)
has been made, the identity of the party making such proposal or the
material terms of such proposal to the extent that Oryx determines that
such disclosure is required under applicable law (and no such disclosure
shall constitute an "Adverse Change in the Oryx Recommendation" hereunder).
Unless this Agreement is terminated, Oryx shall be required to take the
actions specified in the first sentence of this Section 5.1(b) whether or
not the Oryx Board of Directors makes an Adverse Change in the Oryx
Recommendation after the date hereof.
(c) Kerr-McGee shall, as promptly as reasonably practicable following
the execution of this Agreement, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Kerr-McGee Stockholders Meeting")
(which meeting the parties intend to be held on the same date as the Oryx
Stockholders Meeting and which shall be held no later than 45 days
following the declaration of effectiveness of the Form S-4) for the purpose
of obtaining the Required Kerr-McGee Vote with respect to this Agreement
and the Merger (including the issuance of Company Common Stock pursuant to
the Merger) and shall take all lawful action to solicit the adoption of
this Agreement by the Required Kerr-McGee Vote. Unless otherwise required
by their fiduciary duties, the Board of Directors of Kerr-McGee shall (i)
recommend adoption of this Agreement by the stockholders of Kerr-McGee to
the effect as set forth in Section 3.1(f), and (ii) not withdraw, modify or
materially qualify in any manner adverse to Oryx such recommendation or
take any action or make any statement in connection with the Kerr-McGee
Stockholders Meeting materially inconsistent with such recommendation
(collectively, an "Adverse Change in the Kerr-McGee Recommendation");
provided the foregoing shall not prohibit accurate disclosure of factual
information regarding the business, financial condition or results of
operations of Kerr-McGee or Oryx or the fact that an Acquisition Proposal
has been made, the identity of the party making such proposal or the
material terms of such proposal to the extent that Kerr-McGee determines
that such disclosure is required under applicable law (and no such
disclosure shall constitute an "Adverse Change in the Kerr-McGee
Recommendation" hereunder). Unless this Agreement is terminated, Kerr-McGee
shall be required to take the actions specified in the first sentence of
this Section 5.1(c) whether or not the Kerr-McGee Board of Directors makes
an Adverse Change in the Kerr-McGee Recommendation after the date hereof.
(d) Nothing in this Section 5.1 shall permit Kerr-McGee or Oryx to
terminate this Agreement or affect any other obligation of Kerr-McGee or
Oryx under this Agreement.
5.2 Access to Information. Upon reasonable notice, each party shall (and
shall cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other party
reasonable access during normal business hours, during the period prior to the
Effective
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Time, to all its properties, books, contracts, commitments, records, officers
and employees and, during such period, such party shall (and shall cause its
Subsidiaries to) furnish promptly to the other party (a) a copy of each material
report, schedule, registration statement and other document filed, published,
announced or received by it during such period pursuant to the requirements of
federal or state securities laws, as applicable (other than documents which such
party is not permitted to disclose under applicable law, rule or regulation),
and (b) consistent with its legal obligations, all other information concerning
it and its business, properties and personnel as such other party may reasonably
request; provided, however, that either party may restrict the foregoing access
to the extent that any law, rule or regulation of any Governmental Entity
applicable to such party or any confidentiality or similar agreement requires
such party or its Subsidiaries to restrict access to any properties or
information. The parties will hold any such information in confidence to the
extent required by, and in accordance with, the provisions of the letters dated
September 18, 1998 between Oryx and Kerr-McGee (the "Confidentiality
Agreements"). Any investigation by Kerr-McGee or Oryx or any of their
representatives shall not affect the representations and warranties of Oryx or
Kerr-McGee, as the case may be.
5.3 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party
will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger
and the other transactions contemplated by this Agreement as soon as
practicable after the date hereof, including (i) preparing and filing as
promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, tax ruling requests and other
documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such consents, waivers,
licenses, registrations, permits, authorizations, tax rulings, orders and
approvals. In furtherance and not in limitation of the foregoing, each
party hereto agrees to make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act and any other Regulatory Law (as
defined below) with respect to the transactions contemplated hereby as
promptly as practicable after the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other Regulatory Law and to use
its reasonable best efforts to take all other actions necessary to cause
the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable. Nothing in this Section 5.3(a) shall
require any of Kerr-McGee and its Subsidiaries or Oryx and its Subsidiaries
to sell, hold separate or otherwise dispose of or conduct their business in
a specified manner, or agree to sell, hold separate or otherwise dispose of
or conduct their business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of Kerr-McGee, Oryx or
their respective Subsidiaries or the conduct of their business in a
specified manner, whether as a condition to obtaining any approval from a
Governmental Entity or any other Person or for any other reason, if such
sale, holding separate or other disposition or the conduct of their
business in a specified manner is not conditioned on the Closing or would
reasonably be expected to have a Material Adverse Effect on the Surviving
Corporation and its Subsidiaries, taken together, after giving effect to
the Merger.
(b) Each of Kerr-McGee and Oryx shall, in connection with the efforts
referenced in Section 5.3(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under
the HSR Act or any other Regulatory Law, use its reasonable best efforts to
(i) cooperate in all respects with each other in connection with any filing
or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, (ii) promptly inform
the other party of any communication received by such party from, or given
by such party to, the Antitrust Division of the Department of Justice (the
"DOJ") or the Federal Trade Commission (the "FTC") or any other
Governmental Entity and of any material
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communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC or any such other Governmental Entity or,
in connection with any proceeding by a private party, with any other
Person, and to the extent permitted by the DOJ, the FTC or such other
applicable Governmental Entity or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences. For
purposes of this Agreement, "Regulatory Law" means the Sherman Act, as
amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, if
any, statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition.
(c) Subject to the terms and conditions of this Agreement, in
furtherance and not in limitation of the covenants of the parties contained
in Sections 5.3(a) and 5.3(b), if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Regulatory Law, each of Kerr-McGee and
Oryx shall cooperate in all respects with each other and use its respective
reasonable best efforts to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent,
that is in effect and that prohibits, prevents or restricts consummation of
the transactions contemplated by this Agreement.
(d) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in Section 5.1 or 5.2 or this Section 5.3 shall limit a
party's right to terminate this Agreement pursuant to Article VII or to
take any actions specifically permitted pursuant to Section 5.4.
(e) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted
by any Governmental Entity or any private party challenging any of the
transactions contemplated hereby as violative of any Regulatory Law, each
of Kerr-McGee and Oryx shall use its reasonable best efforts to resolve any
such objections or challenge as such Governmental Entity or private party
may have to such transactions under such Regulatory Law so as to permit
consummation of the transactions contemplated by this Agreement.
5.4 Acquisition Proposals. Without limitation on any of such party's other
obligations under this Agreement (including under Article IV hereof), and except
with respect to a transaction specifically permitted under Section 4.1(e) or
(f), each of Kerr-McGee and Oryx agrees that neither it nor any of its
Subsidiaries nor any of its or their officers, employees, directors, agents or
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) will, directly or indirectly,
initiate, solicit or knowingly facilitate (including by way of furnishing
information) any inquiries or the making of any proposal or offer with respect
to a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving it or any of its Subsidiaries, or any purchase or sale of the assets
(including stock of Subsidiaries) of it or any of its Subsidiaries, taken as a
whole, having an aggregate value equal to 10% or more of the consolidated asset
value of such party, or any purchase or sale of, or tender or exchange offer
for, 10% or more of the equity securities of such party (any such proposal or
offer (other than a proposal or offer made by the other party or an affiliate
thereof) being hereinafter referred to as an "Acquisition Proposal"). Each of
Kerr-McGee and Oryx further agrees that neither it nor any of its Subsidiaries
nor any of their officers, employees, directors, agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) will, directly or indirectly, have any discussion with or
provide any confidential information or data to any Person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. Notwithstanding anything
herein to the contrary, each of Kerr-McGee and Oryx or its respective Board of
Directors shall be permitted,
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subject to Sections 7.1(f) and 7.2: (A) to the extent applicable, to comply with
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal; (B) to the extent required by its fiduciary duties, to
approve or recommend or resolve to approve or recommend an Acquisition Proposal
or otherwise make an Adverse Change in the Kerr-McGee Recommendation or an
Adverse Change in the Oryx Recommendation, as the case may be; and (C) engage in
any discussions or negotiations with, or provide any information to, any Person
in response to an unsolicited bona fide written Acquisition Proposal by any such
Person, if and only to the extent that (i) the approval of its stockholders
referred to in Section 3.1(g) or 3.2(g), as the case may be, shall not have been
obtained, (ii) its Board of Directors determines that such Acquisition Proposal
is a Superior Proposal (as defined in Section 8.11), and (iii) prior to
providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, its Board of Directors receives from
such Person an executed confidentiality agreement containing confidentiality
terms at least as favorable to it as those contained in the relevant
Confidentiality Agreement. Each of Kerr-McGee and Oryx agrees that it will
notify the other party promptly of any inquiries, proposals or offers received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with, it or any of its representatives with
respect to, or which could reasonably be expected to lead to, an Acquisition
Proposal indicating, in connection with such notice, the name of such Person and
the material terms, conditions and other aspects of any such inquiries,
proposals, offers, requests, discussions or negotiations, including promptly
forwarding copies of any written Acquisition Proposals, and promptly keep the
other party informed of the status and terms of any such proposals or offers and
the status and terms of any such discussions or negotiations. Each of Kerr-McGee
and Oryx agrees that it will, and will cause its officers, employees, directors,
agents and representatives to, immediately cease any activities, discussions or
negotiations existing as of the date of this Agreement with any parties
conducted heretofore with respect to any Acquisition Proposal. Nothing in this
Section 5.4 shall permit Kerr-McGee or Oryx to terminate this Agreement or
affect any other obligation of Kerr-McGee or Oryx under this Agreement. No
action taken in respect of a Superior Proposal which is specifically permitted
pursuant to this Section 5.4, including without limitation any change in
recommendation of the Board of Directors of either Kerr-McGee or Oryx and the
public announcement thereof, will constitute a breach of any other provision
hereof.
5.5 Employee Benefits Matters. (a) Except as otherwise provided in this
Section 5.5, (i) each of the Kerr-McGee Plans and Oryx Plans and other
employment arrangements in effect on the date hereof (or as amended or
established in accordance with or as permitted by this Agreement) shall be
maintained in effect by the Surviving Corporation from and after the Effective
Time with respect to the employees, former employees, directors or former
directors of Kerr-McGee and its Subsidiaries, and Oryx and its Subsidiaries,
respectively, who are covered by such Benefit Plans immediately prior to the
Effective Time, and the Surviving Corporation shall assume as of the Effective
Time each Oryx Plan maintained by Oryx immediately prior to the Effective Time
and perform such Benefit Plan in the same manner and to the same extent that
Oryx would be required to perform thereunder, and (ii) except as may be
expressly provided in a valid written waiver voluntarily signed by an affected
employee, from and after the Effective Time the Surviving Corporation will honor
all Oryx Plans, including all employment, change-in-control, severance,
termination, consulting and unfunded retirement or benefit agreements (including
any obligations arising from the Merger constituting a "change of control" or
"corporate change" thereunder, as applicable), in accordance with the terms
thereof, without offset, deduction, counterclaim, interruption or deferment
(other than offsets, deductions, counterclaims, interruptions or deferments (x)
permitted by the applicable Oryx Plan, (y) to comply with income or payroll tax
withholding obligations, or (z) under other applicable law); provided, however,
that, except as provided under applicable law, nothing contained in this Section
5.5(a) shall limit the Surviving Corporation from exercising any reserved right
contained in any such Kerr-McGee Plan or Oryx Plan or any other right which
Kerr-McGee or Oryx had prior to the Effective Time, or which the Surviving
Corporation has after the Effective Time, to amend, modify, suspend, revoke or
terminate any such Benefit Plan. Without limiting the foregoing, (i) each
participant in any Kerr-McGee Plan or Oryx Plan shall receive credit for
purposes of eligibility to participate, vesting and eligibility to receive
benefits (such as higher rates of matching contributions for service after the
Effective Time and eligibility for early retirement) under any Benefit Plan of
the Surviving Corporation or
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any of its Subsidiaries or affiliates for service credited for the corresponding
purpose under such Benefit Plan made available to such participant, but not for
purposes of benefit accrual under any defined benefit pension plan unless the
participant's accrued benefit liability related to such service is transferred
to such defined benefit pension plan; provided, however, that such crediting of
service shall not operate to cause any such Benefit Plan to fail to comply with
the applicable provisions of the Code and ERISA, and (ii) with respect to any
group health Benefit Plan of the Surviving Corporation or any of its
Subsidiaries or affiliates made available to Oryx employees or Kerr-McGee
employees on or after the Effective Time, the Surviving Corporation will cause
such Benefit Plan to provide credit for any co-payments or deductibles by such
employees for the remainder of the coverage period during which such Benefit
Plan replaces an Oryx Plan or Kerr-McGee Plan, as the case may be, and to waive
all pre-existing condition exclusions and waiting periods that would not have
applied to such employees under the applicable Oryx Plan or Kerr-McGee Plan
immediately prior to the availability of the replacement Benefit Plan. Kerr-
McGee and Oryx will cooperate on and after the date hereof to develop
appropriate employee benefit plans, programs and arrangements, including but not
limited to, executive and incentive compensation, stock option and supplemental
executive retirement plans, for employees and directors of the Surviving
Corporation and its Subsidiaries from and after the Effective Time. However, no
provision contained in this Section 5.5 shall be deemed to constitute an
employment contract between the Surviving Corporation and, or otherwise confer
any rights upon, any individual, or constitute a waiver of the Surviving
Corporation's right to amend, modify, limit or restrict the employment of, or to
discharge, any employee at any time, with or without cause.
(b) During the period from the Effective Time until December 31, 1999,
the Surviving Corporation shall maintain or cause to be maintained Benefit
Plans for the benefit of employees, former employees, directors and former
directors of Oryx and its Subsidiaries providing benefits that, in the
aggregate, are substantially comparable to the benefits provided under the
Oryx Plans that are in effect on the date hereof; provided, however, that
(i) any Oryx Plans which are defined benefit pension plans shall be
maintained without amendment through December 31, 1999 (other than
amendments required by law) and (ii) except as aforesaid or as provided
under applicable law, nothing herein contained shall limit the Surviving
Corporation from exercising any reserved right contained in any particular
Benefit Plan or any other right which Oryx had prior to the Effective Time,
or which the Surviving Corporation has after the Effective Time, to amend,
modify, suspend, revoke or terminate any such Benefit Plan. During the
period from the Effective Time until December 31, 1999, the Surviving
Corporation will not terminate the employment of any individual who was an
employee of Oryx immediately prior to the Effective Time without providing
a minimum of two weeks' prior written notice to such employee, during which
notice period the individual will be treated as an employee of the
Surviving Corporation for purposes of all Benefit Plans.
(c) The foregoing provisions of this Section 5.5 shall not apply with
respect to any employees or former employees covered by any collective
bargaining agreements.
(d) With respect to Benefit Plans under which Oryx Common Stock is
required to be used for purposes of the payment of benefits, grant of
awards or exercise of options (other than Oryx Stock Option Plans) (each,
an "Oryx Stock Plan"), (i) Oryx shall take such action as may be necessary
so that, after the Effective Time, such Oryx Stock Plan shall provide for
the issuance or purchase in the open market only of Company Common Stock
rather than Oryx Common Stock and otherwise to amend such Oryx Stock Plans
to reflect this Agreement, the Reverse Split, the Exchange Ratio and the
Merger, and (ii) the Surviving Corporation shall (x) reserve for issuance
under such Oryx Stock Plan or otherwise provide a sufficient number of
shares of Company Common Stock for delivery upon payment of benefits,
grants of awards or exercise of options under such Oryx Stock Plan, (y) as
soon as practicable after the Effective Time, file or amend one or more
registration statements under the Securities Act with respect to the shares
of Company Common Stock subject to such Oryx Stock Plan to the extent such
filing or amendment is required under applicable law and use its best
efforts to maintain the effectiveness of such registration statement(s)
(and the current status of the prospectuses contained therein or related
thereto) so long as such benefits, grants or awards remain
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payable or such options remain outstanding, as the case may be and (z)
cause such shares of Company Common Stock subject to such Oryx Stock Plan
to be listed for trading on the NYSE. Unless otherwise agreed to by the
parties, Oryx shall use its reasonable best efforts to obtain any
shareholder approvals that may be necessary for the deduction of any
compensation payable under any Oryx Stock Plan or other compensation
arrangement.
(e) Prior to the Effective Time, each of Kerr-McGee and Oryx will take
the actions set forth in Exhibit 5.5(e) with respect to its Benefit Plans.
No such action will constitute a breach of any other provision hereof.
5.6 Fees and Expenses. Whether or not the Merger is consummated, all
Expenses (as defined below) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses, except (a) if the Merger is consummated, the Surviving Corporation
shall pay, or cause to be paid, any and all property or transfer taxes imposed
on Oryx or its Subsidiaries and (b) the SEC filing fee and printer's fees
incurred in connection with the filing, printing and mailing of the Joint Proxy
Statement/Prospectus, which shall be shared equally by Kerr-McGee and Oryx, and
(c) if applicable, as provided in Section 7.2. As used in this Agreement,
"Expenses" includes all out-of-pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the Stock Option
Agreements and the transactions contemplated hereby and thereby, including the
preparation, printing, filing and mailing of the Joint Proxy
Statement/Prospectus and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereby.
5.7 Directors' and Officers' Indemnification and Insurance.
(a) The Surviving Corporation shall (i) indemnify and hold harmless,
and provide advancement of expenses to, all past and present directors,
officers and employees of Kerr-McGee, Oryx and their respective
Subsidiaries to the same extent such persons are indemnified or have the
right to advancement of expenses as of the date of this Agreement by
Kerr-McGee, Oryx or their respective Subsidiaries pursuant to Kerr-McGee's,
Oryx's or such Subsidiary's certificate of incorporation, by-laws or other
constituent documents and indemnification agreements, if any, in existence
on the date hereof with any such directors, officers and employees for acts
or omissions occurring at or prior to the Effective Time (including for
acts or omissions occurring in connection with the approval of this
Agreement and the consummation of the transactions contemplated hereby);
and (ii) cause to be maintained for a period of six years after the
Effective Time the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by Kerr-McGee, Oryx
or their respective Subsidiaries (provided that the Surviving Corporation
(or any successor) may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims
arising from facts or events that occurred on or before the Effective Time
(including for acts or omissions occurring in connection with the approval
of this Agreement and the consummation of the transactions contemplated
hereby); provided, however, that in no event shall the Surviving
Corporation be required to expend in any one year an amount in excess of
200% of the annual premiums currently paid by Kerr-McGee and Oryx for such
insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount. In addition, from and after the Effective
Time, directors and officers of Oryx who become directors or officers of
the Surviving Corporation will be entitled to the same indemnity rights and
protections as are afforded to the directors and officers of the Surviving
Corporation.
(b) The provisions of this Section 5.7 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in
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addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract
or otherwise.
5.8 Public Announcements. Kerr-McGee and Oryx shall use reasonable best
efforts to develop a joint communications plan and each party shall use
reasonable best efforts (i) to ensure that all press releases and other public
statements with respect to this Agreement, the Stock Option Agreements or the
transactions contemplated hereby or thereby shall be consistent with such joint
communications plan, and (ii) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other and provide each other a reasonable
opportunity to review and comment before issuing any press release or otherwise
making any public statement with respect to this Agreement, the Stock Option
Agreements or the transactions contemplated hereby or thereby. In addition to
the foregoing, except to the extent disclosed in or consistent with the Joint
Proxy Statement/Prospectus in accordance with the provisions of Section 5.1,
neither Kerr-McGee nor Oryx shall issue any press release or otherwise make any
public statement or disclosure concerning the other party or the other party's
business, financial condition or results of operations without the consent of
the other party, which consent shall not be unreasonably withheld or delayed.
5.9 Accountant's Letters. (a) Kerr-McGee shall use reasonable best efforts
to cause to be delivered to Oryx two letters from Kerr-McGee's independent
public accountants, one dated the date on which the Form S-4 shall become
effective and one dated the Closing Date, each addressed to Kerr-McGee and Oryx,
in form and substance reasonably satisfactory to Oryx and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4. Kerr-McGee
shall use reasonable best efforts to cause to be delivered to Oryx a letter from
Kerr-McGee's independent accountants dated as of the date the Form S-4 is
declared effective and as of the Closing Date, stating that accounting for the
Merger as a pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations is appropriate if the Merger is
closed and consummated as contemplated by this Agreement.
(b) Oryx shall use reasonable best efforts to cause to be delivered to
Kerr-McGee two letters from Oryx's independent public accountants, one
dated the date on which the Form S-4 shall become effective and one dated
the Closing Date, each addressed to Oryx and Kerr-McGee, in form and
substance reasonably satisfactory to Kerr-McGee and customary in scope and
substance for comfort letters delivered by independent public accountants
in connection with registration statements similar to the Form S-4. Oryx
shall use reasonable best efforts to cause to be delivered to Kerr-McGee a
letter from Oryx's independent public accountants, addressed to Oryx and
Kerr-McGee, dated as of the date the Form S-4 is declared effective and as
of the Closing Date, stating that stating that Oryx qualifies as a
"combining company" in accordance with the criteria set forth in Opinion 16
of the Accounting Principles Board and accordingly is a poolable entity.
(c) Each of Kerr-McGee and Oryx shall use reasonable best efforts to
cause the transactions contemplated by this Agreement, including the
Merger, to be accounted for as a pooling of interests under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations,
and such accounting treatment to be accepted by the SEC.
5.10 Listing of Shares of Company Common Stock. Kerr-McGee shall use its
reasonable best efforts to cause the shares of Company Common Stock to be issued
in the Merger and the shares of Company Common Stock to be reserved for issuance
upon exercise of the Oryx Stock Options and conversion of the Oryx Debentures to
be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Closing Date.
5.11 Affiliates. (a) Not less than 45 days prior to the Effective Time,
Oryx shall deliver to Kerr-McGee a letter identifying all persons who, in the
opinion of Oryx, may be deemed at the time this Agreement is submitted for
adoption by the stockholders of Oryx, "affiliates" of Oryx for purposes of Rule
145 under the Securities Act or for purposes of qualifying the Merger for
pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and
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regulations, and such list shall be updated as necessary to reflect changes from
the date thereof. Oryx shall use reasonable best efforts to cause each person
identified on such list to deliver to Kerr-McGee, not less than 30 days prior to
the Effective Time, a written agreement substantially in the form attached as
Exhibit 5.11 hereto (an "Affiliate Agreement"). Not less than 45 days prior to
the Effective Time, Kerr-McGee shall deliver to Oryx a letter identifying all
persons who, in the opinion of Kerr-McGee, may be deemed "affiliates" of
Kerr-McGee for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date hereof. Kerr-McGee shall use
reasonable best efforts to cause each person identified on such list to deliver
to Oryx not less than 30 days prior to the Effective Time, a written agreement
including the substance of paragraphs (C), (D) and (E) of Exhibit 5.11 hereto.
