SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
December 2, 1998 (December 1, 1998)
________________________________________________
Date of report (Date of earliest event reported)
Mobil Corporation
______________________________________________________
(Exact Name of Registrant as Specified in Charter)
Delaware 1-7555 13-2850309
______________ _____________________ __________________
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
3225 Gallows Road
Fairfax, Virginia 22037-0001
Telephone: (703) 846-3000
____________________________________________________________
(Address of Principal Executive Offices)
Item 5. Other Events.
On December 1, 1998, Mobil Corporation, a Delaware corporation
("Mobil"), Exxon Corporation, a New Jersey corporation ("Exxon"), and Lion
Acquisition Subsidiary Corporation, a Delaware corporation and a wholly-
owned direct subsidiary of Exxon ("Merger Subsidiary"), entered into an
Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the
Merger Agreement and subject to the terms and conditions set forth therein,
Merger Subsidiary will be merged with and into Mobil, with Mobil being the
surviving corporation of such merger (the "Merger"), and as a result of the
Merger, Mobil will become a wholly-owned subsidiary of Exxon. At the
Effective Time (as defined in the Merger Agreement) of the Merger, (i) each
issued and outstanding share of common stock, par value $1.00 per share, of
Mobil (the "Mobil Common Stock") will be converted into the right to
receive 1.32015 shares of common stock, without par value, of Exxon and
(ii) each issued and outstanding share of Series B ESOP Convertible
Preferred Stock, par value $1.00 per share, of Mobil (the "Series B
Preferred Stock") will be converted into the right to receive one share of
a new series of preferred stock to be issued by Exxon (having, to the
extent possible, terms identical to those of the Series B Preferred Stock
immediately prior to the Effective Time).
In connection with the execution of the Merger Agreement, Mobil
and Exxon entered into a Stock Option Agreement (the "Option Agreement")
pursuant to which Mobil granted Exxon an option (the "Option") to purchase
up to approximately 14.9% of the outstanding shares of Mobil Common Stock
(after giving effect to the Option) exercisable in the circumstances
specified in the Option Agreement.
A copy of the Merger Agreement is attached hereto as Exhibit 2.1
and a copy of the Option Agreement is attached hereto as Exhibit 2.2. The
foregoing description is qualified in its entirety by reference to the full
text of such exhibits. A joint press release announcing the execution of
the Merger Agreement and the Option Agreement was issued on December 1,
1998, a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of December
1, 1998, among Mobil, Exxon and Merger Subsidiary.
2.2 Stock Option Agreement, dated as of December 1,
1998, between Mobil and Exxon.
99.1 Mobil and Exxon Joint Press Release, dated
December 1, 1998.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: December 2, 1998
MOBIL CORPORATION
By: /s/ Gordon G. Garney
-----------------------------------
Name: Gordon G. Garney
Title: Senior Assistant Secretary
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of December
1, 1998, among Mobil, Exxon and Merger Subsidiary.
2.2 Stock Option Agreement, dated as of December 1,
1998, between Mobil and Exxon.
99.1 Mobil and Exxon Joint Press Release, dated
December 1, 1998
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
December 1, 1998
among
MOBIL CORPORATION
EXXON CORPORATION
and
LION ACQUISITION SUBSIDIARY CORPORATION
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TABLE OF CONTENTS(1)
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PAGE
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ARTICLE 1
THE MERGER
SECTION 1.01. The Merger ...............................................2
SECTION 1.02. Conversion of Shares.......................................2
SECTION 1.03. Surrender and Payment......................................4
SECTION 1.04. Stock Options..............................................6
SECTION 1.05. Adjustments ...............................................8
SECTION 1.06. Fractional Shares..........................................8
SECTION 1.07. Withholding Rights.........................................9
SECTION 1.08. Lost Certificates..........................................9
SECTION 1.09. Shares Held by Company Affiliates..........................9
SECTION 1.10. Dissenter's Rights........................................10
ARTICLE 2
CERTAIN GOVERNANCE MATTERS
SECTION 2.01. Acquiror Name.............................................10
SECTION 2.02. Acquiror Board of Directors...............................10
SECTION 2.03. Transition Committee......................................11
SECTION 2.04. Certificate of Incorporation of the Surviving
Corporation...................................11
SECTION 2.05. By-laws of the Surviving Corporation......................11
SECTION 2.06. Directors and Officers of the Surviving
Corporation...................................11
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Corporate Existence and Power.............................12
SECTION 3.02. Corporate Authorization...................................12
SECTION 3.03. Governmental Authorization................................13
SECTION 3.04. Non-Contravention.........................................13
SECTION 3.05. Capitalization of the Company.............................14
SECTION 3.06. Subsidiaries..............................................15
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(1) The Table of Contents is not a part of this Agreement.
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SECTION 3.07. SEC Filings ..............................................16
SECTION 3.08. Financial Statements......................................17
SECTION 3.09. Disclosure Documents......................................17
SECTION 3.10. Absence of Certain Changes................................18
SECTION 3.11. No Undisclosed Material Liabilities.......................19
SECTION 3.12. Litigation ..............................................19
SECTION 3.13. Taxes ..............................................19
SECTION 3.14. Employee Benefit Plans....................................20
SECTION 3.15. Compliance with Laws......................................22
SECTION 3.16. Finders' or Advisors' Fees................................22
SECTION 3.17. Environmental Matters.....................................22
SECTION 3.18. Opinion of Financial Advisor..............................23
SECTION 3.19. Pooling; Tax Treatment....................................23
SECTION 3.20. Pooling Letter............................................23
SECTION 3.21. Takeover Statutes.........................................23
SECTION 3.22. Rights Agreement..........................................24
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 4.01. Corporate Existence and Power.............................24
SECTION 4.02. Corporate Authorization...................................24
SECTION 4.03. Governmental Authorization................................25
SECTION 4.04. Non-Contravention.........................................25
SECTION 4.05. Capitalization............................................26
SECTION 4.06. Subsidiaries..............................................27
SECTION 4.07. SEC Filings ..............................................28
SECTION 4.08. Financial Statements......................................28
SECTION 4.09. Disclosure Documents......................................29
SECTION 4.10. Absence of Certain Changes................................30
SECTION 4.11. No Undisclosed Material Liabilities.......................30
SECTION 4.12. Litigation ..............................................30
SECTION 4.13. Taxes ..............................................31
SECTION 4.14. Employee Benefit Plans....................................31
SECTION 4.15. Compliance with Laws......................................32
SECTION 4.16. Finders' or Advisors' Fees................................33
SECTION 4.17. Environmental Matters.....................................33
SECTION 4.18. Opinion of Financial Advisor..............................33
SECTION 4.19. Pooling; Tax Treatment....................................33
SECTION 4.20. Pooling Letter............................................34
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ARTICLE 5
COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of the Company....................................34
SECTION 5.02. Company Stockholder Meeting; Proxy Material...............36
SECTION 5.03. Other Offers..............................................37
ARTICLE 6
COVENANTS OF ACQUIROR
SECTION 6.01. Conduct of Acquiror.......................................39
SECTION 6.02. Obligations of Merger Subsidiary..........................40
SECTION 6.03. Director and Officer Liability............................40
SECTION 6.04. Acquiror Stockholder Meeting; Form S-4....................41
SECTION 6.05. Stock Exchange Listing....................................42
SECTION 6.06. Employee Benefits.........................................42
ARTICLE 7
COVENANTS OF ACQUIROR AND THE COMPANY
SECTION 7.01. Best Efforts .............................................45
SECTION 7.02. Certain Filings...........................................45
SECTION 7.03. Access to Information.....................................46
SECTION 7.04. Tax and Accounting Treatment..............................46
SECTION 7.05. Public Announcements......................................46
SECTION 7.06. Further Assurances........................................47
SECTION 7.07. Notices of Certain Events.................................47
SECTION 7.08. Affiliates ..............................................47
SECTION 7.09. Payment of Dividends......................................48
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party...............48
SECTION 8.02. Conditions to the Obligations of Acquiror and
Merger Subsidiary.............................49
SECTION 8.03. Conditions to the Obligations of the Company..............51
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ARTICLE 9
TERMINATION
SECTION 9.01. Termination ..............................................52
SECTION 9.02. Effect of Termination.....................................54
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices ..............................................54
SECTION 10.02. Non-Survival of Representations and
Warranties....................................55
SECTION 10.03. Amendments; No Waivers...................................55
SECTION 10.04. Expenses ..............................................55
SECTION 10.05. Successors and Assigns...................................57
SECTION 10.06. Governing Law............................................57
SECTION 10.07. Jurisdiction.............................................57
SECTION 10.08. Waiver of Jury Trial.....................................57
SECTION 10.09. Counterparts; Effectiveness..............................58
SECTION 10.10. Entire Agreement.........................................58
SECTION 10.11. Captions ..............................................58
SECTION 10.12. Severability.............................................58
EXHIBITS AND SCHEDULES
Exhibit A - Stock Option Agreement
Exhibit B-1 - Affiliate's Letter Relating to Pooling (Company)
Exhibit B-2 - Affiliate's Letter Relating to Pooling (Acquiror)
Exhibit B-3 - Affiliate's Letter (Company)
Exhibit C-1 - Tax Certificate (Acquiror)
Exhibit C-2 - Tax Certificate (Company)
Schedule 1.04 Schedule 3.01 Schedule 3.04 Schedule 3.06(a) Schedule 3.06(b)
Schedule 3.10 Schedule 3.11(c) Schedule 3.13 Schedule 3.14
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Schedule 4.11(c) Schedule 4.13 Schedule 4.14 Schedule 7.08(a) Schedule 7.08(b)
Schedule 8.01(e)
1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 1, 1998 among
Mobil Corporation, a Delaware corporation (the "Company"), Exxon
Corporation, a New Jersey corporation ("Acquiror"), and Lion Acquisition
Subsidiary Corporation, a newly-formed Delaware corporation and a
wholly-owned first-tier subsidiary of Acquiror ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Acquiror, Merger
Subsidiary and the Company have approved this Agreement, and deem it
advisable and in the best interests of their respective stockholders to
consummate the merger of Merger Subsidiary with and into the Company on the
terms and conditions set forth herein;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger contemplated by this Agreement qualify as a
"reorganization" within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the rules and regulations
promulgated thereunder;
WHEREAS, for accounting purposes, it is intended that the Merger
be accounted for as a pooling of interests under United States generally
accepted accounting principles ("GAAP"); and
WHEREAS, as a condition and inducement to Acquiror entering into
this Agreement and incurring the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Acquiror and the Company
are entering into a Stock Option Agreement in the form of Exhibit A hereto
(the "Option Agreement") pursuant to which the Company has granted Acquiror
an option, exercisable under the circumstances specified therein, to
purchase shares of common stock, par value $1.00 per share, of the Company
(the "Shares").
NOW, THEREFORE, in consideration of the promises and the
respective representations, warranties, covenants, and agreements set forth
herein, the parties hereto agree as follows:
1
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time, Merger
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with the requirements of the General Corporation Law of the
State of Delaware (the "Delaware Law"), whereupon the separate existence of
Merger Subsidiary shall cease, and the Company shall be the surviving
corporation in the Merger (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company
and Merger Subsidiary will file a certificate of merger with the Secretary
of State of the State of Delaware and make all other filings or recordings
required by Delaware Law in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of Delaware or at such later time
as is specified in the certificate of merger (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be
subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Delaware Law.
(d) The closing of the Merger (the "Closing") shall take place (i)
at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York,
NY, as soon as practicable, but in any event within three business days
after the day on which the last to be fulfilled or waived of the conditions
set forth in Article 8 (other than those conditions that by their nature
are to be fulfilled at the Closing, but subject to the fulfillment or
waiver of such conditions) shall be fulfilled or waived in accordance with
this Agreement or (ii) at such other place and time or on such other date
as the Company and Acquiror may agree in writing (the "Closing Date").
SECTION 1.02. Conversion of Shares. (a) At the Effective Time by
virtue of the Merger and without any action on the part of the holder
thereof:
(i) each Share held by the Company as treasury stock or owned by
Acquiror or any subsidiary of Acquiror (excluding Shares, if any,
held in any "Rabbi trust" identified on Schedule 3.14, which may
be accounted for as treasury stock ("Rabbi Trust Shares"))
immediately prior to the Effective Time (together with the
2
associated Company Right (as defined in Section 3.05), if any)
shall be canceled, and no payment shall be made with respect
thereto;
(ii) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
Surviving Corporation with the same rights, powers and privileges
as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation;
(iii) each Share (including each Rabbi Trust Share) (together
with the associated Company Right) outstanding immediately prior
to the Effective Time shall, except as otherwise provided in
Section 1.02(a)(i), be converted into the right to receive 1.32015
(the "Exchange Ratio") shares of fully paid and nonassessable
common stock, without par value, of Acquiror ("Acquiror Common
Stock"); and
(iv) Each issued and outstanding share of Series B ESOP
Convertible Preferred Stock, par value $1.00 per share, of the
Company (the "Series B Preferred Stock") held in the leveraged
ESOP portion of the Company's Employee Savings Plan (the
"Leveraged ESOP"), other than Dissenting Shares, shall be
converted into the right to receive one validly issued, fully paid
and nonassessable share of a new series of preferred stock to be
issued by Acquiror (as a successor under Section 8(A) of the
Certificate of Designation, Preferences and Rights establishing
the Series B Preferred Stock) at the Effective Time (the "Acquiror
Preferred Stock"). Each share of Acquiror Preferred Stock shall,
to the extent possible, have terms that are identical to those of
the Series B Preferred Stock immediately prior to the Effective
Time, except that, (a) as a result of the Merger the issuer
thereof shall be Acquiror rather than the Company, and (b) upon
conversion thereof (at the same times and subject to the same
terms and conditions under which Series B Preferred Stock is
convertible into Shares) each share of Acquiror Preferred Stock
shall be converted into that Merger Consideration (as defined
below) which the holder thereof would have received had the Series
B Preferred Stock of such holder been converted into Shares
immediately prior to the Effective Time.
(b) All Acquiror Common Stock issued as provided in this Section
1.02 shall be of the same class and shall have the same terms as the
currently outstanding Acquiror Common Stock. Acquiror shall, following the
Closing, except as provided in Section 1.03(c), pay all stamp duties and
stamp duty reserve tax, if any, imposed in connection with the issuance or
3
creation of the Acquiror Common Stock and Acquiror Preferred Stock in
connection with the Merger. The Company shall have the right to approve the
Certificate of Designations establishing the Acquiror Preferred Stock, such
approval not to be unreasonably withheld.
(c) From and after the Effective Time, all Shares (together with
the associated Company Rights) converted in accordance with Section
1.02(a)(iii) and all Series B Preferred Stock (other than Dissenting
Shares) converted in accordance with Section 1.02(a)(iv) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares or
Series B Preferred Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration or Preferred
Merger Consideration (each as defined below), as applicable, and any
dividends payable pursuant to Section 1.03(f). From and after the Effective
Time, all certificates representing the common stock of Merger Subsidiary
shall be deemed for all purposes to represent the number of shares of
common stock of the Surviving Corporation into which they were converted in
accordance with Section 1.02(a)(ii).
(d) The Acquiror Common Stock to be received as consideration
pursuant to the Merger by each holder of Shares (together with cash in lieu
of fractional shares of Acquiror Common Stock as specified below) is
referred to herein as the "Merger Consideration". The Acquiror Preferred
Stock to be received as consideration pursuant to the Merger by each holder
of Series B Preferred Stock is referred to herein as the "Preferred Merger
Consideration."
(e) For purposes of this Agreement, the word "Subsidiary" when
used with respect to any Person means any other Person, whether
incorporated or unincorporated, of which (i) more than fifty percent of the
securities or other ownership interests or (ii) securities or other
interests having by their terms ordinary voting power to elect more than
fifty percent of the board of directors or others performing similar
functions with respect to such corporation or other organization, is
directly owned or controlled by such Person or by any one or more of its
Subsidiaries. For purposes of this Agreement, "Person" means an individual,
a corporation, a limited liability company, a partnership, an association,
a trust or any other entity or organization, including a government or
political subdivision or any agency or instrumentality thereof.
SECTION 1.03. Surrender and Payment. (a) Prior to the Effective Time,
Acquiror shall appoint an agent reasonably acceptable to the Company (the
"Exchange Agent") for the purpose of exchanging certificates representing
Shares or Series B Preferred Stock (the "Certificates") for the Merger
Consideration or Preferred Merger Consideration, as applicable. Acquiror will
4
make available to the Exchange Agent, as needed, the Merger Consideration
and Preferred Merger Consideration to be paid in respect of the Shares and
the Series B Preferred Stock, respectively. Promptly after the Effective
Time, Acquiror will send, or will cause the Exchange Agent to send, to each
holder of record at the Effective Time of Shares and Series B Preferred
Stock a letter of transmittal for use in such exchange (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) in
such form as the Company and Acquiror may reasonably agree, for use in
effecting delivery of Shares and Series B Preferred Stock to the Exchange
Agent.
(b) Each holder of Shares that have been converted into a right
to receive the Merger Consideration, upon surrender to the Exchange Agent
of a Certificate, together with a properly completed letter of transmittal,
will be entitled to receive the Merger Consideration in respect of the
Shares represented by such Certificate. Until so surrendered, each such
Certificate shall, after the Effective Time, represent for all purposes
only the right to receive such Merger Consideration. Each holder of Series
B Preferred Stock that has been converted into a right to receive the
Preferred Merger Consideration, upon surrender to the Exchange Agent of a
Certificate, together with a properly completed letter of transmittal, will
be entitled to receive the Preferred Merger Consideration in respect of the
Series B Preferred Stock represented by such Certificate. Until so
surrendered, each such Certificate shall, after the Effective Time,
represent for all purposes only the right to receive such Preferred Merger
Consideration.
(c) If any portion of the Merger Consideration or the Preferred
Merger Consideration is to be paid to a Person other than the Person in
whose name the Certificate is registered, it shall be a condition to such
payment that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting
such payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares or Series B Preferred Stock. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this
Article 1.
