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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _____ TO _____
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COMMISSION FILE NUMBER 1-5254
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MAPCO INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-0705739
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1800 SOUTH BALTIMORE AVENUE, TULSA, OKLAHOMA 74119
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (918) 581-1800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
Common Stock, $1.00 Par value New York Stock Exchange
Pacific Stock Exchange
Chicago Stock Exchange
$400 million in Debt Securities None
($400 million designated as Medium-Term Notes,
$353 million of which have been issued (and
$21 million of which have matured and have been
paid) as of March 27, 1995, with maturities
from 9 months to 30 years)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO .
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THE AGGREGATE MARKET VALUE OF MAPCO INC.'S ("MAPCO") VOTING STOCK HELD BY
NON-AFFILIATES OF MAPCO, BASED ON THE LAST SALE PRICE OF MAPCO COMMON STOCK ON
THE NEW YORK STOCK EXCHANGE ON MARCH 27, 1995 WAS $1,614,328,272. ON THAT DATE,
29,894,968 SHARES OF MAPCO COMMON STOCK WERE OUTSTANDING, OF WHICH 29,392,448
SHARES WERE HELD BY NON-AFFILIATES.
DOCUMENTS INCORPORATED BY REFERENCE
LIST HEREUNDER THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE
PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: PROXY STATEMENT
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO REGULATION
14-A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (TO THE EXTENT SET FORTH IN PART
I, ITEM 1 AND PART III, ITEMS 10, 11, 12 AND 13 OF THIS ANNUAL REPORT).
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TABLE OF CONTENTS
PART I
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PAGE
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Item 1. Business.................................................................... 1
BUSINESS OF MAPCO......................................................... 1
NATURAL GAS LIQUIDS....................................................... 1
PETROLEUM................................................................. 5
COAL...................................................................... 8
EXECUTIVE OFFICERS OF MAPCO INC. ......................................... 12
EMPLOYEES................................................................. 12
Item 2. Properties.................................................................. 12
Item 3. Legal Proceedings........................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders......................... 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....... 14
Item 6. Selected Financial Data..................................................... 14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 15
Item 8. Financial Statements and Supplementary Data................................. 24
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................................. 24
PART III
Item 10. Directors and Executive Officers of the Registrant.......................... 24
Item 11. Executive Compensation...................................................... 24
Item 12. Security Ownership of Certain Beneficial Owners and Management.............. 24
Item 13. Certain Relationships and Related Transactions.............................. 24
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............ 25
SIGNATURES............................................................................. 28
</TABLE>
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PART I
ITEM 1. BUSINESS.
BUSINESS OF MAPCO
MAPCO Inc. ("MAPCO" or the "Company") is a diversified energy company
which, through separate subsidiaries and affiliates, is engaged in the
production of natural gas liquids ("NGLs") and coal; the transportation by
pipeline of NGLs, anhydrous ammonia and refined petroleum products; the
transportation by truck of refined petroleum products; the refining of crude
oil; the marketing of NGLs, refined petroleum products, coal, fertilizers and
crude oil; the trading of crude oil, refined petroleum products and NGLs; NGL
storage; and the marketing of motor fuel and merchandise through convenience
store operations. MAPCO was incorporated in Delaware in 1958 and has its
principal executive offices in Tulsa, Oklahoma. For convenience of reference and
simplification of this report, references herein to MAPCO or the Company include
its subsidiaries or affiliates, unless the context requires otherwise.
SEGMENT INFORMATION
The segment reporting structure for MAPCO is as follows:
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SEGMENT BUSINESS ACTIVITY INCLUDED WITHIN SEGMENT
----------------------------- ------------------------------------------------------
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Natural Gas Liquids.......... Liquid Petroleum Gas ("LPG") and Fertilizer Sales, NGL
Production and Gas Processing, Pipeline Operations and
Underground Storage.
Petroleum.................... Refining, Retail and Wholesale Marketing, and Crude,
NGL and Refined Products Trading.
Coal......................... Coal Production and Marketing.
</TABLE>
Financial information about these segments for each of the three years
ended December 31, 1994 is set forth in Note 9 to the consolidated financial
statements on page F-15 and Management's Discussion and Analysis of Financial
Condition and Results of Operations on pages 15 through 24.
NATURAL GAS LIQUIDS
GENERAL
The Natural Gas Liquids segment operations include the transportation and
processing of NGLs as well as pipeline transportation of anhydrous ammonia,
refined products and crude oil. The NGL segment operations also include
fractionation, underground storage and the wholesale and retail marketing of
NGLs and fertilizers. The 1994 Natural Gas Liquids segment revenues were $510.3
million and operating profit was $131.2 million compared to $465.2 million of
revenues and $118.8 million of operating profit in 1993.
LPG AND FERTILIZER SALES
Propane is used principally as a fuel in various domestic, agricultural,
commercial, industrial and vehicle motor fuel applications. Residential
customers (generally in areas not served by natural gas) use propane for home
heating, cooking and other domestic uses. The major portion of MAPCO's propane
sales is for domestic usage. Agricultural uses include crop drying, fuel for
tractors and irrigation engines and other agricultural heating purposes.
Commercial and industrial uses include fuel for shopping centers and industrial
plants.
The marketing of propane and related appliances is carried on under the
trade names "Thermogas" and "Fuel Gas" through 192 Company-owned and operated
retail plants in states in the upper Midwest and the Southeast regions of the
United States. Propane is also supplied to dealers operating in the same area,
as well as to wholesale outlets and industrial accounts. Based upon published
industry data, Thermogas is currently the fourth largest retail propane marketer
in the United States. In 1994, MAPCO sold 253.8 million gallons of retail
propane compared to 232.4 million gallons in 1993.
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On September 1, 1994, Thermogas Company, a wholly-owned subsidiary of MAPCO
Natural Gas Liquids Inc., acquired the assets of Emro Propane Company, a
subsidiary of Emro Marketing, which is a wholly-owned subsidiary of Marathon Oil
(hereinafter "Emro"). The assets acquired included fifty-seven (57) retail
propane plants in the states of Illinois, Indiana, Michigan and Ohio. As part of
the consideration for the assets of Emro, MAPCO transferred thirty-nine (39)
retail petroleum convenience stores in Florida and one travel stop facility in
Tennessee from its Petroleum segment operations to Emro.
Approximately 95% of the propane sold by MAPCO in 1994 was purchased from
outside sources. The largest propane supplier accounted for approximately 21% of
such outside purchases during 1994. MAPCO's propane supply arrangements are
standard for the industry with prices being subject to adjustment in accordance
with changes in industry-wide market price levels.
MAPCO, at 43 of its Thermogas retail plants, also blends, markets and
applies nitrogen solutions, fertilizers, mixed fertilizers and agricultural
chemicals. Fluid fertilizers are sold under the trade name "Thermogas Fluid
Fertilizer." In 1994, 137,671 tons of wholesale and retail fluid fertilizer
ingredients were sold in the Midwest and Southeast as compared to 139,393 tons
in 1993. Most of these sales were made during the Spring.
NGL PRODUCTION AND GAS PROCESSING
MAPCO owns certain liquefiable hydrocarbons in natural gas under 234,000
acres in the West Panhandle gas field of Texas. MAPCO obtains its liquids
through the processing of the gas at three plants it owns and operates in this
field. Although only one of the plants is currently operating, these plants have
a combined processing capacity of 260 million cubic feet of gas per day. In
1994, an average of 5,655 barrels per day of NGLs was produced and sold from the
West Panhandle field, compared to 5,021 barrels per day in 1993. The extracted
liquids are moved through MAPCO's Mid-America and Seminole pipeline systems to
Midwestern and Gulf Coast markets.
Since 1991, MAPCO's West Panhandle field gas supplier has taken more than
its percentage ownership share of the field's production. The cumulative effect
of this acceleration in gas taken has resulted in the Westpan operations having
a 31.7 billion cubic feet and $29.4 million over-take position. This imbalance
will be adjusted by offsets from future field production. MAPCO uses the sales
method of accounting for its gas balancing arrangements which allows the
immediate recognition of all revenues on NGLs sold. The acceleration in gas
taken contributed an estimated $5.7 million, $4.3 million and $9.0 million to
MAPCO's consolidated operating profit in 1994, 1993 and 1992, respectively.
MAPCO owns a 50% interest in and operates a 107,000 barrel per day
fractionator at Conway, Kansas. This fractionator receives mixed NGLs from the
gathering areas in the Overthrust Belt area of Wyoming and Utah, New Mexico,
west Texas, western Oklahoma and Kansas for separation into ethane-propane mix,
propane, normal butane, iso-butane and natural gasoline. After separation, the
products are moved principally to markets in the Midwest and on the Texas Gulf
Coast. MAPCO also owns and operates a 5,000 barrel per day depropanizer at
Hobbs, New Mexico.
MID-AMERICA PIPELINE
Mid-America Pipeline Company ("Mid-America"), a wholly-owned subsidiary of
MAPCO Natural Gas Liquids Inc., owns and operates 7,204 miles of pipeline and
related storage facilities.
The Mid-America pipeline system transports NGLs which consist of: propane
used as fuel and petrochemical feedstock; butane and natural gasoline used as
refinery and petrochemical feedstock; ethane-propane mixtures and ethylene used
as petrochemical feedstock; and mixed NGLs for further fractionation. The
pipeline system consists of 7,185 miles of pipe varying in diameter from two to
twelve inches. The main line of this pipeline system runs from the Wyoming-Utah
Overthrust Belt area through the northwestern New Mexico portion of the Four
Corners area to near Hobbs, New Mexico, and from Hobbs to Conway, Kansas, where
it branches into east and west legs. The west leg extends to near Minneapolis,
Minnesota, and the east leg leads to near Janesville, Wisconsin. Spurs from
these legs extend into southeast Kansas, Iowa and Illinois.
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Mid-America's Illini II is a 116-mile pipeline connecting a chemical customer's
plants in Illinois and transports ethylene.
Mid-America also transports crude oil from St. James, Louisiana to Memphis,
Tennessee. This crude oil is transported in pipeline space leased by Mid-America
in the Capline Pipeline system, which extends from St. James to near
Collierville, Tennessee. Crude oil is then transported through a 32-mile
pipeline, operated and partially owned (19 miles only) by Mid-America to MAPCO
Petroleum's Memphis Refinery. Mid-America also transports jet fuel by pipeline
from the Memphis Refinery to the nearby Memphis International Airport.
MAPCO AMMONIA PIPELINE
MAPCO Ammonia Pipeline (the "Ammonia System") transports liquid anhydrous
ammonia for use as fertilizer. This system consists of 1,093 miles of pipeline
varying from four to eight inches in diameter. It receives ammonia from plants
in the Texas Panhandle and near Enid and Tulsa, Oklahoma for delivery to points
principally in Kansas, Nebraska, Iowa and southern Minnesota.
SEMINOLE PIPELINE
Seminole Pipeline Company ("Seminole") owns 1,311 miles of pipeline,
predominantly fourteen inches in diameter, extending from Hobbs Station in west
Texas to the Mont Belvieu Terminal on the Texas Gulf Coast, together with
related pumping, metering and storage facilities. MAPCO owns 80% of the stock of
Seminole and operates and manages the pipeline.
Seminole operates as a batch system moving demethanized mix, ethane-propane
mix and specification liquid products. Products are received from gas processing
plants and from Mid-America for delivery to various destinations along the
pipeline system. The Texas Gulf Coast market served by Seminole is predominantly
for petrochemical and refining feedstock.
During 1993, Seminole completed an expansion of the pipeline which
consisted of an additional 544-mile, 14-inch pipeline from west Texas to Mont
Belvieu, Texas, increasing the potential capacity of the line to 300,000 barrels
per day.
See "Legal Proceedings" Item 3 beginning on page 12 for information
concerning litigation proceedings connected with Seminole.
LIQUID MOVEMENTS
The following table summarizes the Mid-America, Ammonia and Seminole
Systems' total movements of liquids in millions of barrel miles (barrels of
liquids times number of miles transported) and revenue per 100 barrel miles for
each of the past five years:
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BARREL MILES (IN MILLIONS)
AND REVENUE PER 100 BARREL MILES
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1994 1993 1992 1991 1990
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Natural Gas Liquids.................. 109,854 95,568 90,951 87,966 79,990
Anhydrous Ammonia.................... 3,851 3,587 3,976 3,743 3,692
Crude Oil and Refined Products....... 4,900 4,711 4,636 4,068 4,510
------- ------- ------- ------- -------
Total...................... 118,605 103,866 99,563 95,777 88,192
======= ======= ======= ======= =======
Revenue Per 100 Barrel Miles......... 18.7c. 19.3c. 19.8c. 20.2c. 20.8c.
======= ======= ======= ======= =======
</TABLE>
The Mid-America, Ammonia and Seminole Systems operate as common carriers.
The single largest shipper accounted for approximately 22.6% of pipeline
transportation revenues during 1994. Total pipeline deliveries in 1994 were 273
million barrels, compared with 245 million barrels in 1993.
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LIQUIDS SUPPLY
The Department of Energy estimates of total proved reserves of NGLs for
Mid-America's and Seminole's source of supply areas in Texas, New Mexico,
Oklahoma, Kansas, Colorado, Wyoming and Utah are as follows:
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TOTAL INDUSTRY RESERVES
IN MILLIONS OF BARRELS
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December 31, 1990........................................ 4,437
December 31, 1991........................................ 4,316
December 31, 1992........................................ 4,351
December 31, 1993........................................ 4,172
December 31, 1994........................................ Not Available
</TABLE>
Mid-America's and Seminole's supply areas are also served by other
pipelines.
UNDERGROUND STORAGE
Underground storage facilities for NGLs are owned or operated by MAPCO at
locations along its pipeline system in the states of Iowa, Kansas, Nebraska,
Oklahoma and Texas. The capacity of these facilities on December 31, 1994 was
approximately 16 million barrels. Other storage operations compete with MAPCO
for storage leasing in the Conway and Hutchinson, Kansas areas. Competition is
intense in the storage business.
COMPETITIVE CONDITIONS
The marketing of NGLs and fertilizer and the transportation businesses in
which MAPCO operates are highly competitive. MAPCO competes with a number of
companies engaged in propane marketing, some of which are larger than MAPCO and
may have more significant financial resources. In addition, other pipelines,
tank cars, trucks, barges and local sources of supply (refineries, gasoline
plants and ammonia plants) and other sources of energy such as natural gas,
coal, oil and electricity, all provide competition for pipeline operations.
Propane competes with natural gas in areas served by natural gas distribution
systems and extension of natural gas service may result in the loss of
customers. Competition for retail and wholesale fertilizer customers is intense
in all of the areas served by MAPCO.
REGULATIONS AND ENVIRONMENTAL MATTERS
Federal, state and local environmental and safety laws and regulations
affect the Natural Gas Liquids segment's marketing of NGLs, nitrogen solution
fertilizers, mixed fertilizers and agricultural chemicals and the operation of
its natural gas processing plants. It is the policy of the Natural Gas Liquids
segment to comply with such laws and regulations. At this time, MAPCO cannot
accurately predict the effect which such laws and regulations may have on such
activities and future earnings. Pipeline operations are subject to the
provisions of the Interstate Commerce Act applicable to interstate common
carrier pipelines and the Hazardous Liquid Pipeline Safety Act. The Federal
Energy Regulatory Commission regulates tariff rates, shipping regulations and
other practices of Mid-America and Seminole. Tariff rates for liquid anhydrous
ammonia as transported by the Ammonia System are regulated by the Interstate
Commerce Commission. Under the Interstate Commerce Act, MAPCO is required to
file reasonable and nondiscriminatory tariff rates and is subject to certain
other regulations relating to, among other things, permissible depreciation
charges.
The United States Department of Transportation has prescribed safety
regulations for common carrier pipelines. The pipeline systems are subject to
various state laws and regulations concerning safety standards, exercise of
eminent domain and similar matters. Mid-America and Seminole also file tariff
rates covering intrastate movements with various state commissions.
The Natural Gas Liquids segment did not incur in 1994 and does not at this
time anticipate any material capital expenditures for environmental control
facilities in 1995.
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PETROLEUM
GENERAL
The Petroleum segment operates two refining and marketing systems: the
Alaska System and the Mid-South System. The Alaska System includes a refinery at
North Pole, Alaska, the wholesale marketing of refined petroleum products, and a
22-unit chain of retail motor fuel and convenience store outlets. The Mid-South
System includes a refinery at Memphis, Tennessee, the wholesale and spot
marketing of refined petroleum products and NGLs, a 182-store chain of retail
motor fuel convenience stores and interstate fuel stops in 9 Southeastern
states.
The 1994 Petroleum segment revenues were $2,187.0 million and operating
profit was $26.4 million ($95.1 million before the $68.7 million negative impact
from the Alaska Royalty Oil settlement described under "Legal Proceedings," Item
3 beginning on page 12) compared to $1,881.0 million of revenues and $108.9
million of operating profit in 1993.
ALASKA SYSTEM
NORTH POLE REFINERY
MAPCO's refinery, located near Fairbanks at North Pole, Alaska ("North Pole
Refinery"), is the largest refinery in the state. The refinery is located
approximately two miles from its supply point for crude oil, the Trans-Alaska
Pipeline System ("TAPS"). The North Pole Refinery's processing capability is
approximately 130,000 barrels per day. At maximum crude throughput, 43,000
barrels per day of refined product can be produced. These products are gasoline,
commercial and military jet fuel, heating oil, diesel fuel, fuel oil, naphtha
and asphalt. MAPCO's principal market for these products in Alaska is to
governmental, wholesale, commercial and industrial customers and to MAPCO's
retail marketing operations. MAPCO's retail marketing operations, as described
below, accounted for about 10% of the North Pole Refinery's 1994 product sales
volume, and MAPCO Express' retail gasoline sales, as described below, accounted
for about 81% of the Refinery's gasoline production. In 1994, average throughput
at the North Pole Refinery was 123,346 barrels per day of crude oil which
resulted in the average production of 37,609 barrels per day of petroleum
products compared to 124,971 barrels per day of average crude throughput and
average production of 37,699 barrels per day of petroleum products in 1993.
The North Pole Refinery's crude oil is purchased from the state of Alaska
or is purchased or received on exchanges from crude oil producers. The North
Pole Refinery has an agreement with the state of Alaska for the purchase of
royalty oil which is scheduled to expire on December 31, 2003. The agreement
provides for the purchase of up to 35,000 barrels per day of the state's royalty
share of crude oil produced from Prudhoe Bay, Alaska. These volumes, along with
crude oil either purchased or received under exchange agreements, are utilized
as throughput in the production of products at the refinery. Approximately 29%
of the throughput is refined and sold as finished product and the remainder is
returned to the TAPS and either delivered to repay exchange obligations or sold.
Effective February 1, 1992, the North Pole Refinery discontinued its
receipt of crude oil under an assignment of rights of Golden Valley Electric
Association to purchase 5,000 barrels per day of state of Alaska royalty oil.
See "Legal Proceedings" Item 3 beginning on page 12 for information
concerning the settlement of litigation connected with state of Alaska royalty
oil contracts.
RETAIL MARKETING
MAPCO, under the brand name "MAPCO Express," is engaged in the retail
marketing of gasoline, diesel fuel, other petroleum products, convenience
merchandise and deli snack foods at 22 stores in Anchorage, Fairbanks and
Juneau, Alaska. In 1994, convenience merchandise and deli fast food accounted
for approximately 33% of MAPCO Express' gross margin compared to approximately
38% in 1993. All of the motor fuel sold by MAPCO Express stores is supplied
either by exchanges or directly from the North Pole Refinery.
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In June 1993, the Company sold its retail heating fuel operation, "MAPCO
Express Fuels." MAPCO Express Fuels previously operated in the Fairbanks
residential and commercial heating fuels markets and in rural interior Alaska
and on the waterborne Yukon River and Norton Sound markets, selling primarily
gasoline, heating fuels, diesel and lubricants. MAPCO Express Fuels operations
were not material to the operating results of the Petroleum segment.
MID-SOUTH SYSTEM
MEMPHIS REFINERY
MAPCO's refinery in Memphis, Tennessee ("Memphis Refinery") enjoys a niche
position as the only refinery in Tennessee and has a throughput capacity of
approximately 90,000 barrels per day. In 1994, the Memphis Refinery processed an
average 86,347 barrels per day compared to 77,141 barrels per day in 1993.
Products produced by the Memphis Refinery are gasoline, low sulfur diesel fuel,
jet fuel, K-1 kerosene, No. 6 fuel oil, propane and elemental sulfur. These
products are marketed primarily in the Mid-South region of the United States to
wholesale customers, such as industrial and commercial consumers, jobbers,
independent dealers, other refiner/marketers and MAPCO's retail marketing
operations. Sales to MAPCO's retail marketing operations accounted for about 24%
of the Memphis Refinery's 1994 sales volume, with no other single customer
accounting for more than 9% of total sales. During 1994, the Memphis Refinery's
gasoline sales to MAPCO's retail marketing operations were 45% of the refinery's
gasoline production.
The Memphis Refinery has access to crude oil from the Gulf Coast via common
carrier pipeline and by river barges. In addition to domestic crude oil, the
Memphis Refinery has the capability of receiving and processing certain foreign
crudes. During 1994, the majority of the crude oil processed at the Memphis
Refinery was purchased from various suppliers on a posted-plus price basis.
Although this method of purchase reduces the financial effect of volatile crude
oil markets, the financial results of the refinery may be significantly impacted
by changes in the market prices for crude oil and refined products. MAPCO cannot
with any assurance predict the future of crude oil and product prices or their
impact on the financial results of the Petroleum segment.
RETAIL MARKETING
MAPCO, primarily under the brand names "MAPCO Express" and "Shell," is
engaged in the retail marketing of gasoline, diesel fuel, other petroleum
products, convenience merchandise and deli fast food items at 182 stores
primarily in Tennessee.
MAPCO's stores have been designed to be modern neighborhood-type
facilities, attracting convenience-oriented customers with a variety of today's
most widely-used products and services. In 1994, convenience merchandise and
deli fast food accounted for approximately 49% of MAPCO Express' gross margin.
Certain retail marketing assets were transferred to Emro Marketing Company in
1994. See "LPG and Fertilizer Sales" beginning on page 1 for further information
regarding this transfer.
OTHER PETROLEUM OPERATIONS
CRUDE, NGL AND REFINED PRODUCTS TRADING
MAPCO buys, sells and exchanges domestic and foreign crude oil to supply
its refinery systems in Tennessee and Alaska. During 1994, in addition to
refinery supply, MAPCO purchased and sold an average of 17,776 barrels per day
of crude oil compared to 17,012 barrels per day in 1993.
MAPCO also buys, sells and exchanges domestic and imported NGLs in the
Midwest, Gulf Coast and Rocky Mountain regions. Although some NGLs are produced
by MAPCO, the majority is purchased from outside sources and sold under both
short and long-term arrangements.
NGL sales and purchases for 1994 averaged 74,710 barrels per day, compared
with 49,864 barrels per day in 1993. The supply of and demand for NGLs can
materially affect the volume of product available to MAPCO and also the market
for such product.
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COMPETITIVE CONDITIONS
The petroleum industry is highly competitive in all phases from the
procurement of crude oil to the refining, distribution and marketing of refined
products. Many of MAPCO's competitors are large integrated oil companies, which,
because of their diverse operations, strong capitalization and recognized brand
names may be better able to withstand volatile industry conditions, shortages of
crude oil or intense price competition.
The principal competitive forces affecting MAPCO's refining businesses are
feedstock costs, refinery efficiency, refinery product mix, product distribution
and marketing costs. Some of MAPCO's competitors in the refining business can
more easily process sour crudes, and accordingly, are more flexible in the
crudes which may be processed. Since MAPCO has no crude oil reserves and does
not engage in crude oil exploration, it must obtain its crude oil requirements
from unaffiliated sources. MAPCO believes that it will be able to obtain
adequate crude oil and other feedstocks at generally competitive prices for the
foreseeable future.
The principal competitive factors affecting MAPCO's retail marketing
businesses are location, product price and quality, appearance and cleanliness
of stores and brand-name identification.
REGULATIONS AND ENVIRONMENTAL MATTERS
Federal, state and local pricing and environmental laws and regulations
affect MAPCO's refining and marketing operations. It is the policy of the
Petroleum segment to comply with such laws and regulations. MAPCO's refining
operations are subject to regulations relating to air emissions, water
discharges and soil and groundwater contamination which may result from spillage
or discharge of petroleum and hazardous materials at its refineries, terminals
and retail outlets. Groundwater monitoring and remediation is ongoing at both
refineries and at various MAPCO retail outlets. Air and water pollution control
equipment is operating at both refineries to comply with applicable regulations.
The Clean Air Act Amendments of 1990 (the "CAAA") continue to impact the
Petroleum segment, particularly its refinery operations, through a number of
programs and provisions of the CAAA. The provisions impacting the Petroleum
segment include Maximum Achievable Control Technology (MACT) rules which are
being developed for the refining industry, controls on individual chemical
substances present at its facilities and new operating permit rules which may be
applicable to its facilities. These provisions impact other companies in the
industry in similar ways and are not expected to adversely impact the Company's
competitive position.
MAPCO's retail petroleum operations are subject to federal, state and local
regulations regarding petroleum underground storage tanks ("USTs"). The United
States Environmental Protection Agency ("EPA") and several states in which MAPCO
conducts retail operations have adopted laws requiring owners and operators of
USTs used for petroleum products to register such tanks with state offices. In
addition, these UST regulations have imposed new technical standards, corrective
action and financial responsibility requirements relating to such tanks. The
regulations establish requirements for owners and operators of USTs, including
leak detection systems, corrosion protection systems, tank system repairs and
replacement, tank closure and corrective action for leaking tanks. EPA
regulations were issued in late 1988 and compliance is to be phased in over the
course of a ten (10) year period.
The Petroleum segment incurred approximately $5.5 million in capital
expenditures for environmental control facilities in 1994 and has budgeted $11.1
million in capital expenditures for environmental control facilities in 1995.
Such expenditures are not deemed by the segment to be material.
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COAL
GENERAL
MAPCO's Coal segment operations produced and marketed bituminous coal for
domestic and foreign markets from one surface and six underground mining
complexes located in Kentucky, Maryland, Illinois and Virginia. MAPCO also
operates a coal terminal on the Ohio River near Mt. Vernon, Indiana, used for
the transloading of coal. The 1994 Coal segment revenues were $425.5 million and
operating profit was $35.9 million compared to $414.4 million in revenues and
$46.9 million in operating profit in 1993.
COAL PRODUCTION
Tonnage produced by the Coal segment in 1994 was 13,033,311 tons(1),
compared with 13,151,820 tons in 1993. Tonnage sold in 1994 was 14,549,451 tons,
compared with 14,357,619 tons in 1993. Tonnage transloaded at the Mt. Vernon
coal terminal in 1994 was 3,427,399 tons compared with 3,213,978 tons in 1993.
In 1994, approximately 88% of MAPCO's production was mined by underground mining
methods and approximately 12% by surface mining methods. Of the total amount of
tons sold by MAPCO's Coal segment, approximately 44% consisted of low sulfur
coal (29% steam and 15% metallurgical coal), 19% medium sulfur steam coal and
37% high sulfur steam coal.
On January 27, 1995, MAPCO Coal's Webster County Coal Corporation
subsidiary ceased the production and shipping of coal at its Retiki Mine located
near Henderson, Kentucky. Due to the negative impact of the Clean Air Act, the
low BTU content of the coal and the lack of customers for the mine's output, the
Company decided to close the mine. See "Legal Proceedings," Item 3 beginning on
page 12 for information concerning litigation connected with a coal sales
contract at the Retiki Mine.
The following table sets forth the volume of coal sold by MAPCO's Coal
segment and the average sales price per ton for each of the past five years:
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
(TONS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Produced Tons Sold............................ 12,949 13,209 13,520 13,791 13,183
Purchased Tons Sold........................... 1,600 1,149 1,191 1,063 767
------ ------ ------ ------ ------
Total Tons Sold............................... 14,549 14,358 14,711 14,854 13,950
====== ====== ====== ====== ======
Average Sales Price Per Ton................... $28.93 $28.44 $28.88 $29.28 $29.45
====== ====== ====== ====== ======
</TABLE>
COAL MARKETING
MAPCO's steam coal is sold primarily to electric utilities and industrial
and cogeneration customers located in the Eastern United States and, to a lesser
extent, in Europe. MAPCO's metallurgical coal is sold to steel and coke
producers located in the United States, South America, the Far East, Europe and
Northern Africa. Of the 14.5 million tons sold during 1994, 68.7% was to
domestic utilities, 16.5% to export customers, 7.1% to domestic industrial
users, 4.5% to cogeneration customers, and 3.2% to other coal-related entities.
During 1994, 79.3% of the total tons marketed by MAPCO's Coal segment was
sold under contracts having a term of more than one year ("long-term
contracts"), many of which contain price adjustment provisions designed to
reflect changes in market conditions, labor and other production costs and, when
the coal is sold other than FOB the mine, changes in railroad and/or barge
freight rates. The relevant provisions of such long-term contracts, however, are
not identical, and the selling price of the coal does not necessarily reflect
every change in production costs incurred by the producing coal mine. Certain of
MAPCO's long-term contracts may be reopened periodically for price
renegotiation. The remainder of MAPCO's coal production is sold under spot
market arrangements having terms of one year or less. In the case of
metallurgical coal sold in
- ---------------
(1) As referred to throughout the description of the Coal segment, "tons" are
defined as short tons of 2,000 pounds, unless otherwise indicated.
8
<PAGE> 11
the domestic market and both metallurgical and steam coal sold in the export
market, such contracts are generally subject to negotiation each year or have
annual price renegotiation provisions if longer than one year.
During 1994, total demand for coal produced in the U.S. was 1,021 million
tons as determined by the U.S. Department of Energy. This was 6.6% more than the
1993 demand level of 958 million tons. Consumption for 1994 was approximately
1,018 million tons while 1993 consumption was 1,000 million tons. Domestic
utility coal consumption, which represented approximately eighty-eight percent
(88%) of total domestic consumption, increased by approximately 19 million tons
compared to 1993, while domestic industrial and coking coal consumption was
essentially unchanged. International demand for U.S.-produced steam and
metallurgical coals declined approximately 3% with total deliveries of
approximately 72 million tons. In general, demand for U.S. steam and
metallurgical coals was impacted by the slow economic recovery worldwide and
availability of coals from other lower-cost or government-subsidized
coal-producing countries. Consequently, there was a reduction in the sales price
of coals placed in the export market.
LABOR MATTERS
On February 1, 1993, the collective bargaining agreement between MC Mining,
Inc. ("MC Mining"), a wholly-owned subsidiary of MAPCO Inc., and the United Mine
Workers of America ("UMWA") expired. Previously, in December 1992, MC Mining had
given the UMWA notice of its intention to enter into decision-and-effects
bargaining concerning MAPCO's decision to either sell MC Mining or contract out
its operation. After approximately eighteen months of bargaining, MC Mining
declared impasse and partially implemented its last-and-best offer made to the
UMWA. In September 1994, the UMWA filed several unfair labor practices with the
National Labor Relations Board ("NLRB") alleging that MC Mining had failed to
bargain in good faith to legitimate impasse and improperly implemented portions
of the last bargaining proposal to the UMWA. On November 22, 1994, the NLRB
acknowledged the UMWA's request to withdraw these charges and approved the
withdrawal with closure of the case. On February 6, 1995, the UMWA filed charges
with the NLRB alleging that MC Mining had engaged in unfair labor practices by
refusing to bargain with the UMWA since August 22, 1994. This charge is
currently under investigation by the NLRB.
In early June, 1993, the UMWA filed a petition with the NLRB seeking an
election to decide whether the UMWA should represent hourly employees at MAPCO
Coal's Pontiki Coal Corporation ("Pontiki"). On August 13, 1993, the NLRB
conducted a representation election and the unofficial vote count was 78 votes
opposed to unionization, 101 votes supporting the UMWA, and 23 votes challenged
by the UMWA. On August 4, 1994, the twenty-three (23) challenged votes were
counted and the NLRB declared Pontiki the winner of the representation election.
RESERVES
The following table sets forth MAPCO's Coal segment's estimated
economically recoverable coal reserves for 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
MAPCO's Coal Reserves......................................... 343,087,000(2) 348,443,000(2)
=========== ===========
</TABLE>
- ---------------
(2) Included in MAPCO's coal reserve figures for 1994 and 1993 are 35,072,000
tons owned or controlled by MC Mining, an affiliate of MAPCO Coal Inc. The
coal reserve figure for 1994 includes approximately 2,569,286 tons
associated with Webster County Coal Corporation's Retiki Mine that ceased
production on January 27, 1995. In the normal course of business, the Coal
segment continuously reviews its coal assets and properties for the purpose
of purchasing or disposing of coal assets and businesses to optimize
operating profit and cash flow potentials. As part of this process,
beginning in October 1994, the Company initiated a core drilling program at
its Mettiki Mine in western Maryland and changed its mine plan at its
Pattiki Mine located near Carmi, Illinois. Based on preliminary information
generated to date, the total coal reserve figures identified above may be
understated by approximately 17 million tons because certain existing coal
reserves will be reclassified to either the measured or indicated class of
coal reserves.
9
<PAGE> 12
Estimated economically-recoverable coal reserves in 1994 for MAPCO's Coal
segment by type of coal is set forth in the following table:
<TABLE>
<CAPTION>
TYPE OF COAL(3) MEASURED TONS INDICATED TONS TOTAL TONS
- --------------------------------------------------- ------------- -------------- ----------
<S> <C> <C> <C>
High Sulfur........................................ 48,249,000 54,966,000 103,215,000
Medium Sulfur...................................... 27,757,000 22,793,000 50,550,000
Low Sulfur......................................... 70,768,000 76,831,000 147,599,000
Low Sulfur/Metallurgical........................... 28,745,000 12,978,000 41,723,000
----------- ----------- -----------
Total Coal Reserves................................ 175,519,000 167,568,000 343,087,000
=========== =========== ===========
</TABLE>
- ---------------
(3) Definitions for low, medium and high sulfur coal are as follows: (a) low
sulfur coal means coal containing less than 1.0% sulfur; (b) medium sulfur
coal means coal containing between 1.0% and 2.0% sulfur; and (c) high
sulfur coal means coal containing in excess of 2.0% sulfur.
MAPCO's reserve base is estimated using guidelines defined by the U.S.
Geological Survey in its publication Circular 891 entitled "Coal Resource
Classification System of the U.S. Geological Survey" ("USGS 891"). The estimates
of economically-recoverable coal reserves are based upon MAPCO's analysis of
local seam conditions in keeping with USGS 891 and upon the operating experience
of the appropriate technical mining personnel. In general, such reserve
estimates are based on yearly evaluations made by the Coal segment's
professional engineers and geologists. As discussed herein, MAPCO's Coal segment
periodically modifies estimates of reserves owned or controlled by MAPCO which
may increase or decrease previously reported amounts. The annual reserve
evaluations are based on information developed by core hole drilling programs,
examination of outcrops, acquisitions, dispositions, actual production amounts,
changes in mining methods, abandonments and other relevant information.
All measured or indicated reserves referred to in the table above can be
mined by current mining practices and techniques. In addition, MAPCO's available
coal resources include incremental tons in excess of the noted indicated or
measured tons that may be mined in the future following potential improvements
in mining equipment and techniques. For economic and other operational reasons,
a portion of MAPCO's reserves described above may be mined only after the
construction of additional mining facilities and additional capital investment.
Nevertheless, the extent to which all of the coal in MAPCO's recoverable
reserves will eventually be mined will depend on a myriad of factors, including
but not limited to, future domestic and foreign economic and energy supply
conditions, coal mining practices and capabilities, and governmental
regulations. See "Regulations and Environmental Matters" at page 11.
The reserve classifications in the table referred to above have been
determined using the following criteria:
Measured -- Accessed and virgin coal that lies within a radius of 1/4
mile of a point of thickness of coal measurement. The sites for thickness
measurement are so closely spaced and the geologic character so well
defined that the average thickness, areal extent, size, shape and depth of
coal beds are well established. This classification has the highest degree
of geologic assurance.
Indicated -- Virgin coal that lies between 1/4 mile and 3/4 mile from
a point of thickness of coal measurement. The assurance, although lower
than for measured, is high enough to assume continuity between points of
measurement. There are no sample and measurement sites in areas of
indicated coal and the classification has a moderate degree of geologic
assurance.
COMPETITIVE CONDITIONS
The coal industry is highly competitive. MAPCO's Coal segment competes with
many other large coal producers, several of which may have greater coal reserves
or more substantial financial resources, as well as the hundreds of small and
medium-sized producers in North America and abroad. Additionally, in the last
several years, a consolidation of the coal industry has been occurring as
evidenced by various mergers and/or reorganizations involving coal companies and
coal properties.
10
<PAGE> 13
In many cases, the Coal segment faces competitors, particularly in the
export market, which benefit from favorable exchange rates, government-supported
or subsidized coal production, lower costs by virtue of such factors as less
difficult mining conditions, less severe governmental regulation, and lower
transportation costs, all of which may provide a competitive advantage with
respect to price. Steam coal also competes with other fuels and energy sources,
including oil, natural gas, hydroelectric power, solar and nuclear energy.
In addition to the factors of price, availability, and public acceptance of
alternative energy sources, the impact of federal energy policies and taxation
may have an impact on MAPCO's Coal segment. MAPCO is not able to predict at this
time the effect, if any, on the Coal segment's operations of any changes in
federal energy or tax policy and its concurrent impact or the particular pricing
levels of competing fuels (i.e., oil and natural gas). Nevertheless, any
sustained and marked increase in the cost of coal sold resulting from any
governmental imposition, tax or other, could have a material adverse effect on
such business, both domestic and abroad.
In 1994, based upon data established by the U.S. Department of Labor's Mine
Safety and Health Administration, MAPCO ranked 23rd in total production among
U.S. coal producers. While MAPCO's Coal segment's annual production accounts for
only about 1.3% of the United States' coal production, MAPCO believes that it
will remain competitive due to its above-average productivity per man day and
sufficient financial resources, the latter of which enables MAPCO to employ
reasonably modern and efficient production equipment.
REGULATIONS AND ENVIRONMENTAL MATTERS
MAPCO's Coal segment, as well as the domestic coal industry, is subject to
the U.S. Department of Labor's Mine Safety and Health Administration's
comprehensive regulatory requirements and guidelines. In addition, MAPCO's coal
mining operations are subject to regulation with respect to its environmental
effects, including air and water quality control, reclamation of disturbed
surface land, limitations on land use, solid waste and industrial waste
disposal, noise, aesthetics and other matters by various federal, regional,
state and local authorities. In this connection, numerous permits are required
for construction projects and for the operation of existing facilities.
Additionally, such operations are subject to state and federal health and safety
rules and regulations. In general, compliance with these health and safety laws
is a cost common to all producers to some extent. MAPCO believes that the Coal
segment's competitive position has not been, nor should it be, adversely
impacted by these laws and regulations, except in the export market where
MAPCO's Coal segment competes with various foreign producers subject to less
stringent health and safety regulations.
In 1990, Congress enacted the Clean Air Act Amendments of 1990 ("Clean Air
Act") which imposed, among other things, additional controls on the emissions of
sulfur dioxide ("SO2") and nitrogen oxides from coal-fired power plants. About
two-thirds of the high sulfur coal produced from MAPCO's Illinois Basin
operations is sold pursuant to long-term agreements for use in electric utility
generating units which are currently fitted with flue gas desulfurization
systems for the removal of SO2 emissions. Since implementation of the provisions
of the Clean Air Act, these generating units have used, and MAPCO believes they
will continue to use, its Illinois Basin coals. The primary utility customers
for the medium sulfur coal produced at MAPCO's Mettiki Mine in western Maryland
have installed scrubbers as their compliance strategy. MAPCO's east Kentucky and
Virginia operations produce both low sulfur and compliance coals. Compliance
coals are generally coals that have SO2 content less than or equal to 1.20 lbs.
per million BTU. Since the Clean Air Act permits utilities to use low sulfur and
compliance coals in lieu of constructing expensive sulfur dioxide removal
systems, implementation of Phase 1 of this legislation in 1995 should have a
favorable impact on the marketability of and pricing for MAPCO's extensive
reserves of low sulfur and compliance coal. MAPCO cannot predict at this moment
the timing or extent of such favorable impact, if any.
MAPCO's Coal segment is subject to various federal, state, and local
environmental laws, including but not limited to, the Clean Water Act, the Clean
Air Act, and the Safe Drinking Water Act as well as mining and reclamation
standards of the Surface Mining Control and Reclamation Act of 1977 and the
regulations promulgated thereunder. It is the policy of the Coal segment to
operate in compliance with such standards, laws and regulations. MAPCO believes
that this policy will not substantially affect its ability to compete with
11
<PAGE> 14
similarly situated and complying competitors in the marketplace. Present
compliance is largely a result of capital expenditures made in prior years and
of current maintenance and monitoring activities conducted in the ordinary
course of business. Although the coal industry is subject to these numerous
environmental regulations, MAPCO's Coal segment did not incur in 1994 any
material capital expenditures in order to comply with applicable federal, state
and local environmental laws and regulations. No material capital expenditures
are anticipated for environmental control facilities for 1995 with respect to
MAPCO's Coal segment's operations.
EXECUTIVE OFFICERS OF MAPCO INC.
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES PRESENTLY YEAR FIRST
NAME AGE HELD WITH REGISTRANT BECAME OFFICER
- ---------------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
James E. Barnes............. 61 Chairman of the Board and Chief Executive 1983
Officer
Robert M. Howe.............. 55 President and Chief Operating Officer 1984
Philip W. Baxter............ 46 Senior Vice President -- Strategic Planning 1985
David W. Bowman............. 54 Senior Vice President, General Counsel and 1987
Secretary
Joseph W. Craft III......... 44 Senior Vice President -- Coal 1982
Frank S. Dickerson, III..... 55 Senior Vice President, Chief Financial 1987
Officer and Treasurer
W. Jeffrey Hart............. 53 Senior Vice President -- Petroleum 1983
David S. Leslie............. 64 Senior Vice President -- Corporate Affairs 1981
and Assistant to the Chief Executive Officer
Jack D. Maynard............. 51 Senior Vice President -- Human Resources 1984
Robert G. Sachse............ 46 Senior Vice President -- Natural Gas Liquids 1993
Donald R. Wellendorf........ 42 Vice President and Controller 1994
</TABLE>
Each of the executive officers named above are elected annually by the
directors of MAPCO and serve at the directors' discretion. Each individual named
above has been an officer or employee of MAPCO for at least the past five years.
There are no family relationships between or among any of the above-named
persons or between or among any of the above-named persons and any directors of
MAPCO.
EMPLOYEES
As of December 31, 1994, MAPCO and its subsidiaries had 6,051 employees. Of
the total number of employees, 2,139 were employed in the Natural Gas Liquids
segment; 2,213 in the Petroleum segment; 1,438 in the Coal segment; and 261 in
the general corporate area. Less than three percent of MAPCO's work force is
unionized and covered by collective bargaining agreements. Such an agreement has
been entered into with the Oil Chemical and Atomic Workers Union covering 165
employees in the Petroleum segment.
ITEM 2. PROPERTIES.
All the various physical properties are discussed in PART I, Item 1, SUPRA,
pertaining to MAPCO's business.
ITEM 3. LEGAL PROCEEDINGS.
Retiki Mine Contract Litigation
The Coal segment's Retiki Mine sold all of its production to Big Rivers
Electric Corporation ("Big Rivers") under a cost-plus fee management contract
that was scheduled to terminate in mid-January 1996.
12
<PAGE> 15
The Retiki Mine was expected to close concurrently with contract expiration.
Through December 31, 1994, MAPCO Coal's Webster County Coal Corporation
subsidiary ("Webster County") has invoiced Big Rivers approximately $9.0 million
for certain costs associated with the operation of the Retiki Mine. Big Rivers
has declined to pay Webster County the invoiced amount. A breach of contract and
declaratory judgment action was initiated by Webster County against Big Rivers
in mid-January 1994, in order to collect the invoiced amount due from Big Rivers
at that time as well as to obtain a declaratory judgment by which Big Rivers
would be determined to be liable for other operating costs associated with the
Retiki Mine.
In January of 1995, Webster County and Big Rivers entered into a limited
settlement agreement partially resolving this dispute and leading to the
immediate cessation of production of coal at the Retiki Mine. Under the terms of
the partial settlement agreement, Webster County will continue to supply Big
Rivers with the total tons of coal that would have been delivered during the
remaining term of the contract but from alternative sources. Trial on issues
which remain in dispute is scheduled to proceed in October 1995.
Management believes that Webster County will prevail in this litigation and
that all, or substantially all, of the disputed costs will be collected.
State Royalty Oil Settlement
The refining and marketing arm of the Company, MAPCO Petroleum Inc.,
operates a refinery in Alaska through its subsidiary, MAPCO Alaska Petroleum
Inc. ("MAPI"). Since 1978, MAPI (and/or its predecessor) has had long-term
agreements with the state of Alaska (the "State") to purchase royalty oil from
the State at prices linked to amounts payable by North Slope oil producers in
satisfaction of their royalty obligations to the State. In 1977, the State
commenced suit against the producers (in an action entitled State of Alaska v.
Amerada Hess, et al.) alleging that they incorrectly calculated their royalty
payments.
As of April 1992, the State had settled its royalty oil claims against all
of the producers. On the basis of these settlements, the State billed MAPI for
retroactive increases in the prices paid by MAPI under all four of its royalty
oil purchase agreements. The State's claims were comprised of retroactive price
adjustments of $98 million, $9.2 million, $2.9 million and $6.4 million, not
including future interest. MAPI commenced litigation against the State in 1992
seeking a determination that it was not liable for retroactive price increases.
The parties settled all pending claims and entered into a settlement
agreement, effective August 1, 1994, whereby MAPI paid the State $95 million.
MAPI accrued $68.7 million during the second quarter of 1994 related to the
settlement.
Texas Explosion Litigation
On April 7, 1992, a liquefied petroleum gas explosion occurred near an
underground salt dome storage facility located near Brenham, Texas and owned by
an affiliate of the Company, Seminole Pipeline Company ("Seminole"). The
National Transportation Safety Board and the Texas Railroad Commission
essentially determined that the probable cause of the explosion was the result
of overfilling the storage facility.
The Company, as well as Seminole, Mid-America Pipeline Company and other
non-MAPCO entities have been named as defendants in civil actions filed in state
district courts in Texas. During 1993, Seminole received reimbursements from its
insurers for settlements which disposed of all the death claims and
substantially all of the serious injury claims resulting from the incident.
Generally, the types of remaining claims consist primarily of personal injury
and property damage claims, coupled with theories of nuisance and diminished
property value.
Although plaintiffs seek actual and punitive damages, the Company believes
that complete resolution of the remaining Texas explosion actions by litigation
or settlement, after reimbursement of insurance coverage, will not have a
material adverse effect on the Company's business, results of operations or
consolidated financial position.
13
<PAGE> 16
Seminole Loop/Aquila-LaGrange Line Litigation
In May 1993, Seminole completed its Seminole loop project and in January
1994, Seminole completed its Aquila-LaGrange line project. Seminole is the
defendant in over 70 lawsuits claiming additional compensation for and/or
damages to tracts of land traversed by these projects in 15 counties in the
state of Texas. Many of the lawsuits claim punitive damages for alleged fraud,
illegal entry and other wrongful conduct. Claims in this litigation are not
covered by the Company's insurance.
The Company believes that complete resolution of the Seminole
loop/Aquila-LaGrange line litigation will not have a material adverse effect on
the Company's business, results of operations or consolidated financial
position.
General
The Company and its subsidiaries are involved in various other lawsuits,
claims and regulatory proceedings incidental to their businesses. In the opinion
of management, the outcome of such matters will not have a material adverse
effect on the Company's business, consolidated financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information regarding the market for MAPCO's common equity and related
stockholder matters is set forth herein at page 24.
ITEM 6. SELECTED FINANCIAL DATA.
The following table contains selected consolidated financial data for the
years indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales and Operating Revenues............... $3,059.3 $2,715.3 $2,786.8 $2,782.8 $2,822.5
Net Income................................. $ 79.1 $ 127.0 $ 100.7 $ 125.9 $ 130.0
Earnings per Common Share.................. $ 2.64 $ 4.24 $ 3.37 $ 4.20 $ 4.13
Cash Dividends Declared per Common Share... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Working Capital............................ $ 52.5 $ 73.3 $ 65.3 $ 66.8 $ 39.2
Total Assets............................... $2,166.1 $1,961.1 $1,911.7 $1,702.3 $1,699.9
Long-Term Debt (excluding current
maturities).............................. $ 720.9 $ 585.5 $ 669.4 $ 638.8 $ 654.3
Stockholders' Equity....................... $ 622.6 $ 574.3 $ 477.5 $ 412.7 $ 330.1
</TABLE>
On September 1, 1994, MAPCO completed the acquisition of certain assets of
Emro. The purchase price included a $186 million cash payment and the transfer
to Emro Marketing Company of the retail convenience store assets of MAPCO
Florida Inc. See Note 2 -- Acquisition to MAPCO Inc.'s consolidated financial
statements on page F-8 for further information regarding this acquisition.