(b) The Surviving Corporation shall use its reasonable best efforts to
publish no later than 90 days after the end of the first month after the
Effective Time in which there are at least 30 days of post-Merger combined
operations (which month may be the month in which the Effective Time
occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
5.12 Oryx Partnership Name. Prior to the Effective Time, if Kerr-McGee so
requests, Oryx shall take all actions necessary to cause the name of the Oryx
Partnership to be changed to "Kerr-McGee Partners, L.P.", or such other name as
shall be agreed by Kerr-McGee and Oryx, upon the Effective Time.
5.13 Reverse Stock Split. Prior to the Effective Time, Oryx shall have
taken all necessary action to effect the Reverse Split as contemplated hereby
immediately prior to the Effective Time, including taking all necessary action
pursuant to Section 15.05 of the indenture under which the Oryx Debentures were
issued to adjust the conversion rate for the Oryx Debentures upon and following
the Reverse Split to reflect the Exchange Ratio.
5.14 Transition Management.
(a) As soon as practicable after the date of this Agreement, the
parties shall create a special transition management task force (the "Task
Force"), which shall be comprised of Luke R. Corbett, Robert L. Keiser and
Tom J. McDaniel. The Task Force shall examine various alternatives
regarding the manner in which to best organize the business of the
Surviving Corporation after the Effective Time.
(b) As soon as practicable after the date of this Agreement, the Task
Force will develop a plan (the "Plan") with respect to the communications
with the employees of Kerr-McGee and Oryx and their respective Subsidiaries
regarding the transactions contemplated by this Agreement. Notwithstanding
any other provision of this Agreement, prior to the Effective Time, neither
Kerr-McGee nor Oryx will contact or communicate with any employee of the
other party or its Subsidiaries with respect to the transactions
contemplated by this Agreement, unless pursuant to the Plan or in
accordance with the authorization of the Task Force. In addition, except
pursuant to the Plan, neither Kerr-McGee nor Oryx will have any
communication or contact with any employee of the other party or its
Subsidiaries concerning, relating to or in any way bearing upon any closing
or relocation of or reduction in size, staff or function of any present
facility of the other party. The Plan will address such topics as the
identity of senior management of the Surviving Corporation (other than as
provided elsewhere herein), integration of Kerr-McGee and Oryx, retention
bonuses, short- and long-term plans for the corporate headquarters, group
offices, payroll and benefits administration. Kerr-McGee and Oryx will
cooperate and provide all needed notices under the Worker Adjustment and
Retraining Notification Act and its regulations.
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Article VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of Oryx and Kerr-McGee to effect the Merger are subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. (i) Oryx shall have obtained the Required
Oryx Vote in connection with the approval of the Reverse Split and the
adoption of this Agreement by the stockholders of Oryx and (ii) Kerr-McGee
shall have obtained the Required Kerr-McGee Vote in connection with the
adoption of this Agreement by the stockholders of Kerr-McGee.
(b) No Injunctions or Restraints, Illegality. No law, rule or
regulation shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other order,
decree or ruling issued by a court or other Governmental Entity of
competent jurisdiction shall be in effect having the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger.
(c) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(d) Governmental and Regulatory Approvals. Other than the filing
provided for under Section 1.3 and filings pursuant to the HSR Act (which
are addressed in Section 6.1(c)), all consents, approvals and actions of,
filings with and notices to any Governmental Entity required of Kerr-McGee,
Oryx or any of their Subsidiaries to consummate the Merger and the other
transactions contemplated hereby, the failure of which to be obtained or
taken would reasonably be expected to have a Material Adverse Effect on the
Surviving Corporation and its Subsidiaries, taken together after giving
effect to the Merger, shall have been obtained (for purposes of this
Section 6.1(d), the failure to obtain or make any such consents, approvals,
actions, filings or notices required under state or local Environmental
Laws with respect to Oryx Permits or Kerr-McGee Permits shall not be deemed
to have a Material Adverse Effect on the Surviving Corporation).
(e) NYSE Listing. The shares of Company Common Stock to be issued in
the Merger and such other shares to be reserved for issuance in connection
with the Merger shall have been approved for listing on the NYSE, subject
to official notice of issuance.
(f) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act. No stop order
suspending the effectiveness of the Form S-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(g) Pooling. Oryx shall have received and delivered to Kerr-McGee and
Kerr-McGee's independent public accountants letters from its independent
public accountants, dated as of the date the Form S-4 is declared effective
and as of the Closing Date, stating that Oryx qualifies as a "combining
company" in accordance with the criteria set forth in Opinion 16 of the
Accounting Principles Board and accordingly is a poolable entity.
Kerr-McGee shall have received and delivered to Oryx letters from its
independent public accountants, dated as of the date the Form S-4 is
declared effective and as of the Closing Date, stating that accounting for
the Merger as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations is appropriate if
the Merger is closed and consummated as contemplated by this Agreement.
(h) Reverse Split. The Reverse Split shall have been effected on the
terms contemplated hereby immediately prior to the Effective Time.
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6.2 Additional Conditions to Obligations of Kerr-McGee. The obligations of
Kerr-McGee to effect the Merger are subject to the satisfaction of, or waiver by
Kerr-McGee, on or prior to the Closing Date of the following additional
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Oryx set forth in this Agreement that is qualified as to
Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Oryx set forth in this Agreement that is
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent in either
case that such representations and warranties speak as of another date, in
which case they shall be so true and correct as of such date), and
Kerr-McGee shall have received a certificate of the chief executive officer
and the chief financial officer of Oryx to such effect.
(b) Performance of Obligations of Oryx. Oryx shall have performed or
complied in all material respects with all agreements and covenants
required to be performed by it under this Agreement at or prior to the
Closing Date, and Kerr-McGee shall have received a certificate of the chief
executive officer and the chief financial officer of Oryx to such effect.
(c) Tax Opinion. Kerr-McGee shall have received from Simpson Thacher &
Bartlett, counsel to Kerr-McGee, on or before the Form S-4 shall become
effective and, subsequently, on the Closing Date, a written opinion dated
as of such dates, based on appropriate representations of Kerr-McGee and
Oryx, to the effect that (i) the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and (ii) Kerr-McGee and Oryx will each be a party to the
reorganization within the meaning of Section 368(b) of the Code.
(d) Rights Agreement. No "Shares Acquisition Date", "Distribution
Date" or "Triggering Event" shall have occurred pursuant to and as defined
in the Oryx Rights Agreement.
6.3 Additional Conditions to Obligations of Oryx. The obligations of Oryx
to effect the Merger are subject to the satisfaction of, or waiver by Oryx, on
or prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Kerr-McGee set forth in this Agreement that is qualified as
to Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Kerr-McGee set forth in this Agreement
that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the
extent in either case that such representations and warranties speak as of
another date, in which case they shall be so true and correct as of such
date), and Oryx shall have received a certificate of the chief executive
officer and the chief financial officer of Kerr-McGee to such effect.
(b) Performance of Obligations of Kerr-McGee. Kerr-McGee shall have
performed or complied in all material respects with all agreements and
covenants required to be performed by it under this Agreement at or prior
to the Closing Date, and Oryx shall have received a certificate of the
chief executive officer and the chief financial officer of Kerr-McGee to
such effect.
(c) Tax Opinion. Oryx shall have received from Jones, Day, Reavis &
Pogue, counsel to Oryx, on or before the Form S-4 shall become effective
and, subsequently, on the Closing Date, a written opinion dated as of such
dates, based on appropriate representations of Kerr-McGee and Oryx, to the
effect that (i) the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and
(ii) Kerr-McGee and Oryx will each be a party to the reorganization within
the meaning of Section 368(b) of the Code.
(d) Rights Agreement. No "Stock Acquisition Date" or "Distribution
Date" shall have occurred pursuant to and as defined in the Kerr-McGee
Rights Agreement.
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Article VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Oryx or Kerr-McGee:
(a) By mutual written consent of Kerr-McGee and Oryx;
(b) By either Oryx or Kerr-McGee if the Effective Time shall not have
occurred on or before June 30, 1999 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section
7.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(c) By either Oryx or Kerr-McGee if any law, rule or regulation shall
have been adopted or promulgated, or any Governmental Entity shall have
issued an order, decree or ruling or taken any other action which shall
have become final and nonappealable, having the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger; provided,
however, that the right to terminate this Agreement under this Section
7.1(c) shall not be available to any party who failed to comply with
Section 5.3 in connection with such action;
(d) By Oryx or Kerr-McGee, prior to receipt of its required
stockholders approval, upon five Business Days' prior notice to the other
party (which notice shall entitle the other party to terminate this
Agreement pursuant to Section 7.1(f)), in order to accept a proposal which
its Board of Directors shall have determined as of the date of such notice
is a Superior Proposal; provided, however, that (i) any financing with
respect thereto is committed for the full amount required, (ii) the
terminating party shall have complied with its obligations under Section
5.4, (iii) such notice shall include a copy of any proposed or definitive
documentation relating to such Superior Proposal, and shall otherwise
indicate all material terms and conditions with respect thereto, (iv) prior
to any such termination, the terminating party shall, if requested by the
other party in connection with a revised proposal by it, negotiate in good
faith for such five Business Day period with the other party, (v) the Board
of Directors of the terminating party shall have determined, as of the
effective date of such termination, after taking into account any revised
proposal by the other party during such five Business Day period, that such
third-party proposal remains a Superior Proposal (and such financing
remains so committed) and (vi) immediately following such termination, the
terminating party enters into definitive and binding documentation with
respect to such Superior Proposal; provided, further, that it shall be a
condition to termination by the terminating party pursuant to this Section
7.1(d) that the terminating party shall have made the payment of the fee to
the other party required by Section 7.2;
(e) By either Oryx or Kerr-McGee if (i) the approval by the
stockholders of Oryx required for the consummation of the Reverse Split or
the Merger shall not have been obtained by reason of the failure to obtain
the Required Oryx Vote or (ii) the approval by the stockholders of
Kerr-McGee required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the Required Kerr-McGee Vote,
in each case upon the taking of such vote at a duly held meeting of
stockholders of Oryx or Kerr-McGee, as the case may be, or at any
adjournment thereof;
(f) (i) By Oryx if the Board of Directors of Kerr-McGee shall have
effected an Adverse Change in the Kerr-McGee Recommendation (or resolved to
take such action), approved or recommended another Acquisition Proposal (or
resolved to take such action) or failed to reconfirm its recommendation set
forth in Section 3.1(f), if so requested by Kerr-McGee, within fifteen days
following such request and in any event at least ten days prior to the Oryx
Stockholders Meeting, or
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Kerr-McGee shall have delivered the notice described in Section 7.1(d)
above or breached Section 4.1(l); or
(ii) by Kerr-McGee if the Board of Directors of Oryx shall have
effected an Adverse Change in the Oryx Recommendation (or resolved to
take such action) or shall have approved or recommended another
Acquisition Proposal (or resolved to take such action) or failed to
reconfirm its recommendation set forth in Section 3.2(f), if so
requested by Oryx, within fifteen days following such request, and in
any event at least ten days prior to the Kerr-McGee Stockholders
Meeting, or Oryx shall have delivered the notice described in Section
7.1(d) above or breached Section 4.2(l); or
(g) By Kerr-McGee, if a "Shares Acquisition Date" or "Triggering
Event" shall have occurred pursuant to and as defined in the Oryx Rights
Agreement; or by Oryx, if a "Stock Acquisition Date" shall have occurred
pursuant to and as defined in the Kerr-McGee Rights Agreement.
7.2 Effect of Termination.
(a) In the event of termination of this Agreement by either Oryx or
Kerr-McGee as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Kerr-McGee or Oryx or their respective officers or directors except with
respect to Section 3.1(m), Section 3.2(m), the second sentence of Section
5.2, Section 5.6, this Section 7.2 and Article VIII, which provisions shall
survive such termination, and except that, notwithstanding anything to the
contrary contained in this Agreement, neither Kerr-McGee nor Oryx shall be
relieved or released from any liabilities or damages arising out of its
willful material breach of this Agreement.
(b) Kerr-McGee shall pay Oryx the sum $60 million if this Agreement is
terminated solely as follows: (i) by Oryx pursuant to Section 7.1(f) or (g)
(which fee shall be payable immediately upon such termination); (ii) by
Kerr-McGee pursuant to Section 7.1(d) (which fee shall be payable as a
condition to such termination); or (iii) by either party pursuant to
Section 7.1(e)(ii), if (A) at or at any time prior to such termination,
Oryx was entitled to terminate this Agreement pursuant to Section 7.1(f)
(which fee shall be payable immediately upon such termination) or (B) (x)
at any time after the date of this Agreement and at or before the date of
the Kerr-McGee Stockholders Meeting an Acquisition Proposal with respect to
Kerr-McGee shall have been publicly announced or otherwise publicly
communicated (a "Prior Kerr-McGee Proposal"), and (y) within twelve months
of the termination of this Agreement, Kerr-McGee enters into a definitive
agreement with respect to (1) such Prior Kerr-McGee Proposal or any other
Acquisition Proposal (with respect to Kerr-McGee) with any party who made a
Prior Kerr-McGee Proposal or (2) any Alternative Transaction (as defined in
Section 8.11) with respect to Kerr-McGee with any other Person, and such
Prior Kerr-McGee Proposal, Acquisition Proposal or Alternative Transaction
is consummated (which fee shall be payable immediately upon such
consummation).
(c) Oryx shall pay Kerr-McGee the sum $60 million if this Agreement is
terminated solely as follows: (i) by Kerr-McGee pursuant to Section 7.1(f)
or (g) (which fee shall be payable immediately upon such termination); (ii)
by Oryx pursuant to Section 7.1(d) (which fee shall be payable as a
condition to such termination); or (iii) by either party pursuant to
Section 7.1(e)(i), if (A) at or at any time prior to such termination,
Kerr-McGee was entitled to terminate this Agreement pursuant to Section
7.1(f) (which fee shall be payable immediately upon such termination) or
(B) (x) at any time after the date of this Agreement and at or before the
date of the Oryx Stockholders Meeting an Acquisition Proposal with respect
to Oryx shall have been publicly announced or otherwise publicly
communicated (a "Prior Oryx Proposal"), and (y) within twelve months of the
termination of this Agreement, Oryx enters into a definitive agreement with
respect to (1) such Prior Oryx Proposal or any other Acquisition Proposal
(with respect to Oryx) with any party who made a Prior Oryx Proposal or (2)
any Alternative Transaction with respect to Oryx with any other Person, and
such Prior Oryx Proposal, Acquisition Proposal or Alternative Transaction
is consummated (which fee shall be payable immediately upon such
consummation).
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(d) In addition, in any case in which a fee is payable pursuant to
paragraph (b) or (c) above, the party paying such fee shall in addition
promptly pay the other party the sum of $5 million in respect of Expenses
incurred by or on behalf of it in connection with this Agreement and the
Stock Option Agreements, such payment to be made in cash at the time of the
payment of the fee pursuant to paragraph (b) or (c) above.
7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the stockholders of Oryx and Kerr-McGee, but, after any such approval, no
amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Article VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants and other agreements, shall survive the Effective Time, except for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time and
this Article VIII.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the tenth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to Kerr-McGee, to
Kerr-McGee Corporation
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Fax: (405) 270-4211
Attention: General Counsel
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with a copy to
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Fax: (212) 455-2502
Attention: David B. Chapnick, Esq.
(b) if to Oryx to
Oryx Energy Company
Oryx Energy Center
13155 Noel Road
Dallas, Texas 75240
Fax: (972) 715-8955
Attention: General Counsel
with a copy to
Jones, Day, Reavis & Pogue
599 Lexington Avenue, 30th Floor
New York, New York 10022
Fax: (212) 755-7306
Attention: Robert A. Profusek, Esq.
8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". Inclusion of any matter on any Schedule to this Agreement shall not
be deemed an admission that such item is material or otherwise required to be
included on such Schedule.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement, the Stock Option Agreements and the
Confidentiality Agreements constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.7 (which is intended to be for the benefit
of the Persons covered thereby and may be enforced by such Persons).
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED THEREIN.
8.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
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contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other party, and any attempt to make any such assignment without
such consent shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
8.9 Submission to Jurisdiction; Waivers. Each of Kerr-McGee and Oryx
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Kerr-McGee and Oryx hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Kerr-McGee and Oryx hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
8.10 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.11 Definitions. As used in this Agreement:
(a) "Alternative Transaction" means, with respect to Oryx or
Kerr-McGee, any merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving it or any of its material Subsidiaries, or any
purchase or sale of the assets (including stock of Subsidiaries) of it or
any of its Subsidiaries, taken as a whole, having an aggregate value equal
to 25% or more of the consolidated asset value of such party, or any
purchase or sale of, or tender or exchange offer for, 25% or more of the
equity securities of such party.
(b) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(c) "Benefit Plans" means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section 3(3) of
ERISA and any bonus, incentive, deferred compensation, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, stay
agreement or bonus, change in control and severance plan, program,
arrangement and contract) in effect on the date of this Agreement or
disclosed on the Oryx Disclosure Schedule or the Kerr-McGee Disclosure
Schedule, as the case may be, to which such Person or its Subsidiary is a
party, which is maintained or contributed
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to by such Person, or with respect to which such Person could incur
material liability under Section 4069, 4201 or 4212(c) of ERISA.
(d) "Board of Directors" means the Board of Directors of any specified
Person and any committees thereof.
(e) "Business Day" means any day on which banks are not required or
authorized to close in each of New York, New York; Oklahoma City, Oklahoma;
and Dallas, Texas.
(f) "known" or "knowledge" means, with respect to any party, the
knowledge of such party's executive officers after reasonable inquiry.
(g) "Material Adverse Effect" means, with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with
all other changes, circumstances and effects, is or is reasonably likely to
be materially adverse to (i) the business, financial condition or results
of operations of such entity and its Subsidiaries (or, following the
Merger, of the Surviving Corporation and its Subsidiaries) taken as a
whole, other than any change, circumstance or effect relating (x) to the
economy or financial markets in general or (y) in general to the industries
in which Kerr-McGee or Oryx operate and not specifically relating to
Kerr-McGee or Oryx or (ii) the ability of such party to consummate the
transactions contemplated by this Agreement or the Stock Option Agreements.
(h) "the other party" means, with respect to Oryx, Kerr-McGee and
means, with respect to Kerr-McGee, Oryx.
(i) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(j) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such party or any other Subsidiary of such party is a general
partner or managing member (excluding partnerships, the general partnership
interests of which held by such party or any Subsidiary of such party do
not have a majority of the voting interests in such partnership) or (ii) at
least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries.
(k) "Superior Proposal" means with respect to Kerr-McGee or Oryx, as
the case may be, a written proposal made by a Person other than either such
party which (I) contemplates (i) a merger, reorganization, consolidation,
share exchange, business combination, recapitalization, liquidation,
dissolution, tender offer, exchange offer or similar transaction involving
such party as a result of which such party's stockholders prior to such
transaction in the aggregate cease to own at least 50% of the voting
securities of the ultimate parent entity resulting from such transaction or
(ii) a sale, lease, exchange, transfer or other disposition (including
without limitation a contribution to a joint venture) of at least 50% of
the assets of such party and its Subsidiaries, taken as a whole, and (II)
is on terms which the Board of Directors of such party determines (after
consultation with its financial advisors and outside counsel), taking into
account, among other things, all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal, (i) would, if
consummated, result in a transaction that is more favorable, from a
financial point of view, to its stockholders (in their capacities as such)
than the transactions contemplated by this Agreement (in the case of
Section 7.1(d), as proposed to be revised) and (ii) is reasonably likely to
be financed and otherwise completed.
-------------------------
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IN WITNESS WHEREOF, Kerr-McGee and Oryx have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
KERR-McGEE CORPORATION
By: /s/ LUKE R. CORBETT
----------------------------------
Name: Luke R. Corbett
Title: Chairman and Chief
Executive Officer
ORYX ENERGY COMPANY
By: /s/ ROBERT L. KEISER
----------------------------------
Name: Robert L. Keiser
Title: Chairman and Chief
Executive Officer
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EXHIBIT 1.5
FORM OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
KERR-MCGEE CORPORATION
FIRST: The name of the corporation is:
KERR-McGEE CORPORATION
SECOND: The registered office of the corporation in the State of Delaware
is located at No. 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name and address of its resident agent is The Corporation Trust
Company, No. 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (1) The total number of shares of all classes of stock which the
corporation shall have the authority to issue is 340,000,000, of which
40,000,000 shares shall be preferred stock, without par value, and 300,000,000
shall be common stock of the par value of $1.00 per share.
Each holder of common stock, as such, shall be entitled to one vote for
each share of common stock held of record by such holder on all matters on which
stockholders generally are entitled to vote; provided, however, that, except as
otherwise required by law, holders of common stock, as such, shall not be
entitled to vote on any amendment to this certificate of incorporation
(including any certificate of designations relating to any series of preferred
stock) that relates solely to the terms of one or more outstanding series of
preferred stock if the holders of such affected series are entitled, either
separately or together with the holders of one or more other such series, to
vote thereon pursuant to this certificate of incorporation (including any
certificate of designations relating to any series of preferred stock) or
pursuant to the General Corporation Law of the State of Delaware.
(2) The preferred stock may be issued from time to time in one or more
series. The resolution or resolutions of the Board of Directors providing for
the issue of shares of a particular series shall fix, subject to applicable laws
and provisions of this certificate of incorporation, the voting power,
designation, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of the shares of such
series. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(i) the number of shares constituting such series, including the
authority to increase or decrease such number, and the distinctive
designation of such series;
(ii) the rate of dividends payable on shares of such series, the dates
on which such dividends shall be paid, and whether such dividends shall be
cumulative or noncumulative;
(iii) the full or limited voting power, if any, for such series and
the terms and conditions under which such voting power may be exercised;
(iv) the right, if any, of the corporation to redeem shares of such
series and the terms and conditions of such redemption;
(v) the obligations, if any, of the corporation to retire shares of
such series pursuant to a retirement or sinking fund of a similar nature or
otherwise and the terms and conditions of such obligation;
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(vi) the terms and conditions, if any, upon which the shares of such
series shall be convertible into shares of stock of any other class or
series including the conversion rate and the term of adjustment thereof, if
any;
(vii) the amount which the holders of the shares of such series shall
be entitled to receive in case of a liquidation, dissolution or winding up
of the corporation;
(viii) the relative priority of the shares of such series to shares of
other classes or series with respect to dividends or upon the dissolution
of or the distribution of assets of the corporation; and
(ix) and other rights and qualifications, preferences and limitations
or restrictions of the shares of such series;
so far as not inconsistent with the provisions of this certificate of
incorporation and to the full extent now or hereafter permitted by the laws
of the State of Delaware.
(3) Except as otherwise provided in this paragraph (3), no direct or
indirect purchase by the corporation from any Interested Stockholder (as
hereinafter defined) of shares of common stock of the corporation beneficially
owned by such Interested Stockholder for less than two years prior to the date
of such purchase shall be made at a per share price in excess of Fair Market
Value (as hereinafter defined) at the time of such purchase unless such purchase
is approved by the affirmative vote of not less than a majority of the Voting
Stock (as defined in Article THIRTEENTH) held by Disinterested Stockholders (as
hereinafter defined).