(e) Any portion of the Merger Consideration or the Preferred
Merger Consideration made available to the Exchange Agent pursuant to
Section 1.03(a) that remains unclaimed by the holders of Shares or Series B
5
Preferred Stock one year after the Effective Time shall be returned to
Acquiror, upon demand, and any such holder who has not exchanged his Shares
for the Merger Consideration or the Series B Preferred Stock for the
Preferred Merger Consideration, as applicable, in accordance with this
Section prior to that time shall thereafter look only to Acquiror for
payment of the Merger Consideration in respect of his Shares or the
Preferred Merger Consideration in respect of the Series B Preferred Stock.
Notwithstanding the foregoing, Acquiror shall not be liable to any holder
of Shares or Series B Preferred Stock for any amount paid to a public
official pursuant to applicable abandoned property laws. Any amounts
remaining unclaimed by holders of Shares or Series B Preferred Stock three
years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of
any governmental entity) shall, to the extent permitted by applicable law,
become the property of Acquiror free and clear of any claims or interest of
any Person previously entitled thereto.
(f) No dividends or other distributions with respect to Acquiror
Common Stock or Acquiror Preferred Stock issued in the Merger shall be paid
to the holder of any unsurrendered Certificates until such Certificates are
surrendered as provided in this Section. Subject to the effect of
applicable laws, following such surrender, there shall be paid, without
interest, to the record holder of the Acquiror Common Stock or Acquiror
Preferred Stock, as appropriate, issued in exchange therefor (i) at the
time of such surrender, all dividends and other distributions payable in
respect of such Acquiror Common Stock or Acquiror Preferred Stock, as the
case may be, with a record date after the Effective Time and a payment date
on or prior to the date of such surrender and not previously paid and (ii)
at the appropriate payment date, the dividends or other distributions
payable with respect to such Acquiror Common Stock or Acquiror Preferred
Stock, as the case may be, with a record date after the Effective Time but
with a payment date subsequent to such surrender. For purposes of dividends
or other distributions in respect of Acquiror Common Stock and Acquiror
Preferred Stock, all Acquiror Common Stock and Acquiror Preferred Stock to
be issued pursuant to the Merger (but not options therefor issued pursuant
to Section 1.04 unless actually exercised at the Effective Time) shall be
entitled to dividends pursuant to the immediately preceding sentence as if
issued and outstanding as of the Effective Time.
SECTION 1.04. Stock Options. (a) At the Effective Time, each
outstanding option to purchase Shares (a "Company Stock Option") granted
under the Company's plans identified in Schedule 1.04 as being the only
compensation or benefit plans or agreements pursuant to which Shares may be
issued (collectively, the "Company Stock Option Plans"), whether vested or
not vested, shall be deemed assumed by Acquiror and shall thereafter be
6
deemed to constitute an option to acquire, on the same terms and conditions
as were applicable under such Company Stock Option prior to the Effective
Time (in accordance with the past practice of the Company with respect to
interpretation and application of such terms and conditions), the number
(rounded down to the nearest whole number) of shares of Acquiror Common
Stock determined by multiplying (x) the number of Shares subject to such
Company Stock Option immediately prior to the Effective Time by (y) the
Exchange Ratio, at a price per share of Acquiror Common Stock (rounded up
to the nearest whole cent) equal to (A) the exercise price per Share
otherwise purchasable pursuant to such Company Stock Option divided by (B)
the Exchange Ratio. In addition, prior to the Effective Time, the Company
will make any amendments to the terms of such stock option or compensation
plans or arrangements that are necessary to give effect to the transactions
contemplated by this Section. The Company represents that no consents are
necessary to give effect to the transactions contemplated by this Section.
(b) Acquiror shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Acquiror Common Stock and
Acquiror Preferred Stock for delivery pursuant to the terms set forth in
this Section 1.04.
(c) At the Effective Time, each award or account (including
restricted stock, stock equivalents and stock units, but excluding Company
Stock Options) outstanding as of the date hereof ("Company Award") that has
been established, made or granted under any employee incentive or benefit
plans, programs or arrangements and non-employee director plans maintained
by the Company on or prior to the date hereof which provide for grants of
equity-based awards or equity- based accounts shall be amended or converted
into a similar instrument of Acquiror, in each case with such adjustments
to the terms and conditions of such Company Awards as are appropriate to
preserve the value inherent in such Company Awards with no detrimental
effects on the holders thereof. The other terms and conditions of each
Company Award, and the plans or agreements under which they were issued,
shall continue to apply in accordance with their terms and conditions,
including any provisions for acceleration (as such terms and conditions
have been interpreted and applied by the Company in accordance with its
past practice). The Company represents that (i) there are no Company Awards
or Company Stock Options other than those reflected in Section 3.05 and
(ii) all employee incentive or benefit plans, programs or arrangements and
non-employee director plans under which any Company Award has been
established, made or granted and all Company Stock Option Plans are
disclosed in Schedule 1.04.
(d) At the Effective Time, Acquiror shall file with the
Securities and Exchange Commission (the "SEC") a registration statement on
an appropriate form or a post-effective amendment to a previously filed
registration statement under the Securities Act of 1933, as amended (the
7
"1933 Act"), with respect to the Acquiror Common Stock subject to options
and other equity-based awards issued pursuant to this Section 1.04, and
shall use its reasonable best efforts to maintain the current status of the
prospectus contained therein, as well as comply with any applicable state
securities or "blue sky" laws, for so long as such options or other
equity-based awards remain outstanding.
SECTION 1.05. Adjustments. If at any time during the period
between the date of this Agreement and the Effective Time, any change in
the outstanding shares of capital stock of Acquiror or the Company (other
than as contemplated in Section 3.05 or Section 4.05 or permitted under
this Agreement) shall occur, including, without limitation, by reason of
any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with a
record date during such period, the Merger Consideration and Preferred
Merger Consideration shall be appropriately adjusted.
SECTION 1.06. Fractional Shares. (a) No fractional shares of
Acquiror Common Stock shall be issued in the Merger, but in lieu thereof
each holder of Shares otherwise entitled to a fractional share of Acquiror
Common Stock will be entitled to receive, from the Exchange Agent in
accordance with the provisions of this Section 1.06, a cash payment in lieu
of such fractional shares of Acquiror Common Stock representing such
holder's proportionate interest, if any, in the proceeds from the sale by
the Exchange Agent in one or more transactions of the number of shares of
Acquiror Common Stock delivered to the Exchange Agent by Acquiror pursuant
to Section 1.03(a) over the aggregate number of whole shares of Acquiror
Common Stock to be distributed to the holders of the certificates
representing Shares pursuant to Section 1.03(b) (such excess being herein
called the "Excess Shares"). The parties acknowledge that payment of the
cash consideration in lieu of issuing fractional shares was not separately
bargained for consideration but merely represents a mechanical rounding off
for purposes of simplifying the corporate and accounting problems that
would otherwise be caused by the issuance of fractional shares. As soon as
practicable after the Effective Time, the Exchange Agent, as agent for the
holders of the certificates representing Shares, shall sell the Excess
Shares at then prevailing prices on the New York Stock Exchange (the
"NYSE") in the manner provided in the following paragraph.
(b) The sale of the Excess Shares by the Exchange Agent, as agent
for the holders that would otherwise receive fractional shares, shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. The compensation
payable to the Exchange Agent and the expenses incurred by the Exchange
Agent, in each case, in connection with such sale or sales of the Excess
Shares, and all related commissions, transfer taxes and other out-of-pocket
8
transaction costs, will be paid by the Surviving Corporation out of its own
funds and will not be paid directly or indirectly by Acquiror. Until the
proceeds of such sale or sales have been distributed to the holders of
Shares, the Exchange Agent shall hold such proceeds in trust for the
holders of Shares (the "Common Shares Trust"). The Exchange Agent shall
determine the portion of the Common Shares Trust to which each holder of
Shares shall be entitled, if any, by multiplying the amount of the
aggregate proceeds comprising the Common Shares Trust by a fraction, the
numerator of which is the amount of the fractional share interest to which
such holder of Shares would otherwise be entitled and the denominator of
which is the aggregate amount of fractional share interests to which all
holders of Shares would otherwise be entitled.
(c) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Shares in lieu of any fractional
shares of Acquiror Common Stock, the Exchange Agent shall make available
such amounts to such holders of Shares without interest.
SECTION 1.07. Withholding Rights. Each of the Surviving
Corporation and Acquiror shall be entitled to deduct and withhold from the
consideration otherwise payable to any person pursuant to this Article such
amounts as it is required to deduct and withhold with respect to the making
of such payment under any provision of federal, state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving
Corporation or Acquiror, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by the Surviving Corporation or Acquiror, as the case may be.
SECTION 1.08. Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation, the posting by
such person of a bond, in such reasonable amount as the Surviving
Corporation may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration or Preferred Merger Consideration to be paid in respect of
the Shares or Series B Preferred Stock, as applicable, represented by such
Certificates as contemplated by this Article.
SECTION 1.09. Shares Held by Company Affiliates. Anything to the
contrary herein notwithstanding, any shares of Acquiror Common Stock (or
certificates therefor) issued to affiliates of the Company pursuant to
Section 1.03 shall be subject to the restrictions described in Exhibit B-1
9
and Exhibit B-3, and such shares (or certificates therefor) shall bear a
legend describing such restrictions.
SECTION 1.10. Dissenter's Rights. Notwithstanding anything in this
Agreement to the contrary, any shares of Series B Preferred Stock
outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing
and who has delivered a written demand for appraisal of such shares in
accordance with Section 262 of the Delaware Law, if such Section 262
provides for appraisal rights for such shares in the Merger ("Dissenting
Shares"), shall not be converted into the right to receive the Preferred
Merger Consideration, unless and until such holder fails to perfect or
effectively withdraws or otherwise loses his right to appraisal and payment
under the Delaware Law. If, after the Effective Time, any such holder fails
to perfect or effectively withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted
as of the Effective Time into the right to receive the Preferred Merger
Consideration to which such holder is entitled, without interest or
dividends thereon. Any amounts paid to holders of Dissenting Shares in an
appraisal proceeding will be paid by the Surviving Corporation out of its
own funds and will not be paid, directly or indirectly, by Acquiror.
ARTICLE 2
CERTAIN GOVERNANCE MATTERS
SECTION 2.01. Acquiror Name. Acquiror shall take all such action
as is necessary to change its name to "Exxon Mobil Corporation" effective
as of the Effective Time, which action shall include, without limitation,
seeking stockholder approval to amend Acquiror's certificate of
incorporation as provided in Section 6.04.
SECTION 2.02. Acquiror Board of Directors. (a) At the Effective
Time, Acquiror shall cause the Board of Directors of Acquiror to consist of
not more than 19 directors, up to 13 of whom shall be the directors of
Acquiror prior to the Effective Time and six of whom shall be directors
designated prior to the Effective Time by the Company reasonably acceptable
to Acquiror (of whom two shall be Persons who immediately prior to the
Effective Time were directors and executive officers of the Company and
four shall be Persons who immediately prior to the Effective Time were
directors but not executive officers of the Company) (the "Company Board
Designees"). Prior to the Effective Time, the Board of Directors of
Acquiror shall take all action necessary to amend the by-laws of Acquiror
to increase the size of the Board of Directors of Acquiror to not more than
19 and to elect the Company Board Designees to the Board of Directors of
Acquiror, in each case as of the Effective Time.
(b) The Board of Directors of Acquiror shall take all action
necessary to cause Mr. Lucio A. Noto to be elected as Vice Chairman of the
Board of Directors of Acquiror as of the Effective Time.
(c) Acquiror shall cause there to be at least one Company Board
Designee on each of the Audit Committee and Compensation Committee of the
Board of Directors of Acquiror as of the Effective Time.
(d) If the Effective Time occurs on a date which is less than
nine months before the next regularly scheduled annual meeting of
stockholders of Acquiror, Acquiror further agrees to use all reasonable
efforts necessary to (i) nominate the Company Board Designees for election
as directors, (ii) elect Mr. Lucio A. Noto as Vice Chairman of the Board of
Directors of Acquiror, and (iii) cause at least one Company Board Designee
to be on each of the Audit Committee and Compensation Committee of the
Board of Directors of Acquiror, in each case in connection with and as of
such next regularly scheduled annual meeting.
SECTION 2.03. Transition Committee. The parties agree to establish
a Transition Committee which will have a consultative role and which will
be in effect from the date hereof until the earlier of the termination
hereof and the Effective Time. The Transition Committee shall be comprised
of Mr. Lee R. Raymond and Mr. Lucio A. Noto. The Transition Committee will
be concerned with matters relating to planning the integration after the
Effective Time of Acquiror and the Company, including organization and
staffing. The Transition Committee will draw upon the resources of Acquiror
and the Company as necessary or appropriate.
SECTION 2.04. Certificate of Incorporation of the Surviving
Corporation. The certificate of incorporation of the Company in effect at
the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable law.
SECTION 2.05. By-laws of the Surviving Corporation. The by-laws of
Merger Subsidiary in effect at the Effective Time shall be the by-laws of
the Surviving Corporation until amended in accordance with applicable law.
SECTION 2.06. Directors and Officers of the Surviving Corporation.
From and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, (a) the directors
10
of Merger Subsidiary at the Effective Time shall be the directors of the
Surviving Corporation, and (b) the officers of the Company at the Effective
Time shall be the officers of the Surviving Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquiror that:
SECTION 3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except for those the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Material Adverse Effect" with respect to any
Person means a material adverse effect on the financial condition,
business, liabilities, properties, assets or results of operations, taken
as a whole, of such Person and its Subsidiaries, taken as a whole, except
to the extent resulting from (w) any changes in general United States or
global economic conditions, (x) any changes affecting the oil and gas
industry in general, (y) matters whose significance or impact would
reasonably be expected to be primarily short term (i.e., under 18 months)
or (z) matters disclosed on Schedule 3.01. The Company has heretofore
delivered to Acquiror true and complete copies of the Company's certificate
of incorporation and by-laws as currently in effect.
SECTION 3.02. Corporate Authorization. (a) The execution, delivery
and performance by the Company of this Agreement and the Option Agreement
and the consummation by the Company of the transactions contemplated hereby
and thereby are within the Company's corporate powers and, except for any
required approval by the Company's stockholders in connection with the
consummation of the Merger, have been duly authorized by all necessary
corporate action. The affirmative vote of holders of the outstanding Shares
and outstanding shares of Series B Preferred Stock having votes
representing a majority of the votes of all such outstanding capital stock,
11
voting together as a single class, is the only vote of the holders of any
of the Company's capital stock necessary in connection with consummation of
the Merger. Assuming due authorization, execution and delivery of this
Agreement and the Option Agreement by Acquiror and Merger Subsidiary, as
applicable, each of this Agreement and the Option Agreement constitutes a
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(b) The Company's Board of Directors, at a meeting duly called
and held, has (i) determined that this Agreement and the Option Agreement
and the transactions contemplated hereby and thereby (including the Merger)
are fair to and in the best interests of the Company's stockholders, (ii)
approved and adopted this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby (including the Merger), and
(iii) resolved (subject to Section 5.02) to recommend approval and adoption
of this Agreement by its stockholders.
SECTION 3.03. Governmental Authorization. The execution, delivery
and performance by the Company of this Agreement and the Option Agreement
and the consummation of the Merger by the Company require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of a certificate of merger in
accordance with Delaware Law, (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), (c) compliance with any applicable requirements of Council
Regulation No. 4064/89 of the European Community, as amended (the "EC
Merger Regulation"), (d) compliance with any applicable requirements of
Part IX of the Canadian Competition Act (the "Canadian Act"), (e)
compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder
(the "Exchange Act"), (f) compliance with any applicable requirements of
the 1933 Act and (g) other actions or filings which if not taken or made
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
SECTION 3.04. Non-Contravention. Except as set forth in Schedule
3.04, the execution, delivery and performance by the Company of this
Agreement and the Option Agreement and the consummation by the Company of
the transactions contemplated hereby and thereby do not and will not (a)
assuming compliance with the matters referred to in Section 3.02,
contravene or conflict with the certificate of incorporation or by-laws of
the Company, (b) assuming compliance with the matters referred to in
12
Section 3.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to the Company or any of its Subsidiaries, (c)
constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the Company or
any of its Subsidiaries or to a loss of any benefit to which the Company or
any of its Subsidiaries is entitled under any provision of any agreement,
contract or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit or other similar
authorization held by the Company or any of its Subsidiaries, or (d) result
in the creation or imposition of any Lien on any asset of the Company or
any of its Subsidiaries, except for such contraventions, conflicts or
violations referred to in clause (b) or defaults, rights of termination,
cancellation or acceleration, or losses or Liens referred to in clause (c)
or (d) that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. For purposes of this Agreement, "Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset other
than any such mortgage, lien, pledge, charge, security interest or
encumbrance (i) for Taxes (as defined in Section 3.13) not yet due or being
contested in good faith (and for which adequate accruals or reserves have
been established on the Acquiror Balance Sheet or the Company Balance
Sheet, as the case may be) or (ii) which is a carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like lien arising in the
ordinary course of business. Except as disclosed in Schedule 3.04, neither
the Company nor any Subsidiary of the Company is a party to any agreement
that expressly limits the ability of the Company or any Subsidiary of the
Company, or would limit Acquiror or any Subsidiary of Acquiror after the
Effective Time, to compete in or conduct any line of business or compete
with any Person or in any geographic area or during any period of time
except to the extent that any such limitation, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect
on Acquiror after the Effective Time.
SECTION 3.05. Capitalization of the Company. The authorized
capital stock of the Company consists of 1,200,000,000 Shares and
30,000,000 shares of preferred stock, par value $1.00 per share (of which
6,000,000 shares are designated Series A Junior Participating Preferred
Stock and 191,062 are designated Series B Preferred Stock). As of the close
of business on November 27, 1998, there were outstanding 779,934,096
Shares, no shares of Series A Junior Participating Preferred Stock (all of
which are reserved for issuance in accordance with the Rights Agreement
(the "Company Rights Agreement"), dated as of December 15, 1995, between
the Company and Mellon Bank, N.A., as Rights Agent, pursuant to which the
Company has issued rights ("Company Rights") to purchase the Series A
Junior Participating Preferred Stock) and 165,791.77 shares of Series B
Preferred Stock, and employee stock options to purchase an aggregate of
31,337,561 Shares (of which options to purchase an aggregate of 19,313,161
13
Shares were exercisable) and Company Awards (other than outstanding
restricted stock) with respect to an aggregate of 1,257,513.9444 Shares.
