<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO
SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
UNION TEXAS PETROLEUM HOLDINGS, INC.
(NAME OF SUBJECT COMPANY)
----------------
VWK ACQUISITION CORP.
ATLANTIC RICHFIELD COMPANY
(BIDDERS)
----------------
COMMON STOCK, PAR VALUE $0.05 PER SHARE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
----------------
90864010 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
DIANE A. WARD, ESQ.
VWK ACQUISITION CORP.
C/O ATLANTIC RICHFIELD COMPANY
515 SOUTH FLOWER STREET
LOS ANGELES, CA 90071
(213) 486-2808
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPY TO:
RICHARD HALL, ESQ.
CRAVATH, SWAINE & MOORE
WORLDWIDE PLAZA
825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 474-1000
----------------
MAY 4, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
----------------
CALCULATION OF FILING FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION VALUATION* FILING FEE
- --------------------------------------------------------------------------------
<S> <C>
$2,647,999,628....................................................... $529,600
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 91,310,332 shares of common stock of the subject company,
par value $0.05 per share, together with the associated common stock
purchase rights (collectively, the "Shares"), at a price per Share of $29.00
in cash. Such number of Shares represents all the Shares outstanding as of
May 1, 1998, plus the number of Shares issuable upon the exercise of all
outstanding options or other rights to acquire Shares.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
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Page 1 of 7 pages.
Exhibit Index on page 7.
<PAGE>
SCHEDULE 13D AND 14D-1
CUSIP NO. 90864010 5
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ATLANTIC RICHFIELD COMPANY
I.R.S. NO. 23-0371610
- ----------------------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [_]
- ----------------------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------------------
4. SOURCE OF FUNDS
BK OO
- ----------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f) [_]
- ----------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ----------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,833,334*
- ----------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ----------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 23.9% OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS AS
OF MAY 1, 1998*
- ----------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
* See footnote on following page.
Page 2 of 7 pages
Exhibit Index on page 7
<PAGE>
SCHEDULE 13D AND 14D-1
CUSIP NO. 90864010 5
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
VWK ACQUISITION CORP.
I.R.S. NO. 95-4685496
- ----------------------------------------------------------------------------------
<S> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF GROUP
(a) [_]
(b) [_]
- ----------------------------------------------------------------------------------
3. SEC USE ONLY
- ----------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- ----------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) OR 2(f) [_]
- ----------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- ----------------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,833,334*
- ----------------------------------------------------------------------------------
8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [_]
- ----------------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 23.9% OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS AS
OF MAY 1, 1998*
- ----------------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON
CO
</TABLE>
* On May 4, 1998, Atlantic Richfield Company ("Parent") entered into a
Stockholder Agreement (the "Stockholder Agreement") with Petroleum
Associates, L.P. and KKR Partners II, L.P. (the "Stockholders"), stockholders
of Union Texas Petroleum Holdings, Inc., a Delaware corporation (the
"Company"). The Stockholders have represented in the Stockholder Agreement
that they have voting and dispositive control over 21,833,334 Shares.
Pursuant to the Stockholder Agreement, the Stockholders have agreed to tender
into the Offer (as hereinafter defined), and not to withdraw therefrom, all
such Shares as well as any Shares thereinafter acquired by them. In addition,
the Stockholders have granted an option to sell to Parent the Shares over
which they have voting and dispositive control (including those acquired
after the date of the Stockholder Agreement) at a price per Share equal to
the Offer Price (as hereinafter defined), exercisable if, and only if, the
Stockholders fail to comply with their obligation to tender into the Offer,
and not to withdraw therefrom, such Shares and VWK Acquisition Corp., a
wholly owned subsidiary of Parent (the "Purchaser"), has otherwise accepted
Shares for purchase pursuant to the Offer. Under the Stockholder Agreement,
the Stockholders have granted to certain individuals designated by Parent a
proxy, which is irrevocable during the term of the Stockholder Agreement,
with respect to the Shares subject to the Stockholder Agreement to vote such
Shares under certain circumstances. Parent's right to purchase and vote the
Shares subject to the Stockholder Agreement is reflected in Rows 7 and 9 of
each of the tables above. A copy of the Stockholder Agreement is attached
hereto as Exhibit (c)(2), and the Stockholder Agreement is described more
fully in Section 12 of the Offer to Purchase dated May 8, 1998 (the "Offer to
Purchase") attached hereto as Exhibit (a)(1).
Page 3 of 7 pages
Exhibit Index on page 7
<PAGE>
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by the Purchaser and Parent of
beneficial ownership of the Shares subject to the Shareholder Agreement. The
cover page above and item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Union Texas Petroleum Holdings, Inc.,
a Delaware corporation (the "Company"), which has its principal executive
offices at 1330 Post Oak Boulevard, Houston, Texas 77056.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all the outstanding Shares at a price of $29.00 per Share, net to the seller
in cash (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. Information concerning the number of
outstanding Shares is set forth in "Introduction" of the Offer to Purchase and
is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, a
Delaware corporation, and Parent, a Delaware corporation. The Purchaser is a
wholly owned subsidiary of Parent. Information concerning the principal
business and the address of the principal offices of the Purchaser and Parent
is set forth in Section 9 ("Certain Information Concerning the Purchaser and
ARCO") of the Offer to Purchase and is incorporated herein by reference.
Information regarding the names, business addresses, principal occupation and
occupations, positions, offices or employments during the last five years as
well as the other information required by Item 2 with respect to the directors
and executive officers of the Purchaser and Parent is set forth in Schedule I
to the Offer to Purchase and is incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and ARCO") and Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; the Stockholder Agreement") of
the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stockholder Agreement") of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Share Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
Page 4 of 7 pages
Exhibit Index on page 7
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and ARCO") and Section 12 ("Purpose of
the Offer; the Merger Agreement; the Stockholder Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", Section 9 ("Certain Information
Concerning the Purchaser and ARCO"), Section 11 ("Contacts and Transactions
with the Company; Background of the Offer") and Section 12 ("Purpose of the
Offer; the Merger Agreement; the Stockholder Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Share Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in Section 17 ("Stockholder Litigation") of
the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of May 4, 1998, among
the Purchaser, Parent and the Company and the Stockholder Agreement, copies of
which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and (c)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated May 8, 1998.
(a)(8) Text of Press Release dated May 4, 1998, issued by the Company and
Parent.
(a)(9) Text of Press Release dated May 8, 1998, issued by Parent.
(b)(1) Credit Agreement dated as of December 15, 1994, among Parent, each
Subsidiary Borrower, the Banks named therein and Morgan Guaranty Trust
Company of New York, as Agent, as amended by Amendment No. 1 to Credit
Agreement dated as of December 14, 1995.
(b)(2) Bank Facility Commitment Letter dated May 4, 1998, among Parent, J. P.
Morgan Securities Inc., Morgan Guaranty Trust Company of New York,
BancAmerica Robertson Stephens, Bank of America NT & SA, Citicorp
Securities, Inc., Citibank, N.A., Chase Securities Inc. and The Chase
Manhattan Bank.
(c)(1) Agreement and Plan of Merger dated as of May 4, 1998, among the
Purchaser, Parent and the Company.
(c)(2) Stockholder Agreement dated as of May 4, 1998, among Parent and the
Stockholders.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
Page 5 of 7 pages
Exhibit Index on page 7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: May 8, 1998
VWK Acquisition Corp.
/s/ Terry G. Dallas
By:
-----------------------------------
Name: Terry G. Dallas
Title: President
Atlantic Richfield Company
/s/ Terry G. Dallas
By:
-----------------------------------
Name: Terry G. Dallas
Title: Senior Vice President and
Treasurer
Page 6 of 7 pages
Exhibit Index on page 7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
------- ------------------------------------------------------------- ------
<C> <S> <C>
(a)(1) Offer to Purchase............................................
(a)(2) Letter of Transmittal........................................
(a)(3) Notice of Guaranteed Delivery................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.....................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.................................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9................................
(a)(7) Form of Summary Advertisement dated May 8, 1998..............
(a)(8) Text of Press Release dated May 4, 1998, issued by the
Company and Parent...........................................
(a)(9) Text of Press Release dated May 8, 1998, issued by Parent....
(b)(1) Credit Agreement dated as of December 15, 1994, among Parent,
each Subsidiary Borrower, the Banks named therein and Morgan
Guaranty Trust Company of New York, as Agent, as amended by
Amendment No. 1 to Credit Agreement dated as of December 14,
1995.........................................................
(b)(2) Bank Facility Commitment Letter dated May 4, 1998, among
Parent, J.P. Morgan Securities Inc., Morgan Guaranty Trust
Company of New York, BancAmerica Robertson Stephens, Bank of
America NT & SA, Citicorp Securities, Inc., Citibank, N.A.,
Chase Securities Inc. and The Chase Manhattan Bank...........
(c)(1) Agreement and Plan of Merger dated as of May 4, 1998, among
the Purchaser, Parent and the Company........................
(c)(2) Stockholder Agreement dated as of May 4, 1998, among Parent
and the Stockholders.........................................
</TABLE>
Page 7 of 7 pages
Exhibit Index on page 7
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the associated Common Stock Purchase Rights)
of
Union Texas Petroleum Holdings, Inc.
at
$29.00 Net Per Share
by
VWK Acquisition Corp.,
a wholly owned subsidiary of
Atlantic Richfield Company
---------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 5, 1998,
UNLESS THE OFFER IS EXTENDED.
---------------
THE BOARD OF DIRECTORS OF UNION TEXAS PETROLEUM HOLDINGS, INC. (THE "COMPANY")
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE STOCKHOLDER AGREEMENT, THE
OFFER, THE MERGER (EACH AS DEFINED HEREIN) AND THE OTHER TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT AND
DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER
AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT AND TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO
THE OFFER.
---------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER
OF SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS ON THE DATE OF PURCHASE, (2) THE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING
EXPIRED OR BEEN TERMINATED AND (3) ANY WAITING OR OTHER PERIOD UNDER
THE RULES AND REGULATIONS OF THE COUNCIL AND COMMISSION OF THE
EUROPEAN COMMUNITIES APPLICABLE TO THE OFFER OR THE MERGER HAVING
EXPIRED OR BEEN TERMINATED.
---------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, have such stockholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile), and any other required documents to the
Depositary and deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal (or such facsimile) or, in the case of a
book-entry transfer effected pursuant to the procedures described in Section
2, deliver an Agent's Message (as defined herein) and any other required
documents to the Depositary and deliver such Shares pursuant to the procedures
for book-entry transfer described in Section 2, in each case prior to the
expiration of the Offer or (2) request such stockholder's broker, dealer,
bank, trust company or other nominee to effect the transaction for such
stockholder. A stockholder having Shares registered in the name of a broker,
dealer, bank, trust company or other nominee must contact such broker, dealer,
bank, trust company or other nominee if such stockholder desires to tender
such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery described in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to D.F. King & Co., Inc. (the "Information Agent") or to
Morgan Stanley & Co. Incorporated (the "Dealer Manager") at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
---------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
May 8, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................. 1
THE TENDER OFFER......................................................... 4
1. Terms of the Offer.................................................. 4
2. Procedure for Tendering Shares...................................... 5
3. Withdrawal Rights................................................... 8
4. Acceptance for Payment and Payment.................................. 9
5. Certain U.S. Federal Income Tax Consequences........................ 10
6. Price Range of the Shares; Dividends on the Shares.................. 11
7. Effect of the Offer on the Market for the Shares; Share Quotation;
Exchange Act Registration; Margin Regulations....................... 11
8. Certain Information Concerning the Company.......................... 12
9. Certain Information Concerning the Purchaser and ARCO............... 14
10. Source and Amount of Funds.......................................... 14
11. Contacts and Transactions with the Company; Background of the Offer. 15
12. Purpose of the Offer; the Merger Agreement; the Stockholder
Agreement........................................................... 17
13. Dividends and Distributions......................................... 30
14. Certain Conditions of the Offer..................................... 31
15. Certain Legal Matters............................................... 33
16. Fees and Expenses................................................... 35
17. Stockholder Litigation.............................................. 36
18. Miscellaneous....................................................... 36
SCHEDULE I--Directors and Executive Officers of ARCO and the Purchaser... S-1
</TABLE>
<PAGE>
To the Holders of Common Stock
of Union Texas Petroleum Holdings, Inc.:
INTRODUCTION
VWK Acquisition Corp., a Delaware corporation (the "Purchaser"), which is a
wholly owned subsidiary of Atlantic Richfield Company, a Delaware corporation
("ARCO"), hereby offers to purchase all the issued and outstanding shares (the
"Shares") of Common Stock, par value $0.05 per share (the "Common Stock"), of
Union Texas Petroleum Holdings, Inc., a Delaware corporation (the "Company"),
together with the associated common stock purchase rights (the "Rights")
issued pursuant to the Company's Rights Agreement dated September 12, 1997 (as
amended from time to time, the "Rights Agreement"), at a price of $29.00 per
Share, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Unless the context otherwise requires, all references to Shares
include the associated Rights, and all references to the Rights include the
benefits that may enure to holders of the Rights pursuant to the Rights
Agreement.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all fees and expenses of Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), which is acting as Dealer Manager (the
"Dealer Manager"), First Chicago Trust Company of New York, which is acting as
the Depositary (the "Depositary"), and D. F. King & Co., Inc., which is acting
as the Information Agent (the "Information Agent"), incurred in connection
with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE STOCKHOLDER AGREEMENT, THE OFFER, THE MERGER AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER
AGREEMENT AND DETERMINED THAT THE TERMS OF THE OFFER, THE MERGER AND THE OTHER
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER
AGREEMENT ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE FACTORS CONSIDERED
BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS DECISION TO
APPROVE THE MERGER AGREEMENT, THE STOCKHOLDER AGREEMENT, THE OFFER, THE MERGER
AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE
STOCKHOLDER AGREEMENT AND TO RECOMMEND THAT STOCKHOLDERS OF THE COMPANY
ACCEPT AND TENDER THEIR SHARES PURSUANT TO THE OFFER ARE DESCRIBED IN THE
COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE
"SCHEDULE 14D-9"), WHICH IS BEING MAILED TO STOCKHOLDERS OF THE COMPANY
HEREWITH.
SALOMON BROTHERS INC, NOW DOING BUSINESS AS SALOMON SMITH BARNEY
(COLLECTIVELY WITH ALL OTHER ENTITIES DOING BUSINESS AS SALOMON SMITH BARNEY,
"SALOMON SMITH BARNEY") AND PETRIE PARKMAN & CO., INC. ("PETRIE PARKMAN") HAVE
ACTED AS THE COMPANY'S FINANCIAL ADVISORS. THE OPINION OF SALOMON SMITH BARNEY
DATED MAY 3, 1998, AND THE OPINION OF PETRIE PARKMAN DATED MAY 3, 1998, THAT,
AS OF SUCH DATE, THE CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE MERGER
BY THE COMPANY'S STOCKHOLDERS IS FAIR TO THE HOLDERS OF SHARES FROM A
FINANCIAL POINT OF VIEW, ARE SET FORTH IN FULL AS ANNEXES TO THE SCHEDULE 14D-
9 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") ON THE
DATE HEREOF. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ SUCH OPINIONS
CAREFULLY IN THEIR ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) THAT NUMBER OF SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE FULLY
DILUTED SHARES (AS DEFINED IN SECTION 14) ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION"), (II) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT") APPLICABLE TO THE PURCHASE
OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED (THE "HSR
CONDITION") AND (III) ANY WAITING OR OTHER PERIOD UNDER THE EC REGULATIONS (AS
DEFINED IN SECTION 15) APPLICABLE TO THE OFFER OR THE MERGER, OR THE EXERCISE
BY ARCO OR THE PURCHASER OF FULL OWNERSHIP AND VOTING RIGHTS WITH RESPECT TO
THE SHARES TO BE ACQUIRED PURSUANT TO THE OFFER AND
1
<PAGE>
THE MERGER, SHALL HAVE EXPIRED OR BEEN TERMINATED, AND THE EUROPEAN COMMISSION
(AS DEFINED IN SECTION 15) SHALL HAVE TAKEN ALL SUCH ACTION AS SHALL BE
REQUIRED SO THAT ARCO AND THE PURCHASER MAY CONSUMMATE THE OFFER AND THE
MERGER AND EXERCISE FULL OWNERSHIP AND VOTING RIGHTS WITH RESPECT TO THE
SHARES TO BE ACQUIRED PURSUANT TO THE OFFER AND THE MERGER (THE "EC
CONDITION"). The Purchaser reserves the right (subject to obtaining the
consent of the Company and the applicable rules and regulations of the
Commission), which it presently has no intention of exercising, to waive or
reduce the Minimum Condition. See Sections 1, 12 and 14.
On May 8, 1998, ARCO made the filing pursuant to the HSR Act applicable to
the Offer. Accordingly, the waiting period under the HSR Act will expire on
May 23, 1998, unless the waiting period is extended as described in Section
15.
ARCO expects to make the filing in connection with the Offer required under
the EC Regulations during the week of May 11, 1998. The waiting period under
the EC Regulations applicable to the Offer will expire one month after such
filing is made, unless extended or shortened in accordance with the EC
Regulations. The Purchaser does not expect that the EC Condition will be
satisfied until after the initial Expiration Date (as defined in Section 1)
for the Offer. ACCORDINGLY, THE PURCHASER EXPECTS THAT IT WILL BE NECESSARY
FOR THE PURCHASER TO EXTEND THE EXPIRATION DATE UNTIL THE EC CONDITION IS
SATISFIED UNLESS THE PURCHASER ELECTS TO WAIVE THE EC CONDITION IN WHOLE OR IN
PART, WHICH IT DOES NOT CURRENTLY INTEND TO DO.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 4, 1998 (the "Merger Agreement"), among ARCO, the Purchaser and the
Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Company (the "Merger") with the Company surviving the Merger
as a subsidiary of ARCO. In the Merger, each issued Share (other than Shares
owned by ARCO, the Purchaser or the Company or any wholly owned subsidiary of
ARCO, the Purchaser or the Company or by stockholders, if any, who are
entitled to and properly exercise appraisal rights under Delaware law) will be
converted into an amount in cash equal to the price per Share paid pursuant to
the Offer, without interest thereon. Consummation of the Merger is subject to
a number of conditions, including approval by stockholders of the Company if
such approval is required under applicable law. See Section 12.
The Company has informed the Purchaser that, as of May 8, 1998, the Company
had outstanding 1,750,000 shares of 7.14% Series A Cumulative Preferred Stock,
par value $0.01 per share (the "Series A Preferred Stock"). ARCO and the
Purchaser are not offering to purchase the Series A Preferred Stock pursuant
hereto. However, they may seek to acquire some or all of the outstanding
shares of Series A Preferred Stock pursuant to a separate offer to the holders
of Series A Preferred Stock or otherwise. The Merger Agreement provides that
the Series A Preferred Stock will not be affected by the Merger.
In connection with the execution of the Merger Agreement, ARCO entered into
a Stockholder Agreement dated as of May 4, 1998 (the "Stockholder Agreement"),
with Petroleum Associates, L.P. and KKR Partners II, L.P. (the "Principal
Stockholders"). The Principal Stockholders have represented in the Stockholder
Agreement that they have voting and dispositive control over 21,833,334
Shares, which represented approximately 23.9% of the Fully Diluted Shares as
of May 1, 1998. Pursuant to the Stockholder Agreement, among other things, the
Principal Stockholders have agreed to tender all such Shares pursuant to the
Offer and have granted to certain individuals designated by ARCO a proxy,
which is irrevocable during the term of the Stockholder Agreement, to vote
such Shares in favor of the Merger. See Section 12.
The Merger Agreement and the Stockholder Agreement are more fully described
in Section 12.
The Company has informed the Purchaser that, as of May 1, 1998, there were
85,285,286 Shares issued and outstanding and 6,025,046 Shares reserved for
issuance upon the exercise of outstanding options or other rights to purchase
Shares from the Company. Based upon the foregoing and assuming that no Shares
are otherwise issued after May 1, 1998, there would be 91,310,332 Fully
Diluted Shares outstanding and the Minimum Condition will be satisfied if at
least 45,655,167 Shares (including the 21,833,334 Shares subject to the
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Stockholder Agreement) are validly tendered and not withdrawn prior to the
Expiration Date. The actual number of Shares required to be tendered to
satisfy the Minimum Condition will depend upon the actual number of Shares
outstanding on the date that the Purchaser accepts Shares for payment pursuant
to the Offer. If the Minimum Condition is satisfied and the Purchaser accepts
for payment Shares tendered pursuant to the Offer, the Purchaser will be able
to elect a majority of the members of the Company's Board of Directors and to
effect the Merger without the affirmative vote of any other stockholder of the
Company. See Section 12.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the Merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Friday, June 5, 1998 unless and until the Purchaser shall have extended the
period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as
so extended by the Purchaser, will expire.
As described in Section 15, the Purchaser expects that the waiting period
under the EC Regulations applicable to the Offer will not expire until after
the initial Expiration Date. ACCORDINGLY, THE PURCHASER EXPECTS THAT IT WILL
BE NECESSARY FOR THE PURCHASER TO EXTEND THE EXPIRATION DATE UNTIL THE EC
CONDITION IS SATISFIED UNLESS THE PURCHASER ELECTS TO WAIVE THE EC CONDITION
IN WHOLE OR IN PART, WHICH IT DOES NOT CURRENTLY INTEND TO DO.
In the Merger Agreement, the Purchaser has agreed that, except as described
in the next sentence, it will not, without the consent of the Company, (a)
reduce the number of Shares subject to the Offer, (b) reduce the Offer Price,
(c) modify or add to the conditions to the Offer (which are set forth in
Section 14), (d) extend the Offer, (e) change the form of consideration
payable in the Offer or (f) otherwise amend the Offer in any manner materially
adverse to the Company's stockholders. However, the Merger Agreement provides
that, without the consent of the Company, the Purchaser may (i) extend the
Offer if at the Expiration Date any of the conditions to the Purchaser's
obligation to purchase Shares are not satisfied, until such time as such
conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer and (iii) extend the Offer for
any reason for a period (an "ARCO Extension Period") of not more than 10
business days beyond the latest expiration date that would otherwise be
permitted under the terms of the Merger Agreement as described in this
sentence, provided that if the Purchaser extends the Offer pursuant to this
clause (iii), it must waive during any ARCO Extension Period, all conditions
of the Offer set forth in Section 14 other than the Minimum Condition and the
conditions set forth in paragraphs (d) and (g) of Section 14, and (iv) if the
option granted to ARCO pursuant to the Stockholder Agreement is then
exercisable, reduce the number of Shares necessary to satisfy the Minimum
Condition to that number of shares which, together with the shares of Common
Stock that may be purchased by ARCO upon exercise of such option, would
represent at least a majority of the Fully Diluted Shares. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule l4d-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Subject to the terms of the Merger Agreement (which, as described above,
prohibit certain amendments to the Offer without the consent of the Company)
and the applicable rules and regulations of the Commission, the Purchaser
reserves the right (but shall not be obligated except as described below), at
any time and from time to time, and regardless of whether or not any of the
events or facts set forth in Section 14 shall have occurred, (a) to extend the
period of time during which the Offer is open, and thereby delay acceptance
for payment of and the payment for any Shares, by giving oral or written
notice of such extension to the Depositary and (b) to amend the Offer in any
other respect by giving oral or written notice of such amendment to the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO
EXTEND THE OFFER.
If by 12:00 midnight, New York City time, on Friday, June 5, 1998 (or any
date or time then set as the Expiration Date), any or all of the conditions to
the Offer have not been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated except as described below), subject to the terms
and conditions contained in the Merger Agreement and to the applicable rules
and regulations of the Commission, (a) to terminate the Offer and not accept
for payment or pay for any Shares and return all tendered Shares to tendering
stockholders, (b) to waive all the unsatisfied conditions and accept for
payment and pay for all Shares validly tendered prior to the Expiration Date
and not theretofore withdrawn, (c) to extend the Offer and, subject to the
right of stockholders to withdraw Shares until the Expiration Date, retain the
Shares that have been tendered
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during the period or periods for which the Offer is extended or (d) to amend
the Offer. If any of the conditions of the Offer set forth in Section 14
(other than the Minimum Condition) is not satisfied on the Expiration Date of
the Offer, then, if requested by the Company, the Purchaser must extend the
Offer one or more times (the period of each such extension to be determined by
the Purchaser) for up to 30 days in the aggregate for all such extensions,
provided that at the time of such extension any such condition is reasonably
capable of being satisfied and the Company has not received a Takeover
Proposal (as defined in Section 12).
Any extension, waiver, amendment or termination will be followed as promptly
as practicable by public announcement thereof. In the case of an extension,
Rule 14e-l(d) under the Exchange Act requires that the announcement be issued
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer, and by
the terms of the Merger Agreement, which require that the Purchaser pay for
Shares accepted for payment as soon as practicable after the Expiration Date.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and l4e-1 under
the Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of such offer or information
concerning such offer, other than a change in price or a change in the
percentage of securities sought, will depend upon the facts and circumstances
then existing, including the relative materiality of the changed terms or
information. With respect to a change in price or a change in the percentage
of securities sought, a minimum period of 10 business days is generally
required to allow for adequate dissemination to stockholders.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares, and will be furnished to brokers, dealers, banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant
to the procedures for book-entry transfer set forth
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below (and a Book-Entry Confirmation (as defined below) received by the
Depositary), in each case prior to the Expiration Date, or (b) the tendering
stockholder must comply with the guaranteed delivery procedures described
below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase. Any financial institution that is a participant of
the Book-Entry Transfer Facility's system may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer into the Depositary's account at
the Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message, and any other required documents, must, in
any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation". DELIVERY
OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-
ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 2, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
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(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange, Inc. (the
"NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Distribution of Rights. Holders of Shares will be required to tender one
Right for each Share tendered to effect a valid tender of such Share. Unless
and until the Distribution Date (as defined in the Rights Agreement) occurs,
the Rights are represented by and transferred with the Shares. Accordingly, if
the Distribution Date does not occur prior to the Expiration Date of the
Offer, a tender of Shares will constitute a tender of the associated Rights.
If, however, pursuant to the Rights Agreement or otherwise, a Distribution
Date does occur, certificates representing a number of Rights equal to the
number of Shares being tendered must be delivered to the Depositary in order
for such Shares to be validly tendered. If a Distribution Date has occurred, a
tender of Shares without Rights constitutes an agreement by the tendering
stockholder to deliver certificates representing a number of Rights equal to
the number of Shares tendered pursuant to the Offer to the Depositary within
three trading days after the date such certificates are distributed. The
Purchaser reserves the right to require that it receive such certificates
prior to accepting Shares for payment. Payment for Shares tendered and
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of, among other things, such certificates, if such certificates
have been distributed to holders of Shares. The Purchaser will not pay any
additional consideration for the Rights tendered pursuant to the Offer. The
Rights Agreement has been amended as of May 3, 1998, to exempt the Merger
Agreement, the Stockholder Agreement, the acquisition of Shares by ARCO or the
Purchaser pursuant to the Offer or the Stockholder Agreement and the other
transactions contemplated by the Merger Agreement and the Stockholder
Agreement from the provisions of the Rights Agreement.
Appointment. By executing a Letter of Transmittal (or a facsimile thereof),
a tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after May 4, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
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Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, ARCO, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under any
duty to give notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter
of Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such stockholder and payment of
cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%. All stockholders surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Purchaser and
the Depositary). Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. Noncorporate foreign stockholders should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy
of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after Tuesday, July
7, 1998.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase and must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of the Shares to be withdrawn,
if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution, the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer described in Section 2, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and otherwise comply with the Book-
Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may not
be rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
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Purchaser, ARCO, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all
Shares validly tendered prior to the Expiration Date and not properly
withdrawn in accordance with Section 3 promptly after the Expiration Date. The
Purchaser expressly reserves the right to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's offer).
ARCO filed a Notification and Report Form with respect to the Offer under
the HSR Act on May 8, 1998. The waiting period under the HSR Act with respect
to the Offer will expire at 11:59 p.m., New York City time, on May 23, 1998.
However, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from ARCO.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by ARCO with such
request. ARCO expects to make the filing in connection with the Offer required
under the EC Regulations during the week of May 11, 1998. The waiting period
under the EC Regulations applicable to the Offer will expire one month after
such filing is made, unless extended or shortened in accordance with the EC
Regulations. The Purchaser does not expect that the EC Condition will be
satisfied until after the initial Expiration Date for the Offer. ACCORDINGLY,
THE PURCHASER EXPECTS IT WILL BE NECESSARY FOR THE PURCHASER TO EXTEND THE
EXPIRATION DATE UNTIL THE EC CONDITION IS SATISFIED UNLESS THE PURCHASER
ELECTS TO WAIVE THE EC CONDITION IN WHOLE OR IN PART, WHICH IT DOES NOT
CURRENTLY INTEND TO DO. See Section 15 for additional information concerning
the HSR Act and the applicability of United States and foreign antitrust laws
to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, with respect to such Shares and (c) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the
highest per Share consideration paid to any other stockholder pursuant to the
Offer. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
an agent for tendering stockholders for the purpose of receiving payment from
the Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedures described in Section 2, such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of
the Offer.
9
<PAGE>
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to ARCO, or to one or more direct or indirect wholly
owned subsidiaries of ARCO, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser
of its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for U.S. federal income tax purposes, a stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer or the Merger and the aggregate tax basis in
the Shares tendered by the stockholder and purchased pursuant to the Offer or
converted into cash in the Merger, as the case may be. Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer or converted into cash in the Merger, as the case may be.
If Shares are held by a stockholder as capital assets, gain or loss
recognized by the stockholder will be capital gain or loss, which will be
long-term capital gain or loss if the stockholder's holding period for the
Shares exceeds one year, and in the case of a noncorporate stockholder, will
be eligible for a maximum federal income tax rate of 28% (if the Shares were
held for more than one year and no more than 18 months) or 20% (if the Shares
were held for more than 18 months). In addition, under present law the ability
to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares may be subject to 31% backup withholding
unless the stockholder provides its TIN and certifies that such number is
correct or properly certifies that it is awaiting a TIN, or unless an
exemption applies. Exemptions are available for stockholders that are
corporations and for certain foreign individuals and entities. A stockholder
that does not furnish a required TIN may be subject to a penalty imposed by
the IRS. See "Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the U.S. federal income tax liability of the person subject
to the backup withholding, provided that the required information is given to
the IRS. If backup withholding results in an overpayment of tax, a refund can
be obtained by the stockholder by filing a federal income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
10
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the NYSE and the Pacific Exchange, Inc. (the
"Pacific Exchange") under the symbol UTH, and have been at all times since
September 24, 1987. The following table sets forth, for each of the periods
indicated, the high and low sales prices per Share on the NYSE Composite
Transactions Tape and the amount of cash dividends paid per Share.
UNION TEXAS PETROLEUM HOLDINGS, INC.
<TABLE>
<CAPTION>
COMMON STOCK
HIGH LOW CASH DIVIDENDS
---- ---- --------------
<S> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 31,
1996:
First Quarter................ $20 1/4 $17 5/8 $.05
Second Quarter............... 20 1/4 18 .05
Third Quarter................ 21 3/4 18 5/8 .05
Fourth Quarter............... 23 20 5/8 .05
FISCAL YEAR ENDED DECEMBER 31,
1997:
First Quarter................ 23 7/8 17 15/16 .05
Second Quarter............... 21 3/8 17 1/4 .05
Third Quarter................ 24 9/16 19 7/8 .05
Fourth Quarter............... 24 1/2 20 .05
FISCAL YEAR ENDING DECEMBER 31,
1998:
First Quarter................ 23 1/8 18 3/16 .05
Second Quarter (through May
7, 1998).................... 28 3/4 19 1/2 .05
</TABLE>
On May 1, 1998, the last full trading day before the public announcement of
the execution of the Merger Agreement, the last reported sales price of the
Shares on the NYSE Composite Transactions Tape was $20.50 per Share. On May 7,
1998, the last full trading day before commencement of the Offer, the last
reported sales price of the Shares on the NYSE Composite Transactions Tape was
$28 9/16 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
The Merger Agreement permits the Company to continue to pay regular
quarterly dividends on the Shares of not more than $0.05 per Share. The
payment of dividends on the Shares is a matter for the discretion of the Board
of Directors of the Company and is subject to customary restrictions thereon.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; SHARE QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Share Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NYSE or the
Pacific Exchange for continued listing. According to the NYSE's published
guidelines, the NYSE would consider delisting the Shares if, among other
things, the total number of stockholders (including both holders of record and
beneficial holders of stock held in the name of NYSE member organizations)
were to fall below 400, or such number of total stockholders were to fall
below 1,200 and the average monthly trading volume of the Shares were to fall
below 100,000, the number of publicly held Shares (exclusive of management or
other concentrated holdings) were to fall below 600,000 or the aggregate
market value of publicly held Shares were to not exceed $8 million. The
published rules of the Pacific Exchange provide that the Pacific Exchange
would consider delisting a Tier I security, such as the Shares, if the issuer
failed to have at least 200,000 publicly held shares, held by at least 400
shareholders or 300 shareholders
11
<PAGE>
of 100 shares or more, with a market value of at least $1,000,000, and have
net worth of at least $2,000,000 or $4,000,000 depending on profitability
levels during the issuer's four most recent fiscal years. If these standards
are not met, the Shares might nevertheless continue to be listed on the
Pacific Exchange as a Tier II security, but if the number of holders of the
Shares were to fall below 250, or if the number of publicly held Shares were
to fall below 300,000 or represent a market value of less than $500,000, the
Pacific Exchange's rules provide that the Pacific Exchange would consider
delisting the Shares entirely. According to the Company, as of May 1, 1998,
there were approximately 300 holders of record of Shares and there were
85,285,286 Shares outstanding. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, the Shares no longer meet the requirements
of the NYSE or the Pacific Exchange for continued listing and the Shares are
no longer listed, the market for Shares would be adversely affected.
If the NYSE and the Pacific Exchange were to delist the Shares, it is
possible that the Shares would continue to trade on other securities exchanges
or in the over-the-counter market and that price quotations would be reported
by such exchanges or through the Nasdaq National Market or other sources. The
extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of holders of Shares
remaining at such time, the interests in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of the
Shares under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant
to Section 14(a) of the Exchange Act in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933 may be impaired or eliminated. The Purchaser intends to seek to cause
the Company to apply for termination of registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal offices at 1330
Post Oak Boulevard, Houston, Texas 77056. The Company is a U.S.-based
independent oil and gas company with worldwide operations.
Set forth below is certain selected financial information with respect to
the Company and its subsidiaries excerpted from the information contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (the "Company 1997 10-K") and the Company's Quarterly Report on Form
10-Q for
12
<PAGE>
the three months ended March 31, 1998 (the "Company 1998 10-Q"). More
comprehensive financial information is included in the Company 1997 10-K, the
Company 1998 10-Q and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by
reference to the Company 1997 10-K, the Company 1998 10-Q and such other
documents and all the financial information (including any related notes)
contained therein. The Company 1997 10-K, the Company 1998 10-Q and such other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
UNION TEXAS PETROLEUM HOLDINGS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED AND AS OF DECEMBER THREE MONTHS ENDED
31, AND AS OF MARCH 31,
------------------------------ -------------------
1997 1996 1995 1998 1997
---------- ---------- -------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of
Operations:
Revenues............... $ 933,228 $1,036,449 $876,029 $ 193,781 $292,430
Income before income
taxes................. 269,302 379,039 253,327 35,479 132,653
Net income............. 135,866 152,227 102,350 8,853 63,770
Less: preferred
dividends............. -- -- -- 868 --
Net income applicable
to common
stockholders.......... 135,866 152,227 102,350 7,985 63,770
Consolidated Balance
Sheet Data:
Total current assets... 175,353 203,542 211,355
Total assets........... 2,021,556 1,942,004 2,292,760
Total current
liabilities........... 279,656 280,839 266,174
Total liabilities...... 1,352,961 1,355,982 1,440,927
Total stockholders'
equity................ 668,595 586,022 851,833
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options and other matters, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in the Company's
proxy statements distributed to the Company's stockholders and filed with the
Commission. Such information should be available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
DC 20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, NY 10048 and Citicorp Center, 500 West
Madison Street (Suite 1400), Chicago, IL 60661. Copies of such information
should be obtainable, by mail, upon payment of the Commission's customary
charges, by writing to the Commission's principal office at 450 Fifth Street,
N.W., Washington, DC 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's Web site address, http://www.sec.gov. Such material should also
be available for inspection at the library of the NYSE, 20 Broad Street, New
York, NY 10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and ARCO do not have any
knowledge that any such information is untrue, neither the Purchaser nor ARCO
takes any responsibility for the accuracy or completeness of such information
or for any failure by the Company to disclose events that may have occurred
and may affect the significance or accuracy of any such information.