The provisions of this paragraph (3) shall not apply to (i) any offer to
purchase made by the corporation which is made on the same terms and conditions
of the holders of all shares of common stock of the corporation, or (ii) any
open market purchases by the corporation of shares of its common stock at
prevailing market prices.
The provisions of this paragraph (3) shall not be amended without the
affirmative vote of (a) not less than a majority of the Voting Stock entitled to
vote thereon and (b) not less than a majority of the Voting Stock entitled to
vote thereon held by Disinterested Stockholders.
For purposes of this paragraph (3): (i) the terms "INTERESTED STOCKHOLDER"
shall have the meaning of "Related Person" set forth in paragraph (B)(3) of
Article THIRTEENTH except that the percent of Voting Stock referred to in
clauses (a) and (b) of such definition shall be five percent (5%) rather than
ten percent (10%); (ii) the term "FAIR MARKET VALUE" shall have the meaning set
forth in paragraph (B)(9) of Article THIRTEENTH except that "FAIR MARKET VALUE"
shall mean the highest sale price or bid quotation during the five-trading day
period preceding the date of the purchase of the stock; and (iii) the terms
"DISINTERESTED STOCKHOLDERS" means those holders of the Voting Stock, none of
which is an Interested Stockholder.
(4) Series B Preferred Stock
SECTION 1. Designation and Amount. There shall be designated a series
of preferred stock as "Series B Junior Participating Preferred Stock" (the
"Series B Preferred Stock") and the number of shares constituting the
Series B Preferred Stock shall be 1,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series B Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the corporation convertible into Series B Preferred
Stock.
SECTION 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the corporation (the "Preferred Stock") (or
any similar stock) ranking prior and superior to the
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Series B Preferred Stock with respect to dividends, the holders of
shares of Series B Preferred Stock, in preference to the holders of
common stock of the corporation (the "Common Stock") and of any other
stock of the corporation ranking junior to the Series B Preferred Stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July, and
October in each year (each such date being referred to herein as a
"Dividend Payment Date"), commencing on the first Dividend Payment Date
after the first issuance of a share or fraction of a share of Series B
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock,
declared on the Common Stock since the immediately preceding Dividend
Payment Date or, with respect to the first Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series B
Preferred Stock. In the event the corporation shall at any time after
July 9, 1996 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend
of $1 per share on the Series B Preferred Stock shall nevertheless be
payable, when, as and if declared, on such subsequent Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative, whether or
not earned or declared, on outstanding shares of Series B Preferred
Stock from the Dividend Payment Date next preceding the date of issue of
such shares, unless the date of issue of such shares is prior to the
record date for the first Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive a quarterly dividend and
before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of
shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in this certificate of incorporation or
required by law, each share of Series B Preferred
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Stock shall entitle the holder thereof to 100 votes on all matters upon
which the holders of the Common Stock of the corporation are entitled to
vote. In the event the corporation shall at any time after July 9, 1996
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in this certificate of
incorporation or in any other certificate of designations creating a
series of Preferred Stock or any similar stock, and except as otherwise
required by law, the holders of shares of Series B Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
SECTION 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series B Preferred Stock outstanding shall have been paid in
full, the corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the Series
B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (as to dividends) with the
Series B Preferred Stock, except dividends paid ratably on the Series
B Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred
Stock, provided that the corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the corporation ranking junior (as to
dividends and upon dissolution, liquidation or winding up) to the
Series B Preferred Stock or rights, warrants or options to acquire
such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, except
in accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
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preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any
shares of stock of the corporation unless the corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
SECTION 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their retirement become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.
SECTION 6. Liquidation, Dissolution or Winding up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution
shall be made (A) to the holders of the Common Stock or of shares of any
other stock of the corporation ranking junior, upon liquidation,
dissolution or winding up, to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not earned or declared, to
the date of such payment, provided that the holders of shares of Series B
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares
of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series B
Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event, however, that there
are not sufficient assets available to permit payment in full of the Series
B liquidation preference and the liquidation preferences of all other
classes and series of stock of the corporation, if any, that rank on a
parity with the Series B Preferred Stock in respect thereof, then the
assets available for such distribution shall be distributed ratably to the
holders of the Series B Preferred Stock and the holders of such parity
shares in the proportion to their respective liquidation preferences. In
the event the corporation shall at any time after July 9, 1996 declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 7. Consolidation, Merger, etc. In case the corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are converted into, exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case each share of Series B Preferred Stock shall at the
same time be similarly converted into, exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is converted, exchanged or
converted. In the event the corporation shall at any time after July 9,
1996 declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a
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greater or lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to the
conversion, exchange or change of shares of Series B Preferred Stock shall
be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
SECTION 8. No Redemption. The shares of Series B Preferred Stock shall
not be redeemable from any holder.
SECTION 9. Rank. The Series B Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the corporation, junior to all
other series of Preferred Stock and senior to the Common Stock.
SECTION 10. Amendment. If any proposed amendment to this certificate
of incorporation would alter, change or repeal any of the preferences,
powers or special rights given to the Series B Preferred Stock so as to
affect the Series B Preferred Stock adversely, then the holders of the
Series B Preferred Stock shall be entitled to vote separately as a class
upon such amendment, and the affirmative vote of two-thirds of the
outstanding shares of the Series B Preferred Stock, voting separately as a
class, shall be necessary for the adoption thereof, in addition to such
other vote as may be required by the General Corporation Law of the State
of Delaware.
SECTION 11. Fractional Shares. Series B Preferred Stock may be issued
in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all
other rights of holders of Series B Preferred Stock.
(5) Preemptive Rights. Neither the holders of preferred stock nor the
holders of common stock shall have any preemptive rights, and the corporation
shall have the right to issue and sell to any person or persons any shares of
its capital stock or any option rights or any securities having conversion or
option rights, without first offering such shares, rights or securities to any
holders of preferred stock or common stock.
FIFTH: (1) The business and affairs of the corporation shall be managed by
a Board of Directors. The number of directors shall be fixed from time to time
by resolution adopted by affirmative vote of the majority of the Board of
Directors, but shall not be fixed at a number less than three.
The directors shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, with the term of the first class to expire at the 1999 annual meeting
of the stockholders, the term of office of the second class to expire at the
2000 annual meeting of the stockholders, and the term of office of the third
class to expire at the 2001 annual meeting of the stockholders, with the members
of each class to hold office until their successors are elected and qualified.
At each succeeding annual meeting of the stockholders of the corporation, the
successors to the class of directors whose term expires at the meeting shall be
elected to hold office for a term expiring at the annual meeting of the
stockholders held in the third year following the year of their election.
Newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred until such director's successor shall have been
elected and qualified. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
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Directors may be removed only for cause, and then only by the affirmative
vote of at least 75 percent in voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting as a single
class.
(2) Notwithstanding the foregoing, whenever the holders of any one or more
series of preferred stock issued by the corporation shall have the right, voting
separately as a series or separately as a class with one or more such other
series, to elect directors at an annual or special meeting of stockholders, the
election, term of office, removal, filling of vacancies and other features of
such directorships shall be governed by the terms of this certificate of
incorporation (including any certificate of designations relating to any series
of preferred stock) applicable thereto, and such directors so elected shall not
be divided into classes pursuant to this Article FIFTH unless expressly provided
by such terms.
SIXTH: The Board of Directors shall be authorized to make, amend, alter,
change, add to or repeal the By-Laws of the corporation in any manner not
inconsistent with the laws of the State of Delaware, subject to the power of the
stockholders to amend, alter, change, add to or repeal the By-Laws made by the
Board of Directors. Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of the holders of at least
75 percent in voting power of all the shares of the corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required in order for the stockholders to alter, amend or repeal any
provision of the By-Laws which is to the same effect as Article FIFTH, Article
SIXTH, and Article FOURTEENTH of this certificate of incorporation or to adopt
any provision inconsistent therewith.
SEVENTH: (1) (a) The corporation shall, to the full extent permitted by the
Laws of the State of Delaware as then in effect or, if less stringent, in effect
on December 31, 1985 ("Delaware Law"), and as more fully described in the
By-Laws, indemnify any person (the "Indemnitee") made or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether or not by
or in the right of the corporation, by reason of the fact that the Indemnitee is
or was a director, officer or employee of the corporation or is or was serving
at the request of the corporation as a director, officer, employee, trustee,
partner, or other agent of any other enterprise or legal person (any such
action, suit or proceeding being herein referred to as a "Legal Action") against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the Indemnitee in connection with
such Legal Action or its investigation, defense or appeal (herein called
"Indemnified Expenses"), if the Indemnitee has met the standard of conduct
necessary under Delaware Law to permit such indemnification. Rights to
indemnification shall extend to the heirs, beneficiaries, administrators and
executors of any deceased Indemnitee.
For purposes of this Section, reference to "any other enterprise or
legal person" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries.
(b) The Indemnified Expenses shall be paid by the corporation in
advance as shall be appropriate to permit Indemnitee to defray such
expenses currently as incurred, provided the Indemnitee agrees in writing
that in the event it shall ultimately be determined as provided hereunder
that Indemnitee was not entitled to be indemnified, then Indemnitee shall
promptly repay to the corporation such amounts so paid.
(c) Any amendment, repeal or modification of this Article SEVENTH, the
corporation's By-Laws or any applicable provision of Delaware Law, or any
other instrument, which eliminates or diminishes the indemnification rights
provided for in this Article SEVENTH shall be ineffective as against an
Indemnitee with respect to any Legal Action based upon actions taken or not
taken by the Indemnitee prior to such repeal or the adoption of such
modification or amendment. The provisions of
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this Article SEVENTH, Section (1) shall be applicable to all Legal Actions
made or commenced after the adoption hereof, whether arising from acts or
omissions to act occurring before or after its adoption. The provisions of
this Article SEVENTH, Section (1) shall be deemed to be a contract between
the corporation and each director or officer who serves in such capacity at
any time while this Article SEVENTH, Section (1) and the relevant
provisions of Delaware Law and other applicable law, if any, are in effect.
If any provision of this Article SEVENTH, Section (1) shall be found to be
invalid or limited in application by reason of any law or regulation, it
shall not affect the validity of the remaining provisions hereof. The
rights of indemnification provided in this Article SEVENTH, Section (1)
shall neither be exclusive of, nor be deemed in limitation of, any rights
to which an officer, director, employee or agent may otherwise be entitled
or permitted by contract, this certificate of incorporation, vote of
stockholders or directors or otherwise, or as a matter of law, both as to
actions in such person's official capacity and actions in any other
capacity while holding such office, it being the policy of the corporation
that indemnification of any person whom the corporation is obligated to
indemnify pursuant to subsection (a) of this Article SEVENTH, Section (1)
shall be made to the fullest extent permitted by law.
(d) The corporation may purchase and maintain insurance on behalf of
any person described in subsection (a) of this Article SEVENTH, Section (1)
against any liability asserted against such person, whether or not the
corporation would have the power to indemnify such person against such
liability under the provisions of this Article SEVENTH, Section (1) or
otherwise.
(2) To the full extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. No repeal,
amendment or modification of this Article, whether direct or indirect, shall
eliminate or reduce its effect with respect to any act or omission of a director
of the corporation occurring prior to such repeal, amendment or modification.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
sec.291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
sec.279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH: [Reserved]
TENTH: [Reserved]
ELEVENTH: [Reserved]
TWELFTH: [Reserved]
THIRTEENTH: The vote of the stockholders of the corporation required to
approve any Business Transaction shall be as set forth in this Article
THIRTEENTH. Each capitalized term shall have the meaning ascribed to it in
Paragraph (B) of this Article.
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(A) Notwithstanding any provision of law or any other provision of this
certificate of incorporation or any agreement with any national securities
exchange or otherwise which might permit a lesser vote or no vote and in
addition to any affirmative vote required of the holders of any particular class
or series of Voting Stock by law or by this certificate of incorporation, the
affirmative vote of the holders of not less than 51% of the outstanding shares
of Voting Stock of the corporation beneficially owned by stockholders other than
the Related Person shall be required for the approval or authorization of any
Business Transaction; provided, however, that such 51% voting requirement shall
not be applicable to any Business Transaction, and such Business Transaction
shall require only such affirmative vote as is required by law, any other
provision of this certificate of incorporation, any preferred stock designation
or any agreement with any national securities exchange, if, in the case of a
Business Transaction that does not involve any cash or other consideration being
received by the stockholders of the corporation solely in respect of their
ownership of shares of Voting Stock of the corporation, the condition specified
in the following paragraph (1) is satisfied, or, in the case of any other
Business Transaction, the conditions specified in either of the following
paragraphs (1) and (2) are satisfied.
(1) the Continuing Directors at the time of such Business Transaction
constitute at least a majority of the Board of Directors of the corporation
and such Business Transaction shall have been approved by a majority vote
of the Continuing Directors; or
(2) (a) the consideration to be received by holders of a particular
class or series of outstanding Voting Stock (including common stock) shall
be in cash or in the same form as was previously paid in order to acquire
beneficially shares of such class or series of Voting Stock that are
beneficially owned by the Related Person and, if the Related Person
beneficially owns shares of any class or series of Voting Stock that were
acquired with varying forms of consideration, the form of consideration to
be received by holders of such class or series of Voting Stock shall be
either cash or the form used to acquire beneficially the largest number of
shares of such class or series of Voting Stock beneficially acquired by it
prior to the Announcement Date; and
(b) the aggregate amount of the cash and the Fair Market Value as
of the Consummation Date of any consideration other than cash to be
received per share by holders of common stock in such Business
Transaction shall be at least equal to the highest of the following (it
being intended that the requirements of this clause (A)(2)(b) shall be
required to be met with respect to all shares of common stock
outstanding whether or not the Related Person has acquired any shares of
the common stock):
(i) if applicable, the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of common stock beneficially
owned by the Related Person which were acquired beneficially by such
Related Person (x) within the two-year period immediately prior to
the Announcement Date or (y) in the transaction in which it became a
Related Person, whichever is higher; or
(ii) the Fair Market Value per share of common stock on the
Announcement Date or on the Determination Date, whichever is higher;
and
(c) the aggregate amount of the cash and the Fair Market Value as
of the Consummation Date of any consideration other than cash to be
received per share by holders of shares of any other class or series of
Voting Stock, other than common stock, shall be at least equal to the
highest of the following (it being intended that the requirements of
this clause (A)(2)(c) shall be required to be met with respect to every
class and series of such outstanding Voting Stock, whether or not the
Related Person has previously acquired any shares of a particular class
or series of Voting Stock):
(i) if applicable, the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid in order to acquire any shares of such class or series of Voting
Stock beneficially owned by the Related Person which were acquired
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beneficially by such Related Person (x) with the two-year period
immediately prior to the Announcement Date or (y) in the transaction
in which it became a Related Person, whichever is higher;
(ii) if applicable, the highest preferential amount per share to
which the holders of share of such class or series of Voting Stock
are entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation; or
(iii) the Fair Market Value per share of such class or series of
Voting Stock on the Announcement Date or the Determination Date,
whichever is higher; and
(d) after such Related Person has become a Related Person and prior
to the consummation of such Business Transaction:
(i) such Related Person shall not have become the Beneficial
Owner of any additional shares of Voting Stock of the corporation,
except as part of the transaction in which it became a Related Person
or upon conversion of convertible securities acquired by it prior to
becoming a Related Person or as a result of a pro rata stock dividend
or stock split; and
(ii) such Related Person shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of
any loans, advances, guarantees, pledges or other financial
assistance or tax credits or other tax advantages provided by the
corporation or any Subsidiary, whether in anticipation of or in
connection with such Business Transaction or otherwise; and
(iii) such Related Person shall not have caused any material
change in the corporation's business or capital structure, including,
without limitation, the issuance of shares of capital stock of the
corporation to any third party; and
(iv) there shall have been (aa) no failure to declare and pay at
the regular date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding preferred stock, and (bb) no
reduction in the annual rate of dividends paid on common stock (after
giving effect to any reclassification, including any reverse stock
split, recapitalization, reorganization or similar transaction which
has the effect of enlarging or reducing the number of outstanding
shares of common stock), unless such failure or reduction shall have
been approved by a majority of the Continuing Directors; and
(e) a proxy or information statement describing the proposed
Business Transaction and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations thereunder
(or any subsequent provisions replacing such Act, rules and
regulations), whether or not the corporation is then subject to such
requirements, shall be mailed at least thirty (30) days prior to the
consummation of such Business Transaction to the public stockholders of
the corporation and shall contain at the front thereof in a prominent
place (i) any recommendations as to the advisability (or inadvisability)
of the Business Transaction which the Continuing Directors, if any, may
choose to state and (ii) the opinion of a reputable national investment
banking firm as to the fairness (or not) of such Business Transaction
from the point of view of the remaining public stockholders of the
corporation (such investment banking firm to be engaged solely on behalf
of the remaining public stockholders, to be paid a reasonable fee for
their services by the corporation upon receipt of such opinion, to be
unaffiliated with such Related Person, and, if there are at the time any
Continuing Directors, to be selected by a majority of the Continuing
Directors).
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(B) For purposes of this Article THIRTEENTH:
(1) the term "Business Transaction" shall mean
(a) any merger or consolidation of the corporation or any
Subsidiary with (i) any Related Person or (ii) any other corporation or
entity (whether or not itself a Related Person) which is, or after such
merger or consolidation, would be, an Affiliate of a Related Person;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or in a series of transactions) to or
with any Related Person or any Affiliate of any Related Person of assets
of the corporation or any Subsidiary having an aggregate Fair Market
Value of $10,000,000 or more;
(c) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of a Related
Person or any Affiliate of the Related Person;
(d) the issuance of or transfer by the corporation or any
Subsidiary (in one transaction or in a series of related transactions)
of any securities of the corporation or any Subsidiary to a Related
Person, or any Affiliate of a Related Person, in exchange for cash,
securities or other property (or a combination thereof) having a Fair
Market Value of $10,000,000 or more, other than the issuance of
securities upon the conversion of convertible securities of the
corporation or any Subsidiary which were not acquired by such Related
Person (or such Affiliate) from the corporation or a Subsidiary;
(e) any reclassification of securities (including any reverse stock
split), or recapitalization or reorganization of the corporation, or any
merger or consolidation of the corporation with any of its Subsidiaries
or any self tender offer for or repurchase of securities of the
corporation or any Subsidiary by the corporation or any Subsidiary or
any other transaction (whether or not with or into or otherwise
involving a Related Person) which in any such case has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class or series of stock or securities
convertible into stock of the corporation or any Subsidiary which is
directly or indirectly beneficially owned by any Related Person or any
Affiliate of any Related Person;
(2) A person shall mean any individual, firm, corporation, group (as
such term is used in Rule 13d of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on December 31, 1984) or
other entity.
(3) "Related Person" shall mean any person (other than the corporation
or any Subsidiary or any employee benefit plan of the corporation or any
Subsidiary) who or which:
(a) is the beneficial owner, directly or indirectly, of more than
ten percent of the combined voting power of the then outstanding shares
of Voting Stock; or
(b) is an Affiliate of the corporation and at anytime within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of ten percent or more of the
combined voting power of the then outstanding shares of Voting Stock; or
(c) is an assignee of or has otherwise succeeded to the beneficial
ownership of any shares of Voting Stock that were at any time within the
two-year period immediately prior to the date in question beneficially
owned by a Related Person, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of
1933.
(4) A person shall be a "beneficial owner" of any Voting Stock:
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
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(b) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether or not such right is exercisable
immediately), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(5) For the purposes of determining whether a person is a Related
Person pursuant to Paragraph (B)(3) of this Article THIRTEENTH, the number
of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned by such Related Person through application of Paragraph (B)(4)
of this Article but shall not include any other shares of Voting Stock that
may be issuable pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or otherwise.
(6) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1984.
(7) "Subsidiary" shall mean any corporation more than 50% of whose
outstanding stock having ordinary voting power in the election of directors
is owned, directly or indirectly, by this corporation or by a Subsidiary or
by this corporation and one or more Subsidiaries; provided, however, that
for the proposes of the definition of Related Person set forth in Paragraph
(B)(3) of this Article THIRTEENTH, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security is owned,
directly or indirectly, by this corporation.
(8) "Continuing Director" shall mean any member of the Board of
Directors of this corporation who is unaffiliated with, and not a nominee
of, the Related Person and was a member of the Board prior to the time that
the Related Person became a Related Person, and any successor of a
Continuing Director who is unaffiliated with, and not a nominee of, the
Related Person and who is recommended to succeed a Continuing Director by a
majority of Continuing Directors then on the Board of Directors.
(9) "Fair Market Value" shall mean: (1) in the case of stock, the
highest closing sale price during the 30-day period preceding the date in
question of a share of such stock on the Composite Tape of New York Stock
Exchange-Listed stocks, or, if such stock is not quoted on the New York
Stock Exchange-Composite Tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such exchange, the
highest closing sales price or bid quotation with respect to a share of
such stock during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotation System
or any system then in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock as determined
by a majority of the Continuing Directors in good faith; and (2) in the
case of stock of any class or series which is not traded on any United
States registered securities exchange nor in the over-the-counter market or
in the case of property other than cash or stock, the fair market value of
such property on the date in question as determined by a majority of the
Continuing Directors in good faith.
(10) In the event of any Business Transaction in which the corporation
survives, the phrase "any consideration other than cash to be received" as
used in Paragraph (A)(2)(b) and (A)(2)(c) of this Article THIRTEENTH shall
include the shares of common stock and/or the share of any other class of
outstanding Voting Stock retained by the holders of such shares.
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(11) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Transaction.
(12) "Determination Date" shall mean the date on which the Related
Person became a Related Person.
(13) "Consummation Date" shall mean the date of the consummation of
the Business Transaction.
(14) The terms "Voting Stock" shall mean all outstanding shares of
capital stock of all classes and series of the corporation entitled to vote
generally in the election of directors of the corporation, in each case
voting together as a single class.
(C) If the Continuing Directors constitute at least a majority of the Board
of Directors of the corporation, a majority of such Continuing Directors shall
have the power and duty to determine, on the basis of information known to them
after reasonable inquiry, all facts necessary to determine compliance with this
Article THIRTEENTH, including, without limitation:
(1) whether a person is a Related Person;
(2) the number of shares of Voting Stock beneficially owned by any
person;
(3) whether a person is an Affiliate or Associate of another person;
(4) whether the requirements of (A) of this Article THIRTEENTH have
been met with respect to any Business Transaction; and
(5) whether the assets which are the subject of any Business
Transaction have, or the consideration to be received for the issuance or
transfer of securities by the corporation or any Subsidiary in any Business
Transaction has, an aggregate Fair Market Value of $10,000,000 or more. The
good faith determination of a majority of the Continuing Directors on such
matters shall be conclusive and binding for all purposes of this Article
THIRTEENTH.
(D) Nothing contained in this Article THIRTEENTH shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
(E) Notwithstanding anything contained in this certificate of incorporation
to the contrary, the affirmative vote of (1) the holders of at least 51% of the
Voting Stock, voting together as a single class, and (2) the holders of a least
51% of the Voting Stock, voting together as a single class, other than shares of
Voting Stock beneficially owned by a Related Person, shall be required to alter,
amend or repeal this Article THIRTEENTH or to adopt any provision inconsistent
therewith.