All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as set forth in this Section and except for changes since the close of
business on November 27, 1998 resulting from the exercise of employee stock
options outstanding on such date or options or stock-based awards granted
as permitted by Section 5.01, there are outstanding (a) no shares of
capital stock or other voting securities of the Company, (b) except for the
Series B Preferred Stock, no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the
Company, and (c) except for the Series B Preferred Stock, and except for
the Option Agreement, no options, warrants or other rights to acquire from
the Company, and no preemptive or similar rights, subscription or other
rights, convertible securities, agreements, arrangements or commitments of
any character, relating to the capital stock of the Company, obligating the
Company to issue, transfer or sell, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company or obligating the Company to grant, extend or
enter into any such option, warrant, subscription or other right,
convertible security, agreement, arrangement or commitment (the items in
clauses 3.05(a), 3.05(b) and 3.05(c) being referred to collectively as the
"Company Securities"). Except for the Series B Preferred Stock, there are
no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities.
SECTION 3.06. Subsidiaries. (a) Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has all powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted, except for those the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. Each Subsidiary of the Company is duly
qualified to do business and is in good standing in each jurisdiction where
the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those
jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. All
"significant subsidiaries", as such term is defined in Section 1-02 of
Regulation S-X under the Exchange Act (each, a "Significant Subsidiary") of
the Company and their respective jurisdictions of incorporation are
identified in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1997 (the "Company 10-K") or in Schedule 3.06(a).
(b) Except for directors' qualifying shares and except as set
forth in the Company 10-K, all of the outstanding capital stock of, or
14
other ownership interests in, each Significant Subsidiary of the Company is
owned by the Company, directly or indirectly, free and clear of any
material Lien and free of any other material limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests). There are no
outstanding (i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other
voting securities or ownership interests in any Significant Subsidiary of
the Company or (ii) options, warrants or other rights to acquire from the
Company or any of its Significant Subsidiaries, and no preemptive or
similar rights, subscription or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of any Significant Subsidiary of the Company, obligating the
Company or any of its Significant Subsidiaries to issue, transfer or sell,
any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for any capital stock,
voting securities or ownership interests in, any Significant Subsidiary of
the Company or obligating the Company or any Significant Subsidiary of the
Company to grant, extend or enter into any such option, warrant,
subscription or other right, convertible security, agreement, arrangement
or commitment except, in any such case under clause (i) or (ii), to the
extent relating to an insignificant equity interest in any Significant
Subsidiary (the items in clauses 3.06(b)(i) and 3.06(b)(ii) being referred
to collectively as the "Company Subsidiary Securities"). Except as set
forth on Schedule 3.06(b), there are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding Company Subsidiary Securities.
SECTION 3.07. SEC Filings. (a) The Company has delivered to
Acquiror (i) its annual reports on Form 10-K for its fiscal years ended
December 31, 1995, 1996 and 1997, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended after December 31, 1997, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since December 31, 1997,
and (iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1997 (the documents
referred to in this Section 3.07(a) being referred to collectively as the
"Company SEC Documents"). The Company's quarterly report on Form 10-Q for
its fiscal quarter ended September 30, 1998 is referred to herein as the
"Company 10-Q".
(b) As of its filing date, each Company SEC Document complied as
to form in all material respects with the applicable requirements of the
Exchange Act and the 1933 Act.
(c) As of its filing date, each Company SEC Document filed
pursuant to the Exchange Act did not contain any untrue statement of a
15
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each such registration statement, as amended or supplemented,
if applicable, filed pursuant to the 1933 Act as of the date such statement
or amendment became effective did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
SECTION 3.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Company (including any related notes and schedules)
included in its annual reports on Form 10-K and the quarterly reports on
Form 10-Q referred to in Section 3.07 fairly present in all material
respects, in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods
then ended (subject to normal year-end adjustments and the absence of notes
in the case of any unaudited interim financial statements). For purposes of
this Agreement, "Company Balance Sheet" means the consolidated balance
sheet of the Company as of September 30, 1998 set forth in the Company 10-Q
and "Company Balance Sheet Date" means September 30, 1998.
SECTION 3.09. Disclosure Documents. (a) Neither the proxy
statement of the Company (the "Company Proxy Statement") to be filed with
the SEC in connection with the Merger, nor any amendment or supplement
thereto, will, at the date the Company Proxy Statement or any such
amendment or supplement is first mailed to shareholders of the Company or
at the time such shareholders vote on the adoption and approval of this
Agreement and the transactions contemplated hereby, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company Proxy Statement
will, when filed, comply as to form in all material respects with the
requirements of the Exchange Act. No representation or warranty is made by
the Company in this Section 3.09 with respect to statements made or
incorporated by reference therein based on information supplied by Acquiror
or Merger Subsidiary for inclusion or incorporation by reference in the
Company Proxy Statement.
(b) None of the information supplied or to be supplied by Company
for inclusion or incorporation by reference in the Acquiror Proxy Statement
(as defined in Section 4.09) or in the Form S-4 (as defined in Section
4.09) or any amendment or supplement thereto will, at the time the Acquiror
16
Proxy Statement or any such supplement or amendment thereto is first mailed
to the stockholders of Acquiror or at the time such stockholders vote on
the matters constituting the Acquiror Stockholder Approval (as defined in
Section 4.02) or at the time the Form S-4 or any such amendment or
supplement becomes effective under the 1933 Act or at the Effective Time,
as the case may be, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
SECTION 3.10. Absence of Certain Changes. Except as set forth in
Schedule 3.10, since the Company Balance Sheet Date, the Company and its
Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably would be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the
Company (other than (i) quarterly cash dividends payable by the Company
consistent with past practice (including periodic dividend increases
consistent with past practice), but which for the sake of clarity shall not
include any special dividends) or (ii) required dividends on the Series B
Preferred Stock) or any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in, the Company
or any of its Subsidiaries (other than any such repurchases prior to the
date hereof pursuant to the Company's publicly announced stock buyback
program or, after the date hereof, as permitted under Section 5.01(e));
(c) any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries;
(d) any transaction or commitment made, or any contract, agreement
or settlement entered into, by (or judgment, order or decree affecting) the
Company or any of its Subsidiaries relating to its assets or business
(including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries
taken as a whole, other than transactions, commitments, contracts,
agreements or settlements (including without limitation settlements of
litigation and tax proceedings) in the ordinary course of business
consistent with past practice, those contemplated by this Agreement, or as
17
agreed to in writing by Acquiror;
(e) any change in any method of accounting or accounting practice
(other than any change for tax purposes) by the Company or any of its
Subsidiaries, except for any such change which is not significant or which
is required by reason of a concurrent change in GAAP; or
(f) any (i) grant of any severance or termination pay to (or
amendment to any such existing arrangement with) any director, officer or
employee of the Company or any of its Subsidiaries, (ii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of the Company or any of its Subsidiaries, (iii) increase in
benefits payable under any existing severance or termination pay policies
or employment agreements or (iv) increase in (or amendments to the terms
of) compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any of its Subsidiaries, other than in the
ordinary course of business consistent with past practice, as permitted by
this Agreement, or as agreed to in writing by Acquiror.
SECTION 3.11. No Undisclosed Material Liabilities. There are no
liabilities of the Company or any Subsidiary of the Company of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than:
(a) liabilities disclosed or provided for in the Company Balance
Sheet or in the notes thereto;
(b) liabilities which in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company;
(c) liabilities disclosed in the Company SEC Documents filed
prior to the date hereof or set forth in Schedule 3.11(c); and
(d) liabilities under this Agreement.
SECTION 3.12. Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of the
Company threatened against or affecting, the Company or any of its
Subsidiaries or any of their respective properties before any court or
arbitrator or any governmental body, agency or official which would
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 3.13. Taxes. Except as set forth in the Company Balance Sheet
(including the notes thereto) or as otherwise set forth in Schedule 3.13 and
18
except as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, (i) all Company Tax Returns required to be
filed with any taxing authority by, or with respect to, the Company and its
Subsidiaries have been filed in accordance with all applicable laws; (ii)
the Company and its Subsidiaries have timely paid all Taxes shown as due
and payable on the Company Tax Returns that have been so filed, and, as of
the time of filing, the Company Tax Returns correctly reflected the facts
regarding the income, business, assets, operations, activities and the
status of the Company and its Subsidiaries (other than Taxes which are
being contested in good faith and for which adequate reserves are reflected
on the Company Balance Sheet); (iii) the Company and its Subsidiaries have
made provision for all Taxes payable by the Company and its Subsidiaries
for which no Company Tax Return has yet been filed; (iv) the charges,
accruals and reserves for Taxes with respect to the Company and its
Subsidiaries reflected on the Company Balance Sheet are adequate under GAAP
to cover the Tax liabilities accruing through the date thereof; (v) there
is no action, suit, proceeding, audit or claim now proposed or pending
against or with respect to the Company or any of its Subsidiaries in
respect of any Tax where there is a reasonable possibility of an adverse
determination; and (vi) to the best of the Company's knowledge and belief,
neither the Company nor any of its Subsidiaries is liable for any Tax
imposed on any entity other than such Person, except as the result of the
application of Treas. Reg. ss. 1.1502-6 (and any comparable provision of
the tax laws of any state, local or foreign jurisdiction) to the affiliated
group of which the Company is the common parent. For purposes of this
Agreement, "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, all net income, gross
income, gross receipts, excise, stamp, real or personal property, ad
valorem, withholding, social security (or similar), unemployment,
occupation, use, service, service use, license, net worth, payroll,
franchise, severance, transfer, recording, employment, premium, windfall
profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, profits, disability, sales, registration,
value added, alternative or add-on minimum, estimated or other taxes,
assessments or charges imposed by any federal, state, local or foreign
governmental entity and any interest, penalties, or additions to tax
attributable thereto. For purposes of this Agreement, "Tax Returns" shall
mean any return, report, form or similar statement required to be filed
with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
SECTION 3.14. Employee Benefit Plans. (a) Prior to the date
hereof, the Company has provided Acquiror with a list (set forth on
Schedule 3.14) identifying each material "employee benefit plan," as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), each material employment, severance or similar contract,
19
plan, arrangement or policy applicable to any director, former director,
employee or former employee of the Company and each material plan or
arrangement (written or oral), providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by
the Company and covers any employee or director or former employee or
director of the Company, or under which the Company has any liability. Such
material plans (excluding any such plan that is a "multiemployer plan", as
defined in Section 3(37) of ERISA) are referred to collectively herein as
the "Company Employee Plans".
(b) Each Company Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations (including but not limited to ERISA
and the Code) which are applicable to such Plan, except where failure to so
comply would not, individually or in the aggregate, have a Material Adverse
Effect on the Company.
(c) Neither the Company nor any affiliate of the Company has
incurred a liability under Title IV of ERISA that has not been satisfied in
full, and no condition exists that presents a material risk to the Company
or any affiliate of the Company of incurring any such liability other than
liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
(d) Each Company Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to Section 501(a) of the
Code.
(e) Except as set forth in Schedule 3.14, no director or officer
or other employee of the Company or any of its Subsidiaries will become
entitled to any retirement, severance or similar benefit or enhanced or
accelerated benefit (including any acceleration of vesting or lapse of
repurchase rights or obligations with respect to any employee stock option
or other benefit under any stock option plan or compensation plan or
arrangement of the Company) solely as a result of the transactions
contemplated hereby.
(f) Except as reflected in the Company SEC Documents filed prior
to the date hereof, no Company Employee Plan provides post-retirement
20
health and medical, life or other insurance benefits for retired employees
of the Company or any of its Subsidiaries.
(g) Except as set forth on Schedule 3.14, there has been no
amendment to, written interpretation or announcement (whether or not
written) by the Company or any of its affiliates relating to, or change in
employee participation or coverage under, any Company Employee Plan which
would increase materially the expense of maintaining such Company Employee
Plan above the level of the expense incurred in respect thereof for the 12
months ended on the Company Balance Sheet Date.
SECTION 3.15. Compliance with Laws. Neither the Company nor any of
its Subsidiaries is in violation of, or has since January 1, 1997 violated,
any applicable provisions of any laws, statutes, ordinances or regulations
except for any violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 3.16. Finders' or Advisors' Fees. Except for Goldman,
Sachs & Co., a copy of whose engagement agreement has been provided to
Acquiror, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf
of the Company or any of its Subsidiaries who might be entitled to any fee
or commission in connection with the transactions contemplated by this
Agreement.
SECTION 3.17. Environmental Matters. (a) Except as set forth in
the Company SEC Documents filed prior to the date hereof and with such
exceptions as, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect on the
Company, (i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit, proceeding or review is pending or, to
the knowledge of the Company or any of its Subsidiaries, threatened by any
Person against, the Company or any of its Subsidiaries, and no penalty has
been assessed against the Company or any of its Subsidiaries, in each case,
with respect to any matters relating to or arising out of any Environmental
Law; (ii) the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws; (iii) there are no liabilities of or relating
to the Company or any of its Subsidiaries relating to or arising out of any
Environmental Law of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be
expected to result in such a liability; and (iv) there has been no
environmental investigation, study, audit, test, review or other analysis
conducted of which the Company has knowledge in relation to the current or
prior business of the Company or any of its Subsidiaries or any
21
property or facility now or previously owned, leased or operated by the
Company or any of its Subsidiaries which has not been delivered to Acquiror
at least five days prior to the date hereof.
(b) For purposes of this Section 3.17 and Section 4.17, the term
"Environmental Laws" means any federal, state, local and foreign statutes,
laws (including, without limitation, common law), judicial decisions,
regulations, ordinances, rules, judgments, orders, codes, injunctions,
permits, governmental agreements or governmental restrictions relating to
human health and safety, the environment or to pollutants, contaminants,
wastes, or chemicals.
SECTION 3.18. Opinion of Financial Advisor. The Company has
received the opinion of Goldman, Sachs & Co. to the effect that, as of the
date of such opinion, the Exchange Ratio is fair from a financial point of
view to the holders of Shares (other than Acquiror or any of its
Subsidiaries or affiliates), and, as of the date hereof, such opinion has
not been withdrawn.
SECTION 3.19. Pooling; Tax Treatment. (a) The Company intends that the
Merger be accounted for under the "pooling of interests" method under the
requirements of Opinion No. 16 (Business Combinations) of the Accounting
Principles Board of the American Institute of Certified Public Accountants, the
Financial Accounting Standards Board, and the rules and regulations of the SEC.
(b) Neither the Company nor any of its affiliates has taken or
agreed to take any action or is aware of any fact or circumstance that
would prevent the Merger from qualifying (i) for "pooling of interests"
accounting treatment as described in (a) above or (ii) as a reorganization
within the meaning of Section 368 of the Code (a "368 Reorganization").
SECTION 3.20. Pooling Letter. The Company has received a letter
from Ernst & Young LLP dated as of November 22, 1998 and addressed to the
Company, a copy of which has been delivered to Acquiror, in which Ernst &
Young LLP concurs with the Company management's conclusion that, as of
November 22, 1998, no conditions exist related to the Company that would
preclude the Acquiror from accounting for the Merger as a pooling of
interests, and such letter has not been withdrawn or modified in any
material respect as of the date hereof.
SECTION 3.21. Takeover Statutes. The Board of Directors of the Company
has taken the necessary action to make inapplicable the application of Section
203 of the Delaware Law, any other applicable antitakeover or similar statute or
regulation and the supermajority voting provisions of Article 6 of the
22
Company's certificate of incorporation to this Agreement and the Option
Agreement and the transactions contemplated hereby and thereby.
SECTION 3.22. Rights Agreement. The Board of Directors of the
Company has resolved to, and the Company promptly after the execution
hereof will, take all action necessary to render the rights issued pursuant
to the terms of the Company Rights Agreement inapplicable to the Merger,
this Agreement, the Option Agreement and the other transactions
contemplated hereby and thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company that:
SECTION 4.01. Corporate Existence and Power. Each of Acquiror and
Merger Subsidiary is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation and
has all corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except for those the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on Acquiror. Acquiror is duly
qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by
it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect on
Acquiror. Since the date of its incorporation, Merger Subsidiary has not
engaged in any activities other than in connection with or as contemplated
by this Agreement. Acquiror has heretofore delivered to the Company true
and complete copies of Acquiror's and Merger Subsidiary's certificate of
incorporation and by-laws as currently in effect.
SECTION 4.02. Corporate Authorization. (a) The execution, delivery
and performance by Acquiror and Merger Subsidiary of this Agreement, and by
Acquiror of the Option Agreement, and the consummation by Acquiror and
Merger Subsidiary of the transactions contemplated hereby and thereby are
within the corporate powers of Acquiror and Merger Subsidiary and have been
duly authorized by all necessary corporate action, except for any required
approval by Acquiror's stockholders of (i) the Merger, (ii) the amendment
of Acquiror's certificate of incorporation to increase the authorized
shares of Acquiror Common Stock and to change Acquiror's name in accordance
23
with Section 2.01 and (iii) the issuance of Acquiror Common Stock in
connection with the Merger (clauses (i), (ii) and (iii) being the "Acquiror
Stockholder Approval") and except for the designation by the Board of
Directors of shares of the Acquiror's authorized preferred stock as
Acquiror Preferred Stock. The affirmative vote of the holders of shares of
Acquiror Common Stock and shares of Class A Preferred Stock having votes
representing a majority of the votes cast by all such shares, voting
together as a single class, is the only vote of the holders of any of
Acquiror's capital stock necessary in connection with obtaining the
Acquiror Stockholder Approval. Assuming due authorization, execution and
delivery of this Agreement and the Option Agreement by the Company, this
Agreement constitutes a valid and binding agreement of each of Acquiror and
Merger Subsidiary and the Option Agreement constitutes a valid and binding
agreement of Acquiror, in each case enforceable against such party in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The shares of Acquiror Common Stock and Acquiror
Preferred Stock issued pursuant to the Merger, when issued in accordance
with the terms hereof, will be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
(b) Acquiror's Board of Directors, at a meeting duly called and
held, has (i) approved this Agreement and the Option Agreement and the
transactions contemplated hereby and thereby (including the Merger), and
(ii) resolved (subject to Section 6.04) to recommend approval by its
stockholders of the matters constituting the Acquiror Stockholder Approval.