13
<PAGE>
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND ARCO
The Purchaser, a Delaware corporation which is a wholly owned subsidiary of
ARCO, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal office of the Purchaser is
located at the principal office of ARCO. All outstanding shares of capital
stock of the Purchaser are owned by ARCO.
ARCO is a Delaware corporation with its principal office located at 515
South Flower Street, Los Angeles, California 90071. ARCO is one of the largest
integrated oil and gas companies, engaged in the worldwide exploration,
development, production and transportation of petroleum and natural gas, the
refining and transportation of petroleum and petroleum products and the
marketing of petroleum products. ARCO also engages in the worldwide
manufacture and sale of chemical products.
Available Information. ARCO is subject to the informational requirements of
the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning ARCO's directors and officers, their remuneration, stock
options and other matters, the principal holders of ARCO's securities and any
material interest of such persons in transactions with ARCO is required to be
disclosed in proxy statements distributed to ARCO's stockholders and filed
with the Commission. Such reports, proxy statements and other information
should be available for inspection at the Commission and copies thereof should
be obtainable from the Commission in the same manner as is set forth with
respect to the Company in Section 8. Such material should also be available
for inspection at the library of the NYSE, 20 Broad Street, New York, NY
10005.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer and the Merger
will be approximately $2.6 billion. The Purchaser plans to obtain all funds
needed for the Offer and the Merger through a capital contribution from ARCO.
ARCO intends to fund this capital contribution from the proceeds of the sale
of commercial paper and other short-term borrowings backed by an existing and
an additional bank facility.
ARCO's existing $3.0 billion revolving credit facility (the "Existing
Facility"), which can be used for general corporate purposes, is provided
pursuant to a Credit Agreement (the "Credit Agreement") dated as of December
15, 1994, as amended December 14, 1995, among ARCO, the borrowing subsidiaries
party thereto, the Banks named therein (the "Banks") and Morgan Guaranty Trust
Company of New York, as Agent ("Morgan Guaranty"). Pursuant to the Credit
Agreement, ARCO or any subsidiary borrower can request the Banks to make
"Domestic Loans" and "Euro-Currency Loans" to such person.
Domestic Loans bear interest on any day at either a "CD Rate" or a "Base
Rate". The CD Rate in effect on any day is equal to the "Base CD Rate" in
effect on such day plus a spread ranging from 0.265% to 0.625% per annum,
depending upon ARCO's long-term debt rating. The Base CD Rate for any day is a
per annum rate of interest based on the secondary market rate for certificates
of deposit of comparable maturity to the interest period for the Domestic
Loan, adjusted by reference to the reserve requirements prescribed by the
Federal Reserve Board for a member bank of the Federal Reserve System in New
York City in respect of new non-personal time deposits having a maturity
comparable to the interest period for the Domestic Loan and by reference to
the annual assessment rate payable by an adequately capitalized member of the
Bank Insurance Fund to the Federal Deposit Insurance Corporation. The Base
Rate for any day is a rate per annum equal to the higher of (i) rate of
interest publicly announced by Morgan Guaranty in New York City as its Prime
Rate and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate (as defined in
the Credit Agreement) for such day.
Euro-Currency Loans bear interest at a per annum rate determined on the
basis of the rates per annum at which deposits in the applicable currency are
offered to certain euro-currency reference banks in the London interbank
market in comparable amounts and for comparable interest periods plus a spread
ranging from 0.140% to 0.500% per annum, depending upon ARCO's long-term debt
rating.
14
<PAGE>
In addition to Domestic Loans and Euro-Currency Loans, the Credit Agreement
provides that ARCO and each subsidiary borrower may request the Banks to make
"Money Market Loans", which are uncommitted advances at competitive rates made
on an auction basis.
The Credit Agreement provides for the payment by ARCO of a facility fee on
the aggregate commitment of the Banks under the Existing Facility, regardless
of utilization, at a rate ranging from 0.060% to 0.250% per annum, depending
upon ARCO's long-term debt rating. The Credit Agreement contains customary
conditions to borrowing, representations and warranties, covenants and events
of default. ARCO has unconditionally guaranteed the obligations of each of the
subsidiary borrowers under the Credit Agreement. The commitment of the Banks
expires on the December 15, 2000.
The foregoing description of the Existing Facility is qualified in its
entirety by reference to the Credit Agreement, a copy of which is filed as
Exhibit (b)(1) to ARCO's Tender Offer Statement on Schedule 14D-1 filed with
the Commission on the date hereof (the "Schedule 14D-1"). The Credit Agreement
should be read in its entirety for a more complete description of the matters
summarized above.
ARCO has entered into a Commitment Letter (the "Commitment Letter"), dated
May 4, 1998, with the parties named therein for a $3.0 billion revolving
credit facility (the "New Facility"). The Commitment Letter provides that the
New Facility may be used, among other purposes, to support commercial paper
borrowings associated with funding the consummation of the Offer and the
Merger and will have a term of 150 days. The Commitment Letter further
provides that the other terms and conditions of the New Facility will be
substantially the same as those described above with respect to the Existing
Facility, except that the facility fee for the New Facility will be 0.050% and
the spread applicable to Euro-Currency Loans will be 0.150%. The New Facility
is expected to become effective prior to any commercial paper issuances
associated with funding the consummation of the Offer and the Merger.
The foregoing description of the New Facility is qualified in its entirety
by reference to the Commitment Letter, a copy of which is filed as Exhibit
(b)(2) to the Schedule 14D-1. The Commitment Letter should be read in its
entirety for a more complete description of the matters summarized above.
ARCO may repay such commercial paper and other short-term borrowings out of
cash flow generated internally by ARCO and its affiliates from either
operations or assets sales and/or through the issuance of debt or equity
securities.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
In light of the companies' joint efforts in Alaska and Trinidad,
representatives of ARCO and the Company have met from time to time to discuss
such existing joint efforts and possibilities for future joint efforts between
the companies. On March 4, 1998, William E. Wade, Jr., President of ARCO, met
with John Whitmire, Chairman and Chief Executive Officer of the Company, in
Houston, Texas. The conversation covered a variety of topics including the
Alaska and Trinidad projects and the status of the oil and gas industry.
On Thursday, April 16, 1998, Mr. Wade met with Mr. Whitmire in Houston. Mr.
Wade said that ARCO had reviewed the Company and its operations in depth and
concluded that the Company would be an excellent strategic fit for ARCO and
that ARCO was prepared to offer to acquire all the outstanding Shares for
$28.50 per Share in cash. Mr. Wade said that it was important that any
transaction between ARCO and the Company be a friendly, negotiated
transaction, that the Company negotiate with ARCO on an exclusive basis and
that the negotiations be completed in no more than three weeks. Mr. Wade said
that ARCO was very familiar with the Company and its operations and that
ARCO's proposal was not subject to due diligence. Mr. Whitmire indicated that
he would discuss ARCO's proposal with the Company's Board of Directors and
would contact Mr. Wade early the following week regarding the reaction of the
Board to ARCO's proposal.
On Monday, April 20, 1998, Mr. Whitmire called Mr. Wade to inform him that
the Company had retained financial and legal advisors to analyze the ARCO
proposal and that a meeting of the Company's Board of Directors would be held
on Friday, April 24, 1998, to consider the proposal.
15
<PAGE>
On April 24, 1998, Mr. Whitmire called Mr. Wade following the Company's
Board meeting. Mr. Whitmire stated that while the ARCO proposal was
attractive, the Board of Directors was not willing to authorize exclusive
negotiations with ARCO at the price ARCO had proposed. He said that he
believed that ARCO should review certain non-public information regarding the
Company that may not have been reflected in the ARCO offer price. Mr. Wade and
Mr. Whitmire had several additional telephone conversations later that day,
and it was decided that representatives of ARCO would meet with
representatives of the Company on Sunday, April 26, 1998, in Houston. On
Saturday, April 25, 1998, ARCO and the Company signed a confidentiality
agreement.
On Sunday, April 26, 1998, representatives of ARCO met with representatives
of the Company in Houston to review information provided by the Company. The
information included data regarding the Company's exploration and operating
activities outside the United States and its petrochemical business.
On Monday, April 27, 1998, Mr. Wade called Mr. Whitmire and said that the
information provided to ARCO did not cause ARCO to change its valuation of the
Company. Mr. Wade said that ARCO, however, would be prepared to increase its
proposed offer price from $28.50 to $29.00 per Share if the Company was
prepared promptly to commence exclusive negotiations with ARCO to be completed
no later than May 7, 1998. Mr. Wade said that this represented ARCO's best
offer.
On Monday, April 27, 1998, ARCO's legal advisors sent to the Company and its
legal advisors the proposed forms of the Merger Agreement and related
agreements. Additional telephone conversations occurred between the two
companies regarding the timing and logistics for the parties to meet to begin
negotiation of the transaction.
On Tuesday, April 28, 1998, Mr. Wade and Mr. Whitmire met in New York City
to discuss the proposed transaction. Mr. Wade also called Mr. Michael W.
Michelson, a partner of KKR and a director of the Company, to discuss the ARCO
proposal.
On Wednesday, April 29, 1998, representatives of the Company and ARCO and
their legal and financial advisors met in New York City to begin negotiation
of the agreements. On Friday, May 1, 1998, representatives of ARCO and
representatives of the Principal Stockholders and their legal advisors began
negotiation of the terms of the Stockholder Agreement by telephone.
Negotiations between ARCO and each of the Company and the Principal
Stockholders continued until Sunday, May 3, 1998.
On Sunday, May 3, 1998, the boards of directors of the Company and ARCO met
to approve the transaction.
The Merger Agreement and the Stockholder Agreement were executed by the
parties, and ARCO and the Company publicly announced the agreements before the
opening of trading on the NYSE on Monday, May 4, 1998.
A subsidiary of the Company and ARCO Alaska, Inc., a wholly owned subsidiary
of ARCO ("ARCO Alaska"), are co-venturers with a third party in the
development of the Alpine oil field on the North Slope in Alaska. ARCO Alaska
is the operator of the Alpine field and the Company's subsidiary and ARCO
Alaska have 22% and 56% working interests, respectively, in the field. Since
January 1, 1995, a total of $95,000,000 has been spent by all parties towards
development of the field. The total capital commitment by all parties for the
life of the field is estimated to be between $600,000,000 and $700,000,000. In
addition, a subsidiary of the Company, ARCO Trinidad Exploration and
Production Co., a wholly owned subsidiary of ARCO ("ARCO Trinidad"), and a
third party signed a Production Sharing Contract dated February 18, 1998 with
the government of Trinidad and Tobago covering deep water Block 27. The
Company's subsidiary and ARCO Trinidad have 15% and 45% working interests,
respectively, in the block. Approximately $20 million has been spent to date
by all parties.
Except as described in this Offer to Purchase (including Schedule I hereto),
none of the Purchaser, ARCO or, to the best knowledge of the Purchaser and
ARCO, any of the persons listed in Schedule I hereto, or any associate or
majority-owned subsidiary of the Purchaser, ARCO or any of the persons so
listed, beneficially owns any equity security of the Company, and none of the
Purchaser, ARCO or, to the best knowledge of the Purchaser
16
<PAGE>
and ARCO, any of the other persons referred to above, has effected any
transaction in any equity security of the Company during the past 60 days. The
Purchaser and ARCO disclaim beneficial ownership of any Shares owned by any
pension plan of ARCO or any affiliate of ARCO.
Except as described in this Offer to Purchase, as of the date hereof (a)
there have not been any contacts, transactions or negotiations between the
Purchaser or ARCO, any of their respective subsidiaries or, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I hereto, on
the one hand, and the Company or any of its directors, officers or affiliates,
on the other hand, that are required to be disclosed pursuant to the rules and
regulations of the Commission and (b) none of the Purchaser, ARCO or, to the
best knowledge of the Purchaser and ARCO, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any person with respect to any securities of the Company. During the
Offer, the Purchaser and ARCO intend to have ongoing contacts and negotiations
with the Company and its directors, officers and stockholders.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENT
Purpose
The purpose of the Offer is to enable ARCO to acquire control of the Company
and to acquire the outstanding Shares. The Offer, as the first step in the
acquisition of the Company, is intended to facilitate the acquisition of all
the outstanding Shares. The purpose of the Merger is to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer, the
Stockholder Agreement or otherwise.
The Merger Agreement
The Merger Agreement provides that following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger", the Purchaser
will be merged with and into the Company, and each issued Share (other than
Shares owned by ARCO, the Purchaser or the Company or a wholly owned
subsidiary of ARCO, the Purchaser or the Company or by stockholders, if any,
who are entitled to and who properly exercise appraisal rights under Delaware
law) will be converted into an amount in cash equal to the price per Share
paid pursuant to the Offer.
Vote Required To Approve Merger. The Delaware General Corporation Law
("DGCL") requires, among other things, that the adoption of any plan of merger
or consolidation of the Company must be approved by the Board of Directors
and, if the "short-form" merger procedure described below is not available,
approved by the holders of a majority of the Company's outstanding voting
securities. The Board of Directors of the Company has approved the Offer, the
Merger and the Merger Agreement; consequently, the only additional action of
the Company that may be necessary to effect the Merger is adoption of the
Merger Agreement by the Company's stockholders if such "short-form" merger
procedure is not available. Under the DGCL, if stockholder adoption of the
Merger Agreement is required in order to consummate the Merger, the vote
required is the affirmative vote of the holders of a majority of the
outstanding Shares (including any Shares owned by the Purchaser). If the
Purchaser acquires, through the Offer, the Merger Agreement, the Stockholder
Agreement or otherwise, voting power with respect to at least majority of the
outstanding Shares (which would be the case if the Minimum Condition were
satisfied and the Purchaser were to accept for payment Shares tendered
pursuant to the Offer), it would have sufficient voting power to effect the
Merger without the affirmative vote of any other stockholder of the Company.
The DGCL also provides that if a parent company owns at least 90% of the
outstanding shares of each class of stock of a subsidiary, the parent company
may merge that subsidiary into the parent company, or the parent company may
merge itself into that subsidiary, pursuant to the "short-form" merger
procedures without prior notice to, or the approval of, the other stockholders
of the subsidiary. In order to consummate the Merger pursuant to these
provisions of the DGCL, the Purchaser would have to own at least 90% of the
outstanding Shares and at least 90% of the outstanding shares of Series A
Preferred Stock. ARCO and the Purchaser are not
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offering to purchase the Series A Preferred Stock pursuant hereto. However,
they may seek to acquire some or all of the outstanding shares of Series A
Preferred Stock pursuant to a separate offer to the holders of Series A
Preferred Stock or otherwise.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver of certain conditions, including the following: (a) if required by
applicable law, the Merger Agreement having been approved and adopted by the
affirmative vote of the holders of a majority of the Shares; (b) the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
having terminated or expired and any consents, approvals and filings under any
foreign antitrust law (including, without limitation, the EC Regulations (as
defined in Section 15)), the absence of which would prohibit the consummation
of the Merger, having been obtained or made; (c) no temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger being in effect; provided, however, that each
of the Company, the Purchaser and ARCO has used all reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any such injunction or other order that may have been
entered; and (d) the Purchaser having previously accepted for payment and paid
for Shares pursuant to the Offer.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the effective time of the Merger, whether before or after
adoption of the Merger Agreement by the stockholders of the Company:
(1) by mutual written consent of ARCO, the Purchaser and the Company;
(2) by either ARCO or the Company,
(a) if the Merger is not consummated on or before January 31, 1999,
unless the failure to consummate the Merger is the result of a wilful
and material breach of the Merger Agreement or the Stockholder
Agreement by the party seeking to terminate the Merger Agreement;
provided, however, that the passage of such period will be tolled for
any part thereof during which any party is subject to a nonfinal order,
decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the Merger;
(b) if any federal, state, local or foreign government or any court
of competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity") issues an order, decree or ruling or takes any
other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
has become final and nonappealable; or
(c) if as the result of the failure of any of the conditions to the
Offer set forth in Section 14, the Offer has terminated or expired in
accordance with its terms without the Purchaser having purchased any
Shares pursuant to the Offer;
(3) by ARCO if, prior to the consummation of the Offer (and other than
during any ARCO Extension Period), the Company breaches any of its
representations or warranties or fails to perform in any material respect
any of its covenants and obligations contained in the Merger Agreement or
the Stockholder Agreement, which breach or failure to perform would give
rise to the failure of a condition set forth in Section 14, provided that
ARCO is not then in wilful and material breach of any representation,
warranty or covenant in the Merger Agreement or the Stockholder Agreement,
and provided further, that such breach or failure to perform is not capable
of being cured by the earlier of 15 days from the time it came to the
knowledge of the Company and the Expiration Date of the Offer;
(4) by the Company in accordance with the terms of the Merger Agreement
described in the second paragraph below under "Takeover Proposals",
provided it has complied with all provisions described in the second
paragraph under "Takeover Proposals", including the notice provisions
therein, and that it complies with the applicable requirements relating to
the payment (including the timing of any payment) of the Termination Fee
(as defined below under "Fees and Expenses; Termination Fee");
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<PAGE>
(5) by the Company if, prior to the consummation of the Offer, ARCO or
the Purchaser shall be in breach of any of their representations and
warranties or fail to perform in any material respect any of their
covenants and obligations contained in the Merger Agreement (provided, that
the Company is not then in wilful and material breach of any
representation, warranty or covenant contained in the Merger Agreement and
provided further, that such breach or failure to perform is not capable of
being cured by the earlier of 15 days from the time it came to the
knowledge of ARCO and the Expiration Date of the Offer);
(6) by the Company if the Offer has not been made in accordance with the
terms of the Merger Agreement described in Section 1; or
(7) by the Company if any event occurs which would result in the
condition set forth in paragraph (e) of Section 14 not being satisfied, and
five business days have elapsed since such occurrence, unless ARCO has
waived its right to terminate the Merger Agreement and its right not to
consummate the Offer for the failure of such condition resulting from such
event.
Takeover Proposals. The Merger Agreement provides that the Company will not,
nor will it permit any of its subsidiaries to, nor will it authorize any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its subsidiaries
(collectively, "Company Representatives") to, and will use its reasonable best
efforts to ensure that none of the Company Representatives will, (1) solicit,
initiate or encourage the submission of any Takeover Proposal, (2) enter into
any agreement with respect to any Takeover Proposal or (3) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes a Takeover Proposal;
provided, however, that, at any time during the period following the date of
the Merger Agreement and prior to the consummation of the Offer (the
"Applicable Period"), the Company may, in response to a Superior Proposal (as
defined below, including the determination by the Board of Directors of the
Company set forth in such definition) that was not solicited by the Company or
any Company Representative and that did not otherwise result from a breach or
a deemed breach of the provisions described in this paragraph, and subject to
providing prior written notice of its decision to take such action to ARCO
(the "Company Notice") and compliance with the notification provisions
described in the second succeeding paragraph below, for a period of no more
than ten business days following delivery of the Company Notice (which period
shall be extended to the end of the 48-hour period following the receipt by
ARCO of notice from the Company that it is prepared to accept a Superior
Proposal), (i) furnish information with respect to the Company to any person
making a Superior Proposal pursuant to a customary confidentiality agreement
as determined by the Company after consultation with its outside counsel and
(ii) participate in discussions or negotiations regarding such Superior
Proposal. The Merger Agreement provides that any action that is in violation
of or inconsistent with the restrictions set forth in the preceding sentence
by any executive officer of the Company or any of its subsidiaries or any
Company Representative or affiliate of the Company, whether or not such person
is purporting to act on behalf of the Company or any of its subsidiaries or
otherwise, shall be deemed to be a breach of the provisions described in this
paragraph by the Company. The Merger Agreement defines "Takeover Proposal" as
any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a business that constitutes 15% or more of
the net revenues, net income or the assets of the Company and its subsidiaries
taken as a whole, or 15% or more of any class of equity securities of the
Company or any of its significant subsidiaries, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15%
or more of any class of equity securities of the Company or any of its
subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement. The Company may deliver only one Company
Notice with respect to each person making a Superior Proposal.
The Merger Agreement further provides that, except as described below,
neither the Board of Directors of the Company nor any committee thereof may
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to ARCO, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
cause the Company to enter into any letter of intent,
19
<PAGE>
agreement in principle or any legally binding acquisition agreement or similar
agreement (an "Acquisition Agreement") related to any Takeover Proposal or
(iii) approve or recommend, or propose to publicly approve or recommend, any
Takeover Proposal. Notwithstanding the foregoing, if the Company has received
a Superior Proposal and if the Purchaser has not accepted for payment any
Shares pursuant to the Offer, the Board of Directors of the Company may
(subject to this and the following sentences) terminate the Merger Agreement,
but only at a time that is during the Applicable Period and is more than 48
hours following ARCO's receipt of written notice advising ARCO that the Board
of Directors of the Company is prepared to accept such Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided, however, that
(x) at the time of such termination, such proposal continues to be a Superior
Proposal, taking into account any amendment of the terms of the Offer or the
Merger by ARCO or any proposal by ARCO to amend the terms of the Merger
Agreement, the Offer or the Merger or any other Takeover Proposal made by ARCO
(a "New ARCO Proposal"), and (y) concurrently with or immediately after such
termination, the Board of Directors of the Company shall cause the Company to
enter into an Acquisition Agreement with respect to such Superior Proposal.
The Merger Agreement defines "Superior Proposal" as any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
outstanding Shares or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines in
its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation) (x) is reasonably capable of being
completed, taking into account all legal, financial, regulatory and other
aspects of the proposal and the third party making such proposal, and (y)
provides greater value to the holders of Shares (specifically taking into
account the expected value of the consideration to be received by the holders
of Shares on the date such consideration is expected to be received by such
holders) than the cash consideration to be received by such stockholder
pursuant to the Offer and the Merger, as the Offer and the Merger may be
amended from time to time, or the value to the holders of Shares to be
provided by any New ARCO Proposal (specifically taking into account the
expected value of the consideration expected to be received in the Offer, the
Merger or any New ARCO Proposal by the holders of Shares on the date such
consideration is expected to be received by such holders).
In addition to the obligations of the Company described in the preceding two
paragraphs, the Merger Agreement provides that the Company will promptly
advise ARCO orally and in writing of any Takeover Proposal or any inquiry or
request for information with respect to or that could reasonably be expected
to lead to any Takeover Proposal, the identity of the person making any such
Takeover Proposal or inquiry or request for information and the material terms
of any such Takeover Proposal or inquiry or request for information. The
Company is further required under the terms of the Merger Agreement to (i)
keep ARCO fully informed of the status including any change to the material
terms of any such Takeover Proposal or inquiry or request for information and
(ii) provide to ARCO as soon as practicable after receipt or delivery thereof
with copies of all correspondence and other written material sent or provided
to the Company or any Company Representative or any affiliate of the Company
from any third party in connection with any Takeover Proposal or inquiry or
request for information or sent or provided by the Company or any Company
Representative or any affiliate of the Company to any third party in
connection with any Takeover Proposal or inquiry or request for information;
provided, however, that the Company shall not be required to provide any
nonpublic information specified in this clause (ii) regarding the business or
financial condition or prospects of such third party if the Company is
prohibited from disclosing such information pursuant to a legally binding
confidentiality agreement.
The Merger Agreement provides that nothing contained therein will prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with applicable
law; provided, however, that neither the Company nor its Board of Directors
nor any committee thereof may withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to the Offer, the Merger or the
Merger Agreement or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal so long as the Merger Agreement is in effect.
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<PAGE>
Fees and Expenses; Termination Fee. The Merger Agreement provides that,
except as described below, all fees and expenses incurred in connection with
the Offer, the Merger and the other transactions contemplated by the Merger
Agreement and the Stockholder Agreement will be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated. The Merger
Agreement further provides that the Company will pay in same-day funds to ARCO
a fee of $85,000,000 (the "Termination Fee") under the following
circumstances: (a) if the Company terminates the Merger Agreement in
accordance with the provisions described above in clause (4) under
"Termination of the Merger Agreement"; (b) if (i) after the date of the Merger
Agreement and prior to the termination of the Merger Agreement, any person
makes a Takeover Proposal, (ii) the Offer shall have remained open until the
scheduled expiration date immediately following the date such Takeover
Proposal is made, (iii) the Minimum Condition is not satisfied at the
expiration of the Offer, (iv) the Merger Agreement is terminated by ARCO or
the Company in accordance with the provisions described above in clause (2)(c)
under "Termination of the Merger Agreement" and (v) within 12 months of the
date of termination of the Merger Agreement, the Company executes a legally
binding agreement or an agreement in principle pursuant to which any person,
entity or group (other than ARCO, the Purchaser or any of their affiliates),
in one transaction or a series of transactions, will acquire more than 50% of
the outstanding Shares or assets of the Company through any open market
purchases, merger, consolidation, tender or exchange offer, recapitalization,
reorganization or other business combination (an "Acquisition Event"); or (c)
if (i) after the date of the Merger Agreement and prior to the termination of
the Merger Agreement, any person makes a Takeover Proposal, (ii) the Merger
Agreement is terminated in accordance with the provisions described above in
clause (2)(c) under "Termination of the Merger Agreement" as a result of the
failure of any condition set forth in paragraph (f) or (g) of Section 14, and
(iii) an Acquisition Event occurs within 12 months of the date of termination
of the Merger Agreement. Any fee due pursuant to the provisions described in
this paragraph will be paid on the date of termination of the Merger Agreement
in the case of a fee due under clause (a) of the preceding sentence, or on the
date such Acquisition Event is consummated in the case of a fee due under
clause (b) or (c) of the preceding sentence.
Conduct of Business. The Merger Agreement provides that, except as
contemplated or permitted by the Merger Agreement or the Stockholder Agreement
or to the extent that ARCO otherwise agrees, from May 4, 1998 to the effective
time of the Merger or earlier termination of the Merger Agreement: (a) the
Company will, and will cause its subsidiaries to, conduct their respective
business in the usual, regular and ordinary course consistent with past
practice except as required to comply with changes in applicable law occurring
after the date of the Merger Agreement (subject to the express restrictions
set forth below, including, without limitation, the restrictions of clauses
(e) and (f) below) and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve intact their current business
organizations and keep available the services of their current officers and
employees to maintain their respective goodwill and ongoing business; (b) the
Company will not, and will not permit any of its subsidiaries to, (i) declare,
set aside or pay any dividends on, or make other distributions in respect of,
any of its capital stock (other than regular quarterly cash dividends not in
excess of $0.05 per Share with usual record and payment dates and in
accordance with the Company's present dividend policy and regular quarterly
cash dividends with respect to the Series A Preferred Stock), other than
dividends and distributions by a direct or indirect wholly owned subsidiary of
the Company to its parent, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities; (c) the Company will not, and will not permit any
of its subsidiaries to, issue, deliver, sell, pledge or grant (i) any shares
of its capital stock, (ii) any bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matter on which stockholders
of the Company may vote or other voting securities, (iii) any securities
convertible into, or exchangeable for, or any options, warrants or rights to
acquire, any such shares, voting securities or convertible or exchangeable
securities or (iv) any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units, other than the issuance
of Shares (and associated Rights) upon the exercise of stock options
outstanding on the date of the Merger Agreement or under the Company's Savings
Plan for Salaried Employees, Deferred Compensation
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Plan or defined contribution retirement plan for employees of Virginia
Indonesia Company and in accordance with the present terms of such stock
options and plan; (d) the Company will not, and will not permit any of its
subsidiaries to, amend its certificate or incorporation or by-laws (or
comparable charter or organizational documents); (e) the Company will not, and
will not permit any of its subsidiaries to, enter into or amend any material
technical contract, long-term drilling rig contract, agreement to sell,
purchase or share seismic and other geological or geophysical data, or any
material contract for the purchase or sale of oil, gas, LPG, LNG, ethylene,
propylene or other hydrocarbon or petrochemical products other than in the
ordinary course of business consistent with past practice; (f) the Company
will not, and will not permit any of its subsidiaries to, (i) enter into, or
amend, or negotiate to enter into or amend, any farm-out or farm-in
arrangement, area of mutual interest agreement, exploration license, lease,
concession agreement, production sharing contract, operating service agreement
or similar agreement or arrangement evidencing an interest in hydrocarbons, or
participate in any bidding group, bidding round or public hearing with respect
thereto, (ii) acquire, or negotiate to acquire, any interest in a corporation,
partnership or joint venture arrangement which holds an oil and gas interest
of the type described in the foregoing clause, (iii) sell, transfer, assign,
relinquish or terminate (other than relinquishments or terminations required
by the terms of existing agreements) or negotiate to take any such action with
respect to, the Company's interest (as of the date of the Merger Agreement) in
any oil and gas exploration license, lease, area of mutual interest agreement,
concession agreement, production sharing contract, operating service agreement
or other agreement or arrangement evidencing an interest in hydrocarbons, or
in the equity or debt securities of any corporation, partnership or joint
venture arrangement which holds such an interest, including, without
limitation, the imposition of any pledge, lien, charge, mortgage, encumbrance
or security interest of any kind or nature whatsoever (collectively, "Liens"),
other than Liens permitted by the Merger Agreement, on any of the foregoing,
(iv) give, or negotiate to give, any approvals relating to development plans,
work plans, budgets or capital expenditure commitments in connection with any
oil and gas interests of the type described in the foregoing clause, other
than expenditures in the Company's existing capital expenditure budget, or (v)
make any change in the Company's petrochemical business, including, without
limitation, the imposition of any Lien, other than Liens permitted by the
Merger Agreement, thereon, or enter into any agreements or negotiations to
acquire or build new petrochemicals capacity or expand existing petrochemicals
capacity, or dispose of (including by way of a contribution of assets or
otherwise), all or any portion of the Company's petrochemical business, or to
alter or amend, in any material respect, any contracts relating to the
Company's petrochemical business, other than in the ordinary course of
business consistent with past practice; (g) the Company will not, and will not
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging
or consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division thereof
or (ii) any assets that are material, individually or in the aggregate, to the
Company and its subsidiaries taken as a whole; (h) the Company will not, and
will not permit any of its subsidiaries, to (i) grant to any officer or
director of the Company or any of its subsidiaries any increase in
compensation, except in the ordinary course of business consistent with prior
practice or to the extent required under employment agreements in effect as of
the date of the most recent audited financial statements included in the
documents required to be filed by the Company under the Exchange Act which are
filed and publicly available prior to the date of the Merger Agreement (the
"Filed Company SEC Documents"), (ii) grant to any employee, officer or
director of the Company or any of its subsidiaries any increase in severance
or termination pay, except to the extent required under any agreement in
effect as of December 31, 1997, (iii) enter into any employment, consulting,
indemnification, severance or termination agreement with any such employee,
officer or director, (iv) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or benefit plan of the
Company or (v) take any action to accelerate any rights or benefits, or make
any material determinations not in the ordinary course of business consistent
with prior practice, under any collective bargaining agreement or benefit plan
of the Company; (i) the Company will not, and will not permit any of its
subsidiaries to, make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets, liabilities
or results of operations of the Company, except insofar as may have been
required by a change in generally accepted accounting principles or by
operation of law; (j) the Company will not, and will not permit any of its
subsidiaries to, sell, lease, license or otherwise dispose of, or subject to
any Lien, any properties or assets, except sales of inventory and excess or
obsolete assets
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in the ordinary course of business consistent with past practice; (k) the
Company will not, and will not permit any of its subsidiaries to, (i) incur
any indebtedness for borrowed money or guarantee any such indebtedness of
another person or issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter into any
"keep-well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to or in the Company or any direct or indirect wholly owned
subsidiary of the Company; (l) the Company will not, and will not permit any
of its subsidiaries to, make or agree to make any new capital expenditure or
expenditures, other than expenditures in the Company's existing capital
expenditure budget, that, individually, is in excess of $1,500,000 or, in the
aggregate, are in excess of $5,000,000; (m) the Company will not, and will not
permit any of its subsidiaries to, make any material tax election or settle or
compromise any material tax liability or refund, consent to any extension or
waiver of the statute of limitations period applicable to any tax claim or
action, if any such election, settlement, compromise, consent or other action
would have the effect of increasing the tax liability or reducing any net
operating loss, foreign tax credit, net capital loss or any other credit or
tax attribute of the Company or any of its subsidiaries (including, without
limitation, deductions and credits related to alternative minimum taxes); (n)
the Company will not, and will not permit any of its subsidiaries to, enter
into any hedging agreement or other financial agreement or arrangement
designed to protect the Company against fluctuations in commodities prices or
currency exchange rates, except agreements or arrangements entered into in the
ordinary course of business consistent with past practice; (o) the Company
will not, and will not permit any of its subsidiaries to, (i) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms or the terms of the Merger Agreement, of
liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or notes thereto) of the Company
included in the Filed Company SEC Documents or incurred in the ordinary course
of business consistent with past practice, (ii) cancel any material
indebtedness (individually or in the aggregate) or waive any claims or rights
of substantial value or (iii) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party; (p) the Company will not, and
will not permit any of its subsidiaries to, make any material change
(including failing to renew) in the amount or nature of the insurance policies
covering the Company and its subsidiaries, other than pursuant to the terms of
such existing policies as of the date of the Merger Agreement; (q) the Company
will not, and will not permit any of its subsidiaries to, enter into any
agreements in connection with, or negotiate to give any approvals to, the
amendment, extension, modification or waiver of any of the terms and
conditions (as in effect on the date of the Merger Agreement) of the
Indonesian Participating Units issued by Unimar Company, or any guarantee or
"keep well" or other agreement to maintain any financial condition with
respect thereto; and (r) the Company will not, and will not permit any of its
subsidiaries to, authorize any of, or commit or agree to take any of, the
foregoing actions.
In addition to the foregoing, in the Merger Agreement the Company and ARCO
have agreed that they will not, and will not permit any of their respective
subsidiaries to, take any action that would, or that would reasonably be
expected to, result in (a) any of the representations and warranties of such
party set forth in the Merger Agreement and the Stockholder Agreement, to the
extent a party thereto, that is qualified as to materiality becoming untrue,
(b) any of such representations and warranties that is not so qualified
becoming untrue in any material respect or (c) any of the conditions to the
Offer set forth in Section 14, or any condition to the Merger described under
"Conditions to the Merger" above, not being satisfied, subject to the
Company's right to take actions specifically permitted by the Merger Agreement
described above in "Takeover Proposals".
In the Merger Agreement, the Company has also agreed to promptly advise ARCO
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, would have, a material adverse effect on the Company.
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Board of Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment for, Shares by the Purchaser pursuant
to the Offer, the Purchaser will be entitled to designate such number of
directors on the Board of Directors of the Company as will give the Purchaser,
subject to compliance with Section 14(f) of the Exchange Act, representation
on the Board of Directors of the Company equal to at least that number of
directors, rounded up to the next whole number, which is the product of (a)
the total number of directors on the Board of Directors of the Company (giving
effect to the directors elected pursuant to this sentence) multiplied by (b)
the percentage that (i) such number of Shares so accepted for payment and paid
for by the Purchaser plus the number of Shares otherwise owned by the
Purchaser or any other subsidiary of ARCO bears to (ii) the number of Shares
outstanding, and the Company will, at such time, cause the Purchaser's
designees to be so elected; provided, however, that in the event that the
Purchaser's designees are appointed or elected to the Board of Directors of
the Company, until the effective time of the Merger, the Board of Directors of
the Company will include at least three directors who were directors of the
Company as of the date of the Merger Agreement and who are not officers of the
Company. Subject to applicable law, the Company has agreed to take all action
requested by ARCO necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule l4f-1 promulgated thereunder,
which Information Statement is attached as Appendix A to the Schedule 14D-9.
See "Plans for the Company" below.