During 1994, MAPCO settled its long-standing dispute with the state of
Alaska relative to its royalty oil purchase agreements. Refer to Management's
Discussion and Analysis of Financial Condition and Results of Operations on
pages 15 through 24 and Note 11 -- Commitments and Contingencies to MAPCO Inc.'s
14
<PAGE> 17
consolidated financial statements on page F-17 for further information regarding
the impact of this settlement on MAPCO's financial condition and results of
operations.
During 1994, 1993, 1992, 1991, and 1990, MAPCO repurchased a total of
148,466, 101,949, 288,100, 463,871, and 4,651,647 shares, respectively of its
common stock on the open market at a cost of approximately $8.7 million, $6.2
million, $16.5 million, $20.2 million, and $182.1 million, respectively. At
January 31, 1991, MAPCO had the authority from its Board of Directors to
repurchase 2.5 million shares primarily for employee stock option and other
benefit plans. As of March 27, 1995, 1,031,568 shares had been purchased at a
cost of $53.2 million under this authority.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion and analysis of MAPCO Inc.'s ("MAPCO" or the
"Company") financial condition and results of operations should be read in
conjunction with the financial statements and segment information presented on
pages F-2 through F-20 of this report.
FINANCIAL CONDITION
CASH GENERATION
Cash generation (usage) was as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Funds provided by operations............................... $ 212 $ 246 $ 196
Changes in operating assets and liabilities................ (77) 7 34
----- ----- -----
Net cash provided by operating activities.................. 135 253 230
Net cash used in investing activities...................... (293) (123) (209)
Net cash provided by (used in) financing activities........ 119 (116) (17)
----- ----- -----
Cash generation (usage).................................... $ (39) $ 14 $ 4
===== ===== =====
</TABLE>
Funds provided by operations in 1994 as compared to 1993 decreased
primarily due to lower operating profit in the Petroleum segment resulting from
the State Royalty Oil settlement. (See Note 11 to the consolidated financial
statements on page F-17 for a discussion of the settlement.) The increase in
funds provided by operations in 1993 as compared to 1992 was attributable to
reduced operating costs, higher refinery margins and lower interest expense.
(See comments under Results of Operations on page 17 for additional information
regarding segment operating results.)
The negative impact of the changes in operating assets and liabilities of
$77 million in 1994 primarily resulted from the decrease in litigation reserves
and taxes payable as a result of the State Royalty Oil settlement.
Capital expenditures and acquisitions in 1994 were $304 million, of which
$65 million was for capital items necessary to maintain existing operations,
compared to capital expenditures and acquisitions of $144 million in 1993, of
which $52 million was for capital items necessary to maintain existing
operations. Capital expenditures in 1994 included $186 million for the
acquisition of the assets of Emro Propane Company ("Emro") and $6 million for
environmental projects. The 1993 capital expenditures included $52 million for
expansion of the Seminole Pipeline and $18 million for environmental projects.
Financing activities in 1994 included an increase in short-term borrowings
of $165 million used primarily for the acquisition of the assets of Emro and
payment of the State Royalty Oil settlement. Other financing activities included
payment of an $8 million scheduled maturity of a Medium Term Note, payment of
$30 million of dividends and the repurchase of 148,466 shares of MAPCO common
stock for $9 million pursuant to MAPCO's authorized stock repurchase program.
Financing activities in 1993 included a reduction in short-term borrowings of
$140 million, payment of a $10 million scheduled maturity of a Medium Term Note,
redemption of the Mt. Vernon Economic Development Bonds for $7 million, payment
of $30 million of
15
<PAGE> 18
dividends and the repurchase of 101,949 shares of MAPCO common stock for $6
million pursuant to the repurchase program. These uses of cash in 1993 were
partially offset by Seminole Pipeline's issuance of $75 million of 6.67% Senior
Notes in support of the Seminole Pipeline expansion project.
CAPITALIZATION
Capitalization, which includes long-term debt (excluding current
maturities) and stockholders' equity, increased from $1,160 million at December
31, 1993, to $1,344 million at December 31, 1994. The increase is primarily
attributable to debt incurred for the acquisition of the assets of Emro and for
payment of the State Royalty Oil settlement. MAPCO's long-term debt as a percent
of capitalization increased from 50% at December 31, 1993, to 54% at December
31, 1994.
Various loan agreements contain restrictive covenants which, among other
things, limit the payment of advances or dividends by two of Natural Gas
Liquids' ("NGL") subsidiaries to MAPCO. At December 31, 1994, $180 million of
net assets were restricted by such provisions.
LIQUIDITY AND CAPITAL RESOURCES
MAPCO's primary sources of liquidity are its cash and cash equivalents,
internal cash generation and external financing. At December 31, 1994, MAPCO's
cash and cash equivalents were $31 million compared to $70 million at December
31, 1993.
MAPCO's external financing sources include its bank credit agreement, its
uncommitted bank credit lines and its ability to issue public or private debt,
including commercial paper. MAPCO renegotiated its bank credit agreement in
April 1994, obtaining a $300 million commitment. The total commitment under the
bank credit agreement reduces in quarterly amounts of $25 million commencing
June 30, 1998. This agreement serves as a back-up for outstanding commercial
paper and for borrowings against bank money market lines. As of December 31,
1994, no borrowings were outstanding under the bank credit agreement.
In 1990, MAPCO filed a shelf registration statement with the Securities and
Exchange Commission providing for the issuance of up to $400 million of debt
securities. As of December 31, 1994, MAPCO had outstanding $335 million of
Medium Term Notes issued pursuant to this registration. MAPCO has the
authorization to issue up to an additional $47 million of Medium Term Notes. The
proceeds from any debt issued under the shelf registration statement have been
and will continue to be used for general corporate purposes, including working
capital, capital expenditures, reduction of other debt and acquisitions.
On September 1, 1994, MAPCO completed the acquisition of the assets of Emro
which included the transfer to Emro Marketing Company of MAPCO Florida Inc.'s
retail convenience store assets in Florida. The cash payment for this
acquisition has been reflected in the capital expenditures for 1994. MAPCO
financed this acquisition primarily through the issuance of commercial paper and
bank money market lines.
MAPCO's existing debt and credit agreements contain covenants which limit
the amount of additional indebtedness the Company can incur. Management
believes, however, that MAPCO has sufficient capacity to fund its anticipated
needs.
Capital expenditures in 1995 are currently expected to be about $250
million, of which $184 million will be for expansion projects and $14 million
for environmental projects. MAPCO expects to utilize cash from operations and
short-term funding sources as needed to meet anticipated 1995 capital
expenditures; however, MAPCO's long-term liquidity is expected to increase since
cash from operations is anticipated to exceed currently projected capital
expenditures, environmental projects, debt service and dividends. MAPCO
anticipates that future excess internal cash generation will be used primarily
for debt reduction and to fund new capital projects.
INFLATION
During the past five years, MAPCO has benefitted from the relatively low
rates of inflation experienced in the United States. MAPCO's operating costs are
influenced to a greater extent by specific price changes in oil
16
<PAGE> 19
and gas and allied industries than by changes in general inflation. Crude,
refined product and NGL prices are particularly sensitive to OPEC production
levels and/or the attitudes of traders concerning the supply and demand balance
in the near future. These costs could increase with a possible adverse effect on
MAPCO's profitability. Although every effort will be made to do so, it is
possible that MAPCO, like many other companies, may not be able to adjust its
sales prices to maintain parity with inflation-driven operating costs.
MAPCO attempts to minimize the impact of inflation on operating costs
through on-going productivity improvements and cost-reduction programs.
Significant volumes of MAPCO Coal's production are sold pursuant to long-term
contracts that provide for cost adjustments which are generally
inflation-related. MAPCO Petroleum uses the last-in, first-out method of
inventory valuation for crude oil, refined petroleum products and retail
merchandise inventories. This method of inventory valuation results in cost of
sales which more closely represent current costs.
OTHER
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 114, Accounting by Creditors for
Impairment of a Loan, SFAS No. 116, Accounting for Contributions Received and
Contributions Made and SFAS No. 118, Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures. Adoption of these standards is not
expected to materially affect MAPCO's financial position, liquidity or results
of operations. MAPCO expects to adopt these standards in 1995.
MAPCO maintains property and liability insurance at limits believed to be
sufficient to cover estimated potential risks. Losses up to deductible amounts
of the various coverages would not have a material effect on MAPCO's financial
position, liquidity or results of operations.
RESULTS OF OPERATIONS
INCOME STATEMENT
1994 Results Compared to 1993
Net income was $79 million in 1994, a $48 million decrease from the $127
million reported in 1993. Net income in 1994 was reduced $46 million by the
impact of the State Royalty Oil settlement. Earnings per common share were $4.16
in 1994, before the $1.52 per share impact of the State Royalty Oil settlement,
compared to $4.24 in 1993. Net income and earnings per share in 1993 included
$0.12 per share of mostly non-recurring charges. Average common shares
outstanding were 30.0 million in both 1994 and 1993.
Sales and operating revenues by segment were as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1994 1993
------ ------
<S> <C> <C>
Natural Gas Liquids........................................ $ 510 $ 465
Petroleum.................................................. 2,187 1,881
Coal....................................................... 426 414
Eliminations............................................... (64) (45)
------ ------
$3,059 $2,715
====== ======
</TABLE>
The $344 million increase in sales and operating revenues was due
principally to a change in strategies associated with trading activities in the
Petroleum segment. Natural Gas Liquids' sales and operating revenues increased
$45 million due to additional propane sales volumes resulting from the September
1, 1994, Emro acquisition and higher transportation revenues. The increase in
transportation revenues resulted from: (a) increased deliveries of demethanized
mix as higher Gulf Coast ethane prices prompted increased ethane recovery by
producers, (b) additional throughput volumes from new plant connections and (c)
a new long-term contract with a major customer. Petroleum segment sales and
operating revenues increased $306 million over 1993. Trading strategies employed
in 1994 involved the purchase and sale of wet barrels in contrast to
17
<PAGE> 20
1993 when trading was conducted primarily on the New York Mercantile Exchange
where physical ownership of wet barrels is not required. The $12 million
increase in Coal sales and operating revenues was primarily attributable to
higher production and sales volumes at the Mettiki Mine and higher brokerage
sales volumes. Coal revenues also benefitted from index-driven contract price
increases and two new long-term sales contracts.
Outside purchases and operating expenses by segment are provided below (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1994 1993
---------------------- ----------------------
OUTSIDE OPERATING OUTSIDE OPERATING
PURCHASES EXPENSES PURCHASES EXPENSES
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Natural Gas Liquids................ $ 121 $187 $ 131 $162
Petroleum.......................... 1,830 235 1,517 160
Coal............................... 44 301 33 293
------- ------- ------- -------
$ 1,995 $723 $ 1,681 $615
======= ======= ======= =======
</TABLE>
Outside purchases in 1994 increased $314 million from 1993. Natural Gas
Liquids' outside purchases decreased $10 million despite $21 million in
purchases added by the Emro operations. The $31 million decrease in non-Emro
purchases was attributable to lower propane prices and reduced volumes from
operating fewer retail propane plants. Petroleum's outside purchases increased
$313 million reflecting the new trading strategies previously discussed. The $11
million increase in Coal's outside purchases reflects higher brokerage volumes.
Operating expenses in 1994 were $108 million higher than 1993. Natural Gas
Liquids' operating expenses increased $25 million principally due to: (a) the
incremental operating costs associated with the Emro operations, (b)
refurbishing a portion of pipeline in connection with a new long-term contract,
(c) costs associated with the buyout of a gas supply contract and (d) higher
product storage costs. Operating expenses in Petroleum increased $75 million, of
which $69 million was attributable to the State Royalty Oil settlement.
Excluding the State Royalty Oil settlement and $12 million of unusual items ($8
million received relative to a North Pole Refinery contract settlement and $4
million received from a North Pole Refinery environmental claim) which reduced
1993 operating expenses, 1994 expenses were $6 million less than in 1993
primarily due to lower fuel costs at the North Pole Refinery. Coal's operating
expenses increased $8 million primarily as a result of higher production levels
and increased overburden removal costs at the Martiki Mine, higher production
levels at the Mettiki Mine and reduced productivity at the Pontiki, Dotiki and
Pattiki Mines.
Depreciation, depletion and amortization was $103 million in 1994 and $97
million in 1993. The increase was primarily attributable to: (a) depreciation
and amortization associated with the Emro assets acquired in 1994, (b) a full
year of depreciation for the 1993 Seminole Pipeline expansion and (c) additional
costs associated with the phasing-out of conventional mining equipment in
conjunction with the conversion to continuous mining equipment at the Dotiki and
Pattiki Mines.
Interest and debt expense was $53 million in 1994 compared to $47 million
in 1993. Higher debt levels, resulting from the Emro acquisition and State
Royalty Oil settlement, and higher interest rates were the principal reasons for
the increase.
MAPCO's effective tax rate for 1994 was 30.8% compared to 36.7% in 1993.
The difference between the statutory Federal income tax rate of 35% and the
effective tax rate for 1994 and 1993 was primarily due to statutory depletion
and state income taxes and, for 1993, the deferred tax impact of the increase in
the corporate income tax rate included in the Omnibus Budget Reconciliation Act
of 1993 ("OBRA").
1993 Results Compared to 1992
Net income in 1993 increased $26 million over the $101 million reported in
1992. Earnings per common share were a record $4.24 in 1993 compared to $3.37 in
1992. Net income and earnings per share in 1993 would have been $131 million and
$4.36, respectively, excluding $0.12 per share of mostly non-recurring
18
<PAGE> 21
charges. Net income and earnings per share in 1992 would have been $121 million
and $4.06, respectively, excluding $0.69 per share of mostly non-recurring
charges. Average common shares outstanding were 30.0 million in 1993 and 29.9
million in 1992.
Sales and operating revenues by segment were as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1993 1992
------ ------
<S> <C> <C>
Natural Gas Liquids................................. $ 465 $ 453
Petroleum........................................... 1,881 1,951
Coal................................................ 414 430
Eliminations........................................ (45) (47)
------ ------
$2,715 $2,787
====== ======
</TABLE>
Sales and operating revenues decreased $72 million because of lower sales
in the Petroleum and Coal segments. The decline in sales and operating revenues
for the Petroleum segment was due principally to lower sales prices at both the
Memphis and North Pole Refineries. Coal sales and operating revenues declined
because of lower prices and slightly lower sales volumes resulting from poor
market conditions. In addition, coal sales prices were negatively impacted by a
price decrease on 2 million tons under a contract price reopener provision.
Natural Gas Liquids' sales and operating revenues increased from 1992 because of
additional propane sales volumes from operating more retail propane plants,
completion of the Seminole Pipeline expansion project and the negative impact on
1992 revenues of an explosion near Seminole's facilities near Brenham, Texas
("Brenham explosion"). Natural Gas Liquids' revenues in 1992 included $7 million
for the termination and buyout of a pipeline transportation agreement.
Outside purchases and operating expenses by segment are provided below (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1993 1992
---------------------- ----------------------
OUTSIDE OPERATING OUTSIDE OPERATING
PURCHASES EXPENSES PURCHASES EXPENSES
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Natural Gas Liquids.......... $ 131 $ 162 $ 110 $ 169
Petroleum.................... 1,517 160 1,626 165
Coal......................... 33 293 34 316
------- ------- ------- -------
$ 1,681 $ 615 $ 1,770 $ 650
======= ======= ======= =======
</TABLE>
Outside purchases in 1993 decreased $89 million from 1992, primarily as a
result of lower average crude prices at both the Memphis and North Pole
Refineries.
Operating expenses in 1993 were $35 million less than in 1992. Natural Gas
Liquids' operating expenses decreased $7 million in 1993; however, excluding a
$20 million insurance premium penalty charged against 1992 operations, operating
expenses increased $13 million. The increase in expenses was primarily
attributable to higher power, pension and benefit and property tax expenses in
transportation and higher operating costs from the increased number of retail
propane plants. Operating expenses in Petroleum decreased $5 million because of
$8 million received by the North Pole Refinery in the 1993 settlement of a
contract dispute which more than offset higher environmental costs and higher
maintenance costs on the fluid catalytic cracker at the Memphis Refinery. Coal's
operating expenses decreased $23 million due to efficiencies gained from the
installation of new longwall shields early in 1993 and resolution of water
inundation problems in 1992 combined with problems associated with aging
longwall shields at the Mettiki Mine, lower production levels at the Pontiki and
Virginia Mines in 1993 and retiree medical obligations of $6 million which were
included in 1992 expenses.
Depreciation, depletion and amortization was $97 million in both 1993 and
1992. Increases in depreciation expense from the Seminole Pipeline expansion and
additional retail propane plants acquired in
19
<PAGE> 22
1992 were largely offset by lower Coal segment depreciation expense. Coal's
depreciation expense decreased primarily because of revisions in the estimated
useful lives of certain long-lived assets.
Interest and debt expense was $47 million in 1993 compared to $53 million
in 1992. Lower interest rates and debt levels were the primary reasons for the
decrease. Also, 1992 expenses included $4 million of debt retirement expense.
MAPCO's effective tax rate for 1993 was 36.7% compared to 31.1% in 1992.
The difference between the statutory Federal income tax rate of 35% in 1993 and
34% in 1992 and the effective tax rate for 1993 and 1992 was primarily due to
statutory depletion and state income taxes and, for 1993, the deferred tax
impact of the increase in the corporate income tax rate included in the OBRA.
OPERATING PROFIT
1994 Results Compared to 1993
Operating profit by segment was as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1994 1993
----- -----
<S> <C> <C>
Natural Gas Liquids................................. $ 131 $ 119
Petroleum........................................... 27 109
Coal................................................ 36 47
----- -----
$ 194 $ 275
===== =====
</TABLE>
NATURAL GAS LIQUIDS SEGMENT RESULTS
The $12 million increase in 1994 operating profit is primarily attributable
to $7 million contributed by the Emro operations which were acquired in 1994 and
an increase in transportation operating profit. Transportation operating profit
increased because revenue increases exceeded higher operating costs. (Increases
in NGL's revenues and operating expenses are described in the Income Statement
section on page 17.) Excluding the incremental operating profit from Emro,
retail propane operating profit decreased $4 million as a result of warmer
weather and operating fewer propane plants.
PETROLEUM SEGMENT RESULTS
Petroleum segment operating profit decreased $82 million. A $69 million
charge related to the State Royalty Oil settlement accounted for most of the
change. The remaining $13 million decrease in operating profit was primarily
attributable to an $8 million contract settlement received by the North Pole
Refinery in 1993 and lower refined product margins at the North Pole Refinery
resulting from increased competition and a weaker Alaska market.
COAL SEGMENT RESULTS
Coal segment operating profit decreased $11 million primarily due to higher
production costs at the Pontiki, Martiki, Dotiki and Pattiki Mines. These higher
costs were partially offset by the positive impact on operating profit of higher
production and sales volumes at the Mettiki Mine, higher average sales prices in
the current year which resulted from index-driven contract price increases and
two new sales contracts. Numerous equipment failures contributed to higher
production costs at Pontiki. Martiki's higher costs were attributable to
increased overburden removal costs associated with higher stripping ratios
during the current year. Dotiki's and Pattiki's higher production costs were
primarily due to increased depreciation and reduced productivity.
20
<PAGE> 23
1993 Results Compared to 1992
Operating profit by segment was as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1993 1992
----- -----
<S> <C> <C>
Natural Gas Liquids................................. $ 119 $ 114
Petroleum........................................... 109 74
Coal................................................ 47 36
----- -----
$ 275 $ 224
===== =====
</TABLE>
NATURAL GAS LIQUIDS SEGMENT RESULTS
The $5 million increase in 1993 operating profit is primarily attributable
to increased transportation and retail propane operating profits. Transportation
revenues increased because of the completion of the Seminole Pipeline expansion
in May 1993 and because of the negative impact of the Brenham explosion on 1992
revenues. Although revenues grew in 1993, volumes on the Rocky Mountain
Extension and Seminole Pipeline were negatively impacted as a result of
producers leaving ethane in the natural gas stream rather than extracting the
liquids for shipment to the Texas Gulf Coast. Transportation expenses were lower
in 1993 primarily due to the Brenham explosion which negatively impacted 1992
expenses. Retail propane operating profit increased because volumes were higher
in 1993; however, higher expenses and lower margins partially offset the
favorable impact of higher volumes. The increases in volumes and expenses were
principally attributable to additional retail propane plants. Lower margins
reflected the intense price competition faced throughout 1993.
PETROLEUM SEGMENT RESULTS
Petroleum segment operating profit increased $35 million over 1992 due to
higher refinery margins, $8 million received in 1993 relative to a North Pole
Refinery contract settlement and higher Mid-South Retail fuel margins and lower
expenses. These positive factors were partially offset by higher Memphis
Refinery expenses.
The increase in refinery margins primarily reflects lower average crude
costs during 1993. Mid-South Retail fuel margins increased due to lower average
fuel costs in 1993. Mid-South Retail's lower expenses were primarily
attributable to fewer stores in operation and lower environmental expenses.
Expenses at the Memphis Refinery increased primarily due to operating problems
with the fluid catalytic cracker unit during the first quarter of 1993 and
higher maintenance and environmental costs.
COAL SEGMENT RESULTS
Coal segment operating profit increased $11 million over 1992 principally
because of lower production costs at both the Mettiki and Martiki Mines and the
negative impact on 1992 results of a $6 million charge for legislatively-imposed
retiree medical obligations. These factors were partially offset by lower
revenues in 1993. The Mettiki Mine's aging longwall shields were replaced and
its water inundation problems encountered in 1992 were resolved, resulting in a
16% decrease in per ton production costs. Overburden stripping ratios at the
Martiki Mine were lower in 1993 which is the primary reason for Martiki's lower
per ton production costs. Revenues for the Coal segment decreased primarily as a
result of a price reopener on a long-term sales contract with a major customer.
ENVIRONMENTAL ISSUES
Estimated liabilities for environmental costs, primarily in the Petroleum
segment, were determined without consideration of possible recoveries from third
parties. Estimated liabilities for environmental matters were $31 million and
$34 million at December 31, 1994 and 1993, respectively. Receivables recorded in
connection with laws permitting reimbursement by the states of certain expenses
associated with underground
21
<PAGE> 24
storage tank containment problems and repairs were $19 million and $20 million
at December 31, 1994 and 1993, respectively.
OTHER ISSUES
Natural Gas Liquids Segment
Since 1991, MAPCO's West Panhandle field gas supplier has taken more than
its agreed percentage share of the field's production. The cumulative effect of
this acceleration in gas taken has resulted in the Westpan operations having a
32 billion cubic feet and $29 million over-take position. This imbalance will be
offset by limiting gas taken from future field production. MAPCO uses the sales
method of accounting for its gas balancing arrangements which results in
recognition of all revenues on natural gas liquids sold. The acceleration in gas
taken contributed an estimated $6 million, $4 million and $9 million to MAPCO's
consolidated operating profit in 1994, 1993 and 1992, respectively.
On April 7, 1992, a liquefied petroleum gas explosion occurred near an
underground salt dome storage facility near Brenham, Texas, which is owned by an
affiliate of the Company, Seminole Pipeline Company. The matter was investigated
by the National Transportation Safety Board and the Texas Railroad Commission. A
discussion of this matter and its effect on MAPCO is contained in Note 11 to the
consolidated financial statements. (See Page F-17).
Petroleum Segment
Since 1978, MAPCO Alaska Petroleum Inc. (and/or its predecessor) has had
and continues to have long-term agreements with the state of Alaska (the
"State") to purchase royalty oil from the State at prices linked to amounts
payable by North Slope oil producers in satisfaction of their royalty
obligations to the State. In 1977, the State commenced suit against the
producers (in an action entitled State of Alaska v. Amerada Hess, et al.)
alleging that they incorrectly calculated their royalty payments. MAPCO Alaska
Petroleum settled this dispute with the State in 1994. A discussion of the
settlement is contained in Note 11 to the consolidated financial statements.
(See Page F-17).
Coal Segment
Beginning in the third quarter of 1995 and continuing through 1996, the
Martiki Mine anticipates increased operating profit attributable to reduced
mining costs and increased shipments, related principally to favorable
overburden stripping ratios during the initial phases of an expansion into a
virgin reserve area. In 1997, Martiki expects the overburden stripping ratio to
return to more typical levels. Also, a long-term contract for 1.0 million tons
supplied by the Martiki Mine expires at the end of 1996. The combination of the
contract expiration and increased stripping ratios is expected to reduce
operating profit at the Martiki Mine for 1997 and beyond as compared to 1995 and
1996.
A long-term contract for 1.0 million tons with a major customer of the
Mettiki Mine expires at the end of 1996. Although Management is optimistic about
the ability to market the Mettiki Mine's production, Management is unable at
this time to predict with certainty whether Mettiki will be successful in
securing a new contract with this customer or, if a new contract is secured, at
what price. The inability to secure a new contract or to secure alternative
sales sources could have a material adverse impact on MAPCO's results of
operations.
The Coal segment's Retiki Mine sold all of its production to Big Rivers
Electric Corporation ("Big Rivers") under a cost-plus management fee contract
that was scheduled to terminate in mid-January, 1996. The Retiki Mine was
expected to close concurrently with contract expiration. Through December 31,
1994, MAPCO Coal's Webster County Coal Corporation subsidiary ("Webster County")
has invoiced Big Rivers approximately $9.0 million for certain costs associated
with the operation of the Retiki Mine. Big Rivers has declined to pay Webster
County the invoiced amount. A breach of contract and declaratory judgment action
was initiated by Webster County against Big Rivers in mid-January, 1994, in
order to collect the invoiced
22
<PAGE> 25
amount due from Big Rivers at that time as well as to obtain a declaratory
judgment by which Big Rivers would be determined to be liable for other
operating costs associated with the Retiki Mine.
In January of 1995, Webster County and Big Rivers entered into a limited
settlement agreement partially resolving this dispute and leading to the
immediate cessation of production of coal at the Retiki Mine. Under the terms of
the partial settlement agreement, Webster County will continue to supply Big
Rivers with the total tons of coal that would have been delivered during the
remaining term of the contract, but from alternative sources. Trial on issues
which remain in dispute is scheduled to proceed in October, 1995. Management
believes that Webster County will prevail in this litigation and that all, or
substantially all, of the disputed costs will be collected. Operations at the
Retiki Mine have contributed less than 2% of MAPCO's consolidated operating
profit during each of the past three years.
The Coal segment has significant long-term contracts at sales prices above
current spot market prices. In addition to the contract expirations discussed
above, long-term contracts for 1.4 million annual tons expired on December 31,
1994; however, a new contract with a major customer for 1.2 million annual tons
with similar pricing terms was entered into and will be effective July 1995.
Contracts for 0.5 million and 1.0 million annual tons will expire in 1995 and
1996, respectively. In 1997, 2.0 million tons will be subject to market price
adjustments.
During 1993, the United Mine Workers Association ("UMWA") filed a petition
with the National Labor Relations Board ("NLRB") seeking an election to decide
whether the UMWA should represent hourly employees at MAPCO Coal's Pontiki Mine.
On August 13, 1993, the NLRB conducted a representation election and the
unofficial vote count was 78 votes opposed to unionization, 101 votes supporting
the UMWA, and 23 votes challenged by the UMWA. On August 4, 1994, the NLRB
determined that all 23 challenged ballots were cast by eligible voters, all of
whom voted in opposition to the UMWA. As a result, the NLRB declared Pontiki the
winner of the representation election.
The Clean Air Act is expected to alter the pattern of U.S. coal
consumption, especially in 1995 and beyond, resulting in a general decrease in
demand for high sulfur coals and an increase in demand for low sulfur coals.
Legislation of this type is not expected to materially impact the Coal segment's
future operating profits primarily because most of MAPCO Coal's higher sulfur
coals are sold to customers with scrubbers, or to customers that have indicated
their intentions to install scrubbers. Additionally, MAPCO's management believes
the anticipated strength in the low sulfur and compliance coal markets should
offset any financial impact of the Clean Air Act.
GENERAL MANAGEMENT DISCUSSION
The consolidated financial statements were prepared by management who are
responsible for their integrity and objectivity. These financial statements,
which include amounts based on management's best estimates and judgments, were
prepared in accordance with generally accepted accounting principles. The
consolidated financial statements were independently audited by Deloitte &
Touche LLP, whose report appears on page F-1.
MAPCO maintains a system of internal controls that is designed to provide
reasonable assurance that financial records are accurate, assets are protected,
and consolidated financial statements are stated fairly. This system is
supported by the selection and training of qualified personnel, management
oversight, proper division of responsibilities, the dissemination of written
policies and procedures, and an internal audit program to monitor the system's
effectiveness. Management believes the present system of internal controls
effectively provides the assurances described above.
The Board of Directors, through its Audit Committee comprised of
non-employee Directors of the Company, monitors management's financial reporting
responsibilities. The Audit Committee meets periodically with representatives of
management, internal audit, and Deloitte & Touche LLP, to discuss specific
accounting, reporting, internal control and regulatory compliance matters.
Deloitte & Touche LLP and the Company's internal auditors have unlimited access
to members of the Audit Committee.
23
<PAGE> 26
Approximately 16% of MAPCO stockholders participate in the voluntary
Dividend Investment Plan whereby cash dividends are used to purchase additional
MAPCO common stock. This service is free and is administered by the Harris Trust
Company of New York. Stockholders with questions about their accounts should
contact the Harris Trust Company of New York, Dividend Reinvestment Department,
P.O. Box 2857, Church Street Station, New York, New York 10008.
During 1994 and 1993, MAPCO declared quarterly dividends of $0.25 per
share. Dividends were payable in March, June, September and December. The annual
dividend in 1994 and 1993 was $1.00 per share.
MAPCO common stock is traded on the New York, Chicago, and Pacific Stock
Exchanges under the symbol MDA. MAPCO had 5,388 stockholders of record on
December 31, 1994.
The high and low closing prices of MAPCO common stock on the New York Stock
Exchange during the quarterly periods of 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
----------------- -----------------
QUARTER HIGH LOW HIGH LOW
------------------------------------------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
First........................................... $63.75 $58.63 $54.00 $48.88
Second.......................................... 64.50 59.00 57.75 51.00
Third........................................... 61.13 55.38 64.25 56.38
Fourth.......................................... 55.75 49.75 65.25 57.38
</TABLE>
The closing price of MAPCO's common stock on the New York Stock Exchange on
March 27, 1995 was $54.00.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of MAPCO Inc., together with the
report thereon of Deloitte & Touche LLP dated January 27, 1995 and the
supplementary financial data specified by Item 302 of Regulation S-K are set
forth on pages F-1 through F-20 hereof. See Item 14 for Index.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors of MAPCO is incorporated by reference
herein from MAPCO's Proxy Statement to be filed for its 1995 Annual Meeting of
Stockholders. See "Executive Officers of MAPCO Inc." in PART I, Item 1, SUPRA,
regarding executive officers of MAPCO.
ITEM 11. EXECUTIVE COMPENSATION.
Incorporated by reference herein from MAPCO's Proxy Statement to be filed
for its 1995 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference herein from MAPCO's Proxy Statement to be filed
for its 1995 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Incorporated by reference herein from MAPCO's Proxy Statement to be filed
for its 1995 Annual Meeting of Stockholders.
24
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements.
<TABLE>
<CAPTION>
PAGE
-----------------
<S> <C>
Independent Auditors' Report............................................... F-1
Consolidated Statements of Income for the years ended December 31, 1994,
1993 and 1992............................................................ F-2
Consolidated Balance Sheets as of December 31, 1994 and 1993............... F-3
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1993 and 1992...................................................... F-4
Consolidated Statements of Changes in Stockholders' Equity for the years
ended December 31, 1994, 1993 and 1992................................... F-5
Notes to Consolidated Financial Statements................................. F-6 through F-20
(a) 2. Financial Statement Schedules.
Schedule I -- Condensed financial information of registrant................ S-1 through S-4
Schedule II -- Valuation and qualifying accounts for the years ended
December 31, 1994, 1993 and 1992......................................... S-5
</TABLE>
Other schedules of MAPCO Inc. and its subsidiaries are omitted because of
the absence of the conditions under which they are required or because the
required information is included in the Financial Statements or Notes thereto.
(a) 3. Exhibits.
<TABLE>
<CAPTION>
ITEM
- --------------------
<C> <S>
3.(i) -- Restated Certificate of Incorporation, as amended and restated
effective May 14, 1987 [Filed herewith*]
3.(ii) -- MAPCO Inc. By-Laws, as amended April 16, 1989 [Filed herewith*]
4.(a) -- Specimen of Common Stock Certificate [Filed herewith*]
4.(b) -- Note Agreement between Mid-America Pipeline Company and The
Prudential Insurance Company of America dated as of April 30, 1992 [a
copy of this Agreement will be furnished to the Commission on request
as provided in sec.229.601(b) (4) (iii) (A) of Regulation S-K]
4.(c) -- Note Agreement between Mid-America Pipeline Company and The
Prudential Insurance Company of America dated as of May 20, 1992 [a
copy of this Agreement will be furnished to the Commission on request
as provided in sec.229.601(b) (4) (iii) (A) of Regulation S-K]
4.(d) -- Note Agreement between Mid-America Pipeline Company and The
Prudential Insurance Company of America dated as of July 13, 1992 [a
copy of this Agreement will be furnished to the Commission on request
as provided in sec.229.601(b) (4) (iii) (A) of Regulation S-K]
4.(e) -- Note Agreement between Mid-America Pipeline Company and The
Prudential Insurance Company of America dated as of July 20, 1992 [a
copy of this Agreement will be furnished to the Commission on request
as provided in sec.229.601(b) (4) (iii) (A) of Regulation S-K]
4.(f) -- Note Agreement between Mid-America Pipeline Company and The
Prudential Insurance Company of America dated as of November 20, 1992
[a copy of this Agreement will be furnished to the Commission on
request as provided in sec.229.601(b) (4) (iii) (A) of Regulation
S-K]
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
ITEM
- --------------------
<C> <S>
4.(g) -- Competitive Advance and Revolving Credit Facility Agreement dated as
of April 29, 1994, among MAPCO Inc., Chemical Bank, as Agent and the
Lenders named therein [Exhibit 4.(g) to Quarterly Report on Form 10-Q
for the period ended March 31, 1994*]
4.(h) -- Rights Agreement dated as of June 12, 1986 between MAPCO Inc. and
Harris Trust Company of New York, as amended [Filed herewith*]
4.(i) -- Note Agreement dated as of June 16, 1989 between MAPCO Inc. and IDS
Life Insurance Company of New York, American Enterprise Life
Insurance Company, et al. [Filed herewith*]
4.(j) -- Note Agreement dated as of December 1, 1993 between Seminole Pipeline
Company and Principal Mutual Life Insurance Company, et al. [a copy
of this Agreement will be furnished to the Commission on request as
provided in sec.229.601(b) (4) (iii) (A) of Regulation S-K]
4.(k) -- Indenture dated as of March 31, 1990 between MAPCO Inc. and Bankers
Trust, Trustee [Exhibit 4.0 to Current Report on Form 8-K dated
February 19, 1991*]
MANAGEMENT CONTRACTS AND COMPENSATORY PLANS OR ARRANGEMENTS
10.(a) -- Form of Agreement between MAPCO Inc. and Directors relating to
indemnification [Exhibit 10.(c) to Report on Form 10-K for the fiscal
year ended December 31, 1992*]
10.(b) -- Form of Agreement between MAPCO Inc. and certain officers and key
employees relating to indemnification [Filed herewith*]
10.(c) -- MAPCO Inc. 1986 Retirement Plan for Directors, as amended and
restated effective March 29, 1989 [Filed herewith*]
10.(d) -- Form of Agreement between MAPCO Inc. and certain officers relating to
employment dated December 20, 1989, effective January 1, 1990 [Filed
herewith*]
10.(e) -- Form of Amendment Letter to Agreement Dated December 20, 1989 between
MAPCO Inc. and certain officers relating to employment dated March
14, 1990 [Filed herewith*]
10.(f) -- Amendments to Letter Agreement relating to employment dated December
18, 1991 between MAPCO Inc. and James E. Barnes and Robert M. Howe
[Exhibit 10.(h).1 to Report on Form 10-K for fiscal year ended
December 31, 1991*]
10.(g) -- Supplemental Retirement Agreement, as amended and restated, as of
December 12, 1991 between MAPCO Inc. and James E. Barnes [Exhibit
10.(i) to Report on Form 10-K for the fiscal year ended December 31,
1991*]
10.(h) -- Supplemental Retirement Agreement, as amended and restated, as of
December 12, 1991 between MAPCO Inc. and Robert M. Howe [Exhibit
10.(j) to Report on Form 10-K for the fiscal year ended December 31,
1991*]
10.(i) -- Amendment effective December 31, 1993, to Supplemental Retirement
Agreement, as amended and restated, effective December 1, 1984,
between MAPCO Inc. and Robert M. Howe [Exhibit 10(k) to Report on
Form 10-K for the fiscal year ended December 31, 1993*]
10.(j) -- MAPCO Inc. 1986 Stock Option Plan, effective January 1, 1986 [Exhibit
10.(k) to Report on Form 10-K for the fiscal year ended December 31,
1992*]
10.(k) -- MAPCO Inc. Supplemental Executive Retirement Plan effective January
1, 1986 [Exhibit 10(n) to Report on Form 10-K for the fiscal year
ended December 31, 1993*]
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
ITEM
- --------------------
<C> <S>
10.(l) -- MAPCO Inc. 1989 Stock Incentive Plan, as amended and restated
effective June 1, 1992 [Filed herewith*]
10.(m) -- MAPCO Inc. 1989 Outside Director Stock Option Plan, as amended March
24, 1993 [Filed herewith*]
10.(n) -- MAPCO Inc. Long-Term Investment Savings Plan, effective January 1,
1994 [Exhibit 10(q) to Report on Form 10-K for the fiscal year ended
December 31, 1993*]
10.(o) -- MAPCO Inc. Long-Term Investment Savings Trust, effective January 10,
1994 [Exhibit 10(r) to Report on Form 10-K for the fiscal year ended
December 31, 1993*]
OTHER MATERIAL CONTRACTS
10.(p) -- Settlement Agreement between the state of Alaska and MAPCO Alaska
Petroleum Inc. executed on August 31, 1994 and effective August 1,
1994 [Exhibit 10 to Quarterly Report on Form 10-Q for the period
ending September 30, 1994*]
10.(q) -- Purchase and Sale Agreement dated August 3, 1994 between Emro Propane
Company and Emro Marketing Company and MAPCO Natural Gas Liquids
Inc., MAPCO Petroleum Inc. and MAPCO Florida Inc. [Exhibit 10 to Form
8-K filed on September 12, 1994*]
11. -- Statement re: computation of per share earnings
12. -- Computation of Ratio of Earnings to Fixed Charges
21. -- List of Subsidiaries
23. -- Independent Auditors' Consent
24. -- Power of Attorney, included as part of the signature page of this
report
27. -- Financial Data Schedule
</TABLE>
- ---------------
* Incorporated herein by reference
All other schedules and exhibits are omitted because they are not required
or are not applicable.
(b) Reports on Form 8-K
Except for the following amendments, no current reports on Form 8-K were
filed during the last quarter of the year ended December 31, 1994:
(i) Current Report on Form 8-K/A (Amendment No. 1) filed November 7, 1994,
to provide supplemental financial schedules to the Company's previous
Current Report on Form 8-K which was filed on September 12, 1994, in
connection with the acquisition of assets of Emro Propane Company.
(ii) Current Report on Form 8-K/A (Amendment No. 2) filed November 10,
1994, to provide Exhibit 23 to Amendment No. 1.
27
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, MAPCO Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MAPCO INC.
Dated: March 22, 1995 By /s/ JAMES E. BARNES
JAMES E. BARNES
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
We, the undersigned officers and directors of MAPCO Inc. hereby severally
constitute James E. Barnes and Frank S. Dickerson, III, and each of them singly,
our true and lawful attorneys with full power to them, and each of them singly,
to sign for us and in our names in the capacities indicated below, any and all
amendments to this report, and generally to do all such things in our names and
behalf in our capacities as officers and directors to enable MAPCO Inc. to
comply with the provisions of the Securities Exchange Act of 1934, as amended,
and all requirements of the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by our said attorneys, or
either of them, to any and all amendments to this report.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ JAMES E. BARNES Chairman of the Board and March 22, 1995
(James E. Barnes) Chief Executive Officer
/s/ FRANK S. DICKERSON, III Senior Vice President, Chief March 22, 1995
(Frank S. Dickerson, III) Financial Officer and
Treasurer
/s/ DONALD R. WELLENDORF Vice President and March 22, 1995
(Donald R. Wellendorf) Controller (Principal
Accounting Officer)
/s/ HARRY A. FISCHER, JR. Director March 22, 1995
(Harry A. Fischer, Jr.)
/s/ WAYNE K. GOETTSCHE Director March 22, 1995
(Wayne K. Goettsche)
/s/ DONALD PAUL HODEL Director March 22, 1995
(Donald Paul Hodel)
/s/ MALCOLM T. HOPKINS Director March 22, 1995
(Malcolm T. Hopkins)
/s/ ROBERT M. HOWE Director March 22, 1995
(Robert M. Howe)
/s/ PHILIP C. LAUINGER, JR. Director March 22, 1995
(Philip C. Lauinger, Jr.)
Director March 22, 1995
(Donald L. Mellish)
/s/ ROBERT L. PARKER Director March 22, 1995
(Robert L. Parker)
/s/ HERMAN J. SCHMIDT Director March 22, 1995
(Herman J. Schmidt)
/s/ SAMUEL F. SEGNAR Director March 22, 1995
(Samuel F. Segnar)
</TABLE>
28
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
MAPCO Inc., its Directors and Stockholders:
We have audited the accompanying consolidated financial statements of MAPCO
Inc. and subsidiaries, listed at Item 14(a)1 herein. Our audits also included
the financial statement schedules listed at Item 14(a)2. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of MAPCO Inc. and subsidiaries at
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We have also previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheets as of December 31, 1992,
1991 and 1990, and the related consolidated statements of income, cash flows,
and changes in stockholders' equity for the years ended December 31, 1991 and
1990 (none of which are presented herein); and we expressed unqualified opinions
on those consolidated financial statements. In our opinion, the information set
forth in the selected financial data for each of the five years in the period
ended December 31, 1994, appearing in Item 6 herein, is fairly stated, in all
material respects, in relation to the consolidated financial statements from
which it has been derived.
Deloitte & Touche LLP
Tulsa, Oklahoma
January 27, 1995
F-1
<PAGE> 32
MAPCO INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Sales and Operating Revenues(1).............................. $3,059.3 $2,715.3 $2,786.8
-------- -------- --------
Expenses:
Outside purchases and operating expenses(1)................ 2,718.2 2,296.4 2,420.3
Selling, general and administrative........................ 68.1 72.8 70.7
Depreciation, depletion and amortization................... 102.9 97.3 96.5
Interest and debt expense.................................. 53.2 46.5 53.3
Other (income) expense -- net.............................. .3 (.6) 1.4
-------- -------- --------
2,942.7 2,512.4 2,642.2
-------- -------- --------
Income before Provision for Income Taxes..................... 116.6 202.9 144.6
Provision for Income Taxes (Note 6).......................... 35.9 74.5 45.0
-------- -------- --------
Income before Minority Interest.............................. 80.7 128.4 99.6
Minority Interest in Earnings of Subsidiary.................. (1.6) (1.4) 1.1
-------- -------- --------
Net Income................................................... $ 79.1 $ 127.0 $ 100.7
======== ======== ========
Earnings per Common Share (Notes 7 and 8).................... $ 2.64 $ 4.24 $ 3.37
======== ======== ========
</TABLE>
- ---------------
(1) Includes consumer excise taxes of $157.2 million, $148.7 million and $146.5
million in 1994, 1993 and 1992, respectively.
See notes to consolidated financial statements.
F-2
<PAGE> 33
MAPCO INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(DOLLARS AND SHARES
IN MILLIONS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 30.6 $ 69.8
Receivables, less allowance for doubtful accounts (1994 -- $2.3;
1993 -- $3.3)...................................................... 2 63.3 228.8
Inventories (Note 4).................................................. 1 11.0 113.4
Prepaid expenses...................................................... 44.1 27.3
Other current assets.................................................. 29.9 23.6
-------- --------
Total current assets.......................................... 478.9 462.9
-------- --------
Property, Plant and Equipment, at cost:
Natural Gas Liquids................................................... 1,326.0 1,170.3
Petroleum............................................................. 569.5 566.3
Coal.................................................................. 570.8 571.2
Corporate............................................................. 35.2 34.0
-------- --------
2,501.5 2,341.8
Less -- accumulated depreciation and depletion........................ (1,027.3) (974.5)
-------- --------
1,474.2 1,367.3
-------- --------
Other Assets............................................................ 213.0 130.9
-------- --------
$2,166.1 $1,961.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt.................................. $ 32.2 $ 12.8
Accounts payable...................................................... 270.0 247.1
Accrued taxes......................................................... 37.8 47.3
Accrued payroll and related expenses.................................. 14.0 21.2
Other current liabilities............................................. 72.4 61.2
-------- --------
Total current liabilities..................................... 426.4 389.6
-------- --------
Long-Term Debt, excluding current maturities (Note 5)................... 720.9 585.5
-------- --------
Other Liabilities....................................................... 77.8 115.2
-------- --------
Deferred Income Taxes (Note 6).......................................... 293.8 273.5
-------- --------
Minority Interest....................................................... 24.6 23.0
-------- --------
Commitments and Contingencies (Note 11)
-------- --------
Stockholders' Equity (Notes 7,8 and 10):
Capital stock:
Preferred Stock, without par value, 1 shares authorized; no shares
issued
Series A Junior Participating Preferred Stock, without par value,
.2 shares authorized; no shares issued
Common Stock, $1 par value, 75 shares authorized; 62.8 shares
issued -- 1994; 62.7 shares issued -- 1993........................ 62.8 62.7
Capital in excess of par value........................................ 202.6 200.0
Retained earnings..................................................... 1,356.4 1,306.7
-------- --------
1,621.8 1,569.4
Treasury Stock, at cost, 32.9 shares -- 1994; 32.8 shares -- 1993..... (935.6) (926.9)
Loan to ESOP.......................................................... (63.6) (68.2)
-------- --------
622.6 574.3
-------- --------
$2,166.1 $1,961.1
======== ========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 34
MAPCO INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................................. $ 79.1 $ 127.0 $ 100.7
Reconciliation of net income to net cash provided by
operating activities:
Depreciation, depletion and amortization................. 102.9 97.3 96.5
Provision for deferred income taxes...................... 12.7 12.5 (9.1)
Other items not requiring cash (Note 3).................. 17.0 9.7 8.2
------- ------- -------
Funds provided by operations........................... 211.7 246.5 196.3
Changes in operating assets and liabilities (Note 3)..... (76.5) 6.7 33.6
------- ------- -------
Net cash provided by operating activities.............. 135.2 253.2 229.9
------- ------- -------
Cash Flows from Investing Activities:
Capital expenditures and acquisitions, net of liabilities
assumed (Note 3)......................................... (303.9) (144.3) (213.9)
Proceeds from sales of property, plant and equipment........ 10.8 18.5 4.6
Other....................................................... 2.7
------- ------- -------
Net cash used in investing activities.................. (293.1) (123.1) (209.3)
------- ------- -------
Cash Flows from Financing Activities:
Purchase of common stock.................................... (8.7) (6.2) (16.5)
Increase (decrease) in borrowings........................... 165.1 (139.5) (67.8)
Dividends................................................... (30.0) (30.0) (29.9)
Issuance of long-term debt.................................. .1 75.4 246.1
Payments on long-term debt.................................. (8.4) (17.3) (147.5)
Exercise of stock options................................... .9 1.0 .4
Other....................................................... (.3) .6 (1.3)
------- ------- -------
Net cash provided by (used in) financing activities.... 118.7 (116.0) (16.5)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents.............. (39.2) 14.1 4.1
Cash and Cash Equivalents, January 1.......................... 69.8 55.7 51.6
------- ------- -------
Cash and Cash Equivalents, December 31........................ $ 30.6 $ 69.8 $ 55.7
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 35
MAPCO INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL
$1 PAR VALUE IN TREASURY STOCK
--------------- EXCESS OF RETAINED ---------------- LOAN TO
SHARES AMOUNT PAR VALUE EARNINGS SHARES AMOUNT ESOP
------ ------ --------- -------- ------ ------- -------
(DOLLARS AND SHARES IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991........... 62.5 $62.5 $ 195.5 $1,138.3 (32.5) $(907.2) $ (76.4)
Net income......................... 100.7
Dividends ($1.00 per share)........ (29.9)
Purchase of common stock........... (.3) (16.5)
ESOP loan repayments............... 3.9
Exercise of stock options.......... .1 .1 .3
Other.............................. 3.2 .1 3.0
----- ------ ------- -------- ----- ------- -------
Balance, December 31, 1992........... 62.6 62.6 199.0 1,209.1 (32.7) (920.7) (72.5)
Net income......................... 127.0
Dividends ($1.00 per share)........ (30.0)
Purchase of common stock........... (.1) (6.2)
ESOP loan repayments............... 4.3
Exercise of stock options.......... .1 .1 1.3
Other.............................. (.3) .6
----- ------ ------- -------- ----- ------- -------
Balance, December 31, 1993........... 62.7 62.7 200.0 1,306.7 (32.8) (926.9) (68.2)
Net income......................... 79.1
Dividends ($1.00 per share)........ (30.0)
Purchase of common stock........... (.1) (8.7)
ESOP loan repayments............... 4.6
Exercise of stock options.......... .1 .1 2.7
Other.............................. (.1) .6
----- ------ ------- -------- ----- ------- -------
Balance, December 31, 1994........... 62.8 $62.8 $ 202.6 $1,356.4 (32.9) $(935.6) $ (63.6)
===== ===== ======= ======== ===== ======= =======
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 36
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Consolidation --
The consolidated financial statements include the accounts of MAPCO Inc.
and its subsidiaries ("MAPCO" or the "Company"). Certain reclassifications have
been made to prior year amounts to conform to current year presentations. All
significant intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents --
Cash equivalents consist of short-term, highly liquid investments which are
readily convertible into cash. All investments classified as cash equivalents
have original maturities of three months or less.