FOURTEENTH: Any action required or permitted to be taken by the holders of
the common stock of the corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by such holders. Except as otherwise required by law and subject to the
rights of the holders of any series of preferred stock, special meetings of
stockholders of the corporation may be called only by the Chief Executive
Officer of the corporation or by the Board of Directors pursuant to a resolution
approved by the Board of Directors.
FIFTEENTH: Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of the holders of at least
75 percent in voting power of all the shares of the corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to alter, amend or repeal Article FIFTH, Article SIXTH, Article
FOURTEENTH or this Article FIFTEENTH or to adopt any provision inconsistent
therewith.
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EXHIBIT 1.6
FORM OF
AMENDED AND RESTATED
BY-LAWS
OF
KERR-MCGEE CORPORATION
Article I
OFFICES
SECTION 1. The principal place of business of Kerr-McGee Corporation
("Corporation") shall be in Oklahoma City, Oklahoma.
SECTION 2. The Corporation may also have offices at such other places as
the Board of Directors may from time to time appoint or the business of the
Corporation may require.
Article II
SEAL
SECTION 1. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words "Corporate Seal,
Delaware". The Corporate Seal may be used by causing it or a facsimile thereof
to be impressed, affixed or reproduced.
SECTION 2. The corporate seal shall be retained under the custody and
control of the Secretary or Assistant Secretary except as and to the extent the
use of same by others may be expressly authorized by the Board of Directors.
Article III
STOCKHOLDERS' MEETINGS
SECTION 1. All meetings of the stockholders for any purpose may be held at
such place as shall be stated in the notice of the meeting.
SECTION 2. An annual meeting of the stockholders shall be held within one
hundred fifty (150) days after the end of each fiscal year as the Board of
Directors may set for a particular year's annual meeting, at which meeting they
shall elect by a plurality vote by ballot a board of directors and transact such
other business as may properly be brought before the meeting.
SECTION 3. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
be requisite and shall constitute a quorum at all meetings of the stockholders
for the transaction of business except as otherwise provided by law, by the
Certificate of Incorporation or by these By-Laws. If, however, such majority
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of voting stock shall be
present. At such adjourned meeting at which the requisite amount of voting stock
shall be represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
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SECTION 4. At any meeting of the stockholders, every stockholder having the
right to vote shall be entitled to vote in person or by proxy appointed either
by an instrument in writing, subscribed by such stockholder or by other means
permitted by applicable law.
SECTION 5. Except as may otherwise be provided by law or in the Certificate
of Incorporation of the Corporation, or any amendment thereto, each stockholder
shall have one vote for each share of the stock having voting power, registered
in his name on the books of the Corporation, and except where the transfer books
of the Corporation shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders entitled to vote, no share
of stock shall be voted on at any election for directors which shall have been
transferred on the books of the Corporation within twenty days preceding such
election of directors, or on any other matter respecting which stockholders are
entitled to vote if such stock has been so transferred within twenty days prior
to action on such matter.
SECTION 6. Except as otherwise provided by law, written notice of the
annual meeting of stockholders shall be given at least ten days prior to the
meeting, and in accordance with Article XXI hereof, to each stockholder so
entitled to vote thereat.
SECTION 7. A complete list of the stockholders so entitled to vote at the
ensuing election of directors arranged in alphabetical order, with the address
of each, and the number of voting shares registered in the name of each, shall
be filed in the office where the election is to be held, at least ten days
before every election, and shall at all times during the ordinary business hours
and during the whole time of said election be open to the examination of any
stockholder.
SECTION 8. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, shall be called only by the
Chief Executive Officer of the Corporation or by the Secretary at the direction
of the Board of Directors pursuant to a resolution approved by the Board of
Directors.
SECTION 9. Business transacted at all special meetings shall be confined to
the objects stated in the notice of the meeting.
SECTION 10. Written notice of a special meeting of stockholders, stating
the time and place and object thereof, shall be given at least ten days before
such meeting, and in accordance with Article XXI hereof, to each stockholder
entitled to vote thereat.
SECTION 11.
(A) Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a)
pursuant to the Corporation's notice of meeting delivered pursuant to
Article III, Section 6 of these By-Laws, (b) by or at the direction of
the Chief Executive Officer or the Board of Directors or (c) by any
stockholder of the Corporation who is entitled to vote at the meeting,
who complied with the notice procedures set forth in subparagraphs (2)
and (3) of this paragraph (A) of this By-Law and who was a stockholder
of record at the time such notice is delivered to the Secretary of the
Corporation.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this By-Law, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation, and, in the case
of business other than nominations, such other business must be a proper
matter for stockholder action. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than seventy days nor more than ninety days
prior to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting
is advanced by more than twenty days, or delayed by more
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than seventy days, from such anniversary date, notice by the stockholder
to be timely must be so delivered not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on
the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of
such meeting is first made. Such stockholder's notice shall set forth
(a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director all information relating to such
person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director
if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired
to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of
such stockholder and the beneficial owner, if any, on whose behalf the
proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal
is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner and (ii) the class
and number of shares of the Corporation which are owned beneficially and
of record by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees
for director or specifying the size of the increased Board of Directors
made by the Corporation at least eighty days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's
notice required by this By-Law shall also be considered timely, but only
with respect to nominees for any new positions created by such increase,
if it shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the
tenth day following the day on which such public announcement is first
made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting pursuant
to Article III, Section 10 of these By-Laws. Nominations of persons for
election to the Board of Directors may be made at a special meeting of
stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Chief
Executive Officer or the Board of Directors or (b) by any stockholder of
the Corporation who is entitled to vote at the meeting, who complies with
the notice procedures set forth in this By-Law and who is a stockholder of
record at the time such notice is delivered to the Secretary of the
Corporation. Nominations of stockholders of persons for election to the
Board of Directors may be made at such a special meeting of stockholders if
the stockholder's notice as required by paragraph (A)(2) of this By-Law
shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the ninetieth day prior to such special
meeting and not later than the close of business on the later of the
seventieth day prior to such special meeting or the tenth day following the
day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(C) General.
(1) Only persons who are nominated in accordance with the
procedures set forth in this By-Law shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this By-Law. Except as otherwise
provided by law, the Certificate of Incorporation or these By-Laws, the
chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the
meeting was made in accordance
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with the procedures set forth in this By-Law and, if any proposed
nomination or business is not in compliance with this By-Law, to declare
that such defective nomination shall be disregard or that such proposed
business shall not be transacted.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) For purposes of this By-Law, no adjournment nor notice of
adjournment of any meeting shall be deemed to constitute a new notice of
such meeting for purposes of this Section 11, and in order for any
notification required to be delivered by a stockholder pursuant to this
Section 11 to be timely, such notification must be delivered within the
periods set forth above with respect to the originally scheduled
meeting.
(4) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this By-Law. Nothing in this By-Law shall be
deemed to affect any rights of stockholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8
under the Exchange Act.
Article IV
DIRECTORS
SECTION 1. The property and business of the Corporation shall be managed by
its Board of Directors, the members of which need not be stockholders.
SECTION 2. The Board of Directors of the Corporation shall consist of such
number of directors, not less than three, as shall from time to time be fixed
exclusively by resolution of the Board of Directors. The directors shall be
divided into three classes in the manner set forth in the Certificate of
Incorporation of the Corporation, each class to be elected for the term set
forth therein. Directors shall (except as hereinafter provided for the filling
of vacancies and newly created directorships) be elected by the holders of a
plurality of the voting power present in person or represented by proxy and
entitled to vote.
SECTION 3. Each director shall be elected to serve until his successor
shall be elected and shall qualify by evidence of acceptance of such office and
such acceptance shall be presumed in the absence of express rejection thereof by
the person elected within ten days after his knowledge of election. A person who
has passed his 64th birthday and who has not theretofore served as a director of
the Corporation shall not be eligible to be elected a director, whether pursuant
to this Section 3 or to Section 6, of this Article. A person who has passed his
70th birthday, or who has retired as an employee, shall not in any event be
eligible for reelection to the Board or be qualified for continued service as a
director of the Corporation, irrespective of prior service as a director of the
Corporation. For purposes of this Section, any service as a director of Oryx
Energy Company prior to the merger of Oryx Energy Company shall be deemed to be
prior service as a director of the Corporation. Any failure of any director to
meet the qualifications for service as a director set forth in these By-Laws, or
otherwise under law, shall result in the termination of the term of such
director.
SECTION 4. The directors may hold their meetings, have one or more offices
and keep the books of the Corporation in the City of Oklahoma City, Oklahoma, or
at such other places as they may from time to time determine and designate.
SECTION 5. The members of the Board of Directors or any committee thereof
may participate in a meeting of such Board or committee, as the case may be, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each
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other, and participation in a meeting pursuant to this subsection shall
constitute presence in person at such a meeting.
SECTION 6. Vacancies in the Board of Directors, however occasioned, and
newly created directorships resulting from any increase in the authorized number
of directors, may be filled only by a majority of the remaining directors then
in office though less than a quorum and the accepting directors so chosen shall
hold office for a term as set forth in the Certificate of Incorporation of the
Corporation and until a successor or successors have been duly elected and
qualified unless sooner displaced.
SECTION 7. Notwithstanding the foregoing, whenever the holders of any one
or more series of Preferred Stock issued by the Corporation shall have the
right, voting separately by series, to elect directors at an annual or special
meeting of stockholders, the election, term of office, removal, filling of
vacancies and other features of such directorships shall be governed by the
terms of the Amended and Restated Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to Article SEVENTH of the Amended and Restated Certificate of
Incorporation unless expressly provided by such terms. The number of directors
that may be elected by the holders of any such series of Preferred Stock shall
be in addition to the number fixed by or pursuant to the By-Laws. Except as
otherwise expressly provided in the terms of such series, the number of
directors that may be so elected by the holders of any such series of stock
shall be elected for terms expiring at the next annual meeting of stockholders
and without regard to the classification of the members of the Board of
Directors as set forth in Section 2 hereof, and vacancies among directors so
elected by the separate vote of the holders of any such series of Preferred
Stock shall be filled by the affirmative vote of a majority of the remaining
directors elected by such series, or, if there are no such remaining directors,
by the holders of such series in the same manner in which such series initially
elected a director.
SECTION 8. Subject to provisions of pertinent law and the Certificate of
Incorporation, dividends, if any, declared respecting any class of shares of the
Corporation's capital stock may be declared by the Board of Directors at any
regular meeting thereof and despite any provision of the By-Laws to the contrary
at any special meeting thereof, whether or not consideration or action
respecting dividends be stated in the notice thereof; and dividends may be paid
in cash or, if the declaration thereof so provides, in property, including
shares of the Corporation. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repair or maintaining
any property of the Corporation, or for such other purpose as the Board of
Directors shall deem conducive to the interest of the Corporation, and the Board
of Directors may abolish any reserve in the manner in which it was created.
SECTION 9. The Board of Directors shall have power to close the stock
transfer books of the Corporation for a period not exceeding sixty days
preceding the date of any meeting of stockholders or the date for payment of any
dividend or the date for the allotment of rights or the date when any change or
conversion or exchange of capital stock shall go into effect or for any other
purpose; provided, however, that in lieu of closing the stock transfer books, as
aforesaid, the Board of Directors may fix in advance a date not exceeding sixty
days preceding the date of any meeting of stockholders or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date for such other purpose, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting or entitled
to receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange of
capital stock, or for such other purpose, and in such case only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting and any adjournment,
thereof, or to receive such allotment of rights, or to exercise such rights or
to be considered as stockholders for such other purpose, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
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SECTION 10. In addition to the powers and authorities by these By-Laws
expressly conferred upon it, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Certificate of Incorporation or by these By-Laws directed or required
to be exercised or done by the stockholders.
SECTION 11. Any action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting if prior to such action a
written consent thereto is signed by all members of the Board and such written
consent is filed with the minutes of proceedings of the Board.
Article V
COMMITTEES
SECTION 1. The Board of Directors may appoint an Executive Committee of two
or more directors, which shall consist of the Chief Executive Officer and such
other director or directors as shall be designated by resolution adopted by the
Board of Directors. Such Committee shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation while the Board of Directors is not in session except
that it shall not have power or authority in reference to (1) amending the
Certificate of Incorporation, (2) adopting an agreement of merger or
consolidation under Section 251 or 252 of the Delaware General Corporation Law,
(3) recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, (4) recommending to
the stockholders dissolution of the Corporation or revocation of a dissolution,
or (5) amending the By-Laws; nor shall it have any power or authority which the
Board of Directors in the management of the business and affairs of the
Corporation while the Board of Directors is not in session except that it shall
not have power or authority in reference has by resolution withheld from it.
Vacancies in the membership of the Committee shall be filled by the Board of
Directors at a regular meeting or a special meeting called for that purpose.
SECTION 2. The Committees of the Board shall be governed by Subsection (2)
of Section 141(c) of the Delaware General Corporation Law which provides for the
designation of committees of the Corporation's Board of Directors and the
permissible functions of such committees.
SECTION 3. The Board of Directors by resolution or resolutions adopted by a
majority of the Board of Directors may designate other committees, each
committee to consist of two or more directors of the Corporation and to exercise
such powers and duties and to have such name as may be designated by resolution
adopted by the Board of Directors.
SECTION 4. Each committee of the Board of Directors may meet at such stated
times and/or upon call with such notice as said committee may by resolution
provide from time to time. At all meetings of each committee, a majority of
members thereof shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the members present at any
meeting at which there is a quorum shall be the act of the committee.
SECTION 5. Committees of the Board of Directors shall keep regular minutes
of their proceedings. Any action required or permitted to be taken at any
meeting of the Committee may be taken without a meeting if prior to such action
a written consent thereto is signed by all members of the Committee and such
written consent is filed with the minutes of proceedings of the Committee.
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Article VI
COMPENSATION OF DIRECTORS
SECTION 1. Directors may, pursuant to resolution of the Board of Directors,
be paid a stated sum with respect to each regular and special meeting of the
Board of Directors and be allowed their expenses of attendance, if any, for
attending each meeting of the Board of Directors. Directors who are not
full-time employees of the Corporation may be paid such additional compensation
for their services as directors as may from time to time be fixed by resolution
of the Board of Directors. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2. Members of the Executive Committee and members of other
committees of the Board of Directors who are not full-time employees of the
Corporation may, pursuant to resolution of the Board of Directors, be paid a
stated sum for attending meetings of such committees. All members of committees
of the Board of Directors may, pursuant to resolution of the Board of Directors,
be allowed their expenses of attendance, if any, for attending meetings of such
committees.
Article VII
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 1. Annual meetings of the Board of Directors shall be held at such
place within or without the State of Delaware as soon as practicable following
the election of new directors at the annual meeting of the stockholders.
SECTION 2. Regular meetings of the Board of Directors may be held at such
time and place, within or without the State of Delaware as shall from time to
time be determined by the Board of Directors. After there has been such
determination and notice thereof has been once given to each member of the Board
of Directors, regular meetings may be held without any further notice being
given.
SECTION 3. Special meetings of the Board of Directors may be called by the
Chief Executive Officer on twenty-four hour's notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
Chief Executive Officer or Secretary in like manner and on like notice on the
written request of a majority of the directors.
SECTION 4. At all meetings of the Board of Directors, a majority of the
directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute or by the
Certificate of Incorporation or by these By-laws. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Article VII-A
WAR AND NATIONAL EMERGENCY
SECTION 5. The emergency bylaws provided in this Article VII-A shall be
operative during any emergency resulting from an attack on the United States, or
during any nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, as a result of which a quorum
of the Board of Directors cannot readily be convened for action. To the extent
not inconsistent with these emergency bylaws, the By-Laws of the Corporation
shall remain in effect during any emergency and upon its termination these
emergency bylaws shall cease to be operative.
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SECTION 6. During any such emergency a meeting of the Board of Directors
may be called by any officer or director by giving two days' notice thereof to
such of the directors as it may be feasible to reach at the time and by such
means as may be feasible at the time. The notice shall specify the time and the
place of the meeting, which shall be the head office of the Corporation or any
other place specified in the notice. At any such meeting three members of the
then existing Board of Directors shall constitute a quorum, which may act by
majority vote.
SECTION 7. If the number of directors who are available to act shall drop
below three, additional directors, in whatever number is necessary to constitute
a Board of three Directors, shall be selected automatically from the first
available officers or employees in the order provided in the emergency
succession list established by the Board of Directors and in effect at the time
an emergency arises. Additional directors, beyond the minimum number of three
directors, but not more than three additional directors, may be elected from any
officers or employees on the emergency succession list.
SECTION 8. The Board of Directors is empowered with the maximum authority
possible under the Delaware Corporation Law, and all other applicable law, to
conduct the interim management of the affairs of the Corporation in an emergency
in what it considers to be in the best interests of the Corporation (including
the right to amend this Article) irrespective of the provisions of the
Certificate of Incorporation or of the By-Laws.
Article VIII
OFFICERS
SECTION 1. The officers of the Corporation shall be chosen by the Board of
Directors, shall include a Chief Executive Officer and a President, and may
include a Chairman of the Board (who shall be selected from the directors then
serving), one or more Vice Chairmen of the Board (who shall be selected from the
directors then serving), one or more Executive Vice Presidents, Senior Vice
Presidents, and Vice Presidents, respectively, a General Counsel, a Secretary,
one or more Assistant Secretaries, a Treasurer, one or more Assistant
Treasurers, and a Controller. Any number of offices may be held by the same
person, but if an instrument is required by law to be executed, acknowledged or
verified by two or more officers, no officer shall execute, acknowledge or
verify such instrument in more than one capacity for such purpose.
SECTION 2. Without limiting the right of the Board of Directors to choose
officers of the Corporation at any time when vacancies occur or when the number
of officers is increased, the Board of Directors at the first meeting after each
annual meeting of stockholders shall choose a Chief Executive Officer, a
President and such other officers as shall be designated at such time,
including, if so designated, a Chairman of the Board, one or more Vice Chairmen
of the Board, Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents, respectively, a General Counsel, a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers, and a Controller.
None of said officers, except the Chairman of the Board, and Vice Chairmen of
the Board, need be members of the Board.
SECTION 3. The Board of Directors may choose such other officers and agents
as it shall deem necessary or advisable, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors, or, in the absence of
exact specification or limitation thereof by the Board of Directors, as the
Chief Executive Officer may determine from time to time. Subject to the below
provisions, each of the officers of the Corporation elected by the Board of
Directors or appointed by an officer in accordance with these By-Laws shall have
the powers and duties prescribed by law, by the By-Laws or by the Board of
Directors and, in the case of appointed officers, the powers and duties
prescribed by the appointing officer, and, unless otherwise prescribed by the
By-Laws or by the Board of Directors or such appointing officer, shall have such
further powers and duties as ordinarily pertain to that office.
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SECTION 4. The salaries of all officers of the Corporation and of its
wholly owned subsidiaries, other than his own salary, shall be determined by the
Chief Executive Officer but shall be reviewed from time to time by an Executive
Compensation Committee appointed by the Board of Directors from among its
members. The Executive Compensation Committee shall recommend to the Board of
Directors such changes in the officers' salaries as fixed by the Chief Executive
Officer as it may deem appropriate and the Board of Directors shall instruct the
Chief Executive Officer to implement those of the recommended changes which it
approves. The salary of the Chief Executive Officer shall be determined by the
Board of Directors.
SECTION 5. The officers of the Corporation shall hold office until their
successors are chosen and qualify in their stead. Any officer elected or
appointed by the Board of Directors may be removed at any time with or without
cause by the affirmative vote of a majority of the whole Board of Directors.
Article IX
CHAIRMAN OF THE BOARD
SECTION 1. The Chairman of the Board shall do and perform such duties as
may from time to time be assigned to him by the Board of Directors or the Chief
Executive Officer.
Article X
CHIEF EXECUTIVE OFFICER
SECTION 1. The Chief Executive Officer shall preside at all meetings of the
stockholders and of the Board of Directors, and shall be a member, ex officio,
of all committees, except the Audit, Finance, Stock Option and Executive
Compensation committees. The Chief Executive Officer shall have general and
active management of the business of the Corporation, and shall see that all
orders and resolutions of the Board of Directors and of the committees thereof
are carried into effect.
SECTION 2. The Chief Executive Officer shall have authority, which he may
delegate, to execute certificates of stock, bonds, deeds, powers of attorney,
mortgages and other contracts, under the seal of the Corporation, unless
required by law to be otherwise signed and executed and unless the signing and
execution thereof shall be expressly and exclusively delegated by the Board of
Directors to some other officer or agent of the Corporation.
Article XI
VICE CHAIRMAN OF THE BOARD
SECTION 1. In the absence of the Chief Executive Officer, the Vice Chairman
(or, if there exists more than one Vice Chairman, the Vice Chairman designated
by the Board of Directors) shall serve as the Chief Executive Officer of the
Corporation. The Vice Chairmen of the Board shall advise and counsel with the
Chief Executive Officer and with other officers of the Corporation, and each
shall do and perform such other duties as may from time to time be assigned to
him by the Board of Directors or the Chief Executive Officer.
SECTION 2. Any Vice Chairman of the Board, to the extent delegated by the
Chief Executive Officer or the Board of Directors, may execute certificates of
stock, bonds, deeds, powers of attorney, mortgages and other contracts under the
seal of the Corporation, unless required by law to be otherwise signed and
executed and unless the signing and execution thereof be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation.
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Article XII
PRESIDENT
SECTION 1. The President shall be the chief operating officer of the
Corporation.
SECTION 2. The President shall have the authority, which he may delegate,
to execute certificates of stock, bonds, deeds, powers of attorney, mortgages
and other contracts, under the seal of the Corporation, unless required by law
to be otherwise signed and executed and unless the signing and execution thereof
shall be expressly and exclusively delegated by the Board of Directors or the
Chief Executive Officer to some other officer or agent of the Corporation.
Article XIII
VICE PRESIDENTS
SECTION 1. There may be one or more Executive Vice Presidents, one or more
Senior Vice Presidents, and such other Vice Presidents, with or without other
such special designations, as may be elected by the Board of Directors from time
to time.
SECTION 2. The Executive Vice Presidents and each of the Vice Presidents
shall have the authority to sign certificates of stock, bonds, deeds, mortgages
and other contracts, unless required by law to be otherwise signed and executed
and unless the signing and execution thereof shall be expressly and exclusively
delegated by the Board of Directors or the Chief Executive Officer to some other
officer or agent of the Corporation, and perform such duties and exercise such
powers as the Board of Directors or the Chief Executive Officer shall prescribe.
Article XIV
SECRETARY
SECTION 1. The Secretary shall attend all sessions of the Board of
Directors and all meetings of the stockholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for all committees of the Board of Directors when required.
He shall give, or cause to be given, all required notices of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or the Chief Executive Officer,
under whose supervision he shall be. He shall be responsible for keeping in safe
custody the seal of the Corporation, and when such is proper, he shall affix the
same to any instrument requiring it, and when so affixed, it shall be attested
by his signature or by the signature of an Assistant Secretary.