Stock Options. The Merger Agreement provides that prior to the consummation
of the Offer, the Board of Directors of the Company (or, if appropriate, any
committee administering the Company Stock Plans) shall adopt such resolutions
or take such other actions as are required to ensure that all Company Stock
Options and all Company SARs heretofore granted under any Company Stock Plan
that are outstanding at the effective time of the Merger shall not give the
holder thereof the right to receive any capital stock of ARCO, the Company or
the surviving corporation after the effective time of the Merger or to receive
from ARCO, the Company or the surviving corporation any consideration other
than an amount of cash equal to (i) (x) the excess, if any, of the
consideration payable pursuant to the Merger over the exercise price per share
of Common Stock subject to such Company Stock Option or Company SAR,
multiplied by (y) the number of shares of Common Stock for which such Company
Stock Option or Company SAR shall not theretofore have been exercised, less
(ii) such amounts as may be required to be deducted or withheld with respect
thereto under the Code or under any provision of state, local or foreign tax
law. The Merger Agreement defines (a) "Company Stock Option" as any option to
purchase Common Stock granted under any Company Stock Plan, (b) "Company SAR"
as any stock appreciation right linked to the price of Common Stock and
granted under any Company Stock Plan, and (c) "Company Stock Plans" as the
plans providing for the grant of Company Stock Options or any other issuance
of capital stock of the Company as specified in the Merger Agreement.
The Merger Agreement further provides that, prior to the expiration of the
Offer, the Company will, subject to compliance with applicable law, make an
offer to pay each holder of a Company Stock Option that is not automatically
subject to a cash payment upon consummation of the Offer, promptly after the
consummation of the Offer and in exchange for the cancellation of such Company
Stock Option, an amount in cash equal to (x)(1) the excess, if any, of the
Offer Price over the exercise price per share of Common Stock subject to such
Company Stock Option multiplied by (2) the number of shares of Common Stock
for which such Company Stock Option shall not theretofore have been exercised,
less (y) such amounts as may be required to be deducted or withheld with
respect thereto under the Code or under any provision of state, local or
foreign tax law. In addition, the Merger Agreement provides that, subject to
compliance with applicable law, the Company may take any actions necessary to
purchase Shares from those officers of the Company and members of the Board of
Directors of the Company as are designated by the Board of Directors of the
Company, and such purchase shall take place after the consummation of the
Offer at a price per share equal to the Offer Price.
Benefit Plans. The Merger Agreement provides that ARCO will cause the
surviving corporation to (a) maintain for a period of one year after the
effective time of the Merger the benefit plans of the Company, as specified in
the Merger Agreement (other than plans providing for the issuance of capital
stock of the Company or based on the value of capital stock of the Company) in
effect on the date of the Merger Agreement or (b) make available to employees
of the Company and its subsidiaries (including employees transferred to
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employment with ARCO or other subsidiaries of ARCO) the employee benefit plans
of ARCO and its subsidiaries that are provided to similarly situated employees
of ARCO and its subsidiaries. The Merger Agreement also provides that: (i)
following the effective time of the Merger, ARCO will cause the Company and
its subsidiaries to honor (subject to the provisions described in this
paragraph and under "Indemnification") all obligations under any contracts,
agreements and commitments of the Company and its subsidiaries prior to the
date of the Merger Agreement (or as established or amended in accordance with
or permitted by the Merger Agreement) the existence of which does not
constitute a violation of the terms of the Merger Agreement, which apply to
any current or former employee, or current or former director of the parties
hereto or any of their subsidiaries; provided, however, that this undertaking
is not intended to prevent the Company or any subsidiary of the Company from
enforcing such contracts, agreements and commitments in accordance with their
terms, including, any reserved right to amend, modify, suspend, revoke or
terminate any such contract, agreement or commitment; (ii) for purposes of any
of the Company's benefit plans conferring rights on a current or former
employee, officer or director as a result of a change of control of the
Company, the consummation of the Merger shall be deemed to constitute a
"Change of Control" (as that term is defined in such benefit plans of the
Company); (iii) if any employee or officer of the Company or any of its
subsidiaries becomes a participant in any employee benefit plan, program,
practice or policy of ARCO or any subsidiary of ARCO or the surviving
corporation, such employee or officer shall be given credit thereunder for all
service prior to the effective time of the Merger with the Company and its
subsidiaries or any predecessor employer (to the extent such credit was given
by the Company) for purposes of eligibility and vesting (but not for benefit
accrual purposes), except to the extent that crediting such service would
result in duplication of benefits; (iv) for a period of two years from the
consummation of the Offer, if any segment or business of the Company or its
subsidiaries (a "Segment") is sold or otherwise disposed of, ARCO agrees, and
shall cause the surviving corporation to agree, to provide, or cause the buyer
of or other successor to such Segment to provide, each employee whose
employment is involuntarily terminated after such sale or other disposition
with severance benefits which are no less favorable than the severance
benefits to which such employee would have been entitled had such employee's
employment instead then been involuntarily terminated by the Company or its
subsidiaries, pursuant to the Company's benefit plans existing as of the date
hereof, but only to the extent that the obligations of the Company and its
subsidiaries under the Company's benefit plans have not been discharged prior
to such involuntary termination of employment (for the purposes of this
clause, the term "involuntarily terminated" shall be used as such term is used
in the relevant benefit plans of the Company); (v) on or before 90 days after
the consummation of the Merger, ARCO will (x) notify each management employee
who is a participant in the Company's Executive Severance Plan as to whether
ARCO intends to continue the employment of such participant or to terminate
the employment of such participant, (y) with respect to each participant whose
employment ARCO intends to terminate, notify such participant of the effective
date of such termination and the details of the terms and conditions of such
participant's employment intended by ARCO to be applicable prior to the date
of such termination, and (z) with respect to each participant to whom ARCO
intends to offer continued employment, notify such participant of any desired
changes ARCO would make in the terms and conditions of such participant's
employment; (vi) ARCO shall maintain, or shall cause the surviving corporation
or its successors to maintain, with respect to employees and former employees
(and their eligible dependents) of the Company and its subsidiaries who are
participating in the Company's retiree medical plan as of the effective time
of the Merger or who should be eligible to participate in the Company's
retiree medical plan if they retired as of the later of (x) the effective time
of the Merger or (y) in the case of an employee who is involuntarily
terminated for purposes of any Company severance plan (as currently in
effect), as of the end of the salary continuation period under such severance
plan, retiree medical coverage that is consistent with the retiree medical
coverage provided to similarly situated employees and former employees of ARCO
and its subsidiaries at such time; (vii) without regard to whether the
Company's Salaried Employees' Pension Plan (the "CSEPP") or the Company's
Supplemental Retirement Plan II (the "SERP") are continued following the
effective time of the Merger, ARCO shall cause certain benefits provided by
the CSEPP and the SERP (pertaining to additional service credit under such
plans for certain participants who are involuntarily terminated), with respect
to employees of the Company as of the effective time of the Merger who are
involuntarily terminated from employment with ARCO or any subsidiary of ARCO
within two years after the effective time of the Merger, to be continued for a
period of not less than two years following the effective time of the Merger;
(viii) at ARCO's election, the Company shall
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amend the CSEPP and Savings Plan for Salaried Employees to cause all employees
of the Company and its subsidiaries to become 100% vested in their accrued
benefits under such plans as of the effective time of the Merger. provided
that in all cases, any employee of the Company or any of its subsidiaries who
is a participant in the CSEPP or the Savings Plan for Salaried Employees as of
the effective time of the Merger shall become 100% vested in his or her
accrued benefits under such plans if and when such employee is involuntarily
terminated within two years of the effective time of the Merger. The Merger
Agreement further provides that nothing therein shall be construed as giving
any employee of the Company or any subsidiary of the Company any right to
continued employment following the effective time of the Merger.
Indemnification. In the Merger Agreement, ARCO has agreed, to the fullest
extent permitted by law: (a) to cause the surviving corporation to honor all
the Company's obligations to indemnify (including any obligations to advance
funds for expenses) the current or former directors or officers of the Company
and its subsidiaries for acts or omissions by such directors and officers
occurring at or prior to the effective time of the Merger to the extent that
such obligations of the Company exist on the date of the Merger Agreement,
whether pursuant to the Restated Certificate of Incorporation, as amended, or
By-laws, as amended, of the Company, individual indemnity agreements or
otherwise; (b) that such obligations will survive the Merger and will continue
in full force and effect in accordance with the terms of the Restated
Certificate of Incorporation, as amended, and By-laws, as amended, of the
Company and such individual indemnity agreements from the effective time of
the Merger until the expiration of the applicable statute of limitations with
respect to any claims against such directors or officers arising out of such
acts or omissions; and (c) for a period of six years after the effective time
of the Merger, to cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company
(provided that ARCO may substitute therefor policies with reputable and
financially sound carriers of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect
to claims arising from or related to facts or events which occurred at or
before the effective time of the Merger; provided, however, that ARCO will not
be obligated to make annual premium payments for such insurance to the extent
such premiums exceed 300% of the annual premiums paid as of the date hereof by
the Company for such insurance (such 300% amount, the "Maximum Amount"). If
such insurance coverage cannot be obtained at all, or can only be obtained at
an annual premium in excess of the Maximum Amount, ARCO will maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to such amount; provided, however, that if such insurance
coverage cannot be obtained at all, ARCO shall purchase all available extended
reporting periods with respect to pre-existing insurance in an amount which,
together with all other insurance purchased pursuant to clause (c) above, does
not exceed the Maximum Amount. The Merger Agreement further provides that ARCO
will not, and will cause the Company not to, take any action that would have
the effect of limiting the aggregate amount of insurance coverage required to
be maintained for the individuals referred to in clause (c) above.
In the Merger Agreement, ARCO has also agreed that: (a) from and after the
consummation of the Offer, to the full extent permitted by law, ARCO will, and
will cause the Company (or any successor to the Company), to indemnify, defend
and hold harmless the present officers and directors of the Company and its
subsidiaries (each an "Indemnified Party") against all losses, claims,
damages, liabilities, fees and expenses (including attorneys' fees and
disbursements), judgments, fines and amounts paid in settlement (collectively,
"Losses") arising out of actions or omissions occurring at or prior to the
effective time of the Merger in connection with the Merger Agreement, the
Stockholder Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and the Stockholder Agreement; provided,
however, that an Indemnified Party shall not be entitled to indemnification
under this clause (a) for Losses arising out of actions or omissions by the
Indemnified Party constituting (i) a breach of the Merger Agreement or the
Stockholder Agreement, (ii) criminal conduct or (iii) any violation of
federal, state or foreign securities laws; and provided further, however, that
in order to be entitled to indemnification under this clause (a), an
Indemnified Party must give ARCO and the Company prompt written notice of any
third party claim which may give rise to any indemnity obligation under this
clause (a), and ARCO and the Company shall have the right to assume the
defense of any such claim through counsel of their own choosing (subject to
such counsel's reasonable judgment that separate defenses that would create a
conflict of interest on the part of such counsel are not available), provided
that if ARCO and the Company do
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not assume any such defense, they shall be liable for all reasonable costs and
expenses of defending such claim incurred by the Indemnified Party, including
reasonable fees and disbursements of counsel and shall advance such reasonable
costs and expenses to the Indemnified Party; provided, however, that such
advance shall be made only after receiving an undertaking from the Indemnified
Party that such advance shall be repaid if it is determined that such
Indemnified Party is not entitled to indemnification therefor and that neither
ARCO nor the Company shall be liable under this clause (a) for any Losses
resulting from any settlement, compromise or offer to settle or compromise any
such claim or litigation or other action, without the prior written consent of
ARCO and the Company; (b) the Company shall not, and ARCO shall not permit the
Company to, amend or repeal any provision of the Restated Certificate of
Incorporation or By-laws of the Company after the consummation of the Offer if
such action would adversely affect the rights of individuals who on or prior
to the consummation of the Offer were entitled to advances, indemnification or
exculpation thereunder, for actions or omissions by such individuals prior to
the effective time of the Merger; and (c) in the event the surviving
corporation or any successor to the surviving corporation (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii)
transfers all or substantially all its properties and assets to any person,
then, and in each case, proper provision shall be made so that the successors
of the surviving corporation honor the obligations of the Company set forth in
the provisions of the Merger Agreement described in this and the immediately
preceding paragraph.
Reasonable Efforts; Notification. The Merger Agreement provides that: (a)
upon the terms and subject to the conditions set forth in the Merger
Agreement, each of the Company, ARCO and the Purchaser will use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and the Stockholder
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary
to obtain an approval or waiver from, or to avoid an action or proceeding by,
any Governmental Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits
or other legal proceedings, whether judicial or administrative, challenging
the Merger Agreement or the Stockholder Agreement or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by the
Merger Agreement and the Stockholder Agreement and to fully carry out the
purposes of the Merger Agreement and the Stockholder Agreement; (b) in
connection with the foregoing, the Company and the Board of Directors of the
Company will (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to the
Merger Agreement or the Stockholder Agreement or any transaction contemplated
thereby and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger Agreement or the Stockholder
Agreement, take all action necessary to ensure that the transactions
contemplated thereby may be consummated as promptly as practicable on the
terms contemplated by the Merger Agreement and the Stockholder Agreement and
otherwise to minimize the effect of such statute or regulation on the
transactions contemplated thereby; provided, however, that nothing in the
Merger Agreement will require any party to waive any substantial rights or
agree to any substantial limitation on its operations or to take any action
that would result in any of the consequences referred to in paragraph (a) of
Section 14; and (c) the Company shall give prompt notice to ARCO and ARCO or
the Purchaser shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in the Merger Agreement or the
Stockholder Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under the Merger
Agreement or the Stockholder Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under the Merger Agreement or the Stockholder Agreement.
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Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that following the election or appointment of the
Purchaser's designees to the Board of Directors of the Company as described
above under "Board of Directors", prior to the effective time of the Merger,
any amendment or termination of the Merger Agreement, extension for the
performance or waiver of the obligations of ARCO or the Purchaser or waiver of
the Company's rights thereunder will require the concurrence of a majority of
the directors of the Company who were directors on the date of the Merger
Agreement and who are not officers of the Company.
Rights Agreement. The Rights Agreement has been amended as of May 3, 1998 to
exempt the Merger Agreement, the Stockholder Agreement, the acquisition of
Shares by ARCO or the Purchaser pursuant to the Offer or the Stockholder
Agreement and the other transactions contemplated by the Merger Agreement and
the Stockholder Agreement from the provisions of the Rights Agreement. The
Company has agreed that neither it nor the Board of Directors will, without
the prior consent of ARCO, (i) further amend the Rights Agreement, (ii) redeem
the Rights or (iii) take any action with respect to, or make any determination
under, the Rights Agreement.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit
(c)(1) to the Schedule 14D-1. The Merger Agreement should be read in its
entirety for a more complete description of the matters summarized above.
The Stockholder Agreement
Pursuant to the Stockholder Agreement, the Principal Stockholders have
agreed to tender into the Offer, and not to withdraw therefrom, all the Shares
over which the Principal Stockholders had voting and dispositive control on
May 4, 1998 (comprising 21,833,334 Shares), as well as any Shares acquired by
the Principal Stockholders after such time.
The Principal Stockholders have further agreed in the Stockholder Agreement
that they will not (a) transfer (which term for purposes of the Stockholder
Agreement includes any sale, gift, pledge or other disposition), or consent to
any transfer of, any or all of the Shares subject to the Stockholder Agreement
or any interest therein, (b) enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of the
Shares subject to the Stockholder Agreement or any interest therein, (c) grant
any proxy, power-of-attorney or other authorization in or with respect to the
Shares subject to the Stockholder Agreement, (d) deposit the Shares subject to
the Stockholder Agreement into a voting trust or enter into a voting agreement
or arrangement with respect to such Shares or (e) take any other action that
would in any way restrict, limit or interfere with the performance of the
Principal Stockholders' obligations under the Stockholder Agreement or the
transactions contemplated by the Stockholder Agreement or the Merger
Agreement. The Principal Stockholders have also agreed in the Stockholder
Agreement that they will not, nor will they authorize or permit any officer,
director, partner, affiliate or employee of, or any investment banker,
attorney or other advisor or representative of, the Principal Stockholders to,
solicit, initiate or encourage the submission of, enter into any agreement
with respect to, or participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal,
in each case subject to certain exceptions applicable in the event that the
Company is entitled to take such actions with regard to any Takeover Proposal.
In addition, the Principal Stockholders have granted ARCO an irrevocable
option to purchase the Shares subject to the Stockholder Agreement at a price
per Share of $29.00 in cash. The option becomes exercisable, in whole but not
in part, by ARCO if, and only if, the Principal Stockholders fail to comply
with their obligation to tender into the Offer, and not to withdraw therefrom,
the Shares subject to the Stockholder Agreement and the Purchaser has
otherwise accepted Shares for purchase pursuant to the Offer.
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Under the Stockholder Agreement, the Principal Stockholders have granted to
certain individuals designated by ARCO a proxy, which is irrevocable during
the term of the Stockholder Agreement, with respect to the Shares subject to
the Stockholder Agreement to vote such Shares in favor of the Merger, the
adoption of the Merger Agreement and the approval of the other transactions
contemplated by the Merger Agreement and against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company, (ii) any Takeover
Proposal and (iii) any amendment of the Company's Restated Certificate of
Incorporation, as amended, or its Bylaws, as amended, or other proposal or
transaction involving the Company or any subsidiary of the Company, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify any provision of the Merger Agreement or the
Stockholder Agreement, the Merger or any other transaction contemplated by the
Merger Agreement or change in any manner the voting rights of any class of
capital stock of the Company. The Principal Stockholders have agreed not to
commit or agree to take any action inconsistent with the foregoing.
The Stockholder Agreement (including the option granted thereunder)
terminates upon the earlier of (i) the effective time of the Merger and (ii)
the termination of the Merger Agreement in accordance with its terms. The
Stockholder Agreement provides that upon any termination of thereof, the
Stockholder Agreement (including the option) shall thereupon become void and
of no further force and effect, and there shall be no liability in respect of
the Stockholder Agreement or of any transactions contemplated thereby or by
the Merger Agreement on the part of any party to the Stockholder Agreement or
any of its directors, officers, partners, stockholders, employees, agents,
advisors, representatives, or affiliates; provided, however, that nothing in
the Stockholder Agreement shall relieve any party from any liability for such
party's willful breach of the Stockholder Agreement.
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed
as Exhibit (c)(2) to the Schedule 14D-1. The Stockholder Agreement should be
read in its entirety for a more complete description of the matters summarized
above.
Plans for the Company
If a majority of the outstanding Shares are purchased by the Purchaser
pursuant to the Offer, ARCO currently intends to request the Company to reduce
the number of its directors to not more than seven and to designate four ARCO
representatives as a majority of the Company's Board of Directors. Following
completion of the Offer and the Merger, ARCO intends to integrate the
Company's operations with those of ARCO under the direction of ARCO's
management. ARCO's principal reason for acquiring the Company is the strategic
fit of the Company's oil and gas operations with ARCO's operations. ARCO is
reviewing the Company's petrochemical operations and, following such review,
may dispose of all or a portion of the Company's interest in these operations
through a sale, joint venture or other transaction. While ARCO does not have
any current plans with respect to the sale or other disposition of any other
significant assets of the Company or any other material change in the
Company's business, ARCO may determine to do so after further review.
Appraisal Rights
The holders of Shares do not have appraisal rights as a result of the
Offer. However, if the Merger is consummated, holders of Shares and holders of
Series A Preferred Stock at the effective time of the Merger will have certain
rights pursuant to the provisions of Section 262 of the DGCL ("Section 262")
to dissent and demand appraisal of their Shares or Series A Preferred Stock,
as the case may be. Under Section 262, dissenting stockholders who comply with
the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares or Series A Preferred Stock
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) and to receive payment of such fair value in cash,
together with a fair rate of interest, if any. Any such judicial determination
of the fair value of Shares or Series A Preferred Stock could be based upon
factors other than, or in addition to, the price per Share to be paid in the
Merger or the market value of the Shares or Series A Preferred Stock. The
value so determined could be more or less than the price per Share to be paid
in the Merger.
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The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262. FAILURE TO FOLLOW THE
STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY
RESULT IN THE LOSS OF SUCH RIGHTS.
Going Private Transactions
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions. The Purchaser does not
believe that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the Merger and the consideration
offered to minority stockholders in the Merger be filed with the Commission
and disclosed to stockholders prior to the consummation of the Merger.
Except as otherwise described in this Offer to Purchase, the Purchaser and
ARCO have no current plans or proposals that would relate to, or result in, an
extraordinary corporate transaction involving the Company, such as a merger,
reorganization or liquidation involving the Company or any of its
subsidiaries, a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, any change in the present Board of Directors or
management of the Company including, but not limited to, any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the Board of Directors, any material change in the Company's
present capitalization or dividend policy, any other material change in the
Company's corporate structure or business, causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to
be authorized to be quoted in an inter-dealer quotation system of a registered
national securities association or a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or ARCO of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or ARCO for any breach of the Merger Agreement, including
termination thereof.
If the Company should (a) split, combine or otherwise change the Shares or
its capitalization, (b) acquire or otherwise cause a reduction in the number
of outstanding Shares or other securities or (c) issue or sell additional
Shares, shares of any other class of capital stock, other voting securities or
any securities convertible into, or rights, warrants or options, conditional
or otherwise, to acquire any of the foregoing, other than Shares issued
pursuant to the exercise of outstanding Company Stock Option, then, subject to
the provisions described in Section 14, the Purchaser may, subject to the
terms of the Merger Agreement (which restrict the Purchaser from taking
certain actions without the consent of the Company), make such adjustments as
it deems appropriate in the Offer Price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
If, on or after May 4, 1998, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior
to the transfer of the Shares purchased pursuant to the Offer to the Purchaser
or its nominee or transferee on the Company's stock transfer records (other
than the dividends permitted under the Merger Agreement as described in clause
(b)(i) under the heading "The Merger Agreement--Conduct of Business" in
Section 12), then, subject to the provisions described in Section 14 and
subject to the terms of the Merger Agreement (which restrict the Purchaser
from taking certain actions without the consent of the Company), (a) the Offer
Price may be reduced by the amount of any such cash dividend or cash
distribution and (b) the whole of any such noncash dividend, distribution or
issuance to be received by the tendering stockholders will (i) be received and
held by the tendering stockholders for the account of the Purchaser and will
be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of the Purchaser, accompanied by
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appropriate documentation of transfer, or (ii) at the direction of the
Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be entitled
to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, the
Purchaser will not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares promptly after the termination or withdrawal of the
Offer), to pay for any Shares tendered pursuant to the Offer unless (i) the
Minimum Condition shall have been satisfied, (ii) the HSR Condition shall have
been satisfied and (iii) the EC Condition shall have been satisfied. For
purposes of the Minimum Condition, the Merger Agreement defines "Fully Diluted
Shares" as all outstanding securities entitled generally to vote in the
election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities, other than potential
dilution attributable to the Rights. Furthermore, notwithstanding any other
term of the Offer or the Merger Agreement, the Purchaser will not be required
to commence the Offer, accept for payment or, subject as aforesaid, to pay for
any Shares not theretofore accepted for payment or paid for, and may terminate
or amend the Offer, with the consent of the Company or if, at any time on or
after the date of the Merger Agreement and before the acceptance of Shares for
payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or proceeding
by any Governmental Entity in any of the significant geographical regions
in which the Company or any of its subsidiaries operates or by or before
the European Commission (i) challenging the acquisition by ARCO or the
Purchaser of any Shares, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or any other transaction
contemplated by the Merger Agreement or the Stockholder Agreement, or
seeking to obtain from the Company, ARCO or the Purchaser any damages in
connection with the Offer, the Merger or the Merger Agreement that are
material in relation to the Company and its subsidiaries taken as a whole,
(ii) seeking to prohibit or limit the ownership or operation by the
Company, ARCO or any of their respective subsidiaries of any material
portion of the business or assets of the Company, ARCO or any of their
respective subsidiaries, or to compel the Company, ARCO or any of their
respective subsidiaries, to dispose of or hold separate any material
portion of the business or assets of the Company, ARCO or any of their
respective subsidiaries, as a result of the Offer, the Merger or any other
transaction contemplated by the Merger Agreement or the Stockholder
Agreement, (iii) seeking to impose limitations on the ability of ARCO or
the Purchaser to acquire or hold, or exercise full rights of ownership of,
any Shares, including the right to vote the Shares purchased by it on all
matters properly presented to the stockholders of the Company, (iv) seeking
to prohibit ARCO or any of its subsidiaries from effectively controlling in
any material respect the business or operations of the Company and its
subsidiaries in connection with the Offer, the Merger or the Merger
Agreement or (v) which otherwise is reasonably likely to have a Material
Adverse Effect. The Merger Agreement defines "Material Adverse Effect" as
(a) any materially adverse effect on the business, assets, properties,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole, or (b) any prevention or material delay in
the ability of the Company to consummate the Offer, the Merger and the
other transactions contemplated by the Merger Agreement and the Stockholder
Agreement, which has occurred or would reasonably be expected to occur as a
result of any change, effect, event, occurrence or state of facts;
provided, however, with respect to clauses (a) and (b), other than any
change, effect, event, occurrence or state of facts, to the extent such
change, effect, event, occurrence or state of facts is the result of
adverse changes in economic conditions, or of conditions or adverse changes
in or affecting the worldwide energy industry generally, including, but not
limited to, changes in markets and prices for oil, gas and other
hydrocarbons or hydrocarbon products;
(b) any statute, rule, regulation, legislation, interpretation, judgment,
order or injunction shall be enacted, entered, enforced, promulgated,
amended or issued in any of the significant geographical regions
31
<PAGE>
in which the Company or any of its subsidiaries operates or by the European
Council (as defined in Section 15) or the European Commission with respect
to, or shall be deemed applicable to, or any consent or approval shall be
withheld with respect to, (i) ARCO, the Company or any of their respective
subsidiaries or (ii) the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement or the Stockholder Agreement, by any
Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
(c) since the date of the Merger Agreement, there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or would be reasonably expected to have a Material
Adverse Effect, and if a Material Adverse Effect has occurred, it shall be
continuing;
(d) there shall be any temporary, preliminary or permanent restraining
order or injunction or other legal restraint or prohibition by any
Governmental Entity that prevents or makes illegal the consummation of the
Offer, the Merger or any of the other transactions contemplated by the
Merger Agreement or the Stockholder Agreement;
(e) there shall have occurred and continued for at least three calendar
days: (i) a general suspension of trading in, or limitation on prices for,
securities on the NYSE, any national securities exchange or the Nasdaq
National Market System (excluding suspensions or limitations resulting from
physical damage or interference with such exchanges not related to market
conditions); (ii) a decline of at least 30% in the Dow Jones Industrial
Index; (iii) a declaration of a banking moratorium or suspension of
payments in respect of banks in the United States; (iv) a mandatory
limitation by the United States Government or a change in the general
financial, banking or capital markets which materially and adversely
affects the ability of major financial institutions in the United States to
extend credit; (v) a commencement of a war, armed hostilities or other
major national or international crisis directly involving the United States
(other than an action involving personnel of the United Nations); or (vi)
in the case of any of the foregoing existing on the date of the Merger
Agreement, a material acceleration or worsening thereof;
(f) any representation and warranty of the Company or any other party
(other than ARCO and the Purchaser) in the Merger Agreement or the
Stockholder Agreement shall not be true and correct in all material
respects (provided that any representation or warranty of the Company or
any other party (other than ARCO and the Purchaser) contained in the Merger
Agreement or the Stockholder Agreement that is qualified by a materiality
standard or a Material Adverse Effect qualification shall not be further
qualified by this condition) as of the date of the Merger Agreement and
(except with respect to the representation and warranty relating to title
to properties and to the extent such representations or warranties
expressly relate to an earlier date) as of the scheduled or extended
expiration of the Offer;
(g) the Company shall have failed to comply with the terms of the Merger
Agreement described in clause (f) under the heading "The Merger Agreement--
Conduct of Business" in Section 12 or the Company or any other party (other
than ARCO and the Purchaser) shall have failed to comply with any agreement
or covenant in any material respect of the Company or any other party
(other than ARCO and the Purchaser) to be performed or complied with by any
of them under the Merger Agreement or the Stockholder Agreement;
(h) there shall have been issued, delivered, sold or granted any Common
Stock pursuant to the Rights Agreement; or
(i) the Merger Agreement shall have been terminated in accordance with
its terms;
which in the sole judgment of the Purchaser or ARCO, in the case of any such
condition, and regardless of the circumstances giving rise to any such
condition (including any action or inaction by ARCO or any of its affiliates),
makes it inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and ARCO
and may be asserted by the Purchaser or ARCO regardless of the circumstances
giving rise to such condition or may be waived by the Purchaser and ARCO in
whole or in part at any time and from time to time in their sole discretion.
The failure
32
<PAGE>
by ARCO, the Purchaser or any other affiliate of ARCO at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right,
the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company and discussions of
representatives of ARCO with representatives of the Company, none of the
Purchaser, ARCO or the Company is aware of any license or regulatory permit
that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock
of the Company's subsidiaries) as contemplated herein or of any approval or
other action by any Governmental Entity that would be required or desirable
for the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required or desirable, the
Purchaser and ARCO currently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws". While
(except as otherwise expressly described in this Section 15) the Purchaser
does not presently intend to delay the acceptance for payment of or payment
for Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result
in consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for a description
of certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Section 203 of the DGCL, in general, prohibits a Delaware corporation such
as the Company from engaging in a "Business Combination" (defined as a variety
of transactions, including mergers) with an "Interested Stockholder" (defined
generally as a person that is the beneficial owner of 15% or more of a
corporation's outstanding voting stock) for a period of three years following
the time that such person became an Interested Stockholder unless, among other
things, prior to the time such person became an Interested Stockholder, the
board of directors of the corporation approved either the Business Combination
or the transaction that resulted in the stockholder becoming an Interested
Stockholder. The Company's Board of Directors has approved the Merger
Agreement, the Stockholder Agreement, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and the Stockholder
Agreement. Therefore, Section 203 of the DGCL is inapplicable to the Merger.
Based on information supplied by the Company, the Purchaser does not believe
that any other state takeover statutes or similar laws purport to apply to the
Offer or the Merger. Neither the Purchaser nor ARCO has currently complied
with any state takeover statute or regulation. The Purchaser reserves the
right to challenge
33
<PAGE>
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken
in connection with the Offer or the Merger is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the Offer or the Merger. In such case, the Purchaser
may not be obligated to accept payment or pay for any Shares tendered pursuant
to the Offer. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated after the expiration
of a 15-calendar day waiting period commenced by the filing by ARCO of a
Notification and Report Form with respect to the Offer, unless ARCO receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. ARCO made such filing on Friday, May 8, 1998. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from ARCO concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by ARCO with
such request. Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act. Thereafter, such
waiting period may be extended only by court order or with the consent of
ARCO. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue. Expiration or termination of the applicable waiting period under the
HSR Act is a condition to the Purchaser's obligation to accept for payment and
pay for Shares tendered pursuant to the Offer.
The provisions of the HSR Act would similarly apply to any purchase, other
than pursuant to the Offer, of the Shares subject to the Stockholder
Agreement, except that the initial waiting period for any purchase of such
Shares would expire 30 calendar days following the filing of HSR Act
Notification and Report Forms by ARCO and the Company. ARCO made such filing
on Friday, May 8, 1998. A request for additional information or material from
ARCO or the Company during the initial 30-day waiting period would extend the
waiting period until 11:59 p.m. New York City time on the 20th calendar day
after the date of substantial compliance by ARCO and the Company with such
request. If the purchase of Shares pursuant to the Stockholder Agreement is
effected through a tender of such Shares pursuant to the Offer, the HSR
requirements applicable to the Offer described in the prior paragraph would
apply rather than the requirements described in this paragraph.
The Merger will not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or ARCO or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the result thereof.
EC Regulation. According to the Company 1997 10-K, the Company conducts
substantial operations in the European Economic Area (the "EEA"). The rules
and regulations of the Council of the European Communities (the "European
Council") and of the Commission of the European Communities (the "European
Commission"), including, without limitation, Council Regulation (EEC) No
4064/89 of 21 December 1989 on
34
<PAGE>
the control of concentration between undertakings (as amended) (OJ L 257/14,
21.9.90) and Commission Regulation (EC) No 447/98 of 1 March 1998 on the
notifications, time limits and hearings provided for Council Regulation (EEC)
No 4064/89 on the control of concentrations between undertakings
(OJ L 61/1/, 2.3.98) (the "EC Regulations"), require that concentrations with
a "Community dimension" be notified in prescribed form to the European
Commission for review and approval prior to being put into effect. In such
cases, the European Commission will, with certain exceptions, have exclusive
jurisdiction to review the concentration as opposed to the individual member
states within the EEA. The concentration may not become effective for one
month following notification. This waiting period may be extended in
accordance with the EC Regulations, if, among other things, the Commission so
decides pursuant to Article 7(2) of Council Regulation (EEC) No 4064/89. ARCO
expects to notify the proposed Merger to the European Commission during the
week of May 11, 1998, and this waiting period may also be shortened if the
European Commission so orders.
The Purchaser does not expect that the EC Condition will be satisfied until
after the initial Expiration Date for the Offer. Accordingly, the Purchaser
expects that it will be necessary for the Purchaser to extend the Expiration
Date until the EC Condition is satisfied unless the Purchaser elects to waive
the EC Condition in whole or in part, which it does not currently intend to
do.
There can be no assurance that a challenge to the Offer will not be made
pursuant to the EC Regulations or by legal action brought by private parties
or, if such a challenge is made, what the outcome would be. See Section 14.
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals
may be required or desirable in connection with the consummation of the Offer.
Certain of such filings or approvals, if required or desirable, may not be
made or obtained prior to the expiration of the Offer. The Purchaser is
seeking further information regarding the applicability of any such laws and
currently intends to take such action as may be required or desirable. If any
foreign Governmental Entity takes any action prior to the completion of the
Offer that might have certain adverse effects, the Purchaser will not be
obligated to accept for payment or pay for any Shares tendered. See
Section 14.
16. FEES AND EXPENSES
Morgan Stanley is acting as Dealer Manager in connection with the Offer and
is providing certain financial advisory services to the Purchaser and ARCO in
connections with the Offer. Pursuant to an engagement letter dated May 1,
1998, between ARCO and Morgan Stanley, fees of $1,500,000 are currently
payable to Morgan Stanley. An additional fee of $10,000,000 will be payable to
Morgan Stanley in the event the Offer is consummated. ARCO has also agreed to
reimburse Morgan Stanley for its out-of-pocket expenses, including the fees
and expenses of its counsel and any other advisor retained by Morgan Stanley
in connection with its engagement, and to indemnify Morgan Stanley and certain
related persons against certain liabilities and expenses, including certain
liabilities under federal securities laws.
In the ordinary course of its business, Morgan Stanley engages in securities
trading, market-making and brokerage activities and may, at any time, hold
long or short positions and may trade or otherwise effect transaction in
securities of the Company. As of May 6, 1998, Morgan Stanley had a long
position of 6,731 Shares and a short position of 7,500 Shares held for its own
accounts.
The Purchaser and ARCO have retained D. F. King & Co., Inc. to act as the
Information Agent and First Chicago Trust Company of New York to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the U.S. federal securities
laws.
Neither the Purchaser nor ARCO will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
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<PAGE>
17. STOCKHOLDER LITIGATION
On May 6, 1998, two purported class actions entitled Squyres et al. v. Barry
et al. and McMullen v. Union Texas Petroleum Holdings, Inc., et al.,
respectively, were filed in the Court of Chancery in the State of Delaware.
These actions both claim, among other things, that certain individual
directors of the Company have breached their fiduciary duties to stockholders
by failing to consider strategic alternatives to the Merger that would
maximize value to the stockholders. In addition, the Squyres action claims
that ARCO aided and abetted in the breaches of fiduciary duty committed by
these individual directors and that the Principal Stockholders breached their
duty of loyalty to the stockholders by arranging a transaction that unfairly
benefits them to the detriment of the other stockholders. Both complaints seek
declaratory and injunctive relief and attorneys' fees and experts' fees.
18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. Neither the Purchaser nor ARCO is aware of any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent the Purchaser or
ARCO becomes aware of any state law that would limit the class of offerees in
the Offer, the Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
is being made on behalf of the Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR ARCO NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and ARCO have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the Commission).
VWK Acquisition Corp.