Inventories --
Inventories include crude oil, refined petroleum products, natural gas
liquids, coal, fertilizer, chemicals, appliances and retail merchandise.
Inventories are valued at the lower of cost or market. Crude oil, refined
petroleum products and retail merchandise inventories in the Petroleum segment
are determined on a last-in, first-out ("LIFO") basis. Appliances, chemicals,
fertilizer and other inventories related to fertilizer in the Natural Gas
Liquids ("NGL") segment are determined on an average cost basis. All other
inventories are determined on a first-in, first-out basis. Net exchange balances
are classified as inventory.
Advance Royalties --
Rights to leased coal lands are often acquired through royalty payments.
Where royalty payments represent prepayments recoupable against future
production, they are capitalized, and amounts expected to be recouped within one
year are classified as a current asset. As mining occurs on those leases, the
prepayment is included in the cost of mined coal. Amounts estimated to be
nonrecoupable are expensed.
Depreciation and Depletion --
Depreciation and depletion is computed on the straight-line method at rates
based upon estimated useful lives or, if applicable, on the units-of-production
method based on estimated recoverable reserves. Maintenance, repairs and minor
replacements are expensed. Costs of replacements constituting improvements are
capitalized. Gains or losses arising from retirements are included in income
currently, except for gains and loss on certain assets within the NGL segment
which are depreciated using regulatory group depreciation methods.
Excess of Purchase Price over Net Assets of Companies Acquired --
Amounts applicable to acquisitions prior to 1971 ($4.6 million) are not
amortized. Amounts applicable to acquisitions after 1970 are amortized on a
straight-line basis over periods not exceeding forty years. MAPCO continually
evaluates the periods of amortization to determine whether subsequent events and
circumstances warrant revision of the estimated useful lives of acquired assets.
Revenue Recognition --
MAPCO's revenue recognition policies provide that revenues are recognized
when earned based on transfer of title or delivery.
Environmental Expenditures --
Environmental expenditures that relate to current or future revenues are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations that do not contribute to current or future
revenue generation are expensed. Environmental liabilities are recorded
independently of
F-6
<PAGE> 37
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
any potential claim for recovery. Receivables are recognized in cases where
reimbursements of remediation costs are available from state funds and the
realization of those funds is considered probable. Accruals related to
environmental matters are generally determined based on site-specific plans for
remediation, taking into account prior remediation experience of MAPCO and other
companies.
Debt Discount and Expense --
Debt discount and expense arising from the issuance of debt securities are
capitalized and amortized using the principal outstanding method.
Gas Balancing Arrangements --
MAPCO uses the sales method of accounting for its gas balancing
arrangements. Under the sales method, MAPCO recognizes revenues on all West
Panhandle gas field gas liquids sold to its customers without regard to the
under/over take position of its gas supplier. Imbalances resulting from
under/over take will be offset by future field production.
Futures Activity --
Futures, forward and option contracts are used to hedge against the risk of
price changes for selected sales commitments of crude oil and refined petroleum
products. Contracts that qualify as hedges are correlated to price movements of
crude oil and refined petroleum product inventory and any gains or losses
resulting from market changes will be substantially offset by losses or gains on
the hedged inventory. Contracts which do not qualify as hedges are classified as
speculative and are marked-to-market at the end of each month. MAPCO did not
engage in any material hedging, speculative or other activities involving
derivative financial instruments during 1994, 1993 and 1992. Commodity
speculative trading activity was immaterial to MAPCO's results of operations in
1994, 1993 and 1992.
Treasury Stock --
MAPCO common stock purchased by the Company is recorded as treasury stock,
at cost.
Income Taxes --
Deferred income tax expense is recognized based on the net change for the
year in the deferred income tax liability, except for changes resulting from
differences between the assigned values and tax basis of assets acquired and
liabilities assumed in purchase business combinations. Deferred income tax
assets and liabilities are based on enacted tax laws and the expected reversal
of the temporary differences between the book and tax bases of assets and
liabilities.
Earnings per Common Share --
Earnings per common share are based on the weighted average number of
common shares outstanding. Average common shares outstanding were 30.0 million
in 1994 and 1993 and 29.9 million in 1992.
ESOP --
MAPCO's loan to its Employee Stock Ownership Plan ("ESOP") is recorded as a
reduction of stockholders' equity in MAPCO's consolidated balance sheets.
Compensation and interest expense are recognized based on MAPCO's cash
contributions to the ESOP.
F-7
<PAGE> 38
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Nature of Business --
Natural Gas Liquids segment operations include the transportation,
processing and underground storage of NGLs, the pipeline transportation of
anhydrous ammonia, refined products and crude oil, and the sale of appliances,
propane and fertilizer. The pipeline main line runs from the Wyoming-Utah
Overthrust Belt to Hobbs, New Mexico and from Hobbs through the Midwest into
Minnesota and Wisconsin. The main line also runs from Hobbs across Texas to the
Gulf Coast. Tariff charges for pipeline operations are made on account to
shippers who are engaged in energy or energy-related businesses. Operations at
three gas processing plants (only one of which is currently operating) in the
West Panhandle gas field in Texas produce NGLs which are sold in the Midwestern
and Gulf Coast markets. Propane, appliances and fertilizer are marketed through
retail plants to residential, agricultural and industrial customers located in
the upper Midwest and the Southeast regions of the United States. Sales are
generally made on account.
Petroleum segment operations include two refining and marketing systems:
the Alaska System and the Mid-South System. The Alaska System includes a
refinery at North Pole, Alaska, whose non-affiliated customers include
wholesale, commercial, governmental and industrial consumers. Sales are
generally made on account. The Alaska system also includes retail convenience
stores in Fairbanks, Anchorage and Juneau, Alaska. The Mid-South System includes
a refinery at Memphis, Tennessee, whose non-affiliated customers include
industrial and commercial consumers, jobbers, independent dealers and other
refiner/marketers primarily located in the Mid-South region of the United
States. Sales are generally made on account. The Mid-South System also includes
retail convenience store operations located throughout the Southeastern United
States. MAPCO buys, sells and exchanges crude oil to supply its refinery
systems. These transactions are with companies engaged in energy or
energy-related businesses and sales are generally made on account.
Coal segment operations produce and market steam and metallurgical coal for
sale in domestic and foreign markets. Steam coal is sold primarily to electric
utilities located in the Eastern United States and, to a lesser extent, Europe.
Metallurgical coal is sold to steel and coke producers located primarily in the
United States, South America, the Far East, Europe and Northern Africa. Sales
are generally made on account. Export shipments are generally secured by letters
of credit or other similar guarantees prior to the coal being delivered to the
customer.
NOTE 2. ACQUISITION
On September 1, 1994, MAPCO completed the acquisition of the assets of Emro
Propane Company ("Emro"). Emro is engaged in the supply and retail marketing of
NGLs. The purchase price of $198 million included a $186 million cash payment
and the transfer to Emro Marketing Company of MAPCO Florida Inc.'s retail
convenience store assets in Florida. The cash payment was financed through the
issuance of commercial paper and bank money market lines. The acquisition has
been recorded using the purchase method of accounting. The excess of the
aggregate purchase price over the fair market value of net assets acquired of
approximately $84 million was recognized as goodwill and is being amortized over
30 years. The operating results of Emro have been included in MAPCO's
consolidated financial statements since the date of acquisition.
The following unaudited pro forma results of operations assume the
acquisition occurred as of January 1, 1993 (in millions except per share
amounts):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993
-------- --------
<S> <C> <C>
Sales and Operating Revenues............................ $3,071.3 $2,737.5
Net Income.............................................. $ 86.2 $ 134.3
Earnings per Common Share............................... $ 2.87 $ 4.48
</TABLE>
F-8
<PAGE> 39
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma financial information is not necessarily indicative of the
operating results that would have occurred had the Emro acquisition been
consummated as of January 1, 1993, nor are they necessarily indicative of future
operating results.
NOTE 3. CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURES
Other items not requiring (providing) cash reported in cash flows from
operating activities consist of (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Net periodic pension income........................... $ (.1) $(1.1) $(2.0)
(Gain) loss on sales of property, plant and
equipment........................................... 2.4 (5.4) 2.1
Minority interest in earnings of subsidiary........... 1.6 1.4 (1.1)
Refinery turnaround accrual........................... 1.9 3.2 3.5
Litigation and environmental accrual.................. 1.0 5.7 (.5)
Recovery of advance royalties......................... 4.0 3.7 3.1
Other non-cash income and expense items -- net........ 6.2 2.2 3.1
----- ----- -----
$17.0 $ 9.7 $ 8.2
===== ===== =====
</TABLE>
Changes in operating assets and liabilities consist of (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Decrease (increase) in:
Receivables...................................... $(33.7) $ 7.7 $(31.8)
Inventories...................................... 8.3 6.5 (40.8)
Prepaid expenses................................. (17.0) 3.9 (5.6)
Other current assets............................. (6.3) .6 (.8)
Other assets..................................... (12.9) (6.0) (10.2)
Increase (decrease) in:
Accounts payable................................. 22.9 (19.8) 87.2
Accrued taxes.................................... (7.1) 5.8 2.8
Accrued payroll and related expenses............. (7.2) 4.8 (4.2)
Other current liabilities........................ 10.2 1.3 (3.7)
Other liabilities................................ (33.7) 1.9 40.7
------ ------ ------
$(76.5) $ 6.7 $ 33.6
====== ====== ======
</TABLE>
Income taxes paid were $37.9 million, $64.8 million and $49.2 million
during 1994, 1993 and 1992, respectively.
Interest paid, net of amounts capitalized, was $51.9 million, $47.3 million
and $54.1 million during 1994, 1993 and 1992, respectively.
Total accrued interest costs were $53.2 million, $49.3 million and $55.3
million during 1994, 1993 and 1992, respectively. There was no interest
capitalized during 1994; $2.8 million was capitalized during 1993 and $2.0
million was capitalized during 1992.
In connection with the 1994 acquisition of Emro, MAPCO purchased assets
with a fair value of $117 million, assumed liabilities of $3 million and
transferred to Emro Marketing Company $12 million of MAPCO Florida Inc.'s assets
(see Note 2 for additional information regarding the Emro acquisition).
F-9
<PAGE> 40
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Included in capital expenditures and acquisitions in 1992 is $6.0 million
for MAPCO common stock issued in connection with acquisitions in which MAPCO
received assets with a fair value of $11.9 million and assumed liabilities of
$5.9 million.
NOTE 4. INVENTORIES
Inventories consist of (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1993
------ ------
<S> <C> <C>
Raw materials -- crude oil.................................. $ 21.8 $ 25.6
------ ------
Finished products:
Refined petroleum products................................ 26.1 24.9
Fertilizer and natural gas liquids........................ 31.5 46.0
Retail merchandise........................................ 23.7 12.1
Coal...................................................... 7.9 4.8
------ ------
89.2 87.8
------ ------
Inventories................................................. $111.0 $113.4
====== ======
</TABLE>
The cost to replace the Petroleum segment's crude oil, refined petroleum
products and retail merchandise inventories in excess of LIFO carrying values
was approximately $11.6 million and $6.5 million at December 31, 1994 and 1993,
respectively.
NOTE 5. LONG-TERM DEBT
Long-term debt consists of (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1993
------ ------
<S> <C> <C>
MAPCO INC.
Commercial paper and bank money market lines................. $185.1 $ 20.0
8.43% ESOP Notes, payable in mortgage type principal
reductions annually through 2003........................... 63.6 68.2
Medium Term Notes, various maturities through 2022........... 334.8 342.8
------ ------
583.5 431.0
------ ------
SUBSIDIARIES
Senior Notes:
8.51% Notes, payable $15.0 million in 2007................. 15.0 15.0
8.95% Notes, payable $35.5 million in 2012................. 35.5 35.5
8.20% Notes, payable $2.5 million annually 2007 through
2012.................................................... 15.0 15.0
8.59% Notes, payable $14.5 million in 2017................. 14.5 14.5
8.70% Notes, payable $2.0 million annually 2018 through
2022.................................................... 10.0 10.0
6.67% Notes, payable $15.0 million annually 2001 through
2005.................................................... 75.0 75.0
Other........................................................ 4.6 2.3
------ ------
169.6 167.3
------ ------
753.1 598.3
Less -- current maturities................................... (32.2) (12.8)
------ ------
Long-term debt............................................... $720.9 $585.5
====== ======
</TABLE>
F-10
<PAGE> 41
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Interest rates on commercial paper and bank money market lines ranged from
3.49% to 6.29% and from 3.10% to 4.27% during 1994 and 1993, respectively.
Commercial paper and bank money market lines outstanding at December 31, 1994
and 1993 were classified as long-term debt. MAPCO has the ability and the
intent, if necessary, under a bank credit agreement to refinance commercial
paper and bank money market lines with long-term debt having maturities in
excess of one year.
MAPCO has a bank credit agreement for a line of credit of $300 million. The
bank credit agreement provides for reduction of the total commitment in
quarterly increments of $25 million commencing June 30, 1998. Interest on
borrowings under the bank credit agreement would be at rates generally less than
the prime interest rate. MAPCO must pay a commitment fee to maintain the bank
credit agreement. This agreement serves as a back-up for MAPCO's outstanding
commercial paper and bank money market lines. As of December 31, 1994, no
borrowings were outstanding under the bank credit agreement.
The ESOP Notes' interest rate is subject to revision in the event there is
a change in Internal Revenue Service regulations regarding taxability of the
interest to the lenders.
MAPCO had $334.8 million of Medium Term Notes outstanding as of December
31, 1994. The Notes mature at various times through 2022 and bear interest at
rates ranging from 7.60% to 8.87%. Previously issued Medium Term Notes of $8
million and $10 million matured during 1994 and 1993, respectively.
On August 10, 1993, the Company redeemed all the outstanding variable rate
Mt. Vernon Economic Development Bonds due May 10, 2012 in the principal amount
of $6.5 million plus accrued interest.
In December 1993, Seminole Pipeline Company issued $75 million of 6.67%
Senior Notes in the private placement market. These notes are payable at $15
million annually from 2001 through 2005.
The scheduled amounts to be paid on long-term debt during the next five
years are: 1995 -- $32 million, 1996 -- $26 million, 1997 -- $32 million,
1998 -- $37 million and 1999 -- $32 million.
Various loan agreements contain restrictive covenants which, among other
things, limit the payment of advances or dividends by two of Natural Gas
Liquids' subsidiaries to MAPCO. At December 31, 1994, $180 million of net assets
were restricted by such provisions.
NOTE 6. INCOME TAXES
MAPCO adopted SFAS No. 109, Accounting for Income Taxes, effective January
1, 1993. The cumulative effect of adopting SFAS No. 109 on the Company's
financial statements was to increase 1993 net income by $.4 million.
F-11
<PAGE> 42
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The tax effects of
significant items comprising the Company's net deferred tax liability are as
follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1993
------ ------
<S> <C> <C>
Deferred tax liabilities:
Differences between book and tax basis of property....... $295.6 $295.4
Other.................................................... 21.7 19.2
------ ------
317.3 314.6
------ ------
Deferred tax assets:
Accrued expenses not currently deductible................ 29.3 30.2
Reserves not currently deductible........................ 6.0 17.8
Other.................................................... 10.2 7.6
------ ------
45.5 55.6
------ ------
Net deferred tax liability................................. 271.8 259.0
Net current deferred tax asset............................. 22.0 14.5
------ ------
Deferred income taxes...................................... $293.8 $273.5
====== ======
</TABLE>
Income before provision for income taxes is substantially all derived from
domestic operations. Significant components of the provision for income taxes
are as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Current:
Federal........................................... $22.5 $58.0 $49.5
Enacted change in Federal tax rate................ 1.7
State............................................. .7 2.3 4.6
----- ----- -----
23.2 62.0 54.1
----- ----- -----
Deferred:
Federal........................................... 12.0 5.1 (9.8)
Enacted change in Federal tax rate................ 6.9
State............................................. .7 .5 .7
----- ----- -----
12.7 12.5 (9.1)
----- ----- -----
Provision for income taxes.......................... $35.9 $74.5 $45.0
===== ===== =====
</TABLE>
F-12
<PAGE> 43
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the statutory U.S. Federal income tax rate and MAPCO's
effective income tax rate is as follows (in percents):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Statutory rate......................................... 35.0 35.0 34.0
Increase (decrease) resulting from:
Excess of tax over book depletion.................... (5.1) (3.1) (4.0)
State income taxes, net of Federal benefit........... 1.0 1.0 2.4
Deferred tax impact of change in the Federal tax
rate.............................................. 3.4
Other................................................ (.1) .4 (1.3)
---- ---- ----
Effective income tax rate.............................. 30.8 36.7 31.1
==== ==== ====
</TABLE>
At December 31, 1994, a subsidiary of MAPCO had Federal income tax net
operating loss carryforwards of $7.0 million which expire in various years
through 2003.
NOTE 7. STOCK RIGHTS
Under a Rights Agreement (as amended in 1989), MAPCO has one Right
outstanding for each outstanding share of MAPCO common stock. Under certain
limited conditions as defined in the Rights Agreement, each Right entitles the
registered holder to purchase from MAPCO one two-hundredth of a share of Series
A Junior Participating Preferred Stock ("Preferred Stock") at $175 subject to
adjustment. At December 31, 1994, there were 29.9 million Rights outstanding,
that if exercised, would result in the issuance of 149,577 shares of Preferred
Stock.
The Rights are not exercisable until the Distribution Date (as defined in
the Rights Agreement) which will occur upon the earlier of (i) ten days
following a public announcement that an Acquiring Person has acquired beneficial
ownership of 15% or more of MAPCO's outstanding common stock or (ii) ten
business days following the commencement of a tender offer or exchange offer
that would result in a person or group owning 15% or more of MAPCO's outstanding
common stock.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire MAPCO without
conditioning the offer on a substantial number of Rights being redeemed. Upon
exercise and the occurrence of certain events as defined in the Rights
Agreement, each holder of a Right, except the Acquiring Person (as defined in
the Rights Agreement), will have the right to receive MAPCO common stock or
common stock of the acquiring company having a value equal to two times the
exercise price of the Right.
The Rights should not interfere with any merger or other business
combination approved by MAPCO since the Board of Directors may, at its option,
at any time prior to the close of business on the earlier of the tenth day
following the Stock Acquisition Date (as defined in the Rights Agreement) or
July 7, 1996, redeem all but not less than all of the then outstanding Rights at
$.05 per Right. The Rights expire on July 7, 1996, and do not have voting power
or dividend privileges.
NOTE 8. STOCK INCENTIVE PLANS
Under the MAPCO Inc. 1989 Stock Incentive Plan (the "Plan"), stock options,
stock appreciation rights, restricted stock, phantom stock and stock purchase
rights may be issued to key employees. At December 31, 1994, only stock options
and restricted stock had been awarded under the Plan. Each stock option entitles
the holder to purchase from MAPCO one share of common stock at the option price,
which is determined by the closing sales price of MAPCO common stock on the
grant date. Options expire ten years
F-13
<PAGE> 44
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
from the date of the grant. One-third of the options granted in 1994 will vest
in 1998, one-third in 1999 and one-third in 2000.
Options granted under the Plan contain a Replacement Option feature. The
Replacement Option feature is triggered when an optionee uses stock, rather than
cash, to exercise an option. Upon exercise by an exchange of stock, Replacement
Options are granted equal to the number of shares tendered for the exercise of
the option plus the number of shares of stock withheld for income tax purposes.
The exercise price per share for any Replacement Option is equal to the fair
market value of a share of common stock on the date the Replacement Option is
granted. A Replacement Option is not exercisable for at least six months from
the grant date for those granted prior to January 22, 1992 and twelve months for
those granted after January 22, 1992.
In May 1992, MAPCO stockholders approved an amendment to the Plan which
increased the number of gross shares (i.e., the number of options issuable,
including shares forfeited for tax withholding and shares surrendered to
exercise an option) which may be issued under the Plan to 7 million; however,
the maximum number of actual net shares which may be issued under the Plan
remained at 2 million (plus a small number of shares from prior plans). The
number of gross shares available for future grants under the Plan was 3,782,350
at December 31, 1994. The cumulative number of actual net shares issued under
the Plan was 262,314 at December 31, 1994.
A summary of employee stock option activity for options issued pursuant to
the Plan and prior plans is as follows:
<TABLE>
<CAPTION>
NUMBER EXERCISE NUMBER EXERCISE
OUTSTANDING PRICE EXERCISABLE PRICE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
At December 31, 1991............. 1,509,904 $18.94-$63.63 132,259 $18.94-$55.75
Granted........................ 826,656 $52.88-$61.75
Exercised...................... (621,704) $18.94-$55.00
Canceled....................... (89,855) $27.69-$61.63
---------- ------------- --------- -------------
At December 31, 1992............. 1,625,001 $18.94-$63.63 269,475 $18.94-$63.63
Granted........................ 653,191 $49.25-$64.25
Exercised...................... (413,600) $18.94-$60.13
Canceled....................... (50,835) $37.00-$61.63
---------- ------------- --------- -------------
At December 31, 1993............. 1,813,757 $18.94-$64.25 677,144 $18.94-$63.63
Granted........................ 648,170 $50.38-$64.50
Exercised...................... (384,714) $18.94-$60.50
Canceled....................... (33,122) $40.25-$63.38
---------- ------------- --------- -------------
At December 31, 1994............. 2,044,091 $18.94-$64.50 853,329 $18.94-$64.50
========== ============= ========= =============
</TABLE>
MAPCO has a Director Stock Option Plan ("Directors' Plan") which provides
for the grant of stock options to MAPCO's non-employee Directors. Under the
Directors' Plan, stock options are granted at the closing price of MAPCO's
common stock on the date of the grant. The number of options granted, which is
fixed by the plan, become fully exercisable on the date of grant. The maximum
number of shares which may be issued under the Directors' Plan is 200,000
shares. Options were granted to purchase 18,000 shares for each of the years
1994, 1993 and 1992 at $62.38, $57.25 and $59.50 per share, respectively.
Options outstanding and exercisable at December 31, 1994, 1993 and 1992 were
101,927 shares, 83,927 shares and 65,927 shares, respectively.
F-14
<PAGE> 45
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9. SEGMENT INFORMATION
MAPCO's operations are organized into three segments: Natural Gas Liquids,
Petroleum and Coal. Natural Gas Liquids includes the movement by pipeline of
NGLs, refined products, crude oil, and anhydrous ammonia, and includes the
retail and wholesale marketing of natural gas liquids (including propane,
ethane, butane and natural gasolines), appliances and fertilizer, and the
operation of natural gas processing plants (only one of which is currently
operating) and underground storage facilities; Petroleum includes the refining
of crude oil and refined petroleum products, the wholesale and retail marketing
of refined petroleum products, the retail marketing of merchandise and deli fast
food, and the trading of crude oil, NGLs and refined petroleum products; Coal
includes the production and marketing of coal. Intersegment sales and operating
revenues are generally made at prevailing market prices. Segment information is
as follows (in millions):
<TABLE>
<CAPTION>
SALES AND OPERATING REVENUES ADDITIONS
------------------------------------- TO PROPERTY, DEPRECIATION,
UNAFFILIATED OPERATING IDENTIFIABLE PLANT AND DEPLETION &
CUSTOMERS INTERSEGMENT TOTAL PROFIT ASSETS EQUIPMENT AMORTIZATION
------------ ------------ ------- --------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Natural Gas Liquids............. $ 465.0 $ 45.3 $ 510.3 $ 131.2 $1,085.1 $164.8 $ 36.5
Petroleum....................... 2,168.8 18.2 2,187.0 26.4* 593.6 26.9 31.3
Coal............................ 425.5 425.5 35.9 442.2 30.8 32.2
Eliminations.................... (63.5) (63.5) (.8)
-------- ------ -------- ------- -------- ------ -------
Total segments.............. 3,059.3 3,059.3 193.5* 2,120.1 222.5 100.0
General corporate expense....... (23.4) 46.0 1.3 2.9
Interest and debt expense....... (53.2)
Other income (expense) -- net... (.3)
-------- ------ -------- ------- -------- ------ -------
$3,059.3 $3,059.3 $ 116.6 $2,166.1 $223.8 $ 102.9
======== ====== ======== ======= ======== ====== =======
Year Ended December 31, 1993
Natural Gas Liquids............. $ 426.3 $ 38.9 $ 465.2 $ 118.8 $ 833.7 $ 97.4 $ 32.5
Petroleum....................... 1,874.6 6.4 1,881.0 108.9 619.4 28.6 32.1
Coal............................ 414.4 414.4 46.9 428.2 17.4 29.6
Eliminations.................... (45.3) (45.3) (.9)
-------- ------ -------- ------- -------- ------ -------
Total segments.............. 2,715.3 2,715.3 274.6 1,880.4 143.4 94.2
General corporate expense....... (25.8) 80.7 .7 3.1
Interest and debt expense....... (46.5)
Other income (expense) -- net... .6
-------- ------ -------- ------- -------- ------ -------
$2,715.3 $2,715.3 $ 202.9 $1,961.1 $144.1 $ 97.3
======== ====== ======== ======= ======== ====== =======
Year Ended December 31, 1992
Natural Gas Liquids............. $ 416.7 $ 36.8 $ 453.5 $ 113.7 $ 803.9 $139.9 $ 28.8
Petroleum....................... 1,940.5 10.7 1,951.2 73.9 618.6 37.8 32.0
Coal............................ 429.6 429.6 36.0 432.9 35.4 32.1
Eliminations.................... (47.5) (47.5) (1.0)
-------- ------ -------- ------- -------- ------ -------
Total segments.............. 2,786.8 2,786.8 223.6 1,854.4 213.1 92.9
General corporate expense....... (24.3) 57.3 1.7 3.6
Interest and debt expense....... (53.3)
Other income (expense) -- net... (1.4)
-------- ------ -------- ------- -------- ------ -------
$2,786.8 $2,786.8 $ 144.6 $1,911.7 $214.8 $ 96.5
======== ====== ======== ======= ======== ====== =======
</TABLE>
- ---------------
*Includes a $68.7 million charge relative to the State of Alaska Royalty Oil
settlement.
In 1994, MAPCO transferred the liquefied petroleum gas ("LPG") supply unit
of the Petroleum segment into the NGL segment. All prior year amounts have been
restated to reflect the transfer.
F-15
<PAGE> 46
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10. EMPLOYEE BENEFIT PLANS
MAPCO has two defined benefit plans covering substantially all employees.
One of these plans is the MAPCO Inc. and Subsidiaries Pension Plan which has two
separate benefit structures. The benefit formula for the MAPCO Inc. and
subsidiaries (except Coal) structure is a step-rate-plan formula based on final
average pay and years of service, while the benefit formula for the Coal
structure is a flat dollar unit formula based on years of service. The second
plan, which is significantly smaller and covers employees of South Atlantic Coal
Company, has a career average pay formula based on years of service. MAPCO's
funding policy for both of these plans is to make the minimum annual
contributions required by the Employee Retirement Income Security Act. No
contributions were required for 1994 due to the current favorable funded status
of these plans. The assets in these plans are primarily comprised of equity
securities, but also include fixed income securities, guaranteed investment
contracts and equity real estate investments.
Net periodic pension income from MAPCO's defined benefit pension plans
includes the following components (in millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Service cost............................................... $ (5.9) $ (5.4) $ (5.0)
Interest cost on projected benefit obligation.............. (10.5) (9.8) (8.8)
Actual return on plan assets............................... .5 27.6 13.0
Net amortization and deferral.............................. 16.0 11.3 2.8
------ ------ ------
Net periodic pension income................................ $ .1 $ 1.1 $ 2.0
====== ====== ======
</TABLE>
The funded status of MAPCO's defined benefit pension plans and the amounts
recognized in MAPCO's consolidated balance sheets are as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
------- -------
<S> <C> <C>
Vested benefit obligation......................................... $(109.2) $(119.3)
======= =======
Accumulated benefit obligation.................................... $(115.4) $(126.6)
======= =======
Projected benefit obligation...................................... $(129.4) $(143.3)
Plan assets at fair value......................................... 153.2 158.0
------- -------
Plan assets in excess of projected benefit obligation............. 23.8 14.7
Unrecognized net actuarial loss................................... 8.9 18.3
Unrecognized prior service cost................................... 2.5 5.6
Remaining unrecognized net asset existing at date of initial
application..................................................... (7.2) (10.7)
------- -------
Prepaid pension cost.............................................. $ 28.0 $ 27.9
======= =======
</TABLE>
The rates used in determining pension income for the two pension plans for
1994 and the funded status of the plans on December 31, 1994 are as follows:
<TABLE>
<CAPTION>
SOUTH
MAPCO INC. ATLANTIC
AND SUBSIDIARIES COAL COMPANY
---------------- ------------
<S> <C> <C>
Discount rate............................................ 9.0% 9.0%
Rate of increase in compensation......................... 5.0% 4.0%
Long-term rate of return on plan assets.................. 10.0% 10.0%
</TABLE>
F-16
<PAGE> 47
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The rates used in determining the funded status of the two pension plans on
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
SOUTH
MAPCO INC. ATLANTIC
AND SUBSIDIARIES COAL COMPANY
---------------- ------------
<S> <C> <C>
Discount rate............................................ 7.5% 7.5%
Rate of increase in compensation......................... 5.0% 4.0%
Long-term rate of return on plan assets.................. 10.0% 10.0%
</TABLE>
The rates used in determining pension income for the two pension plans for
the years 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
SOUTH
MAPCO INC. ATLANTIC
AND SUBSIDIARIES COAL COMPANY
---------------- ------------
<S> <C> <C>
Discount rate............................................ 8.5% 8.5%
Rate of increase in compensation......................... 6.0% 4.0%
Long-term rate of return on plan assets.................. 10.0% 10.0%
</TABLE>
The excess of the assets in the MAPCO Pension Plan over the projected
benefit obligation at the date MAPCO changed its method of accounting for its
pension plan is being amortized on a straight-line basis over the average
remaining service period of plan participants.
The Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act") imposed
obligations for certain retiree medical costs on MAPCO. The undiscounted
liability at December 31, 1994, relative to MAPCO's obligations under the Coal
Act was $24.8 million. The expected payments under the Coal Act are $.3 million
in 1995, $.4 million in each of the years 1996 through 1999 and $22.9 million
thereafter. MAPCO's recorded liability relative to the Coal Act at December 31,
1994 was $6.2 million. The difference between the expected aggregate
undiscounted liability of $24.8 million and the liability reflected in the
financial statements is the result of discounting the expected payments which
span more than 35 years.
MAPCO has an ESOP that includes substantially all employees through
voluntary participation. Allocation of the MAPCO common stock held by the ESOP
to individual employees is based on the employee's eligible contribution to the
ESOP and the number of shares of common stock available for allocation. The
common stock available for allocation will be released in quarterly installments
over the term of the ESOP's loan from MAPCO.
MAPCO's cash contributions to the ESOP will equal the ESOP's principal and
interest payments on its loan from MAPCO reduced by the dividends the ESOP
receives on the MAPCO common stock held by the ESOP. Dividends of $2.3 million
in 1994, $2.5 million in 1993 and $2.4 million in 1992 on the MAPCO common stock
owned by the ESOP were used for debt service. MAPCO made cash contributions to
the ESOP of $8.0 million in 1994, $7.8 million in 1993 and $8.0 million in 1992.
MAPCO recognized compensation expense in connection with the ESOP of $2.3
million, $1.7 million and $1.5 million and interest expense of $5.7 million,
$6.1 million and $6.5 million in 1994, 1993 and 1992, respectively.
NOTE 11. COMMITMENTS AND CONTINGENCIES
MAPCO leases land, buildings and equipment under lease agreements which
provide for the payment of both minimum and contingent rentals. The annual
rental expense under operating leases was $19 million, $17 million and $19
million in 1994, 1993 and 1992, respectively.
Future minimum payments under operating leases are $65 million in total and
during the next five years are: 1995 -- $13 million, 1996 -- $10 million,
1997 -- $8 million, 1998 -- $7 million and 1999 -- $5 million.
F-17
<PAGE> 48
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STATE ROYALTY OIL SETTLEMENT
The refining and marketing arm of the Company, MAPCO Petroleum Inc.,
operates a refinery in Alaska through its subsidiary, MAPCO Alaska Petroleum
Inc. ("MAPI"). Since 1978, MAPI (and/or its predecessor) has had long-term
agreements with the state of Alaska (the "State") to purchase royalty oil from
the State at prices linked to amounts payable by North Slope oil producers in
satisfaction of their royalty obligations to the State. In 1977, the State
commenced suit against the producers (in an action entitled State of Alaska v.
Amerada Hess, et al.) alleging that they incorrectly calculated their royalty
payments.
As of April 1992, the State had settled its royalty oil claims against all
of the producers. On the basis of these settlements, the State billed MAPI for
retroactive increases in the prices paid by MAPI under all four of its royalty
oil purchase agreements. The State's claims were comprised of retroactive price
adjustments of $98 million, $9.2 million, $2.9 million and $6.4 million, not
including future interest. MAPI commenced litigation against the State in 1992
seeking a determination that it was not liable for retroactive price increases.
The parties settled all pending claims and entered into a settlement
agreement effective August 1, 1994, whereby MAPI paid the State $95 million.
MAPI accrued $68.7 million during the second quarter of 1994 related to the
settlement.
TEXAS EXPLOSION LITIGATION
On April 7, 1992, a LPG explosion occurred near an underground salt dome
storage facility located near Brenham, Texas and owned by an affiliate of the
Company, Seminole Pipeline Company ("Seminole"). The National Transportation
Safety Board and the Texas Railroad Commission essentially determined that the
probable cause of the explosion was the result of overfilling the storage
facility.
The Company, as well as Seminole, Mid-America Pipeline Company and other
non-MAPCO entities have been named as defendants in civil actions filed in state
district courts in Texas. During 1993, Seminole received reimbursements from its
insurers for settlements which disposed of all the death claims and
substantially all of the serious injury claims resulting from the incident.
Generally, the types of remaining claims consist primarily of personal injury
and property damage claims, coupled with theories of nuisance and diminished
property value.
Although plaintiffs seek actual and punitive damages, the Company believes
that complete resolution of the remaining Texas explosion actions by litigation
or settlement, after reimbursement of insurance coverage, will not have a
material adverse effect on the Company's business, results of operations or
consolidated financial position.
SEMINOLE LOOP/AQUILA-LAGRANGE LINE LITIGATION
In May 1993, Seminole completed its Seminole loop project and in January
1994, Seminole completed its Aquila-LaGrange line project. Seminole is the
defendant in over 70 lawsuits claiming additional compensation for and/or
damages to tracts of land traversed by these projects in 15 counties in the
state of Texas. Many of the lawsuits claim punitive damages for alleged fraud,
illegal entry and other wrongful conduct. Claims in this litigation are not
covered by the Company's insurance.
The Company believes that complete resolution of the Seminole
Loop/Aquila-LaGrange line litigation will not have a material adverse effect on
the Company's business, results of operations or consolidated financial
position.
GENERAL LITIGATION
The Company and its subsidiaries are involved in various other lawsuits,
claims and regulatory proceedings incidental to their businesses. In the opinion
of management, the outcome of such matters will not
F-18
<PAGE> 49
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
have a material adverse effect on the Company's business, consolidated financial
position or results of operations.
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair value
amounts have been determined by the Company using available market information
and appropriate valuation methodologies.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents and long-term receivables: The carrying amounts
reported in the balance sheet for cash and cash equivalents and long-term
receivables approximate their fair value.
Long-term debt, including current maturities: The carrying amounts of
commercial paper and other variable-rate debt instruments approximate their fair
value. The fair values of fixed-rate long-term debt are estimated using
discounted cash flow analyses based on the Company's incremental borrowing rates
for similar types of borrowing arrangements.
Insurance accruals: The fair value of insurance accruals, which represent
contractual obligations to pay cash in the future, is estimated based on a
discounted cash flow analysis using the Company's incremental borrowing rate as
the discount rate.
The carrying amounts and fair values of the Company's financial instruments
are as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1994 1993
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Cash and cash equivalents...................... $ 30.6 $ 30.6 $ 69.8 $ 69.8
Long-term receivables.......................... 13.8 13.8 6.9 6.9
Long-term debt, including current maturities... 753.1 732.2 598.3 640.2
Insurance accruals............................. 11.2 9.9 16.8 12.4
</TABLE>
The assumed incremental borrowing rates used to determine the fair value of
fixed-rate long-term debt were 8.73% to 9.08% and 7.0% to 7.81% for 1994 and
1993, respectively. The incremental borrowing rates used to determine the fair
value of insurance accruals were 8.69% for 1994 and 6.5% for 1993.
Futures, forward and option contracts are used to hedge against the risk of
price changes for selected sales commitments of crude oil and refined petroleum
products. These contracts permit settlement by delivery of commodities and
therefore, are not financial instruments. Contracts that qualify as hedges are
correlated to price movements of crude oil and refined petroleum product
inventory and any gains or losses resulting from market changes will be
substantially offset by gains or losses on the hedged inventory. MAPCO's crude
oil and refined petroleum products hedging activities resulted in an unrealized
gain of $1.3 million at December 31, 1994 and an unrealized loss of $3.6 million
at December 31, 1993.
NOTE 13. ENVIRONMENTAL MATTERS
Environmental expenditures that relate to current or future revenues are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations that do not contribute to current or future
revenue generation are expensed. Environmental liabilities are determined
without consideration of possible recoveries from third parties and are recorded
independently of any potential claim
F-19
<PAGE> 50
MAPCO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for recovery. Receivables are recognized in cases where reimbursements of
remediation costs are available from state funds and the realization of those
funds is considered probable. Accruals related to environmental matters are
generally determined based on site-specific plans for remediation, taking into
account prior remediation experience of MAPCO and other companies. Environmental
liabilities are discounted only if the aggregate obligation of a specific matter
and the amount and timing of the related cash payments are fixed or reliably
determinable. The effect of discounting environmental liabilities is not
material to MAPCO's financial statements.
Estimated liabilities for environmental costs, primarily in the Petroleum
segment, at December 31, 1994 and 1993 were $30.9 million and $33.7 million,
respectively. Receivables of $18.5 million and $20.3 million at December 31,
1994 and 1993, respectively, have been recognized as recoverable from state
funds in connection with laws permitting reimbursement by the states of certain
expenses associated with underground storage tank containment problems and
repairs.
NOTE 14. SUPPLEMENTAL QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER
---------------------------------------------
1 2 3 4
------ ------ ------ ------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1994
Sales and operating revenues.................... $692.1 $738.1 $805.3 $823.8
Operating profit (loss)......................... $ 81.0 $(16.3) $ 55.0 $ 73.8
Net income (loss)............................... $ 41.4 $(24.6) $ 24.7 $ 37.6
Earnings (loss) per common share................ $ 1.38 $ (.82) $ .83 $ 1.25
1993
Sales and operating revenues.................... $691.7 $663.3 $665.6 $694.7
Operating profit................................ $ 63.0 $ 65.6 $ 73.4 $ 72.6
Net income...................................... $ 33.9 $ 31.3 $ 26.9 $ 34.9
Earnings per common share....................... $ 1.13 $ 1.04 $ .90 $ 1.17
</TABLE>
F-20
<PAGE> 51
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Expenses:
Selling, general and administrative.............................. $ 20.4 $ 14.5 $ 17.0
Depreciation and amortization.................................... 2.9 3.1 3.6
Interest and debt expense........................................ 39.8 40.0 46.6
Other income -- net.............................................. (2.9) (10.7) (9.1)
------ ------ ------
Loss before Provision for Income Taxes............................. (60.2) (46.9) (58.1)
Provision for Income Taxes......................................... 21.5 15.8 23.9
Equity in Net Income of Subsidiaries............................... 117.8 158.1 134.9
------ ------ ------
Net Income......................................................... $ 79.1 $127.0 $100.7
====== ====== ======
</TABLE>
See notes to condensed financial statements.
S-1
<PAGE> 52
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 7.3 $ 52.1
Receivables........................................................... .3 .5
Prepaid expenses and other............................................ 31.1 5.6
-------- --------
Total current assets.......................................... 38.7 58.2
-------- --------
Property, Plant and Equipment, at cost.................................. 8.9 13.3
-------- --------
Other Assets:
Receivables from and investments in subsidiaries...................... 1,209.9 982.8
Other assets.......................................................... 4.9 4.5
-------- --------
Total other assets............................................ 1,214.8 987.3
-------- --------
$1,262.4 $1,058.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt.................................. $ 31.0 $ 12.6
Accounts payable...................................................... 24.5 22.0
Other current liabilities............................................. 6.1 16.7
-------- --------
Total current liabilities..................................... 61.6 51.3
-------- --------
Long-Term Debt, excluding current maturities............................ 552.6 418.4
-------- --------
Other Liabilities....................................................... 20.0 15.0
-------- --------
Deferred Income Taxes................................................... 5.6 (.2)
-------- --------
Stockholders' Equity:
Common stock.......................................................... 62.8 62.7
Capital in excess of par value........................................ 202.6 200.0
Retained earnings..................................................... 1,356.4 1,306.7
-------- --------
1,621.8 1,569.4
Treasury stock, at cost............................................... (935.6) (926.9)
Loan to ESOP.......................................................... (63.6) (68.2)
-------- --------
622.6 574.3
-------- --------
$1,262.4 $1,058.8
======== ========
</TABLE>
See notes to condensed financial statements.
S-2
<PAGE> 53
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................................... $ 79.1 $ 127.0 $ 100.7
Reconciliation of net income to cash provided by operating
activities:
Depreciation and amortization.............................. 2.9 3.1 3.6
Provision for deferred income taxes........................ (7.9) (1.2) (1.9)
Equity in net income of subsidiaries....................... (117.8) (158.1) (134.9)
Other items not requiring cash............................. 5.7 1.3 2.5
Changes in operating assets and liabilities................ (16.5) (3.0) 1.8
------- ------- -------
Net cash used in operating activities................. (54.5) (30.9) (28.2)
------- ------- -------
Cash Flows from Investing Activities:
Capital expenditures....................................... (1.3) (.6) 4.4
Proceeds from sales of property, plant and equipment....... 1.0 1.4
Accounts with subsidiaries................................. (109.4) 241.8 37.3
------- ------- -------
Net cash provided by (used in) investing activities... (109.7) 242.6 41.7
------- ------- -------
Cash Flows from Financing Activities:
Purchase of common stock................................... (8.7) (6.2) (16.5)
Increase (decrease) in borrowings.......................... 165.1 (139.5) (67.8)
Dividends.................................................. (30.0) (30.0) (29.9)
Issuance of long-term debt................................. 154.8
Payments on long-term debt................................. (8.0) (10.0) (67.4)
Exercise of stock options.................................. .9 1.0 .4
Other...................................................... .1 .6 (1.4)
------- ------- -------
Net cash provided by (used in) financing activities... 119.4 (184.1) (27.8)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents................ (44.8) 27.6 (14.3)
Cash and Cash Equivalents, January 1,........................... 52.1 24.5 38.8
------- ------- -------
Cash and Cash Equivalents, December 31,......................... $ 7.3 $ 52.1 $ 24.5
======= ======= =======
</TABLE>
See notes to condensed financial statements.
S-3
<PAGE> 54
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Consolidation -- The financial statements of MAPCO Inc. reflect the
investment in subsidiaries using the equity method.
Statements of Cash Flow -- MAPCO Inc. made cash payments for interest of
$38.6 million, $41.3 million and $48.2 million in 1994, 1993 and 1992,
respectively.
Income Taxes -- MAPCO Inc. files a consolidated Federal income tax return
with its subsidiaries. Members of the consolidated group are allocated income
tax expense or benefit based upon their results as reflected in the consolidated
Federal income tax return.
NOTE 2. CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to the Consolidated Financial Statements and related
notes of MAPCO Inc. and subsidiaries for additional information.
NOTE 3. DEBT AND GUARANTEES
Information on the long-term debt of MAPCO Inc. is disclosed in Note 5 to
the Consolidated Financial Statements. MAPCO Inc. has guaranteed certain trade
payable obligations and performance guarantees arising in the ordinary course of
business. The scheduled amounts to be paid on long-term debt during the next
five years are: 1995-$31 million, 1996-$25 million, 1997-$31 million, 1998-$36
million and 1999-$32 million.
NOTE 4. DIVIDENDS RECEIVED
Subsidiaries of MAPCO Inc. do not make formal cash dividend declarations
and distributions to the parent. MAPCO Inc. receives and disburses cash on
behalf of its subsidiaries. Any restrictions in debt agreements on the transfer
of cash to MAPCO Inc. by its subsidiaries did not have any impact during 1994,
1993 or 1992.
S-4
<PAGE> 55
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN MILLIONS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
----------- ---------- ----------------------- ------------- ----------
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) PERIOD
- ------------------------------------------ ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Allowance for doubtful accounts --
Receivables.......................... $3.3 $ .3 $ $ 1.3 $2.3
==== ==== ==== ===== ====
Year Ended December 31, 1993
Allowance for doubtful accounts --
Receivables.......................... $3.0 $1.3 $ $ 1.0 $3.3
==== ==== ==== ===== ====
Allowance for doubtful accounts --
Other assets......................... $1.9 $ $ $ 1.9 $
==== ==== ==== ===== ====
Year Ended December 31, 1992
Allowance for doubtful accounts --
Receivables.......................... $1.9 $2.8 $ $ 1.7 $3.0
==== ==== ==== ===== ====
Allowance for doubtful accounts --
Other assets......................... $1.9 $ $ $ $1.9
==== ==== ==== ===== ====
</TABLE>
- ---------------
(1) Bad debts written off, less recoveries (net).
S-5
<PAGE> 56
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -----------
<S> <C>
3.(i) -- Restated Certificate of Incorporation, as amended and restated,
effective May 14, 1987
3.(ii) -- MAPCO Inc. By-Laws, as amended April 16, 1989
4.(a) -- Specimen of Common Stock Certificate
4.(h) -- Rights Agreement dated as of June 12, 1986 between MAPCO Inc. and
Harris Trust Company of New York, as amended
4.(i) -- Note Agreement dated as of June 16, 1989 between MAPCO Inc. and IDS
Life Insurance Company of New York, American Enterprise Life
Insurance Company, et al.
10.(b) -- Form of Agreement between MAPCO Inc. and certain officers and key
employees relating to indemnification
10.(c) -- MAPCO Inc. 1986 Retirement Plan for Directors, as amended and
restated effective March 29, 1989
10.(d) -- Form of Agreement between MAPCO Inc. and certain officers relating to
employment dated December 20, 1989, effective January 1, 1990
10.(e) -- Form of Amendment Letter to Agreement Dated December 20, 1989 between
MAPCO Inc. and certain officers relating to employment dated March
14, 1990
10.(l) -- MAPCO Inc. 1989 Stock Incentive Plan, as amended and restated
effective June 1, 1992
10.(m) -- MAPCO Inc. 1989 Outside Director Stock Option Plan, as amended March
24, 1993
11. -- Statement re: computation of per share earnings
12. -- Computation of Ratio of Earnings to Fixed Charges
21. -- List of Subsidiaries
23. -- Independent Auditors' Consent
27. -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3.(i)
Restated Certificate of Incorporation
As Amended and Restated effective May 14, 1987
<PAGE> 2
RESTATED
CERTIFICATE OF INCORPORATION
OF
MAPCO INC.
(As Amended and Restated effective May 14, 1987)
The following Restated Certificate of Incorporation restates,
integrates and amends the Certificate of Incorporation. It has been duly
adopted by the Board of Directors and Stockholders of the Corporation, in
accordance with Section 242 and 245 of the General Corporation Law of Delaware.
The capital of the Corporation will not be reduced under or by reason of the
amendments made hereby. The Corporation was originally incorporated on October
3, 1958 under the name Midcontinent Eastern Pipeline Corporation.