SECTION 2. The Assistant Secretaries in the absence or disability of the
Secretary shall perform and exercise the powers of the Secretary and shall
perform such further duties as may be prescribed by the Secretary, the Board of
Directors or the Chief Executive Officer.
Article XV
TREASURER
SECTION 1. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation, in
such depositories as may be designated by the Board of Directors or the Chief
Executive Officer.
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SECTION 2. The Treasurer shall: (a) endorse or cause to be endorsed in the
name of the Corporation for collection the bills, notes, checks or other
negotiable instruments received by the Corporation, (b) sign or cause to be
signed all bills, notes, checks or other negotiable instruments issued by the
Corporation and (c) pay out or cause to be paid out money, as the Corporation
may require, taking proper vouchers therefor; provided, however, that the Board
of Directors and the Chief Executive Officer may by resolution delegate, with or
without power to re-delegate, any and all of the foregoing duties of the
Treasurer to other officers, employees or agents of the Corporation, and to
provide that other officers, employees and agents shall have power to sign
bills, notes, checks, vouchers, orders, or other instruments on behalf of the
Corporation. The Treasurer shall render to the Chief Executive Officer and to
the Board of Directors, whenever they may require it, an account of his
transactions as Treasurer.
SECTION 3. The Treasurer shall give the Corporation a bond if required by
the Board of Directors in a sum, and with one or more sureties satisfactory to
the Board, for the faithful performance of the duties of his office and for the
restoration of the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
SECTION 4. The Assistant Treasurers in the absence or disability of the
Treasurer shall perform and exercise the powers of the Treasurer and shall
perform such further duties as may be prescribed by the Treasurer, the Board of
Directors or the Chief Executive Officer.
Article XVI
CONTROLLER
SECTION 1. The Controller shall have charge of the Corporation's books of
account, records and auditing, and shall be subject in all matters to the
control of the Board of Directors and the Chief Executive Officer.
Article XVII
VACANCIES AND DELEGATION OF DUTIES OF OFFICERS
SECTION 1. If the office of any officer or agent, one or more, becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office, or otherwise, the Board of Directors may choose a successor or
successors, who shall, unless the Board of Directors otherwise specifies, hold
office for the unexpired term in respect of which such vacancy occurred, or
until his successor shall be elected.
SECTION 2. In case of the absence of any officer of the Corporation, or for
any other reason that the Board of Directors may deem sufficient, the Board of
Directors may delegate, for the time being, the powers or duties, or any of
them, of such officer to any other officers and/or directors; provided a
majority of the entire Board of Directors concurs therein.
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Article XVIII
STOCK AND STOCKHOLDERS
SECTION 1. The shares of stock of the Corporation shall be represented by
certificates, provided that the Board of Directors may provide by resolution or
resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertificated shares. Any such resolution shall
not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate as provided in Article XVIII, Section 2 of these
By-Laws, or as otherwise permitted by law, representing the number of shares
registered in certificate form.
SECTION 2. The certificates of stock of the Corporation shall be numbered
and shall be entered in the books of the Corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed by the
Chairman of the Board, Chief Executive Officer, Vice Chairman of the Board,
President or a Vice President, and the Secretary or an Assistant Secretary. Any
and all signatures on a stock certificate may be a facsimile.
SECTION 3. Upon surrender to the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Corporation will issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books. Transfers of uncertificated shares will be made on the records
of the Corporation as may be provided by law.
SECTION 4. The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and accordingly
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person whether or not it shall
have express or other notice thereof, except as expressly provided by the laws
of Delaware.
SECTION 5. A new certificate of stock of the Corporation may be issued in
place of any certificate theretofore issued by the Corporation and alleged to
have been lost, stolen or destroyed.
The Board of Directors may from time to time prescribe the terms and
conditions under which such new certificates may be issued. Among other things,
the Board of Directors may require that the owner of the allegedly lost, stolen
or destroyed certificate, or his legal representatives, submit proper evidence
in writing and under oath that the alleged loss, theft, or destruction actually
occurred, and may require that such owner or representatives give the
Corporation a bond, satisfactory to the Corporation as to form and security,
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate. A new certificate may
be issued without requiring any bond when, in the judgment of the Board of
Directors or of any officer of the Corporation to whom the Board of Directors
may delegate appropriate authority, it is proper to waive the bond requirement.
Article XIX
INSPECTION OF BOOKS, CHECKS AND FISCAL YEAR
SECTION 1. The Board of Directors shall determine from time to time
whether, and, if allowed, when and under what conditions and regulations the
accounts and books of the Corporation (except such as may by statute be
specifically open to inspection), or any of them, shall be open to the
inspection of the stockholders, and the stockholders' rights in this respect are
and shall be restricted and limited accordingly.
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SECTION 2. Checks or demands for money and notes of the Corporation may be
signed by such officer or officers or such person or persons other than those
herein authorized and in such manner as the Board of Directors or the Chief
Executive Officer may from time to time provide.
SECTION 3. The fiscal year shall begin the first day in January of each
year and end the following December 31.
Article XX
DIRECTORS' ANNUAL STATEMENT
SECTION 1. The Board of Directors shall present at each annual meeting a
full and clear statement of the business and condition of the Corporation.
Article XXI
NOTICES
SECTION 1. Whenever under the provisions of the Certificate of
Incorporation or of these By-Laws notice (which as herein used shall include
also annual reports, proxy statements and solicitations and other communications
to holders of the Corporation's securities) is required to be, or may be, given
to any director, officer, stockholder or other person, it may, unless legally
controlling provisions prohibit the same, be given in writing, by mail, by
depositing the same in any U.S. post office or letter-box, in a postpaid sealed
wrapper addressed to such person to whom the notice may be, or is required to be
given, at such address as appears on the books of the Corporation, and all
notices given in accordance with the provisions of this Article shall be deemed
to be given at the time when the same shall be thus mailed.
SECTION 2. Should a person who is a stockholder own shares evidenced by
more than one stock certificate, nevertheless only one notice (when any is
required to be, or may be, given to holders of shares of any or all classes)
shall be, in the sole discretion of the Corporation, required to be mailed and
if different addresses as to such person are recorded on the Corporation's stock
ledger the notice may be mailed to the address that appears to have been given
latest in time unless the stockholders shall have expressly directed otherwise
in writing to the Secretary of the Corporation, nor shall variations in the
designation of the name or identity of any one stockholder require the mailing
of more than one notice to any one stockholder, which may be mailed to any one
of the names or designations that may so appear in the Corporation's stock
ledger with respect to such stockholder; and, at the sole discretion of the
Corporation, the distribution of dividend payments may be, unless a stockholder
shall expressly request multiple distributions strictly in accordance with the
stock ledger record of his multiple ownerships, handled in accordance with or so
as not to be repugnant to the purpose of the above provisions, which is to avoid
the expenditure by the Corporation of effort, time and expense in such matters
that might have been avoided had the recording of a stockholder's name and/or
address incident to his multiple record ownership of shares been effected
accurately, uniformly and consistently.
SECTION 3. Any stockholder, director or officer may waive in writing or
otherwise any notice required to be given under the provisions of pertinent
statutes or of the Certificate of Incorporation or of these By-Laws. A waiver of
notice in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice.
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Article XXII
INDEMNIFICATION
SECTION 1. The Corporation shall, to the full extent permitted by the Laws
of the State of Delaware as then in effect or, if less stringent, in effect on
December 31, 1985 ("Delaware Law"), indemnify any person (the "Indemnitee") made
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative and
whether or not by or in the right of the Corporation, by reason of the fact that
the Indemnitee is or was a director, officer or employee of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee, trustee, partner, or other agent of any other enterprise or legal
person (any such action, suit or proceeding being herein referred to as a "Legal
Action") against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the Indemnitee in
connection with such Legal Action or its investigation, defense or appeal
(herein called "Indemnified Expenses"), if the Indemnitee has met the standard
of conduct necessary under Delaware Law to permit such indemnification. Rights
to indemnification shall extend to the heirs, beneficiaries, administrators and
executors of any deceased Indemnitee.
For purposes of this Section, reference to "any other enterprise or legal
person" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries.
The Indemnified Expenses shall be paid by the Corporation in advance as
shall be appropriate to permit Indemnitee to defray such expenses currently as
incurred, provided the Indemnitee agrees in writing that in the event it shall
ultimately be determined as provided hereunder that Indemnitee was not entitled
to be indemnified, then Indemnitee shall promptly repay to the Corporation such
amounts so paid. The prepayment of expenses as provided for in this Section 1
shall be authorized by the Board of Directors in the specific case unless the
Board of Directors receives within thirty (30) days of the Indemnitee's request
for indemnification an opinion of counsel selected in the manner provided for in
Section 2 of this Article XXII that there is no reasonable basis for a belief
that the Indemnitee's conduct met the requisite standard of conduct. The fees of
such counsel and all related expenses shall, in all cases, be paid by the
Corporation.
SECTION 2. The determination of whether Indemnitee has met the standard of
conduct required to permit indemnification under this By-Law shall in the first
instance be submitted to the Board of Directors of the Corporation. If the Board
by a majority vote of a quorum consisting of directors who were not parties to
such Legal Action determines Indemnitee has met the required standard of conduct
such determination shall be conclusive; but if such affirmative majority vote is
not given, then the matter shall be referred to independent legal counsel for
determination. Such outside counsel shall be selected by agreement of the Board
of Directors and Indemnitee or, if they are unable to agree, then by lot from
among those New York City law firms which (i) have more than 100 attorneys, (ii)
have a substantial practice in the corporate and securities areas of law, (iii)
have not performed any services for the Corporation or any of its subsidiaries
or affiliates for at least five (5) years and (iv) have a rating of "av" in the
then current Martindale-Hubbell Law Directory. The fees and expenses of counsel
in connection with making this determination shall be paid by the Corporation.
Notwithstanding the foregoing, if dissatisfied with the determination so
made by counsel, Indemnitee may within two (2) years thereafter, petition any
court of competent jurisdiction to determine whether Indemnitee is entitled to
indemnification under the provisions hereof and such court shall thereupon have
the exclusive authority to make such determination. The Corporation shall pay
all expenses (including attorneys' fees) actually incurred by Indemnitee in
connection with such judicial determination.
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The termination of any Legal Action by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not meet the requisite
standard of conduct; however, a successful defense of a Legal Action by
Indemnitee on the merits or otherwise shall conclusively establish Indemnitee
did meet such standard of conduct notwithstanding any previous determination to
the contrary under this Section 2.
SECTION 3. The indemnification and advance payment of expenses as provided
in this Article XXII shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under any provision of law, the Certificate of
Incorporation, any By-Law or otherwise.
SECTION 4. If any provision of this Article XXII shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, the validity,
legality and enforceability of the remaining provisions of this Article XXII
shall not in any way be affected or impaired thereby.
SECTION 5. Any amendment, repeal or modification of these By-Laws, the
Corporation's Certificate of Incorporation or any applicable provision of
Delaware Law, or any other instrument, which eliminates or diminishes the
indemnification rights provided for in this Article XXII shall be ineffective as
against an Indemnitee with respect to any Legal Action based upon actions taken
or not taken by the Indemnitee prior to such repeal or the adoption of such
modification or amendment. The provisions of this By-Law shall be applicable to
all Legal Actions made or commenced after the adoption hereof, whether arising
from acts or omissions to act occurring before or after its adoption. The
provisions of this By-Law shall be deemed to be a contract between the
Corporation and each director or officer who serves in such capacity at any time
while this By-Law and the relevant provisions of Delaware Law and other
applicable law, if any, are in effect. If any provision of this By-Law shall be
found to be invalid or limited in application by reason of any law or
regulation, it shall not affect the validity of the remaining provisions hereof.
The rights of indemnification provided in this By-Law shall neither be exclusive
of, nor be deemed in limitation of, any rights to which an officer, director,
employee or agent may otherwise be entitled or permitted by contract, this
By-Law, vote of stockholders or directors or otherwise, or as a matter of law,
both as to actions in such person's official capacity and actions in any other
capacity while holding such office, it being the policy of the Corporation that
indemnification of any person whom the Corporation is obligated to indemnify
pursuant to this By-Law shall be made to the fullest extent permitted by law.
Article XXIII
AMENDMENTS
SECTION 1. These By-Laws may be altered or amended or repealed, in whole or
in part: By the affirmative vote of the holders of a majority of the stock
issued and outstanding and entitled to a vote thereat, at any regular or special
meeting of the stockholders, or by the affirmative vote of a majority of the
Board of Directors in attendance at any regular or special meeting of the Board
of Directors; provided, however, that, notwithstanding any other provisions of
these By-Laws or any provision of law which might otherwise permit a lesser vote
of the stockholders, the affirmative vote of the holders of at least 75 percent
in voting power of all shares of the Corporation entitled to vote generally in
the election of directors, voting together as a single class, shall be required
in order for the stockholders to alter, amend or repeal Section 8 and Section 11
of Article III, Sections 2 and 6 of Article IV or this proviso to this Article
XXIII of these By-Laws or to adopt any provision inconsistent with any of such
Sections or with this proviso.
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APPENDIX B
AMENDMENT TO THE CERTIFICATE
OF INCORPORATION OF ORYX ENERGY COMPANY
Article FOURTH of the Restated Certificate of Incorporation of Oryx Energy
Company shall be amended by adding thereto the following provision:
"Immediately upon effectiveness of this amendment to the Restated
Certificate of Incorporation of the Corporation pursuant to Delaware
General Corporation Law (the "Effective Time"), each share outstanding
immediately prior thereto of the Corporation's common stock, par value
$1.00 per share ("Old Common Stock"), shall automatically, without further
action on the part of the Corporation or any holder of the Old Common
Stock, be reclassified into and become 0.369 shares of the Corporation's
common stock, par value $1.00 per share ("New Common Stock"), as
constituted following the Effective Time. After the Effective Time,
certificates previously representing shares of Old Common Stock will
represent the number of shares of New Common Stock into which such shares
of Old Common Stock shall have been reclassified pursuant to this
amendment."
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APPENDIX C
[LEHMAN BROTHERS LOGO]
October 14, 1998
Board of Directors
Kerr-McGee Corporation
Kerr-McGee Center
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Members of the Board:
We understand that Kerr-McGee Corporation ("Kerr-McGee") and Oryx Energy
Company ("Oryx") are considering entering into a transaction pursuant to which
Oryx will effect a reverse stock split (the "Reverse Split") and will then
immediately merge with and into Kerr-McGee (together, the "Merger") and, upon
effectiveness of the Merger (including the Reverse Split), each share of common
stock of Oryx outstanding prior to the Reverse Split will be converted into the
right to receive 0.369 shares of the common stock of Kerr-McGee (the "Exchange
Ratio"). The terms and conditions of the Merger are set forth in more detail in
the Agreement and Plan of Merger dated October 14, 1998 by and among Kerr-McGee
and Oryx (the "Agreement").
We have been requested by the Board of Directors of Kerr-McGee to render
our opinion with respect to the fairness, from a financial point of view, to
Kerr-McGee of the Exchange Ratio. We have not been requested to opine as to, and
our opinion does not in any manner address, Kerr-McGee's underlying business
decision to proceed with or effect the Merger.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Merger, including provisions therein relating to
corporate governance and management of Kerr-McGee following the Merger; (2) such
publicly available information concerning Kerr-McGee and Oryx that we believe to
be relevant to our analysis, including, without limitation, each of the periodic
reports and proxy statements filed by Kerr-McGee and Oryx since January 1, 1998
(including the audited and unaudited financial statements included in such
reports and statements); (3) financial and operating information with respect to
the respective businesses, operations and prospects of Kerr-McGee and Oryx as
furnished to us by Kerr-McGee and Oryx, respectively, including financial
projections based on the respective business plans of Kerr-McGee and Oryx and,
in particular, (A) certain estimates of proved and non-proved reserves, (B)
projected annual production of such reserves in certain domestic and
international areas and (C) amounts and timing of the cost savings and operating
synergies expected to result from a combination of the businesses of Kerr-McGee
and Oryx; (4) a trading history of Kerr-McGee common stock from September 30,
1997 to the present and a comparison of that trading history with those of other
companies that we deemed relevant, including Oryx; (5) a trading history of the
Oryx common stock from September 30, 1997 to the present and a comparison of
that trading history with those of other companies that we deemed relevant,
including Kerr-McGee; (6) a comparison of the historical financial results and
present financial condition of Kerr-McGee with those of other companies that we
deemed relevant; (7) a comparison of the historical financial results and
present financial condition of Oryx with those of other companies that we deemed
relevant; (8) the potential pro forma impact of the Merger on Kerr-McGee
LEHMAN BROTHERS
600 TRAVIS STREET 7330 CHASE TOWER TELEPHONE 713/236-3956 FACSIMILE 713/222-8908
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(including the cost savings and operating synergies expected by management of
Kerr-McGee to result from a combination of the businesses of Kerr-McGee and
Oryx); and (9) a comparison of the financial terms of the Merger with the
financial terms of certain other transactions that we deemed relevant. In
addition, we have (i) had discussions with the senior managements of Kerr-McGee
and Oryx concerning their respective businesses, operations, financial
conditions, assets, reserves, production profiles, exploration programs and
prospects and the cost savings, operating synergies and strategic benefits
expected by the managements of Kerr-McGee and Oryx to result from a combination
of the businesses of Kerr-McGee and Oryx and (ii) undertaken such other studies,
analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy
and completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information and
have further relied upon the assurances of managements of Kerr-McGee and Oryx
that they are not aware of any facts or circumstances that would make such
information inaccurate or misleading. With respect to the financial projections
for Kerr-McGee, Oryx and Kerr-McGee following the consummation of the merger
(the "Combined Company") (including the cost savings and operating synergies
expected to result from a combination of the businesses of Kerr-McGee and Oryx),
upon advice of Kerr-McGee and Oryx, we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the managements of Kerr-McGee and Oryx, as the case
may be, as to the future financial performance of Kerr-McGee, Oryx and the
Combined Company, and that each of Kerr-McGee and Oryx would perform, and the
Combined Company will perform, substantially in accordance with such
projections. In arriving at our opinion, we have not conducted a physical
inspection of the properties and facilities of Kerr-McGee or Oryx and have not
made or obtained from third parties any evaluations or appraisals of the assets
or liabilities of Kerr-McGee or Oryx. With your permission, we have assumed that
the Merger will qualify for pooling-of-interests accounting treatment. Our
opinion necessarily is based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Exchange Ratio is fair to
Kerr-McGee.
We have acted as financial advisor to Kerr-McGee in connection with the
Merger and will receive a fee for our services, a substantial portion of which
is contingent upon the consummation of the Merger. In addition, Kerr-McGee has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed various investment banking
services for Kerr-McGee and Oryx in the past and have received customary
compensation for such services. In the ordinary course of our business, we
actively trade in the debt and equity securities of Kerr-McGee and Oryx for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of
Kerr-McGee and is rendered to the Board of Directors in connection with its
consideration of the Merger. This opinion is not intended to be and does not
constitute a recommendation to any stockholder of Kerr-McGee as to how such
stockholder should vote with respect to the Merger.
Very truly yours,
LEHMAN BROTHERS
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APPENDIX D
PERSONAL AND CONFIDENTIAL
October 14, 1998
Board of Directors
Oryx Energy Company
13155 Noel Road
Dallas, TX 75240-5067
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $1.00
per share (the "Oryx Common Stock"), of Oryx Energy Company ("Oryx") of the
exchange ratio of one share, after giving effect to the Reverse Split (as
defined below), of Common Stock, par value $1.00 per share (the "Company Common
Stock"), of Kerr-McGee Corporation ("Kerr-McGee") to be received for each share
of Oryx Common Stock (the "Exchange Ratio") pursuant to the Agreement and Plan
of Merger, dated as of October 14, 1998, between Kerr-McGee and Oryx (the
"Agreement").
Pursuant to the Agreement, Oryx will be merged with and into Kerr-McGee
(the "Merger") and each share of Oryx Common Stock will be converted into the
right to receive one share of Company Common Stock. Prior to the Merger, Oryx
will effect a reverse stock split of Oryx Common Stock pursuant to which each
share of Oryx Common Stock will become .369 shares of Oryx Common Stock (the
"Reverse Split"), and each share of Common Stock, par value $1.00 per share, of
Kerr-McGee (the "Kerr-McGee Common Stock") issued and outstanding immediately
prior to the Merger shall remain issued and outstanding as one share of Company
Common Stock.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with Oryx having provided certain investment banking services to Oryx
from time to time, including having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We have also provided certain investment banking services to
Kerr-McGee from time to time, including having acted as a co-managing
underwriter of public offerings of $150 million principal amount of 6 5/8% Notes
due 2007 and $150 million principal amount of 7 1/8% Debentures due 2027, both
on October 16, 1997. Goldman, Sachs & Co. provides a full range of financial
advisory and securities services and, in the course of its normal trading
activities, may from time to time effect transactions and hold securities,
including derivative securities, of Oryx or Kerr-McGee for its own account and
for the accounts of customers. Goldman, Sachs & Co. may provide investment
banking services to Kerr-McGee and its subsidiaries in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
Oryx and Kerr-McGee for the five years ended December 31, 1997; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of Oryx and
Kerr-McGee; certain other communications from Oryx and Kerr-McGee to their
respective stockholders; certain internal financial analyses and prospective
information for Oryx and Kerr-McGee prepared by their respective managements;
and estimates of cost savings and synergies expected to result from the Merger
prepared jointly by the managements of Oryx and Kerr-McGee (the "Synergies"). We
also have held discussions with members of the senior management of Oryx and
Kerr-McGee regarding the strategic rationale for, and the potential benefits of,
the Merger and the past and current business operations, financial condition and
future prospects of their respective companies. We have reviewed
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Oryx Energy Company
October 14, 1998
Page 2
certain information provided by Oryx and Kerr-McGee relating to their oil and
gas reserves, including reserve information for the year ended December 31,
1997, prepared by the respective managements of Oryx and Kerr-McGee and a review
of Oryx's reserves prepared by an independent petroleum engineer, and we have
discussed such reserve information with the respective senior managements of
Oryx and Kerr-McGee. In addition, we have reviewed the reported price and
trading activity for shares of Oryx Common Stock and shares of Kerr-McGee Common
Stock, compared certain financial and stock market information for Oryx and
Kerr-McGee with similar information for certain other companies the securities
of which are publicly traded, reviewed the financial terms of certain recent
business combinations in the oil and gas industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed with your consent that the internal prospective financial information,
including the Synergies, prepared by the managements of Oryx and Kerr-McGee have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the managements of Oryx and Kerr-McGee. We also have
assumed with your consent that the Merger will be accounted for as a
pooling-of-interests under generally accepted accounting principles. In
addition, we have not made an independent evaluation or appraisal of the assets
and liabilities of Oryx or Kerr-McGee or any of their subsidiaries and we have
not been furnished with any such evaluation or appraisal. With respect to oil
and gas reserve information, we are not experts in the evaluation of oil and gas
properties and, with your consent, have relied without independent verification
solely upon the reserve information and internal estimates prepared by senior
management of Oryx and Kerr-McGee. We were not requested to solicit, and did not
solicit, interest from other parties with respect to an acquisition of or other
business combination with Oryx. Our advisory services and the opinion expressed
herein are provided for the information and assistance of the Board of Directors
of Oryx in connection with its consideration of the Merger and such opinion does
not constitute a recommendation as to how any holder of shares of Oryx Common
Stock should vote with respect to the Merger.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair from a financial point of view
to the holders of Oryx Common Stock.