SECTION 4.03. Governmental Authorization. The execution, delivery
and performance by Acquiror and Merger Subsidiary of this Agreement, and by
Acquiror of the Option Agreement, and the consummation by Acquiror and
Merger Subsidiary of the transactions contemplated hereby and thereby
require no action by or in respect of, or filing with, any governmental
body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law, (b) compliance with
any applicable requirements of the HSR Act, (c) compliance with any
applicable requirements of the EC Merger Regulation, (d) compliance with
any applicable requirements of the Canadian Act, (e) compliance with any
applicable requirements of the Exchange Act, (f) compliance with any
applicable requirements of the 1933 Act and (g) other actions or filings
which if not taken or made would not, individually or in the aggregate,
have a Material Adverse Effect on Acquiror.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by Acquiror and Merger Subsidiary of this Agreement, and by
Acquiror of the Option Agreement, and the consummation by Acquiror and
24
Merger Subsidiary of the transactions contemplated hereby and thereby do
not and will not (a) assuming compliance with the matters referred to in
Section 4.02, contravene or conflict with the certificate of incorporation
or by-laws of Acquiror or Merger Subsidiary, (b) assuming compliance with
the matters referred to in Section 4.03, contravene or conflict with any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Acquiror or any of its Subsidiaries, (c)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Acquiror or any
of its Subsidiaries or to a loss of any benefit to which Acquiror or any of
its Subsidiaries is entitled under any provision of any agreement, contract
or other instrument binding upon Acquiror or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by Acquiror
or any of its Subsidiaries or (d) result in the creation or imposition of
any Lien on any asset of Acquiror or any of its Subsidiaries, except for
such contraventions, conflicts or violations referred to in clause (b) or
defaults, rights of termination, cancellation or acceleration, or losses or
Liens referred to in clause (c) or (d) that would not, individually or in
the aggregate, have a Material Adverse Effect on Acquiror. Neither Acquiror
nor any Subsidiary of Acquiror is a party to any agreement that expressly
limits the ability of Acquiror or any Subsidiary of Acquiror to compete in
or conduct any line of business or compete with any Person or in any
geographic area or during any period of time except to the extent that any
such limitation, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect on Acquiror after the Effective
Time.
SECTION 4.05. Capitalization. The authorized capital stock of
Acquiror consists of 3,000,000,000 shares of Acquiror Common Stock and
200,000,000 shares of preferred stock, without par value (of which
16,500,000 are designated Class A Preferred Stock and 100,000,000 are
designated Class B Preferred Stock). As of the close of business on
November 27, 1998, there were outstanding 2,427,693,787 shares of Acquiror
Common Stock, 1,884,638 shares of Class A Preferred Stock and no shares of
Class B Preferred Stock, and employee stock options to purchase an
aggregate of 70,537,194 shares of Acquiror Common Stock (of which options
to purchase an aggregate of 59,117,944 shares of Acquiror Common Stock were
exercisable). All outstanding shares of capital stock of Acquiror have been
duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in this Section and except for changes since the close
of business on November 27, 1998 resulting from the exercise of employee
stock options outstanding on such date or options or other stock-based
awards granted as permitted by Section 6.01 and except for the shares to be
issued in connection with the Merger, there are outstanding (a) no shares
of capital stock or other voting securities of Acquiror, (b) no securities
of Acquiror convertible into or exchangeable for shares of capital stock or
voting securities of Acquiror, and (c) no options, warrants or other rights
25
to acquire from Acquiror, and no preemptive or similar rights, subscription
or other rights, convertible securities, agreements, arrangements, or
commitments of any character, relating to the capital stock of Acquiror,
obligating Acquiror to issue, transfer or sell any capital stock, voting
security or securities convertible into or exchangeable for capital stock
or voting securities of Acquiror or obligating Acquiror to grant, extend or
enter into any such option, warrant, subscription or other right,
convertible security, agreement, arrangement or commitment (the items in
clauses 4.05(a), 4.05(b) and 4.05(c) being referred to collectively as the
"Acquiror Securities"). There are no outstanding obligations of Acquiror or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Acquiror Securities.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary of Acquiror is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has all powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those the absence of which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Acquiror. Each Subsidiary of Acquiror is duly qualified
to do business and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its
activities makes such qualifications necessary, except for those
jurisdictions where failure to be so qualified would not, individually or
in the aggregate, have a Material Adverse Effect on Acquiror. All
Significant Subsidiaries of Acquiror and their respective jurisdictions of
incorporation are identified in Acquiror's annual report on Form 10-K for
the fiscal year ended December 31, 1997 ("Acquiror 10-K").
(b) Except for directors' qualifying shares and except as set
forth in the Acquiror 10-K, all of the outstanding capital stock of, or
other ownership interests in, each Significant Subsidiary of Acquiror is
owned by Acquiror, directly or indirectly, free and clear of any material
Lien and free of any other material limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose of such
capital stock or other ownership interests). There are no outstanding (i)
securities of Acquiror or any of its Subsidiaries convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Significant Subsidiary of Acquiror, and (ii)
options, warrants or other rights to acquire from Acquiror or any of its
Significant Subsidiaries, and no preemptive or similar rights,
subscriptions or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the capital stock
of any Significant Subsidiary of Acquiror, obligating Acquiror or any of
its Significant Subsidiaries to issue, transfer or sell, any capital stock,
voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities
or ownership interests in, any Significant Subsidiary of Acquiror or
26
obligating Acquiror or any Significant Subsidiary of Acquiror to grant,
extend or enter into any such option, warrant, subscription or other right,
convertible security, agreement, arrangement or commitment except, in any
such case under clause (i) or (ii), to the extent relating to an
insignificant equity interest in any Significant Subsidiary (items in
clauses 4.06(b)(i) and 4.06(b)(ii) being referred to collectively as the
"Acquiror Subsidiary Securities"). There are no outstanding obligations of
Acquiror or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any outstanding Acquiror Subsidiary Securities.
SECTION 4.07. SEC Filings. (a) Acquiror has delivered to the
Company (i) its annual reports on Form 10-K for its fiscal years ended
December 31, 1995, 1996 and 1997, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended after December 31, 1997, (iii) its proxy or
information statements relating to meetings, of, or actions taken without a
meeting by, the stockholders of Acquiror held since December 31, 1997, and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1997 (the documents
referred to in this Section 4.07(a) being referred to collectively as the
"Acquiror SEC Documents"). The Acquiror's quarterly report on Form 10- Q
for its fiscal quarter ended September 30, 1998 is referred to herein as
the "Acquiror 10-Q".
(b) As of its filing date, each Acquiror SEC Document complied as
to form in all material respects with the applicable requirements of the
Exchange Act and the 1933 Act.
(c) As of its filing date, each Acquiror SEC Document filed
pursuant to the Exchange Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each such registration statement as amended or supplemented,
if applicable, filed pursuant to the 1933 Act as of the date such statement
or amendment became effective did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
SECTION 4.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of Acquiror (including any related notes and schedules) included
in the annual reports on Form 10-K and the quarterly reports on Form 10-Q
referred to in Section 4.07 fairly present in all material respects, in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
27
consolidated financial position of Acquiror and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject to normal year-end adjustments and the absence of notes in the
case of any unaudited interim financial statements). For purposes of this
Agreement, "Acquiror Balance Sheet" means the consolidated balance sheet of
Acquiror as of September 30, 1998 set forth in the Acquiror 10-Q and
"Acquiror Balance Sheet Date" means September 30, 1998.
SECTION 4.09. Disclosure Documents. (a) The proxy statement of
Acquiror (the "Acquiror Proxy Statement") to be filed with the SEC in
connection with the Merger and the Registration Statement on Form S-4 of
Acquiror (the "Form S-4") to be filed under the 1933 Act relating to the
issuance of Acquiror Common Stock in the Merger, that may be required to be
filed with the SEC in connection with the issuance of shares of Acquiror
Common Stock pursuant to the Merger and any amendments or supplements
thereto, will, when filed, subject to the last sentence of Section 4.09(b),
comply as to form in all material respects with the applicable requirements
of the 1933 Act.
(b) Neither the Acquiror Proxy Statement nor any amendment or
supplement thereto, will, at the date the Acquiror Proxy Statement or any
such amendment or supplement is first mailed to shareholders of Acquiror or
at the time such shareholders vote on the matters constituting the Acquiror
Stockholder Approval, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Neither the Form S- 4 nor any amendment or supplement thereto
will at the time it becomes effective under the 1933 Act or at the
Effective Time contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. No representation or warranty is
made by Acquiror in this Section 4.09 with respect to statements made or
incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference in the Acquiror Proxy
Statement or the Form S-4.
(c) None of the information supplied or to be supplied by
Acquiror for inclusion or incorporation by reference in the Company Proxy
Statement or any amendment or supplement thereto will, at the date the
Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of Company or at the time such stockholders vote on
the adoption and approval of this Agreement and the transactions
contemplated hereby, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
28
SECTION 4.10. Absence of Certain Changes. Since the Acquiror
Balance Sheet Date, Acquiror and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has
not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably would be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Acquiror;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Acquiror
(other than (i) quarterly cash dividends payable by Acquiror consistent
with past practice (including periodic dividend increases consistent with
past practice), but which for the sake of clarity shall not include any
special dividends), or (ii) required dividends on preferred stock
outstanding on the date hereof) or any repurchase, redemption or other
acquisition by Acquiror or any of its Subsidiaries of any outstanding
shares of capital stock or other equity securities of, or other ownership
interests in, Acquiror (other than any such repurchases prior to the date
hereof pursuant to Acquiror's publicly announced stock buyback program or,
after the date hereof, as permitted under Section 6.01(e)); or
(c) any change prior to the date hereof in any method of
accounting or accounting practice (other than any change for tax purposes)
by Acquiror or any of its Subsidiaries, except for any such change which is
not significant or which is required by reason of a concurrent change in
GAAP.
SECTION 4.11. No Undisclosed Material Liabilities. There are no
liabilities of the Acquiror or any Subsidiary of the Acquiror of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than:
(a) liabilities disclosed or provided for in the Acquiror Balance
Sheet or in the notes thereto;
(b) liabilities which in the aggregate would not reasonably be
expected to have a Material Adverse Effect on Acquiror;
(c) liabilities disclosed in the Acquiror SEC Documents filed
prior to the date hereof or set forth in Schedule 4.11(c); and
(d) liabilities under this Agreement.
29
SECTION 4.12. Litigation. Except as disclosed in the Acquiror SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of
Acquiror threatened against or affecting, Acquiror or any of its
Subsidiaries or any of their respective properties before any court or
arbitrator or any governmental body, agency or official which would
reasonably be expected to have a Material Adverse Effect on Acquiror.
SECTION 4.13. Taxes. Except as set forth in the Acquiror Balance Sheet
(including the notes thereto) or as otherwise set forth on Schedule 4.13 and
except as would not, individually or in the aggregate, have a Material Adverse
Effect on Acquiror, (i) all Acquiror Tax Returns required to be filed with any
taxing authority by, or with respect to, Acquiror and its Subsidiaries have been
filed in accordance with all applicable laws; (ii) Acquiror and its Subsidiaries
have timely paid all Taxes shown as due and payable on Acquiror Tax Returns that
have been so filed, and, as of the time of filing, Acquiror Tax Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of Acquiror and its Subsidiaries (other
than Taxes which are being contested in good faith and for which adequate
reserves are reflected on the Acquiror Balance Sheet); (iii) Acquiror and its
Subsidiaries have made provision for all Taxes payable by Acquiror and its
Subsidiaries for which no Acquiror Tax Return has yet been filed; (iv) the
charges, accruals and reserves for Taxes with respect to Acquiror and its
Subsidiaries reflected on the Acquiror Balance Sheet are adequate under GAAP to
cover the Tax liabilities accruing through the date thereof; (v) there is no
action, suit, proceeding, audit or claim now proposed or pending against or with
respect to Acquiror or any of its Subsidiaries in respect of any Tax where there
is a reasonable possibility of an adverse determination; and (vi) to the best of
Acquiror's knowledge and belief, neither Acquiror nor any of its Subsidiaries is
liable for any Tax imposed on any entity other than such Person, except as the
result of the application of Treas. Reg. ss. 1.1502-6 (and any comparable
provision of the tax laws of any state, local or foreign jurisdiction) to the
affiliated group of which Acquiror is the common parent.
SECTION 4.14. Employee Benefit Plans. (a) Prior to the date
hereof, Acquiror has provided the Company with a list (set forth on
Schedule 4.14) identifying each material "employee benefit plan," as
defined in Section 3(3) of ERISA, each employment, severance or similar
contract, plan, arrangement or policy applicable to any director, former
director, employee or former employee of Acquiror and each material plan or
arrangement (written or oral), providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
30
benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by
Acquiror and covers any employee or director or former employee or director
of Acquiror, or under which Acquiror has any liability. Such material plans
(excluding any such plan that is a "multiemployer plan", as defined in
Section 3(37) of ERISA) are referred to collectively herein as the
"Acquiror Employee Plans".
(b) Each Acquiror Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations (including but not limited to ERISA
and the Code) which are applicable to such Plan, except where failure to so
comply would not, individually or in the aggregate, have a Material Adverse
Effect on Acquiror.
(c) Neither Acquiror nor any affiliate of Acquiror has incurred a
liability under Title IV of ERISA that has not been satisfied in full, and
no condition exists that presents a material risk to Acquiror or any
affiliate of Acquiror of incurring any such liability other than liability
for premiums due the Pension Benefit Guaranty Corporation (which premiums
have been paid when due).
(d) Each Acquiror Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from federal income tax pursuant to Section 501(a) of the
Code.
(e) No director or officer or other employee of Acquiror or any
of its Subsidiaries will become entitled to any retirement, severance or
similar benefit or enhanced or accelerated benefit solely as a result of
the transactions contemplated hereby.
(f) Except as reflected in the Acquiror SEC Documents filed prior
to the date hereof, no Acquiror Employee Plan provides post-retirement
health and medical, life or other insurance benefits for retired employees
of Acquiror or any of its Subsidiaries.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by Acquiror or any of its affiliates
relating to, or change in employee participation or coverage under, any
Acquiror Employee Plan which would increase materially the expense of
maintaining such Acquiror Employee Plan above the level of the expense
incurred in respect thereof for the 12 months ended on the Acquiror Balance
Sheet Date.
SECTION 4.15. Compliance with Laws. Neither Acquiror nor any of its
Subsidiaries is in violation of, or has since January 1, 1997 violated, any
31
applicable provisions of any laws, statutes, ordinances or regulations
except for any violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Acquiror.
SECTION 4.16. Finders' or Advisors' Fees. Except for J.P. Morgan
Securities Inc., whose fees will be paid by Acquiror, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Acquiror or any of its
Subsidiaries who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
SECTION 4.17. Environmental Matters. Except as set forth in the
Acquiror SEC Documents filed prior to the date hereof and with such
exceptions as, individually or in the aggregate, have not had, and would
not reasonably be expected to have, a Material Adverse Effect on Acquiror,
(i) no notice, notification, demand, request for information, citation,
summons, complaint or order has been received by, and no investigation,
action, claim, suit, proceeding or review is pending or, to the knowledge
of Acquiror or any of its Subsidiaries, threatened by any Person against,
Acquiror or any of its Subsidiaries, and no penalty has been assessed
against Acquiror or any of its Subsidiaries, in each case, with respect to
any matters relating to or arising out of any Environmental Law; (ii)
Acquiror and its Subsidiaries are and have been in compliance with all
Environmental Laws; (iii) there are no liabilities of or relating to
Acquiror or any of its Subsidiaries relating to or arising out of any
Environmental Law of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be
expected to result in such a liability; and (iv) there has been no
environmental investigation, study, audit, test, review or other analysis
conducted of which Acquiror has knowledge in relation to the current or
prior business of Acquiror or any of its Subsidiaries or any property or
facility now or previously owned, leased or operated by Acquiror or any of
its Subsidiaries which has not been delivered to the Company at least five
days prior to the date hereof.
SECTION 4.18. Opinion of Financial Advisor. Acquiror has received the
opinion of J.P. Morgan Securities Inc. to the effect that, as of the date of
such opinion, the consideration to be paid by Acquiror in the Merger is fair,
from a financial point of view, to Acquiror, and, as of the date hereof, such
opinion has not been withdrawn.
SECTION 4.19. Pooling; Tax Treatment. (a) Acquiror intends that the
Merger be accounted for as a "pooling of interests" as described in Section
3.19(a).
32
(b) Neither Acquiror nor any of its affiliates has taken or
agreed to take any action or is aware of any fact or circumstance that
would prevent the Merger from qualifying (i) for "pooling of interests"
accounting treatment as described in Section 3.19(a) or (ii) as a 368
Reorganization.