FIRST: The name of the Corporation is MAPCO Inc.
SECOND: The Corporation's registered office in the State of Delaware
is 100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name of the Corporation's registered agent at such address is The Corporation
Trust Company.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of shares of capital stock of all classes
which the Corporation is authorized to issue is 76,000,000 shares of capital
stock, which shall consist of 1,000,000 shares of Preferred Stock, without par
value, and 75,000,000 shares of Common
<PAGE> 3
Stock, $1 par value.
The Board of Directors shall have the authority to fix by resolution
the voting powers, dividend rate, preferences and rights and the
qualifications, limitations or restrictions of any class or classes of
Preferred Stock or any series of any class of Preferred Stock of the
Corporation.
All holders of shares with voting powers, whether Common Stock or
Preferred Stock, shall, except as otherwise required by law or by any
resolution adopted by the Board of Directors pursuant to authority expressly
vested in it by the provisions of this Article, vote and act together as a
single class and not as separate classes.
All shares of Common Stock shall have one vote per share.
FIFTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of this Corporation, and for
further definition, limitation and regulation of the powers of this Corporation
and of its directors and stockholders:
(1) Election of directors need not be by ballot unless the By-laws
so provide.
(2) The number of directors shall be not less than three nor more
than twelve, the exact number thereof within such limitations to be fixed from
time to time by resolution adopted by a majority of the entire Board, and such
exact number shall be nine unless otherwise determined by resolution adopted by
a majority of the entire Board. As used in this paragraph, "entire Board"
means the
2
<PAGE> 4
total number of directors which the Corporation would have if there were no
vacancies as such number is fixed by resolution of the Board of Directors. In
the event that the Board is increased by such a resolution, the vacancy or
vacancies so resulting shall be filled by a vote of the majority of the
directors then in office. No decrease in number in the Board shall shorten the
term of any incumbent directors.
The Board of Directors shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class
expiring at the annual meeting of stockholders in 1971, the second class
expiring at the annual meeting of stockholders in 1972, and the third class
expiring at the annual meeting of stockholders in 1973. Where vacancies occur
on the Board of Directors through death, resignation, disqualification or other
cause and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors
then in office, though less than a quorum, unless so filled by election by the
stockholders at a meeting called for the purpose by notice given prior to such
action by the directors, and the directors so chosen shall hold office until
the next election of the class for which such directors shall have been chosen
and until their successors are duly elected and shall qualify.
At each annual meeting of the stockholders, commencing with the 1971
Annual Meeting, successors to directors of the class whose terms then expire
shall be elected to hold office for a term
3
<PAGE> 5
expiring at the third succeeding annual meeting of stockholders. When the
number of directors is changed, any newly created directorships or any decrease
in directorships shall be so apportioned among the classes as to make all
classes as nearly equal in number as possible. Notwithstanding the foregoing,
whenever the holders of any Preferred Stock, as provided in the Certificate of
Incorporation, shall have the right, voting as a class, to elect directors at
the annual meeting of stockholders, the then authorized number of directors of
the Corporation may be increased by such number as may be therein provided, and
at such meeting the holders of such Preferred Stock shall be entitled to elect
the additional directors so provided for by a vote of the holders of at least a
majority of such Preferred Stock present or so represented at such meeting
voting as a class. Any directors so elected, unless so re-elected at the
annual meeting of stockholders or special meeting held in place thereof, next
succeeding the time when the holders of any such Preferred Stock become
entitled to elect directors as above provided, shall not hold office beyond
such annual or special meeting. This provision shall apply notwithstanding the
maximum number of directors set forth in the provisions hereinabove.
No amendment to the Certificate of Incorporation of the Corporation
shall amend, alter, change or repeal any provision of this paragraph (2) of
this Article FIFTH unless the amendment effecting such amendment, alteration,
change, or repeal shall receive the affirmative vote or consent of the holders
of 75% of
4
<PAGE> 6
all shares of the outstanding stock of the Corporation entitled to vote
thereon.
(3) The Board of Directors shall have power, without the consent
or vote of the stockholders, to make, alter, amend, change, add to or repeal
the By-laws of the Corporation.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this Restated Certificate of Incorporation and to any
By- laws from time to time made by the Board of Directors and/or stockholders;
provided, however, that no By-laws so made shall invalidate any prior act of
directors which would have been valid if such By-law had not been made.
SIXTH: Except as set forth below, the affirmative vote of the holders
of 75% of all classes of stock of the Corporation, entitled to vote in
elections of directors, considered for the purposes of this Article SIXTH as
one class, shall be required (a) for the adoption of any agreement for the
merger or consolidation of the Corporation with or into any other corporation,
or (b) to authorize any sale or lease of all or any substantial part of the
assets of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any assets
(except assets having an aggregate fair market value of less than $6,000,000)
of, any other corporation,
5
<PAGE> 7
person or other entity, if, in either case, as of the record date for the
determination of stockholders entitled to notice thereof and to vote thereon or
consent thereto such other corporation, person or entity is the beneficial
owner, directly or indirectly, of more than 5% of the outstanding shares of
stock of the Corporation entitled to vote in elections of directors considered
for the purposes of this Article SIXTH as one class. Such affirmative vote
shall be in addition to the vote of the holders of the stock of the Corporation
otherwise required by law or any agreement between the Corporation and any
national securities exchange.
For the purpose, but only for the purpose, of determining whether a
person, corporation or other entity is "the beneficial owner, directly or
indirectly, of more than 5% of the outstanding shares of stock of the
Corporation entitled to vote in elections of directors," (x) any corporation,
person or other entity shall be deemed to be the beneficial owner of any shares
of stock of the Corporation (i) which it has the right to acquire pursuant to
any agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, or (ii) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (1), above), by
any other corporation, person or entity with which it or its "affiliate" or
"associate" (as defined below) has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of stock of the
Corporation, or which is its "affiliate" or "associate" as those terms are
defined in Rule 12b-2 of the General rules and
6
<PAGE> 8
regulations under the Securities Exchange Act of 1934 as in effect on January
1, 1980, and (y) the outstanding shares of any class of stock of ;the
Corporation shall include shares deemed owned through application of clauses
(i) and (ii) above.
The Board of Directors shall have the power and duty to determine for
the purposes of this Article SIXTH, on the basis of information known to the
Corporation, whether (i) such other corporation, person or other entity
beneficially owns more than 5% of the outstanding shares of stock of the
Corporation entitled to vote in elections of directors, (ii) a corporation,
person or entity is an "affiliate" or "associate" (as defined above) of
another, (iii) the assets being acquired by the Corporation, or any subsidiary
thereof, have an aggregate fair market value of less than $6,000,000 and (iv)
the memorandum of understanding referred to below is substantially consistent
with the transaction covered thereby. Any such determination shall be
conclusive and binding for all purposes of this Article SIXTH.
The provisions of this Article SIXTH shall not be applicable to (i)
any merger or consolidation of the Corporation with or into any other
corporation, or any sale of lease of all or any substantial part of the assets
of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any assets
of, any corporation if the Board of Directors of the corporation shall by
resolution have approved a memorandum of understanding with such other
corporation with respect to and substantially consistent with such transaction,
7
<PAGE> 9
prior to the time that such other corporation shall have become a holder of
more than 5% of the outstanding shares of stock of the Corporation entitled to
vote in elections of directors; or (ii) any merger or consolidation of the
Corporation with, or any sale or lease to the Corporation or any subsidiary
thereof of any of the assets of, any corporation of which a majority of the
outstanding share of all classes of stock entitled to vote in elections of
directors is owned of record or beneficially by the Corporation and its
subsidiaries.
No amendment to the Certificate of Incorporation of the Corporation
shall amend, alter, change or repeal any of the provisions of this Article
SIXTH unless the amendment affecting such amendment, alteration, change or
repeal shall receive the affirmative vote of the holders of 75% of all classes
of stock of the Corporation entitled to vote in elections of directors,
considered for the purpose of this Article SIXTH as one class.
SEVENTH: A Director of this Corporation shall not be liable to the
Corporation or its Stockholders for monetary damages for breach of fiduciary
duty as a Director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law
as the same exists or may hereafter be amended.
8
<PAGE> 1
EXHIBIT 3.(ii)
MAPCO Inc. By-Laws, as amended April 16, 1989
<PAGE> 2
BY-LAWS
(AS AMENDED APRIL 16, 1989)
ARTICLE I
Offices
SECTION 1. The principal office or place of business of the
Corporation in the State of Delaware shall be at 100 West lOth Street,
Wilmington, Delaware 19899.
SECTION 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 1. The annual meetings of stockholders shall be held on such
date and at such time and place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors and
stated in the notice of the meeting or in a duly executed waiver of notice
thereof, at which time the Directors shall be elected as provided in these
By-laws and the Restated Certificate of Incorporation, and any other proper
business may be transacted. At an annual meeting of the stockholders, only
such business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (c) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, if such business
relates to the election of Directors of the Corporation, the procedures in
Article III, Section 1 and 2 must be complied with. If such business relates
to any other matter, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation, not less than 60 days nor more than 90 days prior
to the meeting; provided, however, that in the event that less than 70 days'
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the date on which
such notice of the date of the meeting was mailed or such public disclosure was
made. A stockholder's notice to the Secretary shall set forth as to each
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matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Notwithstanding anything in the By-laws
to the contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 1. The chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting in accordance with
the provisions of this Section 1, and if he should so determine, the chairman
shall so declare to the meeting that any such business not properly brought
before the meeting shall not be transacted.
SECTION 2. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Restated Certificate
of Incorporation, may be called at any time by the Chairman of the Board or by
resolution of the Board of Directors. Special meetings of the stockholders may
be held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of meeting or duly executed waiver thereof.
SECTION 3. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice. The chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 3, and if he should so determine, the chairman shall
so declare to the meeting that any business not brought before the meeting
shall not be transacted.
SECTION 4. Written notice of the annual or special meeting shall be
given to each stockholder entitled to vote thereat, stating the date, hour,
place and object of the meeting. The written notice shall be provided at least
10 days but not more than 60 days before the date of the meeting, unless
otherwise provided by law.
SECTION 5. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least 10 days before every election of
Directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder for any purpose germane to the meeting,
during ordinary business hours, for a period of at least
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10 days prior to the election, either at a place within the city, town or
village where the election is to be held and which place shall be specified in
the notice of the meeting, or, if not specified, at the place where such
meeting is to be held, and the list shall be produced and kept at the time and
place of election during the whole time thereof, and subject to the inspection
of any stockholder who may be present.
SECTION 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Restated Certificate of Incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, a majority in number
of the shares of the stockholders, present in person or represented by proxy,
shall have power to adjourn the meeting from time to time without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified.
SECTION 7. At all meetings of the stockholders, the Chairman of the
Board, or in his absence the President, or in the absence of both a person
chosen by the Board of Directors, shall act as chairman of the meeting and the
Secretary of the Corporation, or in his absence an Assistant Secretary or in
the absence of the Secretary and all Assistant Secretaries any person appointed
by the chairman of the meeting, shall act as secretary of the meeting.
SECTION 8. Each stockholder of record entitled to vote in accordance
with the laws of the State of Delaware, the Restated Certificate of
Incorporation, or other certificate filed pursuant to law, and these By-laws,
shall be entitled at every meeting of the stockholders of the Corporation to
one vote for each share of stock entitled to vote standing in his name on the
books of the Corporation.
SECTION 9. Each stockholder may vote by proxy but no proxy shall be
voted after three years from its date except as otherwise provided by the laws
of the State of Delaware.
SECTION 10. Persons holding stock in a fiduciary capacity shall be
entitled to vote the shares so held, and persons whose stock is pledged shall
be entitled to vote, unless in the transfer by the pledgor on the books of the
Corporation he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee or his proxy may represent said stock and vote thereon.
SECTION 11. The vote upon any question before a meeting of
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the stockholders need not be by ballot, unless the same is demanded by a
stockholder or is otherwise required by law. When a quorum is present at any
meeting the vote of the holders of a majority of the stock having voting power,
present in person or represented by proxy, shall decide any questions brought
before such meeting unless the question is one upon which, by express provision
of law or of the Restated Certificate of Incorporation or by these By-Laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question. With respect to the election of
Directors, each stockholder entitled to vote shall have the right to vote for
as many candidates as there are positions on the Board to be filled and to cast
one vote, but only one vote, for each such candidate of his choice. A vote
cast in favor of the election of candidates named in any proxy shall be deemed
and treated as one vote cast in favor of each such candidate. The candidate or
several candidates, up to the number of positions on the Board to be filled,
receiving the highest number of votes shall be elected to serve as Directors
during the ensuing year and until the election of their respective successors.
SECTION 12. Action Without a Meeting.
(a) Unless otherwise provided in the Restated Certificate of
Incorporation, any action to be taken at any annual or special meeting
of the stockholder of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the actions so taken, shall be
signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take
such action at a meeting in which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate
written consent shall be given to those stockholders who have not
consented in writing.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless,
within 60 days of the earliest dated consent delivered to the
Corporation, written consents signed by a sufficient number of holders
to take action are delivered to the Corporation.
(c) The record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be
fixed by the Board of Directors. Any stockholder seeking to have the
stockholders authorize or take corporate action by written consent
without a meeting shall, by written notice to the Chairman of the
Board or the
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President of the Corporation, request the Board of Directors to fix a
record date. Upon receipt of such a request, the Chairman of the
Board or the President of the Corporation shall, as promptly as
practicable, call a special meeting of the Board of Directors to be
held as promptly as practicable, but in any event not more than 10
days following the date of receipt for such a request. At such a
meeting, the Board of Directors shall fix a record date which record
date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall
not be more than 10 days after the date that the resolution fixing the
record date is adopted by the Board of Directors. Notice of the
record date shall be published in accordance with the rules and
policies of the National Association of Securities Dealers, Inc. If
no record date has been so fixed by the Board of Directors, the record
date for determining the stockholders entitled to consent to corporate
action in writing without a meeting, where no prior action by the
Board of Directors is required by the Delaware General Corporation
Law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation. If no date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by the Delaware
General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting
shall be at the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
(d) In the event of the delivery to the Corporation of a
written consent or consents purporting to represent the requisite
voting power to authorize or take corporate action and/or related
revocations, the Secretary of the Corporation shall provide for the
safekeeping of such consents and revocations and shall, as promptly as
practicable, engage independent inspectors for the purpose of promptly
performing a ministerial review of the validity of the consents and
revocations. No action by a written consent without a meeting shall
be effective until such inspectors have completed their review,
determined that the requisite number of ballots and unrevoked consents
has been obtained to authorize or take actions specified in the
consents and certifies such determination for entry in the records of
the Corporation for the purpose of recording the proceedings of
meetings of the stockholders.
(e) For purposes of this Section 12, delivery to the
Corporation shall be effected by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which
proceedings of meetings of
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stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail,
return receipt requested.
ARTICLE III
Directors
SECTION 1. The business and property of the Corporation shall be
managed and controlled by the Board of Directors. The number of Directors
shall be not less than three nor more than 12, the exact number thereof within
such limitations to be fixed from time to time by resolution adopted by a
majority of the entire Board of Directors, and such exact number shall be nine
unless otherwise determined by resolution adopted by a majority of the entire
Board of Directors. As used in this Section, "entire Board" means the total
number of Directors which the Corporation would have if there were no vacancies
as such number is fixed by resolution of the Board of Directors. In the event
that the Board of Directors is increased by such a resolution, the vacancy or
vacancies so resulting shall be filled by a vote of the majority of the
Directors then in office. No decrease in number in the Board of Directors
shall shorten the term of any incumbent Directors. Each Director shall hold
office until his successor is elected and qualified or until his earlier
resignation or removal.
The Board of Directors shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class
expiring at the Annual Meeting of Stockholders in 1980, the second class
expiring at the Annual Meeting of Stockholders in 1981, and the third class
expiring at the Annual Meeting of Stockholders in 1982.
At each Annual Meeting of Stockholders, commencing with the 1980
Annual Meeting, successors to Directors of the class whose terms then expire
shall be elected to hold office for a term expiring at the third succeeding
Annual Meeting of Stockholders. Elections of Directors need not be by ballot,
unless a ballot is demanded by any stockholder or is otherwise required by law.
When the number of Directors is changed, any newly created directorships or any
decrease in directorships shall be so apportioned among the classes as to make
all classes as nearly equal in number as possible, and to the extent of any
difference in number within the limit of the foregoing, the class or classes
caused to have the greatest number of Directors shall be the class or classes
then having the last date or later dates for the expiration of its or their
terms. Nominations for election to the Board of Directors of the Corporation
at a meeting of stockholders may be made by the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of Directors
at such meeting.
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Such nominations, other than those made by or on behalf of the Board of
Directors, shall be made by notice in writing delivered or mailed by first
class United States mail, postage prepaid, to the Nominating Committee of the
Board of Directors in care of the Secretary of the Corporation, and received
not less than 60 days nor more than 90 days prior to such meeting; provided,
however, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given to stockholders, such nomination shall have been
mailed or delivered to the Nominating Committee of the Board of Directors in
care of the Secretary not later than the close of business on the tenth day
following the day on which the notice of meeting was mailed or such public
disclosure was made. Such notice shall set forth (a) as to each proposed
nominee (i) the name, age, business address and, if known, residence address
of each such nominee, (ii) the principal occupation or employment of each such
nominee, (iii) the number of shares of stock of the Corporation which are
beneficially owned by each such nominee, and (iv) any other information
concerning the nominee that must be disclosed as to nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (including such person's written consent to be named as a
nominee and to serve as a Director if elected); and (b) as to the stockholder
giving the notice (i) the name and address as they appear on the Corporation's
books, of such stockholder and (ii) the class and number of shares of the
Corporation which are beneficially owned by such stockholder. At the request
of the Board of Directors, any person nominated by the Board of Directors for
election as a Director shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
Director of the Corporation unless nominated in accordance with the procedures
set forth in this Section 1 of these By-laws. The chairman of the meeting may,
if the facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
Notwithstanding the foregoing, whenever the holders of any Preferred
Stock, as provided in the Restated Certificate of Incorporation or in any
resolution or resolutions of the Board of Directors establishing any such
Preferred Stock, shall have the right, voting as a class, to elect Directors at
the Annual Meeting of Stockholders, the then authorized number of Directors of
the Corporation may be increased by such number as may be therein provided, and
at such meeting the holders of such Preferred Stock shall be entitled to elect
the additional Directors so provided for by a vote of the holders of at least a
majority of such Preferred Stock present or so represented at such meeting
voting as a class. Any Directors so elected, unless so re-elected at the
Annual
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Meeting of Stockholders or Special Meeting held in place thereof, next
succeeding the time when the holders of any such Preferred Stock become
entitled to elect Directors as above provided, shall not hold office beyond
such Annual or Special Meeting. This provision shall apply notwithstanding the
maximum number of Directors set forth in the provisions hereinabove.
SECTION 2. Where vacancies occur on the Board of Directors through
death, resignation, disqualification or other cause, and where newly created
directorships result from any increase in the authorized number of Directors,
such vacancies and newly created directorships may be filled by a majority of
the Directors then in office, though less than a quorum, unless so filled by
election by the stockholders at a meeting called for the purpose by notice
given prior to such action by the Directors, and the Directors so chosen shall
hold office until the next election of the class for which such Directors shall
have been chosen and until their successors are duly elected and shall qualify.
Any Director of this Corporation may resign at any time by giving written
notice to the Board of Directors, the Chairman of the Board or the Secretary of
the Corporation. Such resignation shall take effect at the time specified
therein, if any, or if no time is specified therein, then upon receipt of such
notice by the addressee; and, unless otherwise provided therein, the acceptance
of such resignation shall not be necessary to make it effective.
Meetings of the
Board of Directors
SECTION 3. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
SECTION 4. The Board of Directors may meet at such place and time as
they shall determine for the purpose of organization or otherwise. The Board
of Directors may meet immediately after the Annual Meeting of Stockholders and
no notice of such meeting shall be necessary to the Directors in order legally
to constitute the meeting, provided a quorum shall be present, or they may meet
at such time and place as may be fixed by the consent in writing of all of the
Directors, or upon notice as provided in Article IV, Section 1 hereof, or
without notice as provided in Article IV, Section 2 hereof.
SECTION 5. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
SECTION 6. Special meetings of the Board may be called by the
Chairman of the Board or the President on three days' notice to each Director
by mail or on one day's notice if delivered to him
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personally or communicated to him by telephone or by telegram; special meetings
shall be called by the Chairman of the Board or the President or the Secretary
in like manner and on like notice on the written request of a majority of the
Board of Directors.
SECTION 7. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given if all the Directors shall
be present thereat.
SECTION 8. At all meetings of the Board of Directors or any committee
thereof, a majority of the total number of Directors or members of such
committee, as the case may be, but not less than two Directors or committee
members, 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 (or any such committee). If at any meeting of the Board of Directors
(or of any committee thereof) there shall be less than a quorum present, the
majority of those present may adjourn the meeting from time to time without
notice other than announcement at the meeting until a quorum is obtained.
SECTION 9. Unless otherwise restricted by the Restated Certificate of
Incorporation or these By-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee. Unless
otherwise restricted by the Restated Certificate of Incorporation or these
By-laws, any or all members of the Board of Directors, or of any committee
designated by the Board, may participate in a meeting of the Board or of such
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 other, and participation in a meeting pursuant to this
By-law shall constitute presence in person at any such meeting.
Committees of Directors
SECTION 10. There shall be an Executive Committee of the Board of
Directors to consist of three or more of the Directors of the Corporation. The
members, and the Chairman of the Executive Committee, shall be appointed by a
majority of the entire Board and shall hold office at the pleasure of the
Board. The Executive Committee, to the extent allowed by law, shall have and
may exercise all the powers of the Board of Directors (when the Board is not in
session) in the management of the business and affairs of the Corporation (and
may authorize the seal of the Corporation to be affixed to all papers which may
require it) except that the
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Executive Committee shall have no power to (a) elect Directors; (b) alter,
amend or repeal these By-laws; (c) declare any dividend or make any other
distribution to the stockholders of the Corporation; (d) appoint any member of
any Board Committee; or (e) authorize any merger or consolidation, or sale,
lease or encumbrance of all or substantially all the assets, of the
Corporation, or any acquisition by the Corporation of all or substantially all
of the business or assets of any other corporation or entity. Regular meetings
of the Executive Committee shall be held at such time and place as the
Committee may determine, and special meetings may be called at any time by any
officer or any member of the Committee. Notice of each meeting of the
Executive Committee shall be given (or waived) in the same manner as notice for
a Directors' meeting, and a majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business. The Executive
Committee may appoint a secretary who need not be a member of the Committee.
SECTION 11. In addition to the Executive Committee provided for by
Section 10 of this Article III, the Board of Directors may, by resolution
passed by a majority of the entire Board, designate one or more committees,
each committee to consist of three or more of the Directors which, to the
extent provided in the resolution, but not in derogation of the powers of the
Executive Committee, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of
Directors.
SECTION 12. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
Compensation of Directors
SECTION 13. The Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors and/or a stated
monthly fee as Director as may be so fixed by said Board of Directors. No
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may, in addition, be allowed compensation for attending committee
meetings.
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Interested Directors
SECTION 14. No contract or transaction between the Corporation and
one or more of its directors or officers, or between the Corporation and any
other corporation, partnership, association, or other organization in which one
or more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose
if (i) the material facts as to his or their relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE IV
Notices
SECTION 1. Notices to stockholders shall be in writing and delivered
personally or mailed to the stockholders at their addresses appearing on the
books of the Corporation. Notices to Directors may be in writing and delivered
personally or by telephone, or by telegram or mail at their addresses appearing
on the books of the Corporation. Notice by mail shall be deemed to be given at
the time when the same shall be mailed.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statute or of the Restated Certificate of Incorporation or of
these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
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ARTICLE V
Officers
SECTION 1. The officers of the Corporation shall be a Chairman of the
Board of Directors, whose title shall be Chairman of the Board, a President,
one or more Executive Vice Presidents, one or more Senior Vice Presidents, one
or more Vice Presidents, a Secretary, a Treasurer and a Controller, and such
other officers as may be appointed in accordance with the provisions of Section
3 of this Article. Two or more offices may be held by the same person, except
that the same person shall not be Chairman of the Board and an Executive Vice
President, a Senior Vice President, Treasurer or a Vice President and the same
person shall not be President, and an Executive Vice President, a Senior Vice
President, Treasurer or a Vice President. Without limiting the generality of
the foregoing, the same person may be Chairman of the Board and President, but
neither the Chairman of the Board nor the President shall also be the Treasurer
of the Corporation.
SECTION 2. The officers of the Corporation shall be elected annually
by the Board of Directors. Election of officers need not be by ballot. The
President shall be a Director. Each officer, except such officers as may be
appointed in accordance with the provision of Section 3 of this Article, shall
continue in office until his successor shall have been duly elected or
appointed and qualified in his stead, or until he shall resign, or shall have
been removed by the Board.
SECTION 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary, including one or more Assistant Secretaries,
one or more Assistant Treasurers and one or more Assistant Controllers, 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.
SECTION 4. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
SECTION 5. Any officer elected or appointed by the Board of Directors
may be removed at any time by the affirmative vote of a majority of the Board
of Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
Chief Executive Officer
SECTION 6. Either the Chairman of the Board or the President may be
designated by the Board of Directors to be the Chief Executive officer of the
Corporation. The individual so designated will have the final responsibility,
subject to the control of the
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Board, for the control and direction of the Corporation. The Chief Executive
Officer shall see that all orders and resolutions of the Board of Directors are
carried into effect. In the absence of such designation by the Board, the
Chairman of the Board shall be deemed to have such responsibility.
Chief Operating Officer
SECTION 7. Either the President or another officer of the Corporation
may be designated by the Board of Directors to be the Chief Operating Officer
of the Corporation, and the person so designated shall have direct
responsibility and authority for the day-to-day operation of the business of
the Corporation, subject to the control of the Chief Executive Officer and the
Board of Directors. In the absence of such designation by the Board, the
President shall be deemed to have such responsibility.
Chairman of the Board
SECTION 8. The Chairman of the Board, when he is not also the Chief
Executive Officer, shall upon request advise, counsel and assist the Chief
Executive Officer in every way practicable. He shall, if present, preside at
all meetings of the stockholders and the Board of Directors.
President
SECTION 9. The President may be designated either the Chief Executive
Officer or the Chief Operating Officer. If the President has been designated
the Chief Operating Officer of the Corporation, the President, in addition to
his duties as Chief Operating Officer for the day-to-day operation of the
business of the Corporation, shall report to and assist the Chairman in
carrying out the Chairman's Chief Executive Officer function, as directed. If
the President has been designated by the Board as the Chief Executive Officer,
he shall discharge that function, subject to the control of the Board, as set
forth in Section 6. In the absence of the Chairman, the President shall
preside at stockholder and Board of Director meetings.
Administrative Powers of the Chairman
of the Board and the President
SECTION 10. The Chairman of the Board and the President each may
sign, with the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, certificates for shares of stock of the Corporation; and
each may sign, execute and deliver in the name of the Corporation all deeds,
mortgages, bonds, agreements, documents, contracts or other instruments
authorized by the Board of Directors except in cases where the signing,
execution
<PAGE> 15
-14-
or delivery thereof shall be expressly delegated by the Board of Directors or
by these By-laws to some other officer or agent of the Corporation or where any
thereof shall be required by law otherwise to be signed, executed and
delivered, and each may affix the seal of the Corporation to any instrument
which shall require it. Each shall perform such other duties as may from time
to time be assigned to him by the Board of Directors or by these By-laws and,
in general, shall perform all duties incident to the office of Chairman of the
Board or President, whichever is applicable.
Other Officers
SECTION 11. The Executive Vice President and the Senior Vice
President, or, in each case, if there shall be more than one, the Executive
Vice Presidents and the Senior Vice Presidents, and the Vice President, or, if
there shall be more than one, the Vice Presidents, shall perform such duties as
from time to time may be assigned to them by the Chairman of the Board,
President or the Board of Directors.
The Secretary and Assistant Secretaries
SECTION 12. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings
of the meetings of the Corporation and of the Board of Directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, due notice of
all meetings of the stockholders and special meetings of the Board of Directors
and all other notices as required by these By-laws, and shall perform such
other duties as may be prescribed by the Board of Directors or the Senior Vice
President and General Counsel, under whose supervision he shall be. He shall
keep in safe custody the seal of the Corporation and, when necessary or
appropriate, 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 13. Any Assistant Secretary, or if there be more than one,
the Assistant Secretaries in the order determined by the Board of Directors,
shall in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
The Treasurer and Assistant Treasurers
SECTION 14. 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
moneys and other valuable effects
<PAGE> 16
-15-
in the name and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors.
SECTION 15. He shall be under the direction of and report to the
Senior Vice President and Chief Financial Officer and shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall, when the Board of Directors so
requires, render to the President and the Board of Directors, at its regular or
special meetings, an account of all his transactions as Treasurer.
SECTION 16. If required by the Board of Directors, he shall give the
Corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his office and for the
restoration to 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 17. The Senior Vice President and Chief Financial Officer or
any Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board of Directors shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Controller
SECTION 18. The Controller shall be under the direction of and report
to the Senior Vice President and Chief Financial Officer and he shall supervise
and maintain all accounting and related records of the Corporation, prepare
financial statements and related reports, determine that adequate audits of
accounts and records of the Corporation are currently and regularly made,
prepare and interpret such statistical records and reports as may be required
by the Senior Vice President and Chief Financial Officer, the Chairman of the
Board, the President, or the Board of Directors. The Controller shall also
initiate, prepare and issue standard practices relating to accounting matters
and procedures, including clerical and office methods, records, reports and
procedures.
<PAGE> 17
-16-
ARTICLE VI
Certificate of Stock
SECTION 1. Every holder of stock in the Corporation shall be entitled
to have a certificate signed by, or in the name of the Corporation by the
Chairman of the Board, the President or a Vice President, and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the Corporation.
SECTION 2. If such certificate is countersigned (1) by a transfer
agent other than the Corporation, or (2) by a registrar other than the
Corporation, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued,
it may be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Lost Certificates
SECTION 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost or destroyed,
upon receipt of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the Board of Directors may in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
give the Corporation a bond in such sum and with such sureties as it may direct
as indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost or destroyed.
Transfers of Stock
SECTION 4. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Record Date
SECTION 5. The Board of Directors may fix in advance a date, not
exceeding 60 days and not less than 10 days preceding the date
<PAGE> 18
-17-
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 in connection with
obtaining the express consent to corporate action in writing without a meeting,
as a record date for the determination of the stockholders entitled to notice
of, and to vote at, any such meeting, and any adjournment thereof, 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 to give such written consent and in such case such
stockholders and 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 payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give
such consent, 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,
provided, however, that when a stockholder has requested to have a record date
fixed in connection with such stockholder's seeking to have action taken by
written consent, the procedures set forth in Article II, Section 12(c) of these
By-laws shall apply to the extent inconsistent with this Article VI, Section 5.
Registered Stockholders
SECTION 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and 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 otherwise provided by the laws of
Delaware.
ARTICLE VII
Checks, Demands, Deposits, etc.
SECTION 1. The Board of Directors, except as otherwise provided in
these By-laws, may authorize any officer or officers, agent or agents, in the
name of and on behalf of the Corporation, to enter into any contract or execute
and deliver any instrument or to sign checks, demands, drafts or other orders
for the payment of money, notes or other evidences of indebtedness and such
authority may be general or confined to specific instances.
SECTION 2. All funds of the Corporation shall be deposited
<PAGE> 19
-18-
from time to time to the credit of the Corporation in such banks or
depositories as the Board of Directors or its duly authorized officer or
officers, agent or agents may select.
ARTICLE VIII
Indemnification
SECTION 1. The Corporation shall indemnify and advance expenses to,
in the manner and to the full extent permitted by law, any person (or the
estate of any person) who was or is a party to, or is threatened to be made a
party to, any threatened, pending or completed action, suit or proceeding,
whether or not by or in the right of the Corporation, and whether civil,
criminal, administrative, investigative or otherwise, by reason of (or arising
in part out of) the fact that such person is or was a director, officer,
employee or fiduciary of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee, trustee or fiduciary of
another corporation, partnership, joint venture, trust or other enterprise.
Unless otherwise permitted by law, the indemnification provided for herein
shall be made only as authorized in the specific case upon a determination, in
the manner provided by law, that indemnification of or advance of expenses to
the director, officer, employee or fiduciary is proper in the circumstances.
The Corporation may, to the full extent permitted by law, purchase and maintain
insurance on behalf of any such person against any liability which may be
asserted against him or her. To the full extent permitted by law, the
indemnification provided herein shall include expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement of an action, suit or
proceeding. The indemnification provided herein shall not be deemed to limit
the right of the Corporation to indemnify any other person for any such
expenses to the full extent permitted by law, nor shall it be deemed exclusive
of any other rights to which any person seeking indemnification from the
Corporation may be entitled under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office. If any provision of this Article VIII shall be held invalid, the
remaining provisions hereof shall remain in full force and effect and shall not
be affected thereby.
<PAGE> 20
-19-
ARTICLE IX
General Provisions
Dividends
SECTION 1. Dividends upon the capital stock of the Corporation
subject to the provisions of the Restated Certificate of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Restated Certificate of
Incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out
of any funds of the Corporation available for dividends such sum or sums as the
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purposes as the Directors shall think conducive to the interests of the
Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
Fiscal Year
SECTION 3. The fiscal year of the Corporation shall correspond with
the calendar year.
Seal
SECTION 4. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE X
Amendments
SECTION 1. Any of these By-laws may be amended or repealed by the
stockholders or the Board of Directors, at any regular or special meeting
thereof, if notice of such amendment or repeal is contained in the notice of
such special meeting. Such alteration or repeal shall require the affirmative
vote of the holders of record of a majority of the shares of the outstanding
capital stock of the Corporation, or of a majority of the Board of Directors,
as the case may be, unless provisions of the Restated Certificate of
<PAGE> 21
-20-
Incorporation or these By-laws provide for greater than majority vote.
<PAGE> 1
EXHIBIT 4.(a)
Specimen of Common Stock Certificate
<PAGE> 2
<TABLE>
<S> <C> <C>
COMMON STOCK COMMON STOCK
$ PAR VALUE $ PAR VALUE
NUMBER SHARES
NS SEE REVERSE SIDE
FOR LEGEND
[LOGO]
INCORPORATED UNDER THIS CERTIFICATE IS TRANSFERABLE
THE LAWS OF THE IN THE CITY OF NEW YORK, N.Y.
STATE OF DELAWARE OR IN CHICAGO, ILL.
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 565097 10 2
MAPCO INC.
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Mapco Inc. (hereinafter called the Corporation), transferable on the books of the Corporation by said owner in person or by
duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares
represented hereby are issued and shall be held subject to the provisions of the Certificate of Incorporation and By-Laws
of the Corporation, and all amendments and supplements thereto (copies of which are on file at the office of the
Corporation), to all of which the holder hereof by acceptance of this certificate assents. This Certificate is not valued
unless countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of said Corporation and the facsimile signatures of its duly authorized officers.
DATED:
COUNTERSIGNED AND REGISTERED:
HARRIS TRUST COMPANY OF NEW YORK,
TRANSFER AGENT
BY AND REGISTRAR,
CHAIRMAN OF THE BOARD
SECRETARY AUTHORIZED SIGNATURE.
</TABLE>
<PAGE> 3
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement as amended between MAPCO
Inc. (the "Company") and Harris Trust Company of New York (the "Rights Agent")
dated as of June 12, 1986, as amended (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this Certificate. The Company
will mail to the holder of this certificate a copy of the Rights Agreement, as
in effect on the date of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associates thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
MAPCO INC.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ...............Custodian.............
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..................................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
RIGHTS. SUCH REQUESTS MAY BE MADE TO THE TRANSFER AGENT.
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________ SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT ____________________________________________
___________________ ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE
WITHIN-NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED, ________________________
X_____________________________________
(Signature)
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S)
AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
X_____________________________________
(Signature)
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN "ELIGIBLE GUARANTOR INSTITUTION"
AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934,
AS AMENDED.
SIGNATURE(S) GUARANTEED BY:
<PAGE> 1
EXHIBIT 4.(h)
Rights Agreement dated as of June 12, 1986
between MAPCO Inc. and Harris Trust Company of New York,
as Amended
<PAGE> 2
________________________________________________________________________________
MAPCO Inc.
and
HARRIS TRUST COMPANY OF NEW YORK
Rights Agent
_______________
Rights Agreement
Dated as of June 12, 1986,
as Amended
________________________________________________________________________________
<PAGE> 3
Table of Contents
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3 Issue of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4 Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5 Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . 8
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 9
7 Exercise of Rights; Purchase
Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . 10
8 Cancellation and Destruction of
Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9 Reservation and Availability of
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10 Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12 Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 30
13 Consolidation, Merger or Sale
or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14 Fractional Rights and Fractional
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15 Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16 Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
17 Rights Certificate Holder Not Deemed
a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
18 Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
19 Merger or Consolidation or Change of
Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
20 Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
21 Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
22 Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . 43
23 Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
24 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
25 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
26 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
27 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
28 Determinations and Actions
by the Board of Directors, etc. . . . . . . . . . . . . . . . . . . . . . . 48
29 Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
30 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
31 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
32 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
33 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
Exhibit A -- Certificate of Designation, Preferences and Rights
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
ii
<PAGE> 5
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 12, 1986 (the "Agreement"), between
MAPCO Inc., a Delaware corporation (the "Company"), and HARRIS TRUST COMPANY OF
NEW YORK, a New York trust company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on June 12, 1986 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, par value $1.00 per
share, of the Company (the "Common Stock") outstanding at the close of business
on July 8, 1986 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date each Right initially representing
the right to purchase one two-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences
and Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan.
(b) "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 amended and in effect
on the date of this Agreement (the "Exchange Act").
<PAGE> 6
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event, or (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether
or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as
2
<PAGE> 7
described in the proviso to subparagraph (ii) of this paragraph (c))
or disposing of any voting securities of the Company.
provided, however, that nothing in this paragraph (c) shall cause a person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment underwriting until
the expiration of forty days after the date of such acquisition.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Stock" shall mean the common stock, par value
$1.00 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, no par value of the Company.
(i) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) (A), (B) or (C) hereof.
(j) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(k) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(l) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
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(m) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the
Stock Acquisition Date occurs before the Record Date, the close of business on
the Record Date), or (ii) the close of business on the tenth business day (or
such later date as may be determined by the Board of Directors of the Company)
after the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any
such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more right
certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Right Certificates,
the Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are
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<PAGE> 9
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding
as of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 7 hereof), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such
shares of Common Stock shall also be deemed to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between MAPCO
Inc. (the "Company") and Harris Trust Company of New York (the "Rights
Agent") dated as of June 12, 1986, as amended (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain circumstances
set forth in the Right Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or any Affiliate or
Associates thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or
by any subsequent holder, may become null and void.
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With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date of (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section
11 and Section 22 hereof, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one two-hundredths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (such
exercise price per one two-hundredth of a share, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) of
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
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<PAGE> 11
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidence on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or
prior to the
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<PAGE> 12
close of business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one two-hundredths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combined or exchanged any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution
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<PAGE> 13
Date upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one two-hundredths of a share (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of (i) the
close of business on July 7, 1996 (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
earlier of (i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one two-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be $175,
and shall be subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one two-hundredth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one two-hundredths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one two-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if
any, to be paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. The
payment of the
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<PAGE> 14
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check or money order payable
to the order of the Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require, prior to the
occurrence of an event described in Section 11(a)(ii) or Section 13(a), that,
upon any exercise of Rights, a minimum number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associated or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
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(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9.Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its
authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
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(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable from such
securities, and (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one two-hundredths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one two-hundredths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number one two-hundredths of a share of Preferred
Stock (or Common Stock
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<PAGE> 17
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number
of one two-hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for a number of one two-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provide, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification
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<PAGE> 18
of the Preferred Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and Section
7(e) hereof, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(k) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and the Common Stock of the Company shall remain
outstanding and unchanged, (1) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its Subsidiaries
in exchange (n whole or in part) for shares of Common Stock, for shares of
other equity securities of the Company, or for securities exercisable for or
convertible into shares of equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company, with or without consideration,
any additional shares of such equity securities or securities exercisable for
or convertible into shares of such equity securities (other than pursuant to a
pro rata distribution to all holders of Common Stock), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions, to, from or with
(as the case may be) the Company or any of its Subsidiaries, assets, on terms
and conditions less favorable to the Company than the Company would be able to
obtain in arm's-length negotiation with an unaffiliated third party, other than
pursuant to a transaction set forth in Section 13(a) hereof, (4) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of in one transaction or a series of transactions, to, from or with (as
the case may be) the
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<PAGE> 19
Company or any of the Company's Subsidiaries (other than incidental to the
lines of business, if any, engaged in as of the date hereof between the Company
and such Acquiring Person or Associate or Affiliate) assets having an aggregate
fair market value of more than $5,000,000, other than pursuant to a transaction
set forth in Section 13(a) hereof, (5) shall receive any compensation from the
Company or any of the Company's Subsidiaries other than compensation for
full-time employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) shall receive the
benefit, directly or indirectly (except proportionately as a stockholder and
except if resulting from a requirement of law or governmental regulation), of
any loans, advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantage provided by the Company or any of its
Subsidiaries, or
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, unless the event causing the 15% threshold to be
crossed is (1) a transaction set forth in Section 13(a) hereof, or (2) is an
acquisition of shares of Common Stock pursuant to a tender offer or an exchange
offer for all outstanding shares of Common Stock at a price and on terms
determined by at least a majority of the members of the Board of Directors who
are not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice from
one or more investment banking firms, to be (a) at a price which is fair to
stockholders (taking into account all factors which such members of the Board
deem relevant including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interest of the Company
and its stockholders, or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation of
the Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section 13(a) apply
(whether or not with or into or otherwise involving an Acquiring Person) which
has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of
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<PAGE> 20
the Company or any of its Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, then, promptly following five (5) days after the date of the
occurrence of an event described in Section 11(a)-(ii)(B) hereof and promptly
following the occurrence of any event described in Section 11(a)(ii)(A) or (C)
hereof, proper provision shall be made so that each holder of a Right (except
as provided below and in Section 7(e) hereof) shall thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
two-hundredths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one two-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the current market price (determined pursuant to Section 11(d) hereof) per
share of Common Stock on the date of such first occurrence (such number of
shares, the "Adjustment Shares").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect
to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares
of Common Stock (such shares of preferred stock, "common stock
equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x)
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<PAGE> 21
the first occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board
of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the
first and/or second sentence of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as the public announcement at
such time as the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of the Common Stock shall be the
current market price (as determined pursuant to Section 11(d) hereof)
per share of the Common Stock on the Section 11(a)(ii) Trigger Date
and the value of any "common stock equivalent" shall be deemed to have
the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of
Preferred Stock ("equivalent preferred stock")) or securities convertible into
Preferred Stock or equivalent preferred stock at a price per share of Preferred
Stock or per share of equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the current market price (as determined pursuant to
17
<PAGE> 22
Section 11(d) hereof) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery of consideration part
or all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidence of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion
of the cash, assets or evidence of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall
18
<PAGE> 23
be such current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices
per share of such Common Stock for the ten (10) consecutive Trading
Days immediately following such date;provided, however, that in the
event that the current market price per share of the Common Stock is
determined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the shares of Common Stock are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in
use, or, if
19
<PAGE> 24
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and the asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an amount
equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalization with
respect to the Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the "current market price" of on
two-hundredth of a share of Preferred Stock shall be equal to the
"current market price" of one share of Preferred Stock divided by 200.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any
20
<PAGE> 25
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one two-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one two-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one two-hundredths
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one two-hundredths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in
21
<PAGE> 26
the number of Rights shall be exercisable for the number of one two-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become the number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one two-hundredths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
two-hundredth of a share and the number of one two-hundredth of a share which
were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the number
of one two-hundredths of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one two-hundredths of
a share of Preferred Stock at such adjusted Purchase Price.
22
<PAGE> 27
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one two-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one two-hundredths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) thereof), (ii) merge with or into any other person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
thereof, or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidated, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such consolidation,
23
<PAGE> 28
merger or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 26
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine the outstanding share of Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjustment Purchase Price or Number of
Shares. Whenever an adjustment is mad as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail
a brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment herein
contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
24
<PAGE> 29
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation for
merger, (y) any Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof) shall consolidate with, or merge with
or into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets,
earning power or cash flow aggregating more than 50% of the assets, earning
power or cash flow of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section 11(o) hereof),
then, and in each such case, except as contemplated by Section 13(d) hereof,
proper provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and issued,
fully paid, non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of one two-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such one
two-hundredths of a share of which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in
effect immediately prior to such first occurrence), and dividing that product
(which, following the first occurrence of a Section 13 Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the current market price (determined pursuant to
Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party
on the date of consummation of such Section 13 Event; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being
25
<PAGE> 30
specifically intended that the provisions of Section 11 hereof shall apply only
to such Principal Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provision of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person
that is the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or
transactions;provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, the Common Stocks of two or
more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any
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consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each of
its Affiliates which comply in all respects with the requirement for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not heretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock, which complies with the provisions of Section 11(a)(ii)(B)(2)
hereof (or a wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transaction is not less than
the price per share of Common Stock paid to all holders of Common Stock whose
shares were purchased pursuant to such tender offer or exchange offer, and
(iii) the form of consideration being offered to the remaining holders of
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to
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the same fraction of the current market value of a whole Right. For purposes
of this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker is
making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than, except as provided in Section 7(c)
hereof, fractions which are integral multiples of one two-hundredth of a share
of Preferred Stock) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of one two-hundredth of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock that are not integral multiples of
one two-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one two-hundredth of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of one two-hundredth of a share
of Preferred Stock shall be one two-hundredth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute
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certificates which evidence fractional shares of Common Stock. In lieu of
factional shares of Common Stock, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of one
(1) share of Common Stock. For purposes of this Section 14(c), the current
market value of one share of Common Stock shall be the closing price of one
share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
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(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
two-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in section 24 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of
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<PAGE> 35
this Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of a predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at the time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver
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<PAGE> 36
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
and the determination of "current market price") be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary of any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement
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or in any Rights Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or Section 13 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice or any such adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however reasonable care was
exercised in the selection and continued employment thereof.
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(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder
of any Rights Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of New
York (or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York),
in good standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers,
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rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights agent and each transfer agent of the
common Stock and the Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all
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but not less than all the then outstanding Rights at a redemption price of $.05
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption
Price"); provided further, however, that if, following the occurrence of a
Stock Acquisition Date and following the expiration of the right of redemption
hereunder but prior to any Triggering Event, (i) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number of shares of
Common Stock in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did not
result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of 10% or less of the outstanding shares of
Common Stock, and (ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons,
then the right of redemption shall be reinstated and thereafter be subject to
the provisions of this Section 23. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company's right
of redemption hereunder has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the "current market
price", as defined in Section 11(d) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights agent and the holders of the then outstanding Rights
by mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make
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any other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
or (ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related transactions, or more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be
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sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
MAPCO Inc.
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Harris Trust Company of New York
110 William Street
New York, New York 10041
Attention: Corporate Trust
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage pre-paid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence. (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
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protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent shall
execute such supplement or amendment; provided, however, that the Rights Agent
may, but shall not be obligated to, enter into any such supplement or amendment
which affects the Rights Agent's own rights, duties or immunities under this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of one two-
hundredths of a share of Preferred Stock for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and
to exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board to any liability to
the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date,
39
<PAGE> 44
registered holders of the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority 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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board (or at a time or with the
concurrence of a group of directors consisting of less than the entire Board)
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, such determination shall then be made by the Board in
accordance with applicable law and the Company's Certificate of Incorporation
and By-laws.
Section 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State, except that the rights and
obligations of the Rights Agent shall be governed by the laws of the State of
New York.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE> 45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
Attest: MAPCO INC.
By /s/ Royse M. Parr By /s/ James E. Barnes
Royse M. Parr James E. Barnes
Secretary Chairman of the Board,
President and Chief
Executive Officer
Attest: HARRIS TRUST COMPANY
OF NEW YORK
By /s/ Philip J. Capellupo By /s/ Dennis A. Mega
Philip J. Capellupo Dennis A. Mega
Assistant Vice Assistant Vice
President President
41
<PAGE> 46
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
MAPCO Inc.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
We, Joseph W. Craft III, Senior Vice President-Legal and Finance, and
Royse M. Parr, Secretary, of MAPCO Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance with
the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the restated Certificate of Incorporation of the said Corporation, the said
Board of Directors on June 12, 1986, adopted the following resolution creating
a series of 200,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Restated
Certificate of Incorporation, a series of Preferred Stock of the corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitation
or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall initially be 200,000, without par value,
such number of shares to be subject to increase or decrease by action of the
Board of Directors as evidenced by a Certificate of Designation, Preference of
Rights.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Junior Participating
<PAGE> 47
Preferred Stock with respect to dividends, the holders of shares of Series A
Junior Participating 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 tenth day of March, June,
September, and December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $20.00 or (b) subject
to the provision for adjustment hereinafter set forth, 200 times the aggregate
per share amount of all cash dividends, and 200 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 or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, par value of $1.00 per share, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after June 12, 1986 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series A Junior Participating 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 A Junior Participating Preferred Stock as provided in paragraph
(A) above 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 Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $20.00 per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the
2
<PAGE> 48
date of issue of such shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date for the
first Quarterly 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 issues is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating 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 A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to [200] votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating 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 or by law, the
holders of shares of Series A Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
3
<PAGE> 49
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal
to six (6) quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the
Series A Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to
elect two (2) Directors.