Very truly yours,
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APPENDIX E
KERR-MCGEE STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 14, 1998 (the "Agreement"), by
and between Kerr-McGee Corporation, a Delaware corporation ("Issuer"), and Oryx
Energy Company, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Grantee with and into Issuer with Issuer as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement, Issuer has requested that Grantee agree, and Grantee
has agreed, to grant Issuer an option to purchase shares of Grantee's common
stock on substantially the same terms as the Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 9,434,181 (as adjusted as set forth herein) shares (the "Option Shares")
of Common Stock, par value $1.00 per share, of Issuer (the "Issuer Common
Stock") at a purchase price of $46.94 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Oryx Stock Option Agreement, Grantee may exercise the Option,
in whole or in part, at any time or from time to time following the occurrence
of a Purchase Event (as defined below); provided that, except as otherwise
provided herein, the Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time of the Merger, (ii)
12 months after the first occurrence of a Purchase Event or (iii) termination of
the Merger Agreement prior to the occurrence of a Purchase Event (unless such
termination itself constitutes a Purchase Event). Notwithstanding the
termination of the Option, Grantee shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option pursuant to this
Section 2(a) in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
(b) As used herein, a "Purchase Event" means the termination of the
Merger Agreement under any circumstance which would entitle Grantee to
receive any fee from the Issuer pursuant to Section 7.2(b) of the Merger
Agreement.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 20 business days from such
Notice Date for the closing of such purchase (a "Closing"; and the date of
such Closing, a "Closing Date"); provided that such Closing shall be held
only if (A) such purchase would not otherwise violate or cause the
violation of applicable law (including the HSR Act) and (B) no law, rule or
regulation shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other
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order, decree or ruling issued by a court or other Governmental Entity of
competent jurisdiction shall be in effect, which prohibits delivery of such
Option Shares (and the parties hereto shall use their reasonable best
efforts to have any such order, injunction, decree or ruling vacated or
reversed). If such Closing cannot be consummated by reason of a restriction
set forth in clause (A) or (B) above, notwithstanding the provisions of
Section 2(a), such Closing Date shall be within 20 business days following
the elimination of such restriction.
3. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank
account designated by Issuer an amount equal to the Purchase Price multiplied by
the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be free and clear of
all Liens, and Grantee shall deliver to Issuer a letter agreeing that
Grantee shall not offer to sell or otherwise dispose of such Option Shares
in violation of applicable law or the provisions of this Agreement. If, at
the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, Issuer shall not have redeemed the Kerr-McGee
Rights (the "Rights"), or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Right or new rights with terms substantially the same as and
at least as favorable to Grantee as are provided under the Rights Agreement
or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF OCTOBER 14, 1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Authorized Stock. Issuer hereby represents and warrants to Grantee that
Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and, at all times from the date hereof until
the obligation to deliver Issuer Common Stock upon the exercise of the Option or
any Substitute Option (as hereinafter defined) terminates, will have reserved
for issuance, upon exercise of the Option or any Substitute Option, shares of
Issuer Common Stock necessary for Grantee to exercise the Option or Substitute
Option, and Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 6 upon exercise of the Option
or Substitute Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option or Substitute Option, including all additional shares of
Issuer Common Stock or other securities which may be issuable upon exercise of
the Option or Substitute Option pursuant to Section 6, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid
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and nonassessable, and shall be delivered free and clear of all Liens, including
any preemptive rights of any stockholder of Issuer.
5. Purchase Not for Distribution. Grantee hereby represents and warrants to
Issuer that any Option Shares or other securities acquired by Grantee upon
exercise of the Option or Substitute Option will not be taken with a view to the
public distribution thereof and will not be transferred or otherwise disposed of
except in a transaction registered or exempt from registration under the
Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of any
change in Issuer Common Stock by reason of a reclassification, recapitalization,
stock split, split-up, combination, exchange of shares, stock dividend, dividend
payable in any other securities, or any similar event, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event or the record date
therefor, as applicable. If any additional shares of Issuer Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described in the immediately preceding sentence), the number of shares of Issuer
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger,
the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other
property, or the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger shall after such merger represent
less than 50% of the outstanding voting securities of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then,
and in each such case, the agreement governing such transaction shall make
proper provisions so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at
the election of Grantee, of either (I) the Acquiring Corporation (as
defined below) or (II) any person that controls the Acquiring Corporation
(any such person specified in clause (I) or (II) being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject
thereto shall be as set forth in this Section 6 and the repurchase rights
relating thereto shall be as set forth in Section 8; provided, further,
that the Substitute Option shall be exercisable immediately upon issuance
without the occurrence of a Purchase Event; and provided, further, that if
the terms of the Substitute Option cannot, for legal reasons, be the same
as the Option (subject to the variations described in the foregoing
provisos), such terms shall be as similar as possible and in no event less
advantageous to Grantee. Substitute Option Issuer shall also enter into an
agreement with Grantee in substantially the same form as this Agreement
(subject to the variations described in the foregoing provisos), which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the
Assigned Value (as defined below) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as defined below), rounded up to the nearest
whole share. The exercise price
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per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Purchase Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable and
the denominator is the number of shares of Substitute Common Stock for
which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
outstanding Substitute Common Stock but for the limitation in the first
sentence of this Section 6(e), Substitute Option Issuer shall make a cash
payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first sentence of
this Section 6(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in the first sentence of this Section 6(e). This
difference in value shall be determined in good faith by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and, if applicable, any beneficial
owner of 50% or more of the outstanding voting stock of the Acquiring
Corporation (after giving effect to the transaction) assume in writing all
the obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Agreement are given full force and
effect (including, without limitation, any action that may be necessary so
that the holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights comparable to the
Rights by reason of the issuance or exercise of the Substitute Option and
the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value than other shares of
common stock issued by Substitute Option Issuer (other than any diminution
in value resulting from the fact, if applicable, that the shares of
Substitute Common Stock are restricted securities, as defined in Rule 144
under the Securities Act or any successor provision)).
(g) For purposes of this Agreement, the following terms have the
following meanings:
(1) "Acquiring Corporation" means (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation and (iii) the transferee of all or substantially
all of Issuer's assets.
(2) "Assigned Value" means the highest of (w) the price per share
of Issuer Common Stock at which a tender offer or exchange offer for
Issuer Common Stock has been made after the date hereof and prior to the
consummation of the consolidation, merger or sale referred to in Section
6(b), (x) the price per share to be paid by any third party or the
consideration per share to received by holders of Issuer Common Stock,
in each case pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in the
event the transaction referred to in Section 6(b) is a sale of all or
substantially all of Issuer's assets, an amount equal to (i) the sum of
the price paid in such sale for such assets (including assumed
liabilities) and the current market value of the remaining assets of
Issuer, as determined in good faith by a nationally recognized
investment banking firm selected by Grantee, divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time. In the event
that a tender
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offer or exchange offer is made for Issuer Common Stock or an agreement
is entered into for a merger or consolidation involving consideration
other than cash, the value of the securities or other property issuable
or deliverable in exchange for Issuer Common Stock shall be determined
in good faith by a nationally recognized investment banking firm
selected by Grantee.
(3) "Average Price" means the average closing sales price per share
of a share of Substitute Common Stock quoted on the NYSE (or if such
Substitute Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotation System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) for the twenty
trading days immediately preceding the fifth business day prior to the
consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if
Substitute Option Issuer is Issuer, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of
the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
7. Repurchase of Option and Option Shares. (a) Notwithstanding the
provisions of Section 2(a), at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer
(or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the Option
(if and to the extent not previously exercised or terminated) at a price
equal to the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date (as defined below) for a share
of Issuer Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option has not been
exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to time,
repurchase such number of Option Shares as such owner shall designate at
a price equal to the Applicable Price as of the Section 7 Request Date
multiplied by the number of Option Shares requested to be repurchased by
such owner (the "Option Share Repurchase Price").
(b) If Grantee or an owner of Option Shares exercises its rights under
this Section 7, Issuer shall, within 10 business days after the Section 7
Request Date, pay the Option Repurchase Price or Option Share Repurchase
Price, as the case may be, in immediately available funds, and Grantee or
such owner, as the case may be, shall surrender to Issuer the Option or
Option Shares, as the case may be.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of (A)
the highest price per share at which a tender offer or exchange offer
has been made for shares of Issuer Common Stock after the date hereof
and on or prior to such date, (B) the highest price per share to be paid
by any third party for shares of Issuer Common Stock or the
consideration per share to be received by holders of Issuer Common
Stock, in each case pursuant to an agreement for an Acquisition Proposal
with Issuer entered into on or prior to such date or (C) the highest
closing sales price per share of Issuer Common Stock quoted on the NYSE
(or if Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Issuer Common
Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported
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by a recognized source) during the 60 business days preceding such date.
If the consideration to be offered, paid or received pursuant to either
of the foregoing clauses (A) or (B) shall be other than in cash, the
value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by
Grantee.
(ii) "Repurchase Event" means the occurrence of a Purchase Event
followed by the consummation of any transaction the proposal of which
would constitute an Acquisition Proposal.
(iii) "Section 7 Request Date" means the date on which Grantee or
an owner of Option Shares exercises its rights under this Section.
8. Repurchase of Substitute Option. (a) At any time after issuance of the
Substitute Option and prior to the expiration of the Substitute Option,
Substitute Option Issuer (or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the
Substitute Option (if and to the extent not previously exercised or
terminated) at a price equal to the excess, if any, of (x) the Highest
Closing Price as of the Section 8 Request Date (as defined below) for a
share of Substitute Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of shares
of Substitute Common Stock with respect to which the Substitute Option
has not been exercised (the "Substitute Option Repurchase Price"); and
(ii) at the request of an owner of shares of Substitute Common
Stock issued upon exercise of the Substitute Option, repurchase such
number of shares of Substitute Common Stock as such owner shall
designate at a price equal to the Highest Closing Price as of the
Section 8 Request Date multiplied by the number of shares of Substitute
Common Stock requested to be repurchased by such owner (the "Substitute
Share Repurchase Price").
(b) If Grantee or an owner of shares of Substitute Common Stock issued
upon exercise of the Substitute Option exercises its rights under this
Section 8, Substitute Option Issuer shall, within 10 business days after
the Section 8 Request Date, pay the Substitute Option Repurchase Price or
Substitute Share Repurchase Price, as the case may be, in immediately
available funds, and Grantee or such owner, as the case may be, shall
surrender to Issuer the Option or shares of Substitute Common Stock, as the
case may be.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Highest Closing Price" means the highest closing sales price
for shares of Substitute Common Stock quoted on the NYSE (or if the
Substitute Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) during the
six-month period preceding the Section 8 Request Date; and
(ii) "Section 8 Request Date" means the date on which Grantee or an
Owner exercises its rights under this Section.
9. Registration Rights. Issuer shall, if requested by Grantee or any owner
of Option Shares (collectively with Grantee, the "Owners") at any time and from
time to time within three years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
Owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities under any applicable
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state securities laws. Issuer shall use all reasonable efforts to cause each
such registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective for such period not in excess of 180 days from
the day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness may
be suspended for one or more periods of time not exceeding 30 days in the
aggregate if the Board of Directors of Issuer shall have determined that the
filing of such registration statement or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect Issuer. Any registration statement prepared and filed under
this Section 9, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts commissions, brokers' fees and the fees and
disbursements of Owners' counsel related thereto. The Owners shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If during the time period referred to in the
first sentence of this Section 9 Issuer effects a registration under the
Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow the Owners the right to participate in such registration,
and such participation shall not affect the obligation of Issuer to effect two
registration statements for the Owners under this Section 9; provided that, if
the managing underwriters of such offering advise Issuer in writing that in
their opinion the number of shares of Issuer Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering, Issuer shall include the shares requested to be included therein by
the Owners pro rata with the shares intended to be included therein by Issuer.
In connection with any registration pursuant to this Section 9, Issuer and the
Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
10. Listing; Reasonable Best Efforts. (a) If Issuer Common Stock or any
other securities to be acquired upon exercise of the Option are then listed on
the NYSE or any other securities exchange or market, Issuer, upon the request of
any Owner, will promptly file an application to list the shares of Issuer Common
Stock or other securities to be acquired upon exercise of the Option on the NYSE
or such other securities exchange or market and will use its best efforts to
obtain approval of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to permit the
exercise of the Option or the Substitute Option in accordance with the
terms and conditions hereof, as soon as practicable after the date hereof,
including making any appropriate filing of pursuant to the HSR Act and any
other Regulatory Law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other Regulatory Law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
11. Limitation of Grantee Profit. (a) Notwithstanding any other provision
herein, in no event shall Grantee's Total Profit (as defined below) exceed $70
million (the "Maximum Profit") and, if it otherwise would exceed such amount,
Grantee, at its sole discretion, shall either (i) reduce the number of shares
subject to the Option, (ii) deliver to Issuer for cancellation shares of Issuer
Common Stock (or other securities into which such Option Shares are converted or
exchanged), (iii) pay cash to Issuer, or (iv) any combination of the foregoing,
so that Grantee's actually realized Total Profit shall not exceed the Maximum
Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i) the
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) to any unaffiliated third party within
12 months after the exercise of the Option, over (y) the Grantee's
aggregate purchase price for such Option Shares (or other securities), plus
(B) any amounts received by Grantee on the transfer
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of the Option (including amounts payable to Grantee pursuant to Section 7),
plus (C) any equivalent amounts with respect to the Substitute Option, plus
(D) any amounts received by Grantee pursuant to Section 7.2 of the Merger
Agreement, minus (ii) the amounts of any cash previously paid to Issuer
pursuant to this Section 11 plus the value of the Option Shares (or other
securities) previously delivered to Issuer for cancellation pursuant to
this Section 11.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, any payment provided for in Section 7.2 of the
Merger Agreement; provided that if and to the extent the Total Profit
received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to comply with the terms of
Section 11(a) within 30 days of the latest of (i) the date of receipt of
such payment, (ii) the date of receipt of the net cash by Grantee pursuant
to the sale of Option Shares (or securities into which such Option Shares
are converted or exchanged) to any unaffiliated party within 12 months
after the exercise of this Option with respect to such Option Shares, (iii)
the date of receipt of net cash from disposition of the Option and (iv) the
date of receipt of equivalent amounts pursuant to the sale of the
Substitute Option or shares of Substitute Common Stock (or other securities
into which such Substitute Common Stock is converted or exchanged).
(d) For purposes of Section 11(a) and clause (ii) of Section 11(b),
the value of any Option Shares delivered to Issuer shall be the Assigned
Value of such Option Shares and the value of any Substitute Common Stock
delivered to Issuer shall be the Highest Closing Price of such Substitute
Common Stock.
12. Loss, Theft, Etc. of Agreement. This Agreement (and the Option granted
hereby) is exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Miscellaneous. (a) Expenses. Except as otherwise provided in Section 9
hereof or in the Merger Agreement, each of the parties hereto shall bear and pay
all Expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement, together
with the Merger Agreement, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or a federal or state regulatory agency to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way
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be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Grantee to
acquire, or does not require Issuer (or Substitute Option Issuer) to
repurchase, the full number of shares of Issuer Common Stock (or Substitute
Common Stock) as provided in Sections 2 and 7 (or in the case of Substitute
Common Stock Sections 2 and 8), as adjusted pursuant to Section 6, it is
the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement.
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Grantee may assign this Agreement in whole to any
affiliate of Grantee at any time. Except as provided in the next sentence,
Grantee may not, without the prior written consent of Issuer (which shall
not be unreasonably withheld), assign this Agreement to any other person.
Upon the occurrence of a Purchase Event, Grantee may sell, transfer, assign
or otherwise dispose of, in whole at any time, its rights and obligations
hereunder. In the case of any sale, transfer, assignment or disposition of
this Option, Issuer shall do all things reasonably necessary to facilitate
such transaction. This Agreement shall not be assignable by Issuer except
by operation of law. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(i) Representations and Warranties. The representations and warranties
contained in Sections 3.1(a) and 3.2(a) of the Merger Agreement, and, to
the extent they relate to this Stock Option Agreement, in Sections 3.1(c),
(f), (l) and (m) and 3.2(c), (f) and (m) of the Merger Agreement, are
incorporated herein by reference.
(j) Rights Plan. Until the Option has been exercised or terminated in
full and Grantee no longer holds any Option Shares, Issuer shall not amend,
modify or waive any provision of the Kerr-McGee Rights Agreement (the
"Rights Agreement") or take any other action which would cause Grantee or
any of its "Affiliates" or "Associates" to become an "Acquiring Person", or
which would cause a "Stock Acquisition Date" or "Distribution Date", any
event specified in Section 11(a)(ii) or 13 of the Rights Agreement or any
similar event with respect to the Rights to occur, by reason of the
existence or exercise (in whole or in part) of the Option, the beneficial
ownership by Grantee or any of its "Affiliates" or "Associates" of any of
the Option Shares, or the consummation of the other transactions
contemplated hereby (all terms in quotes are used as defined in the Rights
Agreement). This covenant shall also apply to any Substitute Option or
shares of Substitute Common Stock issued in respect thereof, and to any
securities into which any Option Shares or Substitute Common Stock are
converted or exchanged.
(k) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
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(l) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are
entitled at law or in equity. Both parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
(m) Submission to Jurisdiction; Waivers. Each of Issuer and Grantee
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may
be brought and determined in the Chancery or other Courts of the State of
Delaware, and each of Issuer and Grantee hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction
of the aforesaid courts. Each of Issuer and Grantee hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court
is brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
KERR-McGEE CORPORATION
By: /s/ LUKE R. CORBETT
----------------------------------
Name: Luke R. Corbett
Title: Chairman and Chief
Executive Officer
ORYX ENERGY COMPANY
By: /s/ ROBERT L. KEISER
----------------------------------
Name: Robert L. Keiser
Title: Chairman and Chief
Executive Officer
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APPENDIX F
ORYX STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 14, 1998 (the "Agreement"), by
and between Oryx Energy Company, a Delaware corporation ("Issuer"), and
Kerr-McGee Corporation, a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer are concurrently herewith entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms not defined herein shall have the meanings set
forth in the Merger Agreement), providing for, among other things, the merger of
Issuer with and into Grantee with Grantee as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to enter
into the Merger Agreement, Issuer has requested that Grantee agree, and Grantee
has agreed, to grant Issuer an option to purchase shares of Grantee's common
stock on substantially the same terms as the Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 21,140,482 (as adjusted as set forth herein) shares (the "Option Shares")
of Common Stock, par value $1.00 per share, of Issuer (the "Issuer Common
Stock") at a purchase price of $11.50 per Option Share (the "Purchase Price").
2. Exercise of Option. (a) If not in material breach of the Merger
Agreement or the Kerr-McGee Stock Option Agreement, Grantee may exercise the
Option, in whole or in part, at any time or from time to time following the
occurrence of a Purchase Event (as defined below); provided that, except as
otherwise provided herein, the Option shall terminate and be of no further force
and effect upon the earliest to occur of (i) the Effective Time of the Merger,
(ii) 12 months after the first occurrence of a Purchase Event or (iii)
termination of the Merger Agreement prior to the occurrence of a Purchase Event
(unless such termination itself constitutes a Purchase Event). Notwithstanding
the termination of the Option, Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option pursuant to this
Section 2(a) in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
(b) As used herein, a "Purchase Event" means the termination of the
Merger Agreement under any circumstance which would entitle Grantee to
receive any fee from the Issuer pursuant to Section 7.2(c) of the Merger
Agreement.
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 20 business days from such
Notice Date for the closing of such purchase (a "Closing"; and the date of
such Closing, a "Closing Date"); provided that such Closing shall be held
only if (A) such purchase would not otherwise violate or cause the
violation of applicable law (including the HSR Act) and (B) no law, rule or
regulation shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other
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order, decree or ruling issued by a court or other Governmental Entity of
competent jurisdiction shall be in effect, which prohibits delivery of such
Option Shares (and the parties hereto shall use their reasonable best
efforts to have any such order, injunction, decree or ruling vacated or
reversed). If such Closing cannot be consummated by reason of a restriction
set forth in clause (A) or (B) above, notwithstanding the provisions of
Section 2(a), such Closing Date shall be within 20 business days following
the elimination of such restriction.
3. Payment and Delivery of Certificates. (a) On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank
account designated by Issuer an amount equal to the Purchase Price multiplied by
the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be free and clear of
all Liens, and Grantee shall deliver to Issuer a letter agreeing that
Grantee shall not offer to sell or otherwise dispose of such Option Shares
in violation of applicable law or the provisions of this Agreement. If, at
the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, Issuer shall not have redeemed the Oryx
Rights (the "Rights"), or shall have issued any similar securities, then
each Option Share issued pursuant to such exercise shall also represent a
corresponding Right or new rights with terms substantially the same as and
at least as favorable to Grantee as are provided under the Rights Agreement
or any similar agreement then in effect.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF OCTOBER 14, 1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A
WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising
under the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s) containing such
reference have been sold or transferred in compliance with the provisions of
this Agreement under circumstances that do not require the retention of such
reference.
4. Authorized Stock. Issuer hereby represents and warrants to Grantee that
Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and, at all times from the date hereof until
the obligation to deliver Issuer Common Stock upon the exercise of the Option or
any Substitute Option (as hereinafter defined) terminates, will have reserved
for issuance, upon exercise of the Option or any Substitute Option, shares of
Issuer Common Stock necessary for Grantee to exercise the Option or Substitute
Option, and Issuer will take all necessary corporate action to authorize and
reserve for issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 6 upon exercise of the Option
or Substitute Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option or Substitute Option, including all additional shares of
Issuer Common Stock or other securities which may be issuable upon exercise of
the Option or Substitute Option pursuant to Section 6, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all Liens, including any preemptive rights
of any stockholder of Issuer.
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5. Purchase Not for Distribution. Grantee hereby represents and warrants to
Issuer that any Option Shares or other securities acquired by Grantee upon
exercise of the Option or Substitute Option will not be taken with a view to the
public distribution thereof and will not be transferred or otherwise disposed of
except in a transaction registered or exempt from registration under the
Securities Act.