May 8, 1998
36
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
ARCO AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF ARCO. The name, business address,
present principal occupation or employment and employment history of each of
the directors and executive officers of ARCO are set forth below. All such
directors and executive officers listed below are citizens of the United
States except John M. Slater, who is a citizen of the United Kingdom. Unless
otherwise indicated, the principal business address of each director or
executive officer is Atlantic Richfield Company, 515 South Flower Street, Los
Angeles 90071.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
Mike R. Bowlin (55).......... Chairman of the Board of ARCO since July 1995,
Chief Executive Officer since July 1994, and a
director since June 1992. Mr. Bowlin served as
President from June 1993 to January 1998, an
Executive Vice President from June 1992 to May
1993 and a Senior Vice President of ARCO from
August 1985 to June 1992, President of ARCO
International Oil and Gas Company from November
1987 to June 1992, President of ARCO Coal
Company from August 1985 to July 1987, a Senior
Vice President of International Oil and Gas
Acquisitions from July 1987 to November 1987, a
Vice President of ARCO from October 1984 to
July 1985 and a Vice President of ARCO Oil and
Gas Company from April 1981 to December 1984.
Mr. Bowlin has been an officer of ARCO since
1984.
Frank D. Boren (63).......... Director of ARCO since 1990. Mr. Boren has
served as President of Sustainable Conservation
since June 1992 and served as President of The
Nature Conservancy from January 1987 to January
1990. From 1980 to 1986 and since January 1990,
Mr. Boren has been a partner of McNeill
Enterprises (real estate). Mr. Boren was a
partner in the law firm of Paul, Hastings,
Janofsky & Walker from 1968 to 1980.
John Gavin (67).............. Director of ARCO since 1989. Mr. Gavin has
served as Chairman of Gamma Services
International (international consulting
services) since January 1990 and Managing
Director (Latin America) for Hicks, Muse, Tate
and Furst since 1995. Mr. Gavin is a former
United States Ambassador to Mexico and serves
as a Director of Dresser Industries, KAP
Resources (Canadian), International Wire
Holdings, Krause's Furniture, Inc.,
Pinkerton's, Inc., and Hotchkis and Wiley
Mutual Funds.
Kent Kresa (60).............. Director of ARCO since 1993. Mr. Kresa has
served as a Director of Northrop Grumman
Corporation (aerospace) since 1987 and as
Chairman, President and Chief Executive Officer
since 1990. From 1987 to 1990, Mr. Kresa was
President and Chief Operating Officer of
Northrop Corporation. Mr. Kresa also serves as
a Director of Chrysler Corporation.
Arnold G. Langbo (61)........ Director of ARCO since May 1998. Mr. Langbo has
served as a Director of Kellogg Company (cereal
products) since 1990 and as Chairman of the
Board and Chief Executive Officer since 1992,
and from 1990 to 1992 served as President and
Chief Operating Officer. Mr. Langbo also serves
as a Director of Johnson & Johnson and
Whirlpool Corporation.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
David T. McLaughlin (66)..... Director of ARCO since 1993. Mr. McLaughlin has
served as Chairman and Chief Executive Officer
of Standard Fusee Corporation (manufacturing)
since 1988. From 1988 to 1997, Mr. McLaughlin
served as Chief Executive Officer and President
and, from 1987 to 1995, served as Chairman of
The Aspen Institute. Mr. McLaughlin was
President of Dartmouth College from 1981 to
1987. Mr. McLaughlin also serves as a Director
of Alliance Entertainment Corp., Atlas Air, CBS
Corporation, and Partnerre Re Holdings Ltd.
John B. Slaughter (64)....... Director of ARCO since 1989. Mr. Slaughter has
been President of Occidental College since
1988. From 1982 to 1988, Mr. Slaughter was
Chancellor, University of Maryland and serves
as a Director of Avery Dennison Corporation,
International Business Machines Corporation,
Northrop Grumman Corporation and Solutia, Inc.
Gary L. Tooker (58).......... Director of ARCO since January 1998. Mr. Tooker
has served as Chairman of the Board of
Motorola, Inc. (manufacturer of electronics
equipment) since 1997 and was Vice Chairman and
Chief Executive Officer from 1993 to 1996 and
President and Chief Operating Officer from 1990
to 1993. Mr. Tooker also serves as a Director
of Eaton Corporation.
Henry Wendt (64)............. Director of ARCO since 1987. Mr. Wendt has
served as Chairman of Global Health Care
Partners of DLJ Merchant Banking Partners, a
Donaldson, Lufkin & Jenrette Company (private
equity investment) since January 1997. Mr.
Wendt is the former Chairman of the Board of
SmithKline Beecham, PLC and its USA subsidiary
SmithKline Beecham Corporation (health care
products), where he served from 1989 to 1994.
Mr. Wendt also serves as a Director of
Allergan, Inc. and West Marine Corp.
William E. Wade, Jr. (55).... President of ARCO since January 1998. Mr. Wade
was a director of ARCO from June 1993 to May
1998. Mr. Wade served as an Executive Vice
President from June 1993 to January 1998 and a
Senior Vice President of ARCO from May 1987 to
May 1993, President of ARCO Oil and Gas Company
from October 1990 to May 1993, President of
ARCO Alaska, Inc. from July 1987 to July 1990,
a Vice President of ARCO from 1985 to 1987 and
a Vice President of ARCO Exploration Company
from 1981 to 1985. Mr. Wade has been an officer
of ARCO since 1985. Mr. Wade also serves as a
Director of Vastar Resources, Inc.
Anthony G. Fernandes (52).... Executive Vice President of ARCO since
September 1994. Mr. Fernandes was a director of
ARCO from September 1994 to May 1998. Mr.
Fernandes served as a Senior Vice President of
ARCO and President of ARCO Coal Company from
September 1990 to September 1994, Vice
President and Controller of ARCO from July 1987
to July 1990, a Vice President of ARCO Oil and
Gas Company from January 1985 to July 1987 and
a Vice President of Anaconda Minerals from May
1981 to January 1985. Mr. Fernandes has been an
officer of ACRO since 1987. Mr. Fernandes also
serves as Chairman of the Board of ARCO
Chemical Company.
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
Marie L. Knowles (51)........ Executive Vice President and Chief Financial
Officer of ARCO since July 1996. Mrs. Knowles
was a director of ARCO from July 1996 to May
1998. Mrs. Knowles served as a Senior Vice
President of ARCO and President of ARCO
Transportation Company from June 1993 to July
1996, Vice President and Controller of ARCO
from July 1990 to May 1993, Vice President of
Finance, Control and Planning of ARCO
International Oil and Gas Company from July
1988 to July 1990, and Assistant Treasurer of
Banking of ARCO from October 1986 to July 1988.
Mrs. Knowles has been an officer of ARCO since
1990. Mrs. Knowles also serves as a Director of
ARCO Chemical Company and Vastar Resources,
Inc.
J. Kenneth Thompson (46)..... Executive Vice President of ARCO since January
1998. Mr. Thompson was a Senior Vice President
of ARCO and President of ARCO Alaska, Inc. from
June 1994 to January 1998. Mr. Thompson was a
Vice President of ARCO and a Vice President of
ARCO Exploration and Production Technology from
June 1993 to June 1994 and a Senior Vice
President, Western District of ARCO Oil and Gas
Company from January 1990 to June 1993. Mr.
Thompson has been an officer of ARCO since
1993.
Michael E. Wiley (47)........ Executive Vice President of ARCO since March
1997. Mr. Wiley was a director of ARCO from
June 1997 to May 1998. Mr. Wiley served as
Chief Executive Officer of Vastar Resources,
Inc. from January 1994 to March 1997 and
President from September 1993 to March 1997.
Prior to the formation of Vastar Resources,
Inc., Mr. Wiley was Senior Vice President of
ARCO from June 1993 to June 1994, President of
ARCO Oil and Gas Company from June 1993 to
October 1993 and Vice President of ARCO and
Manager of ARCO Exploration and Production
Technology from 1991 to 1993. Mr. Wiley has
been an officer of ARCO since 1997. Mr. Wiley
also serves as Chairman of the Board of Vastar
Resources, Inc.
H. L. Bilhartz (51).......... Senior Vice President of ARCO since July 1990
and President of ARCO Exploration and
Production Technology since June 1994. Mr.
Bilhartz served as President of ARCO Alaska,
Inc. from July 1990 to May 1994, a Vice
President of ARCO from June 1987 to July 1990,
President of ARCO Coal Company from July 1987
to July 1990, Vice President and Managing
Director for ARCO British Limited and ARCO
Netherlands in London from 1985 to 1987, Vice
President of Finance, Control and Planning of
ARCO International Oil and Gas Company from
1984 to 1985 and Vice President and District
Manager for ARCO Oil and Gas Company from 1983
to 1984. Mr. Bilhartz has been an officer of
ARCO since 1987.
John B. Cheatham IV (50)..... Senior Vice President of ARCO since December
1995. Mr. Cheatham was President of ARCO
International Oil and Gas Company from December
1995 to January 1998, Senior Vice President,
Operations and New Business Development from
November 1993 to November 1995 and Senior Vice
President, New Business Ventures from November
1992 to November 1993 of
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
ARCO International Oil and Gas Company, and
Senior Vice President Eastern District from
August 1991 to November 1992 and Vice
President, Southeastern District from November
1989 to August 1991 of ARCO Oil and Gas
Company. Mr. Cheatham has been an officer of
ARCO since 1995.
Terry G. Dallas (47)......... Senior Vice President of ARCO since November
1996 and Treasurer since January 1994. Mr.
Dallas was a Vice President of ARCO from June
1993 to November 1996, the Vice President
Corporate Planning from June 1993 to January
1994, and Assistant Treasurer, Corporate
Finance of ARCO from 1990 to 1993 and Manager,
Finance, Control and Planning, ARCO British,
Ltd. from 1988 to 1990. Mr. Dallas has been an
officer of ARCO since 1993. Mr. Dallas also
serves as a Director of Vastar Resources, Inc.
Mark L. Hazelwood (48)....... Senior Vice President of External Affairs of
ARCO since July 1997. Mr. Hazelwood served as
President of ARCO Alaska Transportation, Inc.
from September 1996 to July 1997, President of
ARCO Pipe Line Company from 1994 to March 1996,
Senior Vice President of Marketing of ARCO Oil
and Gas Company from 1991 to 1994, and Vice
President and General Tax Officer of ARCO from
August 1988 to March 1991. Mr. Hazelwood has
been an officer of ARCO since 1997.
John H. Kelly (43)........... Senior Vice President, Human Resources of ARCO
since January 1997. Mr. Kelly was Vice
President, Corporate Units Human Resources of
ARCO from June 1993 to January 1997 and Vice
President, Human Resources of ARCO Oil and Gas
Company from July 1991 to June 1993. Mr. Kelly
has been an officer of ARCO since 1993.
Stephen R. Mut (47).......... Senior Vice President of ARCO since September
1994. Mr. Mut was President of ARCO Global
Energy Ventures from August 1996 to January
1998, President of ARCO Coal Company from
September 1994 to August 1996 and Senior Vice
President of Operations of ARCO International
Oil and Gas Company from 1991 to 1994. Mr. Mut
has been an officer of ARCO since 1994. Mr. Mut
also serves as a Director of ARCO Chemical
Company.
John M. Slater (54).......... Senior Vice President of ARCO since July 1997
and President of ARCO Coal Company since August
1997. Mr. Slater previously worked for BP Coal
for 19 years. Mr. Slater's most recent
positions for BP were Chief Executive Officer
BP Coal and Chairman, Kaltim Prima Coal.
Roger E. Truitt (52)......... Senior Vice President of ARCO and President of
ARCO Products Company since November 1997. Mr.
Truitt was Senior Vice President, Asia Region,
ARCO International Oil and Gas Company from
November 1994 to November 1997, a Senior Vice
President of ARCO Products Company from January
1994 to November 1994 and a Vice President of
ARCO International Oil and Gas Company from
December 1991 to December 1993. Mr. Truitt has
been an officer of ARCO since 1997.
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
Donald R. Voelte, Jr. (45)... Senior Vice President of ARCO since April 1997.
Mr. Voelte previously worked for the Mobil
Corporation for 22 years. Mr. Voelte's most
recent position was President of Mobil Oil
Company's New Exploration and Producing
Ventures from 1994 to April 1997. Mr. Voelte
has been an officer of ARCO since 1997.
Bruce G. Whitmore (54)....... Senior Vice President, General Counsel and
Corporate Secretary of ARCO since December
1994. Mr. Whitmore served as Vice President and
General Counsel of ARCO Chemical Company from
October 1990 to December 1994 and as Associate
General Counsel, Finance and Corporate Affairs
of ARCO from June 1986 to September 1990. Mr.
Whitmore has been an officer of ARCO since
1994.
Allan L. Comstock (54)....... Vice President and Controller of ARCO since
June 1993. Mr. Comstock was a Vice President of
ARCO Chemical Company from October 1989 to June
1993 and General Auditor of ARCO from November
1985 to October 1989. Mr. Comstock has been an
officer of ARCO since 1993.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are
set forth below. The business address of each such director and executive
officer is VWK Acquisition Corp. in care of Atlantic Richfield Company, 515
South Flower Street, Los Angeles 90071. All such directors and executive
officers listed below are citizens of the United States. Further information
concerning the directors and executive officers listed below, each of whom
also serves as an executive officer of ARCO, is provided above.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, AGE AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------
<S> <C>
William E. Wade, Jr. (55).... Chairman of the Board of the Purchaser.
Terry G. Dallas (47)......... President and a Director of the Purchaser.
Marie L. Knowles (51)........ Senior Vice President and a Director of the
Purchaser.
Donald R. Voelte, Jr. (45)... Senior Vice President and a Director of the
Purchaser.
</TABLE>
S-5
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand:
First Chicago Trust First Chicago Trust First Chicago Trust
Company Company Company
of New York of New York of New York
Attention: Tenders & Attention: Tenders & Attention: Tenders &
Exchanges Exchanges Exchanges
P.O. Box 2569, Suite Suite 4680-UTP c/o THE DEPOSITORY TRUST
4660-UTP 14 Wall Street, 8th Floor COMPANY
Jersey City, NJ 07303- New York, NY 10005 55 Water Street, DTC TAD
2569 Vietnam Veterans Memorial
Plaza
New York, NY 10041
By Facsimile Transmission:
(201) 222-4720
or
(201) 222-4721
Confirm By Telephone:
(201) 222-4707
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective telephone numbers and location listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 WATER STREET, 20TH FLOOR
NEW YORK, NY 10005
TOLL FREE (800) 628-8528
BANKS AND BROKERAGE FIRMS
PLEASE CALL:
(212) 269-5550
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NY 10036
(212) 761-7724
<PAGE>
EXHIBIT 99.(a)(2)
Letter of Transmittal
To Tender Shares of Common Stock
(including the associated Common Stock Purchase Rights)
of
Union Texas Petroleum Holdings, Inc.
Pursuant to the Offer to Purchase Dated May 8, 1998
by
VWK Acquisition Corp.,
a wholly owned subsidiary of
Atlantic Richfield Company
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME ON FRIDAY, JUNE 5, 1998, UNLESS THE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
By Mail: By Overnight Courier: By Hand:
First Chicago Trust First Chicago Trust
First Chicago Trust Company Company
Company of New York of New York
of New York Attention: Tenders & Attention: Tenders &
Attention: Tenders & Exchanges Exchanges
Exchanges Suite 4680 c/o THE DEPOSITORY
P.O. Box 2569, 14 Wall Street, 8th TRUST COMPANY
Suite 4660 Floor 55 Water Street, DTC
Jersey City, NJ New York, NY 10005 TAD
07303-2569 Vietnam Veterans
Memorial Plaza
New York, NY 10041
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility as
defined in and pursuant to the procedures described in Section 2 of the Offer
to Purchase. Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificated Stockholders". Stockholders whose
certificates for Shares are not immediately available or who cannot deliver
either the certificates for, or a Book-Entry Confirmation (as defined in
Section 2 of the Offer to Purchase) with respect to, their Shares and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) must tender their Shares in
accordance with the guaranteed delivery procedures described in Section 2 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL IN
EXACTLY AS
NAME(S)
APPEAR(S) ON SHARES TENDERED
CERTIFICATE(S)) (ATTACH LIST IF NECESSARY)
- -------------------------------------------------------------------
NUMBER OF SHARES NUMBER OF
SHARE CERTIFICATE REPRESENTED BY SHARES
NUMBER(S) (1) CERTIFICATE(S)(1) TENDERED(2)
----------------------------
----------------------------
----------------------------
----------------------------
----------------------------
<S> <C> <C> <C>
TOTAL SHARES
</TABLE>
- -------------------------------------------------------------------------------
(1)Need not be completed by Book-Entry Stockholders.
(2)Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
<PAGE>
Holders of Shares will be required to tender one Right (as defined below)
for each Share tendered to effect a valid tender of such Share. Unless and
until the Distribution Date (as defined in the Offer to Purchase) occurs, the
Rights are represented by and transferred with the Shares. Accordingly, if the
Distribution Date does not occur prior to the Expiration Date, a tender of
Shares will constitute a tender of the associated Rights. If, however,
pursuant to the Rights Agreement or otherwise, a Distribution Date does occur,
certificates representing a number of Rights equal to the number of Shares
being tendered must be delivered to the Depositary in order for such Shares to
be validly tendered. If a Distribution Date has occurred, a tender of Shares
without Rights constitutes an agreement by the tendering stockholder to
deliver certificates representing a number of Rights equal to the number of
Shares tendered pursuant to the Offer to the Depositary within three trading
days (as defined herein) after the date such certificates are distributed. The
Purchaser (as defined below) reserves the right to require that it receive
such certificates prior to accepting Shares for payment. Payment for Shares
tendered and purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of, among other things, such certificates, if such
certificates have been distributed to holders of Shares. The Purchaser will
not pay any additional consideration for the Rights tendered pursuant to the
Offer.
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owners(s) ____________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution that Guaranteed Delivery _______________________________
If delivered by book-entry transfer:
Account Number at Book-Entry Transfer Facility _____________________________
Transaction Code Number ____________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to VWK Acquisition Corp., a Delaware
corporation (the "Purchaser") which is a wholly owned subsidiary of Atlantic
Richfield Company, a Delaware corporation, the above-described shares of
common stock, par value $0.05 per share (the "Shares"), of Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), together
with the associated common stock purchase rights (the "Rights") issued
pursuant to the Company's Rights Agreement dated September 12, 1997 (as
amended from time to time, the "Rights Agreement"), upon the terms and subject
to the conditions set forth in the Purchaser's Offer to Purchase dated May 8,
1998 (the "Offer to Purchase"), and this Letter of Transmittal (which,
together with any amendments or supplements thereto or hereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged. Unless the
context otherwise requires, all references to Shares include the associated
Rights, and all references to Rights include the benefits that may enure to
holders of the Rights pursuant to the Rights Agreement.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or
after May 4, 1998), and irrevocably constitutes and appoints First Chicago
Trust Company of New York (the "Depositary"), the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to the full extent of the undersigned's rights with respect to such
Shares (and any such other Shares or securities or rights), (a) to deliver
certificates for such Shares (and any such other Shares or securities or
rights) or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by the Book-Entry
Transfer Facility together, in any such case, with all accompanying evidences
of transfer and authenticity to, or upon the order of, the Purchaser, (b) to
present such Shares (and any such other Shares or securities or rights) for
transfer on the Company's books and (c) to receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and any such other
Shares or securities or rights), all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after May 4, 1998) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or
securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase this tender is irrevocable.
The undersigned hereby irrevocably appoints William E. Wade, Jr., Terry G.
Dallas, Marie L. Knowles, Donald R. Voelte, Jr., and each of them, and any
other designees of the Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual,
special or adjourned meeting of the Company's stockholders or otherwise in
such manner as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper with respect to, to execute any written
consent concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, the Shares tendered hereby
that have been accepted for payment by the Purchaser prior to the time any
such action is taken and with respect to which the undersigned is entitled to
vote (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after May 4, 1998). This appointment
is effective when, and only to the extent that, the Purchaser accepts for
payment such Shares as provided in the Offer to Purchase. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the
Offer. Upon such acceptance for payment, all prior powers of attorney, proxies
and consents given by the undersigned with respect to such Shares (and any
such other Shares or securities or rights) will, without further action, be
revoked and no subsequent powers of attorney, proxies, consents or revocations
may be given (and, if given, will not be effective) by the undersigned.
<PAGE>
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered". In the event that both "Special Delivery
Instructions" and "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person
or persons so indicated. Please credit any Shares tendered herewith by book-
entry transfer that are not accepted for payment by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Purchaser has no obligation pursuant to "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
[_]CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates: ________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not tendered or cates for Shares not tendered or
not accepted for payment and/or not accepted for payment and/or
the check for the purchase price the check for the purchase price
of Shares accepted for payment of Shares accepted for payment
are to be issued in the name of are to be sent to someone other
someone other than the under- than the undersigned, or to the
signed. undersigned at an address other
than that above.
Issue [_] Check [_] Certificate(s)
to:
Mail [_] Check [_] Certificate(s)
to:
Name _____________________________ Name______________________________
(PLEASE PRINT) (PLEASE PRINT)
Address __________________________ Address __________________________
__________________________________ __________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
__________________________________ __________________________________
(TAXPAYER IDENTIFICATION OR (TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER) SOCIAL SECURITY NUMBER)
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
____________________________________________________
____________________________________________________
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ______________
(Must be signed by registered holder(s) as name(s)
appear(s) on the Certificate(s) for the Shares or
on a security position listing or by person(s)
authorized to become registered holder(s) by
certificates and documents transmitted herewith. If
signature is by trustees, executors,
administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a
fiduciary or representative capacity, please
provide the following information and see
Instruction 5.)
Name(s)_____________________________________________
____________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________
Address_____________________________________________
____________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ________________
Taxpayer Identification or
Social Security Number _____________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
____________________________________________________
AUTHORIZED SIGNATURE
____________________________________________________
NAME (PLEASE PRINT)
____________________________________________________
NAME OF FIRM
____________________________________________________
ADDRESS
____________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________
DAYTIME AREA CODE AND TELEPHONE NO.
Dated: ______________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction 1, includes
any participant in the Book-Entry Transfer Facility's system whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (such participant, an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant
to the Offer, either (a) a Letter of Transmittal (or a facsimile thereof),
property completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either
certificates for tendered Shares must be received by the Depositary at one of
such addresses or Shares must be delivered pursuant to the procedures for
book-entry transfer described herein (and a Book-Entry Confirmation received
by the Depositary), in each case prior to the Expiration Date, or (b) the
tendering stockholder must comply with the guaranteed delivery procedures
described below and in Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures described in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, must be
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery as provided in Section 2 of
the Offer to Purchase. A "trading day' is any day on which the New York Stock
Exchange is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or facsimile hereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE>
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered". In any case, new certificate(s) for the remainder
of the Shares that were evidenced by the old certificate(s) will be sent to
the registered holder, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as soon as practicable after the acceptance for
payment of, and payment for, the Shares tendered herewith. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or accepted for payment are to be issued
to, a person other than the registered owner(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered owner(s) or such person(s)) payable on account of the
transfer to such person(s) will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the right, subject to the
terms and conditions contained in the Merger Agreement and to the applicable
rules and regulations of the Commission, to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered. If any of the conditions of the Offer set (other than the Minimum
Condition (as defined in the Offer to Purchase)) is not satisfied on the
Expiration Date, then, if requested by the Company, the Purchaser must extend
the Offer one or more times (the period of each such extension to be
determined by the Purchaser) for up to 30 days in the aggregate for all such
extensions, provided that at the time of such extension any such condition is
reasonably capable of being satisfied and the Company has not received a
Takeover Proposal (as defined in the Offer to Purchase).
<PAGE>
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below in this Letter of Transmittal and certify
under penalties of perjury that such TIN is correct and that such stockholder
is not subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on
such stockholder and payment of cash to such stockholder pursuant to the Offer
may be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at its address set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares
lost. The stockholder will then be instructed as to the steps that must be
taken in order to replace the certificate. This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost
or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
<PAGE>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
PART 1--PLEASE PROVIDE
SUBSTITUTE YOUR TIN IN THE BOX AT ---------------------
FORM W-9 RIGHT AND CERTIFY BY Social Security Number(s)
SIGNING AND DATING BELOW
PART 2--Certification--Under
DEPARTMENT OF penalties of perjury, I certify OR
THE TREASURY that:
INTERNAL (1) the number shown on this form
REVENUE is my correct Taxpayer
SERVICE Identification Number (or I am
waiting for a number to be
issued to me) and
---------------------
(2) I am not subject to backup
withholding because (a) I am
exempt from backup withholding
or (b) I have not been
notified by the Internal
Revenue Service ("IRS") that I
am subject to backup
withholding as a result of a
failure to report all interest
or dividends or (c) the IRS
has notified me that I am no
longer subject to backup
withholding.
Taxpayer Identification
Number(s)
PART 3--
---------------------------------------------------------
Awaiting
TIN
PAYER'S
REQUEST FOR [_]
TAXPAYER --------------------
IDENTIFICATION ---------------------------------------------------------
NUMBER (TIN)
Certification instructions--You must cross out
item (2) in Part 2 above if you have been noti-
fied by the IRS that you are subject to backup
withholding because of under reporting interest
or dividends on your tax returns. However, if
after being notified by the IRS that you were
subject to backup withholding you received an-
other notification from the IRS stating that
you are no longer subject to backup withhold-
ing, do not cross out such item (2). If you are
exempt from backup withholding, check the box
in Part 4 above.
PART 4--
Exempt TIN
[_]
- -------------------------------------------------------------------------------
SIGNATURE _______________________________________ DATE _______________________
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an
application in the near future. I understand that, if I do not provide
a taxpayer identification number to the Depositary, 31% of all
reportable payments made to me will be withheld, but will be refunded
if I provide a certified taxpayer identification number within 60 days.
------------------------------------------------- ----------------------------
SIGNATURE DATE
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL INFORMATION.
<PAGE>
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street, 20th Floor
New York, NY 10005
Toll Free (800) 628-8528
Banks and Brokerage Firms
please call:
(212) 269-5550
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
(212) 761-7724
May 8, 1998
<PAGE>
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
(including the associated Common Stock Purchase Rights)
of
Union Texas Petroleum Holdings, Inc.
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer
(as defined below) if certificates for shares of Common Stock, par value $0.05
per share (the "Shares"), of Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), together with the associated common stock
purchase rights (the "Rights") issued pursuant to the Company's Rights
Agreement dated September 12, 1997 (as amended from time to time, the "Rights
Agreement"), are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). This form may be delivered by
hand to the Depositary or transmitted by telegram, facsimile transmission or
mail to the Depositary and must include a guarantee by an Eligible Institution
(as defined in Section 2 of the Offer to Purchase). See Section 2 of the Offer
to Purchase. Unless the context otherwise requires, all references to Shares
shall include the associated Rights, and all references to Rights include the
benefits that may enure to holders of the Rights pursuant to the Rights
Agreement.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Overnight Courier: By Hand:
By Mail:
First Chicago Trust First Chicago Trust
First Chicago Trust Company Company
Company of New York of New York
of New York Attention: Tenders & Attention: Tenders &
Attention: Tenders & Exchanges Exchanges
Exchanges Suite 4680 c/o THE DEPOSITORY TRUST
P.O. Box 2569, 14 Wall Street, 8th COMPANY
Suite 4660 Floor 55 Water Street, DTC TAD
Jersey City, NJ New York, NY 10005 Vietnam Veterans
07303-2569 Memorial Plaza
By Facsimile: New York, NY 10041
(201) 222-4720
or
(201) 222-4721
Confirm by Telephone:
(201) 222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to VWK Acquisition Corp., a Delaware
corporation (the "Purchaser"), which is a wholly owned subsidiary of
Atlantic Richfield Company, a Delaware corporation, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase
dated May 8, 1998 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby
acknowledged, the number of Shares set forth below, all pursuant to the
guaranteed delivery procedures described in Section 2 of the Offer to
Purchase.
Number ofShares ___________________ Name(s) of RecordHolder(s) ________
-----------------------------------
Certificate Nos.(if available): ___ -----------------------------------
PLEASE PRINT
-----------------------------------
----------------------------------- Address(es) _______________________
If Shares will be tendered by -----------------------------------
book-entry transfer: ZIP CODE
Daytime Area Codeand Tel. No.: ____
Account Number at Book-Entry
Transfer Facility _________________
Signature(s): _____________________
-----------------------------------
Dated: ____________________________
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program
or the Stock Exchange Medallion Program, hereby guarantees to deliver to
the Depositary either the certificates representing the Shares tendered
hereby, in proper form for transfer, or a Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to such Shares, in any such
case together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message (as defined in the Offer to Purchase),
and any other required documents, within three trading days (as defined in
the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _____________________ -----------------------------------
AUTHORIZED SIGNATURE
Address: __________________________
----------------------------------- Name: _____________________________
PLEASE PRINT
ZIP CODE
Title: ____________________________
Area Code andTel No.: _____________
Dated: ____________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.(a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the associated Common Stock Purchase Rights)
of
Union Texas Petroleum Holdings, Inc.
at
$29.00 Net Per Share
by
VWK Acquisition Corp.,
a wholly owned subsidiary of
Atlantic Richfield Company
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 5, 1998, UNLESS EXTENDED.
May 8, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been appointed by VWK Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Atlantic Richfield Company, a
Delaware corporation ("Parent"), to act as Information Agent in connection
with the Purchaser's offer to purchase all outstanding shares of common stock,
par value $0.05 per share (the "Shares"), of Union Texas Petroleum Holdings,
Inc., a Delaware corporation (the "Company"), together with the associated
common stock purchase rights (the "Rights") issued pursuant to the Company's
Rights Agreement dated September 12, 1997 (as amended from time to time, the
"Rights Agreement"), at $29.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated May 8, 1998 (the "Offer to Purchase"), and the related Letter
of Transmittal (which, together with any supplements or amendments thereto,
collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Unless the context otherwise requires, all references to Shares include the
associated Rights, and all references to Rights include the benefits that may
enure to holders of the Rights pursuant to the Rights Agreement. Enclosed
herewith are copies of the following documents:
1. Offer to Purchase dated May 8, 1998;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. Letter to Stockholders of the Company from the Chairman and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
<PAGE>
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope address to First Chicago Trust Company of New York,
the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF ALL SHARES (DETERMINED ON A
FULLY DILUTED BASIS FOR ALL OUTSTANDING STOCK OPTIONS AND ANY OTHER RIGHTS TO
ACQUIRE SHARES) ON THE DATE OF PURCHASE, (2) ANY WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE
PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND
(3) ANY WAITING OR OTHER PERIOD UNDER THE EC REGULATIONS (AS DEFINED IN THE
OFFER TO PURCHASE) APPLICABLE TO THE OFFER OR THE MERGER (AS DEFINED BELOW),
OR THE EXERCISE BY PARENT OR THE PURCHASER OF FULL OWNERSHIP AND VOTING RIGHTS
WITH RESPECT TO THE SHARES TO BE ACQUIRED PURSUANT TO THE OFFER AND THE
MERGER, SHALL HAVE EXPIRED OR BEEN TERMINATED, AND THE EUROPEAN COMMISSION (AS
DEFINED IN THE OFFER TO PURCHASE) SHALL HAVE TAKEN ALL SUCH ACTION AS SHALL BE
REQUIRED SO THAT PARENT AND THE PURCHASER MAY CONSUMMATE THE OFFER AND THE
MERGER AND EXERCISE FULL OWNERSHIP AND VOTING RIGHTS WITH RESPECT TO THE
SHARES TO BE ACQUIRED PURSUANT TO THE OFFER AND THE MERGER.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
FRIDAY, JUNE 5, 1998, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the Merger
Agreement (as defined below), the Stockholder Agreement (as defined in the
Offer to Purchase), the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and the Stockholder Agreement and
determined that the terms of the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and the Stockholder Agreement are fair
to, and in the best interests of, the Company and its stockholders and
unanimously recommends that stockholders of the Company accept and tender
their Shares pursuant to the Offer.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of May 4, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Company, with the Company surviving the merger as a wholly
owned subsidiary of Parent (the "Merger"). In the Merger, each outstanding
Share (other than Shares owned by the Company or any subsidiary of the Company
or by Parent, the Purchaser or any other subsidiary of Parent or by
stockholders, if any, who are entitled to and who properly exercise appraisal
rights under Delaware law) will be converted into the right to receive $29.00
per Share, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by First Chicago Trust Company of New
York (the "Depositary") of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such
Shares, (b) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer effected pursuant to the procedures
described in Section 2 of the Offer to Purchase, an Agent's Message (as
defined in the Offer to Purchase), and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times
<PAGE>
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. THE PURCHASER SHALL
NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED
SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager (as defined in
the Offer to Purchase) and the Information Agent as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. You will be reimbursed upon request for customary mailing and
handling expenses incurred by you in forwarding the enclosed offering
materials to your customers.
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
MORGAN STANLEY & CO.
Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEALER MANAGER, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENT CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.(a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(including the associated Common Stock Purchase Rights)
Union Texas Petroleum Holdings, Inc.
at
$29.00 Net Per Share
by
VWK Acquisition Corp.,
a wholly owned subsidiary of
Atlantic Richfield Company
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 5, 1998, UNLESS EXTENDED.
May 8, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated May 8, 1998
(the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to an offer by VWK Acquisition Corp., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Atlantic
Richfield Company, a Delaware corporation ("Parent"), to purchase shares of
common stock, par value $0.05 per share (the "Shares"), of Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), together
with the associated common stock purchase rights (the "Rights") issued
pursuant to the Company's Rights Agreement dated September 12, 1997 (as
amended from time to time, the "Rights Agreement"), at $29.00 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth
in the Offer. Also enclosed is the Letter to Stockholders of the Company from
the Chairman and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9. Unless the
context otherwise requires, all references to Shares include the associated
Rights, and all references to Rights include the benefits that may enure to
holders of the Rights pursuant to the Rights Agreement.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $29.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined below), the Stockholder Agreement (as defined
in the Offer to Purchase), the Offer, the Merger (as defined below) and the
other transactions contemplated by the Merger Agreement and the Stockholder
<PAGE>
Agreement and determined that the terms of the Offer, the Merger and the
other transactions contemplated by the Merger Agreement and the Stockholder
Agreement are fair to, and in the best interests of, the Company and its
stockholders and unanimously recommends that the stockholders of the
Company accept and tender their Shares pursuant to the Offer.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of May 4, 1998 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, following the consummation of
the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company, with the Company
surviving the merger as a wholly owned subsidiary of Parent (the "Merger").
In the Merger, each outstanding Share (other than Shares owned by the
Company or by any subsidiary of the Company or by Parent, the Purchaser or
any other subsidiary of Parent or by stockholders, if any, who are entitled
to and who properly exercise appraisal rights under Delaware law) will be
converted into the right to receive $29.00 per Share, without interest, as
set forth in the Merger Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least a majority of all
Fully Diluted Shares (as defined in the Offer to Purchase) on the date of
purchase, (2) any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 applicable to the purchase of Shares pursuant to
the Offer having expired or been terminated and (3) any waiting or other
period under the EC Regulations (as defined in the Offer to Purchase)
applicable to the Offer or the Merger, or the exercise by Parent or the
Purchaser of full ownership and voting rights with respect to the Shares to
be acquired pursuant to the Offer and the Merger, shall have expired or
been terminated, and the European Commission (as defined in the Offer to
Purchase) shall have taken all such action as shall be required so that
Parent and the Purchaser may consummate the Offer and the Merger and
exercise full ownership and voting rights with respect to the Shares to be
acquired pursuant to the Offer and the Merger.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, June 5, 1998, unless the Offer is extended by
the Purchaser.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form set forth below. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified below. Your instructions to us should be
forwarded promptly to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by First Chicago Trust Company of New
York (the "Depositary"), of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such
Shares, (b) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer effected pursuant to the procedures
described in Section 2 of the Offer to Purchase, an Agent's Message (as
defined in the Offer to Purchase), and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering shareholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE
PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO
EXTEND THE OFFER.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
(TOGETHER WITH THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
BY
VWK ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ATLANTIC RICHFIELD COMPANY
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated May 8, 1998, of VWK Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Atlantic Richfield Company, a Delaware
corporation, and the related Letter of Transmittal, relating to shares of
common stock, par value $0.05 per share of Union Texas Petroleum Holdings,
Inc., a Delaware corporation (the "Shares"), together with the associated
common stock purchase rights (the "Rights") pursuant to the Company's Rights
Agreement dated September 12, 1997 (as amended from time to time, the "Rights
Agreement"). Unless the context otherwise requires, all references to Shares
include the associated Rights, and all references to Rights include the
benefits that may enure to holders of the Rights pursuant to the Rights
Agreement.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set
forth in such Offer to Purchase and the related Letter of Transmittal.