(ii) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders
of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised
unless the holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of such voting
right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default
period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors or, if such right is exercised
at an annual meeting, to elect two (2) Directors. If the number which
may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be
necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred
Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or paripassu with the Series A Junior
Participating Preferred Stock.
4
<PAGE> 50
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stocking
outstanding, irrespective of series, may request, the calling of
special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to
vote pursuant to this paragraph (C)(iii) shall be given to each holder
of record of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such order
or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of Directors
until the holders of Preferred Stock shall have exercised their right
to elect two (2) Directors voting as a class, after the exercise of
which right (x) the Directors so selected by the holders of Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors
elected by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by
the holders of Preferred Stock as a
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<PAGE> 51
class shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the certificate of incorporation or
by-laws irrespective of any increase made pursuant to the provisions
of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
certificate of incorporation or by-laws). Any vacancies in the Board
of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating 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 A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating 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 on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase
6
<PAGE> 52
or otherwise acquire such shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the
Series A Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series A Junior
Participating 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 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 A Junior
Participating 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 cancellation
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 the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $200 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior
7
<PAGE> 53
thereto, the holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by dividing
(i) the Series A Liquidation Preference by (ii) 200 (as appropriately adjusted
as set forth in subparagraph C below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment 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.
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 exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 200 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
8
<PAGE> 54
Stock is changed or exchanged. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Junior Participating
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 A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as
to the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting as
a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series Junior Participating Preferred Stock.
9
<PAGE> 55
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 7th day
of July, 1986.
MAPCO Inc.
/s/ Joseph W. Craft III
--------------------------------
Joseph W. Craft III
Senior Vice President-Legal
and Finance
Attest:
/s/ Royse M. Parr
- --------------------
Royse M. Parr
Secretary
10
<PAGE> 56
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JULY 7, 1996 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.05 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM
IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
MAPCO Inc.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of June 12, 1986 (the "Rights
Agreement"), between MAPCO Inc., a Delaware corporation (the "Company") and
HARRIS TRUST COMPANY OF NEW YORK, a New York trust company (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 PM (New York
City time) on July 7, 1996 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
two-hundredth of a fully paid, non-assessable share of Series A Junior
Participating Preferred
_______________
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
<PAGE> 57
Stock (the "Preferred Stock") of the Company, at a purchase price of $175 per
one two-hundredth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The Purchase Price shall be paid, at the
election of the holder, in cash or shares of Common Stock of the Company having
an equivalent value. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of ____________ ___, 1986, based on the Preferred Stock
as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
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<PAGE> 58
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events, including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one two-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate
3
<PAGE> 59
or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.05 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the Stock Acquisition Date (as
such time period may be extended pursuant to the Rights Agreement), and (ii)
the Final Expiration Date. After the expiration of the redemption period, the
Company's right of redemption may be reinstated if an Acquiring Person reduces
his beneficial ownership to 10% or less of the outstanding shares of Common
Stock in a transaction or series of transactions not involving the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one two-hundredth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder
4
<PAGE> 60
of shares of Preferred Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________ ___, 19___
ATTEST: __________________________
____________________________ By_____________________
Secretary Title:
Countersigned:
____________________________
By___________________________
Authorized Signature
5
<PAGE> 61
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells, assigns
and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________ Attorney, to
transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________________, 19___
________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
<PAGE> 62
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _______________, 19___ ___________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 63
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate)
To: MAPCO Inc.
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: ______________________, 19___
______________________________
Signature
Signature Guaranteed:
<PAGE> 64
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________, 19___ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE> 65
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On June 12, 1986, the Board of Directors of MAPCO Inc. (the "Company")
declared a dividend distribution of one Right for each outstanding share of
MAPCO Common Stock to stockholders of record at the close of business on July
8, 1986 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company a unit consisting of one two-hundredth of a share (a
"Unit") of Series A Junior Participating Preferred Stock, without par value
(the "Preferred Stock") at a Purchase Price of $175 per Unit, subject to
adjustment. The Purchase Price may be paid, at the option of the holder, in
cash or shares of Common Stock having a value at the time of exercise equal to
the Purchase Price. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and Harris Trust
Company of New York, as Rights Agent.
Stockholders are not required nor permitted to take any action on or
after the Record Date with respect to the Rights until such time as the
Distribution Date has occurred. The Rights are not exercisable until the
Distribution Date.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days following
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 30% or more of such outstanding shares of
Common Stock. Until the Distribution Date, (i) the Rights will be evidenced by
the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after July
8, 1986 will contain a notation incorporating the Rights Agreement by reference
and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on July 7, 1996, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
<PAGE> 66
Stock as of the close of business on the Distribution Date and, thereafter, the
separate Rights Certificates alone will represent the Rights. Except as
otherwise determined by the Board of Directors, and except in certain other
circumstances specified in the Rights Agreement, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution Date, (i)
the Company is the surviving corporation in a merger with an Acquiring Person
and its Common Stock is not changed or exchanged, (ii) a Person becomes the
beneficial owner of more than 30% of the then outstanding shares of Common
Stock, except under certain circumstances described in the Plan relating to a
tender offer or exchange offer for all outstanding shares of Common Stock,
(iii) an Acquiring Person engages in one or more "self-dealing" transactions as
set forth in the Rights Agreement, or (iv) during such time as there is an
Acquiring Person, an event occurs which results in such Acquiring Person's
ownership interest being increased by more than 1% (e.g., a reverse stock
split), each holder of a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. Notwithstanding any of the foregoing, following the occurrence
of any of the events set forth in this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of either of the events set
forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
For example, at an exercise price of $175 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $350
worth of Common Stock (or other consideration, as noted above) for $175.
Assuming that the Common Stock had a per share value of $50 at such time, the
holder of each valid Right would be entitled to purchase seven shares of Common
Stock for $175.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger described in subparagraph (i) of the second preceding paragraph, or a
merger which follows a tender offer or exchange offer for all outstanding
shares of Common Stock described in subparagraph (ii) of the second preceding
paragraph), or (ii) 50% or more of Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to
2
<PAGE> 67
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the right. The events set forth in
this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification or, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities
at less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. In addition, to the extent that the Company does not have sufficient
shares of Common Stock issuable upon exercise of the Rights following the
occurrence of a Triggering Event, the Company may, under certain circumstances,
reduce the Purchase Price. No fractional Units will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.05 per
Right. After the redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
the Rights will terminate and the only right of the holders of Rights will be
to receive the $.05 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.
3
<PAGE> 68
Other than those provisions relating to the principal economic terms
of the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
July 1, 1986. A copy of the Rights Agreement is available free of charge from
the Rights Agent. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
4
<PAGE> 1
EXHIBIT 4.(i)
Note Agreement dated as of June 16, 1989
between MAPCO Inc. and IDS Life Insurance Company of New York,
American Enterprise Life Insurance Company, et al.
<PAGE> 2
MAPCO INC.
NOTE AGREEMENT
Dated as of June 16, 1989
$85,000,000
8.51% ESOP Notes due December 31, 2003
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . 1
1.1 Issue of Notes . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Closing Conditions . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Required Installments Payments . . . . . . . . . . . . . . . . 4
2.2 Optional Prepayments .... . . . . . . . . . . . . . . . . . . 5
2.3 Partial Payments Pro Rata . . . . . . . . . . . . . . . . . . 5
Section 3. DOWNGRADE EVENTS, ETC . . . . . . . . . . . . . . . . . . . 6
3.1 Rate Changes in Case of Change
in Credit Ratings, Etc. . . . . . . . . . . . . . . . . . . 6
3.2 Required Purchases in Case of
Change in Credit Ratings, Etc. . . . . . . . . . . . . . . . 6
3.3 Other Purchases . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 9
4.1 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Organization; Qualification . . . . . . . . . . . . . . . . 10
4.3 Legal and Authorized Sale . . . . . . . . . . . . . . . . . 10
4.4 Governmental Consent . . . . . . . . . . . . . . . . . . . . 11
4.5 Actions Pending . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Title to Properties . . . . . . . . . . . . . . . . . . . . 11
4.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Conflicting Agreements and
Other Matters . . . . . . . . . . . . . . . . . . . . . . 11
4.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Qualifying Shares, Etc. . . . . . . . . . . . . . . . . . . 13
4.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 14
4.12 Private Offering . . . . . . . . . . . . . . . . . . . . . . 14
4.13 ESOPs . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 ESOP Documents . . . . . . . . . . . . . . . . . . . . . . . 15
4.15 Pollution and Other Regulations . . . . . . . . . . . . . . 15
4.16 Public Utility Holding Company Act . . . . . . . . . . . . . 15
Section 5. INFORMATION AS TO COMPANY, ETC. . . . . . . . . . . . . . . 15
5.1 Financial and Business
Information . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Officer's Certificates . . . . . . . . . . . . . . . . . . . 17
5.3 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Private Credit Rating . . . . . . . . . . . . . . . . . . . 18
5.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
(i)
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 6. COMPANY BUSINESS COVENANTS . . . . . . . . . . . . . . . . . 19
6.1 Liens and Encumbrances . . . . . . . . . . . . . . . . . . . 19
6.2 Sale and Lease-Back . . . . . . . . . . . . . . . . . . . . 22
6.3 Merger and Consolidation . . . . . . . . . . . . . . . . . . 23
6.4 Corporate Existence, etc.
Business . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Payments of Taxes and Claims . . . . . . . . . . . . . . . . 24
6.6 Maintenance of Properties;
Insurance . . . . . . . . . . . . . . . . . . . . . . . . 24
6.7 Compliance with ERISA . . . . . . . . . . . . . . . . . . . 24
6.8 ESOP Existence . . . . . . . . . . . . . . . . . . . . . . . 25
6.9 Prohibition Against ESOP Merger . . . . . . . . . . . . . . 26
6.10 Assignment of ESOP Notes . . . . . . . . . . . . . . . . . . 26
Section 7. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.1 Nature of Default . . . . . . . . . . . . . . . . . . . . . 26
7.2 Default Remedies . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8. TAX PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Interest Rate Adjustment; Tax
Disallowances . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Determination of Taxability . . . . . . . . . . . . . . . . 35
8.3 Contest of Tax . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Request for Qualifying Opinion
of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 40
8.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . 40
Section 9. INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . . . . 41
9.1 Terms Defined . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Directly or Indirectly . . . . . . . . . . . . . . . . . . . 49
9.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10. PURCHASER'S SPECIAL RIGHTS . . . . . . . . . . . . . . . . . 49
10.1 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . 49
10.2 Issue Taxes . . . . . . . . . . . . . . . . . . . . . . . . 49
10.3 Registration of Notes . . . . . . . . . . . . . . . . . . . 49
10.4 Exchange of Notes . . . . . . . . . . . . . . . . . . . . . 49
10.5 Replacement of Notes . . . . . . . . . . . . . . . . . . . . 50
Section 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 50
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.2 Reproduction of Documents. . . . . . . . . . . . . . . . . . 51
11.3 Purchase for Investment; Source
of Funds . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
(ii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
11.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . 52
11.5 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . 52
11.6 Duplicate Originals . . . . . . . . . . . . . . . . . . . . 52
11.7 Survival of Covenants and
Representations; Survival of
Indemnification . . . . . . . . . . . . . . . . . . . . . 52
11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . 52
Attachment A -- Payment and Communications
Attachment B -- Form of 8.51% ESOP Note due December 31, 2003
Attachment C-1 -- Form of Company Special Counsel's Closing Opinion
Attachment C-2 -- Form of Company General Counsel's Closing Opinion
Attachment D -- Form of Special Counsel's Closing Opinion
Attachment E-1 -- Form of Trustee Counsel's Closing Opinion (Hall, Estill, Hardwick, Gable, Golden Nelson)
Attachment E-2 -- Form of Trustee Counsel's Closing Opinion (Robinson, Boese, Orbison & Lewis)
</TABLE>
(iii)
<PAGE> 6
MAPCO INC.
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
NOTE AGREEMENT
$85,000,000
8.51% ESOP Notes due December 31, 2003
Dated as of June 16, 1989
To each of the institutions
listed on Attachment A:
Dear Purchaser:
Mapco Inc., a Delaware corporation (the "Company"), hereby agrees with
you as follows:
SECTION 1. PURCHASE AND SALE OF NOTES
1.1 Issue of Notes. The Company has authorized the issue of
$85,000,000 principal amount of its 8.51% ESOP Notes due December 31, 2003 (the
"Notes"). The Notes shall be dated the date of issue thereof, shall bear
interest on the unpaid principal balances thereof from the date thereof until
the principal balance thereof shall become due and payable at a rate of 8.51%
per annum (the "Initial Coupon Rate") (subject to the provisions of section 8)
and on overdue principal, premium, if any, and interest at the rate specified
therein, which Notes, when issued, sold and delivered pursuant to this
Agreement, will be substantially in the form of Attachment B. Interest on the
Notes shall accrue at the rate per annum specified above (subject to the
provisions of section 8), which interest will be payable as provided in
Attachment B and be computed based on a 360-day year composed of 12 months of
30 days each. Contemporaneously with entering into this Agreement, the Company
is entering into separate Note Agreements (as amended or modified from time to
time, the "Other Agreements") identical to this Agreement with each of the
other institutions named in Attachment A, providing for the sale to each of
such other institutions of Notes in the respective principal amounts specified
opposite their names in Attachment A.
1.2 The Closing. The Company agrees to sell to you and you agree
to purchase from the Company, in accordance with the provisions of this
Agreement, the principal amount of the Notes shown opposite your name on
Attachment A, at par. The closing of your purchase will be held on June 16,
1989 (the "Closing Date") at the offices of Willkie Farr & Gallagher, New York,
New York 10022. On the Closing Date, the Company will deliver to you, unless
you otherwise request, a single Note in the principal amount of your purchase,
dated the Closing Date and registered in your name or in the name of a nominee
designated by you, against payment in immediately available funds.
1.3 Expenses. Whether or not the Notes are sold, the Company will
pay all reasonable expenses relating to this Agreement, including the cost of
reproducing this Agreement and the Notes, the reasonable fees and disbursements
of your special counsel, the
<PAGE> 7
costs of obtaining a private placement number and all reasonable costs related
to modifications of or consents under this Agreement.
1.4 Closing Conditions. Your obligation to purchase the Notes at
the closing is subject to the satisfaction of all of the conditions precedent
set forth below:
(a) Opinions of Counsel -- You shall have received from Debevoise
& Plimpton, special counsel to the Company, David W. Bowman, Senior Vice
President and General Counsel of the Company, Willkie Farr & Gallagher, your
special counsel, Hall, Estill, Hardwick, Gable, Golden & Nelson, special
counsel to the Trustee, and Robinson, Boese, Orbison & Lewis, special counsel
to the Trustee, the closing opinions substantially in the forms of Attachments
C-1, C-2, D, E-1 and E-2,respectively, each addressed to you and dated the
Closing Date. To the extent that any opinion referred to above is rendered in
reliance upon the opinion of any other counsel, you shall have received a copy
of the opinion of such other counsel dated the Closing Date and addressed to
you, or a letter from such other counsel, dated the Closing Date and addressed
to you, authorizing you to rely on such other counsel's opinion.
(b) Representations and Warranties; No Default -- The
representations and warranties of the Company contained in this Agreement shall
be true when made and on the Closing Date in all material respects, and there
shall exist on the Closing Date and after giving effect to the transactions
contemplated hereby, no Event of Default or Default. On the Closing Date, the
Company shall have delivered to you a certificate signed by an Assistant
Secretary and the Treasurer of the Company, dated the Closing Date, to all such
effects and further to the effect as to the satisfaction of the conditions set
forth in section 1.4(d).
(c) Purchase Permitted by Applicable Laws -- Your purchase of and
payment for the Notes to be purchased by you hereunder shall not be prohibited
by any applicable law or governmental regulation (including, without
limitation, Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System) or result in a violation of any order of any court or
governmental body applicable to you (or any of your employees, directors or
affiliates) and shall not subject you to any tax, penalty, liability, or other
onerous condition under or pursuant to any applicable law or governmental
regulation or order, and you shall have received such certificates or other
evidence as you may request to establish compliance with this condition.
(d) ESOP Transactions -- Prior to the closing, you shall have
received a true and correct copy of all agreements and instruments relating to
the ESOP Transactions, including without limitation each of the ESOP Documents
and any other documents governing the terms or administration of the ESOPs, and
all the terms and provisions thereof shall be satisfactory to you in form and
substance and shall contain no term thereof (including schedules and exhibits
thereto) to which you object; all such agreements, documents and instruments
shall be in full force and effect and no term or condition thereof shall have
been amended, modified or waived except with your prior consent; appropriate
determinations satisfactory to you shall have been made establishing the
absence of a non-exempt "prohibited transaction" as such term is defined in
Section 406 of ERISA or Section 4975 of
2
<PAGE> 8
the Code; and the ESOP Transactions shall be duly and validly consummated
concurrently with the closing hereunder. Except as affected by the
transactions contemplated hereby, all conditions precedent to the consummation
of the transactions contemplated by the ESOP Documents shall have occurred, all
governmental authorizations, consents, approvals, exemptions or other actions
required in connection with such transactions shall have been duly received and
such transactions shall have been consummated substantially in accordance with
the terms of such documents.
(e) Compliance with Securities Laws -- The offering and sale of
the Notes under this Agreement shall have complied with all applicable
requirements of Federal and state securities laws and you shall have received
evidence of such compliance in form and substance satisfactory to you at the
closing.
(f) Approvals and Consents -- The Company shall have duly received
all authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of, all Federal, state and local governmental authorities
necessary for the issuance of the Notes pursuant to this Agreement and the
consummation of the ESOP Transactions pursuant to the ESOP Documents
("Approvals and Consents"), and all such Approvals and Consents shall be in
full force and effect at the time of the closing and shall be effective to
permit such issuance and such consummation, and at the closing you shall have
received such certificates or other evidence as you may request to establish
compliance with this condition.
(g) Proceedings -- All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby, and all
documents incident thereto shall be satisfactory in form and substance to you
and your special counsel, and at the closing you and your special counsel shall
have received all such counterpart originals or certified or other copies of
such documents as you or they may reasonably request.
SECTION 2. PAYMENTS
2.1 Recruited Installment Payments. Until the Notes are paid in
fell, the Company will pay the following principal amount (or such lesser
principal amount as shall then be outstanding) of the Notes on December 31, in
each of the following years:
<TABLE>
<CAPTION>
Principal Amount
Year of Payment of Notes to Be Paid
--------------- -------------------
<S> <C>
1989 $1,708,674.97
1990 3,316,145.29
1991 3,598,349.25
1992 3,904,568.78
1993 4,236,847.58
1994 4,597,403.31
1995 4,988,642.33
1996 5,413,175.79
1997 5,873,837.05
</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
1998 6,373,700.58
1999 6,916,102.50
2000 7,504,662.83
2001 8,143,309.63
2002 8,836,305.28
2003 9,588,274.83
</TABLE>
The entire outstanding principal amount of the Notes shall be due and payable
on the maturity date. No payment or prepayment of Notes by the Company
pursuant to section 2.2 hereof shall relieve the Company from its obligation to
make the required installment payments provided for in this section 2.1. Upon
any purchase of Notes by the Company or any Affiliate or Subsidiary pursuant to
section 3.2 hereof or otherwise, the principal amount of each required
installment payment of Notes becoming due on and after the date of such
purchase shall be reduced in the same proportion as the aggregate unpaid
principal amount of Notes is reduced as a result of such purchase. No premium
shall be payable in connection with any required installment payment made
pursuant to this section 2.1.
2.2 Optional Prepayments.
(a) Optional Prepayments -- The Company may, at any time and from
time to time, prepay the Notes, in whole or in part (but, if in part, in a
minimum amount of $100,000 or an integral multiple of $1,000 in excess
thereof), by payment of the principal amount of the Notes or portion thereof to
be prepaid and accrued interest thereon to the date of such prepayment,
together with a premium on such principal amount equal to the Make-Whole
Premium Amount.
(b) Notice of Optional Prepayments -- The Company will give notice
of any optional prepayment of the Notes under this section 2.2 to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (i) such date, (ii) the principal amount of
the Notes to be prepaid on such date, (iii) the accrued interest applicable to
such prepayment and (iv) the revised schedule for required installment payments
on the Notes pursuant to section 2.1 that will be in effect following such
optional prepayment. Notice of prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice, together with the
premium and accrued interest due thereon, shall become due and payable on the
prepayment date. The Company will also give written notice to each holder of a
Note, by telecopy or other same-day written communication, five days prior to
the date fixed for any prepayment under this section 2.2, of the Make-Whole
Premium Amount, if any, applicable to such prepayment and the calculations, in
reasonable detail, used to determine the Make-Whole Premium Amount.
2.3 Partial Payments Pro Rata -- If there is more than one Note
outstanding, the principal amount of each required or optional partial payment
of the Notes pursuant to this Section 2 will be allocated among such Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
outstanding principal amounts of such Notes.
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<PAGE> 10
SECTION 3. DOWNGRADE EVENTS, ETC.
3.1. Rate Changes in Case of Change in Credit Ratings, Etc. At any
time after a Downgrade Event occurring on or prior to the third anniversary of
the Closing Date the interest rate payable on the Notes shall be automatically
increased, effective as of the date of such Downgrade Event, to the rate per
annum determined by adding to the interest rate then payable on the Notes the
Downgrade Event Adjustment (the "Incremental Risk-Adjusted Rate"). Upon the
occurrence of a Readjustment Event during the Event Period the interest rate
then payable on the Notes shall be automatically reduced by the Downgrade
Readjustment, effective as of the date of such Readjustment Event.
Notwithstanding the foregoing, if any of the credit ratings of the Company's
long-term senior unsecured indebtedness continues to be rated less than Baa3 by
Moody's or BBB- by Standard & Poor's (or in either case, the comparable ratings
then in existence) for a period of more than 18 consecutive months (the "Option
Event") each holder of a Note shall have the option to (y) require the Company
to purchase the Note or Notes then held by such holder pursuant to section 3.2
hereof or (z) retain such holder's Note or Notes, in which event the interest
rate payable thereon shall be fixed at the Incremental Risk-Adjusted Rate until
the entire principal balance thereof shall become due and payable.
Any holder may exercise such option by following the procedures
provided in section 3.2(a) and (b) hereof, requiring the Company to purchase
such holder's Note or Notes, or by delivering a notice to the Company which
shall state that such holder is electing to have the interest rate payable on
such holder's Note or Notes fixed at the Incremental Risk-Adjusted Rate
pursuant to this section 3.1, effective as of the first day following such 18
month period.
The Company unconditionally promises to pay interest on the Notes from
the date of the changes and events as contemplated in the second preceding
paragraph at the rate as so adjusted.
3.2. Required Purchases in Case of Change in Credit Ratings, Etc.
(a) Notice -- Any holder of a Note may deliver a notice to the
Company requiring the Company to purchase the Note or Notes then held by such
holder at any time from and after the time specified below until the expiration
date specified in section 3.2(d)
(i) the occurrence of a Change in Control; or
(ii) the occurrence of the option Event; or
(iii) the date indicated in clauses (A) through (D) below in the
event of a Downgrade Event occurring at any time after the Event
Period or in the event of a Downgrade occurring at any time:
(A) if both Moody's and Standard & Poor's are then publicly
rating the Company's long-term senior unsecured indebtedness,
the date of occurrence of such Downgrade or Downgrade Event;
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<PAGE> 11
(B) if only one of Moody's or Standard & Poor's is then
publicly rating such indebtedness, the loth day after (y) such
rating agency shall publicly rate such indebtedness less than
Baa3 or BBB-, as the case may be, in the event of such
Downgrade Event, or (z) Ba2 or BB, as the case may be, in the
event of such Downgrade (or, in either case, the comparable
ratings then in existence) unless, prior to such loth day, the
Company shall have notified such holder pursuant to section
5.5(a)(iii) of such holder's right to require the Company to
obtain a private credit rating;
(C) if both Moody's and Standard & Poor's are then refusing
to rate or are no longer rating such indebtedness, the loth
day after such refusal or the absence of such a rating unless,
prior to such loth day, the Company shall have notified such
holder pursuant to section 5.5(a)(ii) of such holder's right
to require the Company to obtain a private credit rating; or
(D) if the Company is then required pursuant to section 5.4
to obtain a private credit rating from Moody's or Standard &
Poor's, (y) the Business Day immediately following the 60 day
period during which the Company must apply for and obtain such
rating under section 5.4(b) unless the Company shall have
obtained such a rating in accordance with Section 5.4(b) or
(z) the date as of which Moody's shall have delivered to the
Company a private credit rating stating that the Notes are
rated less than Baa3 and Standard & Poor's shall have
delivered to the Company a private credit rating stating that
the Notes are rated less than BBB-, in the event of a
Downgrade Event, or Ba2 and BB, respectively, in the event of
a Downgrade (or, in either case, the comparable ratings then
in existence) (or, if Moody's is then publicly rating the
Company's long-term senior unsecured indebtedness at a level
below Baa3 or Standard & Poor's is then publicly rating such
indebtedness at a level below BBB-, in the event of a
Downgrade Event, or Ba2 and BB, respectively, in the event of
a Downgrade (or, in either case, the comparable ratings then
in effect), the date on which the rating agency not publicly
rating such indebtedness shall have delivered such a private
credit rating); or
(iv) the occurrence of a Significant Subsidiary Default.
(b) Notice Contents -- Any notice from a holder of a Note to the
Company pursuant to section 3.2(a) shall (i) state that such holder is electing
to exercise its right to require the purchase of such holder's Note or Notes by
the Company pursuant to this section 3.2 and (ii) specify the date on which
such purchase shall occur (which date shall be a Business Day which shall occur
not less than 20 nor more than 30 days after the date of such notice). The
Company, on the purchase date specified by such holder, against delivery of the
Note or Notes by the holder thereof, shall purchase such Note or Notes then
held by such holder, without recourse, representation or warranty (other than a
representation and warranty by such holder that such holder owns such Note or
Notes free and clear of any Mortgage), and such holder shall sell such Note or
Notes to the Company at a price (payable in immediately available funds by wire
transfer to the account specified for payments in respect of such Note or Notes
pursuant to section 10.1 hereof or as such holder may
6
<PAGE> 12
otherwise specify) equal to the then outstanding principal amount thereof,
together with interest accrued on such principal amount to the date of
purchase, plus a premium equal to the Make-Whole Premium Amount.
(c) Company Delivery -- Immediately following its receipt thereof,
the Company will deliver to each holder of a Note a copy of any notice received
by it pursuant to section 3.1or section 3.2(a).
(d) Expiration -- The right of a holder of a Note to deliver a
notice pursuant to section 3.1 and section 3.2(a) shall expire on the later of:
(i) the 60th day after the day on which such holder of a Note
shall have received the earliest of the following:
(A) a notice from the Company pursuant to sections 5.5(a) and
5.5(b), (B) a copy of a private credit rating obtained pursuant to
section 5.4(a), (C) a notice from the Company delivered pursuant to
section 5.4(b), or (D) a notice from the Company pursuant to section
3.3(e) relating to a Significant Subsidiary Default, and
(ii) the 15th day after such holder shall have received from the
Company pursuant to section 3.2(c) a copy of the last notice delivered to the
Company by any other holder of a Note during the time period specified in
clause (i) of this section 3.2(d) requiring the Company to purchase such Note
pursuant to this section 3.2 or fixing the interest rate payable on such
holder's Note or Notes at the Incremental Risk-Adjusted Rate pursuant to
section 3.1.
3.3. Other Purchases. Except as provided in section 3.2, the
Company will not, and will not permit any Subsidiaries or any Affiliates to,
purchase or otherwise acquire or make any offer to acquire, directly or
indirectly, Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall contemporaneously offer to acquire the Notes, pro rata, held by
each holder of a Note and upon the same terms. Any Notes purchased or
otherwise acquired for any reason by the Company, any Subsidiary or any
Affiliate shall not be deemed to be outstanding for purposes of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as of the date hereof and as of
the Closing Date that:
4.1. Full Disclosure. Neither this Agreement, nor any financial
statement (except that with respect to any forecasts of financial information
the Company represents only that it had a reasonable basis for making such
forecasts and does not represent as to the accuracy of such forecasts) or other
written material furnished to you and the other institutions named in
Attachment A (the "Purchasers") on behalf of or by the Company in connection
with the negotiation of the sale of the Notes, contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
information contained therein not misleading in light of the
7
<PAGE> 13
circumstances taken as a whole. There is no fact (other than matters of a
general economic or political nature which do not affect the Company or its
Subsidiaries uniquely) which the Company has not disclosed to the Purchasers in
writing that materially adversely affects or, so far as the Company can now
reasonable foresee, will materially adversely affect the Properties, business,
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole or the ability of the Company to perform its obligations under this
Agreement, the ESOP Documents or the ESOPs. Since March 31, 1989, there have
been no materially adverse changes in the Properties, business, or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
4.2. Organization; Qualification.
(a) Due Organization -- The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each Significant Subsidiary is duly organized and existing in
good standing under the laws of the jurisdiction in which it is incorporated;
the Company and its Significant Subsidiaries have the corporate power to own
their respective Properties and to carry on their respective businesses as now
being conducted; and the Company has all requisite power and authority,
corporate and otherwise, to enter into this Agreement and the ESOP Documents,
to establish the ESOPs and to consummate the transactions contemplated thereby
and to carry out the terms thereof.
(b) Duly Qualified -- The Company and each Significant Subsidiary
are duly qualified as foreign corporations to transact business and are in good
standing in each jurisdiction where the ownership of their respective Property
or the nature of the business transacted by them makes such qualification
necessary and where the failure so to qualify might result in a materially
adverse change in the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole.
4.3. Legal and Authorized Sale. The sale and issuance of the Notes
by the Company, the execution and delivery by the Company and compliance by the
Company with all of the provisions of this Agreement, the ESOP Documents and
the ESOPs:
(a) are within the corporate powers of the Company; and
(b) are legal and authorized and will not conflict with, constitute a
violation of, or result in the creation of any Mortgage upon any Property of
the Company under the provisions of, any agreement, charter, instrument, by-law
or other instrument to which the Company is a party or by which any of it or
its Properties may be bound, which conflict, violation or Mortgage would have a
materially adverse effect on the Properties, business or condition(financial or
otherwise) of the Company and its Subsidiaries taken as a whole or the ability
of the Company to perform its obligations under this Agreement, the ESOP
Documents or the ESOPs.
4.4. Governmental Consent. Except as required by this Agreement,
no approval, consent or withholding of objection on the part of any regulatory
body, Federal, state or local, is required in connection with the execution and
delivery by the Company of this
8
<PAGE> 14
Agreement, the ESOP Documents or the ESOPs or compliance by the Company with
any of the provisions thereof.
4.5. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which could reasonably be expected to
result in any material adverse change in the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole
or the ability of the Company to perform its obligations under this Agreement,
the ESOP Documents or the ESOPs.
4.6. Title to Properties. The Company and each of its Significant
Subsidiaries have good and marketable title to their respective real properties
(other than properties which they lease) and good title to all of their other
respective Properties and assets (except to the extent that the failure to have
such title to such other Properties or assets would not have a materially
adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole, and other than
Properties and assets disposed of in the ordinary course of business), subject
to no Mortgage of any kind, other than Mortgages of the nature permitted by
section 6.1(a).
4.7. Taxes. The Company and each of its Subsidiaries have filed
all federal, state and other income tax returns which are required to be filed,
and have paid all taxes as shown on such returns and on all assessments
received by them to the extent that such taxes have become due, except (a) such
taxes as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles or (b) where the failure to pay any such taxes would not
have a materially adverse effect on the Properties, business, condition
(financial or otherwise), or operations of the Company and its Subsidiaries
taken as a whole.
4.8. Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects the business, Property or assets, or financial condition of the Company
and its Subsidiaries taken as a whole. The making, execution, delivery and
performance of this Agreement, the ESOP Documents or the ESOPs will not
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or result in the
creation of any Mortgage upon any of the Properties or assets of the Company or
any of its Significant Subsidiaries pursuant to, the respective charters or
by-laws of the Company or any of its Significant Subsidiaries, any award of any
arbitrator, any material agreement (including any agreement with stockholders)
or instrument, or any order, judgment, decree, statute, law, rule or regulation
to which the Company or any of its Subsidiaries is subject.
4.9. ERISA. (a) Prohibited Transactions. Neither the Company nor
n@y ERISA Affiliate has engaged in a transaction in connection with which the
Company could be subject to a material liability for either a civil penalty
assessed pursuant to section 502(i) of ERISA or a tax imposed by section 4975
of the Code.
9
<PAGE> 15
(b) Plan Termination; Material Liabilities. There has been no
termination of a Plan or trust created under any Plan that would give rise to a
material liability to the PBGC on the part of the Company or an ERISA
Affiliate. No material liability to the PBGC has been or is expected by the
Company to be incurred with respect to any Plan by the Company or an ERISA
Affiliate. The PBGC has not instituted proceedings to terminate any Plan which
is maintained or is to be maintained by the Company or an ERISA Affiliate.
There exists no condition or set of circumstances which presents a material
risk of termination or partial termination of any Plan by the PBGC or
restoration of any Plan heretofore terminated. The Company and each Code
Affiliate is current with all premiums to the PBGC.
(c) Accumulated Funding Deficiency. Full payment has been made of
all amounts which are required under the terms of each Plan to have been paid
as contributions to such Plan as of the last day of the most recent fiscal year
of such Plan ended on or before the date of this Agreement, and no accumulated
funding deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any Plan or any employee
pension benefit plan maintained by the Company or a Code Affiliate. The
Company and each Code Affiliate is current with all required installments under
Section 412(m) of the Code.
(d) Relationship of Benefits to Pension Plan Assets. The current
value of the benefit liabilities (as defined in section 4001(a)(16) of ERISA)
of each Plan does not exceed the fair market value of the assets of such Plan.
Neither the Company nor any Code Affiliate is required to provide security to a
Plan or an employee pension benefit plan maintained by a Code Affiliate under
section 401(a)(29) of the Code. No lien under section 412(n) of the Code or
sections 312(f) or 4068 of ERISA has been or is reasonably expected by the
Company to be imposed on the assets of the Company or any ERISA Affiliate.
(e) Withdrawal Liability. Neither the Company nor any ERISA
Affiliate has made a complete or partial withdrawal (or a reduction in
contribution base units which if continued would result in a partial
withdrawal) from a Multiemployer Plan which has resulted in, or is reasonably
expected by the Company to result in, a material withdrawal liability.
(f) Compliance with ERISA. All employee pension benefit plans (as
defined in section 3(2) of ERISA) maintained by the Company or an ERISA
Affiliate which are intended to be "qualified" are "qualified" under section
401(a) of the Code. All employee benefit plans (as defined in section 3(3) of
ERISA) maintained by the Company or an ERISA Affiliate have been administered
substantially in compliance with ERISA and the applicable provisions of the
Code. There are no pending issues before the IRS or any court of competent
jurisdiction related to the qualification of the Plans except for the filing of
the Plans and the ESOP Trusts with the IRS as contemplated by section 6.8(b).
Neither the Company nor any Code Affiliate has any material liability under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.
(g) Execution of Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not involve any
10
<PAGE> 16
transaction which is a non-exempt prohibited transaction under section 406 of
ERISA or in connection with which a tax could be imposed pursuant to section
4975 of the Code. The representation by the Company in the preceding sentence
is made in reliance upon and subject to the accuracy of your representation in
paragraph 11.3 as to the source of funds used to pay the purchase price of the
Notes.
4.10. Qualifying Shares, etc. The Company Shares will constitute
qualifying employer securities for purposes of ERISA, the Code (including, but
not limited to, section 409(1)(3) hereof) and the rules and regulations issued
thereunder.
4.11. Use of Proceeds. The proceeds from the sale of the Notes will
be used by the Company to effect the ESOP Transactions. None of such proceeds
will be used in violation of any law or regulation. Under current law, as
applied and in effect on the date hereof, the application of the proceeds of
the Notes will constitute a "securities acquisition loan" for purposes of
Section 133 of the Code.
4.12. Private Offering. Neither the Company nor Morgan Stanley &
Co. Incorporated (the only Person authorized or employed by the Company as
agent, broker, dealer or otherwise in connection with the offering or sale of
the Notes or any similar Security of the Company and the only Person to whom
any brokers' fees in connection with the transactions contemplated by the Note
Agreements are payable) has offered any of the Notes or any similar Security of
the Company for sale to, or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Purchasers and 14 other institutional investors, each
of whom was offered all or a portion of the Notes at private sale for
investment.
4.13. ESOPs. The portions of each of the ESOPs intended to be
employee stock ownership plans constitute employee stock ownership plans within
the meaning of Section 4975(e)(7) of the Code and each of the ESOPs and the
Plans of which they are a part are qualified under Section 401(a) of the Code.
Each of the ESOP Trusts has been duly constituted in accordance with a valid
and binding trust instrument, is validly existing and is tax-exempt under
Section 501(a) of the Code. Each of the ESOP Trusts, respectively, has the
requisite power and authority to own its properties and assets. The execution,
delivery and performance of this Agreement and the Note and the consummation of
the ESOP Transactions by the parties thereto will not involve any transaction
which is subject to the prohibitions of Section 406 of ERISA and will not
otherwise constitute a violation of, or give rise to any liability under, any
other provision of Title I of ERISA or Section 4975 of the Code. Under current
law, as applied and in effect on the date hereof, the issuance and sale of the
Notes hereunder to you by the Company qualifies as a "securities acquisition
loan" within the meaning of Section 133 of the Code. Neither of the ESOPs nor
the Trustee has incurred any indebtedness for borrowed money (other than the
loan made under the ESOP Loan Agreements) and, as of the Closing, neither will
have incurred any indebtedness for borrowed money other than indebtedness for
borrowed money represented by the ESOP Notes.
4.14. ESOP Documents. The Company and the ESOP Trustee have
delivered to you true and correct copies of all documents governing the terms
or administration of the
11
<PAGE> 17
ESOPs and ESOP Trusts and all agreements and instruments relating to the ESOP
Transactions. Each of the ESOP Transactions as of the date hereof has been,
and after giving effect to the transactions contemplated hereby will be, duly
and validly consummated and all ESOP Documents are and will be legal, valid and
binding obligations of the respective parties thereto.
4.15. Pollution and Other Regulations. Except as described in the
Company's Form 10-K for the fiscal year ended December 31, 1988 in respect of
compliance with Alaska Environmental Laws, the Company is in compliance in all
material respects with all Environmental Laws and all laws and regulations
relating to equal employment opportunity and employee safety in all
jurisdictions in which it is presently doing business, except where the failure
to do so would not have a material adverse effect on the business, condition
(financial or otherwise), assets or properties of the Company and its
Subsidiaries taken as a whole.
4.16. Public Utility Holding Company Act. Neither the Company nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an ..affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 5. INFORMATION AS TO COMPANY, ETC.
5.1. Financial and Business Information. The Company will deliver
to each Purchaser, if at the time such Purchaser or its nominee holds any Note,
and to each other institutional holder of an outstanding Note:
(a) Quarterly Statements -- within 60 days after the end of each
of the first three quarterly fiscal periods in each fiscal year of the Company,
two copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(2) consolidated statements of income, cash flows and changes
in stockholders' equity of the Company and its Subsidiaries for that
quarter and for the portion of the fiscal year ending with such
quarter, accompanied by a certificate signed by a principal financial
officer of the Company stating that such financial statements present
fairly (subject to normal year-end adjustments) the financial
condition of the companies being reported upon and have been prepared
in accordance with generally accepted accounting principles
consistently applied (except for changes in application in which the
Company's accountants referred to in section 5.1(b) shall have
concurred, which written concurrence shall be delivered with the
financial statements delivered pursuant hereto),provided that the
Company shall be deemed to have satisfied the requirements of this
subdivision (a) upon delivery of a report of the Company on Form 10-Q,
as filed with and meeting the requirements of the Securities and
Exchange Commission, in respect of such quarter;
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<PAGE> 18
(b) Annual Statements -- within 120 days after the end of each
fiscal year of the Company, three copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of that year, and
(2) consolidated statements of income, cash flows and changes
in stockholders' equity of the Company and its Subsidiaries, for that
year, setting forth in each case in comparative form the figures for
the previous fiscal year and accompanied by an opinion of a firm of
independent certified public accountants of recognized national
standing stating that such financial statements present fairly the
financial condition of the companies being reported upon and have been
prepared in accordance with generally accepted accounting principles
consistently applied (except for changes in application in which such
accountants concur, which written concurrence shall be delivered with
the financial statements delivered pursuant hereto) and that the audit
by such accountants in connection with such financial statements has
been conducted in accordance with generally accepted auditing
standards, provided that the Company shall be deemed to have complied
with the requirements of this subdivision (b) upon delivery of a
report of the Company on Form 10-K, as filed with and meeting the
requirements of the Securities and Exchange Commission, in respect of
that year;
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of each periodic report (including Form 8-K, 10-K and 10@),
proxy statement and registration statement or prospectus relating to Securities
of the Company filed with or delivered to any securities exchange, the
Securities and Exchange Commission or any successor agencies (other than
registration statements on Form S-8);
(d) Determination Letter -- promptly upon receipt thereof by the
company or the ESOPs, two copies of each determination letter (whether obtained
pursuant to section 6.8(b) or otherwise) from the Internal Revenue Service
stating that the portions of each of the ESOPs intended to be employee stock
ownership plans constitute employee stock ownership plans and qualified under
sections 401(a) and 4975(e)(7) of the Code;
(e) Notice of Default or Event of Default -immediately upon
becoming aware of the existence of any Default, Event of Default or a
Significant Subsidiary Default, a notice describing its nature and what action
the Company proposes to take with respect thereto;
(f) Requested Information -- with reasonable promptness, any other
data nd information which may be reasonably requested from time to time
(including without limitation the Annual Report (Form 5500 Series) furnished to
the Internal Revenue Service in connection with the Company); and
(g) Change of Rate, etc. -- promptly in accordance with section 3
or 8 following the occurrence thereof, a notice of any event that could
reasonably be expected to give rise to an increase or decrease in the interest
rate applicable to the Notes or the payment of any
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amount by the Company pursuant to section 3 or S.
5.2. Officer's Certificates. With each set of financial statements
delivered pursuant to section 5.1(a) or 5.1(b), the Company will deliver a
certificate signed by its Chief Financial officer or its Treasurer and stating
that the signer has reviewed the relevant terms of this Agreement and has made,
or caused to be made, under the signer's supervision, a review of the
transactions and conditions of the Company and its Subsidiaries during the
period covered by the financial statements then being furnished and that the
review has not disclosed the existence of any Default or Event of Default or,
if a Default or an Event of Default exists, describing its nature, and what
action the Company proposes to take with respect thereto.
5.3. Inspection. The Company will permit the representatives of
each Purchaser, so long as it or its nominee holds any Note, or the
representatives of any other institutional investor which holds a Note, at such
Purchaser's or holder's expense, at any time upon reasonable notice to visit
and inspect any of the Properties of the Company or any Subsidiary, to examine
and make copies and extracts of all their books of account, records, reports
and other papers, and to discuss their respective affairs, finances and
accounts with their respective officers, employees with management duties and
independent public accountants, all at reasonable times and as often as may be
reasonably requested.
5.4 Private Credit Rating. (a) The Company will, if any holder of
a Note shall so request, at any time when (i) the Company does not have
long-term senior unsecured indebtedness that is publicly rated by Moody's or
Standard & Poor's, (ii) such indebtedness is publicly rated by either Moody's
or Standard & Poor's (but not both) and such indebtedness is rated at a level
below Baa3, in the case of Moody's, or BBB-, in the case of Standard & Poor's
(or in either case the comparable ratings then in effect) or (iii) all such
indebtedness that is rated is supported (through defeasance, guarantees, credit
enhancement or otherwise) so as to maintain its rating, immediately after
receiving such request, notify each other holder of a Note of such request and
within 10 days apply for and thereafter diligently attempt to obtain from
either Moody's or Standard & Poor's a private credit rating for the Notes, and,
promptly, and in any event within 10 days after receiving such rating, deliver
a copy thereof to each holder of a Note, together with, if such holder shall
then have any rights under section 3.2, the following statement:
"YOU HAVE THE RIGHT, FOR A PERIOD OF 60 DAYS (SUBJECT TO EXTENSION
UNDER CERTAIN CONDITIONS) FOLLOWING YOUR RECEIPT OF THIS NOTICE, TO
REQUIRE THE UNDERSIGNED, ON THE TERMS AND AT THE PRICE SET FORTH IN
SECTION 3.2 OF THE NOTE AGREEMENT, DATED AS OF JUNE 16, 1989, TO
PURCHASE ANY 0.51% ESOP NOTES DUE DECEMBER 31, 2003 ISSUED BY MAPCO
INC. AND HELD BY YOU."
(b) If the Company does not obtain a private credit rating from
either Moody's or Standard & Poor's for the Notes within 60 days after such
request, it will immediately after the end of such 60-day period notify each
holder of a Note of such failure. Such notice shall include a statement in the
form set forth in section 5.4(a).
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5.5. Notices. The Company will deliver to each holder of a Note:
(a) immediately following the occurrence thereof, a notice of (i)
the initial assignment of credit ratings that are, or of any change in the
credit ratings of the Company's long-term senior unsecured indebtedness causing
such ratings to fall, below Baa3 or Ba2 from Moody's and BBB or BB from
Standard & Poor's, as the case may be, (ii) the fact that Moody's and Standard
& Poor's are refusing to rate or are no longer rating such indebtedness, or
(iii) if moody's or Standard & Poor.s (but not both) is then rating such
indebtedness, the initial assignment of a credit rating that is, or of any
change in the credit rating of such indebtedness causing such rating to fall,
below Baa3 or Ba2 from Moody's or BBB or BB from Standard & Poor's, as
applicable (or the comparable ratings then in effect), together in each case
with (A) a statement of the date of such occurrence, (B) a reasonably detailed
description of the facts and circumstances underlying such occurrence known to
it, (C) if such holder shall then have any rights under section 3.2(a)(iii), a
statement in the form set forth in section 5.4(a) and (D) if a holder of a Note
shall then have the right under section 5.4(a) to request the Company to obtain
a private credit rating, the following statement:
"ANY HOLDER OF A NOTE HAS THE RIGHT, UNDER SECTION 5.4(a) OF THE NOTE
AGREEMENTS, DATED AS OF JUNE 16, 1989, TO REQUIRE THE UNDERSIGNED TO
OBTAIN FROM MOODY'S AND/OR STANDARD & POOR'S A PRIVATE CREDIT RATING
OF THE 8.51% ESOP NOTES DUE DECEMBER 31, 2003 ISSUED BY MAPCO INC."
(b) immediately following the occurrence thereof, a notice of (i)
a Change in Control or (ii) the Option Event together in each case with (A) a
statement of the date of occurrence of such event, (B) a reasonably detailed
description of the facts and circumstances underlying such occurrence known to
it, and (C) a statement in the form set forth in Section 5.4(a) which states
that the Company is obligated to purchase Notes pursuant to section 3.2(a).