6. Adjustment upon Changes in Capitalization, etc. (a) In the event of any
change in Issuer Common Stock by reason of a reclassification, recapitalization,
stock split, split-up, combination, exchange of shares, stock dividend, dividend
payable in any other securities, or any similar event, the type and number of
shares or securities subject to the Option, and the Purchase Price therefor,
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares or other securities or
property that Grantee would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event or the record date
therefor, as applicable. If any additional shares of Issuer Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described in the immediately preceding sentence), the number of shares of Issuer
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee
or one of its Subsidiaries, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger,
the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other
property, or the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger shall after such merger represent
less than 50% of the outstanding voting securities of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then,
and in each such case, the agreement governing such transaction shall make
proper provisions so that the Option shall, upon the consummation of any
such transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at
the election of Grantee, of either (I) the Acquiring Corporation (as
defined below) or (II) any person that controls the Acquiring Corporation
(any such person specified in clause (I) or (II) being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option;
provided that the exercise price therefor and number of shares subject
thereto shall be as set forth in this Section 6 and the repurchase rights
relating thereto shall be as set forth in Section 8; provided, further,
that the Substitute Option shall be exercisable immediately upon issuance
without the occurrence of a Purchase Event; and provided, further, that if
the terms of the Substitute Option cannot, for legal reasons, be the same
as the Option (subject to the variations described in the foregoing
provisos), such terms shall be as similar as possible and in no event less
advantageous to Grantee. Substitute Option Issuer shall also enter into an
agreement with Grantee in substantially the same form as this Agreement
(subject to the variations described in the foregoing provisos), which
shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as defined below) as is equal to the
Assigned Value (as defined below) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as defined below), rounded up to the nearest
whole share. The exercise price per share of Substitute Common Stock of the
Substitute Option (the "Substitute Option Price") shall then be equal to
the Purchase Price multiplied by a fraction in which the numerator is the
number of shares of Issuer Common Stock for which the Option was
theretofore exercisable and the
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denominator is the number of shares of Substitute Common Stock for which
the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
outstanding Substitute Common Stock but for the limitation in the first
sentence of this Section 6(e), Substitute Option Issuer shall make a cash
payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in the first sentence of
this Section 6(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in the first sentence of this Section 6(e). This
difference in value shall be determined in good faith by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in Section
6(b) unless the Acquiring Corporation and, if applicable, any beneficial
owner of 50% or more of the outstanding voting stock of the Acquiring
Corporation (after giving effect to the transaction) assume in writing all
the obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Agreement are given full force and
effect (including, without limitation, any action that may be necessary so
that the holders of the other shares of common stock issued by Substitute
Option Issuer are not entitled to exercise any rights comparable to the
Rights by reason of the issuance or exercise of the Substitute Option and
the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value than other shares of
common stock issued by Substitute Option Issuer (other than any diminution
in value resulting from the fact, if applicable, that the shares of
Substitute Common Stock are restricted securities, as defined in Rule 144
under the Securities Act or any successor provision)).
(g) For purposes of this Agreement, the following terms have the
following meanings:
(1) "Acquiring Corporation" means (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation and (iii) the transferee of all or substantially
all of Issuer's assets.
(2) "Assigned Value" means the highest of (w) the price per share
of Issuer Common Stock at which a tender offer or exchange offer for
Issuer Common Stock has been made after the date hereof and prior to the
consummation of the consolidation, merger or sale referred to in Section
6(b), (x) the price per share to be paid by any third party or the
consideration per share to received by holders of Issuer Common Stock,
in each case pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 6(b), (y) the
highest closing sales price per share for Issuer Common Stock quoted on
the NYSE (or if such Issuer Common Stock is not quoted on the NYSE, the
highest bid price per share as quoted on the National Association of
Securities Dealers Automated Quotation System or, if the shares of
Issuer Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized
source) during the 12-month period immediately preceding the
consolidation, merger or sale referred to in Section 6(b) and (z) in the
event the transaction referred to in Section 6(b) is a sale of all or
substantially all of Issuer's assets, an amount equal to (i) the sum of
the price paid in such sale for such assets (including assumed
liabilities) and the current market value of the remaining assets of
Issuer, as determined in good faith by a nationally recognized
investment banking firm selected by Grantee, divided by (ii) the number
of shares of Issuer Common Stock outstanding at such time. In the event
that a tender offer or exchange offer is made for Issuer Common Stock or
an agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or
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other property issuable or deliverable in exchange for Issuer Common
Stock shall be determined in good faith by a nationally recognized
investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per share
of a share of Substitute Common Stock quoted on the NYSE (or if such
Substitute Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotation System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) for the twenty
trading days immediately preceding the fifth business day prior to the
consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if
Substitute Option Issuer is Issuer, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of
the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
7. Repurchase of Option and Option Shares. (a) Notwithstanding the
provisions of Section 2(a), at any time commencing upon the first occurrence of
a Repurchase Event (as defined below) and ending 12 months thereafter, Issuer
(or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the Option
(if and to the extent not previously exercised or terminated) at a price
equal to the excess, if any, of (x) the Applicable Price (as defined
below) as of the Section 7 Request Date (as defined below) for a share
of Issuer Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option has not been
exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to time,
repurchase such number of Option Shares as such owner shall designate at
a price equal to the Applicable Price as of the Section 7 Request Date
multiplied by the number of Option Shares requested to be repurchased by
such owner (the "Option Share Repurchase Price").
(b) If Grantee or an owner of Option Shares exercises its rights under
this Section 7, Issuer shall, within 10 business days after the Section 7
Request Date, pay the Option Repurchase Price or Option Share Repurchase
Price, as the case may be, in immediately available funds, and Grantee or
such owner, as the case may be, shall surrender to Issuer the Option or
Option Shares, as the case may be.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of (A)
the highest price per share at which a tender offer or exchange offer
has been made for shares of Issuer Common Stock after the date hereof
and on or prior to such date, (B) the highest price per share to be paid
by any third party for shares of Issuer Common Stock or the
consideration per share to be received by holders of Issuer Common
Stock, in each case pursuant to an agreement for an Acquisition Proposal
with Issuer entered into on or prior to such date or (C) the highest
closing sales price per share of Issuer Common Stock quoted on the NYSE
(or if Issuer Common Stock is not quoted on the NYSE, the highest bid
price per share as quoted on the National Association of Securities
Dealers Automated Quotations System or, if the shares of Issuer Common
Stock are not quoted thereon, on the principal trading market on which
such shares are traded as reported by a recognized source) during the 60
business days preceding such date. If the consideration to be offered,
paid or received pursuant to either of the foregoing clauses (A) or (B)
shall be other
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than in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment banking
firm selected by Grantee.
(ii) "Repurchase Event" means the occurrence of a Purchase Event
followed by the consummation of any transaction the proposal of which
would constitute an Acquisition Proposal.
(iii) "Section 7 Request Date" means the date on which Grantee or
an owner of Option Shares exercises its rights under this Section.
8. Repurchase of Substitute Option. (a) At any time after issuance of the
Substitute Option and prior to the expiration of the Substitute Option,
Substitute Option Issuer (or any successor entity thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the
Substitute Option (if and to the extent not previously exercised or
terminated) at a price equal to the excess, if any, of (x) the Highest
Closing Price as of the Section 8 Request Date (as defined below) for a
share of Substitute Common Stock over (y) the Purchase Price (subject to
adjustment pursuant to Section 6(a)), multiplied by the number of shares
of Substitute Common Stock with respect to which the Substitute Option
has not been exercised (the "Substitute Option Repurchase Price"); and
(ii) at the request of an owner of shares of Substitute Common
Stock issued upon exercise of the Substitute Option, repurchase such
number of shares of Substitute Common Stock as such owner shall
designate at a price equal to the Highest Closing Price as of the
Section 8 Request Date multiplied by the number of shares of Substitute
Common Stock requested to be repurchased by such owner (the "Substitute
Share Repurchase Price").
(b) If Grantee or an owner of shares of Substitute Common Stock issued
upon exercise of the Substitute Option exercises its rights under this
Section 8, Substitute Option Issuer shall, within 10 business days after
the Section 8 Request Date, pay the Substitute Option Repurchase Price or
Substitute Share Repurchase Price, as the case may be, in immediately
available funds, and Grantee or such owner, as the case may be, shall
surrender to Issuer the Option or shares of Substitute Common Stock, as the
case may be.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Highest Closing Price" means the highest closing sales price
for shares of Substitute Common Stock quoted on the NYSE (or if the
Substitute Common Stock is not quoted on the NYSE, the highest bid price
per share as quoted on the National Association of Securities Dealers
Automated Quotations System or, if the shares of Substitute Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) during the
six-month period preceding the Section 8 Request Date; and
(ii) "Section 8 Request Date" means the date on which Grantee or an
Owner exercises its rights under this Section.
9. Registration Rights. Issuer shall, if requested by Grantee or any owner
of Option Shares (collectively with Grantee, the "Owners") at any time and from
time to time within three years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
Owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities under any applicable state securities
laws. Issuer shall use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor and to keep
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such registration statement effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The obligations
of Issuer hereunder to file a registration statement and to maintain its
effectiveness may be suspended for one or more periods of time not exceeding 30
days in the aggregate if the Board of Directors of Issuer shall have determined
that the filing of such registration statement or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 9, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Owners' counsel related thereto. The Owners shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If during the time period referred
to in the first sentence of this Section 9 Issuer effects a registration under
the Securities Act of Issuer Common Stock for its own account or for any other
stockholders of Issuer (other than on Form S-4 or Form S-8, or any successor
form), it shall allow the Owners the right to participate in such registration,
and such participation shall not affect the obligation of Issuer to effect two
registration statements for the Owners under this Section 9; provided that, if
the managing underwriters of such offering advise Issuer in writing that in
their opinion the number of shares of Issuer Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering, Issuer shall include the shares requested to be included therein by
the Owners pro rata with the shares intended to be included therein by Issuer.
In connection with any registration pursuant to this Section 9, Issuer and the
Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
10. Listing; Reasonable Best Efforts. (a) If Issuer Common Stock or any
other securities to be acquired upon exercise of the Option are then listed on
the NYSE or any other securities exchange or market, Issuer, upon the request of
any Owner, will promptly file an application to list the shares of Issuer Common
Stock or other securities to be acquired upon exercise of the Option on the NYSE
or such other securities exchange or market and will use its best efforts to
obtain approval of such listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to permit the
exercise of the Option or the Substitute Option in accordance with the
terms and conditions hereof, as soon as practicable after the date hereof,
including making any appropriate filing of pursuant to the HSR Act and any
other Regulatory Law, supplying as promptly as practicable any additional
information and documentary material that may be requested pursuant to the
HSR Act and any other Regulatory Law, and taking all other actions
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
11. Limitation of Grantee Profit. (a) Notwithstanding any other provision
herein, in no event shall Grantee's Total Profit (as defined below) exceed $70
million (the "Maximum Profit") and, if it otherwise would exceed such amount,
Grantee, at its sole discretion, shall either (i) reduce the number of shares
subject to the Option, (ii) deliver to Issuer for cancellation shares of Issuer
Common Stock (or other securities into which such Option Shares are converted or
exchanged), (iii) pay cash to Issuer, or (iv) any combination of the foregoing,
so that Grantee's actually realized Total Profit shall not exceed the Maximum
Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i) the
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) to any unaffiliated third party within
12 months after the exercise of the Option, over (y) the Grantee's
aggregate purchase price for such Option Shares (or other securities), plus
(B) any amounts received by Grantee on the transfer of the Option
(including amounts payable to Grantee pursuant to Section 7), plus (C) any
equivalent amounts with respect to the Substitute Option, plus (D) any
amounts received by Grantee pursuant
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to Section 7.2 of the Merger Agreement, minus (ii) the amounts of any cash
previously paid to Issuer pursuant to this Section 11 plus the value of the
Option Shares (or other securities) previously delivered to Issuer for
cancellation pursuant to this Section 11.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, any payment provided for in Section 7.2 of the
Merger Agreement; provided that if and to the extent the Total Profit
received by Grantee would exceed the Maximum Profit following receipt of
such payment, Grantee shall be obligated to comply with the terms of
Section 11(a) within 30 days of the latest of (i) the date of receipt of
such payment, (ii) the date of receipt of the net cash by Grantee pursuant
to the sale of Option Shares (or securities into which such Option Shares
are converted or exchanged) to any unaffiliated party within 12 months
after the exercise of this Option with respect to such Option Shares, (iii)
the date of receipt of net cash from disposition of the Option and (iv) the
date of receipt of equivalent amounts pursuant to the sale of the
Substitute Option or shares of Substitute Common Stock (or other securities
into which such Substitute Common Stock is converted or exchanged).
(d) For purposes of Section 11(a) and clause (ii) of Section 11(b),
the value of any Option Shares delivered to Issuer shall be the Assigned
Value of such Option Shares and the value of any Substitute Common Stock
delivered to Issuer shall be the Highest Closing Price of such Substitute
Common Stock.
12. Loss, Theft, Etc. of Agreement. This Agreement (and the Option granted
hereby) is exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Miscellaneous. (a) Expenses. Except as otherwise provided in Section 9
hereof or in the Merger Agreement, each of the parties hereto shall bear and pay
all Expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Merger Agreement, this Agreement, together
with the Merger Agreement, (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or a federal or state regulatory agency to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Option does not permit
Grantee to acquire, or does not require Issuer (or Substitute Option
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Issuer) to repurchase, the full number of shares of Issuer Common Stock (or
Substitute Common Stock) as provided in Sections 2 and 7 (or in the case of
Substitute Common Stock Sections 2 and 8), as adjusted pursuant to Section
6, it is the express intention of Issuer to allow Grantee to acquire or to
require Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given as set forth in Section 8.2 of the
Merger Agreement.
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Grantee may assign this Agreement in whole to any
affiliate of Grantee at any time. Except as provided in the next sentence,
Grantee may not, without the prior written consent of Issuer (which shall
not be unreasonably withheld), assign this Agreement to any other person.
Upon the occurrence of a Purchase Event, Grantee may sell, transfer, assign
or otherwise dispose of, in whole at any time, its rights and obligations
hereunder. In the case of any sale, transfer, assignment or disposition of
this Option, Issuer shall do all things reasonably necessary to facilitate
such transaction. This Agreement shall not be assignable by Issuer except
by operation of law. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(i) Representations and Warranties. The representations and warranties
contained in Sections 3.1(a) and 3.2(a) of the Merger Agreement, and, to
the extent they relate to this Stock Option Agreement, in Sections 3.1(c),
(f) and (m) and 3.2(c), (f), (l) and (m) of the Merger Agreement, are
incorporated herein by reference.
(j) Rights Plan. Until the Option has been exercised or terminated in
full and Grantee no longer holds any Option Shares, Issuer shall not amend,
modify or waive any provision of the Oryx Rights Agreement (the "Rights
Agreement") or take any other action which would cause Grantee or any of
its "Affiliates" or "Associates" to become an "Acquiring Person" or an
"Adverse Person" (including by designating any "Ownership Limitation" with
respect to Grantee), or which would cause a "Shares Acquisition Date" or
"Distribution Date", any "Triggering Event" or other event specified in
Section 11(a)(ii) or 13 of the Rights Agreement or any similar event with
respect to the Rights to occur, by reason of the existence or exercise (in
whole or in part) of the Option, the beneficial ownership by Grantee or any
of its "Affiliates" or "Associates" of any of the Option Shares, or the
consummation of the other transactions contemplated hereby (all terms in
quotes are used as defined in the Rights Agreement). This covenant shall
also apply to any Substitute Option or shares of Substitute Common Stock
issued in respect thereof, and to any securities into which any Option
Shares or Substitute Common Stock are converted or exchanged.
(k) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(l) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is
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accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy
to which they are entitled at law or in equity. Both parties further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
(m) Submission to Jurisdiction; Waivers. Each of Issuer and Grantee
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns may
be brought and determined in the Chancery or other Courts of the State of
Delaware, and each of Issuer and Grantee hereby irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction
of the aforesaid courts. Each of Issuer and Grantee hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment
prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court
is brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
ORYX ENERGY COMPANY
By: /s/ ROBERT L. KEISER
-------------------------------------
Name: Robert L. Keiser
Title: Chairman and Chief Executive
Officer
KERR-McGEE CORPORATION
By: /s/ LUKE R. CORBETT
-------------------------------------
Name: Luke R. Corbett
Title: Chairman and Chief Executive
Officer
F-10
<PAGE> 191
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except to the extent indicated below, there is no charter provision,
by-law, contract, arrangement or statute under which any director or officer of
Kerr-McGee Corporation ("Kerr-McGee") is insured or indemnified in any manner
against any liability which he or she may incur in his or her capacity as such.
Article Seventh of the certificate of incorporation of Kerr-McGee (as the
same will be amended and restated upon consummation of the Merger, the "Combined
Company Charter") contains a provision, permitted by Section 102(b)(7) of the
Delaware General Corporation Law (the "DGCL"), limiting the personal monetary
liability of directors for breach of fiduciary duty as a director. The DGCL and
the certificate of incorporation of the combined company provide that such
provision does not eliminate or limit liability (1) for any breach of the
director's duty of loyalty to Kerr-McGee or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the DGCL, or (4) for
any transaction from which the director derived an improper benefit.
Section 145 of the DGCL permits indemnification against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with actions, suits or proceedings in which an
officer, director, employee or agent is a party by reason of the fact that he is
or was such a director, officer, employee or agent, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
However, in connection with actions by or in the right of the corporation, such
indemnification is not permitted if such person has been adjudged liable to the
corporation unless the court determines that, under all of the circumstances,
such person is nonetheless fairly and reasonably entitled to indemnity for such
expenses as the court deems proper. Article Seventh of the Combined Company
Charter provides that Kerr-McGee shall indemnify such persons to the fullest
extent permitted by the DGCL.
Section 145 also permits a corporation to purchase and maintain insurance
on behalf of its directors and officers against any liability which may be
asserted against, or incurred by, such persons in their capacities as directors
or officers of the corporation whether or not Kerr-McGee would have the power to
indemnify such persons against such liabilities under the provisions of such
sections. Kerr-McGee has purchased such insurance.
Section 145 further provides that the statutory provision is not exclusive
of any other right to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
independent directors, or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office.
Article XXII of the by-laws of Kerr-McGee contains provisions regarding
indemnification which parallel those described above.
II-1
<PAGE> 192
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following Exhibits are filed herewith unless otherwise indicated:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2 -- Agreement and Plan of Merger, dated as of October 14,
1998, between Kerr-McGee and Oryx (attached as Appendix A
to the Joint Proxy Statement/ Prospectus contained in
this Registration Statement).
4.1 -- Form of Amended and Restated Certificate of Incorporation
of Kerr-McGee (attached as Exhibit 1.5 to Appendix A to
the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
4.2 -- Form of Amended and Restated By-Laws of Kerr-McGee
(attached as Exhibit 1.6 to Appendix A to the Joint Proxy
Statement/Prospectus contained in this Registration
Statement).
4.3 -- Rights Agreement, dated as of July 9, 1996, between
Kerr-McGee and The Liberty National Bank & Trust Co. of
Oklahoma City, filed as Exhibit 1 to Kerr-McGee's Current
Report on Form 8-K, filed July 9, 1996, and incorporated
herein by reference, and First Amendment to Rights
Agreement by and between Kerr-McGee and Bank One Trust
Company (as successor by merger to The Liberty National
Bank & Trust Co. of Oklahoma City), dated October 14,
1998, filed as Exhibit 4.1 to Kerr-McGee's Current Report
on Form 8-K, filed October 20, 1998, and incorporated
herein by reference.
4.4 -- Indenture dated as of June 1, 1976, between Kerr-McGee
and Citibank, N.A., as trustee, relating to Kerr-McGee's
8 1/2% Sinking Fund Debentures due June 1, 2006, filed as
Exhibit 2 to Kerr-McGee's Form S-7, effective June 10,
1976, Registration No. 2-53878, and incorporated herein
by reference.
4.5 -- Indenture dated as of November 1, 1981, between
Kerr-McGee and United States Trust Company of New York,
as trustee, relating to Kerr-McGee's 7% Debentures due
November 1, 2011 filed as Exhibit 4 to Kerr-McGee's Form
S-16, effective November 16, 1981, Registration No.
2-772987, and incorporated herein by reference.
4.6 -- Indenture dated as of August 1, 1982 filed as Exhibit 4
to Kerr-McGee's Form S-3, effective August 27, 1982,
Registration Statement No. 2-78952, and incorporated
herein by reference, and its first supplement dated May
7, 1996, between Kerr-McGee and Citibank, N.A., as
trustee, relating to Kerr-McGee's 6.625% notes due
October 15, 2007, and 7.125% debentures due October 15,
2027, filed as Exhibit 4.4 to Kerr-McGee's Annual Report
on Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
4.7 -- $325 million Credit Agreement dated as of December 4,
1996, between Kerr-McGee and the lending parties thereto,
providing for a five-year revolving credit facility with
a bullet maturity on the fifth anniversary of the
execution of the Credit Agreement, filed as Exhibit 4.5
to Kerr-McGee's Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference.
4.8 -- Indenture dated as of September 15, 1988, by and between
The Bank of New York and Oryx, filed as Exhibit 4.1 to
Oryx's Amendment No. 2 on Form S-3, filed on June 29,
1990, Registration No. 33-33361, and incorporated herein
by reference.
4.9 -- First Supplemental Indenture by and between The Bank of
New York and Oryx, filed as Exhibit 4.2 to Oryx's
Amendment No. 2 on Form S-3, filed on June 29, 1990,
Registration No. 33-33361, and incorporated herein by
reference.
</TABLE>
II-2
<PAGE> 193
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.10 -- Oryx's $500,000,000 Revolving Credit and Competitive Bid
Facility, dated as of October 17, 1997, filed as Exhibit
10 to Oryx's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein
by reference.
4.11 -- Indenture dated as of May 15, 1989 by and between Oryx
and Texas Commerce Bank National Association, as trustee,
relating to Oryx's 7 1/2% Convertible Subordinated
Debentures due May 15, 2014, filed as Exhibit 4.1 to
Oryx's Form S-1, effective May 5, 1989, Registration No.
33-28494, and incorporated herein by reference.
5 -- Form of Opinion of Simpson Thacher & Bartlett regarding
the legality of the shares of Kerr-McGee common stock to
be registered under this Registration Statement.
8.1 -- Form of Opinion of Simpson Thacher & Bartlett regarding
certain United States federal income tax consequences of
the merger.
8.2 -- Form of Opinion of Jones, Day, Reavis & Pogue regarding
certain United States federal income tax consequences of
the merger.
10.1 -- Employment Letter Agreement of Robert L. Keiser with
Kerr-McGee dated as of October 14, 1998.++
10.2 -- Form of Employment Letter Agreements of David A. Hager,
Patricia L. Horsfall and William H. Kaufman with
Kerr-McGee dated as of October 16, 1998.++
10.3 -- Form of Employment Letter Agreements of Marion E. Anglin,
Jerry W. Box, Steven J. Flowers, Frances G. Heartwell,
William C. Lemmer, Edward W. Moneypenny and Robert L.
Thompson with Kerr-McGee dated as of October 16, 1998.++
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consents of Simpson Thacher & Bartlett (included in the
opinions filed as Exhibits 5 and 8.1 to this Registration
Statement).*
23.4 -- Consent of Jones, Day, Reavis & Pogue (included in the
opinion filed as Exhibit 8.2 to this Registration
Statement).*
23.5 -- Consent of Lehman Brothers Inc.
23.6 -- Consent of Goldman, Sachs & Co.
24 -- Powers of Attorney of the Directors of Kerr-McGee.+
99.1 -- Form of Proxy for holders of Kerr-McGee common stock.++
99.2 -- Form of Proxy for holders of Oryx common stock.++
</TABLE>
- -------------------------
* To be filed by amendment.
++ Previously filed.
+ Previously filed except for Power of Attorney of Matthew R. Simmons, which is
filed herewith.