Dated: 1998 -------------------------------------
Number of Shares -------------------------------------
to be Tendered* SIGNATURE(S)
Shares
-------------------------------------
-------------------------------------
PLEASE PRINT NAME(S)
Address
-------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
-------------------------------------
Taxpayer Identification or Social
Security No.________________________
- --------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
<PAGE>
EXHIBIT 99.(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ---------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee or incompetent
for a designated ward, person(3)
minor, or incompetent
person
7.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
---
<S> <C>
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
educational or other
exempt organization
account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public
Department of entity
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
- ----------------------------------- -----------------------------------
(1) List all names first and circle the name of the person whose number you
furnish. If only one person on a joint account has a Social Security
number, that person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
number or employer identification number (if you have one).
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number (for business and
all other entities), at the local office of the Social Security Administration
or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan, or a custodial account under Section 403(b)(7), if the account
satisfies the requirements of Section 401(f)(7).
. The United States or any agency or instrumentalities.
. A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S.,
the District of Columbia or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a) of the Code.
. An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
. An entity registered at all times under the investment Company Act of
1940.
. A foreign central bank of issue.
. A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441
of the Code.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
. Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
. Payments described in Section 6049(b)(5) of the Code to nonresident
aliens.
. Payments on tax-free covenant bonds under Section 1451 of the Code.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
. Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE
THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH A PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050(A) of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividends, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit (A)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated May 8,
1998, and the related Letter of Transmittal and is not being made to (nor will
tenders be accepted from or on behalf of) holders of Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Morgan Stanley & Co. Incorporated or one or more registered brokers
or dealers licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
AT
$29.00 NET PER SHARE
BY
VWK ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
ATLANTIC RICHFIELD COMPANY
VWK Acquisition Corp., a Delaware corporation (the "Purchaser"), which is a
wholly owned subsidiary of Atlantic Richfield Company, a Delaware corporation
("ARCO"), is offering to purchase all outstanding shares of Common Stock, par
value $0.05 per share (the "Shares"), of Union Texas Petroleum Holdings, Inc., a
Delaware corporation (the "Company"), together with the associated common stock
purchase rights (the "Rights") issued pursuant to the Company's Rights Agreement
dated September 12, 1997 (the "Rights Agreement"), at a price of $29.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 8, 1998,
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Unless the context
otherwise requires, all references to Shares include the associated Rights, and
all references to the Rights include the benefits that may enure to holders of
the Rights pursuant to the Rights Agreement.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 5, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY
DILUTED BASIS ON THE DATE OF PURCHASE (THE "MINIMUM CONDITION"), (2) ANY WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED AND (3) ANY WAITING OR OTHER PERIOD UNDER THE RULES AND REGULATIONS
OF THE COUNCIL AND OF THE COMMISSION OF THE EUROPEAN COMMUNITIES APPLICABLE TO
THE OFFER OR THE MERGER, OR TO THE EXERCISE BY ARCO OR THE PURCHASER OF FULL
OWNERSHIP AND VOTING RIGHTS WITH RESPECT TO THE SHARES TO BE ACQUIRED PURSUANT
TO THE OFFER AND THE MERGER, SHALL HAVE EXPIRED OR BEEN TERMINATED.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as of
May 4, 1998 (the "Merger Agreement"), among ARCO, the Purchaser and the Company
pursuant to which, following the consummation of the Offer and the satisfaction
or waiver of certain conditions, the Purchaser will be merged with the Company
(the "Merger"). In the Merger, each issued Share (other than Shares owned by
ARCO, the Purchaser or the Company or any of their wholly owned subsidiaries, or
by stockholders, if any, who are entitled to and properly exercise appraisal
rights under Delaware law) will be converted into $29.00 in cash, without
interest.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE STOCKHOLDER AGREEMENT (AS DEFINED IN THE OFFER TO PURCHASE), THE
OFFER AND THE MERGER AND THE OTHER TRANSACTIONS
<PAGE>
2
CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary set forth below of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as an agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (a) certificates for such Shares or timely
confirmation of book-entry transfer of such Shares into the Depositary's account
at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures described in Section 2 of the Offer to Purchase, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) and (c) any
other documents required by the Letter of Transmittal. Under no circumstances
will interest be paid on the purchase price of the Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday,
June 5, 1998, unless and until the Purchaser, in its sole discretion (but
subject to the terms of the Merger Agreement), shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date on which the Offer, as so extended by the
Purchaser, shall expire. Subject to the terms of the Merger Agreement (which
prohibit certain amendments to the Offer without the consent of the Company) and
the applicable rules and regulations of the Securities and Exchange Commission,
the Purchaser reserves the right (but shall not be obligated), at any time and
from time to time, and regardless of whether or not any of the events or facts
set forth in Section 14 of the Offer to Purchase shall have occurred, (i) to
extend the period of time during which the Offer is open, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) to amend the Offer
in any other respect by giving oral or written notice of such amendment to the
Depositary. Under no circumstances will interest be paid on the purchase price
for tendered Shares, whether or not the Purchaser exercises its right to extend
the Offer. Any such extension will be followed by a public announcement thereof
no later than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable. Shares
tendered pursuant to the Offer may be withdrawn pursuant to the procedures set
forth below at any time prior to the Expiration Date and, unless theretofore
accepted for payment and paid for by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after Tuesday, July 7, 1998. For a withdrawal to
be effective, a written notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for book-
entry transfer described in Section 2 of the Offer to Purchase, any notice of
withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser in its
sole discretion, which determination will be final and binding.
The Company has provided the Purchaser with the Company's stockholder lists and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and will be
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
<PAGE>
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION
WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at the
Purchaser's expense. No fees or commissions will be payable to brokers, dealers
or other persons other than the Dealer Manager and the Information Agent for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
20th Floor
New York, New York 10005
Toll Free (800) 628-8528
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7724
May 8, 1998
<PAGE>
EXHIBIT (a)(8)
ARCO [logo] Media Relations
515 South Flower Street
Los Angeles, CA 90071-2201
Telephone 213 486 3385
Facsimile 213 486 0169
NEWS
FOR IMMEDIATE RELEASE May 4, 1998
ARCO ANNOUNCES MERGER AGREEMENT WITH
UNION TEXAS PETROLEUM
$3.3 BILLION DEAL SUBSTANTIALLY INCREASES ARCO'S
INTERNATIONAL PRODUCTION AND RESERVES
KKR, CONTROLLING 25.6% OF UNION TEXAS STOCK, SIGNS
COMMITMENT TO TENDER UNION TEXAS INTEREST TO ARCO
LOS ANGELES AND HOUSTON -- ARCO (NYSE: ARC) and Union Texas Petroleum (NYSE:
UTH) announced today that they have signed a definitive merger agreement under
which ARCO will acquire for cash all outstanding shares of Union Texas common
stock for $29 per share in a transaction valued at approximately $3.3 billion,
including debt and preferred stock of Union Texas. The agreement was approved
unanimously by the Boards of Directors of both companies.
In connection with the transaction, ARCO has obtained a commitment from
Kohlberg Kravis Roberts & Co. to tender its holdings of 25.6 percent of the
outstanding Union Texas common shares pursuant to the tender offer.
ARCO Chairman and Chief Executive Officer Mike R. Bowlin called the
agreement "an important building block" for the company. "This acquisition is
consistent with our strategy of building scale and presence in 5 to 6 core
producing areas as a means of creating shareholder value," Bowlin added. "Over
90 percent of Union Texas' assets are located in ARCO's core producing areas,
specifically Venezuela, Indonesia, the North Sea and Alaska. The combination of
the two companies solidifies ARCO's position as a
<PAGE>
Page 2
significant player in those regions and is another step toward accomplishing our
goal of becoming a great global player."
Bowlin noted that "the transaction is especially attractive to ARCO because
of the exceptional degree of overlap between the assets of the two companies and
the ability to implement significant cost reductions as a consequence." Bowlin
said he expects the combination to eventually yield after-tax cost savings of at
least $85 million per year.
The transaction is expected to add 140,000 barrels per day of oil equivalent
(BOE) to ARCO's 1998 production. Union Texas expects strong production growth
over the near term from assets such as the Britannia field in the North Sea, the
Boqueron and DZO concessions in Venezuela, and the Alpine field in Alaska.
The transaction will also add 573 million barrels of proved reserves for a
gross cost of $5.76 per BOE. ARCO estimates it is paying approximately $5 per
proved BOE based on costs attributable to producing oil and gas assets. In
addition, probable and possible reserves also have been identified for future
development.
"In addition to strengthening our core areas," Bowlin noted, "Union Texas
offers several new venture options to ARCO, ranging from its long-established
operations in Pakistan to its growing position in Kazakhstan and Azerbaijan in
the Caspian region. Finally, Union Texas' long-term experience in Indonesia's
LNG business should prove valuable as we continue development and marketing of
ARCO's Tangguh gas reserves."
<PAGE>
Page 3
John Whitmire, Chairman and Chief Executive Officer of Union Texas, said that
"ARCO's tender offer reflects the proven value and potential of Union Texas
Petroleum. Over the past two years, Union Texas' management team and our
employees around the world have made significant progress in creating exciting
growth prospects for our company in areas such as Venezuela, Kazakhstan, China
and Northern Africa. I believe it was Union Texas' growth performance that
attracted ARCO to our organization."
Bowlin said he expects the acquisition to be accretive to operating cash
flow in the first year and only modestly dilutive to earnings through next year.
He noted that there is little downside risk in this transaction as Union Texas'
production from known resources is rising and the cost reductions anticipated
are totally within ARCO's control.
ARCO expects the tender offer will be completed by the end of the company's
second quarter. ARCO plans to finance the transaction using commercial paper
and other short-term borrowings backed by existing and additional bank
facilities.
Under the terms of the merger agreement, ARCO will commence an all-cash
tender offer for all of Union Texas' outstanding common stock on or prior to May
8, 1998. Any shares not purchased in the tender offer will be acquired for $29
per share in cash pursuant to a merger after completion of the tender offer. As
of March 31, 1998, Union Texas had approximately 85.25 million shares
outstanding. The transaction is subject to usual closing conditions, including
regulatory approvals.
<PAGE>
Page 4
Union Texas Petroleum is a Houston-based oil and gas company with 1997 sales
of $909 million and assets of $2.0 billion. In addition to its Caspian Sea
exploration projects and major operations in Indonesia, the North Sea and
Venezuela, the company also has operations in Pakistan, where it produces
approximately 45 percent of the country's domestic oil output.
ARCO is a Los Angeles-based integrated oil and gas company with 1997
earnings of $1.8 billion and global assets of $25.3 billion. Worldwide
operations include all aspects of exploration, production and marketing of crude
oil, natural gas, and natural gas liquids, as well as refining, marketing and
transportation of petroleum products. ARCO is also the majority owner of ARCO
Chemical Company.
# # #
[SOME OF THE MATTERS DISCUSSED IN THIS NEWS RELEASE ARE FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER
MATERIALLY BASED ON NUMEROUS FACTORS, INCLUDING THE REALIZED LEVEL OF CRUDE OIL
AND NATURAL GAS PRODUCTION AND OTHER RISKS DETAILED FROM TIME TO TIME IN THE
COMPANY'S SEC REPORTS, INCLUDING THE 1997 REPORT ON FORM 10-K.]
For information call:
ARCO: (Media) Albert Greenstein, 213-486-3384;
(Investors) Dennis Schiffel, 213-486-1511
UTP: (Media) Carol Cox, 713-968-2714;
(Investors) John Zimmerman, 713-968-2740
<PAGE>
ARCO-UNION TEXAS KEY STATISTICS
<TABLE>
<CAPTION>
As of December 1997 ARCO UTP COMBINED
- -------------------------------------------------------------------------------
Financial
- ---------------------------
<S> <C> <C> <C>
Revenues ($MM) 19,272 933 20,205
Net Income ($MM) 1,771 136 1,907
Cash from Operations ($MM) 3,722 272 3,994
Production
- ---------------------------
Oil (mbbl/d) 641 58 699
Gas (mmcf/d) 1,910 365 2,275
Combined (mboepd) 959 119 1,077
% International 23% 100% 32%
Reserves
- ---------------------------
Oil (mmbbl) 2,699 296* 2,995
Gas (bcf) 8,472 1,605 10,077
Combined (mmboe) 4,111 573 4,684
% International 27% 94% 35%
- -------------------------------------------------------------------------------
* INCLUDING ACQUISITION OF DESARROLLO ZULIA OCCIDENTAL (DZO) IN FEBRUARY 1998
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
ARCO-UNION TEXAS PERSPECTIVES
________________________________________________________________________________
ASSETS
UTP total proved reserves: 573 million barrels of oil equivalent (BOE), of which
25% is from the United Kingdom, 37% from Indonesia, 27% from Venezuela, 5% from
Pakistan, and 6% from Alaska.
1997 UTP production was 44 million BOE (51% natural gas), which is expected to
increase with development of operations in Venezuela, the Britannia field in the
U.K., and the Alpine field in Alaska.
ARCO-UTP SYNERGY
U.K. NORTH SEA: Adds to ARCO's growing presence in the Central North Sea.
- ---------------
Britannia (9.42% interest), one of the largest gas and condensate projects in
the U.K., is expected to begin production in August, 1998. Net proved reserves
are 54 million BOE. The Alba oil field (15.5%) overlies the Britannia field
with 34 million BOE reserves. The Piper/Claymore and associated satellite
fields (20% interest) add 33 million BOE of reserves. UTP's 25% interest in the
Sean peak shaver fields enhances ARCO's strong presence in the Southern Gas
Basin with 20 million BOE reserves. 1997 average net production from the U.K.
as a whole was 49,000 BOE per day.
INDONESIA: Enhances ARCO's current oil and gas operations and fits with ARCO's
- ---------
Tangguh LNG project scheduled for startup in 2003/2004. UTP operations include
a 37.8% interest (26.25% direct, 11.56% indirect through Unimar) in the Sanga
Sanga production sharing contract (PSC) with production supplying the Bontang
LNG plant. UTP has a 50% interest in Unimar whose subsidiary VICO operates the
Bontang PSC and is part operator of the Bontang LNG facility. Proved reserves
were 219 million BOE at the end of 1997 while average net production was 57,000
BOE per day.
VENEZUELA: Builds upon ARCO's Hamaca project and third reactivation round
- ----------
fields. Operator of the DZO unit (100%). In addition, UTP expects to take
operatorship of the Boqueron field later this year. Boqueron has 40 million
barrels of reserves while the DZO has 114 million barrels. Net production is
currently 27,000 BOE per day from the DZO.
<PAGE>
Page 2
PAKISTAN: Adds scope to ARCO's current portfolio. UTP is operator with 30%
- ---------
equity in oil and gas production from 35 fields in the Badin areas in
southeastern Pakistan. Proved reserves were 27 million BOE at the end of 1997
while average net production was 13,000 BOE per day.
ALASKA: Increases ARCO's 56% interest in the Alpine field to 78%. Total field
- -------
reserves are estimated at 365 million barrels. UTP's share of proved reserves
is 32 million BOE.
EXPLORATION
UTP has attractive ventures in Kazakhstan and Azerbaijan. ARCO, through its
LUKARCO joint venture partnership with LUKOIL, has a 12.5% interest in the
Caspian Pipeline Consortium and a 5% interest in the Tengiz oil field in
Kazakhstan. Other UTP prospects are in Trinidad, Tunisia, Papua New Guinea,
Italy, China, Greece, Yemen, Jordan, Bolivia, and Egypt, and Algeria. ARCO
operates a crude oil upgrade project at the Rhourde el Baguel field in Algeria.
PETROCHEMICALS
UTP has a 42% interest and operates an olefins plant in Louisiana. Interests
also include related natural gas liquids plant, pipelines and storage.
<PAGE>
EXHIBIT (A)(9)
FOR IMMEDIATE RELEASE May 8, 1998
ARCO BEGINS ALL-CASH TENDER OFFER
- ---------------------------------
FOR UNION TEXAS PETROLEUM COMMON SHARES;
- ----------------------------------------
OFFER TO EXPIRE JUNE 5, UNLESS EXTENDED
- ---------------------------------------
LOS ANGELES -- ARCO (NYSE: ARC) today commenced its previously announced
all-cash tender offer for all outstanding shares of Union Texas Petroleum (NYSE:
UTH) common stock at a price of $29 per share. The offer is scheduled to expire
at 12:00 midnight, Eastern Daylight Time, on Friday, June 5, unless extended.
A notice of the tender offer appears in today's New York Times. A Schedule
14 D-1 and related documents are being filed today with the Securities and
Exchange Commission.
Offer documents will be mailed to all Union Texas shareholders beginning
Monday, May 11.
As of March 31, 1998, Union Texas had approximately 85.25 million shares
outstanding. As previously announced, the offer has been approved by the Union
Texas Board of Directors and ARCO has obtained a commitment from Kohlberg Kravis
Roberts & Co. to tender its holdings of 25.6 percent of the outstanding Union
Texas common shares pursuant to the tender offer.
Morgan Stanley Dean Witter is acting as dealer-manager for the offer. D. F.
King is the information agent. Copies of the offering documents may be obtained
by calling
D. F. King at (toll free) 800-628-8528.
<PAGE>
Page 2
ARCO is a Los Angeles-based integrated oil and gas company with 1997
earnings of $1.8 billion and global assets of $25.3 billion. Worldwide
operations include all aspects of exploration, production and marketing of crude
oil, natural gas, and natural gas liquids, as well as refining, marketing and
transportation of petroleum products. ARCO is also the majority owner of ARCO
Chemical Company.
# # #
For information, call: (media) Albert Greenstein, 213-486-3384
(investors) Dennis Schiffel, 213-486-3384
<PAGE>
EXHIBIT (b)(1)
CONFORMED COPY
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of December 14, 1995 to the $2,000,000,000 Credit
Agreement dated as of December 15, 1994 (the "Agreement") among Atlantic
Richfield Company (the "Company"), certain subsidiaries of the Company, the
banks listed on the signature pages thereof (the "Banks") and Morgan Guaranty
Trust Company of New York, as Agent (the "Agent").
The parties to the Agreement wish to amend the Agreement to increase
the Commitments of the Banks, as hereinafter provided, such that the aggregate
amount of the Commitments is $3,000,000,000, to extend the Commitment
Termination Date, to amend the pricing of interest and fees thereunder, and to
make certain other amendments to the Agreement, all as hereinafter set forth.
The parties therefore agree as follows:
SECTION 1. Definitions: References. Unless otherwise specifically
-----------------------
defend herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby.
SECTION 2. Amendment of Commitment Amounts. The definition of
-------------------------------
"Commitment" in Section 1.01 is amended to read in full as follows:
"Commitment" shall mean, as to each Bank, the Dollar Amount set forth
opposite its name on Schedule II hereto under the heading "Commitment" (as
such amount may be reduced from time to time as provided in Sections 2.09
and 2.10).
A new Schedule II is added to the Credit Agreement in the form attached hereto.
SECTION 3. Excluded Subsidiaries. (a) The definition of "Excluded
---------------------
Subsidiary" is amended by replacing the "and" immediately in front of clause
(iii) with a comma, and adding a new clause (iv) thereto to read as follows:
and (iv) any Subsidiary which is a single-purpose entity with
indebtedness incurred to finance the construction or development of any
properties or assets, or the acquisition from a Person other than the
Company or its Subsidiaries of
<PAGE>
any properties or assets, if the Person or Persons providing such financing
expressly agree to look to the properties or assets financed or to be
financed and the revenues to be generated by the operation of, or loss or
damage to, such properties or assets as the principal source for the
repayment of such indebtedness, notwithstanding the existence of any
guarantees with respect to repayment of such indebtedness.
(b) Clause (e) of Section 6.01 is amended by adding immediately after
the words "payable or guaranteed by it" the parenthetical phrase, "(including,
without limitation, any indebtedness for borrowed money of any Excluded
Subsidiary to the extent that it is also payable by or is guaranteed by the
Company or any Subsidiary)".
SECTION 4. Extension of Commitment Termination Date. The definition of
------------ ---------------------------
"Commitment Termination Date" in Section 1.01 is amended to read in full as
follows:
"Commitment Termination Date" shall mean December 15, 2000 or, if such
day is not a Euro-Currency Business Day, the next succeeding Euro-Currency
Business Day unless such Euro~Currency Business Day falls in another
calendar month, in which case the Commitment Termination Date shall be the
next preceding Euro-Currency Business Day.
SECTION 5. Amendment of Timing for Certain Borrowings in Pounds
----------------------------------------------------
Sterling. (a) Section 2.02 of the Agreement is hereby amended by amending clause
- --------
(z) thereof (ending immediately before the word "specifying" where it appears
therein) to read in full as follows:
(z) (A) in the case of a Euro-Currency Borrowing to be made in English
pounds sterling, 11:00 a.m., New York City time, on the second Euro-
Currency Business Day before each such Euro-Currency Borrowing and (B) in
the case of a Euro-Currency Borrowing to be made in an Agreed Currency
other than Dollars or English pounds sterling, 12:00 noon, New York City
time, on the fourth Euro-Currency Business Day before each such
Euro-Currency Borrowing,
(b) The second paragraph of Section 2.07(c) is amended by adding,
immediately after the phrase, "at approximately 11:00 a.m., London time,
two Euro-Currency Business Days before the first day of such Interest Period",
the following parenthetical phrase:
(or, in the case of a Euro-Currency Borrowing to be made in English pounds
sterling, at approximately 11:00 a.m., London time, on the first
Euro-Currency Business Day before the first day of such Interest Period)
2
<PAGE>
SECTION 6. Amendment of Pricing. The pricing grid set forth in Section
--------------------
2.07(h) of the Agreement is amended to read in full as follows:
Level I Level II Level III Level IV
Pricing Pricing Pricing Pricing
- --------------------------------------------------------------------------------
Euro-Currency Margin 0.140% 0.150% 0.250% 0.500%
- --------------------------------------------------------------------------------
CD Margin 0.265% 0.275% 0.375% 0.625%
- --------------------------------------------------------------------------------
Facility Fee Rate 0.060% 0.075% 0.125% 0.250%
- --------------------------------------------------------------------------------
SECTION 7. Termination of 364-Day Credit Agreement. The Commitments
---------------------------------------
under the $1,000,000,000 Credit Agreement dated as of December 15, 1994 among
the Company, the other Borrowers referred to therein, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent,
shall terminate on December 14, 1995 simultaneously with the effectiveness
hereof.
SECTION 8. Governing Law. This Amendment shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 9. Counterparts: Effectiveness. This Amendment 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 Amendment shall become effective when the Agent shall have received duly
executed counterparts hereof signed by the Company, all of the Banks and the
Agent.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
THE COMPANY
ATLANTIC RICHFIELD COMPANY
By /s/ Terry G. Dallas
---------------------------------------
Title: Vice President & Treasurer
BANKS
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
---------------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By /s/ Vanessa Sheh Mever
---------------------------------------
Title: Vice President
CHEMICAL BANK
By /s/ James H. Ramage
---------------------------------------
Title: Vice President
4
<PAGE>
CITIBANK, N.A.
By /s/ Mark J. Lyons
---------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ L. Gene Beube
---------------------------------------
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ David P. Cagle
---------------------------------------
Title: Vice President
UNION BANK OF SWITZERLAND
By /s/ Peter S. Humber
---------------------------------------
Title: Vice President
By /s/ Thomas G. Jackson
---------------------------------------
Title: Managing Director
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By /s/ David L. Smith
---------------------------------------
Title: Vice President
NASSAU BRANCH
By /s/ David L. Smith
---------------------------------------
Title: Vice President
5
<PAGE>
THE TORONTO-DOMINION BANK
By /s/ Neva Nesbitt
---------------------------------------
Title: Manager Credit Administration
PNC BANK, NATIONAL ASSOCIATION
By /s/ Ted A. Dunn
---------------------------------------
Title: Assistant Vice President
THE BANK OF NEW YORK
By /s/ Daniel T. Gates
---------------------------------------
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ Gregory P. Brown
---------------------------------------
Title: Vice President
By Judy A. Maahs
---------------------------------------
Title: Assistant Vice President
THE CHASE MANHATTAN BANK, N.A.
By /s/ Stephen M. Feeney
---------------------------------------
Title: Vice President
6
<PAGE>
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Xavier Ratouis
---------------------------------------
Title: Authorized Signature
THE FUJI BANK, LIMITED, LOS ANGELES AGENCY
By /s/ Hirotoshi Naito
---------------------------------------
Title: Joint General Manager
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Tomohiro Nozaki
---------------------------------------
Title: Senior Vice President &
Joint General Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY
By /s/ Kazutaka Kiyoto
---------------------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By /s/ Motokazu Uematsu
---------------------------------------
Title: Deputy General Manager
7
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ Chris P. Johnson
---------------------------------------
Title: Senior Relationship Manager
CREDIT SUISSE
By /s/ Stephen M. Flynn
---------------------------------------
Title: Member of Senior Management
By /s/ Maria N. Gaspara
---------------------------------------
Title: Associate
MELLON BANK, N.A.
By /s/ Richard A. Spelke
---------------------------------------
Title: First Vice President
SOCIETE GENERALE
By /s/ J. Stanley Stewart
---------------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED
By /s/ Hiroshi Amano
---------------------------------------
Title: General Manager
8
<PAGE>
BARCLAYS BANK PLC
By /s/ Richard B. Williams
---------------------------------------
Title: Director
THE SANWA BANK, LIMITED
LOS ANGELES BRANCH
By /s/ Gill S. Realon
---------------------------------------
Title: Vice President
UNION BANK
By /s/ Jeffrey A. Cohen
---------------------------------------
Title: Vice President
FIRST NATIONAL BANK OF BOSTON
By /s/ Heather R. Row
---------------------------------------
Title: Director
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry T. Akins
---------------------------------------
Title: Senior Vice President
9
<PAGE>
BANK OF MONTREAL
By /s/ Warren R. Wimmer
---------------------------------------
Title: Director
THE NORTHERN TRUST COMPANY
By /s/ Michelle D. Griffin
---------------------------------------
Title: Vice President
SWISS BANK CORPORATION,
NEW YORK BRANCH
By /s/ H. Clark Worthley
---------------------------------------
Title: Associate Director
By /s/ Nancy A. Hanrahan
---------------------------------------
Title: Director
WESTPAC BANKING CORPORATION
By /s/ R. Christopher Noble
---------------------------------------
Title: Senior Vice President & Manager
10
<PAGE>
NATIONAL AUSTRALIA BANK
LIMITED A.C.N. 004044937
By /s/ Harvey F. Horowitz
---------------------------------------
Title: Vice President
KREDIETBANK N.V.
By /s/ Robert Snauffer
---------------------------------------
Title: Vice President
By /s/ Raymond F. Murray
---------------------------------------
Title: Vice President
NATIONAL BANK OF ALASKA
By /s/ David Hamilton
---------------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
---------------------------------------
Title: Vice President
11
<PAGE>
SCHEDULE II
COMMITMENTS OF BANKS
Commitment Name of Bank
---------- ------------
$180,000,000 Morgan Guaranty Trust Company
of New York
150,000,000 Bank of America National Trust
& Savings Association
150,000,000 Citibank, N.A.
150,000,000 The First National Bank of Chicago
150,000,000 First Interstate Bank of California
150,000,000 National Westminster Bank plc
150,000,000 NationsBank of Texas, N.A.
150,000,000 Union Bank of Switzerland
100,000,000 The Bank of New York
100,000,000 Barclays Bank PLC
100,000,000 Credit Suisse
100,000,000 The Dai-Ichi Kangyo Bank, Ltd
100,000,000 The Fuji Bank, Limited, Los Angeles Agency
100,000,000 The Industrial Bank of Japan, Limited,
Los Angeles Agency
100,000,000 The Toronto-Dominion Bank
75,000,000 The Chase Manhattan Bank, N.A.
75,000,000 Chemical Bank
12
<PAGE>
Commitment Name of Bank
---------- ------------
60,000,000 The Bank of Nova Scotia
60,000,000 Credit Lyonnais Cayman Islands Branch
60,000,000 Mellon Bank, N.A.
60,000,000 National Australia Bank Limited A.C.N.
004044937
60,000,000 PNC Bank, National Association
60,000,000 The Sanwa Bank, Limited, Los Angeles Branch
60,000,000 Societe Generale
60,000,000 The Sumitomo Bank, Limited
60,000,000 Union Bank
60,000,000 Westpac Banking Corporation
45,000,000 First National Bank of Boston
45,000,000 Bank of Montreal
45,000,000 The Long Term Credit Bank of Japan, Ltd.,
Los Angeles Agency
45,000,000 The Northern Trust Company
45,000,000 Swiss Bank Corporation, New York Branch
45,000,000 Wachovia Bank of Georgia, N.A.
30,000,000 Kredietbank N.V.
20,000,000 National Bank of Alaska
13
<PAGE>
(b)(1)
CONFORMED COPY
================================================================================
ATLANTIC RICHFIELD COMPANY
$2,000,000,000
CREDIT AGREEMENT
Dated as of December 15, 1994
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Agent
================================================================================
14
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
Definitions
1.01. Definitions .................................................... 1
1.02. Accounting Terms and Determinations ............................ 15
ARTICLE II
The Credits
2.01. Commitmems to Lend ............................................. 15
2.02. Notice of Syndicated Borrowings ................................ 16
2.03. Money Market Borrowings ........................................ 17
2.04. Notice to Banks; Funding of Loans .............................. 21
2.05. Notes .......................................................... 22
2.06. Method of Electing Interest Rates............................... 23
2.07. Inerest Rates................................................... 24
2.08. Fees............................................................ 28
2.09. Optional Termination or Reduction of Commitments................ 29
2.10. Maturity of Loans; Mandatory Termination of Commitments......... 29
2.11. Optional Prepayments............................................ 29
2.12. General Provisions as to Payments............................... 30
2.13. Funding Losses.................................................. 31
2.14. Computation of Interest and Fees................................ 32
2.15. Judgment Currency............................................... 32
2.16. Foreign Taxes................................................... 33
2.17. Maximum Interest Rate........................................... 35
ARTICLE III
Conditions To Borrowings
3.01. Initial Borrowing by Each Borrower ............................. 35
3.02. Each Borrowing ................................................. 37
15
<PAGE>
Section Page
- ------- ----
ARTICLE IV
Representations And Warranties
4.01. Representations and Warranties of the Company ..................... 38
4.02. Representations and Warranties of Each Subsidiary Borrower ........ 40
ARTICLE V
Covenants
5.01. Certain Information to be Furnished by the Company................. 42
5.02. Limitation on Mortgages............................................ 44
5.03. Limitation on Sale and Lease-Back.................................. 45
5.04. Consolidation, Merger, Disposition of Assets....................... 46
5.05. Use of Proceeds.................................................... 47
ARTICLE VI
Defaults
6.01. Defaults........................................................... 47
6.02. Notice of Default.................................................. 49
ARTICLE VII
The Agent
7.01. Appointment and Authorization..................................... 50
7.02. Agent and Affiliates.............................................. 50
7.03. Action by Agent................................................... 50
7.04. Consultation with Experts......................................... 50
7.05. Liability of Agent................................................ 50
7.06. Indemnification................................................... 50
7.07. Credit Decision................................................... 51
7.08. Successor Agent................................................... 51
16
<PAGE>
Section Page
- ------- ----
ARTICLE VIII
Change In Circumstances
8.01. Basis for Determining Interest Rate Inadequate or Unfair........... 51
8.02. Illegality......................................................... 54
8.03. Increased Cost and Reduced Return.................................. 54
8.04. Substitute Loans................................................... 56
8.05. Regulation D Compensation.......................................... 57
8.06. Substitution of Bank............................................... 57
ARTICLE IX
The Guarantee
9.01. The Guarantee...................................................... 58
9.02. Guarantee Unconditional............................................ 58
9.03. Waiver by the Company.............................................. 59
9.04. Stay of Acceleration............................................... 59
9.05. Reinstatement in Certain Circumstances............................. 59
ARTICLE X
Miscellaneous
10.01. Notices.......................................................... 60
10.02. No Waiver........................................................ 60
10.03. Governing Law.................................................... 60
10.04. Expenses......................................................... 60
10.05. Amendments, Etc.................................................. 61
10.06. Counterparts; Effectiveness...................................... 61
10.07. Successors and Assigns........................................... 62
10.08. Survival......................................................... 63
10.09. Acknowledgment................................................... 63
10.10. Headings......................................................... 63
10.11. Sharing of Setoffs............................................... 63
10.12. Collateral....................................................... 64
10.13. Consent to Jurisdiction.......................................... 64
17
<PAGE>
Section Page
- ------- ----
SCHEDULE I - Euro-Currency Payment Offices of the Agent
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
Exhibit E - Form of Certificate of Incumbency
Exhibit F - Form of Opinion of Counsel for the Borrower
Exhibit G - Form of Opinion of Special Counsel for the Agent
Exhibit H - Assignment and Assumption Agreement
Exhibit I - Notice of Effectiveness
18
<PAGE>
Credit Agreement (the "Agreement" dated as of December 15, 1994 among
Atlantic Richfield Company (the "Company" or a "Borrower"), each Subsidiary of
the Company which has executed and delivered a counterpart of this Agreement
(individually, a "Subsidiary Borrower" and collectively with the Company, the
"Borrowers"), each of the Banks listed on the signature pages hereof which has
executed and delivered this Agreement (individually, a "Bank" and collectively,
the "Banks") and Morgan Guaranty Trust Company of New York, as Agent (the
"Agent").
The Borrowers desire to borrow from the Banks from time to time amounts in
Dollars and other currencies, the aggregate Dollar Amount of which will not
exceed in the aggregate $2,000,000,000 outstanding at the time of any Borrowing,
for their general corporate purposes and the Banks are prepared to make loans
upon the terms hereof. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. In addition to terms defined elsewhere in this
Agreement, as used in this Agreement the following terms shall have the
following meanings (all terms defined in this Agreement in the singular to have
the same meanings when used in the plural and vice versa):
"Absolute Rate Auction" shall mean a solicitation of Money Market Quotes
setting forth Money Market Absolute Rates pursuant to Section 2.03.
"Adjusted CD Rate" shall have the meaning set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to any Bank, an
administrative questionnaire in the form prepared by the Agent and submitted to
the Agent (with a copy to the Company) duly completed by such Bank.
"Agent" shall mean Morgan Guaranty Trust Company of New York in its capacity
as agent for the Banks hereunder, and its successors in such capacity.
"Agreed Currency" shall mean Dollars, Canadian dollars, Deutsche Marks,
French francs, Japanese yen and pounds sterling and any other currency which is
freely transferable and convertible into Dollars, in which deposits are
customarily offered to banks in the London interbank market, which the Company
requests the Agent to include
19
<PAGE>
as an Agreed Currency hereunder and which is acceptable to each Bank; provided
that the Agent shall promptly notify each Bank of each such request and each
Bank shall be deemed to have agreed to each such request if its objection
thereto has not been received by the Agent within five Domestic Business Days
from the date of such notification by the Agent to such Bank.
"Applicable Lending Office" means, with respect to any Bank, (i) in the case
of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Currency Loans, its Euro-Currency Lending Office and (iii) in the case of
its Money Market Loans, its Money Market Lending Office.
"Approximate Equivalent Amount" of any currency with respect to any amount
of Dollars at any date shall mean the Equivalent Amount of such currency with
respect to such amount of Dollars at such date (i) if such currency is an Agreed
Currency listed below, rounded up to the nearest amount of such Agreed Currency
set forth below opposite such amount of Dollars:
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
AMOUNT OF CANADIAN DEUTSCHE FRENCH JAPANESE POUNDS
DOLLARS DOLLARS MARKS FRANCS YEN STERLING
--------- --------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
up to 1,000,000 1,000 1,000 1,000 1,000 1,000
1,000,000 to 9,999,999 10,000 10,000 10,000 10,000 10,000
10,000,000 to 99,999,999 100,000 100,000 100,000 100,000 100,000
100,000,000 and upwards 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
</TABLE>
and (ii) if such currency is not an Agreed Currency listed above, rounded up to
the nearest amount of such currency as determined by the Agent from time to
time.