(c) promptly following the Company's obtaining knowledge thereof,
a notice of any event, including a Readjustment Event, that could reasonably be
expected to give rise to an increase or decrease in the interest rate
applicable to the Notes or the payment of any amount by the Company pursuant to
section 3 or 8 of this Agreement,
SECTION 6. COMPANY BUSINESS COVENANTS
The Company covenants that on and after the date of this Agreement and
for so long as the Company has any obligations hereunder:
6.1. Liens and Encumbrances. (a) Mortgages. Except as hereinafter
provided, the Company will not, nor will it permit any Domestic Subsidiary to,
issue, assume or guarantee any indebtedness for money borrowed (hereinafter
referred to as "Debt"), secured by any mortgage, security interest, pledge,
lien or other encumbrance ("Mortgage" or "Mortgages") upon any Principal
Property of the Company or of a Domestic Subsidiary or upon any shares of stock
or Debt of any Domestic Subsidiary (whether such Principal Property, shares of
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<PAGE> 21
stock or Debt is now owned or hereafter acquired), without in any such case
effectively securing, concurrently with the issuance, assumption or guaranty of
any such Debt, the Notes (together with, if the Company shall so determine, any
other Debt of or guaranteed by the Company or such Domestic Subsidiary ranking
equally with the Notes and then existing or thereafter created) equally and
ratably with (or prior to) such Debt; provided, however, that the foregoing
restrictions shall not apply to:
(i) Mortgages on any property acquired, constructed or
improved by the Company or any Domestic Subsidiary after the Closing
Date which are created or assumed contemporaneously with, or within
120 days after, such acquisition or completion of such construction or
improvement, or within six months thereafter pursuant to a firm
commitment for financing arranged with a lender or investor within
such 120-day period, to secure or provide for the payment of all or
any part of the purchase price of such property or the cost of such
construction or improvement incurred after the Closing Date, or, in
addition to Mortgages contemplated by clauses (ii) and (iii) below,
Mortgages on any property existing at the time of acquisition thereof,
provided that the Mortgage shall not apply to any property theretofore
owned by the Company or any Domestic Subsidiary other than, in the
case of any such construction or improvement, any theretofore
unimproved real property on which the property so constructed or the
improvement is located;
(ii) mortgages on any property, shares of stock, or
indebtedness existing at the time of acquisition thereof from a
corporation which is merged with or into or consolidated with the
Company or a Domestic Subsidiary;
(iii) Mortgages on property, shares of stock, or
indebtedness of a corporation existing at the time such corporation
becomes a Domestic Subsidiary;
(iv) Mortgages to secure Debt of a Domestic Subsidiary to
the Company or to another Domestic Subsidiary;
(v) Mortgages in favor of the United States of America or
any State thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any State
thereof, to secure partial progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase
price or the cost of constructing or improving the property subject to
such mortgages; and
(vi) Mortgages for the sole purpose of extending, renewing
or replacing in whole or in part Debt secured by any Mortgage referred
to in the foregoing clauses (i) to (v), inclusive, or in this clause
(vi) or any mortgage existing on the Closing Date,provided, however,
that the principal amount of Debt secured thereby shall not exceed the
principal amount of Debt so secured at the time of such extension,
renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the property which
secured the mortgage so extended, renewed or replaced (plus
improvements on such property).
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If the Company shall hereafter be required to secure the Notes at
least equally and ratably with any other Debt pursuant to this section 6.1, the
Company will promptly deliver to the Purchasers a certificate signed by its
Chief Financial Officer or Treasurer stating that such covenant has been
complied with and an opinion of counsel stating that in the opinion of such
counsel such covenant has been complied with and that any instruments executed
by the Company or any Subsidiary in the performance of such covenant comply
with the requirements of such covenant.
(b) Exclusions. The provisions of subsection (a) of this section
6.1 shall not apply to the issuance, assumption or guarantee by the Company or
any Domestic Subsidiary of Debt secured by a Mortgage which would otherwise be
subject to the foregoing restrictions up to an aggregate amount which, together
with all other Debt of the Company and its Domestic Subsidiaries secured by
Mortgages (other than Mortgages permitted by subsection (a) of this section
6-1) which would otherwise be subject to the foregoing restrictions and the
Value (as defined below) of all Sale and Lease-back Transactions (as defined in
section 6.2) in existence at such time (other than any Sale and Lease-back
Transaction which, if such Sale and Lease-back Transaction had been a Mortgage,
would have been permitted by clause (i) of Section 6.1(a) and other than Sale
and Lease-back Transactions as to which application of amounts have been made
in accordance with clause (b) of section 6.2), does not at the time exceed 5%
of Consolidated Net Tangible Assets.
(c) Certain Terms. For purposes of this section 6.1, the
following terms shall have the following meanings specified with respect
thereto:
"Consolidated Net Tangible Assets" shall mean the total of all the
assets appearing on the consolidated balance sheet of the Company and its
Subsidiaries less the following:
(1) current liabilities, including liabilities for
indebtedness maturing more than 12 months from the date of the
original creation thereof but maturing within 12 months from the date
of determination;
(2) reserves for depreciation and other asset valuation
reserves;
(3) intangible assets such as goodwill, trademarks, trade
names, patents, and unamortized debt discount and expense carried as
an asset on said balance sheet; and
(4) appropriate adjustments on account of minority interests
of other persons holding stock in any Subsidiary of the Company.
Consolidated Net Tangible Assets shall be determined in accordance with
generally accepted accounting principles and practices applicable to the type
of business in which the Company and its Subsidiaries are engaged and which are
approved by the independent accountants regularly retained by the Company, and
may be determined as of a date not more than sixty days prior to the happening
of the event for which such determination is being made.
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"Value" shall mean, with respect to a Sale and Lease-back Transaction,
as of any particular time, the amount equal to the greater of (1) the net
proceeds from the sale or transfer of the property leased pursuant to such Sale
and Lease-back Transaction or (2) the fair value in the opinion of the Board of
Directors of the Company of such property at the time of entering into such
Sale and Lease-back Transaction, in either case divided first by the number of
full years of the term of the lease and then multiplied by the number of full
years of such term remaining at the time of determination, without regard to
any renewal or extension options contained in the lease.
6.2. Sale and Lease-Back. The Company will not, nor will it permit
any Domestic Subsidiary to, enter into any arrangement with any person
providing for the leasing to the Company or any Domestic Subsidiary of any
Principal Property (except for temporary leases for a term, including any
renewal thereof, of not more than one year and except for leases between the
Company and a Domestic Subsidiary or between Domestic Subsidiaries), which
Principal Property has been or is to be sold or transferred by the Company or
such Domestic Subsidiary to such person (herein referred to as a "Sale and
Lease-back Transaction") unless the net proceeds of such sale are at least
equal to the fair value (as determined by the Board of Directors of the
Company) of such Principal Property and either (a) the Company or such Domestic
Subsidiary would be entitled, pursuant to the provisions of (1) clause (i) of
paragraph (a) of section 6.1 or (2) paragraph (b) of section 6.1, to incur Debt
secured by a Mortgage on the Principal Property to be leased without equally
and ratably securing the Notes or (b) the Company shall, and in any such case
the Company covenants that it will, within 120 days of the effective date of
any such arrangement (or in the case of (iii) below, within six months
thereafter pursuant to a firm purchase commitment entered into within such
120-day period), apply an amount equal to the fair value (as so determined) of
such Principal Property (i) to the optional redemption of Notes in accordance
with the provisions of this Agreement and the terms of such Notes so to be
redeemed, (ii) to the payment or other retirement of Funded Debt incurred or
assumed by the Company which ranks senior to or pari passu with the Notes or of
Funded Debt incurred or assumed by any Domestic Subsidiary (other than, in
either case, Funded Debt owned by the Company or any Domestic Subsidiary) or
(iii) to the purchase of Principal Property (other than the Principal Property
involved in such sale). For this purpose, Funded Debt means any Debt which by
its terms matures at or is extendable or renewable at the sole option of the
obligor without requiring the consent of the obliges to a date more than twelve
months after the date of the creation of such Debt.
6.3. Merger and Consolidation. The Company will not be a party to
any merger or consolidation or sell, lease or otherwise transfer all or
substantially all of its Property, provided that the Company may merge or
consolidate with another corporation and may sell, lease or otherwise transfer
all or substantially all of its Property as an entirety to another corporation
if (i) the surviving or acquiring corporation (if other than the Company) (A)
is organized under the laws of the United States or a jurisdiction thereof and
(B) expressly assumes the covenants and obligations in this Agreement, (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such transaction, be in default in the performance of any
such covenant or obligation, and (iii) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company or Subsidiary as a result of such transaction as having been incurred
by the
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Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing. Compliance
with this section 6.3 will not affect the rights of any holder of a Note under
section 3.2.
6.4. Corporate Existence, etc.; Business. Except as permitted by
section 6.3, the Company will at all times preserve and keep in full force and
effect its corporate existence, and rights and franchises material to the
Properties, business, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole, except that such rights and
franchises and the corporate existence of any Subsidiary may be terminated
following due authorization by the Board of Directors of the Company.
6.5. Payment of Taxes and Claims. The Company covenants that it
will, and will cause each of its Subsidiaries to, pay all material taxes,
assessments and other governmental charges imposed upon it or any of its
Properties or assets or in respect of any of its franchises, business, income
or profits before any penalty or interest accrues thereon, and all material
claims (including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by law have
or might become a Mortgage upon any of its Properties or assets, provided that
no such tax, assessment, charge or claim need be paid if being contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted and if such reserves or other appropriate provision, if any, as shall
be required by generally accepted accounting principles shall have been made
therefor or if the failure to pay any such tax, assessment, charge or claim
would not have a materially adverse effect on the Properties, business,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole.
6.6. Maintenance of Properties; Insurance. The Company will
maintain or cause to be maintained in good repair, working order and condition
all Properties used or useful in the business of the Company and its
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Company will
maintain or cause to be maintained insurance or self-insurance that is
financially sound and is prudent with respect to its properties and business
and the properties and business of its Subsidiaries (including, without
limitation, business interruption insurance) against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such type
and in such amounts as are customarily carried under similar circumstances by
such other corporations.
6.7. Compliance with ERISA. The Company covenants that it will
not, and will not permit any Subsidiary to engage in any transaction in
connection with which the Company or any Subsidiary could be subject to either
a civil penalty assessed pursuant to section 502(i) of ERISA or a tax imposed
by section 4975 of the Code, terminate any Plan in a manner, or take any other
action with respect to any such Plan, which could result in any liability of
the Company or any Subsidiary to the PBGC, fail to make full payment when due
of all amounts which, under the provisions of any Plan, the Company or any
Subsidiary is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency, whether or not waived, with respect to any
Plan, if, in any such case, such
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penalty or tax or such liability, or the failure to make such payment, or the
existence of such deficiency, as the case may be, could reasonably be expected
to have a material adverse effect on the Company and its Subsidiaries taken as
a whole.
6.8. ESOP Existence. The Company will (a) do all things necessary
to maintain and keep in full force and effect each of the ESOPs as an "employee
stock ownership plan," within the meaning of Section 4975(e)(7) of the Code and
Section 407(d)(6) of ERISA; (b) promptly (and in no event later than 60 days
after the date of this Agreement) apply for, and use its best efforts to obtain
and deliver to you as promptly as practicable but in any case prior to the
Qualification Date, determination letters from the Internal Revenue Service, to
the effect that each of the ESOPs meets the requirements for Qualification
under Sections 401(a) and 4975(e)(7) of the Code and each of the ESOP Trusts
meets the requirements for tax exemption under Section 501(a) of the Code (such
letter not to contain any conditions reasonably deemed unacceptable by you),
and comply with any conditions imposed by the Internal Revenue service,
including without limitation any changes in the ESOPs or the ESOP Trusts which
may be required, for the issuance of such determination letters; provided,
however, that the Company may contest any such conditions which it believes are
unreasonable and upon the conclusion of such contest need only comply with such
conditions to the extent upheld in such contest; (e) comply with any reasonable
request from a holder of a Note for assistance in establishing the status of
the ESOPs or the status of any ESOP Note as a "securities acquisition loan"
under Section 133 of the Code; (d) cause the ESOPs and the ESOP Trusts and the
Plan and trust of which they are a part to be operated and administered at all
times and be amended as necessary so as to comply with ERISA and to remain
qualified under Section 401(a) of the Code and, in the case of the ESOPs,
Section 4975(e)(7) of the Code and with the requirements of Section 407(d)(6)
of ERISA, and tax-exempt under Section 501(a) of the Code; and (e) not amend or
otherwise modify any ESOP Document in a manner that would result, or fail to
amend any ESOP Document in the event of an amendment of this Agreement or of
the Notes if such failure would result, in the extension of credit represented
by any Note ceasing to qualify as a "securities acquisition loan" within the
meaning of Section 133(b) of the Code.
6.9. Prohibition Against ESOP Merger. The Company will not permit
either of the merged with or into or consolidated with any Plan or any other
Person which is subject to Title IV of ERISA or engage in any other transaction
with any Person which materially increases the liability of either of the ESOPs
or interferes with its ability to repay the ESOP Notes.
6.10. Assignment of ESOP Notes. The Company will make no
assignment, pledge, hypothecation or transfer of, or create any security
interest in, (a) the ESOP Notes or (b) any rights of the Company as holder of
the ESOP Notes or the loan evidenced thereby under the ESOP Loan Agreements.
SECTION 7. DEFAULT
7.1 Nature of Default. An "Event of Default" shall exist if any
of the following occurs and is continuing:
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(a) Principal, Premium or Interest Payments -- failure of the
Company to pay principal of any Note on the date the payment is due or to pay
premium or interest on any Note on or before the fifth Business Day after the
date such premium or interest payment is due, provided that any payment made
after its due date shall also include additional interest on the overdue amount
(to the extent permitted by applicable law) at the rate that is 2.0% per annum
in excess of the interest rate (as adjusted pursuant to section 8) that
otherwise would be in effect from time to time;
(b) Purchase of Notes -- failure of the Company to purchase any
Note pursuant to section 3.2 on the date on which such purchase is to be made;
(c) Breach of Particular Covenants -- failure to comply with any
covenant in section 3.2(c), 5.1(f)(i), 5.4, 5.5, 6.1, 6.2 and 6.3 hereof,
which continues for more than 30 days after it first becomes known to the
Trustee or any officer of the Company;
(d) Other Breaches -- failure of the Company to comply with any
other Provision of this Agreement or with its obligations under this Agreement
which continues for more than 30 days after notice from a holder of a Note;
(e) Default on Indebtedness -- (i) failure by the Company to make,
at final maturity thereof, one or more payments due on indebtedness for
borrowed money, which payment or payments are in an aggregate amount exceeding
$10,000,000; or (ii) any event shall occur or any condition shall exist, the
affect of which event or condition is to cause (or permit one or more Persons
to cause, and such Person or Persons shall have caused) more than $10,000,000
of aggregate indebtedness for borrowed money of the Company to become due
before its (or their) stated maturity or before its (or their) regularly
scheduled dates of payment, provided that, in respect of indebtedness for
borrowed Company that (A) is in existence on the date hereafter assumed
(including assumption by law) by the Company from a Person that is not (or is
hereafter assumed from a Person that is and is in existence on the date hereof)
and for automatic acceleration of such upon the occurrence of a default under
any agreement governing such indebtedness without notice to the Company, no
Event of Default shall exist under this subdivision (e) following such a
default until the Person to which such indebtedness is owed shall have notified
the Company or taken other action to indicate that such acceleration has
actually occurred;
(f) Involuntary Bankruptcy Proceedings, etc. -- a custodian,
receiver, liquidator or trustee of the Company, or any Significant Subsidiary,
or of any substantial part of the Properties of any of them, is appointed or
takes possession and such appointment or possession remains in effect for more
than 60 days; or the Company or any Significant Subsidiary generally fails to
pay its debts as they become due; or the Company or any Significant Subsidiary
is adjudicated bankrupt or insolvent; or an order for relief is entered under
the Federal Bankruptcy Code against the Company or any Significant Subsidiary;
or any substantial part of the Properties of the Company or any Significant
Subsidiary is sequestered by court order and the order remains in effect for
more than 60 days; or a petition is filed against the Company or any Subsidiary
under any bankruptcy, reorganization , arrangement, money of the hereof or is
operation of an Affiliate an Affiliate (B) provides indebtedness insolvency,
readjustment of debt, dissolution or liquidation law of any
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jurisdiction, whether now or subsequently in effect, and is not dismissed
within 60 days after filing;
(g) Voluntary Bankruptcy Proceedings, etc. -- the Company or any
Significant Subsidiary files a petition in voluntary bankruptcy or seeking
relief under any provision of any bankruptcy, reorganization, arrangment,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or subsequently in effect; or consents to the filing
of any petition against it under any such law; or consents to the appoints
taking possession by a custodian, receiver, trustee or liquidator of the
Company, or a Significant Subsidiary, or of all or any substantial part of the
Properties of any thereof; or makes an assignment for the benefit of its
creditors;
(h) Misrepresentation -- any representation or warranty aa by the
Company herein or by the Company in any written statement or certificate
furnished by the Company in connection with the transactions contemplated by
this Agreement or furnished by the Company pursuant hereto or thereto, is
untrue in any material respect as of the date of the issuance or making thereof
in light of such statements and certificates taken as a whole, and the failure
of such representation or warranty to be true is immaterial to the properties,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole at the time such failure of representation or
warranty becomes known to an executive officer of the Company;
(i) Judgments -- except to the extent any final judgments are
disclosed to you and the other Purchasers in a letter delivered to you and the
other Purchasers on the Closing Date, final judgment or judgments for the
payment of money aggregating in excess of $5,000,000 or more, is rendered
against the Company or any Significant Subsidiary and any such judgment or
judgments has remained unpaid or unstayed by appeal or otherwise for a period
of 30 days from the date of its entry or, if stayed, from the date on which the
stay is lifted . Provided that no Event of Default shall exist under this
subdivision (i) with respect to a Significant Subsidiary unless the event
relating thereto occurs within the Event Period and, at the time of the
occurrence of such event or as a result of the occurrence of such event a
Downgrade Event exists or occurs;
(j) any "reportable event" as such term is defined in Section
4043 of ERISA occurs in connection with any Plan or trust created thereunder
for which the thirty day notice requirement has not been waived under
applicable regulations, or an event occurs requiring the Company to provide
security to a Plan under Section 401(a)(29) of the Code; any "prohibited
transaction" occurs, as such term is defined in Section 4975 of the Code or in
Section 406 of ERISA, in connection with any Plan or any trust created
thereunder; any notice of intent to terminate a Plan or Plans is filed under
Title IV of ERISA by the Company, any Plan administrator or any combination of
the foregoing; any proceedings are instituted by the PBGC to terminate or to
cause a trustee to be appointed to administer any Plan; any partial or complete
withdrawal is made by the Company or an ERISA Affiliate from any Multiemployer
Plan; any proceedings are instituted by a fiduciary of any Plan against the
Company to enforce Section 515 of ERISA and such proceedings shall not have
been dismissed within 30 days thereafter; the Company or a Code Affiliate fails
to make a required installment under Section 412(m) of the Code or any other
payment required under
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Section 412 of the Code or to pay any amount or amounts which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA on or
before the due date; any application is filed by the Company or a Code
Affiliate for a waiver of the minimum funding standard under Section 412 of the
Code or Section 302 of ERISA; or any "reorganizations. (as defined in Section
418 of the Code or Title IV of ERISA) of any plan which is a Multiemployer Plan
occurs; and each such instance individually, or any two or more such instances
in the aggregate, could in your reasonable judgment be expected to result in
liability of the Company or any Code Affiliate or ERISA Affiliate to the
Internal Revenue Service, to the PBGC or to a Plan ("ERISA Liabilities") in an
aggregate amount exceeding $10,000,000; or
(k) any order, judgment or decree is entered in any proceedings by
a court of competent jurisdiction against the Company or the Trustee decreeing
that the ESOP, the ESOP Trust or the ESOP Transaction has not been properly
established or consummated, as the case may be, and such order, judgment or
decree remains unstayed and in effect for more than 60 days and no appeal is
filed by the Company therefrom within 60 days of the time such order, judgment
or decree first becomes appealable.
(l) the occurrence of a Determination of Taxability as described
in clause (v) of the second paragraph of section 8.2, or the ESOP Trusts fail
to hold "employer securities" (within the meaning of Section 409(l) of the
Code) at any time;
7.2 Default Remedies.
(a) Acceleration -- If an Event of Default described in section 7.
(f) or (g) exists, all of the Notes at the time outstanding shall automatically
become immediately due and payable at par together with interest accrued
thereon without presentment, demand, protest or notice of any kind, all of
which are hereby waived by the Company. If an Event of Default described in
section 7.1(a) or (b) exists, any holder of a Note may, at its option, exercise
any right, power or remedy permitted by law, including the right, by notice to
the Company, to declare the Notes held by such holder to be immediately due and
payable. If any other Event of Default exists, the holder or holders of at
least 50% in outstanding principal amount of the Notes may, at its or their
option, exercise any right, power or remedy permitted by law, including the
right, by notice to the Company, to declare all the outstanding Notes to be
immediately due and payable. Upon each declaration, the principal of the Notes
declared due shall become immediately due and payable, together with all
accrued interest and, to the extent permitted by law, a premium equal to the
Make-Whole Premium Amount, and the Company will immediately make payment,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived.
No course of dealing or delay or failure to exercise any right on the
part of any holder of a Note shall operate as a waiver of such right or
otherwise prejudice such holder's rights, powers or remedies. The Company will
pay or reimburse the holders of the Notes for all reasonable costs and expenses
(including attorneys' fees) incurred by them in collecting any sums due on the
Notes or in otherwise enforcing any of their rights.
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(b) Annulment of Acceleration -- In the event of each declaration
pursuant to sec ion 7.2(a), the holder or holder of at least 66-2/3% in
outstanding principal amount of the Notes may annul such declaration and its
consequences if no judgment or decree has been entered for the payment of any
amount due pursuant to such declaration and if all sums payable under the Notes
and under this Agreement and the Other Agreements (except any principal or
interest on the Notes which has become payable solely by reason of such
declaration) shall have been duly paid.
7.3 Other Remedies. If any Event of Default shall occur and be
continuing, the holder of any Note also may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance
or of any covenant or other agreement contained in this Agreement or in aid of
the exercise of any power granted in this Agreement. No remedy conferred in
this Agreement upon the holder of any Note is intended to be exclusive of any
other remedy conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
SECTION 8. TAX PROVISIONS
8.1 Interest Rate Adjustment; Tax Disallowances.
(a) Interest Rate Adjustment. (i) In the event that at any time
after the date hereof there is for any reason a change in the Federal Tax Rate
or the Inclusion Rate, other than a change resulting from an event described in
clause (ii) below, then in that event, the interest rate on the Notes shall be
automatically adjusted (but not higher than 10.70% per annum), effective as of
the effective date of change for each such change, to the rate per annum
determined by multiplying the Initial Coupon Rate by the Adjustment Fraction.
A holder of a Note shall determine the adjusted interest rate on the Note held
by it in accordance with the foregoing (which determination shall be conclusive
and binding on the Company absent manifest error, provided that, on request by
the Company, within 10 days after receiving such determination, such holder
will deliver to the Company a copy of the calculations made in making such
determination and, on request by the Company within 10 days after receiving
such calculations, such holder will deliver calculations, obtained at the
expense of the Company, of independent accountants selected by such holder
confirming such determination).
(ii) In the event that on or prior to December 31, 1989 legislation
is enacted pursuant to which the exclusion of interest on the Notes from the
Federal gross income of the holders of the Notes under section 133 of the Code
is eliminated by repeal of such section or otherwise, the interest rate on the
Notes shall be adjusted automatically to be 10.30% per annum, effective as of
the effective date of such elimination. Each holder of a Note shall have the
right, after the occurrence of such event, to surrender the Note or Notes then
held by such holder to the Company, and upon such surrender the Company will at
its expense execute and deliver in exchange for each such Note a new Note which
states an interest rate per annum of 10.30% but is otherwise identical to such
Note so surrendered.
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(iii) The Company unconditionally promises to pay interest on the
Notes from the date of each change in interest rate on the Notes pursuant to
clause (i) or (ii) above at the rate as so adjusted from time to time. If for
any reason (e.g., a retroactive effective date) the effective date of change
for any such change is prior to one or more payment dates for which payments
were due and payable on the Notes, adjustments to payments are required under
this section 8.1(a) and (A) the Company shall promptly upon demand by a holder
of Note pay to such holder the amount by which interest computed at such rate
or rates exceeds the amount of interest actually theretofore paid by the
Company on the Notes or (B) such holder shall promptly upon demand for refund
by the Company pay the amount by which the interest computed at such rate or
rates is exceeded by the amount of interest theretofore paid by the Company on
the Notes. The time at which any such payment must be made shall not be
affected by any request by the Company pursuant to the proviso to clause (i)
above or the fact that the calculations referred to in such proviso has not yet
been delivered.
(ii) The interest rate payable with respect to the Notes shall be
the sum of (i) the Initial Coupon Rate (ii) any amounts payable under 8.1(b)
and Section 8.2 that are denominated as interest payments and (iii) any
interest rate adjustment pursuant to Section 3.1 and 8.1(a)(i) above.
For the purposes of this section 8, the following terms shall have the
meanings ascribed to them below:
"Adjustment Fraction" shall mean the following fraction:
(.83)(1-F)/(.66)(1-XF)
Where F is the new Federal Tax Rate and X is the new Inclusion Rate,
respectively, expressed as a decimal (in the case of any change in only one
such factor then only such factor shall be changed and the remaining factor
shall be the factor then in effect). The Adjustment Fraction will be rounded
to three decimal places with rounding up if the fourth decimal place is .0005
or higher, and rounding down otherwise.
"Federal Tax Rate" at any date shall mean, in the case of a holder of a
Note that is a life insurance company, the maximum incremental percentage rate
from time to time applicable to the taxable income of such company as
determined under section 801 of the Code, or any successor thereto, and in the
case of a holder of a Note that is any other Person, the maximum incremental
percentage rate from time to time applicable to the taxable income of any
ordinary business corporation imposed under section 11 of the Code, or any
successor thereto. The maximum incremental percentage rate applicable with
respect to a life insurance company and an ordinary business corporation at the
Closing Date is 34%.
"Inclusion Rate" shall mean the percentage of interest income received
by a holder of a Note on securities acquisition loans which is not excludible
from its gross income for Federal income tax purposes pursuant to section 133
of the Code. The Inclusion Rate shall be 100% if legislation repealing section
133 of the Code is enacted after December 31, 1989 and is effective with
respect to the Notes.
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(b) Tax Disallowances. In the event that at any time (whether
before or after payment of the Notes) a Change of Law shall occur which, in the
reasonable opinion of a holder of a Note, results in any Tax Disallowance, the
Company shall pay to such holder in immediately available funds at the time or
times specified by such holder amounts that shall be equal to the sum of (i)
any Federal income, excise or other tax, alternative minimum tax, levy or other
cost, including, but not limited to, penalties, additions to taxes or interest
related to any of the foregoing, related to the purchase, ownership or
disposition of any Note that arises directly or indirectly, in whole or in
part, as a result of such Change of Law (all such taxes to be calculated
assuming that such holder is subject to the maximum statutory rate in effect
for the tax year or years in which the Tax Disallowance occurs), plus (ii) an
amount representing the time value of money for the period commencing ten days
after such holder shall have given notice to the Company of its intention to
pay, but in no event earlier than the date such holder shall have paid, any
such tax, levy or other cost listed in clause (i) above and ending on the date
payment hereunder is received by such holder (using a factor of 10.70% per
annum) as applied to the amount of such payment, plus (iii) an amount which,
after giving effect to all taxes attributable to the inclusion of such amount
in the Federal taxable income of such holder, shall equal all taxes due on the
payments set forth in clause (i), but only to the extent that such payments set
forth in clause (i) are not items for which such holder is allowed a tax
deduction. The determination of all amounts hereunder by such holder shall be
conclusive and binding on the Company absent manifest error, Provided that, on
request by the Company, within 10 days after receiving such determination, such
holder will deliver to the Company a copy of the calculations made in making
such determination and, on request by the Company within 10 days after
receiving such calculations, such holder will deliver calculations, obtained at
the expense of the Company, of independent accountants selected by such holder
confirming such determination.
For purposes of this section 8.1(b), the following terms shall have
the meanings ascribed to them as follows:
"Change of Law" shall mean, with respect to any holder, any amendment
to the Code or other statute enacted by the Congress of the United States of
America (other than a change in the Federal Tax Rate or the Inclusion Rate), or
any temporary or final regulation promulgated by the Treasury Department, or
any judicial or written administrative interpretation of any of the foregoing,
after the date hereof or with an effective date after the date hereof, which,
in the opinion of counsel chosen by such holder and reasonably acceptable to
the Company, (a) reduces the amount of interest on the Notes or on any interest
in such Notes which is excluded from such holder's Federal gross income under
section 133 of the Code (or any successor provision) or changes the treatment
of such interest as provided in section 812(g) of the Code (or any successor
provision); (b) imposes any Federal tax (including, but not limited to, minimum
preference or excise taxes) upon, extends any such tax to, or otherwise
increases such holder's liability for any such tax solely and directly as a
result of owning, acquiring or disposing of, obligations the interest on which
is partially exempt from Federal income taxation under section 133 of the Code
(or any successor provision); (c) limits the availability of any deduction,
credit, exclusion or other allowance in computing such holder's liability for
any tax allowable to such holder solely and directly as a result of owning,
acquiring or disposing of obligations the interest on which is partially exempt
from Federal income taxation under section 133 of the Code (or any successor
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provision); or (d) results in such holder's disqualification as an entity with
respect to which an interest exclusion is permitted under section 133 of the
Code (or any successor provision) with respect to such holder's Note, provided
that such holder was a Qualified Holder (as defined in section 8.4) immediately
prior to such Change of Law, and provided further that under no circumstances
shall a Change of Law be deemed to have occurred as a result of the gross
negligence or willful misconduct of any holder relating to purely ministerial
or reporting requirements.
"Tax Disallowance" shall mean (with respect to any holder of a Note)
(a) any direct or indirect limit on the availability of any deduction
(including, but not limited to, any net operating loss deduction), exclusion
(including, but not limited to, the exclusion provided in section 812(g) of the
Code), credit or other allowance that would, but for the Change of Law, have
been allowable in computing such holder's liability for any Federal tax,
whether currently in existence or not, including, but not limited to, the tax
imposed under section 11 of the Code, or any successor thereto, (b) the direct
or indirect imposition of any Federal tax or levy of any nature (including, but
not limited to, preference, excise or alternative minimum taxes), (c) the
increase in any rate of Federal tax, rate of inclusion of any item of
adjustment to the alternative minimum taxable income of such holder, or levy
upon such holder (including, but not limited to, preference, excise or
alternative minimum taxes) on some or all of the payments on the Notes, (d) a
disqualification of such holder as an entity with respect to which an interest
exclusion is permitted under section 133 of the Code (or any successor
provision) or (e) any reduction in the net after-tax yield on any Note to such
holder, based upon a fully taxable Note using the then current Federal Tax Rate
and Inclusion Rate in section 8.1(a) and excluding the effect of being able to
deduct any state or local taxes.
8.2 Determination of Taxability. In the event that a
Determination of Taxability shall occur with respect to a holder of a Note, the
Company agrees, anything contained in the Notes or herein to the contrary
notwithstanding, that the interest rate applicable to the Notes shall be
adjusted, retroactive to the Closing Date (or if any Note was originally
entitled to the benefits of section 133 of the Code but ceased to be so
entitled, then retroactive to the date such Note ceased to be entitled to the
benefits of section 133 of the Code or any successor thereto), to 10.70% per
annum, and the Company shall promptly upon demand of such holder pay to such
holder (a) the amount by which interest computed at such rate or rates exceeds
the amount of interest actually theretofore paid by the Company on the Notes
from the date of issuance (or, if later, the date on which the Notes ceased to
be entitled to the benefits of section 133 of the Code), plus (b) all
penalties, additions to taxes, interest attributable to any deficiencies in the
Federal income tax liability of such holder, or other costs directly resulting
from the Note not being entitled to the benefits of section 133 of the Code,
section 812(g) of the Code or any successor thereto, plus (c) an amount
representing the time value of money for the period commencing 30 days after
such holder shall have given notice to the Company of its intention to pay, but
in no event earlier than the date such holder shall have paid, any payment of
the amounts set forth in clause (b) above and ending with respect to each such
amount on the date the holder receives each such payment from the company
pursuant to clause (b) above (using a factor of 10.70% per annum), applied to
the amount of such payment, plus (d) an amount which, after giving effect to
all Federal, state and local taxes attributable to the receipt such amount or
inclusion
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<PAGE> 33
of such amount in income shall equal all such taxes due on the payments set
forth in clause (b), but only to the extent that such Payments set forth in
such clause are not items for which such holder is allowed a tax deduction.
For purposes of this section 8.2 and section 8.3(c), "Determination of
Taxability" shall mean a determination reasonably made by a holder of a Note
that the transaction evidenced by any Note does not constitute a securities
acquisition loan for purposes of section 133 of the code or any successor
thereto or that the interest income on any Note is not entitled to the benefits
of section 133 of the Code or section 812(q) of the Code or any successor
thereto, other than on account of a Change of Law. A Determination of
Taxability shall only be made following the occurrence of one of the following
events:
(i) subject to the provisions of section 8.3, the issuance to
such holder of a revenue agent's report or notice of proposed
adjustment or a notice of deficiency issued to such holder by the
Internal Revenue Service (an "IRS Notice") with respect to the
inclusion in gross income of more than that percentage of the interest
on the Notes which is equal to the excess of 100% over the Statutory
Exclusion (as such term is defined in section 8.4);
(ii) the occurrence of a final decision, judgment, decree or
other order by the Tax Court or by any other court of competent
jurisdiction with respect to such holder which is not appealable or
with respect to which the time for appeal has expired;
(iii) the failure to provide such holder with a Qualifying
opinion of Counsel within 30 days following the receipt by the Company
of a request therefor under section 8.4;
(iv) the execution of a closing agreement by such holder
under section 7121 of the Code (or any successor provision); or
(v) (A) the issuance by the Internal Revenue Service of a
final adverse determination or a final notice of disqualification
under sections 4975(e)(7) and 401(a) of the Code to the Company, from
which all administrative and judicial appeals have been exhausted, or
withdrawal by the Company of its request to issue a favorable
determination letter under such sections, or(B) the failure of the
Internal Revenue service to issue a favorable determination letter
with respect to either of the ESOPs under such sections within 24
months (increased by any period of time during such 24-month period
during which the Internal Revenue Service was not issuing
determination letters) from the Closing Date,provided that a
Determination of Taxability shall not be deemed to have occurred if,
not later than the last day of such 24-month period, and not later
than the last day of each six-month period thereafter (unless the
Company, prior to the end of such six-month period thereafter, shall
have obtained and delivered to the holders of the Notes such a
determination letter), a written opinion, obtained at the Company's
expense, of recognized tax counsel reasonably satisfactory to the
Required Holder(s) stating that there is no issue related to the
Company's qualification which should cause the Internal Revenue
Service not to issue such determination letter.
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Notwithstanding the foregoing provisions of this paragraph, a Determination of
Taxability shall be deemed not to have occurred as to any Note if the interest
exclusion of section 133 of the Code is unavailable to any holder of a Note by
reason of (i) the failure of such holder at any time to qualify as an entity
described in section 133 (a) of the Code, (ii) such holder being or becoming an
employer of any employee covered by the Plan (within the meaning of such term
used in section 133(b)(2)(B) of the Code), (iii) such holder being or becoming
a member of the same "controlled group of corporations" (within the meaning of
such term used in section 133(b)(4) of the Code) as the Company or (iv) any
other act or failure to act by such holder which would cause the interest
exclusion of section 133 of the Code (as in effect on the date hereof) not to
be available to such holder.
8.3 Contest of Tax.
(a) The determination of whether and to what extent it shall be
appropriate (i) to enter into discussions with, and make submissions to, the
internal Revenue Service in respect to any inquiry or claim questioning the
exclusion from gross income of any holder of a Note of the Statutory Exclusion
(as such term is defined in section 8.4) of the interest accrued or received on
such holder's Note (an "Exclusion Claim"), or (ii) to pay any asserted
deficiency in respect of an Exclusion Cl-aim or to file a claim for refund in
respect thereof or to prosecute any appeals from any adverse determinations in
respect thereof, shall in each case be determined in good faith by and shall be
in the sole discretion of such holder. In connection with the foregoing, such
holder shall notify the Company in writing of any Exclusion Claim and shall use
its best efforts to keep the company advised of any Exclusion Claim and the
status thereof, and will permit the Company to suggest appropriate responses
and actions that may reasonably be made and taken by such holder in respect
thereof, but the decision as to such responses and actions shall be solely that
of such holder and the holder shall have the sole right to control all
proceedings relating thereto, having due regard for its entire tax position on
all open matters and not just those matters relating to the Exclusion Claim.
For the purposes of this section 8.3, the right of a holder to control any
proceeding shall mean the right to control the submission and content of
documentation, protests, memoranda of fact and law and briefs, the conduct of
oral arguments or presentations, the selection of witnesses and the negotiation
of stipulations of fact, all as may be appropriate in proceedings before the
Internal Revenue Service, the Tax Court, Claims Court, a Federal District Court
or any court of appellate jurisdiction, as the case may be. The holder may in
its sole discretion settle or compromise any Exclusion Claim, provided the
holder gives the Company notice of its intention to settle or compromise the
Exclusion Claim. If, after receiving the notice referred to in the preceding
sentence and within 45 days of the selection of counsel, the Company provides
the holder with an opinion, reasonably satisfactory to the holder, of
nationally recognized counsel, independent of the ESOPs and the Company and
reasonably satisfactory to the holder, that it is highly probable that the
holder would prevail in litigation with respect to such Exclusion Claim, then,
if the holder settles or compromises the Exclusion Claim, to the extent payment
was made by the Company under paragraph 8.2, the holder shall be deemed to have
received a refund in the amount of such payment, and shall immediately return
such amount to the Company; to the extent payment was not made, the
Determination of Taxability giving rise to the disallowance shall be deemed not
to have occurred. Alternatively, if the Company provides the holder with an
opinion, reasonably satisfactory to
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<PAGE> 35
the holder, of nationally recognized counsel, independent of the ESOPs and the
Company and reasonably satisfactory to the holder, that it is more likely than
not that the holder would prevail in litigation with respect to such Exclusion
Claim, then, if the holder settles or compromises the Exclusion Claim, if the
amount paid by Company pursuant to paragraph 8.2 exceeds 60% of the amount
payable pursuant to paragraph 8.2, the holder shall pay such excess to the
Company; and if 60% of the amount payable pursuant to paragraph 8.2 exceeds the
amount paid by the Company pursuant to paragraph 8.2, the Company shall pay the
amount of such excess to the holder in complete accord and satisfaction of its
obligations as to such issue under paragraph 8.2.
(b) Should any holder determine to take any action with respect to
any Exclusion Claim, the Company shall reimburse and hold harmless such holder
on an after-tax basis for all out-of-pocket expenses incurred in connection
therewith, including, without limitation, all fees and disbursements of
attorneys, accountants and expert witnesses; provided, however, that if the
Company gives such holder written notice that the Company does not want such
holder to contest such Claim and pays such holder the amounts due under this
section 8, the Company will not be responsible for any expenses incurred after
receipt of such notice by such holder.
(c) If the Company shall make any payment to any holder pursuant
to section 8.1(b) or 8.2 and such holder shall thereafter receive a refund or
credit of tax pursuant to section 6402 of the Code for any taxable year to
which such payment related in respect of a claim that part of the interest on
the Notes to which such payment related was excludible from such holder's
Federal gross income, such holder shall pay to the Company, promptly upon its
receipt of such refund or credit, the sum of:
(i) an amount equal to the amount previously paid to such
holder as reimbursement for tax pursuant to section 8.1(b) or 8.2 with
respect to the interest on the Notes for such taxable year to which
such claim for refund related (the "Disputed Interest") multiplied by
a fraction (not greater than one) the numerator of which is the lesser
of the amount of the refund or credit received and the tax paid with
respect to the Disputed Interest and the denominator of which is the
amount of tax paid by such holder with respect to such Disputed
Interest; and
(ii) the amount of any refunds of amounts under section
8.2(b) that had been paid with respect to such Disputed Interest and
with respect to which such holder had been paid pursuant to section
8.1(b) or 8.2.
For purposes of this section 8.3(c), a holder shall be treated as
receiving a refund to the extent any amount previously paid by the Company
pursuant to section 8.2 is no longer in dispute (as determined below) and such
amount shall be paid to the Company if (a) in the case of a Determination of
Taxability resulting solely from an event described in item (iii) of the
definition of Determination of Taxability, upon such holder's receiving a
Qualifying opinion of Counsel (as such term is defined in section 8.4) and (b)
in the case of a Determination of Taxability resulting solely from the issuance
to such holder of an IRS Notice, upon the abandonment, settlement or final
determination favorable to such holder of the relevant claims or adjustments in
such IRS Notice. The amount no longer in dispute with
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respect to an event described in item (iii) of the definition of Determination
of Taxability shall be the amount or amounts specified in such opinion of
counsel and with respect to an event described in item (i) of the definition of
Determination of Taxability shall be the amount or amounts relating to the
claim or adjustment asserted in the IRS Notice which the Internal Revenue
Service has abandoned or agreed not to prosecute further or for which there is
a final determination favorable to such holder, but in no event greater than
the amount previously paid by the Company pursuant to section 8.2.
Notwithstanding the foregoing, to the extent that any refund is received by any
holder after the delivery by the Company to such holder of a notice that the
Company does not want the holder to pursue any contest, the Company shall not
be entitled to any portion of such refund.
8.4 Request for Qualifying Opinion of Counsel. If any Qualified
Holder determines in good faith after consultation with counsel that there is a
substantial likelihood for any reason whatsoever that such Qualified Holder
will be required to include more than that percentage of the interest on the
Notes which is equal to the excess of 100% over the Statutory Exclusion in its
gross income, such Qualified Holder shall be entitled to request a Qualifying
opinion of Counsel with respect to interest on the Notes for a period
commencing with the date of issuance of the Notes and continuing through the
date of such request or for any lesser period specified in such Qualified
Holder's request. If such a request is made, such Qualified Holder shall
supply the counsel rendering such opinion with such information as may be
reasonably requested by such counsel in order for it to form a basis for
rendering the opinion requested.
For purposes of this section 8.4, the following terms shall have the
meanings ascribed to them as follows:
"Qualified Holder" shall mean any holder of a Note who qualifies for
the exclusion from gross income under section 133 of the Code or any successor
provision.
"Qualifying Opinion of Counsel" shall mean a written opinion, provided
at the expense of the Company, of recognized tax counsel, selected by the
Company and reasonably satisfactory to the holder seeking such opinion under
this section 8.4, to the effect that interest on the Notes in an amount equal
to the Statutory Exclusion is excludible from such holder's gross income.
"Statutory Exclusion" shall mean the percentage of interest received
by a Qualified Holder or accrued on the Notes at the time held by a Qualified
Holder that would at the time in question be excludible from gross income of
such Qualified Holder pursuant to section 133 of the Code (or any successor
provision), assuming that the Notes satisfied the conditions of such section.
8.5 Successors and Assigns. Any Person at any time holding any
Note shall be entitled to the benefits of this section 8, and each Person which
at any time shall be a holder of any Note in accordance with section 10.3 shall
be entitled to the benefits of this section 8 for the period in which such
Person be such a holder and in which the provisions of this section 8 would be
applicable to such Note.
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SECTION 9. INTERPRETATION OF THIS AGREEMENT
9.1 Terms Defined. As used in this Agreement (including
Attachments), the following terms have the respective meanings set forth below
or in the section indicated:
"Affiliate" shall mean any Person directly or indirectly controlling or
controlled by or under common control with the Company or any Subsidiary,
provided that, for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of Voting Stock or
by contract or otherwise, and provided further that you shall be deemed not to
be an Affiliate of the Company, the Company or any of its Subsidiaries.
"Agreement" shall mean this Note Agreement, dated as of June 16, 1989,
between the Company and you (including Attachments), as amended or modified
from time to time in accordance with the provisions hereof.
"Business Day" shall mean any day except a Saturday, a Sunday or other
day on which commercial banks in New York City are required or authorized by
law to be closed.
"Change in Control" shall mean the actual occurrence of any of the
following: (i) any Person or group of related Persons shall purchase or
otherwise acquire in one or more transactions (a) beneficial ownership of more
than 50% of the outstanding Voting Stock of the Company or (b) all or
substantially all of the assets of the company; (ii) at any time within a
two-year period, a majority of the members of the Board of Directors of the
Company shall cease to serve in such capacity; or (iii) the Company shall
consolidate with or merge with any Person (other than a Subsidiary) pursuant to
one or more transactions in which shares of Voting Stock of the Company are
changed or exchanged; and at the time of the occurrence of any such event
described in clauses (i) through (iii) above, or at any time within the six
months prior to the occurrence thereof if related to the occurrence of such
event, or at any time within the six months after the occurrence of such event,
a Downgrade Event or a Further Downgrading occurs.
"Closing Date" section 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Code Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company is treated as a "single employer"
under subsection (b), (c), (m), (n) or (o) of section 414 of the Code.
"Company Shares" shall mean shares of Common Stock, par value $1.00
per share, of the Company issued on the Closing Date.
"Debt" section 6.1
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"Default" shall mean any event or condition that, with the passage of
time or giving of notice or both, would become an Event of Default.
"Domestic Subsidiary" shall mean any Subsidiary which owns a Principal
Property.
"Downgrade" shall be deemed to have occurred in the event the Company's
long-term senior unsecured indebtedness shall be rated less than "Ba2" and "BB"
by Moody's and Standard & Poor's, respectively (or in either case, the
comparable ratings then in existence) or shall be so rated by only one or
neither of such rating agencies if the Company has not delivered the notice
required by clause (B) or (C) of section 3.2(a)(iii) within the period of time
specified in such clause (B) or (C), or the Company has not obtained a private
credit rating as specified in section 3.2(a)(iii)(D)(y) or the Company has
obtained the private credit rating or ratings as specified in section
3.2(a)(iii)(D)(z).
"Downgrade Event" shall be deemed to have occurred in the event the
Company's long-term senior unsecured indebtedness shall be rated less than
"Baa3" by Moody's and less than "BBB-" by Standard & Poor,s (or in either case,
the comparable ratings then in existence) or shall be so rated by only one or
neither of such rating agencies if the Company has not delivered the notice
required by clause (B) or (C) of section 3.2(a)(iii) within the period of time
specified in such clause (B) or (C), or the Company has not obtained a private
credit rating as specified in section 3.2(a)(iii)(D)(y) or the Company has
obtained the private credit rating or ratings as specified in section
3.2(a)(iii)(D)(z).
"Downgrade Event Adjustment" shall mean the product of 1.00% and ESOP
Adjustment Factor. The Downgrade Event Adjustment shall be redetermined each
time there is a change in the ESOP Adjustment Factor, which shall be each time
there is a change in either "F" or "X" (as defined in the definition of "ESOP
Adjustment Factor").
"Downgrade Readjustment" shall mean the product of 1.00% and the ESOP
Adjustment Factor. The Downgrade Readjustment shall be redetermined each time
there is a change in the ESOP Adjustment Factor, which shall be each time there
is a change in either "F" or "X" (as defined in the definition of "ESOP
Adjustment Factor").
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders,
awards and standards promulgated by the government of the United States of
America or by any state or municipality thereof or by any court, agency,
instrumentality, regulatory authority or commission of any of the foregoing
concerning the protection of the environment, the air, the waters and ground
water contamination.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, including all regulations from time to time promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company would be deemed to be a "single
employer" within the meaning of section 414(b) or (c) of the Code.
33
<PAGE> 39
"ESOPs" shall mean the Mapco Inc. and Subsidiaries Profit Sharing and
Savings Plan, effective July 1, 1987, as amended and restated effective January
1, 1989, and any successor thereto, and the Mapco Coal Inc.'s and Subsidiaries
Profit Sharing and Savings Plan, effective January 1, 1963, as amended and
restated effective as of July 1, 1989, and any successor thereto.
"ESOP Adjustment Factor" shall mean the fraction resulting from the f
flowing formula:
(1-F)
------
(1-XF)
Where
F = the maximum Federal Tax Rate as of the date of calculation, and
X = the Inclusion Rate as of the date of calculation.
"ESOP Documents" shall mean the ESOPs, Trust Agreements, ESOP Loan
Agreements, ESOP Notes and the Stock Purchase Agreements.
"ESOP Loan Agreements" shall mean the substantially identical Loan
Agreements between the Company and the Trustee in form and substance
satisfactory to you as provided in section 1.4(d), but in any event containing
(i) such terms and conditions as are necessary or desirable to qualify the loan
or loans made thereunder as an "exempt loan" under Tress. Reg. Section
54.4975-7, and (ii) subject to the requirements referred to in clause (i)
above, terms sufficiently parallel to the terms of this Agreement to permit the
extension of credit represented by the Notes to qualify as a "securities
acquisition loan" within the meaning of Section 133(b) of the Code.
"ESOP Notes" shall mean the promissory notes payable to the Company
executed and delivered by the Trustee on behalf of the ESOPs in connection with
the ESOP Transactions and substantially in the form of Exhibit A to each of the
ESOP Loan Agreements.
"ESOP Transactions" shall mean the loans by the Company to the ESOPs
on the date of the closing in an aggregate principal amount of no more than
$85,000,000 pursuant to the ESOP Loan Agreements and the purchase by the
Trustee of the Company Shares on such dates pursuant to the terms of the Stock
Purchase Agreements.
"ESOP Trusts" shall mean the trusts forming part of the ESOPs created
under the Trust Agreements.
"Event of Default" section 5.1.
"Event Period" shall mean the period commencing on the Closing Date an
ending on the later of (a) the third anniversary of the closing Date and (b)
the last day of the 18-month period specified in section 3.1.
34
<PAGE> 40
"Further Downgrading" shall mean that either Moody's or Standard &
P:or a has downgraded the Company's long-term senior unsecured debt at any time
within six months of the occurrence of any event described in clauses (i)
through (iii) in the definition of "Change in Control" and, after such
downgrading, is rated less than "Baa3" by Moody's and less than "BBB-" by
Standard & Poor's (or, in either case, the comparable ratings then in
existence).