SECTION 4.20. Pooling Letter. Acquiror has received a letter from
PricewaterhouseCoopers LLP dated as of November 25, 1998 and addressed to
Acquiror, a copy of which has been delivered to the Company, stating that
based on the information furnished to PricewaterhouseCoopers LLP in the
related certificate of Acquiror's management and based on the letter from
Ernst & Young LLP referenced in Section 3.20, PricewaterhouseCoopers LLP
concurs with Acquiror management's conclusion that, as of November 25,
1998, no conditions exist that would preclude Acquiror's accounting for the
Merger as a pooling of interests, and such letter has not been withdrawn or
modified in any material respect as of the date hereof.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company. From the date hereof until
the Effective Time, the Company and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business
organizations and relationships with third parties. Without limiting the
generality of the foregoing, except with the prior written consent of
Acquiror or as contemplated by this Agreement, and, in the case of clauses
(g), (i), (j) and (l) below, except in the ordinary course of business not
representing a new strategic direction of the Company, from the date hereof
until the Effective Time:
(a) the Company will not, and will not permit any of its
Significant Subsidiaries to, adopt or propose any change in its certificate
of incorporation or by-laws;
(b) the Company will not, and will not permit any Significant
Subsidiary of the Company to, adopt a plan or agreement of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization of the Company or any of
its Significant Subsidiaries (other than a merger or consolidation between
its wholly-owned Subsidiaries);
33
(c) the Company will not, and will not permit any material
Subsidiary of the Company to, issue, sell, transfer, pledge, dispose of or
encumber any shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class or series of the Company or its
material Subsidiaries other than (i) issuances pursuant to the exercise of
convertible securities outstanding on the date hereof or issuances pursuant
to stock based awards or options that are outstanding on the date hereof
and are reflected in Section 3.05 or are granted in accordance with clause
(ii) below and (ii) additional options or stock-based awards to acquire
Shares granted under the terms of any Company Stock Option Plan as in
effect on the date hereof in the ordinary course consistent with past
practice;
(d) the Company will not, and will not permit any material
Subsidiary of the Company to, (i) split, combine, subdivide or reclassify
its outstanding shares of capital stock, or (ii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property with
respect to its capital stock other than, subject to Section 7.09, (x)
regular quarterly cash dividends payable by the Company or such material
Subsidiary consistent with past practice (including periodic dividend
increases consistent with past practice), but which for the sake of clarity
shall not include any special dividend, (y) any required dividends on the
Series B Preferred Stock or (z) dividends paid by any Subsidiary of the
Company to the Company or any wholly-owned Subsidiary of the Company;
(e) the Company will not, and will not permit any Subsidiary of
the Company to, redeem, purchase or otherwise acquire directly or
indirectly any of the Company's capital stock, except for repurchases,
redemptions or acquisitions (x) required by the terms of its capital stock
or any securities outstanding on the date hereof, (y) required by or in
connection with the respective terms, as of the date hereof, of any Company
Stock Option Plan or any dividend reinvestment plan as in effect on the
date hereof in the ordinary course of the operations of such plan
consistent with past practice and only to the extent consistent with
Section 7.04 or (z) effected in the ordinary course consistent with past
practice and only to the extent consistent with Section 7.04;
(f) the Company will not amend the terms (including the terms
relating to accelerating the vesting or lapse of repurchase rights or
obligations) of any outstanding options to purchase Shares (which, it is
understood, will not limit the administration of the relevant plans in
accordance with past practices and interpretations of the Company's Board
and the MCOC (as defined in Section 6.06(e)) to the extent consistent with
Section 7.04) or amend the terms of or terminate the Leveraged ESOP;
34
(g) the Company will not, and will not permit any Subsidiary of
the Company to, make or commit to make any capital expenditure;
(h) the Company will not, and will not permit any Subsidiary of
the Company to, increase the compensation or benefits of any director,
officer or employee, except for normal increases in the ordinary course of
business consistent with past practice or as required under applicable law
or any existing agreement or commitment;
(i) the Company will not, and will not permit any of its
Subsidiaries to, acquire a material amount of assets (as measured with
respect to the consolidated assets of the Company and its Subsidiaries
taken as a whole) of any other Person;
(j) the Company will not, and will not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of any material
assets or property except pursuant to existing contracts or commitments;
(k) except for any such change which is not significant or which
is required by reason of a concurrent change in GAAP, the Company will not,
and will not permit any Subsidiary of the Company to, change any method of
accounting or accounting practice (other than any change for tax purposes)
used by it;
(l) the Company will not, and will not permit any Subsidiary of
the Company to, enter into any material joint venture, partnership or other
similar arrangement;
(m) the Company will not, and will not permit any of its
Subsidiaries to, take any action that would make any representation or
warranty of the Company hereunder inaccurate in any material respect at, or
as of any time prior to, the Effective Time; and
(n) the Company will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
SECTION 5.02. Company Stockholder Meeting; Proxy Material. Unless
the Board of Directors of Acquiror shall take any action permitted by the
third sentence of Section 6.04, the Company shall cause a meeting of its
stockholders (the "Company Stockholder Meeting") to be duly called and held
as soon as reasonably practicable, on a date reasonably acceptable to
Acquiror, for the purpose of voting on the approval and adoption of this
Agreement and the Merger (the "Company Stockholder Approval"). Except as
provided in the next sentence, the Board of Directors of the Company shall
35
recommend approval and adoption of this Agreement by the Company's
stockholders. The Board of Directors of the Company shall be permitted to
(i) not recommend to the Company's shareholders that they give the Company
Stockholder Approval or (ii) withdraw or modify in a manner adverse to
Acquiror its recommendation to the Company's shareholders that they give
the Company Stockholder Approval, only (x) if the Board of Directors of the
Company by a majority vote determines in its good faith judgment that it is
necessary to so withdraw or modify its recommendation to comply with its
fiduciary duty to shareholders under applicable law, after receiving the
advice of outside legal counsel, and (y) if the Company and the senior
officers and directors of the Company have substantially complied with
their obligations set forth in Section 5.03. In connection with the Company
Stockholder Meeting, the Company (x) will promptly prepare and file with
the SEC, will use its reasonable best efforts to have cleared by the SEC
and will thereafter mail to its shareholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for the Company
Stockholder Meeting, (y) will use its reasonable best efforts, subject to
the immediately preceding sentence, to obtain the Company Stockholder
Approval and (z) will otherwise comply with all legal requirements
applicable to the Company Stockholder Meeting.
SECTION 5.03. Other Offers. The Company and its Subsidiaries will
not, and the Company will use its reasonable best efforts to cause the
officers, directors, employees, investment bankers, consultants and other
agents of the Company and its Subsidiaries not to, directly or indirectly,
take any action to solicit, initiate, encourage or facilitate the making of
any Acquisition Proposal (including without limitation by amending, or
granting any waiver under, the Company Rights Agreement) or any inquiry
with respect thereto or engage in discussions or negotiations with any
Person with respect thereto, or disclose any non-public information
relating to the Company or any Subsidiary of the Company or afford access
to the properties, books or records of the Company or any Subsidiary of the
Company to, any Person that has made, or to the Company's knowledge, is
considering making, any Acquisition Proposal; provided that nothing
contained in this Section 5.03 shall prevent the Company from furnishing
non-public information to, or entering into discussions or negotiations
with, or affording access to the properties, books or records of the
Company or its Subsidiaries to, any Person in connection with an
unsolicited bona fide Acquisition Proposal received from such Person so
long as prior to furnishing non-public information to, or entering into
discussions or negotiations with, such Person, (i) the Board of Directors
of the Company by a majority vote determines in its good faith judgment
that it is necessary to do so to comply with its fiduciary duty to
shareholders under applicable law, after receiving the advice of outside
legal counsel, and (ii) the Company receives from such Person an executed
confidentiality agreement with terms no less favorable to the Company
36
than those contained in the Confidentiality Agreement (as defined in
Section 7.03). Nothing contained in this Agreement shall prevent the Board
of Directors of the Company from complying with Rule 14e-2 under the
Exchange Act with regard to an Acquisition Proposal; provided that the
Board of Directors of the Company shall not recommend that the shareholders
of the Company tender their shares in connection with a tender offer except
to the extent the Board of Directors of the Company by a majority vote
determines in its good faith judgment that such a recommendation is
required to comply with the fiduciary duties of the Board of Directors of
the Company to shareholders under applicable law, after receiving the
advice of outside legal counsel. Unless the Board of Directors of the
Company by a majority vote determines in its good faith judgment that it is
necessary not to do so to comply with its fiduciary duty to shareholders
under applicable law, after receiving the advice of outside legal counsel,
the Company will (a) promptly (and in no event later than 48 hours after
receipt of any Acquisition Proposal) notify (which notice shall be provided
orally and in writing and shall identify the Person making such Acquisition
Proposal and set forth the material terms thereof) Acquiror after receipt
of any Acquisition Proposal, any indication of which the Company has
knowledge that any Person is considering making an Acquisition Proposal or
any request for non-public information relating to the Company or any
Subsidiary of the Company or for access to the properties, books or records
of the Company or any Subsidiary of the Company by any Person that has
made, or to the Company's knowledge may be considering making, an
Acquisition Proposal, and (b) will keep Acquiror informed of the status and
material terms of any such Acquisition Proposal or request. The Company and
its Subsidiaries will, and the Company will use its reasonable best efforts
to cause the officers, directors, employees, investment bankers,
consultants and other agents of the Company and its Subsidiaries to,
immediately cease and cause to be terminated all discussions and
negotiations, if any, that have taken place prior to the date hereof with
any parties with respect to any Acquisition Proposal.
For purposes of this Agreement, "Acquisition Proposal" means any
offer or proposal for, or any indication of interest in, any (i) direct or
indirect acquisition or purchase of a business or assets that constitute
20% or more of the net revenues, net income or the assets of the Company
and its Subsidiaries, taken as a whole, (ii) direct or indirect acquisition
or purchase of 20% or more of any class of equity securities of the Company
or any of its Subsidiaries whose business constitutes 20% or more of the
net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole, (iii) tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its Subsidiaries whose business
constitutes 20% or more the net revenues, net income or assets of the
Company and its Subsidiaries, taken as a whole, or (iv) merger,
37
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries whose business constitutes 20% or more of the net revenue, net
income or assets of the Company and its Subsidiaries, taken as a whole,
other than the transactions contemplated by this Agreement. For purposes of
this Agreement, "Superior Proposal" means any bona fide Acquisition
Proposal for or in respect of at least a majority of the outstanding Shares
on terms that the Board of Directors of the Company determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation, taking into account all the terms and conditions of
the Acquisition Proposal, including any break-up fees, expense
reimbursement provisions and conditions to consummation) are more favorable
to all of the Company's stockholders than the Merger.
ARTICLE 6
COVENANTS OF ACQUIROR
Acquiror agrees that:
SECTION 6.01. Conduct of Acquiror. From the date hereof until the
Effective Time, Acquiror and its Subsidiaries shall conduct their business
in the ordinary course consistent with past practice and shall use their
reasonable best efforts to preserve intact their business organizations and
relationships with third parties. Without limiting the generality of the
foregoing, and except with the prior written consent of the Company or as
contemplated by this Agreement, from the date hereof until the Effective
Time:
(a) Acquiror will not adopt or propose any change in its
certificate of incorporation or by-laws, except as contemplated in Section
4.02(a) or 2.02(a);
(b) Acquiror will not adopt a plan or agreement of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization of Acquiror;
(c) Acquiror will not issue, sell, transfer, pledge, dispose of
or encumber any shares of, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class or series of Acquiror,
other than (i) issuances pursuant to the exercise of convertible securities
outstanding on the date hereof or issuances pursuant to stock-based awards
or options outstanding on the date hereof or that are granted in accordance
38
with clause (ii) below and (ii) additional options or stock-based awards to
acquire Acquiror Common Stock granted under the terms of any employee or
director stock option or compensation plan or arrangement of Acquiror as in
effect as of the date hereof in the ordinary course consistent with past
practice;
(d) Acquiror will not (i) split, combine, subdivide or reclassify
its outstanding shares of capital stock or (ii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property with
respect to its capital stock other than, subject to Section 7.09, (x)
regular quarterly cash dividends payable by Acquiror on Acquiror Common
Stock consistent with past practice (including periodic dividend increases
consistent with past practice), but which for the sake of clarity shall not
include any special dividend or (y) any required dividends on preferred
stock outstanding on the date hereof;
(e) Acquiror will not, and will not permit any Subsidiary of
Acquiror to, redeem, purchase or otherwise acquire directly or indirectly
any of Acquiror's capital stock, except for repurchases, redemptions or
acquisitions (x) required by the terms of capital stock or any securities
outstanding on the date hereof, (y) required by or in connection with the
respective terms, as of the date hereof, of any employee stock option plan
or compensation plan or arrangement of Acquiror or any dividend
reinvestment plan as in effect as of the date hereof in the ordinary course
of operations of such plan consistent with past practice and only to the
extent consistent with Section 7.04 or (z) effected in the ordinary course
consistent with past practice and only to the extent consistent with
Section 7.04;
(f) Acquiror will not, and will not permit any of its
Subsidiaries to, take any action that would make any representation or
warranty of Acquiror hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time; and
(g) Acquiror will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
SECTION 6.02. Obligations of Merger Subsidiary. Acquiror will take
all action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.03. Director and Officer Liability. (a) For seven years
after the Effective Time, Acquiror shall indemnify and hold harmless the
individuals who on or prior to the Effective Time were officers, directors
and employees of the Company or its Subsidiaries (collectively, the
"Indemnitees") with respect to all acts or omissions by them in their
39
capacities as such or taken at the request of the Company or any of its
Subsidiaries at any time prior to the Effective Time to the extent provided
under the Company's certificate of incorporation and by-laws in effect on
the date hereof. Acquiror shall cause the Surviving Corporation to honor
all indemnification agreements with Indemnitees (including under the
Company's by-laws) in effect as of the date hereof in accordance with the
terms thereof. To the best knowledge of the Company, the Company has
disclosed to Acquiror all such indemnification agreements prior to the date
hereof.
(b) For seven years after the Effective Time, Acquiror shall
procure the provision of officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time covering
each such Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
in amounts no less favorable than those of such policy in effect on the
date hereof (it being understood that Acquiror may discharge its
obligations pursuant to this paragraph by providing an insurance policy
underwritten by Ancon Insurance Company, Inc., a wholly-owned Subsidiary of
Acquiror); provided, that if the aggregate annual premiums for such
insurance at any time during such period shall exceed 300% of the per annum
rate of premium paid by the Company and its Subsidiaries as of the date
hereof for such insurance, then Acquiror shall, or shall cause its
Subsidiaries to, provide only such coverage as shall then be available at
an annual premium equal to 300% of such rate.
(c) The obligations of Acquiror under this Section 6.03 shall not
be terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 6.03 applies without the consent of such
affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 6.03 applies shall be third party beneficiaries of this
Section 6.03).
SECTION 6.04. Acquiror Stockholder Meeting; Form S-4. Unless the
Board of Directors of the Company shall take any action permitted by the
third sentence of Section 5.02, Acquiror shall cause a meeting of its
stockholders (the "Acquiror Stockholder Meeting") to be duly called and
held as soon as reasonably practicable, on a date reasonably acceptable to
the Company, for the purpose of approving the matters constituting the
Acquiror Stockholder Approval. Except as provided in the next sentence, the
Board of Directors of Acquiror shall recommend approval of the matters
constituting the Acquiror Stockholder Approval. The Board of Directors of
Acquiror shall be permitted to (i) not recommend to Acquiror's shareholders
that they give the Acquiror Stockholder Approval or (ii) withdraw or modify
in a manner adverse to the Company its recommendation to the Acquiror's
shareholders that they give the Acquiror Stockholder Approval, only if the
Board of Directors of Acquiror by a majority vote determines in its good
40
faith judgment that it is necessary to so withdraw or modify its
recommendation to comply with its fiduciary duty to shareholders under
applicable law, after receiving the advice of outside legal counsel. In
connection with the Acquiror Stockholder Meeting, Acquiror (x) will
promptly prepare and file with the SEC, will use its reasonable best
efforts to have cleared by the SEC, and will thereafter mail to its
stockholders as promptly as practicable, the Acquiror Proxy Statement and
all other proxy materials for such meeting, (y) will use its reasonable
best efforts, subject to the immediately preceding sentence, to obtain the
Acquiror Stockholder Approval, and (z) will otherwise comply with all legal
requirements applicable to the Acquiror Stockholder Meeting. Subject to the
terms and conditions of this Agreement and unless the Board of Directors of
the Company shall take any action permitted by the third sentence of
Section 5.02, Acquiror shall prepare and file with the SEC under the 1933
Act the Form S-4, and shall use its reasonable best efforts to cause the
Form S-4 to be declared effective by the SEC as promptly as practicable.
Acquiror shall promptly take any action required to be taken under foreign
or state securities or Blue Sky laws in connection with the issuance of
Acquiror Common Stock in connection with the Merger. The parties
acknowledge and agree that Acquiror may include in such proxy statement to
be mailed to its stockholders a proposal to amend Acquiror's certificate of
incorporation to eliminate the Class B Preferred Stock.
SECTION 6.05. Stock Exchange Listing. Acquiror shall use its
reasonable best efforts to cause the shares of Acquiror Common Stock to be
issued in connection with the Merger to be listed on the NYSE, subject to
official notice of issuance.
SECTION 6.06. Employee Benefits. (a) From and after the Effective
Time, Acquiror shall cause the Surviving Corporation to honor in accordance
with their terms all benefits and obligations under the Executive
Arrangements (as defined in Section 6.06(f)) and, subject to Section
6.06(b), the other Company Employee Plans, each as in effect on the date
hereof (or as amended with the prior written consent of Acquiror), to the
extent that entitlements or rights, actual or contingent (whether such
entitlements or rights are vested as of the Effective Time or become vested
or payable only upon the occurrence of a further event, including a
discretionary determination) exist in respect thereof as of the Effective
Time. Acquiror and the Company hereby agree that the consummation of the
Merger shall constitute a "Change in Control" for purpose of any employee
arrangement and all other Company Employee Plans, pursuant to the terms of
such plans in effect on the date hereof. No provision of this Section
6.06(a) shall be construed as a limitation on the right of Acquiror to
amend or terminate any Company Employee Plans which the Company would
otherwise have under the terms of such Company Employee Plan, and no
provision of this Section 6.06(a) shall be construed to create a right in
41
any employee or beneficiary of such employee under a Company Employee Plan
that such employee or beneficiary would not otherwise have under the terms
of such Company Employee Plan.