"Assessment Rate" shall have the meaning set forth in Section 2.07(b).
"Assignee" has the meaning set forth in Section 10.07(c).
"Authorized Officer" and "Authorized Representative" of any Borrower shall
mean an officer or other representative of such Borrower designated in the
latest Certificate of Incumbency of such Borrower. The Agent and the Banks shall
be conclusively entitled to rely on the latest such Certificate of Incumbency of
such Borrower delivered to the Agent.
"Bank" shall mean each bank which is listed on the signature pages hereof as
having a Commitment and which has executed and delivered this Agreement, and its
successors and assigns.
20
<PAGE>
"Base Rate" means, for any day, a rate per annum equal to tile higher of (i)
the Prime Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate for such day.
"Base Rate Loan" means (i) a Syndicated Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Syndicated Borrowing or Notice of
Interest Rate Election or the provisions of Article VIII or (ii) an overdue
amount which was a Base Rate Loan immediately before it became overdue.
"Borrower" shall mean the Company or any Subsidiary Borrower.
"Benefit Arrangement" means at any time an employee benefit plan within the
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrowing" shall mean the aggregation of Loans of the same type and currency
of one or more Banks made or to be made to any one Borrower pursuant to Article
II on a single date and for a single Interest Period. Borrowings are classified
for purposes of this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Currency Borrowing" is a Borrowing
comprised of Euro-Currency Loans) or by reference to the provisions of Article
II under which participation therein is determined (e.g., a "Syndicated
Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in
proportion to their Commitments and a "Money Market Borrowing" is a Borrowing
under Section 2.03 in which the Bank participants are determined by the Agent in
accordance therewith).
"CD Base Rate" shall have the meaning set forth in Section 2.07(b).
"CD Loan" shall mean (i) a Syndicated Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Syndicated Borrowing or Notice of Interest
Rate Election or the provisions of Article VIII or (ii) an overdue amount which
was a CD Loan immediately before it became overdue.
"CD Margin" shall have the meaning set forth in Section 2.07(h).
"CD Rate" means a rate of interest determined pursuant to Section 2.07 on the
basis of an Adjusted CD Rate.
"CD Reference Banks" shall mean Barclays Bank PLC, Morgan Guaranty Trust
Company of New York, Toronto Dominion Bank and Wachovia Bank and Trust
Company, N.A. and each such other bank as may be appointed pursuant to Section
10.07(d).
21
<PAGE>
"Certificate of Incumbency" shall mean a Certificate of Incumbency described
in Section 3.01(ii) and any successor or replacement Certificate of Incumbency
delivered hereunder.
"Commitment" shall mean, as to each Bank, the Dollar Amount set forth
opposite its name on the signature pages hereof under the heading "Commitment"
(as such amount may be reduced from time to time as provided in Sections 2.09
and 2.10).
"Commitment Termination Date" shall mean December 15, 1999 or, if such day
is not a Euro-Currency Business Day, the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the Commitment Termination Date shall be the next preceding
Euro-Currency Business Day.
"Company" shall mean Atlantic Richfield Company, a Delaware corporation, and
its permitted successors and assigns pursuant to Section 5.04 or 10.07(a)
hereof.
"Consolidated Net Tangible Assets" shall mean at any date the total amount
of assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any thereof which are
by their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed), and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangible assets, all as set forth on
the most recent balance sheet of the Company and its Consolidated Subsidiaries
and computed in accordance with generally accepted accounting principles.
"Consolidated Subsidiary" shall mean, on any date, any Subsidiary or other
entity (including an Excluded Subsidiary) the accounts of which would be
consolidated with those of the Company in its consolidated financial statements
as of such date.
"Debt" shall mean notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Default" shall mean any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Designated Currency" shall mean (i) each Agreed Currency, (ii) any other
currency which is freely transferable and convertible into Dollars, in which
deposits are customarily offered to banks in the London interbank market and
which the Company designates as a Designated Currency hereunder upon five
Domestic Business Days' notice in writing to the Banks through the Agent and
(iii) any other currency which is freely transferable and convertible into
Dollars, in which deposits are not customarily offered to banks in the London
interbank market and which the Company designates as a
22
<PAGE>
Designated Currency hereunder by notice in writing to the Banks through the
Agent; provided that any notice given pursuant to this clause (iii) shall also
propose an appropriate amendment to this Agreement to provide for the basis for
determining the rate to which Money Market Margins are to be added or subtracted
in the relevant Money Market Quotes and to amend any other relevant provisions
hereof as necessary and that any such notice and proposed amendment shall be
effective for all purposes hereunder on the 2Oth Domestic Business Day after the
date of such notification by the Agent to each Bank if no Bank has objected
thereto to the Agent before such 20th Domestic Business Day.
"Dollar Amount" of any currency at any date shall mean (i) the amount of such
currency if such currency is Dollars or (ii) the equivalent amount of Dollars if
such currency is any currency other than Dollars, calculated on the basis of the
arithmetical mean of the buy and sell spot rates of exchange of the Agent for
such currency at the opening of business in London on the relevant FX Date.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Domestic Business Day" shall mean any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to close.
"Domestic Lending Office" shall mean, as to each Bank, its office, branch or
affiliate specified as its "Domestic Lending Office" in its Administrative
Questionnaire or such other office, branch or affiliate as such Bank may from
time to time specify to the Agent and each Borrower as its Domestic Lending
Office; provided that any Bank may from time to time by notice to each Borrower
and the Agent designate separate Domestic Lending Offices for its Base Rate
Loans, on the one hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such Bank shall be deemed to
refer to either or both of such offices, as the context may require.
"Domestic Loans" shall mean CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" shall have the meaning set forth in Section
2.07(b).
"Equivalent Amount" of any currency with respect to any amount of Dollars at
any date shall mean the equivalent in such currency of such amount of Dollars,
calculated on the basis of the arithmetical mean of the buy and sell spot rates
of exchange of the Agent for such other currency at the opening of business in
London on the relevant FX Date.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
23
<PAGE>
"ERISA Group" means the Company and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Euro-Currency Business Day" shall mean any Domestic Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London and, where funds are to be paid or made available in
a currency other than Dollars, on which commercial banks are open for domestic
and international business (including dealings in deposits in such currency) in
both London and the place where such funds are to be paid or made available.
"Euro-Currency Lending Office" shall mean, as to each Bank, (i) for loans
denominated in each of Dollars, Canadian dollars, Deutsche Marks, French francs,
Japanese yen and pounds sterling, its office, branch or affiliate specified as
its "Euro-Currency Lending Office" for such currency in its Administrative
Questionnaire (or, if no such office is specified, its Domestic Lending Office
for Base Rate Loans) or such other office, branch or affiliate of such Bank as
it may from time to time specify to the Agent and each Borrower as its Euro-
Currency Lending Office and (ii) for loans denominated in each other Agreed
Currency permitted hereunder from time to time, such office, branch or
affiliate of such Bank as it may from time to time specify to the Agent and each
Borrower as its Euro-Currency Lending Office for such other currency (or, if no
such office is specified, its Domestic Lending Office for Base Rate Loans).
"Euro-Currency Loan" shall mean (i) a Syndicated Loan which bears interest at
a Euro-Currency Rate pursuant to the applicable Notice of Syndicated Borrowing
or Notice of Interest Rate Election or the provisions of Article VIII or (ii) an
overdue amount which was a Euro-Currency Loan immediately before it became
overdue.
"Euro-Currency Margin" shall have the meaning set forth in Section 2.07(h).
"Euro-Currency Payment Office" of the Agent shall mean, (i) for each of
Dollars, Canadian dollars, Deutsche Marks, French francs, Japanese yen and
pounds sterling, the office, branch or affiliate of the Agent specified as the
"Euro-Currency Payment Office" for such currency in Schedule I hereto or such
other office, branch, affiliate or correspondent bank of the Agent as it may
from time to time specify to each Borrower and each Bank as its Euro-Currency
Payment Office and, (ii) for each other Designated Currency, such office,
branch, affiliate or correspondent bank of the Agent as it may from time to time
specify to each Borrower and each Bank as its Euro-Currency Payment Office for
such Designated Currency.
"Euro-Currency Rate" means a rate of interest determined pursuant to Section
2.07 on the basis of the London Interbank Offered Rate.
24
<PAGE>
"Euro-Currency Reference Banks" shall mean the principal London offices of
National Westminster Bank plc, Morgan Guaranty Trust Company of New York and
Union Bank of Switzerland and each such other bank as may be appointed pursuant
to Section 10.07(f).
"Euro-Currency Reserve Percentage" shall mean with respect to any Bank for
any day that percentage (expressed as a decimal) which is in effect on such day,
as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirement imposed on such Bank in
respect of "Eurocurrency Liabilities" as defined in Regulation D promulgated by
such Board (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Currency Loans and
Money Market LIBOR Loans is determined or in respect of any category of
extensions of credit or other assets which includes loans by a non-United States
office of such Bank to United States residents).
"Event of Default" shall have the meaning assigned to that term in Section
6.01.
"Excluded Subsidiaries" means at any time (i) ARCO Chemical Company and its
subsidiaries if the Company owns at such time directly or indirectly less than
90% of the outstanding voting securities of ARCO Chemical Company, (ii) Vastar
Resources, Inc. and its subsidiaries if the Company owns at such time directly
or indirectly less than 90% of the outstanding voting securities of Vastar
Resources, Inc. and (iii) Lyondell Petrochemical Company and its subsidiaries if
the Company owns at such time directly or indirectly less than 90% of the
outstanding voting securities of Lyondell Petrochemical Company.
"Existing Credit Agreement" means the Credit Agreement dated as of May 31,
1990 among the "Borrowers" referred to therein, the banks party thereto and
Morgan Guaranty Trust Company of New York, as agent.
"Facility Fee Rate" has the meaning set forth in Section 2.07(h).
"Federal Funds Rate" means, for any day, the rate per annum (rounded upward,
if necessary, to the nearest 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day and (ii) if no such rate is so published on
such next succeeding Domestic Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to Morgan Guaranty Trust Company of New York on
such day on such transactions as determined by the Agent.
25
<PAGE>
"Fixed CD Rate" shall have the meaning set forth in Section 2.07(b).
"Fixed Rate Loans" shall mean CD Loans or Euro-Currency Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 8.01(a)(iii)) or any combination of the foregoing.
"Foreign Subsidiary Borrower" shall mean a Subsidiary Borrower (i)
incorporated in a jurisdiction other than a jurisdiction of the United States of
America or (ii) incorporated in a jurisdiction of the United States of America
and treated as resident for tax purposes in a jurisdiction other than a
jurisdiction of the United States of America by the relevant taxing authority of
such other jurisdiction.
"FX Date" shall mean the date on which the Agent's spot rate of exchange
shall be determined for purposes of calculating the Dollar Amount and Equivalent
Amount of any currency at any time. With respect to any calculation of Dollar
Amount or Equivalent Amount as of:
(i) any borrowing date and the last day of each Interest Period for any
type of Borrowing or Group of Loans, the relevant FX Date shall be the latest
date by which a Notice of Borrowing or Notice of Interest Rate Election (if
any) is required to be delivered with respect to such Borrowing or Group of
Loans (unless the Group or Borrowing consists of Base Rate Loans or CD Loans
pursuant to Section 2.04(c), 8.01(a), 8.02 or 8.04(b), in which case the
relevant FX Date shall be four Euro-Currency Business Days before the
borrowing date or last day of the Interest Period);
(ii) the Commitment Termination Date, the relevant FX Date shall be four
Euro-Currency Business Days before the Commitment Termination Date;
(iii) any date of prepayment of any Loan which is not also a borrowing
date, the relevant FX Date shall be the date of such prepayment; and
(iv) each day on which any vote or other action by the Required Banks or
Banks having a specified proportion of the principal amount of the Loans is
to be taken or to be effective and each other day not specified above on
which the Dollar Amount or Equivalent Amount is to be determined (including,
without limitation, pursuant to Section 6.01(e) and 6.01(i)), the relevant FX
Date shall be such day.
"Group of Loans" means at any time a group of Loans consisting of (i) all
Syndicated Loans which are Base Rate Loans at such time, (ii) all Euro-Currency
Loans having the same Interest Period at such time or (iii) all CD Loans having
the same interest period at such time, provided that, if a Syndicated Loan of
any particular Bank is converted to or made as a Base Rate Loan pursuant to
Section 8.02 or 8.03, such Loan
26
<PAGE>
shall be included in the same Group or Groups of Loans from time to time as it
would have been in if it had not been so converted or made.
"Guarantee" shall mean to guarantee or act, directly or indirectly, as a
surety for any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, to incur or assume any obligation,
direct or indirect, contingent or otherwise, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep-
well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into for
the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term "guarantee" shall
not include to endorse for collection or deposit in the ordinary course of
business.
"Interest Period" shall mean: (1) with respect to each Euro-Currency
Borrowing, the period commencing on the date of borrowing specified in the
applicable Notice of Borrowing or on the date specified in the applicable Notice
of Interest Rate Election and ending 1, 2, 3 or 6 months thereafter (or 9 or 12
months thereafter if all Euro-Currency Reference Banks agree to such period) as
the Borrower of such Borrowing may elect in the applicable notice; provided
that:
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Currency Business Day shall be extended to the next succeeding Euro-
Currency Business Day unless such Euro-Currency Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Currency Business Day;
(b) any Interest Period which begins on the last Euro-Currency Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Currency Business
Day of a calendar month; and
(c) any Interest Period which would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date.
(2) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter (or 360 days thereafter if all CD Reference Banks
agree to such period) as the Borrower of such Borrowing may elect in the
applicable notice; provided that:
27
<PAGE>
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Currency Business Day shall be extended to the next succeeding Euro-
Currency Business Day; and
(b) any Interest Period which would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date.
(3) with respect to each Base Rate Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30 days
thereafter; provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Currency Business Day shall be extended to the next succeeding Euro-
Currency Business Day; and
(b) any Interest Period which would otherwise end after the Commitment
Termination Date shall end on the Commitment Termination Date.
(4) with respect to each Money Market LIBOR Loan, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing and ending
such whole number of months thereafter as the Borrower of such Borrowing may
elect in accordance with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Currency Business Day shall be extended to the next succeeding Euro-
Currency Business Day unless such Euro-Currency Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Currency Business Day;
(b) any Interest Period which begins on the last Euro-Currency Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Currency Business
Day of a calendar month; and
(c) any Interest Period which begins before the Commitment Termination
Date and would otherwise end after the Commitment Termination Date shall end
on the Commitment Termination Date; and
(5) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending on such day (not earlier than the seventh day) thereafter
as the Borrower of such Loan may elect in accordance with Section 2.03; provided
that:
28
<PAGE>
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Currency Business Day shall be extended to the next succeeding
Euro-Currency Business Day; and
(b) any Interest Period which begins before the Commitment Termination
Date and would otherwise end after the Commitment Termination Date shall end
on the Commitment Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended,
or any successor statute.
"LIBOR Auction" shall mean a solicitation of Money Market Quotes setting
forth Money Market Margins based on the London Interbank Offered Rate pursuant
to Section 2.03.
"Loan" shall mean a Domestic Loan or a Euro-Currency Loan or a Money Market
Loan and "Loans" means Domestic Loans or Euro-Currency Loans or Money Market
Loans or any combination of the foregoing.
"London Interbank Offered Rate" shall have the meaning set forth in Section
2.07(c).
"Material Plan" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $200,000,000.
"Material Subsidiary" shall mean at any time a Subsidiary which as of such
time meets the definition of a "significant subsidiary" contained as of the date
hereof in Regulation S-X of the Securities and Exchange Commission.
"Money Market Absolute Rate" shall have the meaning set forth in Section
2.03(d)(ii)(E).
"Money Market Absolute Rate Loan" shall mean a Loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" shall mean, as to each Bank, (i) for
Money Market Loans denominated in Dollars, its Domestic Lending Office for Base
Rate Loans or such other office, branch or affiliate of such Bank as it may from
time to time specify as its Money Market Lending Office by notice to each
Borrower and the Agent and (ii) for Money Market Loans denominated in each other
Designated Currency, such office, branch or affiliate of such Bank as it may
from time to time specify as its Money Market Lending Office for such other
Designated Currency by notice to each Borrower and the Agent (or, if no such
office is specified, its Domestic Lending Office for Base Rate Loans); provided
that any Bank may from time to time by notice to each Borrower and
29
<PAGE>
the Agent designate separate Money Market Lending Offices for each of its Money
Market LIBOR Loans denominated in each Designated Currency and its Money Market
Absolute Rate Loans in which case all references herein to the Money Market
Lending Office of such Bank shall be deemed to refer to one or all of such
offices, as the context may require.
"Money Market LIBOR Loan" shall mean a Loan to be made by a Bank pursuant to
a LIBOR Auction (including such a Loan bearing interest at the Base Rate
pursuant to Section 8.01(a)).
"Money Market Loan" shall mean a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"Money Market Margin" shall have the meaning set forth in Section
2.03(d)(ii)(D).
"Money Market Quote" shall mean an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Mortgage" shall mean, with respect to any asset, any mortgage, lien, pledge
or other encumbrance of any kind in respect of such asset.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"New York Interbank Offered Rate" applicable to any Interest Period for any
Euro-Currency Loan or Money Market LIBOR Loan shall mean the average (rounded
upward, if necessary, to the next higher 1/16 of 1%) of the respective rates
per annum at which deposits in the currency in which such Euro-Currency Loan or
Money Market LIBOR Loan is denominated are offered to each of the Euro-Currency
Reference Banks in the New York interbank market at approximately 11:00 a.m.,
New York City time, two Euro-Currency Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Currency Loan of such Euro-Currency Reference Bank to which such Interest
Period is to apply and for a period of time comparable to such Interest Period.
"Notes" means promissory notes of a Borrower, substantially in the form of
Exhibit A hereto and issued to a Bank upon its request pursuant to Section 2.05,
evidencing the obligation of such Borrower to repay the Loans made by it, and
"Note" means any one of such promissory notes issued hereunder.
30
<PAGE>
"Notice of Borrowing" shall mean a Notice of Syndicated Borrowing (as defined
in Section 2.02) or a Notice of Money Market Borrowing (as defined in Section
2.03(f)) and "the date of a Notice of Borrowing" shall mean the date the Notice
of Borrowing is given to the Agent pursuant to Section 2.02 or 2.03(f), as the
case may be.
"Notice of Interest Rate Election" has the meaning set forth in Section 2.06.
"Parent" means, with respect to any Bank, any Person controlling such Bank.
"Participant" has the meaning set forth in Section 10.07(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" shall mean the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"Qualifying Bank" shall mean, with respect to a Money Market Borrowing, any
Bank incorporated in, or formed under the law of, the country designated in the
Money Market Quote Request for such Borrowing or any other Bank whose Money
Market Lending Office for such Money Market Borrowing is located in such
country.
"Quarterly Date" shall mean the last day of each February, May, August and
November, commencing February 28, 1995.
"Reference Banks" shall mean the CD Reference Banks or the Euro-Currency
Reference Banks, as the context may require, and "Reference Bank" shall mean any
one of such Reference Banks.
31
<PAGE>
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time (including any successor
provision thereto or any other United States law or regulation imposing reserves
on deposits or loans).
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time (including any successor
provision thereto).
"Required Banks" shall mean at any date Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, having Loans the Dollar Amount of the aggregate principal amount of
which evidence at least 51% of the Dollar Amount of the outstanding aggregate
principal amount of all the Loans.
"Restricted Property" shall mean:
(a) any property interest owned by the Company or a Subsidiary in land
located in the continental United States of America (which for the purposes
hereof shall include any property located off the coast of the continental
United States of America on which the Company or any Subsidiary conducts
operations pursuant to leases, rights or other authorizations from the United
States of America or any state thereof located within the continental United
States of America) and classified by such owner as productive of crude oil,
natural gas or other petroleum hydrocarbons in paying quantities;
(b) any refining plant or manufacturing plant owned by the Company or a
Subsidiary and located in the continental United States of America, except
(i) related facilities which in the opinion of the Board of Directors of the
Company are transportation or marketing facilities, and (ii) a refining plant
or manufacturing plant which in the opinion of the Board of Directors of the
Company is not a principal plant of the Company and its Subsidiaries; and
(c) any shares of capital stock or indebtedness of a Restricted
Subsidiary (excluding any of such shares which constitute "margin stock" as
defined in Regulation U).
"Restricted Subsidiary" shall mean any Subsidiary of the Company which owns
any Restricted Property, except a Subsidiary substantially all the physical
properties of which are located outside the continental United States of
America.
"Revolving Credit Period" shall mean the period from the date hereof to and
including the Commitment Termination Date.
32
<PAGE>
"Subsidiary" shall mean any corporation or other entity (other than an
Excluded Subsidiary) of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions (whether or not any other class of
securities has or might have voting power by reason of the happening of a
contingency) are at the time owned directly or indirectly by the Company.
"Subsidiary Borrower" shall mean each Subsidiary which has executed and
delivered to the Agent a counterpart of this Agreement.
"Syndicated Loan" shall mean a Domestic Loan or a Euro-Currency Loan made by
a Bank pursuant to Section 2.01; provided that, if any such loan or loans (or
portions thereof) are combined or subdivided pursuant to a Notice of Interest
Rate Election, the term "Syndicated Loan" shall refer to the combined principal
amount resulting from such combination or to each of the separate principal
amounts resulting from such subdivision, as the case may be.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Company's
independent public accountants) with the most recent audited consolidated
financial statements of the Company and its Consolidated Subsidiaries delivered
to the Banks.
ARTICLE II
The Credits
Section 2.01. Commitments to Lend. (a) During the Revolving Credit Period
each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to lend to the Borrowers severally pursuant to this Section from time
to time amounts such that the Dollar Amount of the aggregate principal amount of
all Syndicated Loans by such Bank outstanding to all Borrowers on the date of
any such Borrowing shall not exceed the amount of its Commitment. Each Borrowing
under this subsection (a) shall be in an aggregate principal amount of
$50,000,000 (or the Approximate Equivalent Amount
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thereof) or any larger multiple of $5,000,000 (or the Approximate Equivalent
Amount thereof) (except that, subject to the provisions of Section 3.02(ii), any
such Borrowing may be in the aggregate amount of the unused Commitments or the
Equivalent Amount thereof) and shall be made from the several Banks ratably in
proportion to their respective Commitments. Within the foregoing limits, each
Borrower may borrow under this subsection, repay, or to the extent permitted by
Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit
Period under this subsection.
(b) Each Bank severally agrees to make Euro-Currency Loans in the Agreed
Currencies; provided that, after giving effect to such Borrowing, the
Euro-Currency Loans shall be denominated in not more than six Agreed Currencies
(including Dollars).
Section 2.02. Notice of Syndicated Borrowings. Each Borrower shall give the
Agent notice (a "Notice of Syndicated Borrowing") not later than (w) 12:00 noon,
New York City time, on the Domestic Business Day of each Base Rate Borrowing,
(x) 12:00 noon, New York City time, the next Domestic Business Day before each
CD Borrowing (or the second Domestic Business Day before any CD Borrowing for
which a 360 day Interest Period is requested), (y) 12:00 noon, New York City
time, in the case of a Euro-Currency Borrowing to be made in Dollars, the third
Euro-Currency Business Day before each such Euro-Currency Borrowing (or the
fourth Euro-Currency Business Day before any such Euro-Currency Borrowing for
which a 9 or 12 month Interest Period is requested) and (z) 12:00 noon, New York
City time, in the case of a Euro-Currency Borrowing to be made in an Agreed
Currency other than Dollars, the fourth Euro-Currency Business Day before each
such Euro-Currency Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day in
the case of a Domestic Borrowing or a Euro-Currency Business Day in the case
of a Euro-Currency Borrowing,
(ii) the aggregate amount of such Borrowing; provided that, in any period
of five consecutive Domestic Business Days, the aggregate Dollar Amounts of
all Syndicated Borrowings and all Money Market Borrowings in Canadian dollars
and French francs as of the respective dates of Borrowing shall not exceed
$300,000,000 in each such currency,
(iii) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Currency Rate and, if at a
Euro-Currency Rate, the currency thereof in accordance with the provisions of
Section 2.01(c) and
(iv) in the case of a Fixed Rate Borrowing, the duration of the Interest
Period applicable thereto, subject to the provisions of the definition of
Interest Period and provided that deposits in the currency of such Borrowing
are being offered for such Interest Period to the Euro-Currency Reference
Banks in the London interbank market.
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Section 2.03. Money Market Borrowings. (a) In addition to Syndicated
Borrowings pursuant to Section 2.01, each Borrower may, as set forth in this
Section, request the Banks (or, if the Borrower has requested Money Market
Quotes only from Qualifying Banks pursuant to subsection (b)(iii) of this
Section, the Qualifying Banks) during the Revolving Credit Period to make offers
to make Money Market Loans to such Borrower. The Banks may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this Section.
(b) When a Borrower wishes to request offers to make Money Market Loans under
this Section, it shall transmit to the Agent by telex or facsimile transmission
a Money Market Quote Request substantially in the form of Exhibit B hereto so as
to be received no later than (x) 10:00 a.m., London time, on the fifth
Euro-Currency Business Day prior to the date of Borrowing proposed therein, in
the case of a LIBOR Auction in a Designated Currency other than Dollars, (y)
11:00 a.m., New York City time, on the fourth Euro-Currency Business Day prior
to the date of Borrowing proposed therein, in the case of a LIBOR Auction in
Dollars or (z) 11:00 a.m., New York City time, on the next Domestic Business
Day before the date of Borrowing proposed therein, in the case of an Absolute
Rate Auction (or, in any such case, such other time and date as such Borrower
and the Agent shall have mutually agreed and shall have notified to the Banks
not later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective),
specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Currency
Business Day in the case of a LIBOR Auction or a Domestic Business Day in the
case of an Absolute Rate Auction;
(ii) the proposed currency of such Borrowing, which shall be a Designated
Currency in the case of a LIBOR Auction or Dollars in the case of an Absolute
Rate Auction; provided that after giving effect to such Borrowing, the
outstanding Loans shall be denominated in not more than six Designated
Currencies (including Dollars);
(iii) if the Borrower is a Foreign Subsidiary Borrower and will realize a
tax benefit (or avoid a tax or reimbursement liability) with respect to Loans
made by Qualifying Banks but not with respect to Loans made by other Banks,
whether the Money Market Quotes are being requested from all of the Banks or
only from Qualifying Banks,
(iv) the aggregate amount of such Borrowing, which shall be at least
$50,000,000 (or the Approximate Equivalent Amount thereof) or a larger
multiple of $5,000,000 (or the Approximate Equivalent Amount thereof);
provided that the Dollar Amount of such Borrowing shall not be more than the
then aggregate amount of the Commitments and, in any period of five
consecutive Domestic Business Days,
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the aggregate Dollar Amount of all Syndicated Borrowings and all Money Market
Borrowings in Canadian dollars and French francs as of the respective dates of
Borrowing shall not exceed $300,000,000 in each such currency;
(v) the duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period; and
(vi) whether the Money Market Quotes requested are to set forth a Money
Market Margin or a Money Market Absolute Rate.
Such Borrower may request offers to make Money Market Loans for more than one
Interest Period but not more than one currency in a single Money Market Quote
Request. No Money Market Quote Request shall be given within five Euro-Currency
Business Days (or such other number of days as the Borrower and the Agent may
agree) of any other Money Market Quote Request.
(c) Promptly upon receipt of a Money Market Quote Request, the Agent shall
send to the Banks (or, if the Borrower has requested Money Market Quotes only
from Qualifying Banks pursuant to subsection (b)(iii) of this Section, to the
Qualifying Banks) by telex or facsimile transmission an Invitation for Money
Market Quotes substantially in the form of Exhibit C hereto, which shall
constitute an invitation by such Borrower to each Bank to submit Money Market
Quotes offering to make the Money Market Loans to which such Money Market Quote
Request relates in accordance with this Section.
(d)(i) Each Bank (or, if the Borrower has requested Money Market Quotes only
from Qualifying Banks pursuant to subsection (b)(iii) of this Section, each
Qualifying Bank) may submit a Money Market Quote containing an offer or offers
to make Money Market Loans in response to any Invitation for Money Market
Quotes. Each Money Market Quote must comply with the requirements of this
subsection and must be submitted to the Agent by telex or facsimile transmission
at its offices specified in or pursuant to Section 10.01 not later than (x) 3:00
p.m., London time, on the fourth Euro-Currency Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction in a Designated
Currency other than Dollars, (y) 10:00 a.m., New York City time, on the third
Euro-Currency Business Day prior to the proposed date of Borrowing, in the case
of a LIBOR Auction in Dollars, or (z) 9:30 a.m., New York City time, on the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in any
such case, such other time and date as such Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies such Borrower of the terms of the offer or offers contained
therein not later than (A) 2:00 p.m., London time, on the fourth Euro-Currency
Business Day prior to the proposed date of Borrowing, in the case
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of a LIBOR Auction in a Designated Currency other than Dollars, (B) 9:30 a.m.,
New York City time, on the third Euro-Currency Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction in Dollars, or (C)
9:15 a.m., New York City time, on the proposed date of Borrowing, in the case of
an Absolute Rate Auction. Subject to Articles III and VI, any Money Market Quote
so made shall be irrevocable except with the written consent of the Agent given
on the instructions of such Borrower.
(ii) Each Money Market Quote shall be in substantially the form of Exhibit D
hereto and shall in any case specify:
(A) the proposed date of Borrowing and, in the case of a LIBOR Auction,
the proposed currency of such Borrowing;
(B) the principal amount of each Money Market Loan for which each such
offer is being made, (w) the Dollar Amount of which principal amount may be
greater or less than the Commitment of the quoting Bank, (x) which principal
amount must be $5,000,000 (or the Approximate Equivalent Amount thereof) or a
larger multiple of $1,000,000 (or the Approximate Equivalent Amount thereof),
(y) which principal amount may not exceed in the aggregate with the other
Money Market Loans included in such offer the principal amount of Money
Market Loans for which offers were requested and (z) which principal amount
may be subject to an aggregate limitation as to the principal amount of Money
Market Loans for which offers being made by such quoting Bank may be
accepted;
(C) the duration of the Interest Period applicable to each Money Market
Loan for which each such offer is being made, subject to the provisions of
the definition of Interest Period;
(D) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin") offered
for each such Money Market Loan, expressed as a percentage (rounded to the
nearest 1/10,000th of 1%) to be added to or subtracted from such base rate;
(E) in the case of an Absolute Rate Auction, the rate of interest per
annum (rounded to the nearest 1/10,000th of 1%) (the "Money Market Absolute
Rate") offered for each such Money Market Loan;
(F) the identity of the quoting Bank; and
(G) if the Borrower has requested Money Market Quotes only from
Qualifying Banks pursuant to subsection (b)(iii) of this Section, a
representation and warranty from the quoting Bank that it is a Qualifying
Bank.
(iii) Any Money Market Quote shall be disregarded that:
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(A) is not substantially in the form of Exhibit D hereto or does not
specify all of the information required by subsection (d)(ii) of this
Section;
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set forth in the
applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i) of this
Section.
(e) The Agent shall promptly notify such Borrower of the terms (i) of any
Money Market Quote submitted by a Bank that is in accordance with subsection (d)
of this Section and (ii) of any subsequent Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request;
provided that any such subsequent Money Market Quote shall be disregarded by the
Agent unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Agent's notice to such
Borrower shall specify (x) the aggregate principal amount and currency of Money
Market Loans for which offers have been received for each Interest Period
specified in the related Money Market Quote Request, (y) the respective
principal amounts and Money Market Margins or Money Market Absolute Rates, as
the case may be, so offered and (z) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any single Money
Market Quote may be accepted.
(f) Not later than (x) 5:00 p.m., London time, on the fourth Euro-Currency
Business Day prior to the proposed date of Borrowing, in the case of a LIBOR
Auction in a Designated Currency other than Dollars, (y) 11:15 a.m., New York
City time, on the third Euro-Currency Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction in Dollars, or (z) 10:30 a.m., New
York City time, on the proposed date of Borrowing, in the case of an Absolute
Rate Auction (or, in any such case, such other time and date as such Borrower
and the Agent shall have mutually agreed and shall have notified to the Banks
not later than the date of the Money Market Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective), such
Borrower shall notify the Agent of its acceptance or non-acceptance of the
offers so notified to it pursuant to subsection (e) of this Section. In the case
of acceptance, such notice (a "Notice of Money Market Borrowing") shall specify
the aggregate principal amount of offers for each Interest Period that are
accepted. Such Borrower may accept any Money Market Quote in whole or in part;
provided that:
(i) the aggregate principal amount of each Money Market Borrowing may not
exceed the applicable amount set forth in the related Money Market Quote
Request;
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(ii) the principal amount of each Money Market Borrowing must be at least
$50,000,000 (or the Approximate Equivalent Amount thereof) or a larger
multiple of $5,000,000 (or the Approximate Equivalent Amount thereof);
provided that the Dollar Amount of such Borrowing shall not be more than the
then aggregate amount of the Commitments;
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be; and
(iv) such Borrower may not accept any offer that is described in
subsection (d)(iii) of this Section or that otherwise fails to comply with
the requirements of this Agreement.
(g) If offers are made by two or more Banks with the same Money Market
Margins or Money Market Absolute Rates, as the case may be, for a greater
aggregate principal amount of Money Market Loans than can be accepted for the
related Interest Period (after giving effect to the acceptance of all lower
Money Market Margins or Money Market Absolute Rates, as the case may be,
properly offered for such Interest Period), the principal amount of Money Market
Loans which can be accepted shall be allocated by the Agent among such Banks as
nearly as possible (in such multiples of $1,000,000 (or the Approximate
Equivalent Amount thereof), as the Agent may deem appropriate) in proportion to
the aggregate principal amount of such offers. Determinations by the Agent of
the amounts of Money Market Loans by each Bank shall be conclusive in the
absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share (if any) of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower giving
such notice except pursuant to subsection (c) of this Section or Section
8.01(a).
(b) On the date of each Borrowing, each Bank participating therein shall
make available its ratable share of such Borrowing, (i) if such Borrowing is
denominated in Dollars, not later than 12:00 noon, New York City time (or, in
the case of any Borrowing of Base Rate Loans, 1:00 p.m., New York City time), in
Federal or other funds immediately available to the Agent, in New York City at
its address specified in or pursuant to Section 10.01 and (ii) if such Borrowing
is denominated in another currency, not later than 12:00 noon, local time in the
city of the Agent's Euro-Currency Payment Office for such currency, in such
funds as may then be customary for the settlement of international transactions
in such currency in the city of and at the address of the Agent's Euro-Currency
Payment Office for such currency. Unless the Agent determines that any
applicable condition specified in Article III has not been satisfied, the Agent
will make the funds so received from the Banks available to the Borrower making
such Borrowing at the Agent's aforesaid address.
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(c) Notwithstanding the satisfaction of all conditions referred to in
Section 2.01(c), 2.02 or 2.03(b) with respect to any Borrowing in any currency
other than Dollars, if there shall occur on or prior to the date of such
Borrowing any change in national or international financial, political or
economic conditions or currency exchange rates or exchange controls which would
in the opinion of the Agent make it impracticable for the Euro-Currency Loans or
Money Market LIBOR Loans comprising such Borrowing to be denominated in the
currency specified by the Borrower, then the Agent shall forthwith give notice
thereof to the Borrower and the Banks, and such Loans shall not be denominated
in such currency but shall be made on the date of such Borrowing in Dollars, in
an aggregate principal amount equal to the Dollar Amount of the aggregate
principal amount specified in the related Notice of Borrowing, as Base Rate
Loans, unless the Borrower notifies the Agent at least one Domestic Business Day
before such date that it elects not to borrow on such date.
Section 2.05. Notes. (a) Each Bank may, by notice to a Borrower and the
Agent (to be given not later than two Domestic Business Days prior to the
initial Borrowing) request either that (i) its Loans be evidenced by a single
Note of such Borrower payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans to such Borrower or (ii) its Loans of a particular
type to such Borrower be evidenced by a separate Note of such Borrower in an
amount equal to the aggregate unpaid principal amount of such Loans to such
Borrower. Except as so requested by a Bank and to the extent a Note is issued by
a Borrower pursuant to this Section 2.05, Loans made by such Bank are not
represented or evidenced by any promissory note.