(b) Financial Data Schedule.
Schedules are omitted because they either are not required or are not
applicable or because equivalent information has been included in the financial
statements, the notes thereto or elsewhere herein.
II-3
<PAGE> 194
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the 'Calculation of
Registration Fee' table in the effective registration statement.
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) that, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(5) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by this form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of this form;
(6) that every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to this registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
II-4
<PAGE> 195
(7) insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue;
(8) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request; and
(9) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in this registration statement
when it became effective.
II-5
<PAGE> 196
Pursuant to the requirements of the Securities Act of 1933, as amended,
Kerr-McGee Corporation has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Oklahoma City, Oklahoma, on January 11, 1999.
KERR-McGEE CORPORATION
By: /s/ TOM J. MCDANIEL
----------------------------------
Name: Tom J. McDaniel
Title: Vice Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director, Chairman of the January 11, 1999
- ----------------------------------------------------- Board and Chief Executive
Luke R. Corbett Officer (Principal Executive
Officer)
* Executive Vice President and January 11, 1999
- ----------------------------------------------------- Chief Financial Officer
John C. Linehan (Principal Financial Officer)
* Vice President, Controller January 11, 1999
- ----------------------------------------------------- and Chief Accounting Officer
Deborah A. Kitchens (Principal Accounting
Officer)
/s/ TOM J. MCDANIEL Director January 11, 1999
- -----------------------------------------------------
Tom J. McDaniel
* Director January 11, 1999
- -----------------------------------------------------
Dr. Martin C. Jischke
* Director January 11, 1999
- -----------------------------------------------------
William C. Morris
* Director January 11, 1999
- -----------------------------------------------------
John J. Murphy
* Director January 11, 1999
- -----------------------------------------------------
Leroy C. Richie
* Director January 11, 1999
- -----------------------------------------------------
Richard M. Rompala
* Director January 11, 1999
- -----------------------------------------------------
Matthew R. Simmons
</TABLE>
II-6
<PAGE> 197
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director January 11, 1999
- -----------------------------------------------------
Farah M. Walters
/s/ TOM J. MCDANIEL Attorney-in-Fact January 11, 1999
- -----------------------------------------------------
Tom J. McDaniel
</TABLE>
II-7
<PAGE> 198
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2 -- Agreement and Plan of Merger, dated as of October 14,
1998, between Kerr-McGee and Oryx (attached as Appendix A
to the Joint Proxy Statement/ Prospectus contained in
this Registration Statement).
4.1 -- Form of Amended and Restated Certificate of Incorporation
of Kerr-McGee (attached as Exhibit 1.5 to Appendix A to
the Joint Proxy Statement/Prospectus contained in this
Registration Statement).
4.2 -- Form of Amended and Restated By-Laws of Kerr-McGee
(attached as Exhibit 1.6 to Appendix A to the Joint Proxy
Statement/Prospectus contained in this Registration
Statement).
4.3 -- Rights Agreement, dated as of July 9, 1996, between
Kerr-McGee and The Liberty National Bank & Trust Co. of
Oklahoma City, filed as Exhibit 1 to Kerr-McGee's Current
Report on Form 8-K, filed July 9, 1996, and incorporated
herein by reference, and First Amendment to Rights
Agreement by and between Kerr-McGee and Bank One Trust
Company (as successor by merger to The Liberty National
Bank & Trust Co. of Oklahoma City), dated October 14,
1998, filed as Exhibit 4.1 to Kerr-McGee's Current Report
on Form 8-K, filed October 20, 1998, and incorporated
herein by reference.
4.4 -- Indenture dated as of June 1, 1976, between Kerr-McGee
and Citibank, N.A., as trustee, relating to Kerr-McGee's
8 1/2% Sinking Fund Debentures due June 1, 2006, filed as
Exhibit 2 to Kerr-McGee's Form S-7, effective June 10,
1976, Registration No. 2-53878, and incorporated herein
by reference.
4.5 -- Indenture dated as of November 1, 1981, between
Kerr-McGee and United States Trust Company of New York,
as trustee, relating to Kerr-McGee's 7% Debentures due
November 1, 2011 filed as Exhibit 4 to Kerr-McGee's Form
S-16, effective November 16, 1981, Registration No.
2-772987, and incorporated herein by reference.
4.6 -- Indenture dated as of August 1, 1982 filed as Exhibit 4
to Kerr-McGee's Form S-3, effective August 27, 1982,
Registration Statement No. 2-78952, and incorporated
herein by reference, and its first supplement dated May
7, 1996, between Kerr-McGee and Citibank, N.A., as
trustee, relating to Kerr-McGee's 6.625% notes due
October 15, 2007, and 7.125% debentures due October 15,
2027, filed as Exhibit 4.4 to Kerr-McGee's Annual Report
on Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
4.7 -- $325 million Credit Agreement dated as of December 4,
1996, between Kerr-McGee and the lending parties thereto,
providing for a five-year revolving credit facility with
a bullet maturity on the fifth anniversary of the
execution of the Credit Agreement, filed as Exhibit 4.5
to Kerr-McGee's Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference.
4.8 -- Indenture dated as of September 15, 1988, by and between
The Bank of New York and Oryx, filed as Exhibit 4.1 to
Oryx's Amendment No. 2 on Form S-3, filed on June 29,
1990, Registration No. 33-33361, and incorporated herein
by reference.
4.9 -- First Supplemental Indenture by and between The Bank of
New York and Oryx, filed as Exhibit 4.2 to Oryx's
Amendment No. 2 on Form S-3, filed on June 29, 1990,
Registration No. 33-33361, and incorporated herein by
reference.
</TABLE>
<PAGE> 199
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.10 -- Oryx's $500,000,000 Revolving Credit and Competitive Bid
Facility, dated as of October 17, 1997, filed as Exhibit
10 to Oryx's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997, and incorporated herein
by reference.
4.11 -- Indenture dated as of May 15, 1989 by and between Oryx
and Texas Commerce Bank National Association, as trustee,
relating to Oryx's 7 1/2% Convertible Subordinated
Debentures due May 15, 2014, filed as Exhibit 4.1 to
Oryx's Form S-1, effective May 5, 1989, Registration No.
33-28494, and incorporated herein by reference.
5 -- Form of Opinion of Simpson Thacher & Bartlett regarding
the legality of the shares of Kerr-McGee common stock to
be registered under this Registration Statement.
8.1 -- Form of Opinion of Simpson Thacher & Bartlett regarding
certain United States federal income tax consequences of
the merger.
8.2 -- Form of Opinion of Jones, Day, Reavis & Pogue regarding
certain United States federal income tax consequences of
the merger.
10.1 -- Employment Letter Agreement of Robert L. Keiser with
Kerr-McGee dated as of October 14, 1998.++
10.2 -- Form of Employment Letter Agreements of David A. Hager,
Patricia L. Horsfall and William H. Kaufman with
Kerr-McGee dated as of October 16, 1998.++
10.3 -- Form of Employment Letter Agreements of Marion E. Anglin,
Jerry W. Box, Steven J. Flowers, Frances G. Heartwell,
William C. Lemmer, Edward W. Moneypenny and Robert L.
Thompson with Kerr-McGee dated as of October 16, 1998.++
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of PricewaterhouseCoopers LLP.
23.3 -- Consents of Simpson Thacher & Bartlett (included in the
opinions filed as Exhibits 5 and 8.1 to this Registration
Statement).*
23.4 -- Consent of Jones, Day, Reavis & Pogue (included in the
opinion filed as Exhibit 8.2 to this Registration
Statement).*
23.5 -- Consent of Lehman Brothers Inc.
23.6 -- Consent of Goldman, Sachs & Co.
24 -- Powers of Attorney of the Directors of Kerr-McGee.+
99.1 -- Form of Proxy for holders of Kerr-McGee common stock.++
99.2 -- Form of Proxy for holders of Oryx common stock.++
</TABLE>
- -------------------------
* To be filed by amendment.
++ Previously filed.
+ Previously filed except for Power of Attorney of Matthew R. Simmons, which is
filed herewith.
<PAGE> 1
EXHIBIT 5
FORM OF LEGAL OPINION OF SIMPSON THACHER & BARTLETT
[Letterhead of Simpson Thacher & Bartlett]
(212) 455-2000
, 1999
Kerr-McGee Corporation
Kerr-McGee Center
Oklahoma City, Oklahoma 73102
Ladies and Gentlemen:
We have acted as counsel to Kerr-McGee Corporation, a Delaware corporation
(the "Company"), in connection with the merger of Oryx Energy Company ("Oryx")
with and into the Company (the "Merger") pursuant to the Agreement and Plan of
Merger dated as of October 14, 1998 (the "Merger Agreement") by and between the
Company and Oryx. This opinion letter is furnished to you in connection with a
registration statement on Form S-4 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of up to 43,175,436 shares of common
stock, $0.01 par value per share (the "Shares"), of the Company to be issued in
the Merger in accordance with the terms of the Merger Agreement.
We have examined, and have relied as to matters of fact upon, an executed
copy of the Merger Agreement, the Registration Statement, and originals, or
duplicates or certified or conformed copies, of such records, agreements,
instruments and other documents and such certificates of public officials and of
officers and representatives of the Company, and have made such other and
further investigations, as we have deemed relevant and necessary in connection
with the opinions expressed herein.
In such examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents
submitted to us as duplicates or certified or conformed copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion that the Shares have been duly authorized
and, when issued in the Merger in accordance with the terms of the Merger
Agreement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement. We also consent to the reference to this firm appearing
in the Registration Statement under the caption "Legal Matters."
We are members of the Bar of the State of New York, and we do not express
any opinion herein concerning any law other than the Delaware General
Corporation Law.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE> 1
EXHIBIT 8.1
FORM OF TAX OPINION OF SIMPSON THACHER & BARTLETT
January , 1999
Re: Agreement and Plan of Merger
dated as of October 14, 1998
between Kerr-McGee Corporation
and Oryx Energy Company
Kerr-McGee Corporation
Kerr-McGee Center
Oklahoma City, Oklahoma 73125
Ladies and Gentlemen:
You have requested our opinion with respect to certain United States
federal income tax consequences of the proposed transaction in which Oryx Energy
Company ("Oryx") will be merged (the "Merger") with and into Kerr-McGee
Corporation ("Kerr-McGee"). All capitalized terms used but not defined herein
have the meanings ascribed to them in the Agreement and Plan of Merger, dated as
of October 14, 1998, between Kerr-McGee and Oryx (the "Merger Agreement"). This
opinion is being delivered as an exhibit to the registration statement on Form
S-4 (the "Registration Statement") initially filed by Kerr-McGee with the
Securities and Exchange Commission on November 17, 1998 and containing the Joint
Proxy Statement/Prospectus of Kerr-McGee and Oryx relating to the Merger (the
"Joint Proxy Statement/Prospectus").
In acting as counsel to Kerr-McGee in connection with the Merger, we have,
in preparing our opinion, as hereinafter set forth, participated in the
preparation of the Merger Agreement and the preparation and filing of the Joint
Proxy Statement/Prospectus.
You have requested that we render the opinions set forth below. In
rendering such opinions, we have assumed with your consent that the Merger will
be effected in accordance with the Merger Agreement and that the representations
made by Kerr-McGee and Oryx in letters provided to us and to Jones, Day, Reavis
& Pogue, counsel to Oryx, are true, correct and complete as of the date hereof
and will be true, correct and complete as of the Effective Time. We have also
assumed that the representations and warranties contained in the Merger
Agreement, and statements as to factual matters contained in the Registration
Statement, are true, correct and complete as of the date hereof, and that the
parties have complied with and, if applicable, will continue to comply with, the
covenants contained in the Merger Agreement. We have examined the documents
referred to above and the originals, or copies certified or otherwise identified
to our satisfaction, of such records, documents, certificates or other
instruments and made such other inquiries as in our judgment are necessary or
appropriate to enable us to render the opinions set forth below. We have not,
however, undertaken any independent investigation of any factual matter set
forth in any of the foregoing.
If the Merger is effected on a factual basis different from that
contemplated in the Merger Agreement and the Joint Proxy Statement/Prospectus
the opinions expressed herein may be inapplicable. Our opinions are based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
administrative interpretations, and judicial precedents as of the date hereof.
If there is any subsequent change in the applicable law or regulations, or if
there are subsequently any new applicable administrative or judicial
interpretations of the law or regulations, the opinions expressed herein may
become inapplicable.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Merger will be consummated in accordance
with the Merger Agreement (and exhibits thereto) and
<PAGE> 2
the Delaware General Corporation Law and as described in the Joint Proxy
Statement/Prospectus, we are of the opinion that for federal income tax
purposes:
(1) the merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code;
(2) Kerr-McGee and Oryx will each be a party to such reorganization
within the meaning of Section 368(b) of the Code;
(3) no gain or loss will be recognized by the stockholders of Oryx
upon the reclassification of their shares as a result of the Reverse Split
or with respect to the shares of Oryx Common Stock exchanged for Kerr-McGee
Common Stock in the Merger (except for cash received in lieu of fractional
shares);
(4) no gain or loss will be recognized by Kerr-McGee or Oryx as a
result of the Merger;
(5) the aggregate tax basis of the shares of Kerr-McGee Common Stock
received by an Oryx stockholder will be equal to such stockholder's
aggregate tax basis in the Oryx Common Stock reclassified in the Reverse
Split (reduced by the amount of basis properly allocated to fractional
shares for which cash was received);
(6) a holder's holding period with respect to the shares of Kerr-McGee
Common Stock received pursuant to the Merger will include the holding
period of the Oryx Common Stock reclassified in the Reverse Split and
exchanged therefor; and
(7) the receipt of cash in lieu of fractional shares of stock by a
stockholder of Oryx will result in taxable gain or loss to such stockholder
for United States federal income tax purposes based on the difference
between the amount of cash received by such stockholder and such
stockholder's adjusted tax basis allocated to such fractional share as set
forth above.
We express our opinions herein only as to those matters specifically set
forth above and no opinion should be inferred as to the tax consequences of the
Merger under any state, local or foreign law, or with respect to other areas of
United States federal taxation. We are members of the Bar of the State of New
York, and we do not express any opinion herein concerning any law other than the
federal law of the United States.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name under the
captions "The Merger -- Material United States Federal Income Tax Consequences"
and "Legal Matters" in the Joint Proxy Statement/Prospectus. This opinion letter
is rendered to you in connection with the above described transaction. This
opinion letter may not be relied upon by you for any other purpose, or relied
upon by, or furnished to, any other person, firm or corporation without our
prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE> 1
EXHIBIT 8.2
FORM OF TAX OPINION OF JONES, DAY, REAVIS & POGUE
January , 1999
Oryx Energy Company
13155 Noel Road
Dallas, TX 75240-5067
Ladies and Gentlemen:
We have acted as counsel to Oryx Energy Company (the "Company") in
connection with the proposed Reverse Stock Split and Merger of the Company with
and into Kerr-McGee Corporation ("Kerr-McGee"), as described in the Merger
Agreement between the Company and Kerr-McGee dated as of October 14, 1998 and
the Joint Proxy Statement/Prospectus on Form S-4, dated January , 1999.
Capitalized terms used herein have the meanings ascribed to them in the Merger
Agreement and the Joint Proxy Statement/Prospectus.
Pursuant to your request, we are furnishing you with our opinion as to the
federal income tax consequences of the Merger. For purposes of this opinion we
have relied upon, and assumed the completeness, truth, and accuracy of, the
Merger Agreement, the Joint Proxy Statement/Prospectus, and the representations
provided by authorized officers of the Company and Kerr-McGee, without having
independently verified the completeness, truth and accuracy of such documents.
We have further assumed that any of the above-referenced representations that
are qualified by reference to the knowledge of the representor or others (e.g.,
a representation that a statement is true "to the knowledge of" management) are
true without such qualification.
Based upon the foregoing, and provided that the facts, representations and
assumptions referenced above set forth the facts relating to the Merger fully
and accurately as of the Effective Time, we are of the opinion that:
(i) the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code;
(ii) the Company and Kerr-McGee will each be a party to the reorganization
within the meaning of Section 368(b) of the Internal Revenue Code;
(iii) no gain or loss will be recognized by the stockholders of Oryx upon
the reclassification of their shares as a result of the Reverse Split or with
respect to the shares of Oryx Common Stock exchanged for Kerr-McGee Common Stock
in the Merger (except for cash received in lieu of fractional shares);
(iv) no gain or loss will be recognized by Kerr-McGee or Oryx as a result
of the Merger;
(v) the aggregate tax basis of the shares of Kerr-McGee Common Stock
received by an Oryx stockholder will be equal to such stockholder's aggregate
tax basis in the Oryx Common Stock reclassified in the Reverse Split (reduced by
the amount of basis properly allocated to fractional shares for which cash was
received);
(vi) a holder's holding period with respect to the shares of Kerr-McGee
Common Stock received pursuant to the Merger will include the holding period of
the Oryx Common Stock reclassified in the Reverse Split and exchanged therefor;
and
(vii) the receipt of cash in lieu of fractional shares of stock by a
stockholder of Oryx will result in taxable gain or loss to such stockholder
based on the difference between the amount of cash received by
<PAGE> 2
Oryx Energy Company
January , 1999
Page 2
such stockholder and such stockholder's adjusted tax basis allocated to such
fractional share as set forth above.
This opinion relates solely to the federal income tax consequences of the
Merger discussed herein, and no opinion is expressed as to the consequences
under any foreign, state or local tax law. Except as explicitly stated herein,
no other opinion is expressed or implied. This opinion is based upon currently
applicable provisions of the Internal Revenue Code, regulations thereunder,
current published positions of the Internal Revenue Service and judicial
authorities published to date, all of which are subject to change by the
Congress, the Treasury Department, the Internal Revenue Service or the courts.
Any such change may be retroactive with respect to transactions entered into
prior to the date of such change. No assurance can be provided as to the effect
upon our opinion of any such change. Finally, this opinion is not binding upon
the Internal Revenue Service or the courts, and no assurance can be given that
they will accept this opinion or agree with the views expressed herein.
We hereby consent to the filing of this opinion as an exhibit to the Joint
Proxy Statement/Prospectus. We also consent to the references to Jones Day under
the captions "Experts" and "The Proposed Merger -- Material United States
Federal Income Tax Consequences" in the Joint Proxy Statement/ Prospectus. In
giving this consent, we do not admit that we are in the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder by the Securities
and Exchange Commission.
Very truly yours,
JONES, DAY, REAVIS & POGUE
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports and to all references to our Firm included in or made a part of
this amendment no. 2 to the registration statement on Form S-4.
/s/ ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
January 7, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Kerr-McGee Corporation on Form S-4 (File No. 333-67447) of our report dated
February 17, 1998, on our audits of the consolidated financial statements of
Oryx Energy Company. We also consent to the reference to our firm under the
caption "Experts."
/s/ PricewaterhouseCoopers LLP
- ------------------------------------
Dallas, Texas
January 8, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF LEHMAN BROTHERS
We hereby consent to the use of our opinion letter dated October 14, 1998
to the Board of Directors of Kerr-McGee Corporation (the "Company") attached as
Appendix C to the Company's Joint Proxy Statement/Prospectus on Amendment No. 2
to Form S-4 (the "Prospectus") and to the references to our firm in the
Prospectus under the headings "Summary -- The Merger -- Opinions of Financial
Advisors", "The Proposed Merger -- Background of the Merger", "The Proposed
Merger -- Kerr-McGee's Reasons for Merger; Recommendation of the Board of
Directors of Kerr-McGee" and "The Proposed Merger -- Opinion of Kerr-McGee's
Financial Advisor". In giving such consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder and we do not thereby admit that
we are experts with respect to any part of the Registration Statement under the
meaning of the term "expert" as used in the Securities Act.
LEHMAN BROTHERS INC.
By: /s/ H.E. MCGEE III
----------------------------------
H.E. McGee III
Managing Director
Houston, Texas
January 8, 1999
<PAGE> 1
EXHIBIT 23.6
[GOLDMAN SACHS & CO. LETTERHEAD]
PERSONAL AND CONFIDENTIAL
January 8, 1999
Board of Directors
Oryx Energy Company
13155 Noel Road
Dallas, TX 75240-5067
Re: Amendment No. 2 to Registration Statement (File No. 333-67447) on Form
S-4 of Kerr-McGee Corporation
Ladies and Gentlemen:
Reference is made to our opinion letter dated October 14, 1998 with respect
to the fairness from a financial point of view to the holders of the outstanding
shares of Common Stock, par value $1.00 per share (the "Oryx Common Stock"), of
Oryx Energy Company ("Oryx") of the exchange ratio of one share, after giving
effect to the Reverse Split (as defined therein), of Common Stock, par value
$1.00 per share (the "Company Common Stock"), of Kerr-McGee Corporation
("Kerr-McGee") to be received for each share of Oryx Common Stock (the "Exchange
Ratio") pursuant to the Agreement and Plan of merger, dated as of October 14,
1998, between Kerr-McGee and Oryx (the "Agreement").
The foregoing opinion letter is provided for the information and assistance
of the Board of Directors of Oryx in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose nor is it to be filed with, included
in or referred to, in whole or in part, in any registration statement, proxy
statement or any other document, except in accordance with our prior written
consent. We understand that the Company has determined to include our opinion in
the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our
Firm under the captions "Summary; Opinions of Financial Advisors," "Background
of the merger," "Oryx's Reasons for merger; Recommendations of the Board of
Directors of Oryx" and "Opinion of Oryx's Financial Advisor" and to the
inclusion of the foregoing opinion in the Joint Proxy Statement/Prospectus
included in the above-mentioned Registration Statement. In giving such consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933 or the rules
and regulations of the Securities and Exchange Commission thereunder.
<PAGE> 2
Notwithstanding the foregoing, it is understood that our consent is being
delivered solely in connection with the filing of the above-mentioned version of
the Registration Statement and that our opinion is not to be used, circulated,
quoted or otherwise referred to for any other purpose, nor is it to be filed
with, included in or referred to in whole or in part in any registration
statement (including any subsequent amendments to the above-mentioned
Registration Statement), proxy statement or any other document, except in
accordance with our prior written consent.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
- ------------------------------------
(Goldman, Sachs & Co.)
<PAGE> 1
EXHIBIT 24
KERR-MCGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation (the "Company"),
intends to file with the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, as amended (the "Act"), a
Registration Statement on Form S-4, including a Joint Proxy Statement/Prospectus
(the "Registration Statement"), with such amendment or amendments thereto as may
be necessary or appropriate, together with any and all exhibits and other
documents having relation to the Registration Statement, in connection with the
Company's announced merger with Oryx Energy Company.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the
others and with full power of substitution and resubstitution, to execute for
him and in his name, place and stead, in his capacity as a Director of the
Company, the Registration Statement and any and all amendments and
post-effective amendments thereto, and all instruments necessary or incidental
in connection therewith, as said attorneys or any of them shall deem necessary
or appropriate, together with all instruments necessary or incidental in
connection therewith, and to file the same or cause the same to be filed with
the Commission. Each of said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in any and all
capacities, every act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument effective
the 6th day of January, 1999.
/s/ MATTHEW R. SIMMONS
------------------------------------
Matthew R. Simmons,
Director