"Initial Coupon Rate" section 1.1.
"Make-Whole Premium Amount" shall mean a premium, determined as of the
date of any prepayment of a Note pursuant to section 2.2, any purchase of a
Note by the Company pursuant to section 3.2 or any acceleration of a Note or
the Notes pursuant to section 7.2, equal to the amount (but not less than zero)
obtained by subtracting (a) the sum of the unpaid principal amount of such Note
(or portion thereof) being prepaid, purchased or accelerated and the amount of
interest accrued thereon to the payment date, from (b) the sum of the Current
Values of all amounts of principal of and interest on such Note (or portion
thereof) (using an assumed interest rate equal to 10.70% per annum for interest
accruing after the payment date, regardless of the actual rate of interest then
applicable to such Note) being paid that would otherwise have become due on and
after the date of such determination if such Note were not being prepaid,
accelerated or purchased.
The "Current Value" of the amount of principal and interest payable on
a Note means such amount discounted (on a semiannual basis) to its present
value on the date of such prepayment, acceleration or purchase, in accordance
with the following formula:
Current Value = Amount Payable
---------------
(1 + d/2)n
where "d" is the sum of (1) the Treasury Yield per annum, expressed as a
decimal, and (2) 0.50%, and "n" is an exponent (which need not be an integer)
equal to the number of semiannual periods and portions thereof (any such
portion of a period to be determined by dividing the number of days in such
portion of such period by 180) between the date of such prepayment,
acceleration or purchase and the due date of the amount payable. For such
purpose the due date of any amount of principal of or interest on a Note being
paid means the date or dates as of which such amount is scheduled to be paid,
taking into account, if applicable, the relevant provisions of section 2 with
respect to the manner in which partial prepayments shall be applied.
The "Treasury Yield" shall be determined by reference to the most
recent Federal Reserve Statistical Release H.15(519) which has become publicly
available no more than five Business Days prior to the date fixed for payment
(or, if such statistical Release is no longer published, any publicly available
source of similar market data), and shall be the most recent weekly average
yield on actively traded U.S. Treasury securities adjusted to a constant
maturity equal to the Remaining Life of the Notes. The "Remaining Life of the
Notes" shall equal, at any date of prepayment, acceleration or purchase, the
number of years obtained by dividing (x) the then outstanding principal amount
of the Notes being prepaid into (y) the sum of the products obtained by
multiplying (A) the amount of each then remaining principal payment, including
the payment at final maturity, in respect of the Notes, by (B) the number
35
<PAGE> 41
of years (calculated to the nearest one-twelfth) @hat will elapse between such
date and the date on which such payment is to be made (assuming for purposes of
clauses (A) and (B) that any optional prepayment of any Note pursuant to
section 2.2, any purchase of any Note pursuant to section 3.2, or any
acceleration of a Note or the Notes pursuant to section 7.2, as applicable, in
respect to which the Make-Whole Premium Amount is then being determined, had
not occurred). If the Remaining Life of the Notes is not equal to the constant
maturity of a U.S. Treasury security for which a weekly average yield is given,
the Treasury Yield shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of (as) the
actively traded U.S. Treasury security with a maturity closest to and less than
the Remaining Life of the Notes and (bb) the actively traded U.S. Treasury
security with a maturity closest to and greater than the Remaining Life of the
Notes, except that if the Remaining Life of the Notes is less than three
months, the weekly average yield on actively traded U.S. Treasury securities
adjusted to a constant maturity of three months shall be used. The Treasury
Yield shall be computed to the fifth decimal place (one thousandth of a
percentage point) and then rounded to the fourth decimal place (one hundredth
of a percentage point).
"Moody's" shall mean Moody's Investors Service, Inc. and any successor
thereto which is a nationally recognized rating agency or, if neither Moody's
Investors Service, Inc. nor any such successor shall remain in the business of
rating long-term corporate debt obligations, a nationally recognized rating
agency in the United States of America selected by the Required Holder(s).
"Mortgage" and "Mortgages" section 6.1.
"Multiemployer Plan" shall mean any Plan that is a I.multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" section 1.1.
"Option Event" section 3.1.
"Other Agreements" section 1.1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or a governmental agency or
political subdivision.
"Plan" shall mean an "employee pension benefit plan" (as defined in
section 3(2) of ERISA) which is or has been established and maintained, or to
which contributions are or have been made, by the Company, or an employee
pension benefit plan as to which the Company or any of its Code Affiliate would
be treated as a contributory sponsor under section 4069 of ERISA if it were to
be terminated.
36
<PAGE> 42
"Principal Property" shall mean (a) any interest in property located
in the United States of America which is capable of producing crude oil,
natural gas liquids or coal in paying quantities, (b) any pipeline of four-inch
diameter or larger located within the United States of America (including
without limitation all real and personal property required for the use of such
pipeline) and (c) any refining or manufacturing facility (including, in each
case, the equipment therein but excluding related transportation or marketing
facilities) and any propane outlets or service stations located within the
United States of America, in each case whether owned at November 15, 1982 or
thereafter acquired (other than any facility acquired after November 15, 1982
principally for the control or abatement of atmospheric pollutants or
contaminants, or water, noise, odor or other pollution, or any facility
financed from the proceeds of pollution control or revenue bonds), having a
gross book value (without deduction of any applicable depreciation reserves) on
the date as of which the determination is being made of more than one half of
one percent of Consolidated Net Tangible Assets.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchasers" section 4.1.
"Qualification Date" shall mean the earlier of the following dates:
(i) the date on which the Company and the ESOPs shall receive, after the
exhaustion of all legal remedies, a final determination that the Plans fail to
qualify under Section 401(a) of the Code or are not "employee stock ownership
plans" within the meaning of section 4975(e)(7) of the Code or that the trusts
under the Trust Agreements fail to meet the requirements for tax exemption
under section 501(a) of the Code; or (ii) the last day of the 24-month period
immediately following the Closing Date (increased by any period of time during
such period in which the Internal Revenue Service was not issuing determination
letters), provided that a Qualification Date shall not be deemed to have
occurred if, not later than the last day of such 24-month period, and not later
than the last day of each six-month period thereafter (unless the Company,
prior to the end of such six-month period thereafter, shall have obtained and
delivered to the holders of the Notes such a determination letter), the Company
shall have delivered to the holders of the Notes a written opinion, obtained at
the Company's expense, of recognized tax counsel reasonably satisfactory to the
Required Holder(s) stating that there is no issue related to the Company's
qualification which should cause the Internal Revenue Service not to issue such
determination letter.
"Readjustment Event" shall be deemed to have occurred if the Company's
long-term senior unsecured indebtedness is upgraded by Moody's and Standard &
Poor's to a rating of at least "Baa3" and "BBB-", respectively (or, in either
case, the comparable ratings then in existence).
"Required Holder(s)" shall mean at any time, the holder or holders of
75% of the then outstanding aggregate principal amount of the Notes.
"Security" shall have the same meaning as in section 2(l) of the
Securities Act of 1933, as amended.
37
<PAGE> 43
"Significant Subsidiary" shall mean Mapco Coal Inc., MAPCO
Transportation Inc., MAPCO Petroleum Inc., MAPCO Gas Products Inc. and any
Subsidiary which meets the definition of "Significant Subsidiary" set forth in
Rule 1-02 of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended.
"Significant Subsidiary Default" shall mean the occurrence at any time
during the Event Period of (i) the failure by any Significant Subsidiary to
make, at final maturity thereof, one or more payments due on indebtedness for
borrowed money, which payment or payments are in an aggregate amount exceeding
$10,000,000; or (ii) any event shall occur or any condition shall exist, the
effect of which event or condition is to cause (or permit one or more Persons
to cause, and such Person or Persons shall have caused) more than $10,000,000
of aggregate indebtedness for borrowed money of any Significant Subsidiary to
become due before its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment, provided that, (y) in respect of
indebtedness for borrowed money of any Significant Subsidiary that (A) is in
existence on the date hereof or is hereafter assumed (including assumption by
operation of law) by any Significant Subsidiary from a Person that is not an
Affiliate (or is hereafter assumed from a Person that is an Affiliate and is in
existence on the date hereof) and (B) provides for automatic acceleration of
such indebtedness upon the occurrence of a default under any agreement
governing such indebtedness without notice to such Significant Subsidiary, no
Significant Subsidiary Default shall exist following such a default until the
Person to which such indebtedness is owed shall have notified such Significant
Subsidiary or taken other action to indicate that such acceleration has
actually occurred and (z) no Significant Subsidiary Default shall exist unless
at the time of the occurrence of such event or as a result of the occurrence of
such event a Downgrade Event exists or occurs.
"Standard & Poor's" shall mean Standard & Poor's Corporation and any
successor thereto which is a nationally recognized rating agency or, if neither
Standard & Poor's Corporation nor any such successor shall remain in the
business of rating long-term corporate debt obligations, a nationally
recognized rating agency in the United States of America selected by the
Required Holder(s).
"Stock Purchase Agreements" shall mean the substantially identical
Stock Purchase Agreements, dated as of June 16, 1989, between the Company and
the Trustee.
"Subsidiary" shall mean any corporation or other entity at least a
majority of the outstanding voting shares of which is at the time directly or
indirectly owned or controlled (either alone or through Subsidiaries or
together with Subsidiaries) by the Company or another Subsidiary.
"Trust Agreements" shall mean the Mapco Inc. and Subsidiaries Profit
Sharing and Savings Trust Agreement, as amended and restated effective as of
January 1, 1989, and the Mapco Coal Inc.'s Subsidiaries Profit Sharing and
Savings Trust, as amended and restated effective as of July 1, 1989, both
between the Bank of Oklahoma, N.A. and the Company, as the same may have been
and may in the future be, from time to time amended or supplemented in
accordance with its terms.
38
<PAGE> 44
"Trustee" shall mean the Bank of Oklahoma, N.A. or its successors, as
trustee under the Trust Agreements.
"Voting Stock" shall mean Securities, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions) of any Person.
9.2 Directly or Indirectly. Where any provision in this Agreement
refers to any action which any Person is prohibited from taking, the provision
shall be applicable whether the action is taken directly or indirectly by such
Person, including actions taken by, or on behalf of, any partnership in which
such Person is a general partner and all liabilities of such partnerships shall
be considered liabilities of such Person under this Agreement.
9.3 Governing Law. This Agreement and the Notes shall be governed
by and construed in accordance with New York law.
SECTION 10. PURCHASER'S SPECIAL RIGHTS
10.1 Direct Payment. The Company agrees that, notwithstanding any
provision in this Agreement or the Notes to the contrary, it will pay all sums
becoming due to any institutional holder of Notes in the manner provided in
Attachment A or in any other manner as any institutional holder may designate
to the Company in writing (without presentment of or notation on the Notes).
Any holder of a Note which elects the benefit of this section agrees that, in
the event of a transfer of its Notes, (a) a notation will be made thereon of
all principal, if any, paid on its Notes, and the date to which interest has
been paid, and (b) notice will be given to the Company of the name and address
of the transferee of the transferred Notes.
10.2 Issue Taxes. The Company will pay all transfer, stamp and
similar taxes in connection with the issuance and sale of the Notes and in
connection with any modification of the Notes and will save you harmless
against any and all liabilities relating to such taxes.
10.3 Registration of Notes. The Company will cause to be kept
registers for the registration and transfer of the Notes. The names and
addresses of the holders of the Notes, and all transfers of the name and
addresses of the transferees of such Notes, will be registered in the
applicable register. The Person in whose name any Note is registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement, and the Company shall not be affected by any notice or knowledge to
the contrary.
10.4 Exchange of Notes. Upon surrender of any Note to the Company,
the Company, upon request, will execute and deliver at the Company's expense
(except as provided below), new Notes, in denominations of at least $50,000
(except as may be necessary to reflect any principal amount not evenly
divisible by $50,000), in an aggregate principal amount equal to the
outstanding principal amount of the surrendered Note. Each new Note shall be
payable to any Person as the surrendering holder may request. Each new Note
shall be dated and bear interest from the date to which interest has been paid
on the surrendered Note or dated the date of the surrendered Note if no
interest has been paid
39
<PAGE> 45
thereon. The Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any transfer.
10.5 Replacement of Notes. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Note (provided that if the holder of the Note is an institutional holder, a
certificate signed by an officer thereof as to such loss, theft or destruction
shall be deemed to be reasonably satisfactory evidence to the Company) and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of the Note
is you or any solvent institutional holder of recognized standing, its
own agreement of indemnity shall be deemed to be reasonably
satisfactory to the Company), or
(b) in the case of mutilation, upon surrender and
cancellation of the Note, the Company at its expense will execute and
deliver a new Note, dated and bearing interest from the date to which
interest has been paid on the lost, stolen, destroyed or mutilated
Note or dated the date of the lost, stolen, destroyed or mutilated
Note if no interest has been paid thereon.
SECTION 11. MISCELLANEOUS
11. Notices.
(a) Except as otherwise explicitly provided in this Agreement, all
notices and other communications under this Agreement or under the Notes will
be in writing and will be telecopied (followed by written confirmation of
receipt), hand delivered, delivered by overnight courier, or mailed by
registered or certified mail, postage prepaid:
(i) if to you, in the manner provided in Attachment A or in
any other manner as you may have most recently advised the Company in
writing, or
(ii) if to the Company, to the attention of the
Secretary and the Treasurer, at 1800 South Baltimore
Avenue, Tulsa, Oklahoma 74119.
(b) Any notice so addressed and (i) telecopied or hand delivered,
shall be deemed to be given the same day such notice is telecopied
(and followed by oral confirmation of receipt) or hand delivered, (ii)
delivered by overnight courier, shall be deemed to be given the next
Business Day after such notice is so delivered, or (iii) mailed by
registered or certified mail, shall be deemed to be given three
Business Days after such notice is mailed.
11.2 Reproduction of Documents. This Agreement and all related
documents, including (a) consents, waivers and modifications which may
subsequently be executed, (b) documents received by you at the closing of your
purchase of the Notes (except the Notes themselves), and (c) financial
statements, certificates and other information previously or
40
<PAGE> 46
subsequently furnished to you, may be reproduced by you or the Company by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and you or the Company may destroy any original document
so reproduced. You and the Company agree and stipulate that any such
reproduction shall, to the extent permitted by applicable law, be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not the
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of the reproduction shall
likewise be admissible in evidence.
11.3 Purchase for Investment; Source of Funds.
(a) You represent to the Company that you are purchasing the Notes
for your own account for investment and with no present intention of
distributing or reselling any of the Notes, but without prejudice to your right
at all times to sell or otherwise dispose of all or part of the Notes under an
effective registration statement under the Securities Act of 1933, as amended,
or under an exemption from registration available under that act and provided
that the disposition of your Property shall at all times be and remain in your
control.
(b) You represent that no part of the funds to be used by you to
pay the purchase price of the Notes purchased by you hereunder constitutes
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest. As used in this
section 11.3(b), the terms "employee benefit plan" and .,separate account"
shall have the respective meanings assigned to such terms in section 3 of
ERISA.
11.4 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties except that your obligation to purchase the Notes (as provided in
section 1.2) shall be a right which is personal to the Company and such right
shall not be transferable or assignable by the Company to any other Person
(including successors at law) whether voluntarily or involuntarily. The
provisions of this Agreement and the Other Agreements are intended to be for
the benefit of all holders, from time to time, of a Note, and shall be
enforceable by any holder, whether or not an express assignment of rights under
this Agreement has been made by you or your successor or assign,
11.5 Amendment and Waiver. This Agreement and the Other Agreements
may be amended, and the observance of any term of this Agreement and the Other
Agreements may be waived, with (and only with) the written consent of the
Company and the holders of 66-2/3% of the outstanding principal amount of the
Notes, provided that no amendment or waiver of any of the provisions of
sections 1, 2, 3, 4, 6, 8 and 10 shall be effective as to any holder of a Note
unless consented to by such holder in writing, and provided further that no
amendment or waiver shall, without the written consent of the holders of all
the outstanding Notes, (i) change the amount or time of any prepayment, payment
of principal or premium or, subject to section 8, the rate or time of payment
of interest, (ii) amend section 7 or (iii) amend this section 11.5(a). Executed
or complete and correct copies of any amendment or waiver effected pursuant to
the provisions of this section 11.5(a) shall be delivered by the Company to
each holder of an outstanding Note promptly following the date on which the
same shall become effective.
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<PAGE> 47
11.6 Duplicate Originals. Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
11.7 Survival of Covenants and Representations; Survival of
Indemnification. All covenants, representations and warranties made by the
Company herein and in any certificates delivered pursuant hereto, whether or
not in connection with the Closing Date, shall survive the closing and the
delivery of this Agreement and the Notes. The indemnification provided in
section 8 shall survive the payment of the Notes.
11.8 Severability. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in full force and
effect as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts, or portion which may, for any reason,
be hereafter declared invalid.
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement and
return a counterpart to the Company, whereupon this Agreement will become
binding between us in accordance with its terms.
Very truly yours,
MAPCO INC.
By /s/ James J. Davis
-----------------------------
Vice President and Treasurer
42
<PAGE> 48
The foregoing Agreement is hereby accepted as of the date
first above written.
IDS LIFE INSURANCE COMPANY
By: /s/ ReBecca Roloff
-------------------------------
Name: ReBecca Roloff
----------------------------
Title: Executive Vice President
---------------------------
Insurance Operations
<PAGE> 49
The foregoing Agreement is hereby accepted as of the date
first above written.
IDS LIFE INSURANCE COMPANY
By: /s/ Nancy Hughes
-------------------------------
Name: Nancy Hughes
----------------------------
Title: Assistant Vice President
---------------------------
and Assistant Secretary
<PAGE> 50
The foregoing Agreement is hereby accepted as of the date
first above written.
AMERICAN ENTERPRISE LIFE INSURANCE COMPANY
By: /s/ Donald E. Kreider
-------------------------------
Name: Donald E. Kreider
----------------------------
Title: President
---------------------------
<PAGE> 51
The foregoing Agreement is hereby accepted as of the date
first above written.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Willard L. Adams
-------------------------------
Title: Vice President
<PAGE> 52
The foregoing Agreement is hereby accepted as of the date
first above written.
STEIN ROE FARNHAM/KEYSTONE PROVIDENT
LIFE INSURANCE COMPANY
By: /s/ Donvan J. Paul
------------------------------
Title: Vice President
<PAGE> 53
The foregoing Agreement is hereby accepted as of the date
first above written.
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Joe C. Heiny
------------------------------
Title: Assistant Counsel
By: /s/ G. E. Alton
------------------------------
<PAGE> 1
EXHIBIT 10.(b)
Form of Agreement between MAPCO Inc. and certain officers and key
employees relating to indemnification
<PAGE> 2
PRIVILEGED AND CONFIDENTIAL
INDEMNITY AGREEMENT
AGREEMENT, between _________________ (the "Indemnitee") and MAPCO
Inc., a Delaware corporation (the "Company"), is effective as of the date
Indemnitee became an officer or director of the Company.
WHEREAS, Indemnitee is a director or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies in today's environment;
WHEREAS, basic protection against undue risk of personal liability of
directors and officers heretofore has been provided through insurance coverage
providing reasonable protection at reasonable cost, and Indemnitee has relied
on the availability of such coverage; but as a result of substantial changes in
the marketplace for such insurance it has become increasingly more difficult to
obtain such insurance on terms providing reasonable protection at reasonable
cost;
WHEREAS, the By-laws of the Company require the Company to indemnify
and advance expenses to its directors and officers to the full extent permitted
by law and Indemnitee has been serving and continues to serve as a director or
officer of the Company in part in reliance on such By-laws;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner, the inadequacy of the
Company's director and officer liability insurance coverage, and Indemnitee's
reliance on the aforesaid By-laws, and in part to provide Indemnitee with
specific contractual assurance that protection afforded by such By-laws will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of such By-laws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification of and the
advancing of expenses to Indemnitee to the full extent (whether partial or
complete) permitted by law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the continued coverage of Indemnitee under
the Company's directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee's
service to the Company, directly or indirectly, and intending to be legally
bound hereby, the parties hereto agree as follows:
<PAGE> 3
2
1. In the event Indemnitee was, is or becomes a party to or a witness
or other participant in, or is threatened to be made a party to or a witness or
other participant in, any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation, whether conducted by the Company
or any other party, that Indemnitee in good faith believes might lead to any
such action, suit or proceeding, whether civil, criminal, administrative,
investigative or otherwise (a "Claim") by reason of (or arising in part out of)
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, trustee, agent or fiduciary of another officer,
employee, trustee, agent or fiduciary of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, or by reason
of anything done or not done by Indemnitee in any such capacity (an
"Indemnifiable Event"), the Company shall indemnify Indemnitee to the fullest
extent permitted by law (the determination of which shall be made by the
Reviewing Party referred to below) as soon as practicable but in any event no
later than thirty days after written demand is presented to the Company,
against any and all expenses (including attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
preparing for and defending or participating in the defense of (including on
appeal) any Claim relating to any Indemnifiable Event) (collectively
"Expenses"), judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such judgments, fines, penalties or amounts
paid in settlement) of such Claim. If so requested by Indemnitee, the Company
shall advance (within two business days of such request) any and all such
Expenses to Indemnitee; provided, however, that (i) the foregoing obligation
of the Company shall be subject to the condition that an appropriate person or
body (the "Reviewing Party") shall not have determined (in a written opinion in
any case in which the special, independent counsel referred to in Section 2
hereof is involved) that Indemnitee would not be permitted to be so indemnified
under applicable law, and (ii) if, when and to the extent that the Reviewing
Party determines that Indemnitee would not be permitted to be so Indemnified
under applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid (unless Indemnitee has commenced legal proceedings in a court
of competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, in which event Indemnitee shall not be
required to so reimburse the Company until a final judicial determination
requiring such reimbursement is made with respect thereto as to which all right
of appeal therefrom have been exhausted or lapsed) and the Company shall not be
obligated to indemnify or advance any additional amounts to Indemnitee under
this Agreement (unless there has been a determination by a court of competent
jurisdiction that the Indemnitee would be permitted to be
<PAGE> 4
3
so indemnified or entitled to such expense advances under applicable law). If
there has not been a Change in Control of the Company (as hereinafter
defined), the Reviewing Party (which can, but does not have to, be the
disinterested members of the Board of Directors or a committee comprised of one
or more disinterested members of the Board of Directors) shall be selected by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, proceeding or suit, unless such a quorum
is not obtainable in which case the Reviewing Party shall be selected by the
special, independent counsel referred to in Section 2 hereof. If there has
been a Change in Control of the Company, the Reviewing Party shall be the
special, independent counsel referred to in Section 2 hereof. If indemnitee
has not been indemnified by the expiration of the foregoing thirty-day period
or received expense advances or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified or be
entitled to expense advances in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking from the court a
finding that Indemnitee is entitled to indemnification and expense advances or
enforcement of Indemnitee's entitlement to indemnification and expense advances
or challenging any determination by the Reviewing Party or any aspect thereof
that Indemnitee is not entitled to be indemnified or receive expense advances;
any determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee. Indemnitee agrees to bring any such
litigation in any court in the states of Oklahoma or Delaware having subject
matter jurisdiction thereof and in which venue is proper, and the Company
hereby consents to service of process and to appear in any such proceeding.
2. The Company agrees that if there is a Change in Control of the
Company (as hereinafter defined), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and expense
advances under this Agreement or any other agreement or By-laws now or
hereafter in effect relating to Claims for Indemnifiable Events, the Company
shall seek legal advice only from special, independent counsel selected by
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Company (other than in connection with such matters) or Indemnitee. Unless
Indemnitee has theretofore selected counsel pursuant to this Section 2 and
such counsel has been approved by the Company, the firms in the attached
Exhibit "A" shall be deemed to satisfy the requirements set forth above, and
neither the Company nor Indemnitee shall engage such firm for any purpose
(other than in the case of the Company, with respect to matters concerning the
rights of Indemnitee (or of other indemnitees under similar indemnity
agreements) to indemnity payments and expense advances). Such counsel, among
other things, shall determine whether and to what extent Indemnitee is
permitted to be indemnified or is entitled to expense advances under
<PAGE> 5
4
applicable law and shall render its written opinion to the Company and
Indemnitee to such effect. For purposes of this Agreement, a "Change in
Control of the Company" shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d)(3) and 14(d) of the Securities Exchange
Act of 1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, is or becomes the
beneficial owner (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities, or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for election by
the Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 80% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets. The Company agrees
to pay the reasonable fees of the special, independent counsel referred to
above and to fully indemnify such counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto except for willful
misconduct or gross negligence.
3. The Company shall indemnify Indemnitee against any and all
expenses (including attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any claim asserted or
action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement or Company
By-laws now or hereafter in effect relating to Claims for Indemnifiable Events
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advance payment of
Expenses or insurance recovery, as the case may be.
<PAGE> 6
5
4. If indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of the Expenses,
judgments, fines, penalties and amounts paid in settlement of such action, suit
or proceeding but not, however, for all of the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in the defense of any claim relating in whole or in part to any
Indemnifiable event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
5. For purposes of this Agreement, the termination of any Claim by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
Indemnitee is not entitled to indemnification or expense advance or that
indemnification or expense advance is not permitted by applicable law.
6. The rights of Indemnitee hereunder shall be in addition to any
other rights Indemnitee may have under the Company's By- laws as in effect on
the date of this Agreement or the Delaware General Corporation Law or
otherwise. To the extent a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's By-laws and this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy
by this Agreement the greater benefits so afforded by such change.
7. Indemnitee shall notify the Company in writing of the institution
of any action, suit, proceeding, inquiry or investigation that is or may be
subject to this Agreement; provided, that the failure to give such notice
shall not affect Indemnitee's rights hereunder.
8. To the extent the Company maintains an insurance policy or
policies providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its or their
terms, to the maximum extent of the coverage available for any Company director
or officer.
9. No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Company or any affiliate of the Company against
Indemnitee, his spouse, heirs, executors or personal or legal representatives
after the expiration of two years from the date of accrual of such cause of
action, and any claim or cause of actin of the Company or its affiliate shall
be
<PAGE> 7
6
extinguished and deemed released unless asserted by the timely filing of a
legal action within such two-year period; provided, however, that if any
shorter period of limitation is otherwise applicable to any such cause of
action, such shorter period shall govern.
10. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both of the parties hereto. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
11. In the event of payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
12. The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
By-law or otherwise) of the amounts otherwise indemnifiable hereunder.
13. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors,
assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business and/or
assets of the Company, spouses, heirs, executors, and personal and legal
representatives. This agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer or director of the Company or of
any other enterprise at the Company's request.
14. The provisions of this Agreement shall be severable in the event
that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) are held by a court of competent jurisdiction
to be invalid, void or otherwise unenforceable, and the remaining provisions
shall remain enforceable to the fullest extent permitted by law.
15. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state, but excluding any conflicts-of-law rule or
principle which might refer such governance, construction or enforcement to the
laws of another state or country.
<PAGE> 8
7
Executed this _____day of ____________, ______
MAPCO INC.
By
--------------------------------
James E. Barnes
Chairman and Chief
Executive Officer
By
---------------------------------
Indemnitee
<PAGE> 9
8
EXHIBIT A
Morris, Nichols, Arsht & Tunnell
Twelfth & Market Streets
Post Office Box 1347
Wilmington, DE 19899-1347
302/658-9200
Prickett, Jones, Elliott, Kristol & Schnee
1310 King Street
Post Office Box 1328
Wilmington, DE 19899-1328
302/658-5102
<PAGE> 1
EXHIBIT 10.(c)
MAPCO Inc. 1986 Retirement Plan for Directors
as Amended and Restated
effective March 29, 1989
<PAGE> 2
MAPCO INC.
1986 RETIREMENT PLAN FOR DIRECTORS
EFFECTIVE MARCH 13, 1986
As Amended and Restated
effective March 29, 1989
1. Name and Purpose
The name of this Plan is the MAPCO Inc. 1986 Retirement Plan for
Directors ("Plan"). The purpose of the Plan is to provide any Director of
MAPCO who is not concurrently an employee of MAPCO or any subsidiary thereof
with continuing compensation for services rendered as a retired Director and
thereby assist MAPCO in the realization of its long-term strategies and
objectives.
It is intended that a person retired under this Plan will be available
to provide advice and counsel from time to time on such matters as the Chairman
of the Board shall request, and to be paid meeting fees and expenses related
thereto when applicable.
2. Definitions
"MAPCO" means MAPCO Inc., a Delaware corporation, or any successor to
a substantial portion of its business.
"Credited Service" means all months of service, whether or not
consecutive, as an Eligible Director of MAPCO, including service as an Eligible
Director prior to the Effective Date of the Plan. Service while a Director but
not an Eligible Director will not be deemed to be service for any purpose under
this Plan. Service as a director of a subsidiary of MAPCO will not be deemed
to be service for any purpose under this plan.
"Director" means any member of the Board of Directors of MAPCO
1
<PAGE> 3
on or after the Effective Date.
"Eligible Director" means any Director who is not concurrently
employed by MAPCO or any subsidiary thereof.
"Effective Date" means March 13, 1986.
"Participant" means any Eligible Director whose service has terminated
and who has otherwise qualified to commence to receive a benefit under the
terms of this Plan.
"Plan means this MAPCO Inc. 1986 Retirement Plan for Directors.
"Plan Administrator" means the General Counsel of MAPCO or any other
officer designated by the Chairman of the Board.
"Prior Plan" means the March 11, 1982 MAPCO Inc. Retirement Plan for
Directors as in effect, and as amended to terminate, on March 12, 1986, which
is superseded by this Plan effective March 13, 1986, except as otherwise
provided in Paragraph 3 hereof.
"Retainer" means the annual fee established by the Board of Directors
of MAPCO and paid monthly for service as a Director, but excludes any meeting
fee, expense reimbursement, or any other compensation received by a Director
unless such compensation is specifically included as a part of the Retainer by
action of the Board.
"Termination of Service" means cessation of service as a Director.
3. Eligibility for Benefits
Each Director who has sixty (60) or more months of Credited Service
shall be entitled to a benefit under the plan upon his or
2
<PAGE> 4
her termination of service as a Director. The Prior plan shall continue to be
effective only as to any individual whose service had terminated and who was
entitled to receive benefits thereunder as of March 12, 1986.
4. Plan Benefits
The annual benefit payable under the Plan shall be equal to the
Retainer in effect for Eligible Directors at the time an Eligible Director's
service terminates. This benefit may be paid to the Participant on a monthly
basis, on or before the last day of each month commencing with the month
following the month of his or her Termination of Service, or equivalent payment
may be made on a less frequent basis, at least annually, at the plan
Administrator's sole discretion.
5. Duration of Benefits
(a) Normal Retirement. In the case of a Participant who is age
seventy (70) or older and who has sixty (60) or more months of Credited Service
at the date of his or her Termination of Service, the benefits provided by this
Plan shall, subject to Sections 6 and 7, continue until the last day of the
month in which the death of the Participant occurs.
(b) Vested Benefits. In the case of a Participant who is younger
than age seventy (70) but who has sixty (60) or more months of Credited Service
at the date of his or her Termination of Service, the benefits provided by this
Plan shall, subject to Sections 6 and 7, continue until the first to occur of:
(a) the number of monthly payments made equals the number of months of
3
<PAGE> 5
Credited Service by the Participant as an Eligible Director (or equivalent
payments have been made); or (b) 120 monthly payments (or equivalent payments)
have been made; or (c) the last day of the month in which the death of the
Participant occurs.
(c) Change in Control. Notwithstanding Section 5(b), in the event
that a Participant's service as a Director terminates following a "change in
control" of the Company (as hereinafter defined), such Participant shall not be
subject to the provisions of Section 7 (Forfeiture of Benefits). In addition,
any Participant who is not eligible to receive benefits under Section 5(a)
shall, subject to Section 6, receive the benefits otherwise provided by the
Plan under Section 5(b), (i) regardless of whether he has ten completed sixty
(60) or more months of Credited Service and (ii) during his lifetime for a
period equal to the greater of (x) 120 monthly payments (or equivalent
payments) or (y) a period equal to the number of months of his Credited Service
(or equivalent payments). A "change in control" means the first to occur of
the following events:
(A) the members of the Board of Directors of MAPCO at the
beginning of any consecutive 24 month calendar period
cease for any reason to constitute 75% of the members
of such Board of Directors, unless the election, or
the nomination for election by MAPCO's stockholders,
of each new Director was approved by a vote of at
least 75% of the members of such Board of Directors
then in office who are members of such
4
<PAGE> 6
Board of Directors at the beginning of such 24
calendar month period; or
(B) any "person," including a "group" (as such terms are
used in Sections 13(d) and 14(d)(ii) of the
Securities Exchange Act of 1934, as amended), but
excluding MAPCO, any of it subsidiaries or any
employee benefit plan of MAPCO or any of its
subsidiaries is or becomes the "beneficial owner" (as
defined in Rule 13(d)(iii) under the Securities
Exchange Act of 1934, as amended), directly or
indirectly, of securities of MAPCO representing 25%
or more of the combined voting power of MAPCO's then
outstanding securities; or
(C) the stockholders of MAPCO shall approve a definitive
agreement (1) for the merger or other business
combination of MAPCO with or into another corporation
a majority of the directors of which were not
directors of MAPCO immediately prior to the merger
and in which the stockholders of MAPCO immediately
prior to the effective date of such merger own less
than 50% of the voting power or in such corporation
or (2) for the sale or other disposition of all or
substantially all of the assets of MAPCO.
6. Suspension of Benefits
If a Participant returns to service as a Director or becomes
5
<PAGE> 7
an employee of MAPCO or is or becomes a director or employee of any subsidiary
of MAPCO, payment of benefits under this Plan shall be immediately suspended
and shall commence again on the last day of the month following the month in
which such service or employment terminates.
If a Participant returns to service as an Eligible Director, the
amount and duration of his or her benefits shall be redetermined under Sections
4 and 5, based on the Participant's age, cumulative periods of Credited Service
and the Retainer in effect upon his or her subsequent Termination of Service;
provided, however, that if the Participant is not yet seventy (70) years of age
upon his or her subsequent Termination of Service, the Participant's number of
monthly payments (or equivalent payments) for which he or she qualifies as a
result of his or her cumulative periods of Credited Service shall be reduced by
the number of monthly payments (or equivalent payments) previously received by
the Participant under this Plan.
If, however, a Participant returns to service as an employee of MAPCO
or as a director or employee of a subsidiary of MAPCO, there shall be no
adjustment in the Retainer used to determine the benefit payments and the
amount and the duration of his or her benefits shall not be redetermined, but
shall again be governed by Sections 4 and 5 as previously determined.
7. Forfeiture of Benefits
No benefit shall be paid under this Plan with respect to any month in
which a Participant is employed by or serving as a
6
<PAGE> 8
director of any company if such service constitutes or would in the opinion of
the General Counsel of MAPCO be deemed to constitute a conflict of interest or
other legal impediment of such a nature as would preclude such Participant from
concurrently serving as a Director of MAPCO. No benefit shall be paid
hereunder to any Director terminated for cause.
8. Funding
No promise under this Plan shall be secured by any specific asset of
MAPCO, nor shall any asset of MAPCO be designated as attributable to or be
allocated to the satisfaction of any such promise. Each benefit payment shall
be made from MAPCO's general revenues.
9. Administration
The Plan Administrator shall have full power and authority to
administer the Plan, including the power to promulgate rules of Plan
administration, the power to settle any disputes as to rights or benefits
arising from the Plan, the power to appoint agents and delegate his duties, and
the power to make such decisions or take such action as the Plan Administrator,
at his sole discretion, deems necessary or advisable to aid in the proper
administration of the Plan.
10. Alienation of Benefits
No Participant shall have the right to anticipate, alienate, sell,
transfer, assign, pledge or encumber his or her right to receive any benefit
under this Plan until the benefit is paid to him or her and any attempt thereat
shall be void.
7
<PAGE> 9
11. Withholding Taxes
MAPCO shall deduct from the amount of any payment hereunder, any tax
required to be withheld by applicable law.
12. Governing Law
This Plan shall be governed and construed by the laws of the State of
Delaware.
13. Amendment, Modification, Or Termination Of the Plan
The Board of Directors may, at any time, terminate or, in any respect,
amend or modify the Plan, but such action shall not affect the rights of any
Participant then receiving benefits under the Plan.
8
<PAGE> 1
EXHIBIT 10.(d)
Form of Agreement between MAPCO Inc. and certain officers
relating to employment dated December 20, 1989,
effective January 1, 1990
<PAGE> 2
December 20, 1989
F1
MAPCO Inc. (the "Corporation") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control of the Corporation may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Corporation and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Corporation's management, including you, to their assigned duties without
distraction in the face of potentially-disturbing circumstances arising from
the possibility of a change in control of the Corporation. In that regard, the
Board has determined that this letter agreement (the "Agreement") will better
serve the above-stated objective than the Employment Continuation Agreement
entered into between you and the Corporation dated July 1, 1988 (the "Prior
Agreement"), which is hereby terminated.
In order to induce you to remain in the employ of the Corporation,
the Corporation agrees that you shall receive the severance benefits set forth
in this Agreement in the event your employment with the Corporation is
terminated under the circumstances described below subsequent to a "change in
control of the Corporation" (as defined in Section 2).
1. Term of Agreement. This Agreement shall replace the Prior
Agreement, shall commence on January 1, 1990, and shall continue in effect
through December 31, 1991; provided, however, that commencing on January 1,
1992 and each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than
October 1 of the preceding year, the Corporation shall have given notice
<PAGE> 3
December _____, 1989
Page 2
that it does not wish to extend this Agreement; and provided, further, that if
a change in control of the Corporation, as defined in Section 2, shall have
occurred during the original or extended term of this Agreement, this Agreement
shall automatically continue in effect for a period of twenty-four (24) months
beyond the month in which such change in control occurred. In no event,
however, shall the term of this Agreement extend beyond the end of the calendar
month in which your 65th birthday occurs.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there shall have
been a change in control of the Corporation, as set forth below. For purposes
of this Agreement, a "change in control of the Corporation" shall be deemed to
have occurred if:
(A) any "person," as such term is used in Sections l3(d) and l4(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, or any
corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Corporation representing 25% or more of the combined voting power of
the Corporation's then outstanding securities eligible to vote; or
(B) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in clause (A), (B) or
(D) of this Section) whose election by the Board or nomination for election
by the Corporation's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (hereinafter referred to as "Continuing
Directors"), cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than a
merger or consolidation which
<PAGE> 4
December _____, 1989
Page 3
would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, more than
75% of the combined voting power of the voting securities of the Corporation
or such surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Corporation's then outstanding securities shall
not constitute a change in control of the Corporation; or
(D) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all of the Corporation's assets
(or any transaction having a similar effect).
(ii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a "potential change in control of the Corporation"
during the term of this Agreement, the Corporation may not terminate this
Agreement and you will remain in the employ of the Corporation until the
earliest of (A) a date which is nine (9) months from the date of such potential
change in control of the Corporation or any earlier date approved by the Board,
(B) the date of a change in control of the Corporation, (C) the date you
terminate your employment by reason of death, Disability or Retirement, or (D)
the termination by the Corporation of your employment for any reason.
(iii) For purposes of this Agreement, a "potential change in
control of the Corporation" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been satisfied:
(A) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a change in control of the
Corporation;
(B) any person (including the Corporation) publicly announces an
intention to take or to consider taking actions which, if consummated, would
constitute a change in control of the Corporation.
<PAGE> 5
December _____, 1989
Page 4
(C) any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation (or a
corporation owned, directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their ownership of
stock of the Corporation), who is or becomes the beneficial owner, directly
or indirectly, of securities of the Corporation representing 10% or more of
the combined voting power of the Corporation's then outstanding securities,
increases such person's beneficial ownership of such securities by 5% or
more over the percentage so owned by such person on the date hereof; or
(D) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a potential change in control of the Corporation has
occurred.
3. Termination Following Change in Control.
(i) General. If any of the events described in Section 2
constituting a change in control of the Corporation shall have occurred, you
shall be entitled to the benefits provided in Section 4(iii) upon the
subsequent termination of your employment during the term of this Agreement
unless such termination is (a) because of your death or Disability, (b) by the
Corporation for Cause, or (c) by you other than for Good Reason. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a change in control of the Corporation, and subsequently a change
in control of the Corporation shall have occurred, you shall not be entitled to
any benefits hereunder.
(ii) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given, you
shall not have returned to the full-time performance of your duties, for
purposes of this Agreement your employment may be terminated for "Disability."
(iii) Cause. Termination by the Corporation of your employment for
"Cause" shall mean termination (a) upon the willful and continued failure by
you to substantially perform your duties with the Corporation (other than any
such failure resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a Notice of
Termination (as defined in Subsection 3(v)) by you for Good Reason (as defined
in Subsection 3(iv))), within ten (10) days after a written demand for
substantial performance is delivered to you by the Board, which demand
specifically
<PAGE> 6
December _____, 1989
Page 5
identifies the manner in which the Board believes that you have not
substantially performed your duties, or (b) the willful engaging by you in
conduct which is clearly and materially injurious to the Corporation,
monetarily or otherwise. For purposes of this Subsection, no act, or failure
to act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you in bad faith and without reasonable belief that your action or
omission was in or not opposed to the best interest of the Corporation.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board you were guilty of conduct set forth above in this Subsection and
specifying the particulars thereof in detail.
(iv) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your express written consent, the occurrence after a change
in control of the Corporation of any of the following circumstances unless, in
the case of paragraphs (a), (e), (f), (g) or (h), such circumstances are fully
corrected prior to the Date of Termination (as defined in Section 3(vi))
specified in the Notice of Termination (as defined in Section 3(v)) given in
respect thereof:
(a) the assignment to you of any duties inconsistent with the
status of the position in the Corporation that you held immediately prior to
the change in control of the Corporation or an adverse alteration in the
nature or status of your responsibilities or in the quality or amount of
office accommodations or assistance provided to you, from those in effect
immediately prior to such change in control;
(b) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the change in control of the
Corporation or as the same may be increased from time to time thereafter;
(c) the Corporation's moving you to be based more than 50 miles
from the Corporation's offices at which you are principally employed
immediately prior to the date of the change in control of the Corporation
except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations;
<PAGE> 7
December _____, 1989
Page 6
(d) the failure by the Corporation to pay to you any portion of
your current compensation or compensation under any deferred compensation
program of the Corporation within seven (7) days of the date such
compensation is due;
(e) the failure by the Corporation to continue in effect any
compensation or benefit plan or perquisites in which you participate
immediately prior to the change in control of the Corporation which is
material to your total compensation, including but not limited to the
Corporation's 1981 Stock Appreciation Rights and Stock Option Rights Plan,
1986 Stock Option Plan, 1989 Stock Incentive Plan, the Long-Term Investment
Plan, Annual Incentive Compensation Plan, 1986 Performance Bonus Plan,
Supplemental Retirement Agreement or any successor plans (collectively, the
"Compensation Plans"), unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or the failure by the Corporation to continue your participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other participants, than
existed at the time of the change in control of the Corporation;
(f) the failure by the Corporation to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Corporation's life insurance, medical, dental, vision, accident or
disability plans in which you were participating at the time of the change
in control of the Corporation, the taking of any action by the Corporation
which would directly or indirectly materially reduce any of such benefits,
or the failure by the Corporation to provide you with the number of paid
vacation days to which you are entitled on the basis of your years of
service with the Corporation in accordance with the Corporation's normal
vacation policy in effect at the time of the change in control of the
Corporation;
(g) the failure of the Corporation to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement,
as contemplated in Section 5 hereof; or
(h) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (v) hereof (and, if applicable, the requirements of Subsection
(iii)
<PAGE> 8
December _____, 1989
Page 7
hereof), which purported termination shall not be effective for purposes of
this Agreement.
Your right to terminate your employment pursuant to this Subsection shall not
be affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason hereunder.
(v) Notice of Termination. Any purported termination of your
employment by the Corporation or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 6. "Notice
of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(vi) Date of Termination. "Date of Termination" shall mean (a) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the
full-time performance of your duties during such thirty (30)-day period), and
(b) if your employment is terminated pursuant to Subsection (iii) or (iv)
hereof or for any other reason (other than Disability), the date specified in
the Notice of Termination (which, in the case of a termination for Good Reason
shall not be less than fifteen (15) nor more than sixty (60) days from the date
such Notice of Termination is given, and in the case of a termination for any
other reason shall not be less than thirty (30) days from the date such Notice
of Termination is given); provided, however, that if within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this provision), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Corporation will continue to pay you your full compensation
in effect when the notice giving rise to the dispute was given and
<PAGE> 9
December _____, 1989
Page 8
continue you as a participant in all Compensation Plans, life insurance,
medical, dental, vision, accident or disability plans and any similar plans in
which you were participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement, and shall not be offset against or reduce any
other amounts due under this Agreement and shall not be reduced by any
compensation earned by you as the result of employment by another employer.
4. Compensation During Disability or Upon Termination. Following
a change ln control of the Corporation, you shall be entitled to the following
during a period of disability, or upon termination of your employment, as the
case may be, provided that such period or termination occurs during the term of
this Agreement:
(i) During any period that you fail to perform your full-time
duties with the Corporation as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in effect
at the commencement of any such period, together with all compensation payable
to you under the Corporation's disability plan or program or other similar plan
during such period, until this Agreement is terminated pursuant to Section
3(ii) hereof. Thereafter, or in the event your employment shall be terminated
by reason of your death, your benefits shall be determined under the
Corporation's retirement, insurance and other compensation programs then in
effect in accordance with the terms of such programs.
(ii) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts or benefits to
which you are entitled under any Compensation Plan of the Corporation then in
effect, and the Corporation shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Corporation shall be terminated by
you for Good Reason or by the Corporation other than for Cause or Disability,
then you shall be entitled to the following:
(a) the Corporation shall pay to you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, no later than the fifth day following the Date of
Termination, plus all other amounts to which you are entitled under any
<PAGE> 10
December _____, 1989
Page 9
compensation plan of the Corporation, at the time such payments are due;
(b) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Subsection (v) of this
Section 4, a single sum severance payment equal to the product of three (3)
times the sum of your (1) annual salary as in effect as of your Date of
Termination, (2) an amount equal to the highest award of annual incentive
compensation, if any, made or to be made to you in respect of your
performance for the then current calendar year or any of the three calendar
years preceding your Date of Termination, and (3) the awards paid to you
pursuant to Section 7 of the Performance Bonus Plan or any successor thereto
as a result of a change in control of the Corporation;
(c) the Corporation shall pay you a single sum cash payment equal
to the product of (x) and (y) where (x) equals the difference between (1)
the closing price per share of MAPCO's common stock on the New York Stock
Exchange Consolidated Tape (the "NYSECT") on the day immediately prior to
the change in control of the Corporation and (2) the lowest closing price
per share of MAPCO's common stock on the NYSECT on any day during the 6O-day
calendar day period immediately preceding the change in control of the
Corporation and where (y) equals three (3) times the highest number of
shares of MAPCO's common stock subject to any stock option granted to you
within 24 months of the change in control of the Corporation.
(d) your rights under the Compensation Plans shall be governed by
the terms of those respective plans;
(e) the Corporation shall pay to you all reasonable and appropriate
legal fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, reasonably incurred in
contesting or disputing by arbitration or otherwise, any such termination or
in seeking to obtain or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Internal Revenue Code
of 1986, as amended, (the "Code"), to any payment or benefit provided
hereunder); and
(f) For a thirty-six (36) month period after your Date of
Termination, the Corporation shall arrange to provide
<PAGE> 11
December _____, 1989
Page 10
you with benefits substantially similar to those which you were receiving or
entitled to receive under the Corporation's life, disability, accident and
group health insurance plans or any similar plans in which you were
participating immediately prior to the Date of Termination at a cost to you
which is no greater than that cost to you in effect at the Date of
Termination. Benefits otherwise receivable by you pursuant to this
paragraph (f) shall be reduced to the extent comparable benefits are
actually received on your behalf during the thirty-six (36) month period
following your termination, and such benefits actually received by you shall
be reported to the Corporation.
(g) In addition to the retirement benefits to which you are
entitled under the Supplemental Executive Retirement Plan (the "SERP") and
Long-term Investment Plan ("LIP") or any successor plan thereto, the
Corporation shall pay to you a single sum amount, in cash, equal to the
actuarial equivalent of the excess of (x) the retirement pension (determined
as a straight life annuity commencing at Normal Retirement Age (as defined
in the MAPCO Pension Plan) which you would have accrued under the terms of
the SERP (without regard to any amendment to the SERP made subsequent to a
Change in Control and on or prior to the Date of Termination, which
amendment adversely affects in any manner the computation of retirement
benefits thereunder), determined as if you were fully vested thereunder and
had accumulated (after the Date of Termination) thirty-six (36) additional
months of service credit thereunder at your highest annual rate of
compensation during the twelve (12) months immediately preceding the Date of
Termination, and (y) the retirement pension (determined as a straight life
annuity commencing at Normal Retirement Age which you had then accrued
pursuant to the provisions of the SERP. For purposes of this Section
4(iii)(g) "actuarial equivalent" shall be determined using the same methods
and assumptions utilized under the MAPCO Pension Plan immediately prior to
the Date of Termination.