(b) Each Note issued pursuant to this Section 2.05 shall be in substantially
the form of Exhibit A hereto with appropriate modifications, if such Note
evidences solely Loans of a particular type, to reflect such fact. Each
reference in this Agreement to a "Note" or the "Notes" of such Bank shall be
deemed to refer to and include any or all of such Notes of each Borrower, as the
context may require.
(c) Upon receipt of each Note of a Borrower (if any) pursuant to Section
3.01(vi), the Agent shall send such Note to the relevant Bank. Each Bank shall
record, and may, if such Bank so elects in connection with any transfer or
enforcement of its Note of any Borrower, endorse on the schedule forming a part
thereof appropriate notations to evidence the date, currency, amount and
maturity of each Loan made by it to such Borrower and the date and amount of
each payment of principal made by such Borrower with respect thereto; provided
that the failure of any Bank to make any such recordation or endorsement shall
not affect the obligations of such Borrower hereunder or under its Note. Each
Bank is hereby irrevocably authorized by each Borrower so to endorse such
Borrower's Note and to attach to and make a part of any such Note a continuation
of any such schedule as and when required.
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SECTION 2.06. Method of Electing Interest Rates. (a) The Loans included in
each Syndicated Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Syndicated Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to convert
such Loans to CD Loans as of any Domestic Business Day or to Euro-Currency
Loans as of any Euro-Currency Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert such
Loans to Base Rate Loans or Euro-Currency Loans or elect to continue such
Loans as CD Loans for an additional Interest Period, subject to Section 2.13
in the case of any such conversion or continuation effective on any day other
than the last day of the then current Interest Period applicable to such
Loans; and
(iii) if such Loans are Euro-Currency Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue such
Loans as Euro-Currency Loans for an additional Interest Period, subject to
Section 2.13 in the case of any such conversion or continuation effective on
any day other than the last day of the then current Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent not later than (w) 12:00 noon, New York City time,
on the Domestic Business Day of any conversion into or continuation as Base Rate
Loans, (x) 12:00 noon, New York City time, the next Domestic Business Day before
any conversion into or continuation as CD Loans (or the second Domestic Business
Day before any CD Loans for which a 360 day Interest Period is requested), (y)
12:00 noon, New York City time, on the third Euro-Currency Business Day before
any conversion into or continuation as Euro-Currency Loans (or the fourth Euro-
Currency Business Day before any such conversion into or continuation as Euro-
Currency Loans for which a 9 or 12 month Interest Period is requested) and (z)
12:00 noon, New York City time, on the fourth Euro-Currency Business Day before
any conversion into or continuation as Euro-Currency Loans in an Agreed Currency
other than Dollars. A Notice of Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal amount of the relevant Group
of Loans; provided that (i) such portion is allocated ratably among the Loans
--------
comprising such Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each $50,000,000 or any larger
multiple of $5,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice applies;
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(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans (including the currency thereof) and, if the Loans being
converted are to be Fixed Rate Loans, the duration of the next succeeding
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Currency Loans
in the same currency for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the Borrower
pursuant to subsection (a) above, the Agent shall promptly notify each Bank of
the contents thereof and such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate
Election to the Agent for any Group of Fixed Rate Loans, such Loans shall be
converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
(d) An election by the Borrower to change or continue the rate of interest
applicable to any Group of Loans pursuant to this Section 2.06 shall not
constitute a "Borrowing" for purposes of the provisions of Section 3.02 or
otherwise.
Section 2.07. Interest Rates. (a) Each Base Rate Loan shall bear interest on
the outstanding principal amount thereof, for each day from the date such Loan
is made until the last day of each Interest Period applicable thereto, at a rate
per annum equal to the Base Rate for such day. Such interest shall be payable
for each Interest Period on the last day thereof and, with respect to the
principal amount of any Base Rate Loan converted to a CD Loan or a Euro-Currency
Loan, on each date a Base Rate Loan is so converted. Any overdue principal of or
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1% plus the rate
otherwise applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the CD Margin for such day plus the Adjusted CD
Rate applicable to such Interest Period; provided that if any CD Loan or any
portion thereof shall, as a result of clause (2)(b) of the definition of
Interest Period, have an Interest Period of less than 30 days, such portion
shall bear interest during such Interest Period at the rate applicable to Base
Rate Loans during such period. Such interest shall be payable for each Interest
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Period on the last day thereof and, if such Interest Period is longer than 90
days, at intervals of 90 days after the first day thereof. Any overdue principal
of or interest on any CD Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1% plus the sum of the
CD Margin plus the Adjusted CD Rate applicable to such Loan at the date such
payment was due.
The "Fixed CD Rate" applicable to any Interest Period means a rate per annum
equal to the sum of the CD Margin plus the applicable Adjusted CD Rate.
The "Adjusted CD Rate" applicable to any Interest Period means a rate per
annum determined pursuant to the following formula:
{ CDBR }*
ACDR = {----------} + AR
{1.00 - DRP}
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------------
* The amount in brackets being rounded upwards, if necessary, to the next higher
1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of interest
determined by the Agent to be the arithmetic average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 a.m., New York City time (or as soon thereafter as practicable), on
the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an amount comparable to the
unpaid principal amount of the CD Loan of such CD Reference Bank to which such
Interest Period applies and having a maturity comparable to such Interest
Period.
"Domestic Reserve Percentage" means for any day that percentage (expressed
as a decimal which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York City having a maturity
comparable to the related Interest Period and in an amount of $100,000 or more.
The Fixed CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Domestic Reserve Percentage.
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"Assessment Rate" means for any day the annual assessment rate in effect on
such day which is payable by a member of the Bank Insurance Fund classified as
adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R. (S)
327.3(e) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective date
of any change in the Assessment Rate.
(c) Each Euro-Currency Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Currency Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period for any
Loan shall mean the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in the currency
in which such Loan is denominated are offered to each of the Euro-Currency
Reference Banks in the London interbank market at approximately 11:00 a.m.,
London time, two Euro-Currency Business Days before the first day of such
Interest Period, in an amount approximately equal to the principal amount of the
Loan of such Euro-Currency Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any Euro-Currency Loan shall bear
interest, payable on demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment, at a rate per annum
equal to the sum of 1% plus the Euro-Currency Margin for such day plus the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which one day (or, if such amount due remains
unpaid more than three Euro-Currency Business Days, then for such other period
of time not longer than three months as the Agent may elect) deposits in the
relevant currency in an amount approximately equal to such overdue payment due
to each of the Euro-Currency Reference Banks are offered to such Euro-Currency
Reference Bank in the London interbank market for the applicable period
determined as provided above (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of (i)
if such Euro-Currency Loan is denominated in Dollars, 1% plus the rate
applicable to Base Rate Loans for such day and (ii) if such Euro-Currency Loan
is denominated in any other currency, 1% plus the cost to such Bank of funding
or maintaining such Euro-Currency Loan. The certificate of such Bank as to the
cost of funding or maintaining such Euro-Currency Loan shall be conclusive
absent manifest error).
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(e) Subject to Section 8.01(a)(1), each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with subsection
(c) of this Section as if each Euro-Currency Reference Bank were to participate
in the related Money Market Borrowing ratably in proportion to its Commitment)
plus (or minus) the Money Market Margin quoted by the Bank making such Loan in
accordance with Section 2.03. Each Money Market Absolute Rate Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the Money Market Absolute Rate
quoted by the Bank making such Loan in accordance with Section 2.03. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of (i) if such Money Market Loan is denominated in Dollars, 1% plus the rate
applicable to Base Rate Loans for such day and (ii) if such Money Market Loan is
denominated in any other currency, 1% plus the cost to such Bank of funding or
maintaining such Money Market Loan. The certificate of such Bank certifying the
cost of funding or maintaining such Money Market Loan shall be conclusive absent
manifest error.
(f) The Agent shall determine each interest rate applicable to the Loans
hereunder. The Agent shall give prompt notice to the appropriate Borrower and
the participating Banks by telex or cable of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish quotations
to the Agent as contemplated by this Section. If any Reference Bank does not
furnish a timely quotation, the Agent shall determine the relevant interest
rate on the basis of the quotation or quotations furnished by the remaining
Reference Bank or Banks or, if none of such quotations is available on a timely
basis, the provisions of Section 8.01 shall apply.
(h) Each of "CD Margin", "Euro-Currency Margin" and "Facility Fee Rate"
means, for any day, the amounts set forth below in the row opposite such term
and in the column corresponding to the Pricing Level that applies on such day:
45
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Level I Level II Level III Level IV
Pricing Pricing Pricing Pricing
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro-Currency 0.120% 0.160% 0.300% 0.500%
Margin
- ---------------------------------------------------------------------------------
CD Margin 0.245% 0.285% 0.425% 0.625%
- ---------------------------------------------------------------------------------
Facility Fee Rate 0.080% 0.090% 0.150% 0.250%
- ---------------------------------------------------------------------------------
</TABLE>
As used herein, the following terms have the following meanings:
"Level I Pricing" applies on any date if, on such date, the Company's Long-
Term Debt is rated (x) AA- or higher by S&P or Aa3 or higher by Moody's and (y)
-- ---
not less than A- by S&P and not less than A3 by Moody's.
---
"Level II Pricing" applies on any date if, on such date, (i) the Company's
Long-Term Debt is rated (x) A- or higher by S&P or A3 by Moody's and (y) not
-- ---
less than BBB- by S&P and not less than Baa3 by Moody's and (ii) Level I Pricing
---
does not apply.
"Level III Pricing" applies on any date if, on such date, (i) the Company's
Long-Term Debt is rated BBB- or higher by S&P or Baa3 or higher by Moody's and
--
(ii) neither Level I nor Level II Pricing applies.
"Level IV Pricing" applies on any date if, on such date, none of Level I,
Level II and Level III Pricing applies.
"Long-Term Debt" means the senior unsecured public long-term debt securities
of the Borrower without third-party credit enhancement.
"Moody's" means Moody's Investors Service, Inc.
"Pricing Level" refers to the determination of which of Level I, Level II,
Level III or Level IV Pricing applies on any date.
"S&P" means Standard & Poor's Ratings Group.
Section 2.08. Fees. (a) The Company shall pay to the Agent for the account of
the Banks ratably a facility fee at the Facility Fee Rate for such day. Such
facility fee shall accrue (i) from and including the date upon which this
Agreement becomes effective pursuant to Section 10.06 hereof to but excluding
the date of termination of the Commitments in their entirety, on the daily
aggregate amount of the Commitments (whether used or unused) and (ii) from and
including such date of termination to but
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<PAGE>
excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans.
(b) The Company shall pay to the Agent for its own account fees in the
amounts and at the times previously agreed upon between the Company and the
Agent.
(c) Accrued fees under subsection (a) of this Section shall be payable
quarterly in appears on the fifth Domestic Business Day after each Quarterly
Date for the quarter ending on such Quarterly Date or, if earlier, the fifth
Domestic Business Day after the date of termination of the Commitments in their
entirety, and on the fifth Domestic Business Day after the date on which the
Loans shall be repaid in their entirety.
Section 2.09. Optional Termination or Reduction of Commitments. The Company
may, upon at least three Domestic Business Days' irrevocable notice to the
Agent, terminate at any time, or reduce from time to time by an aggregate amount
of $50,000,000 or a larger multiple of $5,000,000 the aggregate amount of the
Commitments in excess of the Dollar Amount of the aggregate outstanding
principal amount of the Loans.
Section 2.10. Maturity of Loans; Mandatory Termination of Commitments. (a)
The Commitments shall terminate on the Commitment Termination Date, and any
Syndicated Loans then outstanding (together with accrued interest thereon)
shall be due and payable on such date.
(b) The outstanding principal balance of each Money Market Loan shall be
payable on the last day of the Interest Period applicable to such Loan.
(c) On the last day of each Interest Period, the Company shall repay, or
cause one or more Subsidiary Borrowers to repay, such principal amount (together
with accrued interest thereon) of each Bank's outstanding Syndicated Loans, if
any, as may be necessary so that after such repayment the Dollar Amount of the
aggregate outstanding principal amount of all Loans outstanding hereunder does
not exceed the amount of the Commitments on such day.
Section 2.11. Optional Prepayments. (a) Each Borrower may, upon at least one
Domestic Business Day's notice to the Agent, prepay any Group of Base Rate Loans
(or any Money Market LIBOR Loans bearing interest at the Base Rate pursuant to
Section 8.01(a)) or, subject to Section 2.13 and upon at least three
Euro-Currency Business Days' notice to the Agent, prepay any Group of CD or
Euro-Currency Loans in whole at any time, or from time to time in part in
amounts aggregating $50,000,000 (or the Approximate Equivalent Amount thereof)
or any larger multiple of $1,000,000 (or the Approximate Equivalent Amount
thereof), by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included
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<PAGE>
in such Group. No Borrower may prepay all or any portion of the principal amount
of any Money Market Loan (other than a Money Market LIBOR Loan bearing interest
at the Base Rate pursuant to Section 8.01(a)) prior to the maturity thereof.
(b) Upon receipt of a notice of prepayment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share (if any) of such prepayment and such notice shall not thereafter
be revocable by any Borrower.
Section 2.12. General Provisions as to Payments. (a) All payments to be made
by each Borrower hereunder or under the Notes in Dollars shall be made not later
than 12:00 noon, New York City time, on the date when due, in Federal or other
funds immediately available in New York City, to the Agent at its address
referred to in Section 10.01. The Agent will promptly distribute to each Bank
its ratable share of each such payment received by the Agent for the account of
the Banks.
(b) Each Borrowing shall be repaid or prepaid in the currency in which it was
made in the amount borrowed and interest payable thereon shall be paid in such
currency. All payments to be made by each Borrower hereunder or under the Notes
in any currency other than Dollars shall be made in such currency on the date
due in such funds as may then be customary for the settlement of international
transactions in such currency for the account of the Agent, at its Euro-Currency
Payment Office for such currency. The Agent will promptly cause such payments to
be distributed to each Bank in like funds and currency. Notwithstanding the
foregoing provisions of this Section, if, after the making of any Loan in any
currency other than Dollars, currency control or exchange regulations are
imposed in the country which issues such currency with the result that different
types of such currency (the "New Currency") are introduced and the type of
currency in which the Borrowing was made (the "Original Currency") no longer
exists or the Borrower is not able to make payment to the Agent for the account
of the Banks in such Original Currency, then all payments to be made by each
Borrower hereunder or under the Notes in such currency shall be made in such
amount and such type of the New Currency as shall be equivalent to the amount
of such payment otherwise due hereunder or under the Notes in the Original
Currency, it being the intention of the parties hereto that the Borrowers take
all risks of the imposition of any such currency control or exchange
regulations.
(c) Whenever any payment of principal of, or interest on, the Domestic Loans
or of additional compensation shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Currency Loans shall be due on a day which is not a
Euro-Currency Business Day, the date for payment thereof shall be extended to
the next succeeding Euro-Currency Business Day unless such Euro-Currency
Business Day occurs in another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Currency Business Day. Whenever
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<PAGE>
any payment of principal of, or interest on, the Money Market Loans shall be due
on a day which is not a Euro-Currency Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Currency Business Day. If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(d) Unless the Agent shall have been notified by a Bank or a Borrower (the
"Payor") prior to the date on which such Bank is to make payment to the Agent of
the proceeds of a Loan to be made by it hereunder or such Borrower is to make a
payment to the Agent for the account of one or more of the Banks, as the case
may be (each of such payments being herein called a "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may (but shall not be required to), in reliance upon
such assumption, make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment to the
Agent, the recipient of such payment shall, on demand, pay to the Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at the Federal Funds Rate, if the
recipient is a Bank, and at a rate equal to the rate which, if the recipient is
a Borrower, the recipient would have been obligated to pay hereunder for the
Loans that are the subject of, or are equivalent to, such payment for such
period.
Section 2.13. Funding Losses. Each Borrower shall pay to the Agent for the
account of each Bank, upon the request of such Bank through the Agent, such
amount or amounts as shall compensate such Bank for any reasonable loss, cost or
expense incurred by such Bank (or, subject to Section 10.07(b), by an existing
or prospective Participant in the related Loan) as a result of:
(a) any prepayment of a Fixed Rate Loan or any conversion of a Fixed Rate
Loan of such Borrower (pursuant to Section 2.06 or 2.11, Article VI or VIII or
otherwise) held by such Bank on a date before the last day of an Interest Period
applicable thereto, or before the end of an applicable period fixed pursuant to
Section 2.07(d) or
(b) any failure by such Borrower to borrow a Fixed Rate Loan (except to the
extent any Bank shall fail to make funds available to the Borrower in accordance
with this Agreement, but including a failure to borrow due to the occurrence of
any event described in Section 2.04(c)) held or to be held by such Bank on the
date for such Borrowing specified in the relevant Notice of Borrowing under
Section 2.02 or 2.03(f),
such compensation to be payable in the currency specified in the certificate
referred to below and to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid, converted or not borrowed, for the period from the date of
such prepayment or failure to borrow to the
49
<PAGE>
last day of such Interest Period (or, in the case of a failure to borrow, the
Interest Period for such Fixed Rate Loan which would have commenced on the date
of such failure to borrow) in each case at the applicable rate of interest for
such Fixed Rate Loan provided for herein (excluding, however, the CD Margin, the
Euro-Currency Margin or any positive Money Market Margin, as the case may be,
included therein) over (ii) the amount of interest (as reasonably determined by
such Bank) which would have accrued to such Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the London
interbank market or in the New York certificate of deposit market; provided that
such Bank shall have delivered to such Borrower, within 60 days after the date
of such prepayment, conversion or failure to borrow, a certificate as to the
amount and currency of such loss or expense, which certificate shall set forth
in reasonable detail the basis for such loss or expense and shall be conclusive
in the absence of manifest error.
Section 2.14. Computation of Interest and Fees. Interest based on the Prime
Rate and interest on Borrowings denominated in pounds sterling shall be computed
on the basis of a year of 365 days (or 366 days in a leap year) and paid for the
actual number of days elapsed (including the first day but excluding the last
day). All other interest and fees shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed (including the first day
but excluding the last day).
Section 2.15. Judgment Currency. If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein or under
the Notes (the "specified currency") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other
currency at the Agent's New York office on the Euro-Currency Business Day
preceding that on which final, non-appealable judgement is given. The
obligations of the Borrower in respect of any sum due to any Bank or the Agent
hereunder or under any Note shall, notwithstanding any judgment in a currency
other than the specified currency, be discharged only to the extent that on the
Euro-Currency Business Day following receipt by such Bank or the Agent (as the
case may be) of any sum adjudged to be so due in such other currency such Bank
or the Agent (as the case may be) may in accordance with normal, reasonable
banking procedures purchase the specified currency with such other currency. If
the amount of the specified currency so purchased is less than the sum
originally due to such Bank or the Agent, as the case may be, in the specified
currency, the Borrower agrees, to the fullest extent that it may effectively do
so, as a separate obligation and notwithstanding any such judgment, to indemnify
such Bank or the Agent, as the case may be, against such loss, and if the amount
of the specified currency so purchased exceeds (a) the sum originally due to any
Bank or the Agent, as the case may be, in the specified currency and (b) any
amounts shared with other Banks as a result of allocations of such excess as a
disproportionate
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<PAGE>
payment to such Bank under Section 10.11, such Bank or the Agent, as the case
may be, agrees to remit such excess to the Borrower.
Section 2.16. Foreign Taxes. (a) All payments made by any Foreign Subsidiary
Borrower in respect of principal of and interest on its Syndicated Borrowings
and of all other amounts payable by it under this Agreement are payable without
deduction for or on account of any present or future taxes, duties, withholdings
or other charges levied or imposed by the government of any jurisdiction outside
the United States of America or by any political subdivision or taxing authority
thereof or therein (herein called "Foreign Taxes"). If any such Foreign
Subsidiary Borrower shall be required by law to deduct or withhold any Foreign
Taxes from any such amount payable by it hereunder or under any of its Notes in
connection with a Syndicated Borrowing to or for the account of any Bank, (i)
such amount shall be increased as may be necessary so that, after making such
deductions or withholdings (including any deductions or withholdings applicable
to additional amounts payable pursuant to this Section), such Bank receives an
amount equal to the amount it would have received had no such deductions or
withholdings been made and (ii) such Foreign Subsidiary Borrower shall make such
deductions and withholdings and pay the amount thereof to the relevant
government, political subdivision or taxing authority at or prior to the time
required to be paid under applicable law (and shall promptly furnish to the
Agent, for the benefit of the Banks, receipts evidencing such payment). In
addition, each such Foreign Subsidiary Borrower will pay any present or future
stamp or documentary taxes or similar taxes or levies imposed by any government,
political subdivision or taxing authority referred to in the first sentence of
this subsection arising from any payment by it hereunder or under any of its
Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any of its Notes (herein called "Other Taxes").
Each such Foreign Subsidiary Borrower will indemnify each Bank and the Agent
for, and hold each Bank and the Agent harmless against, the full amount of
Foreign Taxes in connection with a Syndicated Loan or Other Taxes (including,
without limitation, any Foreign Taxes in connection with a Syndicated Loan or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid or payable by such Bank or the Agent and any liability of such Bank or the
Agent relating thereto (including, without limitation, penalties, interest and
expenses). This indemnification shall be made within 15 days after demand by
such Bank or the Agent (as the case may be).
(b) If the cost to any Bank of making or maintaining any Syndicated Loan to
a Foreign Subsidiary Borrower is increased, or the amount of any sum received or
receivable under a Syndicated Loan by any Bank (or its Applicable Lending
Office) is reduced, by an amount deemed by such Bank to be material, which
increase or reduction would not have occurred but for the fact that such Foreign
Subsidiary Borrower is incorporated in, or conducts business in, a jurisdiction
outside the United States of America, such Foreign Subsidiary Borrower shall
indemnify such Bank for such increased cost or reduction within 15 days after
demand by such Bank (with a copy to the Agent). This Section 2.16(b) shall not
apply to any liabilities with respect to Foreign
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<PAGE>
Taxes or Other Taxes or liabilities which would be Foreign Taxes or Other Taxes
in the absence of the exclusionary language in Section 2.16(c). A certificate of
such Bank claiming indemnification under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error.
(c) Notwithstanding the provisions of clause (a) above, no Foreign Subsidiary
Borrower shall indemnify any Bank for or pay any additional amount or amounts to
any Bank with respect to any tax, assessment or other governmental charge (i)
imposed on, based upon, or measured by income of the Bank and franchise and
similar taxes imposed upon the Bank by any jurisdiction in which such Bank is
incorporated or maintains its principal place of business or Applicable Lending
Office, (ii) imposed as a result of a connection between the taxing jurisdiction
and such Bank (other than a connection resulting solely from the transactions
contemplated by this Agreement), (iii) imposed as a result of the transfer by
such Bank of its interest in any Note or this Agreement or a change (other than
pursuant to this Section 2.16(c)) in its Applicable Lending Office (other than
taxes imposed as a result of any change in treaty, law or regulation after such
transfer of the Bank's interest in any Note or this Agreement or change in the
Bank's Applicable Lending Office), (iv) imposed as a result of a failure of any
Bank to comply fully with the requirements of the last sentence of this Section
2.16(c), or (v) that would not have been imposed but for (A) a failure by such
Bank to comply with applicable certification, information, documentation or
other reporting requirements concerning such Bank if such compliance is required
by statute or regulation of such country as a precondition to relief or
exemption (whether available by statute or tax treaty) from such tax, assessment
or other governmental charge or (B) a determination by a taxing authority or a
court of competent jurisdiction that a certification, information, documentation
or other proof provided by such Bank to establish an exemption from such tax,
assessment or governmental charge is false. Each Bank will promptly notify the
Company, the relevant Foreign Subsidiary Borrowers, and the Agent of any event
of which it has knowledge that will entitle such Bank to any payment or
indemnification under clause (a) or (b) of this Section 2.16. If the Foreign
Subsidiary Borrower is or will be required to pay additional amounts under this
Section 2.16 to or for the account of any Bank, then such Bank will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such payment or indemnification and will not, in the
good faith opinion of such Bank, be otherwise disadvantageous to such Bank.
(d) If, and to the extent that, any Bank shall obtain a credit against its
United States federal income tax liability for any Foreign Taxes or Other Taxes
indemnified or paid by any Foreign Subsidiary Borrower pursuant to this Section,
such Bank agrees to enter into negotiations in good faith with such Foreign
Subsidiary Borrower to determine the basis on which reimbursement of such credit
can be made to such Foreign Subsidiary Borrower.
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<PAGE>
(e) If, and to the extent that, any Bank shall receive a refund of any
Foreign Taxes or other Taxes indemnified or paid by any Foreign Subsidiary
Borrower pursuant to this Section, such Bank shall pay the amount of such refund
(including, without limitation, any interest received with respect thereto) to
such Foreign Subsidiary Borrower.
(f) All tax receipts required to be delivered under this Section shall be
originals, duplicate originals or duly certified or authenticated copies.
Section 2.17. Maximum Interest Rate. (a) Nothing contained in this Agreement
or any Note shall require the Borrower to pay interest at a rate exceeding the
maximum rate permitted by applicable law.
(b) If the amount of interest payable for the account of any Bank on any
interest payment date in respect of the immediately preceding interest
computation period, computed pursuant to Section 2.07, would exceed the maximum
amount permitted by applicable law to be charged by such Bank, the amount of
interest payable for its account on such interest payment date shall be
automatically reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of any Bank in respect
of any interest computation period is reduced pursuant to clause (b) of this
Section and the amount of interest payable for its account in respect of any
subsequent interest computation period, computed pursuant to Section 2.07, would
be less than the maximum amount permitted by applicable law to be charged by
such Bank, then the amount of interest payable for its account in respect of
such subsequent interest computation period shall be automatically increased to
such maximum permissible amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Bank has been increased
pursuant to this clause (c) exceed the aggregate amount by which interest paid
for its account has theretofore been reduced pursuant to clause (b) of this
Section.
ARTICLE III
Conditions To Borrowings
Section 3.01. Initial Borrowing by Each Borrower. The obligation of each
Bank to make any Loan to be made by it as part of the initial Borrowing by each
Borrower hereunder is subject to the condition precedent that the Agent shall
have received the following documents:
(i) certified copies of the Certificate of Incorporation and By-Laws of
such Borrower and the resolutions of the Board of Directors of such Borrower
adopted in respect of the transactions contemplated hereby and such other
documents as the Agent or the Required Banks may reasonably request relating
to the existence of
53
<PAGE>
such Borrower, the corporate authority for and the validity of this Agreement
and the Notes (if any) of such Borrower, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent;
(ii) a Certificate of Incumbency executed by the Secretary or an Assistant
Secretary of such Borrower in substantially the form of Exhibit E hereto setting
forth the name, title and specimen signature of each Authorized Officer or
Authorized Representative of such Borrower (1) who has signed this Agreement on
behalf of such Borrower, (2) who will sign the Notes (if any) of such Borrower
on behalf of such Borrower or (3) who will, until replaced by another officer or
representative duly authorized for that purpose, act as the representative of
such Borrower for the purposes of signing documents and giving notices and other
communications by such Borrower in connection with this Agreement and the
transactions contemplated hereby;
(iii) an opinion of the General Counsel, a Deputy General Counsel or an
Associate General Counsel of the Company, dated on or prior to the date of such
initial Borrowing, with respect to such Borrower in substantially the form of
Exhibit F hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably request;
provided that such opinion need only cover the Notes (if any) of the Company if
such opinion has been previously rendered in all other respects with respect to
the Company pursuant to clause (viii) of this Section;
(iv) an opinion of Davis Polk & Wardwell, special counsel for the Agent,
dated on or prior to the date of such initial Borrowing, with respect to such
Borrower in substantially the form of Exhibit G hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request; provided that such opinion need only
cover the Notes (if any) of the Company if such opinion has been previously
rendered in all other respects with respect to the Company pursuant to clause
(viii) of this Section;
(v) a certificate signed by the Chairman of the Board, the President or any
Vice President of such Borrower to the effect set forth in clauses (iii) and
(iv) of Section 3.02;
(vi) for the account of each Bank that has requested a Note in accordance
with Section 2.05, a duly executed Note of such Borrower, dated on or before the
date of such initial Borrowing, complying with the provisions of Section 2.05;
(vii) true copies of the designation and acceptance of appointment of the
agent appointed by such Borrower pursuant to Section 10.13(b) if such Borrower
is a Foreign Subsidiary Borrower; and
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(viii) if the initial Borrowing hereunder is by a Subsidiary Borrower,
the documents, certificates and opinions referred to in clauses (i) through
(v), inclusive, of this Section with respect to the Company, all as if the
Company were the Borrower of such initial Borrowing, except that such
opinions of counsel shall not cover the Notes (if any) of the Company.
The certificate and opinions referred to in clauses (ii), (iii), (iv) and (v)
above shall be dated no more than three Euro-Currency Business Days before the
date of such initial Borrowing.
Section 3.02. Each Borrowing. The obligation of each Bank to make each Loan
to be made by it as part of a Borrowing hereunder to any Borrower is subject to
the further conditions precedent that:
(i) the Agent shall have received a Notice of Borrowing as required by
Section 2.02 or 2.03, as the case may be;
(ii) the fact that, immediately after such Borrowing, the Dollar Amount
of the aggregate outstanding principal amount of the Loans will not exceed
the aggregate amount of the Commitments;
(iii) the fact that, immediately after such Borrowing, no Default shall
have occurred and be continuing;
(iv) the fact that the representations and warranties of such Borrower
contained in this Agreement shall be true on and as of the date of such
Borrowing (after giving effect to such Borrowing) as if made on and as of
such date (except to the extent they expressly relate to an earlier date);
and
(v) the fact that, if such Borrower is a Subsidiary Borrower, the
representations and warranties of the Company contained in this Agreement
shall be true on and as of the date of such Borrowing (after giving effect to
such Borrowing) as if made on and as of such date (except to the extent they
expressly relate to an earlier date).
Each Borrowing hereunder by the Company shall be deemed to be a representation
and warranty by the Company on the date of such Borrowing as to the facts
specified in clauses (ii), (iii) and (iv) of this Section. Each Borrowing
hereunder by a Subsidiary Borrower shall be deemed to be a representation and
warranty on the date of such Borrowing (A) by such Subsidiary Borrower as to the
facts specified in clauses (ii), (iii) and (iv) of this Section and (B) by the
Company as to the facts specified in clauses (ii), (iii), (iv) and (v) of this
Section.
ARTICLE IV
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Representations And Warranties
Section 4.01. Representations and Warranties of the Company. The Company
represents and warrants to the Banks as follows:
(a)(1) The Company is (i) a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and
(ii) either is qualified to do business and in good standing in each
jurisdiction where the ownership of its properties or the conduct of its
business requires such qualification or is subject to no material liability
or disability by reason of the failure to be so qualified in any such
jurisdiction.
(2) The Company has all corporate power and authority, governmental
permits, licenses, consents, authorizations, orders and approvals and other
authorizations as are necessary to carry on its business substantially as
presently conducted.
(3) The execution, delivery and performance of this Agreement and of the
Notes (if any) of the Company, and Borrowings hereunder by the Company, are
within its corporate power and authority and have been duly authorized by all
necessary corporate proceedings.
(4) Neither such authorization nor the execution, delivery and performance
by the Company of this Agreement or of the Notes (if any) of the Company
hereunder, nor any Borrowing hereunder by the Company when made, will
conflict with, result in a breach of or constitute a default under any of the
terms, conditions or provisions of any law or any regulation, order, writ,
injunction or decree of any court or governmental authority or of the
Certificate of Incorporation or By-Laws of the Company or result in the
violation or contravention of, or the acceleration of any obligation under,
or cause the creation of any Mortgage on any of the properties of the Company
pursuant to the provisions of, any indenture, agreement or other instrument
representing Debt, or any other agreement material to the Company and its
Consolidated Subsidiaries, considered as a whole, to which it is a party or
by which it is bound.
(5) Assuming its due execution by the Banks and the Agent, this Agreement
constitutes a legal, valid and binding agreement of the Company and the Notes
(if any) of the Company, when duly executed on behalf of the Company and
delivered in accordance with this Agreement, will constitute legal, valid and
binding obligations of the Company.
(b) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1993 and the related consolidated statements
of income and cash flows for the 12 months ended that date, certified by
Coopers &
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Lybrand, copies of all of which have been delivered to the Banks, fairly present
the consolidated financial position of the Company and its Consolidated
Subsidiaries as of such date and the consolidated results of their operations
and cash flows for such fiscal year, in conformity with generally accepted
accounting principles consistently applied.
(c) The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of September 30, 1994 and the related unaudited
consolidated statements of income and cash flows for the nine-month period then
ended, a copy of which has been delivered to each of the Banks, fairly present,
in conformity with generally accepted accounting principles applied on a basis
consistent with (except as disclosed therein) the financial statements referred
to in paragraph (b) of this Section, the consolidated financial position of the
Company and its Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal period (subject to normal
year-end adjustments).
(d) Except as disclosed in writing to the Banks, there has been no material
adverse change since September 30, 1994 in the business, operations, affairs,
assets, condition (financial or otherwise) or results of operations of the
Company and its Consolidated Subsidiaries, considered as a whole.
(e) Except as disclosed in writing to the Banks, there is no action, suit or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries in any court or before or by
any arbitrator, governmental department, agency or instrumentality, which is
reasonably likely to materially and adversely affect the ability of the Company
to perform its obligations hereunder and under its Notes (if any) or which in
any manner draws into question the validity of this Agreement or any Note.
(f) No Default has occurred and is continuing.
(g) No consent, authorization, order or approval of (or filing or
registration with) any governmental commission, board or other regulatory
authority (other than routine reporting requirements) is required for the
execution, delivery and performance by the Company of this Agreement or of the
Notes (if any) of the Company or for Borrowings hereunder by the Company.
(h) Each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect
to each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in respect of
any
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Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could
result in the imposition of a Mortgage or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
(i) Each Material 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 such licenses, authorizations, consents or
approvals, the absence of which will not materially affect the business of
the Company and its Consolidated Subsidiaries taken as a whole.
(j) There are no Mortgages on any asset of the Company or any Subsidiary
on the date hereof which would have been prohibited if Section 5.02 of this
Agreement had been in effect on the date the Company or such Subsidiary, as
the case may be, acquired such asset.
(k) Except as disclosed in writing to the Banks, the description of
environmental matters affecting the Company and its Subsidiaries contained in
each of the Company's reports delivered to the Banks pursuant to clause (ii)
of Section 5.01(c) complied in all material respects as of the date of such
report with the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect
and applicable to the Borrower on the date of such report.
Section 4.02. Representations and Warranties of Each Subsidiary Borrower.
Each Subsidiary Borrower represents and warrants to the Banks as follows:
(a)(1) Such Subsidiary Borrower is (i) a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) either is qualified to do business and in good
standing in each jurisdiction where the ownership of its properties or the
conduct of its business requires such qualification or is subject to no
material liability or disability by reason of the failure to be so qualified
in any such jurisdiction.
(2) Such Subsidiary Borrower has all corporate power and authority,
governmental permits, licenses, consents, authorizations, orders and
approvals, and other authorizations as are necessary to carry on its business
substantially as presently conducted.
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(3) The execution, delivery and performance of this Agreement and of
the Notes (if any) of such Subsidiary Borrower, and Borrowings hereunder by
such Subsidiary Borrower, are within its corporate power and authority and
have been duly authorized by all necessary corporate proceedings.
(4) Neither such authorization nor the execution, delivery and
performance by such Subsidiary Borrower of this Agreement or of the Notes
(if any) of such Subsidiary Borrower hereunder, nor any Borrowing hereunder
by such Subsidiary Borrower when made, will conflict with, result in a
breach of or constitute a default under any of the terms, conditions or
provisions of any law or any regulation, order, writ, injunction or decree
of any court or governmental authority or of the Certificate of
Incorporation or By-Laws of such Subsidiary Borrower or result in the
violation or contravention of, or the acceleration of any obligation under,
or cause the creation of any Mortgage on any of the properties of such
Subsidiary Borrower pursuant to the provisions of, any indenture, agreement
or other instrument representing Debt or any other agreement material to
such Subsidiary Borrower and its consolidated subsidiaries, considered as a
whole, to which it is a party or by which it is bound.