(b) Following the Effective Time, Acquiror shall continue to
provide to individuals who are employed by the Company and its Subsidiaries
as of the Effective Time who remain employed with Acquiror or any
Subsidiary of Acquiror ("Affected Employees"), for so long as such Affected
Employees remain employed by Acquiror or any Subsidiary of Acquiror,
employee benefits (other than salary or incentive compensation) (i)
pursuant to the Company's or its Subsidiaries' employee benefit plans,
programs, policies and arrangements as provided to such employees
immediately prior to the Effective Time or (ii) pursuant to employee
benefit plans, programs, policies or arrangements maintained by Acquiror or
any Subsidiary of Acquiror providing coverage and benefits which, in the
aggregate, are no less favorable than those provided to employees of
Acquiror in positions comparable to positions held by Affected Employees
with Acquiror or its Subsidiaries from time to time after the Effective
Time. Following the Effective Time, Acquiror shall continue to provide to
former employees of the Company or its Subsidiaries (and to employees of
the Company or its Subsidiaries whose employment terminates prior to the
Effective Time) ("Affected Retirees") post retirement benefits (other than
pensions) (i) pursuant to the Company Employee Plans applicable to such
Affected Retirees, each as in effect on the date hereof, or (ii) pursuant
to employee benefit plans, programs, policies or arrangements maintained by
Acquiror or any Subsidiary of Acquiror providing post retirement coverage
and benefits (other than pensions) which, in the aggregate, are no less
favorable than those provided to former employees of Acquiror.
(c) Acquiror will, or will cause the Surviving Corporation to,
give Affected Employees full credit for purposes of eligibility, vesting,
benefit accrual (including benefit accrual under any defined benefit
pension plans, provided that a participant's benefit under any such defined
benefit pension plan may be offset by such participant's accrued benefit
under the Company defined benefit pension plan) and determination of the
level of benefits under any employee benefit plans or arrangements
maintained by Acquiror or any Subsidiary of Acquiror for such Affected
Employees' service with the Company or any Subsidiary of the Company to the
same extent recognized by the Company immediately prior to the Effective
Time.
(d) Acquiror will, or will cause the Surviving Corporation to,
(i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Affected Employees under any welfare benefit plans that
such employees may be eligible to participate in after the Effective Time,
42
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the
Effective Time under any welfare plan maintained for the Affected Employees
immediately prior to the Effective Time, and (ii) provide each Affected
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(e) Acquiror (i) acknowledges that the Company's Board and the
Management Compensation and Organization Committee (the "MCOC") of the
Company's Board has determined that all officers and employees covered by
the Company Management Retention Plan have performed at a level
satisfactory to the Company over the period that the conditional retention
awards granted thereunder have been outstanding and, accordingly, that all
such individuals would be entitled to full payment under the Company
Management Retention Plan were they to retire or otherwise terminate their
employment with the Company or any of its Subsidiaries and (ii) agrees to
give considerable weight to such determination in administering the Company
Management Retention Plan after the Effective Time, given the significant
length of time that has elapsed since the award grants.
(f) Acquiror agrees that the 1986, 1991 and 1995 Company
Incentive Compensation and Stock Ownership Plans, the Company Management
Retention Plan, the Supplemental Pension Annuity Program of Mobil
Corporation, the Executive Life Insurance Program of Mobil Corporation and
the Company Employee Severance Plan (collectively, the "Executive
Arrangements"), as well as any award made under any Executive Arrangement
(including Company Stock Options and Company Awards), shall be administered
in accordance with the past practices and interpretations of the Company's
Board and the MCOC (including those past practices and interpretations
previously disclosed by the Company to Acquiror) with respect to
eligibility, vesting, term and payment, among other matters. Any question
regarding the past practices and interpretations of the Company's Board and
the MCOC and the application thereof to the type of facts and circumstances
in a given case shall be referred to Mr. Lucio A. Noto or his designee for
a final decision with respect thereto, which decision shall not be
inconsistent with the intention of this Agreement and the Merger.
43
ARTICLE 7
COVENANTS OF ACQUIROR AND THE COMPANY
The parties hereto agree that:
SECTION 7.01. Best Efforts. (a) The Company and Acquiror shall
each cooperate with the other and use (and shall use best efforts to cause
their respective Subsidiaries to use) their respective best efforts to
promptly (i) take or cause to be taken all actions, and do or cause to be
done all things, necessary, proper or advisable under this Agreement and
applicable laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable,
including, without limitation, preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents and (ii) obtain all approvals, consents,
registrations, permits, authorizations and other confirmations required to
be obtained from any third party necessary, proper or advisable to
consummate the Merger and the other transactions contemplated by this
Agreement. Subject to applicable laws relating to the exchange of
information, the Company and Acquiror shall have the right to review in
advance, and to the extent practicable each will consult the other on, all
the information relating to the Company and its Subsidiaries or Acquiror
and its Subsidiaries, as the case may be, that appears in any filing made
with, or written materials submitted to, any third party and/or any
governmental authority in connection with the Merger and the other
transactions contemplated by this Agreement.
(b) Notwithstanding anything else contained herein, the
provisions of this Section 7.01 shall not be construed to require either
party to undertake any efforts or to take any action if the result thereof
would give Acquiror the right to decline to consummate the transactions
contemplated by this Agreement pursuant to Section 8.02 by reason of giving
rise to a Substantial Detriment.
SECTION 7.02. Certain Filings. The Company and Acquiror shall
cooperate with one another (a) in connection with the preparation of the
Company Proxy Statement, the Acquiror Proxy Statement and the Form S-4, (b)
in determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and (c) in seeking any such
actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the Company
44
Proxy Statement, the Acquiror Proxy Statement or the Form S-4 and seeking
timely to obtain any such actions, consents, approvals or waivers.
SECTION 7.03. Access to Information. From the date hereof until
the Effective Time, to the extent permitted by applicable law, the Company
and Acquiror will give the other party, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the
offices, properties, books and records of such party and its Subsidiaries,
furnish to the other party, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and
other information as such Persons may reasonably request and will instruct
its own employees, counsel and financial advisors to cooperate with the
other party in its investigation of the business of the Company or
Acquiror, as the case may be; provided that no investigation of the other
party's business shall affect any representation or warranty given by
either party hereunder. All information obtained by Acquiror or the Company
pursuant to this Section shall be kept confidential in accordance with, and
shall otherwise be subject to the terms of, the Confidentiality Agreement
dated November 12, 1998 between Acquiror and the Company (the
"Confidentiality Agreement").
SECTION 7.04. Tax and Accounting Treatment. (a) Each of Acquiror
and the Company shall not take any action and shall not fail to take any
action which action or failure to act would prevent, or would be reasonably
likely to prevent, the Merger from qualifying (a) for "pooling of
interests" accounting treatment as described in Section 3.19(a) or (b) as a
368 Reorganization.
(b) Acquiror shall use its reasonable best efforts to provide to
Davis Polk & Wardwell and Skadden, Arps, Slate, Meagher & Flom LLP a
certificate substantially in the form attached hereto as Exhibit C-1. The
Company shall use its reasonable best efforts to provide to Davis Polk &
Wardwell and Skadden, Arps, Slate, Meagher & Flom LLP a certificate
substantially in the form attached hereto as Exhibit C-2.
SECTION 7.05. Public Announcements. Acquiror and the Company will
consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
any such press release or public statement as may be required by applicable
law or any listing agreement with any national securities exchange may be
issued prior to such consultation, if the party making such release or
statement has used its reasonable efforts to consult with the other party.
45
SECTION 7.06. Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized
to execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise
in the Surviving Corporation any and all right, title and interest in, to
and under any of the rights, properties or assets of the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
SECTION 7.07. Notices of Certain Events. (a) Each of the Company
and Acquiror shall promptly notify the other party of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the
transactions contemplated by this Agreement.
(b) The Company and Acquiror shall promptly notify the other
party of any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting such party or any of its Subsidiaries
which relate to the consummation of the transactions contemplated by this
Agreement.
SECTION 7.08. Affiliates. (a) The Company shall use its reasonable
best efforts to deliver to Acquiror, within 15 days of the date hereof, a
letter agreement substantially in the form of Exhibit B-1 hereto executed
by each Person listed on Schedule 7.08(a).
(b) Acquiror shall use its reasonable best efforts to obtain,
within 15 days of the date hereof, a letter agreement substantially in the
form of Exhibit B-2 hereto executed by each Person listed on Schedule
7.08(b).
(c) Prior to the Effective Time, the Company shall cause to be
delivered to Acquiror a letter identifying, to the best of the Company's
knowledge, all Persons who are, at the time of the Company Stockholder
Meeting, "affiliates" of the Company for purposes of Rule 145 under the
1933 Act. The Company shall furnish such information and documents as
Acquiror may reasonably request for the purpose of reviewing such list. The
Company shall use its reasonable best efforts to cause each Person who is
46
so identified as an affiliate to deliver to Acquiror on or prior to the
Effective Time a letter agreement substantially in the form of Exhibit B-3
to this Agreement.
SECTION 7.09. Payment of Dividends. From the date hereof until the
Effective Time, Acquiror and the Company will coordinate with each other
regarding the declaration of dividends in respect of the shares of Acquiror
Common Stock and the Shares and the record dates and payment dates relating
thereto, it being the intention of the parties that holders of Shares will
not receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their Shares and the shares of Acquiror
Common Stock any holder of Shares receives in exchange therefor in
connection with the Merger.
ARTICLE 8
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Acquiror and Merger Subsidiary to consummate
the Merger are subject to the satisfaction (or, to the extent legally
permissible, waiver) of the following conditions:
(a) this Agreement shall have been adopted by the stockholders of
the Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act relating to
the Merger shall have expired;
(c) the approval by the European Commission of the transactions
contemplated by this Agreement shall have been obtained pursuant to the EC
Merger Regulation;
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit or enjoin the
consummation of the Merger;
(e) the parties shall have received all required approvals and
third party consents listed on Schedule 8.01(e);
(f) the matters constituting the Acquiror Stockholder Approval
shall have been approved by the stockholders of Acquiror in accordance with
applicable law or regulation;
47
(g) the Form S-4 shall have been declared effective under the
1933 Act and no stop order suspending the effectiveness of the Form S-4
shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC;
(h) the shares of Acquiror Common Stock to be issued in the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance; and
(i) (i) Acquiror shall have received a letter from
PricewaterhouseCoopers LLP dated as of the Closing Date and addressed to
Acquiror (a copy of which shall have been furnished to the Company),
stating that based on the information furnished to PricewaterhouseCoopers
LLP in the related certificate of Acquiror's management and based on the
letter from Ernst & Young LLP referenced in clause (ii) below,
PricewaterhouseCoopers LLP concurs with Acquiror management's conclusion
that, as of the Closing Date, no conditions exist that would preclude
Acquiror's accounting for the Merger as a pooling of interests and such
letter shall not have been withdrawn or modified in any material respect
and (ii) the Company shall have received a letter from Ernst & Young LLP
dated as of the Closing Date and addressed to the Company (a copy of which
shall have been furnished to Acquiror), in which Ernst & Young LLP concurs
with the Company management's conclusion that no conditions exist relating
to the Company that would preclude the Acquiror from accounting for the
Merger as a pooling of interests, and such letter shall not have been
withdrawn or modified in any material respect.
SECTION 8.02. Conditions to the Obligations of Acquiror and Merger
Subsidiary. The obligations of Acquiror and Merger Subsidiary to consummate
the Merger are subject to the satisfaction (or, to the extent legally
permissible, waiver) of the following further conditions:
(a) (i) the Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior
to the Effective Time, (ii) except to the extent expressly permitted under
this Agreement, the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto (x) that are qualified by materiality or Material
Adverse Effect shall be true at and as of the Effective Time as if made at
and as of such time, and (y) that are not qualified by materiality or
Material Adverse Effect shall be true in all material respects at and as of
the Effective Time as if made at and as of such time and (iii) Acquiror
shall have received a certificate signed by a vice-president of the Company
to the foregoing effect;
48
(b) there shall not be instituted or pending any action or
proceeding by any governmental authority (whether domestic, foreign or
supranational) before any court or governmental authority or agency,
domestic, foreign or supranational, (i) seeking to restrain, prohibit or
otherwise interfere with the ownership or operation by Acquiror or any
Subsidiary of Acquiror of all or any portion of the business of the Company
or any of its Subsidiaries or of Acquiror or any of its Subsidiaries or to
compel Acquiror or any Subsidiary of Acquiror to dispose of or hold
separate all or any portion of the business or assets of the Company or any
of its Subsidiaries or of Acquiror or any of its Subsidiaries, (ii) seeking
to impose or confirm limitations on the ability of Acquiror or any
Subsidiary of Acquiror effectively to exercise full rights of ownership of
the Shares (or shares of stock of the Surviving Corporation) including,
without limitation, the right to vote any Shares (or shares of stock of the
Surviving Corporation) on any matters properly presented to stockholders or
(iii) seeking to require divestiture by Acquiror or any Subsidiary of
Acquiror of any Shares (or shares of stock of the Surviving Corporation) if
any such matter referred to in clause (i), (ii) or (iii) hereof could
reasonably be expected to result in a substantial detriment to the Acquiror
and its Subsidiaries (including the Company and its Subsidiaries), taken as
a whole (any such substantial detriment being referred to in this Agreement
as a "Substantial Detriment");
(c) there shall not be any statute, rule, regulation, injunction,
order or decree, enacted, enforced, promulgated, entered, issued or deemed
applicable to the Merger and the other transactions contemplated hereby (or
in the case of any statute, rule or regulation, awaiting signature or
reasonably expected to become law), by any court, government or
governmental authority or agency or legislative body, domestic, foreign or
supranational, that is reasonably likely, directly or indirectly, to result
in a Substantial Detriment;
(d) (i) all required approvals or consents of any governmental
authority (whether domestic, foreign or supranational) in connection with
the Merger and the consummation of the other transactions contemplated
hereby shall have been obtained (and all relevant statutory, regulatory or
other governmental waiting periods, whether domestic, foreign or
supranational, shall have expired) unless the failure to receive any such
approval or consent would not be reasonably likely, directly or indirectly,
to result in a Substantial Detriment and (ii) all such approvals and
consents which have been obtained shall be on terms that are not reasonably
likely, directly or indirectly, to result in a Substantial Detriment;
(e) Acquiror shall have received an opinion of Davis Polk &
Wardwell in form and substance reasonably satisfactory to Acquiror, on the
basis of certain facts, representations and assumptions set forth in such
opinion, dated the Effective Time, to the effect that the Merger will be
49
treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code and that each of
Acquiror, Merger Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, such counsel shall be entitled to rely upon certain
representations of officers of Acquiror and the Company reasonably
requested by counsel, including without limitation those contained in
certificates substantially in the form attached as Exhibits C-1 and C-2;
and
(f) since the date of this Agreement, there shall not have been
any event, occurrence, development or state of circumstances which,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on the Company.
SECTION 8.03. Conditions to the Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction (or, to the extent legally permissible, waiver) of the
following further conditions:
(a) (i) Acquiror shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior
to the Effective Time, (ii) except to the extent expressly permitted under
this Agreement, the representations and warranties of Acquiror contained in
this Agreement and in any certificate or other writing delivered by
Acquiror pursuant hereto (x) that are qualified by materiality or Material
Adverse Effect shall be true at and as of the Effective Time as if made at
and as of such time, and (y) that are not qualified by materiality or
Material Adverse Effect shall be true in all material respects at and as of
the Effective Time as if made at and as of such time and (iii) the Company
shall have received a certificate signed by a vice-president of Acquiror to
the foregoing effect;
(b) the Company shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP in form and substance reasonably satisfactory to
the Company, on the basis of certain facts, representations and assumptions
set forth in such opinion, dated the Effective Time, to the effect that the
Merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the Code and that each
of Acquiror, Merger Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, such counsel shall be entitled to rely upon certain
representations of officers of Acquiror and the Company reasonably
requested by counsel, including without limitation those contained in
certificates substantially in the form attached as Exhibits C-1 and C-2; and
50
(c) since the date of this Agreement, there shall not have been
any event, occurrence, development or state of circumstances which,
individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on Acquiror.
ARTICLE 9
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company or any approval of the matters constituting the Acquiror
Stockholder Approval by the stockholders of Acquiror):
(a) by mutual written consent of the Company and Acquiror;
(b) by either the Company or Acquiror,
(i) if the Merger has not been consummated by the first
anniversary of the date hereof (the "End Date"); provided that if
(x) the Effective Time has not occurred by such first anniversary
by reason of non-satisfaction of any of the conditions set forth
in Sections 8.01(b), 8.01(c), 8.01(e), 8.02(b), 8.02(c) or 8.02(d)
and (y) all other conditions in Article 8 have theretofore been
satisfied or (to the extent legally permissible) waived or are
then capable of being satisfied, the End Date will be June 30,
2000; provided further that the right to terminate this Agreement
under this Section 9.01(b)(i) shall not be available to any party
whose failure to fulfill in any material respect any obligation
under this Agreement has caused or resulted in the failure of the
Effective Time to occur on or before the End Date;
(ii) if the Company Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or any adjournment thereof; or
(iii) if the Acquiror Stockholder Approval shall not have
been obtained by reason of the failure to obtain the required vote
at a duly held meeting of stockholders or any adjournment thereof;
51
(c) by either the Company or Acquiror, if there shall be any law
or regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining
Acquiror or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and nonappealable;
(d) by Acquiror, if the Board of Directors of the Company shall
have failed to recommend or withdrawn or modified or changed in a manner
adverse to Acquiror its approval or recommendation of this Agreement or the
Merger, or shall have failed to call the Company Stockholder Meeting in
accordance with Section 5.02, or shall have recommended a Superior Proposal
(or the Board of Directors of the Company resolves to do any of the
foregoing);
(e) by the Company, if (i) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company notifies
Acquiror in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement (or a description of
all material terms and conditions thereof) to such notice, (ii) Acquiror
does not make, within three business days of receipt of the Company's
written notification of its intention to enter into a binding agreement for
a Superior Proposal, an offer that the Board of Directors of the Company
determines, in good faith after consultation with its financial advisors,
is at least as favorable to the shareholders of the Company as the Superior
Proposal, it being understood that the Company shall not enter into any
such binding agreement during such three day period and (iii) the Company
prior to such termination pursuant to this clause (e) pays to Acquiror in
immediately available funds the fees required to be paid pursuant to
Section 10.04. The Company agrees to notify Acquiror promptly if its
intention to enter into a written agreement referred to in its notification
shall change at any time after giving such notification; or
(f) by the Company, if the Board of Directors of Acquiror shall
have failed to recommend or withdrawn or modified or changed in a manner
adverse to the Company its approval and recommendation of the matters
constituting the Acquiror Stockholder Approval, or shall have failed to
call the Acquiror Stockholder Meeting in accordance with Section 6.04 (or
the Board of Directors of Acquiror resolves to do any of the foregoing).