(h) In addition to the retirement benefit you are entitled to under
the MAPCO Inc. and Subsidiaries Profit Sharing and Savings Plan, the
Corporation shall pay you a single sum amount, in cash, equal to eighteen
percent (18%) times your highest annual rate of compensation during the
twelve (12) months immediately preceding your Date of Termination.
(iv) If any payments under this Agreement or any other payments or
benefits received or to be received by you in
<PAGE> 12
December _____, 1989
Page 11
connection with a change in control of the Corporation, or your termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, or any person affiliated with
the Corporation, (the "Severance Payments")) will be subject to the tax (the
"Excise Tax") imposed by section 4999 of the Code (or any similar tax that may
hereafter be imposed), the Corporation shall pay at the time specified below,
an additional amount (the "Gross-Up Payment") such that the net amount retained
by you, after deduction of any Excise Tax on the Severance Payments and any
federal, state and local income tax and Excise Tax upon the payment provided
for by this Subsection 4(iv), shall be equal to the Severance Payments. For
purposes of determining the amount of the Gross-Up Payment, the Excise Tax
shall be assumed to be at a rate equal to the lesser of (i) 20% or (ii) the
rate in effect at the time the amount of the Gross-Up payment is determined.
For purposes of determining whether any of the Severance Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (a) all Severance
Payments shall be treated as "parachute payments" within the meaning of section
280G(2) of the Code, and all "excess parachute payments" within the meaning of
section 28OG(b)(l) shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Corporation's independent auditors and
acceptable to you, such Severance Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually rendered
within the meaning of section 280G(b)(4) of the Code in excess of the base
amount within the meaning of section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax, (b) the amount of the Severance Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Payments or (2) the amount of excess
parachute payments within the meaning of section 28OG(b)(l) (after applying
clause (a), above), and (c) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent
auditors in accordance with the principles of section 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay federal income taxes at your highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at your highest marginal rate of
taxation in the state and locality of your residence on the Date of
Termination, net of the maximum reduction in federal income taxes which could
be obtained from deduction of such state and local taxes. In the event that
the Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment, you shall
repay to the Corporation at the time that the amount
<PAGE> 13
December _____, 1989
Page 12
of such reduction in Excise Tax is finally determined the portion of the
Gross-Up Payment attributable to such reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by you if such
repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code (the "Applicable Rate").
In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of your employment (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Corporation shall make an additional
gross-up payment in respect of such excess (plus any interest payable with
respect to such excess at the Applicable Rate) at the time that the amount of
such excess is finally determined. Any payment to be made to you under this
paragraph shall be payable within five (5) days of your Date of Termination.
(v) The payments provided for in paragraphs (b), (c), (g) and (h)
above, shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation shall pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than the thirtieth day after the Date
of Termination. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the Corporation to you, payable on the fifth day after
demand by the Corporation (together with interest at the Applicable Rate).
(vi) Except as required in Subsection (iii)(f) hereof, you shall
not be required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
5. Successors; Binding Agreement. (i) The Corporation will
require any successor whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Corporation to (A) expressly assume and agree to perform this
<PAGE> 14
December _____, 1989
Page 13
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession had taken place and (B) agree
to notify you of the assumption of the Agreement within 10 days of such
assumption. Failure of the Corporation to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Corporation in the
same amount and on the same terms to which you would be entitled hereunder if
you terminate your employment for Good Reason following a change in control of
the Corporation, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Corporation" shall mean the
Corporation and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder had you
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be authorized by the
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No
<PAGE> 15
December _____, 1989
Page 14
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware without regard to its conflicts of law principles. All
references to sections of the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law, except for any withholding that may be required under Section
4999 of the Code. The obligations of the Corporation under Section 4 shall
survive the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the City of
Tulsa, Oklahoma or, at your option, in the city where you are principally
employed immediately prior to the date of a change in control, in accordance
with the rules of the American Arbitration Association then in effect;
provided, however, that you shall be entitled to seek specific performance of
your rights under Section 3(vi) during the pendency of any dispute or
controversy arising under or in connection with this Agreement. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.
11. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein including the Prior Agreement, is hereby terminated and cancelled.
<PAGE> 16
December _____, 1989
Page 15
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Corporation the enclosed copy of
this letter, which will then constitute our agreement on this subject.
Sincerely,
ATTEST: MAPCO, Inc.
By_________________________ By___________________________
James N. Cundiff Name: James E. Barnes
Assistant Secretary Title: Chairman of the Board,
President and Chief Executive
Officer
Agreed to as of this ____
day of December, 1989.
_________________________
<PAGE> 1
EXHIBIT 10.(e)
Form of Amendment Letter to Agreement Dated December 20, 1989
between MAPCO Inc. and certain officers
relating to employment
dated March 14, 1990
<PAGE> 2
[Barnes & Howe Format]
(Date)
(Name and Address)
Dear ________:
AMENDMENT LETTER TO AGREEMENT DATED 12/20/89
The Board of Directors of MAPCO Inc. (the "Corporation") has
determined to replace Paragraph 4(iii)(g) and Paragraph 4(iii)(i) of the letter
agreement you executed with the Corporation on December 20, 1989 (the
"Agreement") as follows:
(g) In addition to the retirement benefits to which you are
entitled under the Long-Term Investment Plan ("LIP") or any
successor plan thereto and in lieu of any benefits which
otherwise would be payable to you under the Supplemental
Executive Retirement Plan (the "SERP"), or any successor plan
thereto, the Corporation shall pay to you a single sum amount,
in cash, which is actuarially equivalent to the retirement
pension which would be payable to you under the terms of the
SERP (without regard to any amendment to the SERP made
subsequent to a Change in Control and on or prior to the Date
of Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereunder) in
the form of a straight life annuity payable at the later of
your attained age at Termination plus three years or age 55
with the amount payable being determined as though you were
fully vested thereunder (whether or not you are) and had
accumulated (after your Date of Termination) thirty-six (36)
additional months of service credit thereunder at an annual
rate of Compensation equal to (i) your annual salary in
effect at your Date of Termination plus (ii) an amount equal
to the highest award of annual incentive compensation, if any,
made or to be made to you in respect of your performance for
the then current calendar year or any of the three calendar
years preceding your Date of Termination. For purposes of
this Section 4(iii)(g) "actuarially equivalent" shall
<PAGE> 3
2
be determined using the same methods and assumptions utilized
under the MAPCO Pension Plan immediately prior to your Date of
Termination provided that, if you should be less than 52 years
of age at the time payment is made to you, the actuarial
equivalent payment shall be determined as if you are age 55
and be adjusted downward by an interest factor of 7%
compounded annually from age 52 to your attained age if such
attained age is less than 52 at the date of payment.
(i) You and MAPCO have previously entered into that certain
Supplemental Retirement Agreement dated _______________, 1984
(the "Supplemental Agreement"). Pursuant thereto, MAPCO has
agreed, in consideration of your beginning employment with
MAPCO, to pay you retirement income benefits under MAPCO's
retirement plans (the MAPCO Pension Plan and the SERP without
regard to any amendment to either plan made subsequent to a
Change in Control and on or prior to the Date of Termination,
which amendment adversely affects in any manner the
computation of retirement benefits thereunder) which in
combination with the benefits received by you under the Conoco
plan are substantially similar to those you would have
received had your years of service with Conoco been with
MAPCO. In the event of Termination of your employment prior
to your earliest permitted retirement date under MAPCO's
retirement plan for a reason other than one described in
clause (a), (b) or (c) of Section 3(i) and subsequent to a
Change in Control, you shall be given service credit to said
earliest permitted retirement date for purposes of determining
your total retirement income benefit payable by reason of the
Supplemental Agreement and your benefit shall be determined as
though you were fully vested thereunder. Regardless of your
age your benefit determined pursuant to the Supplemental
Agreement shall be payable in a single sum. The single sum
payment shall be the actuarial equivalent of the life annuity
which otherwise would be payable by reason of the Supplemental
Agreement commencing on the later of the first day of the
month next following the termination of your employment or
your earliest permitted retirement date under MAPCO's
retirement plans. The SERP benefit to be applied in
determining your benefit under the Supplemental Agreement
shall be in an amount determined as though you were fully
vested thereunder and without regard to clause (g) of Section
4(iii). "Actuarially equivalent" shall be determined using
the same methods and assumptions utilized under the MAPCO
Pension Plan immediately prior to your Date of Termination
provided that, if should be less than 55 years of age at the
time payment is to be made to you, the actuarial equivalent
payment shall be adjusted downward by an interest factor of 7%
compounded
<PAGE> 4
3
annually from age 55 to your attained age at the date of
payment.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter,
which will then constitute our agreement to revise the Agreement accordingly.
Sincerely,
MAPCO INC.
ATTEST:
By:________________________ By:__________________________
James N. Cundiff David W. Bowman
Assistant Secretary Senior Vice President,
General Counsel and Secretary
AGREED TO AS OF THIS _____ DAY
OF ___________________, 1990.
______________________________
James E. Barnes/Robert M. Howe
<PAGE> 5
[General Format]
(Date)
(Name and Address)
Dear ________:
AMENDMENT LETTER TO AGREEMENT DATED 12/20/89
The Board of Directors of MAPCO Inc. (the "Corporation") has
determined to replace Paragraph 4(iii)(g) of the letter agreement you executed
with the Corporation on December 20, 1989 (the "Agreement") as follows:
(g) In addition to the retirement benefits to which you are
entitled under the Long-Term Investment Plan ("LIP") or any
successor plan thereto and in lieu of any benefits which
otherwise would be payable to you under the Supplemental
Executive Retirement Plan (the "SERP"), or any successor plan
thereto, the Corporation shall pay to you a single sum amount,
in cash, which is actuarially equivalent to the retirement
pension which would be payable to you under the terms of the
SERP (without regard to any amendment to the SERP made
subsequent to a Change in Control and on or prior to the Date
of Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereunder) in
the form of a straight life annuity payable at the later of
your attained age at Termination plus three years or age 55
with the amount payable being determined as though you were
fully vested thereunder (whether or not you are) and had
accumulated (after your Date of Termination) thirty-six (36)
additional months of service credit thereunder at an annual
rate of Compensation equal to (i) your annual salary in
effect at your Date of Termination plus (ii) an amount equal
to the highest award of annual incentive compensation, if any,
made or to be made to you in respect of your performance for
the then current calendar year or any of the three calendar
years preceding your Date of Termination. For purposes of
this Section 4(iii)(g) "actuarially equivalent" shall
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2
be determined using the same methods and assumptions utilized
under the MAPCO Pension Plan immediately prior to your Date of
Termination provided that, if you should be less than 52 years
of age at the time payment is made to you, the actuarial
equivalent payment shall be determined as if you are age 55
and be adjusted downward by an interest factor of 7%
compounded annually from age 52 to your attained age if such
attained age is less than 52 at the date of payment.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter,
which will then constitute our agreement to revise the Agreement accordingly.
Sincerely,
MAPCO INC.
ATTEST:
By:________________________ By:__________________________
James N. Cundiff James E. Barnes
Assistant Secretary Chairman of the Board,
President, Chief Executive
Officer
AGREED TO AS OF THIS _____ DAY
OF ___________________, 1990.
______________________________
[Employee's Name]
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EXHIBIT 10.(l)
MAPCO Inc. 1989 Stock Incentive Plan
as Amended and Restated effective June 1, 1992
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MAPCO INC.
1989 STOCK INCENTIVE PLAN
As Amended and Restated, effective June 1, 1992
Section 1. Purpose
1.1. The purpose of the "MAPCO INC. 1989 STOCK INCENTIVE
PLAN" (the "Plan") is to foster and promote the long-term financial success of
the Company and materially increase shareholder value by (a) motivating
superior performance by means of performance-related incentives, (b)
encouraging and providing for the acquisition of an ownership interest in the
Company by Employees, and (c) enabling the Company to attract and retain the
services of an outstanding management team upon whose judgment, interest, and
special effort the successful conduct of its operations is largely dependent.
Section 2. Definitions
2.1. Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Award" means any Stock Option, Stock Appreciation
Right, share of Restricted Stock, share of Phantom
Stock, Stock Purchase Right, or any combination
thereof, including Awards combining two or more types
of Awards in a single grant.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means the first to occur of the
following events:
(i) the members of the Board at the beginning of
any consecutive twenty-four calendar month
period cease for any reason to constitute at
least seventy-five percent of the members of
such Board, unless the election, or the
nomination for election by the Company's
stockholders, of each new director was
approved by a vote of at least seventy-five
percent of the members of such Board then
still in office who were members of such
Board at the beginning of such twenty-four
calendar month period; or
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(ii) any "person," including a "group" (as such
terms are used in Sections 13(d) and 14(d)(2)
of the Act, but excluding the Company, any of
its subsidiaries or any employee benefit plan
of the Company or any of its subsidiaries) is
or becomes the "beneficial owner" (as defined
in Rule 13(d)(3) under the Act), directly or
indirectly, of securities of the Company
representing twenty- five percent or more of
the combined voting power of the Company's
then outstanding securities; or
(iii) the stockholders of the Company shall approve
a definitive agreement (1) for the merger or
other business combination of the Company
with or into another corporation a majority
of the directors of which were not directors
of the Company immediately prior to the
merger and in which the stockholders of the
Company immediately prior to the effective
date of such merger own less than 50% of the
voting power in such corporation or (2) for
the sale or other disposition of all or
substantially all of the assets of the
Company.
(e) "Change in Control Price" means the highest price per
share of Stock offered in conjunction with any
transaction resulting in a Change in Control (as
determined in good faith by the Committee if any part
of the offered price is payable other than in cash)
or, in the case of a Change in Control occurring
solely by reason of a change in the composition of
the Board, the highest Fair Market Value of the Stock
on any of the 30 trading days immediately preceding
the date on which a Change in Control occurs.
(f) "Code" means the Internal Revenue Code of 1986, as
amended.
(g) "Committee" means the Compensation Committee of the
Board of Directors, which shall consist of three or
more members. The members of the Committee shall be
disinterested administrators within the meaning of
Rule 16b-3 as promulgated under the Act, or any
similar rule which may be in effect from time to
time. No member of the Committee shall be entitled
to participate in the Plan.
(h) "Company" means MAPCO Inc., a Delaware corporation,
and any successor thereto.
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(i) "Disability" means total disability as determined in
accordance with the terms of the Company's long-term
disability plan, as in effect from time to time.
(j) "Employee" means any officer or other key employee of
the Company or any of its majority owned
subsidiaries.
(k) "Fair Market Value" on any date means the closing
price of the Stock as reported by the consolidated
tape of the New York Stock Exchange (or on such other
recognized quotation system on which the trading
prices of the Stock are quoted at the relevant time)
on such date. In the event that there are no Stock
transactions reported on such tape (or such other
system) on such date, Fair Market Value shall mean
the closing price on the immediately preceding date
on which Stock transactions were so reported.
(l) "Option" means the right to purchase Stock at a
stated price for a specified period of time. For
purposes of the Plan, an Option may be either (i) an
"Incentive Stock Option" (ISO) within the meaning of
Section 422A of the Code or ii) a "Nonstatutory Stock
Option" (NSO).
(m) "Participant" means any Employee designated by the
Committee to participate in the Plan.
(n) "Phantom Stock" means a contractual right to receive
a payment from the Company in cash, in Stock or in a
combination thereof in an amount equal to the Fair
Market Value of a share of Stock.
(o) "Period of Restriction" means the period during which
shares of Restricted Stock or Phantom Stock are
subject to forfeiture and restrictions on transfer
pursuant to Section 8.2 of the Plan.
(p) "Prior Plans" means the 1981 Stock Appreciation
Rights and Stock Option Rights Plan for Key Employees
of MAPCO Inc. and its Subsidiaries and the MAPCO Inc.
1986 Stock Option Plan.
(q) "Restricted Stock" means Stock granted to a
Participant subject to restrictions on
transferability pursuant to Section 8 of the Plan.
(r) "Retirement" means termination of employment in
accordance with the retirement provisions of any
retirement plan maintained by the Company or any of
its subsidiaries.
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(s) "Stock" means the common stock of the Company, par
value $1.00 per share.
(t) "Stock Appreciation Right" and "SAR" mean the right
to receive a payment from the Company in cash, in
Stock or in a combination thereof equal to the excess
of the Fair Market Value of a share of Stock at the
date of exercise over a specified price fixed by the
Committee, but subject to such maximum amounts as the
Committee may impose.
(u) "Stock Purchase Right" means a right to purchase
shares of Stock in accordance with the provisions of
Section 9 of the Plan.
2.2. Gender and Number. Except when otherwise indicated by
the context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
Section 3. Eligibility and Participation
Participants in the Plan shall be those Employees selected by
the Committee to participate in the Plan.
Section 4. Powers of the Committee
4.1. Power to Grant. The Committee shall determine the
Participants to whom Awards shall be granted, the type or types of Awards to be
granted and the terms and conditions of any and all such Awards. The Committee
may establish different terms and conditions for different types of Awards, for
different Participants receiving the same type of Award and for the same
Participant for each Award such Participant may receive, whether or not granted
at different times.
4.2. Substitute Awards. The Committee shall have the right
to grant Awards in substitution for or upon the cancellation of previously made
Awards or options that had been granted under the Prior Plans, and such new
Awards may contain terms more favorable to the recipient than the Awards or
options they replace, including, without limitation, a lower exercise price for
Options or the exchange of Restricted Stock or Phantom Stock for Options or
options granted under the Prior Plans.
4.3. Administration. The Committee shall be responsible for
the administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan, to provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration and interpretation
of the Plan in order to carry out its provisions and purposes.
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Determinations, interpretations, or other actions made or taken by the
Committee pursuant to the provisions of the Plan shall be final, binding, and
conclusive for all purposes and upon all persons.
Section 5. Stock Subject to Plan
5.1. Number. Subject to the provisions of Section 5.3, the
number of shares of Stock subject to Awards under the Plan may not exceed
2,000,000 shares (after giving effect to the two-for-one stock split declared
April 16, 1989), plus that number of shares which are available for grants
under the Prior Plans on the date the Plan is adopted, but which were not
subject to outstanding options ("Net Shares"). In addition, although only Net
Shares may actually be issued to Participants under the Plan, up to 7 million
gross shares, in the aggregate, may be represented by stock options and awards
granted under the Plan. There shall also be available under the Plan that
number of shares of Stock subject to all options outstanding under the Prior
Plans on the date the Plan is adopted (as such number of shares may hereafter
be adjusted in accordance with the terms of the Prior Plans) which are
cancelled, terminated or otherwise settled without the issuance of Stock in
accordance with the terms of such options or a direct payment of cash in
exchange therefor. Without limiting the foregoing, the Committee may grant
Awards under the Plan which are conditioned on the cancellation or termination
of options granted under the Prior Plans, including Awards which are payable
solely in cash. In order to maintain stockholder value in the Company's
shares, shares must be purchased by the Company from time-to-time in the open
market equivalent to the shares issued or expected to be issued under the Plan.
5.2. Cancelled, Terminated, or Forfeited Awards. Except as
provided in Section 7.2 with respect to the cash settlement of a Stock
Appreciation Right that had been granted in tandem with an Option, any shares
of Stock subject to an Award which for any reason is cancelled, terminated or
otherwise settled without the issuance of any Stock shall again be available
for Awards under the Plan; provided however, that shares of Restricted Stock
upon which a Participant has received dividend payments while the grant was
outstanding shall not be available for Awards under the Plan upon forfeiture of
the shares by a Participant.
5.3. Adjustment in Capitalization. In the event of any Stock
dividend or Stock split, recapitalization (including, without limitation, the
payment of an extraordinary dividend), merger, consolidation, combination,
spin-off, distribution of assets to stockholders, exchange of shares, or other
similar corporate change, the aggregate number of shares of Stock available for
Awards under Section 5.1 or subject to outstanding Awards and the respective
prices, limitations, and/or performance criteria applicable to outstanding
Awards may be appropriately adjusted by the Committee, whose determination
shall be conclusive; provided,
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however, that any fractional shares resulting from any such adjustment shall be
disregarded.
Section 6. Stock Options
6.1. Grant of Options. Options may be granted to
Participants at such time or times as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of
Options, if any, to be granted to a Participant. Each Option shall be
evidenced by an Option agreement that shall specify the type of Option granted,
the exercise price, the duration of the Option, the number of shares of Stock
to which the Option pertains, and such other terms not inconsistent with the
Plan as the Committee shall determine.
6.2. Option Price. Options granted pursuant to the Plan
shall have an exercise price that is no less than the Fair Market Value of the
Stock on the date the Option is granted.
6.3. Exercise of Options. Options awarded under the Plan
shall be exercisable at such times and shall be subject to such restrictions
and conditions, including the performance of a minimum period of service or
the satisfaction of performance goals, as the Committee may impose, either at
or after the time of grant of such Options; provided that no Option shall be
exercisable for more than 10 years after the date on which it is granted.
Notwithstanding anything in the Plan to the contrary, to the extent required by
the Code, the aggregate Fair Market Value (determined as of the date the Option
is granted) of the shares of Stock with respect to which ISO's are exercisable
for the first time by any Participant during any calendar year (under all plans
of the Company and its subsidiaries) shall not exceed $100,000 or such other
amount as may subsequently be specified under the Code; provided that any
Options granted having a value in excess of such amount shall be deemed to be
Nonstatutory Stock Options.
6.4. Payment. The Committee shall establish procedures
governing the exercise of Options, which shall require that written notice of
exercise be given and that the Option price be paid in full in cash or cash
equivalents, including by personal check, at the time of exercise. The
Committee may, in its discretion, permit a Participant to make payment in Stock
already owned by him, valued at its Fair Market Value on the date of exercise,
as partial or full payment of the exercise price. As soon as practicable after
receipt of a written exercise notice and full payment of the exercise price,
the Company shall deliver to the Participant a certificate or certificates
representing the acquired shares of Stock.
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Section 7. Stock Appreciation Rights
7.1. Grant of Stock Appreciation Rights. Stock Appreciation
Rights may be granted to Participants at such time or times as shall be
determined by the Committee and shall be subject to such terms and conditions
as the Committee may impose. A grant of a SAR shall be made pursuant to a
written agreement containing such provisions not inconsistent with the Plan as
the Committee shall approve.
7.2. Exercise of SARs. SARs may be exercised at such times
or subject to such conditions, including the performance of a minimum period of
service or the satisfaction of performance goals, as the Committee shall
impose, either at or after the time of grant. SARs which are granted in tandem
with an Option may only be exercised upon the surrender of the right to
exercise such Option for an equivalent number of shares and may be exercised
only with respect to the shares of Stock for which the related Option is then
exercisable. Option shares with respect to which a tandem SAR shall have been
exercised for cash shall not again be available for an Award under this Plan.
Notwithstanding any other provision of the Plan, the Committee may impose such
conditions on the exercise of a SAR (including, without limitation, the right
of the Committee to limit the time of exercise to specified periods) as may be
required to satisfy the applicable provisions of Rule 16b-3 as promulgated
under the Act or any successor rule.
7.3. Payment of SAR Amount. Upon exercise of a SAR, the
holder shall be entitled to receive payment of an amount determined by
multiplying:
(a) any increase in the Fair Market Value of a share of
Stock at the date of exercise over the price fixed by
the Committee at the date of grant, by
(b) the number of shares with respect to which the SAR is
exercised;
provided, however, that at the time of grant, the Committee may establish, in
its sole discretion, a maximum amount per share which will be payable upon
exercise of a SAR.
Section 8. Restricted Stock and Phantom Stock
8.1. Grant of Restricted Stock or Phantom Stock. The
Committee may grant shares of Restricted Stock or Phantom Stock to such
Participants at such times and in such amounts, and subject to such other terms
and conditions not inconsistent with the Plan as it shall determine. Each
grant of Restricted Stock or Phantom Stock shall be evidenced by a written
agreement setting forth the terms of such Award.
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8.2. Restrictions on Transferability. Except as provided in
Section 13.1, shares of Restricted Stock or Phantom Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
such time or until the satisfaction of such conditions, including without
limitation, the satisfaction of performance goals or the occurrence of such
event as shall be determined by the Committee either at or after the time of
grant.
8.3. Rights as a Shareholder. Unless otherwise determined by
the Committee at the time of grant, Participants holding shares of Restricted
Stock granted hereunder may exercise full voting rights and other rights as a
stockholder with respect to those shares during the Period of Restriction.
Holders of shares of Phantom Stock shall not be considered as shareholders and,
except to the extent provided in accordance with the Plan, shall have no rights
related to any shares of Stock.
8.4. Dividends and Other Distributions. Unless otherwise
determined by the Committee at the time of grant, Participants holding shares
of Restricted Stock shall be entitled to receive all dividends and other
distributions paid with respect to those shares, provided that if any such
dividends or distributions are paid in shares of Stock, such shares shall be
subject to the same forfeiture restrictions and restrictions on transferability
as apply to the Restricted Stock with respect to which they were paid. Unless
otherwise determined by the Committee at the time of grant, Participants
holding shares of Phantom Stock shall be entitled to receive cash payments
equal to any dividends and other distributions paid with respect to a
corresponding number of shares of Stock; provided that if any such dividends or
distributions are paid in shares of Stock, the Participant will be credited
with additional shares of Phantom Stock in lieu of a cash payment, which shares
shall be subject to the same forfeiture restrictions and restrictions on
transferability as apply to the shares of Phantom Stock in respect of which
they are payable.
8.5. Deferral Election. A Participant may elect, prior to
the date of grant (or such later date permitted by the Committee) and subject
to such restrictions as may be imposed by the Committee, to defer any payment
on, or in respect of, shares of Phantom Stock beyond the date at which such
payment would otherwise have been made. The Committee may provide for growth
additions to be added to the deferred amount over such deferral period. The
Participant shall elect the period of deferral and the method of distribution,
subject to the Committee's approval.
Section 9. Stock Purchase Rights
9.1. Grant of Stock Purchase Rights. The Committee may grant
an Employee Stock Purchase Right which shall enable such Employee to purchase
Stock at not less than its Fair Market Value on the date of grant. The
Committee shall impose such terms and conditions as it shall determine on such
Stock Purchase Right or
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the exercise hereof, and may, in its sole discretion, require the exercise of a
Stock Purchase Right as a condition of receiving an option, Restricted Stock
and/or Phantom Stock under the Plan. In its sole discretion, the Committee may
also provide for forfeiture of all or part of any such Award in the event of a
disposal of the shares purchased pursuant to a Stock Purchase Right prior to a
designated date or dates.
9.2. Loans. With the consent of the Committee, the Company,
in its sole discretion, may make, or arrange for, a loan to a Participant with
respect to the exercise of a Stock Purchase Right. The Committee shall have
full authority to decide whether to make a loan hereunder and to determine the
amount, term and provisions of any such loan, including the interest rate to be
charged in respect of any such loan, whether the loan is to be with or without
recourse against the Participant to whom such loan is made, the terms on which
the loan is to be repaid and the conditions, if any, under which it may be
forgiven. However, no loan hereunder shall have a term (including extensions)
exceeding ten years in duration or be in an amount exceeding 90% of the total
purchase price to be paid by the Participant.
Section 10. Termination of Employment
10.1. Termination of Employment Due to Retirement. Unless
otherwise determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of Retirement, any Option or
Stock Appreciation Rights granted to such Participant which are then
outstanding may be exercised at any time prior to the expiration of the term of
the Options or Stock Appreciation Rights or within three (3) years (or such
shorter period as the Committee shall determine at the time of grant) following
the Participant's termination of employment, whichever period is shorter, and
any shares of Restricted Stock or Phantom Stock then outstanding shall become
nonforfeitable and shall become transferable or payable, as the case may be, as
though the Period of Restriction had expired.
10.2. Termination of Employment Due to Death or Disability.
Unless otherwise determined by the Committee at the time of grant, in the event
a Participant's employment is terminated by reason of death or Disability, any
Options or Stock Appreciation Rights granted to such Participant which are then
outstanding may be exercised by the Participant or the Participant's legal
representative at any time prior to the expiration date of the term of the
Options or Stock Appreciation Rights or within one (1) year (or such shorter
period as the Committee shall determine at the time of grant) following the
Participant's termination of employment, whichever period is shorter, and any
shares of Restricted Stock or Phantom Stock then outstanding shall become
nonforfeitable and shall become transferable or payable, as the case may be, as
though the Period of Restriction had expired.
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10.3. Termination of Employment for Any Other Reason. Unless
otherwise determined by the Committee at the time of grant, in the event the
employment of the Participant shall terminate for any reason other than one
described in Section 10.1 or 10.2, any Options or Stock Appreciation Rights
granted to such Participant which are then outstanding shall be cancelled and
any shares of Restricted Stock or Phantom Stock then outstanding as to which
the Period of Restriction has not lapsed shall be forfeited.
Section 11. Change in Control
11.1. Accelerated Vesting and Payment. Unless the Committee
shall otherwise determine in the manner set forth in Section 11.2 below, in the
event of a Change in Control, each Option shall be cancelled in exchange for a
payment in cash of an amount equal to the excess of the Change in Control Price
over the exercise price for such Option, each SAR shall be fully exercisable
for a period of 60 days using the Change in Control Price instead of Fair
Market Value to determine the amount payable upon the exercise of such SAR
(except that the Change in Control Price shall not apply to SARs granted in
tandem with ISOs) and all shares of Restricted Stock and Phantom Stock shall
become nonforfeitable and be immediately transferable or payable, as the case
may be.
11.2. Alternative Awards. Notwithstanding Section 11.1, no
cancellation, acceleration of exercisability or vesting or cash settlement or
other payment shall occur with respect to any Award or any class of Awards if
the Committee reasonably determines in good faith prior to the occurrence of a
Change in Control that such Award or Awards shall be honored or assumed, or new
rights substituted therefor (such honored, assumed or substituted award
hereinafter called an "Alternative Award"), by a Participant's employer (or the
parent or a subsidiary of such employer) immediately following the Change in
Control, provided that any such Alternative Award must:
(i) be based on stock which is traded on an established
securities market, or which will be so traded within 30 days of the
Change in Control;
(ii) provide such Participant (or each Participant in a class
of Participants) with rights and entitlements substantially equivalent
to or better than the rights, terms and conditions applicable under
such Award, including, but not limited to, an identical or better
exercise or vesting schedule and identical or better timing and
methods of payment;
(iii) have substantially equivalent economic value to such
Award (determined at the time of the Change in Control);
(iv) have terms and conditions which provide that in the
event that the Participant's employment is involuntarily terminated or
constructively terminated:
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(A) any conditions on a Participant's rights under,
or any restrictions on transfer or exercisability applicable
to, each such Alternative Award shall be waived or shall
lapse, as the case may be; or
(B) each Participant shall have the right to
surrender such Alternative Award within 30 days following such
termination in exchange for a payment in cash equal to the
excess of the fair market value of the stock subject to the
Alternative Award over the price, if any, that a Participant
would be required to pay to exercise such Alternative Award.
For this purpose, a constructive termination shall mean a termination
by a Participant following a material reduction in the Participant's
compensation, a material reduction in the Participant's
responsibilities or the relocation of the Participant's principal
place of employment to another location, in each case without the
Participant's written consent.
Section 12. Amendment, Modification, and
Termination of Plan
The Board at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan. No amendment, modification, or
termination of the Plan shall in any manner adversely affect any Award
theretofore granted under the Plan, without the consent of the Participant.
Section 13. Miscellaneous Provisions
13.1. Nontransferability of Awards. No Awards granted under
the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
All rights with respect to Awards granted to a Participant under the Plan shall
be exercisable during his lifetime only by such Participant.
13.2. Beneficiary Designation. Each Participant under the
Plan may from time to time name any beneficiary or beneficiaries (who may be
named contingently or successively) to whom any benefit under the Plan is to be
paid or by whom any right under the Plan is to be exercised in case of his
death. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to or exercised by
the Participant's surviving spouse, if any, or otherwise to or by his estate.
13.3. No Guarantee of Employment or Participation. Nothing
in the Plan shall interfere with or limit in any way the
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right of the Company or any subsidiary to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue
in the employ of the Company or any subsidiary or affiliate. No Employee shall
have a right to be selected as a Participant, or, having been so selected, to
receive any future Awards.
13.4. Tax Withholding. The Company shall have the power to
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local withholding tax requirements on
any Award under the Plan, and the Company may defer payment of cash or issuance
of Stock until such requirements are satisfied. The Committee may, in its
discretion, permit a Participant to elect, subject to such conditions as the
Committee shall impose, (i) to have shares of Stock otherwise issuable under
the Plan withheld by the Company or (ii) to deliver to the Company previously
acquired shares of Stock having a Fair Market Value sufficient to satisfy all
or part of the Participant's estimated total Federal, state, and local tax
obligation associated with the transaction.
13.5. Indemnification. Each person who is or shall have been
a member of the Committee or of the Board shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be made a
party or in which he may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit, or proceeding against him, provided
he shall give the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-laws, by contract,
as a matter of law, or otherwise.
13.6. No Limitation on Compensation. Nothing in the Plan
shall be construed to limit the right of the Company to establish other plans
or to pay compensation to its employees, in cash or property, in a manner which
is not expressly authorized under the Plan.
13.7. Requirements of Law. The granting of Awards and the
issuance of shares of Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
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13.8. Term of Plan. The Plan shall be effective upon its
adoption by the Board, subject to approval by the Company's stockholders at
their next annual meeting. The Plan shall continue in effect, unless sooner
terminated pursuant to Section 12, until the tenth anniversary of the date on
which it is adopted by the Board.
13.9. Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware.
-13-
<PAGE> 1
EXHIBIT 10.(m)
MAPCO Inc. 1989 Outside Director Stock Option Plan
as Amended March 24, 1993
<PAGE> 2
MAPCO INC.
1989 OUTSIDE DIRECTOR STOCK OPTION PLAN
AS AMENDED MARCH 24, 1993
SECTION 1.
PURPOSE
1.1. The purpose of the "MAPCO INC. 1989 OUTSIDE DIRECTOR STOCK OPTION
PLAN" (the "Plan") is to foster and promote the long-term financial success of
the Company and materially increase shareholder value by enabling the Company to
attract and retain the services of outstanding Outside Directors whose judgment,
interest, and special effort is essential to the successful conduct of its
operations.
SECTION 2.
DEFINITIONS
2.1. Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Annual Award" means an Option for 1,000(1) shares of Stock.
(c) "Annual Retainer Fee" means the annual fee payable to an Outside
Director for services as a member of the Board, but exclusive of any fees
paid for services as a member of a committee of the Board, for attending
meetings or for other special services provided to the Company.
Notwithstanding the foregoing, the amount treated as an Annual Retainer Fee
hereunder shall not exceed $20,000, increased at the rate of 10% per annum
on a compounded basis for each calendar year beginning after December 31,
1989.
(d) "Board" means the Board of Directors of the Company.
(e) "Company" means MAPCO Inc., a Delaware corporation, and any
successor thereto.
(f) "Disability" means total disability, which if the Outside Director
were an employee of the Company, would be treated as a total disability
under the terms of the Company's long-term disability plan for employees,
as in effect from time to time.
(g) "Fair Market Value" on any date means the closing price of the
Stock as reported by the consolidated tape of the New York Stock Exchange
(or on such other recognized quotation system on which the trading prices
of the stock are quoted at the relevant time) on such date. In the event
that there are no Stock transactions reported on such tape (or such other
system) on such date, Fair Market Value shall mean the closing price on the
immediately preceding date on which Stock transactions were so reported.
(h) "Option" means the right to purchase Stock at a stated price for a
specified period of time. The term Option shall include Annual Awards.
(i) "Outside Director" means any member of the Board who is not an
employee of the Company or any of its subsidiaries.
(j) "Stock" means the common stock of the Company, par value $1.00 per
share.
2.2. Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
- ---------------
(1) Does not give effect to the two-for-one stock split declared on April 16,
1989.
<PAGE> 3
SECTION 3.
ELIGIBILITY AND PARTICIPATION
Each Outside Director shall participate in the Plan.
SECTION 4.
STOCK SUBJECT TO PLAN
4.1. Number. The total number of shares of Stock subject to Awards under
the Plan may not exceed 100,000(2) shares, subject to adjustment pursuant to
Section 4.3. The shares to be delivered under the Plan may consist, in whole or
in part, of treasury Stock or authorized but unissued Stock, not reserved for
any other purpose.
4.2. Cancelled, Terminated, or Forfeited Awards. Any shares of Stock
subject to an Option which for any reason is cancelled or terminated without the
issuance of any Stock shall again be available for Awards under the Plan.
4.3. Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for issuance
hereunder or subject to Options and the respective exercise prices of
outstanding Options may be appropriately adjusted by the Board, whose
determination shall be conclusive; provided, however, that any fractional shares
resulting from any such adjustment shall be disregarded.
SECTION 5.
STOCK OPTIONS
5.1. Grant of Options. (a) Annual Awards. During each calendar year during
the term of the Plan, each Outside Director shall be granted an Annual Award on
the later to occur of the first business day following the annual meeting of the
Company's stockholders or June 1.
(b) Option Agreement. Each Option shall be evidenced by an Option agreement
that shall specify the exercise price, the term of the Option, and the number of
shares of Stock to which the Option pertains.
5.2. Option Price. Options granted pursuant to Section 5.1(a) as an Annual
Award shall have an exercise price equal to the Fair Market Value of a share of
Stock on the date the Option is granted.
5.3. Exercise of Options. Options awarded under the Plan shall be fully and
immediately exercisable. Each Option shall be exercisable for 10 years after the
date on which it is granted.
5.4. Payment. Options may be exercised by written notice of exercise
accompanied by payment in full of the Option price in cash or cash equivalents,
including by personal check, or with a partial or full payment in Stock already
owned by the Outside Director, valued at Fair Market Value on the date of
exercise. As soon as practicable after receipt of such written exercise notice
and full payment of the Option price, the Company shall deliver to the Outside
Director a certificate or certificates representing the acquired shares of
Stock.
SECTION 6.
TERMINATION OF DUTIES AS A DIRECTOR
6.1. Termination of Duties Due to Retirement. In the event an Outside
Director's membership on the Board ceases on or after he has attained age 70,
any Options then held by such Outside Director may be exercised at any time
prior to the expiration of the term of the Options or within three (3) years
following his cessation of Board membership, whichever period is shorter.
6.2. Termination of Duties Due to Death or Disability. In the event an
Outside Director's membership on the Board ceases by reason of his death or
Disability, any Options then held by such Outside Director may be
- ---------------
(2) Does not give effect to the two-for-one stock split declared on April 16,
1989.
<PAGE> 4
exercised by the Outside Director or his legal representative at any time prior
to the expiration date of the terms of the Options or within one (1) year
following his cessation of Board membership, whichever period is shorter.
6.3. Termination of Duties for Any Other Reason. In the event an Outside
Director's membership on the Board ceases for any reason other than one
described in Section 6.1 or 6.2, any Options then held by such Outside Director
shall be cancelled.
6.4. Services as an Employee. If an Outside Director becomes an employee of
the Company or any of its subsidiaries, the Outside Director shall be treated as
continuing in service for purposes of this Plan, but shall not be eligible to
receive future grants while an employee. If the Outside Director's services as
an employee terminate without his again becoming an Outside Director, the
provisions of this Section 6 shall apply as though such termination of
employment were the termination of the Outside Director's membership on the
Board.
SECTION 7.
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board at any time may terminate or suspend the Plan, and from time to
time may amend or modify the Plan, but any amendment that materially increases
the benefits to be provided to Outside Directors shall be subject to approval by
the Company's stockholders. No amendment, modification, or termination of the
Plan shall in any manner adversely affect any Option theretofore granted under
the Plan, without the consent of the Outside Director.
SECTION 8.
MISCELLANEOUS PROVISIONS
8.1. Nontransferability of Awards. No Options may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. All rights with respect to Options
granted to an Outside Director shall be exercisable during his lifetime only by
him.
8.2. Beneficiary Designation. Each Outside Director may from time to time
name any beneficiary or beneficiaries (who may be named contingently or
successively) by whom any Option granted under the Plan is to be exercised in
case of his death. Each designation will revoke all prior designations by such
Outside Director and will be effective only when filed by the Outside Director
in writing with the Secretary of the Company during his lifetime. In the absence
of any such designation, Options outstanding at the time of an Outside
Director's death shall be exercised by the Outside Director's surviving spouse,
if any, or otherwise by his estate.
8.3. No Guarantee of Membership. Nothing in the Plan shall confer upon an
Outside Director the right to remain a member of the Board.
8.4. Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of Options shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental agencies
or national securities exchanges as may be required.
8.5. Administration. The Plan shall, to the maximum extent possible, be
self-effectuating. Any determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes shall be made by the Company.
8.6. Term of Plan. The Plan shall be effective upon its adoption by the
Board, subject to approval by the Company's stockholders at their next annual
meeting. The Plan shall continue in effect, unless sooner terminated pursuant to
Section 7, until the tenth anniversary of the date on which it is adopted by the
Board.
8.7. Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
<PAGE> 1
EXHIBIT 11.
Statement re: computation of per share earnings
<PAGE> 2
EXHIBIT 11
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Dollars and Shares in Millions except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Computation for Consolidated Statements of Income
Net income (a) ................................. $ 79.1 $127.0 $100.7
====== ====== ======
Weighted average common shares outstanding ..... 30.0 30.0 29.9
Common stock equivalents (stock options) .......
------ ------ ------
Weighted average common shares outstanding ..... 30.0 30.0 29.9
====== ====== ======
Primary earnings per common share (a) .......... $ 2.64 $ 4.24 $ 3.37
====== ====== ======
Additional Primary Computation
Net income (a) ................................. $ 79.1 $127.0 $100.7
====== ====== ======
Weighted average common shares outstanding ..... 30.0 30.0 29.9
Dilutive effect of outstanding options ......... .1 .2 .4
------ ------ ------
Weighted average common shares outstanding,
as adjusted .................................. 30.1 30.2 30.3
====== ====== ======
Primary earnings per common share, as adjusted(b) $ 2.63 $ 4.20 $ 3.32
====== ====== ======
FULLY DILUTED EARNINGS PER COMMON SHARE
Additional Fully Diluted Computation
Net income (a) ................................. $ 79.1 $127.0 $100.7
====== ====== ======
Weighted average common shares outstanding ..... 30.0 30.0 29.9
Dilutive effect of outstanding options ......... .1 .2 .4
------ ------ ------
Weighted average common shares outstanding,
as adjusted .................................. 30.1 30.2 30.3
====== ====== ======
Fully diluted earnings per common share (b) .... $ 2.63 $ 4.20 $ 3.32
====== ====== ======
</TABLE>
_______________
(a) These figures agree with the related amounts in the Consolidated
Statements of Income.
(b) This calculation is submitted in accordance with Securities Exchange
Act of 1934 Release No. 9083, although not required by footnote 2 to
paragraph 14 of APB Opinion No. 15 because it results in dilution of
less than 3%.
<PAGE> 1
EXHIBIT 12.
Computation of Ratio of Earnings to Fixed Charges
<PAGE> 2
EXHIBIT 12
MAPCO INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings as defined:
Income before provision for income taxes ............................... $116.6 $202.9 $144.6 $182.6 $185.7
Fixed charges .......................................................... 60.1 55.3 60.1 63.9 67.3
Capitalized interest included in fixed charges ......................... (2.8) (2.0) (1.2) (1.1)
Amortization of capitalized interest ................................... 3.4 3.5 3.5 3.3 3.6
Distributed income of affiliate accounted for by the equity method ..... 4.5
------ ------ ------ ------ ------
Total .............................................................. $180.1 $258.9 $206.2 $248.6 $260.0
====== ====== ====== ====== ======
Fixed charges as defined:
Interest and debt expense (includes amortization of debt expense
and discount) ....................................................... $ 53.7 $ 46.9 $ 51.7 $ 55.5 $ 59.3
Capitalized interest ................................................... 2.8 2.0 1.2 1.1
Interest expense on guaranteed debt of affiliate accounted for
by the equity method ................................................ .6
Portion of rentals representative of the interest factor ............... 6.4 5.6 6.4 7.2 6.3
------ ------ ------ ------ ------
Total ............................................................. $ 60.1 $ 55.3 $ 60.1 $ 63.9 $ 67.3
====== ====== ====== ====== ======
Ratio of earnings to fixed charges ....................................... 3.0 4.7 3.4 3.9 3.9
====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 21.
List of Subsidiaries
<PAGE> 2
EXHIBIT 21
<TABLE>
<CAPTION>
STATE OR OTHER
SUBSIDIARIES AND JURISDICTION IN
AFFILIATES OF MAPCO INC. WHICH INCORPORATED
------------------------ ------------------
<S> <C>
MAPCO Alaska Inc. Alaska
MAPCO Alaska Petroleum Inc. Alaska
MAPCO Ammonia Pipeline Inc. Delaware
MAPCO Coal Inc. Delaware
MAPCO Coal International Inc. Barbados
MAPCO Express Inc. Alaska
MAPCO Fertilizer Inc. Delaware
MAPCO Florida, Inc. Delaware
MAPCO Gas Inc. Delaware
MAPCO Inc. Nevada
MAPCO Indonesia Inc. Delaware
MAPCO International Inc. Delaware
MAPCO Intrastate Pipeline Company, Inc. Kansas
MAPCO Land & Development Corporation Delaware
MAPCO Land Corporation Delaware
MAPCO Minerals Corporation Delaware
MAPCO Natural Gas Liquids Inc. Delaware
MAPCO Oil & Gas Company Delaware
MAPCO Petroleum Inc. Delaware
MAPCO Purchasing Company Delaware
(1)Cari International Mining Corporation Delaware
Denali Pipeline Company Alaska
Flat Gap Mining Company Delaware
Garrett County Coal Corporation Delaware
Gibson County Coal Corporation Delaware
(2)Koch Carbon, Inc. Delaware
(5)LEXAS OIL, L.L.C. Oklahoma
Martiki Coal Corporation Delaware
MC Mining, Inc. Delaware
Mettiki Coal Corporation Delaware
Mid-America Pipeline Company Delaware
Mt. Vernon Coal Transfer Company Delaware
(2)Permac, Inc. Virginia
Pontiki Coal Corporation Delaware
Posey County Coal Corporation Delaware
(2)Race Fork Coal Corporation Virginia
REP Sales, Inc. West Virginia
Scotts Branch Co. Delaware
(3)Seminole Pipeline Company Delaware
(4)South Atlantic Coal Company, Inc. Virginia
Thermogas Company Delaware
Toptiki Coal Corporation Delaware
Valley Towing Service, Inc. Tennessee
Webster County Coal Corporation Kentucky
White County Coal Corporation Delaware
</TABLE>
____________________________
(1) 80% stock ownership by Garrett County Coal Corporation.
(2) 100% stock ownership by South Atlantic Coal Company, Inc.
(3) A consolidated affiliate with 80% ownership effective as of 1/91.
(4) 50% stock ownership by MAPCO Coal Inc. and 50% stock ownership by REP
Sales, Inc.
(5) 50% stock ownership by MAPCO Petroleum Inc.
<PAGE> 1
EXHIBIT 23.
Independent Auditors' Consent
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
MAPCO Inc.:
We consent to the incorporation by reference of MAPCO Inc.'s Post-Effective
Amendment No. 1 to Registration Statement No. 33-13090 on Form S-8,
Post-Effective Amendment No. 2 to Registration Statement No. 2-77050 on Form
S-8, Post-Effective Amendment No. 1 to Registration Statement No. 33-28722 on
Form S-8, Post-Effective Amendment No. 1 to Registration Statement No. 33-29043
on Form S-8, Post-Effective Amendment No. 1 to Registration Statement No.
33-29044 on Form S-8, Registration No. 33-33217 on Form S-8 and Registration
Statement No. 33-34044 on Form S-3 of our report dated January 27, 1995 (which
expresses an unqualified opinion) appearing in the Annual Report on Form 10-K
of MAPCO Inc. for the year ended December 31, 1994.
Deloitte & Touche LLP
Tulsa, Oklahoma
March 21, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAPCO
INC.'S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1994, AND MAPCO INC.'S
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1994,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 30,600
<SECURITIES> 0
<RECEIVABLES> 265,600
<ALLOWANCES> 2,300
<INVENTORY> 111,000
<CURRENT-ASSETS> 478,900
<PP&E> 2,501,500
<DEPRECIATION> 1,027,300
<TOTAL-ASSETS> 2,166,100
<CURRENT-LIABILITIES> 426,400
<BONDS> 720,900
<COMMON> 62,800
0
0
<OTHER-SE> 559,800
<TOTAL-LIABILITY-AND-EQUITY> 2,166,100
<SALES> 3,059,300
<TOTAL-REVENUES> 3,059,300
<CGS> 0
<TOTAL-COSTS> 2,718,200
<OTHER-EXPENSES> 171,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,200
<INCOME-PRETAX> 116,600
<INCOME-TAX> 35,900
<INCOME-CONTINUING> 79,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,100
<EPS-PRIMARY> 2.64
<EPS-DILUTED> 2.63
</TABLE>