The party desiring to terminate this Agreement pursuant to clause
(b), (c), (d), (e), or (f) of this Section 9.01 shall give written notice
of such termination to the other party in accordance with Section 10.01,
specifying the provision hereof pursuant to which such termination is
effected.
52
SECTION 9.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement shall become void and
of no effect with no liability on the part of any party hereto, except that
(a) the agreements contained in this Section 9.02, in Section 10.04, in the
Option Agreement and in the Confidentiality Agreement shall survive the
termination hereof and (b) no such termination shall relieve any party of
any liability or damages resulting from any willful breach by that party of
this Agreement.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given,
if to Acquiror or Merger Subsidiary, to:
Charles W. Matthews
Exxon Corporation
5959 Las Colinas Boulevard
Irving, Texas 75039-2298
Facsimile No.: (972) 444-1438
with a copy to:
George R. Bason, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 450-4800
if to the Company, to:
Samuel H. Gillespie III
Mobil Corporation
3225 Gallows Road
Fairfax, Virginia 22307-0001
Facsimile No.: (703) 846-4674
53
with a copy to:
Roger S. Aaron
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Facsimile No.: (212) 735-2000
or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section.
SECTION 10.02. Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or
other writing delivered pursuant hereto shall not survive the Effective
Time or the termination of this Agreement.
SECTION 10.03. Amendments; No Waivers. (a) Any provision of this
Agreement (including the Exhibits and Schedules hereto) may be amended or
waived prior to the Effective Time if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the
Company, Acquiror and Merger Subsidiary, or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company, (ii)
any term of the certificate of incorporation of the Surviving Corporation
or (iii) any of the terms or conditions of this Agreement if such
alteration or change would adversely affect the holders of any shares of
capital stock of the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 10.04. Expenses. (a) Except as otherwise specified in this
Section 10.04 or the Option Agreement or agreed in writing by the parties,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such cost or expense; provided that all liability for transfer
54
taxes (other than transfer taxes to be paid by Acquiror in connection with
the issuance and creation of Acquiror Common Stock and Acquiror Preferred
Stock in the Merger, as provided in Section 1.02(b)) incurred by the
Company or the Company's stockholders in connection with the transactions
contemplated hereby shall be paid by the Surviving Corporation out of its
own funds and will not be paid, directly or indirectly, by Acquiror.
(b) If:
(i) the Company shall terminate this Agreement pursuant to
Section 9.01(e);
(ii) Acquiror shall terminate this Agreement pursuant to
Section 9.01(d), unless at the time of such failure to recommend,
withdrawal or adverse modification or change, failure to call the
Company Stockholder Meeting or recommendation of a Superior
Proposal, any of the conditions set forth in Section 8.03(a) or
8.03(c) would not have been satisfied as of such date and would
not be reasonably capable of being satisfied; or
(iii) either the Company or Acquiror shall terminate this
Agreement pursuant to Section 9.01(b)(ii) in circumstances where
the Company Stockholder Approval has not been obtained and prior
to the Company Stockholder Meeting an Acquisition Proposal is made
by any Person and the Company enters into a definitive agreement
within twelve months after termination of this Agreement either
(1) in respect of any Acquisition Proposal with such Person or its
affiliate or (2) in respect of any Acquisition Proposal with any
other Person (other than Acquiror or any affiliate of Acquiror)
providing, in the case of this clause (2), greater value per Share
than the Exercise Price (as defined in the Option Agreement),
then in any case as described in clause (i), (ii) or (iii) (each such case
of termination being referred to as a "Trigger Event") the Company shall
pay to Acquiror (by wire transfer of immediately available funds not later
than the date of termination of this Agreement or, in the case of clause
(iii), the date of such definitive agreement) an amount equal to
$1,500,000,000. Acceptance by Acquiror of the payment referred to in the
foregoing sentence shall constitute conclusive evidence that this Agreement
has been validly terminated and upon acceptance of payment of such amount
the Company shall be fully released and discharged from any liability or
obligation resulting from or under this Agreement (but without limiting the
Company's obligations under the Option Agreement).
55
(c) If the Company shall terminate this Agreement pursuant to
Section 9.01(f) unless at the time of such failure to recommend, withdrawal
or adverse modification or change or failure to call the Acquiror
Stockholder Meeting any of the conditions set forth in Section 8.02(a) or
8.02(f) would not have been satisfied as of such date and would not be
reasonably capable of being satisfied, then Acquiror shall pay to the
Company (by wire transfer of immediately available funds not later than the
date of termination of this Agreement) an amount equal to $1,500,000,000.
Acceptance by the Company of the payment referred to in the foregoing
sentence shall constitute conclusive evidence that this Agreement has been
validly terminated and upon acceptance of payment of such amount the
Acquiror shall be fully released and discharged from any liability or
obligation resulting from or under this Agreement.
SECTION 10.05. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto except
that Merger Subsidiary may transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, its rights under this
Agreement, but any such transfer or assignment will not relieve Merger
Subsidiary of its obligations hereunder.
SECTION 10.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without
regard to principles of conflicts of law.
SECTION 10.07. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of
or in connection with, this Agreement or the transactions contemplated
hereby may be brought in any federal or state court located in the State of
Delaware, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 10.01 shall be deemed effective
service of process on such party.
SECTION 10.08. Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
56
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.09. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
SECTION 10.10. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto), the Option Agreement and the
Confidentiality Agreement constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede
all prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter hereof and thereof. Except as
provided in Section 6.03(c), no provision of this Agreement or any other
agreement contemplated hereby is intended to confer on any Person other
than the parties hereto any rights or remedies.
SECTION 10.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 10.12. 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 so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
MOBIL CORPORATION
By: /s/ Lucio A. Noto
-------------------------------
Name: Lucio A. Noto
Title: Chairman and Chief
Executive Officer
EXXON CORPORATION
By: /s/ Lee R. Raymond
-------------------------------
Name: Lee R. Raymond
Title: Chairman of the Board
LION ACQUISITION SUBSIDIARY
CORPORATION
By: /s/ T. Peter Townsend
--------------------------------
Name: T. Peter Townsend
Title: President
58
EXHIBIT 2.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of December 1, 1998 (the "AGREEMENT")
between Exxon Corporation, a New Jersey corporation ("EXXON"), and Mobil
Corporation, a Delaware corporation ("MOBIL").
W I T N E S S E T H :
WHEREAS, Exxon and Mobil are simultaneously with the execution and
delivery of this Agreement entering into an Agreement and Plan of Merger
(the "MERGER AGREEMENT") pursuant to which, among other things, Merger
Subsidiary will merge with and into Mobil on the terms and subject to the
conditions stated therein; and
WHEREAS, in order to induce Exxon to enter into the Merger Agreement,
Mobil has granted to Exxon the Stock Option (as hereinafter defined), on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Merger Agreement, and for other good
and valuable consideration, the adequacy of which is hereby acknowledged,
the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger
Agreement.
Section 2. Grant of Stock Option. Mobil hereby grants to Exxon an
irrevocable option (the "STOCK OPTION") to purchase, on the terms and
subject to the conditions hereof, for $95.96 per share (the "EXERCISE
PRICE") in cash up to 136,500,000 fully paid and non-assessable shares (the
"OPTION SHARES") of Mobil's common stock, $1.00 par value per share (the
"COMMON STOCK"). The Exercise Price and number of Option Shares shall be
subject to adjustment as provided in Section 6 below. Notwithstanding the
foregoing, if at any time that this Stock Option is exercisable pursuant to
the terms and conditions of this Agreement an Acquisition Proposal has
theretofore been made for a per Share value (such value to be determined as
of the close of the market on the trading day immediately prior to the date
of the Stock Exercise Notice or Cash Exercise Notice, as applicable) below
the Exercise Price, then Exxon's Exercise Price as to 1,000 Option Shares
(as such 1,000 shares may be adjusted pursuant to Section 6) will be
adjusted to be 90% of such per Share value (it being understood that such
adjusted Exercise Price will not apply as to any other Option Shares).
Section 3. Exercise of Stock Option. (a) Exxon may, subject to
the provisions of this Section, exercise the Stock Option, in whole or in
part, at any time or from time to time, after the occurrence of a Trigger
Event and prior to the Termination Date. "TERMINATION DATE" shall mean the
earliest of (i) the Effective Time of the Merger, (ii) 90 days after the
date full payment is made by Mobil to Exxon under Section 10.04(b) of the
Merger Agreement or (iii) one day after the date of the termination of the
Merger Agreement so long as, in the case of this clause (iii), no Trigger
Event has occurred or could still occur under Section 10.04(b) of the
Merger Agreement. Subject to the proviso in the last sentence of Section
3(c), notwithstanding the occurrence of the Termination Date, Exxon shall
be entitled to purchase Option Shares pursuant to any exercise of the Stock
Option, on the terms and subject to the conditions hereof, to the extent
Exxon exercised the Stock Option prior to the occurrence of the Termination
Date.
(b) Exxon may purchase Option Shares pursuant to the Stock
Option only if all of the following conditions are satisfied: no
preliminary or permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States shall be in
effect prohibiting delivery of the Option Shares, any applicable waiting
period under the HSR Act shall have expired or been terminated, and (iii)
any prior notification to or approval of any other regulatory authority in
the U.S. or elsewhere required in connection with such purchase shall have
been made or obtained other than those which if not made or obtained would
not reasonably be expected to result in a significant detriment to Mobil
and its Subsidiaries, taken as a whole.
(c) If Exxon shall be entitled to and wishes to exercise
the Stock Option, it shall do so by giving Mobil written notice (the "STOCK
EXERCISE NOTICE") to such effect, specifying the number of Option Shares to
be purchased and a place and closing date not earlier than three business
days nor later than 10 business days from the date of such Stock Exercise
Notice. If the closing cannot be consummated on such date because any
condition to the purchase of Option Shares has not been satisfied or as a
result of any restriction arising under any applicable law or regulation,
the closing shall occur five days (or such earlier time as Exxon may
specify) after satisfaction of all such conditions and the cessation of all
such restrictions; provided that in no event shall the closing of the
purchase be postponed by more than nine months after the Termination Date
as a result of this clause (c).
(d) So long as the Stock Option is exercisable pursuant to
the terms of Section 3(a) hereof, Exxon may elect, in lieu of exercising
the Stock Option as provided in Section 3(c) hereof, to send a written
notice to Mobil (the "CASH EXERCISE NOTICE") specifying a date not later
than 20 business days and not earlier than 10 business days following the
date such notice is given on which date Mobil shall pay to Exxon in
exchange for the cancellation of the relevant portion of the Stock Option
an amount in cash equal to the Spread (as hereinafter defined) multiplied
by all or such portion of the Option Shares subject to the Stock Option as
Exxon shall specify. As used herein "SPREAD" shall mean the excess, if
any, over the Exercise Price of the higher of (x) if applicable, the
highest price per share of Common Stock paid or proposed to be paid by any
Person pursuant to any Acquisition Proposal (the "ALTERNATIVE EXERCISE
PRICE") or (y) the average of the closing price of the shares of Common
Stock on the NYSE at the end of the regular session, as reported on the
Consolidated Tape, Network A (the "CLOSING PRICE") for the five consecutive
trading days ending on and including the trading date immediately preceding
the date of the Cash Exercise Notice. If the Alternative Exercise Price
includes any property other than cash, the Alternative Exercise Price shall
be the sum of the fixed cash amount, if any, included in the Alternative
Exercise Price plus the fair market value of such other property. If such
other property consists of securities with an existing public trading
market, the average of the closing prices (or the average of the closing
bid and asked prices if closing prices are unavailable) for such securities
in their principal public trading market on the five trading days ending
five days prior to the date of the Cash Exercise Notice shall be deemed to
equal the fair market value of such property. If such other property
consists of something other than cash or securities with an existing public
trading market and, as of the payment date for the Spread, agreement on the
value of such other property has not been reached, the Alternative Exercise
Price shall be deemed to equal such Closing Price. Upon exercise of its
right pursuant to this Section 3(d) and the receipt by Exxon of the
applicable cash amount with respect to the Option Shares or the applicable
portion thereof, the obligations of Mobil to deliver Option Shares pursuant
to Section 3(e) shall be terminated with respect to the number of Option
Shares for which Exxon shall have elected to be paid the Spread. The
Spread shall be appropriately adjusted, if applicable, to give effect to
Section 6.
(e) At any closing pursuant to Section 3(c) hereof, Exxon
shall make payment to Mobil of the aggregate purchase price for the Option
Shares to be purchased and Mobil shall deliver to Exxon a certificate
representing the purchased Option Shares, registered in the name of Exxon
or its designee and at any closing pursuant to Section 3(d) hereof, Mobil
will deliver to Exxon cash in an amount determined pursuant to Section 3(d)
hereof. Any payment made by Exxon to Mobil, or by Mobil to Exxon, pursuant
to this Agreement shall be made by certified or official bank check or by
wire transfer of federal funds to a bank designated by the party receiving
such funds.
(f) Certificates for Common Stock delivered at the closing
described in Section 3(c) hereof shall be endorsed with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended."
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such reference (i) if Exxon
shall have delivered to Mobil a copy of a no-action letter from the staff
of the Securities and Exchange Commission, or a written opinion of counsel,
in form and substance reasonably satisfactory to Mobil, to the effect that
such legend is not required for purposes of, or resale may be effected
pursuant to an exemption from registration under, the 1933 Act or (ii) in
connection with any sale registered under the 1933 Act. In addition, such
certificates shall bear any other legend as may be required by applicable
law.
Section 4. Representations and Warranties of Mobil. Mobil hereby
represents and warrants to Exxon as follows:
(a) Mobil is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
execution, delivery and performance by Mobil of this Agreement and the
consummation of the transactions contemplated hereby are within Mobil's
corporate powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official, except for any filings required to
be made under the HSR Act, the EC Merger Regulation, the Canadian Act and
the Exchange Act, do not contravene, or constitute a violation of, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of Mobil or of any judgment, injunction, order or
decree binding upon Mobil or any of its Subsidiaries, do not and will not
constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Mobil or any of
its Subsidiaries or to a loss of any benefit to which Mobil or any of its
Subsidiaries is entitled under any provision of any agreement, contract or
other instrument binding upon Mobil or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by Mobil or
any of its Subsidiaries, and (vi) do not and will not result in the
creation or imposition of any Lien on any asset of Mobil or any of its
Subsidiaries, except for such contraventions, conflicts or violations
referred to in clause (iv) or defaults, rights of termination, cancellation
or acceleration, or losses or Liens referred to in clauses (v) and (vi)
that would not, individually or in the aggregate, have a Material Adverse
Effect on Mobil. This Agreement has been duly executed and delivered by
Mobil and constitutes a valid and binding agreement of Mobil.
(b) Mobil has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the
date hereof until such time as the obligation to deliver Option Shares upon
the exercise of the Stock Option terminates, will have reserved for
issuance upon any exercise of the Stock Option, the number of Option Shares
subject to the Stock Option (less the number of Option Shares previously
issued upon any partial exercise of the Stock Option). All of the Option
Shares to be issued pursuant to the Stock Option have been duly authorized
and, upon issuance and delivery thereof pursuant to this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all claims, liens, charges, encumbrances and
security interests (other than those created by this Agreement). Option
Shares issued upon exercise of the Stock Option will not be subject to any
preemptive or similar rights. The Board of Directors of Mobil has resolved
to, and Mobil promptly after the execution hereof will, take all necessary
action to render the Company Rights Agreement inapplicable to the grant or
exercise of the Stock Option and the transactions contemplated hereby.
(c) The Board of Directors of Mobil has taken the necessary
action to make inapplicable the application of Section 203 of the Delaware
Law, or any other applicable antitakeover statute or similar statute or
regulation and the supermajority voting provisions of Article 6 of Mobil's
certificate of incorporation to the acquisition of the Option Shares
pursuant to this Agreement.
Section 5. Representations and Warranties of Exxon. Exxon hereby
represents and warrants to Mobil as follows: Exxon is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of New Jersey. The execution, delivery and performance by Exxon of
this Agreement and the consummation of the transactions contemplated hereby
(i) are within Exxon's corporate powers and (ii) have been duly authorized
by all necessary corporate action. The Option Shares acquired by Exxon
upon the exercise of the Stock Options will not be, and the Stock Option is
not being, acquired by Exxon with the intention of making a public
distribution thereof. Neither the Stock Option nor the Option Shares
acquired upon exercise of the Stock Option will be sold or otherwise
disposed of by Exxon except in compliance with the 1933 Act. This
agreement has been duly executed and delivered by Exxon and constitutes a
valid and binding agreement of Exxon.
Section 6. Adjustment upon Changes in Capitalization or Merger.
(a) In the event of any change in the outstanding shares of Common Stock
by reason of a stock dividend, stock split, split-up, merger,
consolidation, recapitalization, combination, conversion, exchange of
shares, extraordinary or liquidating dividend or similar transaction which
would have the effect of diluting Exxon's rights hereunder, the type and
number of shares or securities purchasable upon the exercise of the Stock
Option and the Exercise Price shall be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so
that Exxon will receive upon exercise of the Stock Option the number and
class of shares or other securities or property that Exxon would have
received in respect of the Option Shares had the Stock Option been
exercised immediately prior to such event or the record date therefor, as
applicable. In no event shall the number of shares of Common Stock subject
to the Stock Option exceed 14.9% of the number of shares of Common Stock
issued and outstanding at the time of exercise (treating as outstanding for
this purpose the shares subject to the Stock Option).
(b) Without limiting the foregoing, whenever the number of
Option Shares purchasable upon exercise of the Stock Option is adjusted as
provided in this Section 6, the Exercise Price shall be adjusted by
multiplying the Exercise Price by a fraction, the numerator of which is
equal to the number of Option Shares purchasable prior to the adjustment
and the denominator of which is equal to the number of Option Shares
purchasable after the adjustment.
(c) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that Mobil enters into
an agreement to consolidate with or merge into any person, other than
Exxon or one of its subsidiaries, and Mobil will not be the continuing or
surviving corporation in such consolidation or merger, to permit any
person, other than Exxon or one of its subsidiaries, to merge into Mobil
and Mobil will be the continuing or surviving corporation, but in
connection with such merger, the shares of Common Stock outstanding
immediately prior to the consummation of such merger will be changed into
or exchanged for stock or other securities of Mobil or any other person or
cash or any other property, or the shares of Common Stock outstanding
immediately prior to the consummation of such merger will, after such
merger, represent less than 50% of the outstanding voting securities of the
merged company, or to sell or otherwise transfer all or substantially all
of its assets to any person, other than Exxon or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction will
make proper provision so that the Stock Option will, upon the consummation
of any such transaction and upon the terms and conditions set forth herein,
be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Exxon would have received in respect of Option
Shares had the Stock Option been exercised immediately prior to such
consolidation, merger, sale or transfer or the record date therefor, as
applicable, and will make any other necessary adjustments. Mobil shall
take such steps in connection with such consolidation, merger, liquidation
or other such transaction as may be reasonably necessary to assure that the
provisions hereof shall thereafter apply as nearly as possible to any
securities or property thereafter deliverable upon exercise of the Stock
Option.
Section 7. Further Assurances; Remedies. (a) Mobil agrees to
maintain, free from preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Stock Option may be fully
exercised without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other
rights of third parties to purchase shares of Common Stock from Mobil, and
to issue the appropriate number of shares of Common Stock pursuant to the
terms of this Agreement.
(b) Mobil agrees not to avoid or seek to avoid (whether by
charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed hereunder by Mobil.
(c) Mobil agrees that promptly after the date hereof it
shall take all actions as may from time to time be required (including (i)
complying with all applicable premerger notification, reporting and waiting
period requirements under the HSR Act and (ii) in the event that prior
notification to or approval of any other regulatory authority in the U.S.
or elsewhere is necessary before the Stock Option may be exercised,
cooperating with Exxon in preparing and processing the required notices or
applications) in order to permit Exxon to exercise the Stock Option and
purchase Option Shares pursuant to such exercise and to take all reasonable
action necessary to protect the rights of Exxon against dilution.
(d) The parties agree that Exxon would be irreparably
damaged if for any reason Mobil failed to issue any of the Option Shares
(or other securities or property deliverable pursuant to Section 6 hereof)
upon exercise of the Stock Option or to perform any of its other
obligations under this Agreement, and that Exxon would not have an adequate
remedy at law for money damages in such event. Accordingly, Exxon shall be
entitled to specific performance and injunctive and other equitable relief
to enforce the performance of this Agreement by Mobil. Accordingly, if
Exxon should institute an action or proceeding seeking specific enforcement
of the provisions hereof, Mobil hereby waives the claim or defense that
Exxon has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. Mobil further agrees to waive any requirements for the securing or
posting of any bond in connection with obtaining any such equitable relief.
This provision is without prejudice to any other rights that Exxon may have
against Mobil for any failure to perform its obligations under this
Agreement.
Section 8. Listing of Option Shares. Promptly after the date
hereof, and from time to time thereafter if necessary, Mobil will apply to
list all of the Option Shares subject to the Stock Option on the New York
Stock Exchange and will use its reasonable best efforts to obtain approval
of such listing as soon as practicable.
Section 9. Registration of the Option Shares. (a) If Exxon
requests Mobil in writing, within two years of the exercise of the Stock
Option, to register under the 1933 Act any of the Option Shares purchased
by Exxon hereunder, Mobil will use its reasonable best efforts to cause the
offering of the Option Shares so specified in such request to be registered
as soon as practicable so as to permit the sale or other distribution by
Exxon of the Option Shares specified in its request (and to keep such
registration in effect for a period of at least 90 days), and in connection
therewith Mobil will prepare and file as promptly as reasonably possible
(but in no event later than 60 days from receipt of Exxon's request) a
registration statement under the 1933 Act to effect such registration on an
appropriate form, which would permit the sale of the Option Shares by Exxon
in accordance with the plan of disposition specified by Exxon in its
request. Mobil shall not be obligated to make effective more than two
registration statements pursuant to the foregoing sentence; provided,
however, that Mobil may postpone the filing of a registration statement
relating to a registration request by Exxon under this Section 9 for a
period of time (not in excess of 90 days) if in Mobil's reasonable, good
faith judgment such filing would require the disclosure of material
information that Mobil has a bonafide business purpose for preserving as
confidential (but in no event shall Mobil exercise such postponement right
more than once in any twelve-month period).
(b) Mobil shall notify Exxon in writing not less than 10
days prior to filing a registration statement under the 1933 Act (other
than a filing on Form S-4 or S-8 or any successor form) with respect to any
Common Stock. If Exxon wishes to have any portion of its Option Shares
included in such registration statement, it shall advise Mobil in writing
to that effect within two business days following receipt of such notice,
and Mobil will thereupon include the number of Option Shares indicated by
Exxon under such Registration Statement; provided that if the managing
underwriter(s) of the offering pursuant to such registration statement
advise Mobil that in their opinion the number of shares of Common Stock
requested to be included in such registration exceeds the number which can
be sold in such offering, Mobil shall only include in such registration
such number or dollar amount of Option Shares which, in the good faith
opinion of the managing underwriter(s), can be sold without materially and
adversely affecting such offering.
(c) All expenses relating to or in connection with any
registration contemplated under this Section 9 and the transactions
contemplated thereby (including all filing, printing, reasonable
professional and other fees and expenses relating thereto) will be at
Mobil's expense except for underwriting discounts or commissions and
brokers' fees. Mobil and Exxon agree to enter into a customary
underwriting agreement with underwriters upon such terms and conditions as
are customarily contained in underwriting agreements with respect to
secondary distributions. Mobil shall indemnify Exxon, its officers,
directors, agents, other controlling persons and any underwriters retained
by Exxon in connection with such sale of such Option Shares in the
customary way, and shall agree to customary contribution provisions with
such persons, with respect to claims, damages, losses and liabilities (and
any expenses relating thereto) arising (or to which Exxon, its officers,
directors, agents, other controlling persons or underwriters may be
subject) in connection with any such offer or sale under the federal
securities laws or otherwise, except for information furnished in writing
by Exxon or its underwriters to Mobil. Exxon and its underwriters,
respectively, shall indemnify Mobil to the same extent with respect to
information furnished in writing to Mobil by Exxon and such underwriters,
respectively.
Section 10. Miscellaneous. (a) Extension of Exercise Periods.
The periods for exercise of certain rights under Sections 2 and 3 hereof
shall be extended in each such case at the request of Exxon to the extent
necessary to avoid liability by Exxon under Section 16(b) of the Exchange
Act by reason of such exercise.
(b) Amendments; Entire Agreement. This Agreement may not
be modified, amended, altered or supplemented, except upon the execution
and delivery of a written agreement executed by the parties hereto. This
Agreement, together with the Merger Agreement (including any exhibits and
schedules thereto), contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to such transactions.
(c) Notices. All notices, requests and other
communications to either party hereunder shall be in writing (including
facsimile or similar writing) and shall be given,
if to Exxon, to:
Charles W. Matthews
Exxon Corporation
5959 Las Colinas Boulevard
Irving, Texas 75039-2298
Facsimile No.: (972) 444-1438
with a copy to:
George R. Bason, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 450-4800
if to Mobil, to:
Samuel H. Gillespie III
Mobil Corporation
3225 Gallows Road
Fairfax, Virginia 22037-0001
Facsimile No.: (703) 846-4674
with a copy to:
Roger S. Aaron
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Facsimile No.: (212) 735-2000
or to such other address or facsimile number as either party may hereafter
specify for the purpose by notice to the other party hereto. Each such
notice, request or other communication shall be effective (i) if given by
facsimile, when such facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is
received or (ii) if given by any other means, when delivered at the address
specified in this Section.
(d) Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise
specifically provided herein and without limiting anything contained in the
Merger Agreement.
(e) Severability. If any term, provision, covenant or
restriction of this Agreement is held 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.
(f) Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware without regard to principles of conflicts of law. Any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in any federal or state
court located in the State of Delaware, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 10(c)
hereof shall be deemed effective service of process on such party.
(g) Waiver of Jury Trial. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(h) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(i) Headings. The section headings herein are for
convenience only and shall not affect the construction hereof.
(j) Assignment. This Agreement shall be binding upon each
party hereto and such party's successors and assigns. This Agreement shall
not be assignable by Mobil, but may be assigned by Exxon in whole or in
part to any direct or indirect wholly-owned subsidiary of Exxon, provided
that Exxon shall remain liable for any obligations so assigned.
(k) Survival. All representations, warranties and
covenants contained herein shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(l) Time of the Essence. The parties agree that time shall
be of the essence in the performance of obligations hereunder.
(m) Public Announcement. Exxon and Mobil will consult with
each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and
shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be
unreasonably withheld. Notwithstanding the foregoing, any such press
release or public statement as may be required by applicable law or any
listing agreement with any national securities exchange, may be issued
prior to such consultation, if the party making such release or statement
has used its reasonable efforts to consult with the other party.
Section 11. Profit Limitation. (a) Notwithstanding any other
provision of this Agreement or the Merger Agreement, in no event shall
Exxon's Total Profit (as defined below) exceed $2,000,000,000 (the "MAXIMUM
AMOUNT") and, if it otherwise would exceed such Maximum Amount, Exxon at
its sole election may pay cash to Mobil, deliver to Mobil for cancellation
Option Shares previously purchased by Exxon, or any combination thereof,
so that Exxon's actually realized Total Profit (as defined below) shall not
exceed the Maximum Amount after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement,
the Stock Option may not be exercised for a number of Option Shares as
would, as of the date of the Stock Exercise Notice, result in a Notional
Total Profit (as defined below) of more than the Maximum Amount and, if
exercise of the Stock Option otherwise would result in the Notional Total
Profit exceeding such amount, Exxon, at its discretion, may (in addition to
any of the actions specified in Section 11(a) above) increase the Exercise
Price for that number of Option Shares set forth in the Stock Exercise
Notice so that the Notional Total Profit shall not exceed the Maximum
Amount; provided, that nothing in this sentence shall restrict any exercise
of the Stock Option permitted hereby on any subsequent date at the Exercise
Price set forth in Section 2 hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean the
aggregate amount (before taxes) of the following: the cash amount actually
received by Exxon pursuant to Section 10.04(b) of the Merger Agreement less
any repayment by Exxon to Mobil pursuant to Section 11(a)(i) hereof, (x)
the net cash amounts or the fair market value of any property received by
Exxon pursuant to the sale of Option Shares (or of any other securities
into or for which such Option Shares are converted or exchanged), less (y)
Exxon's purchase price for such Option Shares (or other securities) plus
the aggregate amounts received by Exxon pursuant to Section 3(d).
(d) As used herein, the term "NOTIONAL TOTAL PROFIT" with
respect to any number of Option Shares as to which Exxon may propose to
exercise the Stock Option shall be the Total Profit determined as of the
date of the Stock Exercise Notice assuming that the Stock Option was
exercised on such date for such number of Option Shares and assuming that
such Option Shares, together with all other Option Shares previously
acquired upon exercise of the Stock Option and held by Exxon and its
affiliates as of such date, were sold for cash at the Closing Price on the
preceding trading day (less customary brokerage commissions).
IN WITNESS WHEREOF, Mobil and Exxon have caused this Agreement to be
duly executed as of the day and year first above written.
MOBIL CORPORATION
By: /s/ Lucio A. Noto
-----------------------------
Name: Lucio A. Noto
Title: Chairman and Chief
Executive Officer
EXXON CORPORATION
By: /s/ Lee R. Raymond
----------------------------
Name: Lee R. Raymond
Title: Chairman of the Board
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TUESDAY, DECEMBER 1, 1998
EXXON AND MOBIL SIGN MERGER AGREEMENT
NEW YORK, December 1 -- Exxon and Mobil announced today that they have
signed a definitive agreement to merge the two companies.
Under the terms of the agreement, each share of Mobil will be
converted into 1.32015 shares of Exxon. As a result of the merger, Mobil
shareholders will own about 30 percent of the company, while Exxon
shareholders will own about 70 percent.
Upon completion of the merger, the company's name will be Exxon Mobil
Corporation, with headquarters in Irving, Texas.
L.R. Raymond will be the Chairman, Chief Executive Officer and
President of Exxon Mobil Corporation. L.A. Noto will join the Exxon Mobil
Board of Directors as Vice Chairman.
E.A. Renna will join the Board as a Senior Vice President and
Director. Four additional members of Mobil's Board will be invited to join
the Exxon Mobil Board as non-employee Directors, bringing Board membership
for the company to a total of 19 Directors.
The company will be organized on a functional basis. The Upstream
will report to H.J. Longwell, the Downstream to Mr. Renna and the Chemical
business to R. Dahan. Worldwide downstream headquarters for the company
will be located in Fairfax, Virginia. Worldwide upstream and chemical
headquarters will be in Houston, Texas. Exxon Mobil will continue to use
both the Exxon brand and the Mobil brand.
"This merger brings together two outstanding organizations that share
common values, have compatible strategies and demonstrated track records of
achievement," said Mr. Raymond and Mr. Noto in a joint statement. "The
merger will significantly enhance shareholder value by enabling us to
manage the combined assets of Exxon and Mobil to produce a higher return on
capital employed than either company could achieve on a stand-alone basis.
"The merging of these two companies will deliver significant near-term
pre-tax synergies of about $2.8 billion," they said. "This merger will
enhance our ability to be an effective global competitor in a volatile
world economy and in an industry that is more and more competitive. It
allows us to manage our expanded, combined asset base to deliver increasing
returns and growth to our shareholders while reducing our operating costs.
It also allows us to continue delivering quality products to our customers
at competitive prices into the future. We are confident that with the
exceptional quality of Exxon's and Mobil's employees, we will succeed in
meeting these objectives."
They noted that combining Exxon and Mobil will create a major global
company, headquartered in the U.S., with the technology, the resources and
the people to compete effectively with other companies of a similar or
larger scale in the world oil industry of the 21st Century. "The relative
strengths of our two companies are highly complementary," they said. "When
combined, Exxon Mobil will provide better opportunities for both our
shareholders and employees than those they would experience without this
merger. By combining our operations, we also will be better able to meet
the needs of our customers for quality products in the next century. It's
a good match."
"While we expect to benefit from a reduction of costs in the short-
term, our real objective is to maximize growth and return on investment by
successfully managing the existing assets of Exxon and Mobil and by
selecting the best projects from the large portfolio of investment options
that will be created by this merger," they said. "Combining the
proprietary technologies and management expertise of the two companies also
will reinforce the selection of Exxon Mobil as the partner of choice,
creating additional resource opportunities in the future."
In discussing the strategic fit of Exxon and Mobil, Mr. Raymond said
the two companies line up well with each other in almost every facet of the
business. "In the exploration and production area, for example, Mobil's
and Exxon's respective strengths in West Africa, the Caspian region,
Russia, South America, and North America line up well, with minimal
overlap. Our respective deepwater assets and deepwater technology also
complement each other well."
Exxon Mobil will have combined natural gas sales of about 14 billion
cubic feet per day, giving the company a solid position in this
increasingly important worldwide fuel resource. Mobil also brings major
LNG assets and experience to the combined company that complement Exxon's
assets and technology with little overlap.
Mr. Noto said that in refining and marketing, Exxon and Mobil each
have significant global brand recognition, expertise and technology. "In
the lubricant area, for example, Exxon is an important producer of lube
base stocks, which fits well with Mobil's leadership in lubes marketing."
In the U.S., Exxon Mobil will approach the size and scale nationally
and regionally of the new downstream joint venture companies announced by
other major competitors. Outside the U.S., Exxon Mobil will be
competitively well positioned in key Asian markets and will have
complementary positions in South America. The merger also builds on
Mobil's significant position in Africa.
"Chemicals are another area where there is a good strategic fit," said
Mr. Raymond. "Exxon's chemical product line aligns well with Mobil's
chemical products. The two companies also share a common focus on
efficiency and site integration. Exxon Mobil should realize immediate
benefits through sharing the proprietary technology and best practices of
each company.
Exxon and Mobil also bring important, state-of-the-art proprietary
technologies to the venture that will greatly benefit the merged company.
In exploration and production, this includes leading-edge geoscience
technology to find and develop oil and gas reserves, arctic technology, and
heavy oil technology. In refining, marketing and chemicals, this includes
catalyst, synthetic lubricant and chemical manufacturing technology.
The merger is subject to shareholder and regulatory approval, as well
as other customary conditions. It is intended that the merger will qualify
as a tax-free reorganization in the United States and that it will be
accounted for on a "pooling of interests" basis. In addition, the merger
agreement provides for payment of termination fees of $1.5 billion under
certain circumstances. The parties also have entered in an option
agreement that grants Exxon the option under specified circumstances to
purchase up to 14.9 percent of the authorized but unissued common stock of
Mobil.
Exxon and Mobil expect to provide details of the proposed merger to
their shareholders prior to their annual meetings in April and May,
respectively.
Exxon's program of repurchasing its share to reduce the number of
shares outstanding will be discontinued; however, Exxon will continue to
repurchase its shares to offset dilution from employee incentive programs.
Exxon was advised on the merger by J.P. Morgan. Mobil was advised by
Goldman Sachs.
# # #
FOR FURTHER INFORMATION, CONTACT:
Exxon Media Relations Mobil Media Relations
Phone: 972-444-1107 Phone: 703-846-2500