(5) Assuming its due execution by the Banks and the Agent, this
Agreement constitutes a legal, valid and binding agreement of such
Subsidiary Borrower and the Notes (if any) of such Subsidiary Borrower,
when duly executed on behalf of such Subsidiary Borrower and delivered in
accordance with this Agreement, will constitute legal, valid and binding
obligations of such Subsidiary Borrower.
(b) Except as disclosed in writing to the Banks, there has been no
material adverse change since the last day of the fiscal quarter ending
immediately prior to the date on which such Subsidiary Borrower became a
party hereto in the business, operations, affairs, assets, condition
(financial or otherwise) or results of operations of such Subsidiary
Borrower and its consolidated subsidiaries, considered as a whole.
(c) Except as disclosed in writing to the Banks, there is no action,
suit or proceeding pending or, to the knowledge of such Subsidiary
Borrower, threatened against or affecting such Subsidiary Borrower or any
of its subsidiaries in any court or before or by any arbitrator,
governmental department, agency or instrumentality, which would be
reasonably likely to materially and adversely affect the ability of such
Subsidiary Borrower to perform its obligations hereunder and under its
Notes (if any) or which in any manner draws into question the validity of
this Agreement or such Notes of such Subsidiary Borrower.
(d) No Default has occurred and is continuing.
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(e) No consent, authorization, order or approval of (or filing or
registration with) any governmental commission, board or other regulatory
authority (other than routine reporting requirements) is required for the
execution, delivery and performance by such Subsidiary Borrower of this
Agreement or of the Notes (if any) of such Subsidiary Borrower or for
Borrowings hereunder by such Subsidiary Borrower.
(f) Such Subsidiary Borrower is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
ARTICLE V
Covenants
The Company agrees that, so long as any Bank has any Commitment hereunder
or any amount payable with respect to any loan or under any Note remains unpaid:
Section 5.01. Certain Information to be Furnished by the Company. The
Company will deliver to each Bank:
(a) as soon as available and in any event within 120 days after the
end of each of its fiscal years, the consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income and cash flows for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, prepared in accordance with generally accepted
accounting principles consistently applied and so certified by a nationally
recognized firm of independent certified public accountants;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each of its fiscal years, the
consolidated balance sheet of the Company and its Consolidated Subsidiaries
as of the end of such fiscal quarter, the related consolidated statement of
income for such fiscal quarter and for the portion of the fiscal year ended
with such quarter and the related consolidated statement of cash flows for
the portion of the fiscal year ended with such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by
the chief financial officer or the chief accounting officer of the Company;
(c) promptly after the same are available, copies of all (i)
financial statements, reports and proxy materials sent to shareholders of
the Company and (ii) reports on Forms 10-K, l0-Q and 8-K (or their
equivalents) filed by the Company with the
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Securities and Exchange Commission (or any governmental agency succeeding
to the functions of such Commission);
(d) simultaneously with the delivery of the financial statements
referred to in clause (a) above, a certificate of the Company signed by the
Treasurer, any Assistant Treasurer or other financial officer of the
Company stating whether there exists on the date of such certificate any
Default, and, if any such Default then exists, specifying the nature and
period of existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(e) forthwith, if at any time any executive officer of the Company
shall obtain knowledge of any Default, a certificate of the Treasurer, any
Assistant Treasurer or other financial officer specifying the nature and
period of existence thereof and the action the Company is taking and
proposes to take with respect thereto;
(f) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Mortgage or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Company setting forth details as to such
occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take;
(g) promptly after any executive officer becomes aware thereof, a
notice concerning any actual change in the rating assigned to any of the
Borrower's Long-Term Public Debt from Moody's or S&P (as such terms are
defined in Section 2.07(h)); and
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(h) from time to time such further information regarding compliance
with this Agreement or the business, operations, affairs, assets, condition
(financial or otherwise) or results of operations of the Company and its
Consolidated Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
Section 5.02. Limitation on Mortgages. Nothing in this Agreement or in the
Notes (if any) shall in any way restrict or prevent the Company or any
Subsidiary from incurring any indebtedness; provided that the Company covenants
and agrees that neither it nor any Restricted Subsidiary will issue, assume or
guarantee any Debt secured by any Mortgage upon any Restricted Property without
effectively providing that all of the Loans of all of the Borrowers (together
with, if the Company so determines, any other indebtedness or obligation then
existing and any other indebtedness or obligation thereafter created ranking
equally with the Loans) shall be secured equally and ratably with (or
prior to) such Debt so long as such Debt shall be so secured, except that the
foregoing provisions shall not apply to:
(a) Mortgages affecting property of a corporation existing at the
time it becomes a Subsidiary of the Company or at the time it is merged
into or consolidated with the Company or a Subsidiary;
(b) Mortgages on property existing at the time of acquisition thereof
or incurred to secure payment of all or part of the purchase price thereof
or to secure Debt incurred prior to, at the time of or within 24 months
after acquisition thereof for the purpose of financing all or part of the
purchase price thereof;
(c) Mortgages on property to secure all or part of the cost of
exploration, drilling or development thereof or, in the case of property
which is, in the opinion of the Board of Directors of the Company,
substantially unimproved for the use intended by the Company, all or part
of the cost of improvement thereof, or to secure Debt incurred to provide
funds for any such purpose;
(d) Mortgages which secure only Debt owing by a Subsidiary to the
Company or another Subsidiary;
(e) Mortgages in favor of the United States of America or any state
thereof or any department, agency, instrumentality or political subdivision
of any such jurisdiction to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price
or cost of constructing or improving the property subject thereto,
including, without limitation, Mortgages to secure Debt of the pollution
control or industrial revenue bond type; or
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(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to
in the foregoing clauses (a) to (e) inclusive or of any Debt secured
thereby; provided that the principal amount of Debt secured thereby shall
not exceed the principal amount of Debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Mortgage shall be limited to all or part of substantially the
same property which secured the Mortgage extended, renewed or replaced
(plus improvements on such property).
Notwithstanding the foregoing provisions of this Section, the Company and any
one or more Restricted Subsidiaries may issue, assume or guarantee Debt secured
by Mortgages which would otherwise be subject to the foregoing restrictions or
grant any such Mortgage to secure any such Debt in an aggregate principal amount
which, together with the aggregate outstanding principal amount of all Debt of
the Company and the Restricted Subsidiaries which would otherwise be subject to
the foregoing restrictions (not including Debt permitted to be secured under
clauses (a) to (f) inclusive above) and the aggregate Value of the Sale and
Lease-Back Transactions (as such terms are defined in Section 5.03 hereof) in
existence at such time (not including Sale and Lease-Back Transactions as to
which the Company has complied with Section 5.03(b) hereof), does not at any one
time exceed 10% of the Consolidated Net Tangible Assets of the Company and its
Consolidated Subsidiaries.
The following types of transaction, among others, shall not be deemed to
create Debt secured by Mortgage:
(i) the sale or other transfer of oil, gas or other minerals in place
for a period of time until, or in an amount such that, the transferee will
realize therefrom a specified amount (however determined) of money or such
minerals, or the sale or other transfer of any other interest in property
of the character commonly referred to as a production payment; and
(ii) Mortgages required by any contract or statute in order to permit
the Company or a Subsidiary to perform any contract or subcontract made by
it with or at the request of the United States of America, any state or any
department, agency or instrumentality, or political subdivision of either.
Section 5.03. Limitation on Sale and Lease-Back. The Company covenants and
agrees that neither it nor any Restricted Subsidiary will enter into any
arrangement with any Person (other than the Company or a Subsidiary), or to
which any such Person is a party, providing for the leasing to the Company or a
Restricted Subsidiary for a period of more than three years of any Restricted
Property which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person (other than the
Company or a Subsidiary), to which funds have been or are to be
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advanced by such Person on the security of the leased property (in this Section
and in Section 5.02 hereof called a "Sale and Lease-Back Transaction") unless
either:
(a) the Company or such Restricted Subsidiary would be entitled,
pursuant to the provisions of Section 5.02 hereof, to incur Debt in a
principal amount equal to or exceeding the Value of such Sale and Lease-
Back Transaction, secured by a Mortgage on the property to be leased,
without equally and ratably securing the Loans; or
(b) the Company (and in any such case the Company covenants and agrees
that it will do so) during or immediately after the expiration of four
months after the effective date of such Sale and Lease-Back Transaction
(whether made by the Company or a Restricted Subsidiary) applies to the
voluntary retirement of indebtedness of the Company maturing by the terms
thereof more than one year after the original creation thereof and ranking
at least pari passu with the Loans (hereinafter in this Section 5.03
called "Funded Debt") an amount equal to the Value of such Sale and Lease-
Back Transaction, less the principal amount of Funded Debt voluntarily
retired by the Company within such four-month period, excluding retirements
of Funded Debt as a result of conversions or pursuant to mandatory sinking
fund or repayment provisions or by payment at maturity.
For purposes of Section 5.02 hereof and this Section, the term "Value" shall
mean, with respect to a Sale and Lease-Back Transaction, as of any particular
time, the amount equal to the greater of (i) the net proceeds of the sale or
transfer of the property leased pursuant to such Sale and Lease-Back Transaction
or (ii) the fair value in the opinion of the Board of Directors of the Company
of such property at the time of entering into such Sale and Lease-Back
Transaction, in either case divided first by the number of full years of the
term of the lease and then multiplied by the number of full years of such term
remaining at the time of determination, without regard to any renewal or
extension options contained in the lease.
Section 5.04. Consolidation, Merger, Disposition of Assets. (a) Subject to
the provisions of Section 5.04(b) hereof, nothing contained in this Agreement
shall prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale or conveyance
of all or substantially all the property of the Company, to any other
corporation (whether or not affiliated with the Company) authorized to acquire
and operate the same; provided, however, and the Company hereby covenants and
agrees, that upon any such consolidation, merger, sale or conveyance, other than
a consolidation or merger in which the Company is the continuing corporation,
the due and punctual payment of the principal of and interest on all of its
Loans, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed by the Company,
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including the guarantee contained in Article IX hereof, shall be expressly
assumed by instrument satisfactory in form to the Required Banks and executed
and delivered to the Agent by the corporation (if other than the Company) formed
by such consolidation or into which the Company shall have been merged or by the
corporation which shall have acquired such property.
(b) If, upon any consolidation or merger of the Company with or into any
other corporation, or upon the sale or conveyance of all or substantially all
the property of the Company to any other corporation, any of the remaining
property of the Company or of any Restricted Subsidiary would thereupon become
subject to any Mortgage, the Company, prior to or simultaneously with such
consolidation, merger, sale or conveyance, will secure the Loans of the Company
and all other obligations of the Company under this Agreement, including the
guarantee contained in Article IX hereof, equally and ratably with any other
obligations of the Company or any subsidiary then entitled thereto, by a direct
Mortgage on all such property prior to all Mortgages other than any theretofore
existing thereon.
Section 5.05. Use of Proceeds. The proceeds of the Loans made under this
Agreement will be used by each Borrower for general corporate purposes. None of
such proceeds will be used in violation of Regulation U or of any similar law or
regulation.
ARTICLE VI
Defaults
Section 6.01. Defaults. If one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) any Borrower shall default in the payment when due of any
principal of any Loan or shall default in the payment within ten days of
the due date thereof of any interest on any Loan or any other amount
payable hereunder;
(b) the Company shall fail to perform or observe any covenant or
agreement to be performed by it contained in Sections 5.02, 5.03, 5.04 or
5.05;
(c) any Borrower shall fail to perform or observe any covenant or
agreement to be performed by it contained in this Agreement (other than
those covered by clause (a) or (b) above) for 30 days after written notice
of such failure is given to the Borrower by the Agent at the request of any
Bank;
(d) any Borrower shall have made or be deemed to have made pursuant to
this Agreement any representation or warranty in or pursuant to this
Agreement, or in any certificate or financial statement delivered pursuant
this Agreement or any
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document delivered pursuant to Article III, which shall prove to have been
incorrect in any material respect when made or deemed made;
(e) the Company or any Subsidiary shall fail to pay any indebtedness
for borrowed money (other than the Loans) payable or guaranteed by it, or
any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such indebtedness or guarantee;
provided that (i) the aggregate amount of such indebtedness of or
guaranteed by the Borrowers, including any interest or premium thereon,
shall exceed $75,000,000 (or the Equivalent Amount thereof) and (ii) there
shall be excluded for purposes of the foregoing any such indebtedness or
guarantee (A) in favor of any department, agency, instrumentality or
political subdivision of the United States of America or any state thereof
in respect of any pollution control, industrial revenue bond or other
similar type of financing or (B) incurred to finance, or otherwise relating
primarily to, any assets, projects or operations located or conducted
primarily outside the United States of America; provided, further, that the
obligation of the Company or any Subsidiary to pay such indebtedness or
guarantee referred to in clause (A) or (B) above is being contested in good
faith;
(f) the Company, any Subsidiary Borrower, any Material Subsidiary or
any two or more Subsidiaries which, if such Subsidiaries were one
Subsidiary, would be a Material Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against
the Company, any Subsidiary Borrower, any Material Subsidiary or any two or
more Subsidiaries which, if such Subsidiaries were one Subsidiary, would be
a Material Subsidiary seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days;
or an order for relief shall be entered against the Company or any
Subsidiary under the federal bankruptcy laws as now or hereafter in effect;
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(h) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $50,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA)
in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or
a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
to, one or more Multiemployer Plans which could cause one or more members
of the ERISA Group to incur a current payment obligation in excess of
$50,000,000; or
(i) a final, non-appealable judgment or order enforceable by the
courts of the United States or the United Kingdom for the payment of money
in excess of $50,000,000 (or the Equivalent Amount thereof) shall be
rendered against the Company or any Subsidiary and such judgment or order
shall continue unsatisfied for a period of 30 days;
then, and in every such event, the Agent shall (i) if requested by the Required
Banks, by notice to the Company terminate the Commitments, and they shall
thereupon terminate, and (ii) if requested by Banks having Loans the Dollar
Amount of the principal amount of which is more than 51% of the Dollar Amount
of the aggregate principal amount of all the Loans, by notice to the Company
and each Subsidiary Borrower declare the full unpaid principal of and accrued
interest on the Loans and all other amounts payable hereunder to be immediately
due and payable, whereupon the Commitments shall terminate and the Loans and
such other amounts shall be immediately due and payable, without further
notice, presentment, demand, protest or other formality of any kind, all of
which are hereby expressly waived by the Company and each Subsidiary Borrower;
provided that in the case of the occurrence of an event referred to in clause
(f) or (g) above, the Commitments shall automatically terminate and the full
unpaid principal of and accrued interest on the Loans and all other amounts
payable hereunder shall automatically become immediately due and payable,
without notice, presentment, demand, protest or other formality of any kind, all
of which are hereby expressly waived by the Company and each Subsidiary
Borrower.
Section 6.02. Notice of Default. The Agent shall give notice to the Company
and each Subsidiary Borrower under Section 6.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
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The Agent
Section 7.01. Appointment and Authorization. Each Bank irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the Notes as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
Section 7.02. Agent and Affiliates. Morgan Guaranty Trust Company of New
York shall have the same rights and powers under this Agreement as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and Morgan Guaranty Trust Company of New York and its affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Company or any Subsidiary or any affiliate thereof as if it
were not the Agent hereunder.
Section 7.03. Action by Agent. The obligations of the Agent hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect to
any Default, except as expressly provided in Article VI.
Section 7.04. Consultation with Experts. The Agent may consult with legal
counsel (who may be counsel for any Borrower), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
Section 7.05. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any Borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of any Borrower; (iii) the satisfaction of
any condition specified in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
Section 7.06. Indemnification. Each Bank shall, ratably in accordance with
its Commitment, indemnify the Agent (to the extent not reimbursed by the
Company) against any cost, expense (including counsel fees and disbursements),
claim, demand,
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action, loss or liability (except such as result from the Agent's gross
negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or omitted by the Agent
hereunder.
Section 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
Section 7.08. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any state thereof and having a
combined capital and surplus of at least $200,000,000. Upon the acceptance of
its appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.
ARTICLE VIII
Change In Circumstances
Section 8.01. Basis for Determining Interest Rate Inadequate or Unfair. (a)
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing (other than a Money Market Absolute Rate Loan):
(1) the Agent is advised by the Reference Banks that deposits in the
applicable currency (in the applicable amounts) are not being offered to
the Reference Banks in the relevant market for such Interest Period, or
(2) the Required Banks advise the Agent that the Adjusted CD Rate or
the London Interbank Offered Rate, as the case may be, as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Currency Loans or Money Market LIBOR Loans,
as the case may be, for such Interest Period,
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the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such notice no longer exist: (A)(i) if such circumstances relate to CD
Loans, the obligations of the Banks to make, or to continue or convert
outstanding Loans as or into, CD Loans shall be suspended or (ii) if such
circumstances relate to the London Interbank Offered Rate, the New York
Interbank Offered Rate shall replace the London Interbank Offered Rate for
purposes of interest rate determinations hereunder for Euro-Currency Borrowings
and Money Market LIBOR Borrowings for such Interest Period (and all references
herein to the London interbank market and the London Interbank Offered Rate for
such purposes shall, unless the context otherwise requires, be deemed to be
references to the New York interbank market and the New York Interbank Offered
Rate, respectively), as the case may be, and (B) unless the Company notifies the
Agent at least one Domestic Business Day before the date of the making or
conversion or continuation of any Group of Fixed Rate Loans for which a Notice
of Borrowing or Notice of Interest Rate Election has previously been given that
it elects not to borrow, continue or convert (as the case may be) on such date
or that it elects to do so in another currency such that clause (1) or (2) above
is not applicable thereto,
(i) if such Group of Fixed Rate Loans consists of CD Loans, such CD
Loans shall instead be made, converted into or continued (as the case may
be) (x) as a Group of Euro-Currency Loans if the relevant Borrower so
elects by notice to the Agent and all of the procedures set forth herein
for making, converting into or continuing Euro-Currency Loans, as the case
may be (including the required notice to the Banks but excluding the three
Euro-Currency Business Days' notice required by Section 2.02 or 2.06), can
be complied with at such time or (y) as a Money Market LIBOR Borrowing if
the relevant Borrower so elects by notice to the Agent and all of the
procedures set forth herein for a Money Market LIBOR Borrowing (including
the required notice to the Banks) can be complied with at such time or (z)
if neither of the foregoing types of Loans or Borrowings is elected or is
possible, as Base Rate Loans,
(ii) if such Group of Fixed Rate Loans consists of Euro-Currency
Loans, the interest rate for such Group shall be determined on the basis of
the New York Interbank Offered Rate if all of the procedures set forth
herein for making, converting into or continuing Euro-Currency Loans (as
the case may be) on such basis (including the required notice to the Banks)
can be complied with at such time or, if clause (1) or (2) of this
subsection is applicable to the New York Interbank Offered Rate at such
time, such Group of Euro-Currency Loans shall instead be made, converted
into or continued (as the case may be) (x) as a Group of CD Loans if the
relevant Borrower so elects by notice to the Agent and all of the
procedures set forth herein for making, converting into or continuing CD
Loans, as the case may be (including the required notice to the Banks but
excluding the three Domestic Business Days' notice required by Section 2.02
or 2.06), can be complied with at such time or (y) if making, converting
into or continuing such Loans as CD Loans
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is not elected or is not possible, then such Euro-Currency Loans shall
instead be made or converted into as a Group of Base Rate Loans; provided
that, if such Euro-Currency Loans were to be denominated in a currency
other than Dollars, the principal amount of the CD Loans or Base Rate
Loans, as the case may be, shall be the Dollar Amount of the principal
amount of such Euro-Currency Loans, and
(iii) if such Fixed Rate Borrowing is a Money Market LIBOR Borrowing,
the interest rate for such Money Market LIBOR Borrowing shall be
determined on the basis of the New York Interbank Offered Rate if all of
the procedures set forth herein for a Money Market LIBOR Borrowing on such
basis (including the required notice to the Banks) can be complied with at
such time or, if clause (1) or (2) of this subsection is applicable to the
New York Interbank Offered Rate at such time, the Money Market LIBOR Loans
comprising such Borrowing shall be made in Dollars in a principal amount
equal to the Dollar Amount of the principal amount of such Money Market
LIBOR Borrowing and shall bear interest for each day from and including
the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
(b) If clause (1) or (2) of subsection (a) of this Section becomes
applicable when the New York Interbank Offered Rate has replaced the London
Interbank Offered Rate hereunder, then the Agent shall give notice to the
Company of such condition and the Company and the Agent (in consultation with
the Banks) shall promptly enter into negotiations in good faith with a view to
agreeing upon an alternative basis (a "Substitute Basis") acceptable to the
Company and the Banks and applicable to all Borrowers for determining the
interest rate which shall be applicable to the affected Euro-Currency Loans or
Money Market LIBOR Borrower, which rate shall reflect the cost to the Banks of
maintaining such Euro-Currency Loans plus the Euro-Currency Margin or
maintaining such Money Market LIBOR Loans plus any applicable Money Market
Margin as the case may be. If, prior to the expiration of 20 days from the date
of such notice by the Agent, the Company and the Banks shall agree upon a
Substitute Basis, interest on such Euro-Currency Loans or Money Market LIBOR
Loans for the affected Interest Periods commencing during the period beginning
two Euro-Currency Business Days after the date of such notice and ending on the
date three Euro-Currency Business Days after the Agent notifies the Company and
the Banks that the condition specified in clause (1) or (2) of subsection (a) of
this Section has ceased to be in effect shall be determined on such Substitute
Basis. Each Subsidiary Borrower, by executing and delivering this Agreement,
constitutes and appoints the Company its authorized agent for purposes of
determining the Substitute Basis applicable to Loans of such Subsidiary Borrower
and agrees to be bound by any agreement hereunder by the Company to any such
Substitute Basis. If no such agreement has been reached by the expiration of
such 20-day period, the Agent shall so notify the Banks and each Bank shall,
within ten days after the date of such notice, notify the Company (through the
Agent) of the rate (or the basis of determining the rate) at which it is
prepared to maintain such Euro-Currency Loans or Money Market LIBOR Loans held
by it hereunder for the affected Interest Periods (which rate shall reflect the
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cost to such Bank of maintaining such Loans plus the Euro-Currency Margin or
plus any applicable positive Money Market Margin, as the case may be) and such
rate (or basis) shall be applicable to such Euro-Currency Loans or Money Market
LIBOR Loans, as the case may be, held by it for the affected Interest Periods
applicable thereto referred to in the preceding sentence. The Agent shall
determine the total amount of interest payable by each affected Borrower on each
date for the payment of interest hereunder determined in accordance with this
subsection (b) (to the extent it has received the necessary information from the
Banks) and notify such Borrower of such total amount (provided that no Bank's
right to receive any interest payable to it hereunder shall be impaired by its
failure to provide such information to the Agent). The Company shall have the
right at any time to suspend the obligation of each Bank notifying a rate (or
basis) pursuant to the second preceding sentence of this subsection to make
Euro-Currency Loans.
Section 8.02. Illegality. If, after November 30, 1994 the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Bank (or its Applicable Lending Office) to make, maintain or
fund its Euro-Currency Loans and such Bank shall so notify the Agent, the Agent
shall forthwith give notice thereof to the other Banks, the Company and each
Subsidiary Borrower, whereupon until such Bank notifies the Company, each
Subsidiary Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make, convert into or
continue Euro-Currency Loans shall be suspended. Before giving any notice to the
Agent pursuant to this Section, such Bank shall designate a different Applicable
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such notice is given, each affected Euro-Currency Loan of such Bank
then outstanding shall be converted to a Base Rate Loan (or, if any such
Borrower so elects by at least one Domestic Business Day's notice to the Agent
and such Bank, a CD Loan or, subject to Section 2.03 and the willingness of such
Bank in its own discretion to submit a Money Market Quote, a Money Market
Absolute Rate Loan) either (a) on the last day of the then current Interest
Period applicable to such Euro-Currency Loan if such Bank may lawfully continue
to maintain and fund such Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day, in any case with an Interest Period coincident with the remaining term
of the Interest Period applicable to such affected Euro-Currency Loan of such
Borrower, and such Bank shall make such a Domestic Loan.
Section 8.03. Increased Cost and Reduced Return. (a) If on or after (x)
November 30, 1994, in the case of any Syndicated Loan or any obligation to make
Syndicated Loans or (y) the date of the related Money Market Quote, in the case
of any Money
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Market Loan, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(i) shall subject any Bank (or its Applicable Lending Office) to any
tax, duty or other similar charge with respect to its Fixed Rate Loans, its
Notes or its obligation to make, convert into or continue Fixed Rate Loans,
or shall change the basis of taxation of payments to any Bank (or its
Applicable Lending Office) of the principal of or interest on its Fixed
Rate Loans or any other amounts due under this Agreement in respect of its
Fixed Rate Loans or its obligation to make, convert into or continue Fixed
Rate Loans (except for changes in the rate of tax on the overall net income
of such Bank or its Applicable Lending Office imposed by the jurisdiction
in which such Bank's principal executive office or Applicable Lending
Office is located, and except as provided in clause (d) below) or
(ii) shall impose, modify or deem applicable any reserve, special
deposit, deposit insurance assessment or similar requirement (including,
without limitation, any such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding (A) with respect to any CD
Loan any such requirement included in an applicable Domestic Reserve
Percentage and (B) with respect to any Euro-Currency Loan or Money Market
LIBOR Loan any such requirement included in an applicable Euro-Currency
Reserve Percentage) against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office) or
shall impose on any Bank (or its Applicable Lending Office) or on the
United States market for certificates of deposit or the London interbank
market any other condition affecting its Fixed Rate Loans, its Notes or its
obligation to make, convert into or continue Fixed Rate Loans,
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making, converting into or maintaining any
Fixed Rate Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Applicable Lending Office) under this Agreement or under its
Notes with respect thereto, by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank (with a copy to the Agent), the
Borrower of each affected Fixed Rate Loan or owing the affected sum shall pay to
such Bank (without duplication of amounts otherwise payable hereunder) such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction with respect to such affected Fixed Rate Loan or such affected
sum.
(b) If any Bank shall have reasonably determined that, after November 30,
1994, the adoption of any applicable law, rule or regulation regarding capital
adequacy or any
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change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or the making of any request or the
issuance of any directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
has had the effect of reducing the rate of return on the capital of such Bank
(or its Parent) as a consequence of its obligations hereunder to a level below
that which such Bank (or its Parent) could have achieved but for such adoption,
change or compliance (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the relevant Borrower or (if such Bank is unable to reasonably allocate
such effect among the Borrowers) the Company shall pay to such Bank (without
duplication of amounts otherwise payable hereunder) such additional amount or
amounts as will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Company and the Agent of any event
of which it has knowledge, occurring after November 30, 1994, which will entitle
such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section, setting forth the additional amount or
amounts to be paid to it hereunder and setting forth in reasonable detail the
basis for such compensation shall be conclusive in the absence of manifest
error. In determining such amount, such Bank may use any reasonable averaging
and attribution methods.
(d) This Section 8.03 shall not apply to (i) any liabilities with respect
to Foreign Taxes, Other Taxes or liabilities that would be Foreign Taxes or
Other Taxes in the absence of the exclusionary language in the first sentence of
Section 2.16(c), all of which shall be governed by Section 2.16, or (ii) any
liabilities with respect to taxes, duties or similar charges that would be
described in clauses (i) through (v) of the first sentence of Section 2.16(c) if
Section 2.16(c) applied to the Company and to Subsidiary Borrowers other than
Foreign Subsidiary Borrowers.
Section 8.04. Substitute Loans. If (i) the obligation of any Bank to make,
convert into or continue Euro-Currency Loans has been suspended pursuant to
Section 8.01(b) or 8.02 or (ii) any Bank has demanded compensation under Section
8.03(a) and the Borrower shall, by at least five Euro-Currency Business Days'
prior notice to such Bank through the Agent, have elected that the provisions of
this Section shall apply to such Bank, then, unless and until such Bank notifies
the Company that the circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans denominated in Dollars which would otherwise be made,
converted into or continued by such Bank as CD Loans or Euro-Currency
Loans,
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as the case may be, shall be made instead as Base Rate Loans or, if any
Borrower shall so elect in its Notice of Borrowing or Notice of Interest Rate
Election, CD Loans or Euro-Currency Loans (whichever type is not affected by
such circumstances) for an Interest Period coincident with the related Group
of Fixed Rate Loans,
(b) all Loans denominated in a currency other than Dollars which would
otherwise be made, converted into or continued by such Bank as Euro-Currency
Loans shall be made instead as Base Rate Loans or, if any Borrower shall so
elect in its Notice of Borrowing or Notice of Interest Rate Election, CD
Loans, in each case for an Interest Period coincident with the related Group
of Euro-Currency Loans and in Dollars in a principal amount equal to the
Dollar Amount of the principal amount of such Euro-Currency Loans, and
(c) after each of its CD Loans or Euro-Currency Loans, as the case may be,
has been repaid or converted, all payments of principal which would otherwise
be applied to repay such Fixed Rate Loans shall instead be applied to repay
its Loans made pursuant to Section 8.02 or clauses (a) or (b) above.
Section 8.05. Regulation D Compensation. For so long as any Bank maintains
reserves against "Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Currency Loans is determined or any category of extensions of credit or
other assets which includes loans by a non-United States office of such Bank to
United States residents), and as a result the cost to such Bank (or its Euro-
Currency Lending Office) of making or maintaining its Euro-Currency Loans is
increased, then such Bank may require the Borrower to pay, contemporaneously
with each payment of interest on the Euro-Currency Loans, additional interest on
the related Euro-Currency Loan of such Bank at a rate per annum up to but not
exceeding the excess of (i) (A) the applicable London Interbank Offered Rate
divided by (B) one minus the Euro-Currency Reserve Percentage over (ii) the
applicable London Interbank Offered Rate. Any Bank wishing to require payment of
such additional interest (x) shall so notify the Borrower and the Agent, in
which case such additional interest on the Euro-Currency Loans of such Bank
shall be payable to such Bank at the place indicated in such notice with respect
to each Interest Period commencing at least four Euro-Currency Business Days
after the giving of such notice and (y) shall furnish to the Borrower at least
five Euro-Currency Business Days prior to each date on which interest is payable
on the Euro-Currency Loans an officer's certificate setting forth the amount to
which such Bank is then entitled under this Section (which shall be consistent
with such Bank's good faith estimate of the level at which the related reserves
are maintained by it). Each such certificate shall be accompanied by such
information as the Borrower may reasonably request as to the computation set
forth therein.
Section 8.06. Substitution of Bank. If (i) the obligation of any Bank to
make Euro-Currency Loans has been suspended pursuant to Section 8.01(b) or 8.02
or (ii) any
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Bank has demanded compensation under Section 8.03 or 8.05, the Company shall
have the right, with the assistance of the Agent, to seek a satisfactory
substitute bank or banks (which may be one or more of the Banks) to purchase the
Loans and Notes (if any) of such Bank for cash in the currency in which the
principal thereof is denominated without recourse to such Bank and assume the
Commitment of such Bank.
ARTICLE IX
The Guarantee
Section 9.01. The Guarantee. The Company hereby unconditionally guarantees
that the principal of and interest on each Loan of each Subsidiary Borrower and
all other amounts payable by each such Subsidiary Borrower hereunder and under
each such Subsidiary Borrower's Loans shall be promptly paid in full when due
(whether at stated maturity, by acceleration or otherwise) in accordance with
the terms hereof and thereof and the Company hereby unconditionally agrees that
upon default in the full payment when due (whether at stated maturity, by
acceleration or otherwise) of any of such principal, interest or other amounts,
the Company shall forthwith pay the same at the place, in the currency and in
the manner specified in this Agreement.
Section 9.02. Guarantee Unconditional. The obligations of the Company
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of a Subsidiary Borrower under this
Agreement or any Note, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this Agreement
or any Note;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of a Subsidiary Borrower under this
Agreement or any Note;
(iv) any change in the corporate existence, structure or ownership of
a Subsidiary Borrower, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting a Subsidiary Borrower or its assets or
any resulting release or discharge of any obligation of a Subsidiary
Borrower contained in this Agreement or any Note;
(v) the existence of any claim, setoff or other rights which the
Company may have at any time against a Subsidiary Borrower, the Agent, any
Bank or any other Person, whether in connection herewith or with any
unrelated transactions, provided
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that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against a
Subsidiary Borrower for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the payment
by a Subsidiary Borrower of the principal of or interest on any Loan or any
other amount payable by a Subsidiary Borrower under this Agreement; or
(vii) any other act or omission to act or delay of any kind by a
Subsidiary Borrower, the Agent, any Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
Section, constitute a legal or equitable discharge of the Company's
obligations hereunder.
The Company's obligations hereunder shall remain in full force and effect until
the principal of and interest on all of the Loans of all the Subsidiary
Borrowers and all other amounts payable by the Subsidiary Borrowers under this
Agreement shall have been paid in full and the Commitments shall have
terminated.
Section 9.03. Waiver by the Company. The Company hereby irrevocably and
expressly waives acceptance hereof, diligence, presentment and protest and any
requirement that at any time any right or power be exhausted or any action be
taken by any Person against any Subsidiary Borrower or other Person and all
notices and demands whatsoever.
Section 9.04. Subrogation; Stay of Acceleration. Upon making any payment
with respect to any Subsidiary Borrower hereunder, the Company shall be
subrogated to the rights of the payee against such Subsidiary Borrower with
respect to such payment; provided that the Company shall not enforce any payment
by way of subrogation until all amounts of principal of and interest on the
Loans and all other amounts payable by the Subsidiary Borrowers under this
Agreement have been paid in full. The Company agrees that, as between the
Company, on the one hand, and the Banks and the Agent, on the other, the
obligations of each Subsidiary Borrower guaranteed under this Article may be
declared to be forthwith due and payable as provided in Article VI hereof for
purposes of this Article notwithstanding any stay, injunction or other
prohibition preventing such declaration as against such Subsidiary Borrower and
that, in the event of such declaration, such obligations (whether or not due and
payable by such Subsidiary Borrower) shall forthwith become due and payable by
the Company for purposes of this Article.
Section 9.05. Reinstatement in Certain Circumstances. If at any time any
payment of the principal of or interest on any Loan of any Subsidiary Borrower
or any other amount payable by a Subsidiary Borrower under this Agreement is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such
77
<PAGE>
Subsidiary Borrower or otherwise, the Company's obligations hereunder with
respect to such payment shall be reinstated as though such payment had been due
but not made at such time.
ARTICLE X
Miscellaneous
Section 10.01. Notices. All notices and other communications to any party
provided for herein shall be in writing (including bank wire, telex, facsimile
transmission, telegraph, cable or similar writing) and shall be given to such
party: (x) in the case of any Borrower or the Agent, at its address, facsimile
or telex number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address, facsimile or telex number set forth in its Administrative
Questionnaire or (z) in the case of any party, at such other address as shall be
designated by such party in a notice to the Company, each Subsidiary Borrower
and the Agent. All notices and other communications shall be effective (i) if
given by telex or facsimile transmission, when such telex is transmitted to the
telex or facsimile number specified in this Section and the appropriate
answerback or telephonic confirmation (in the case of any facsimile
transmission) is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent under
Article II or VIII hereof shall not be effective until received.
Section 10.02. No Waiver. No failure on the part of the Agent or any Bank to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or any Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement or any Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 10.03. Governing Law. This Agreement, the Notes and the requests,
invitations and offers provided for herein shall be governed by, and construed
in accordance with, the laws of the State of New York.
Section 10.04. Expenses. The Company agrees to pay or reimburse (i) the
Agent for paying the reasonable fees and expenses of Davis Polk & Wardwell,
special counsel to the Agent, in connection with (a) the preparation, execution
and delivery of this Agreement and the Notes (if any) and the making of the
Borrowings hereunder and (b) any amendment, modification, consent or waiver of
any of the terms of this Agreement or any of the Notes and (ii) the Agent or any
Bank for paying all reasonable costs and expenses of the Banks and the Agent
(including reasonable counsel fees) in connection with the enforcement of this
Agreement or any Note and any collection, bankruptcy,
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<PAGE>
insolvency and other enforcement proceedings resulting therefrom. The Company
hereby agrees to indemnify the Agent and each Bank, their respective affiliates
and the respective directors, officers, agents and employees of the foregoing
(each an "Indemnitee") and hold each Indemnitee harmless from and against any
and all liabilities, losses, damages, costs and expenses of any kind, including,
without limitation, the reasonable fees and disbursements of counsel, which may
be incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee shall be
designated a party thereto) brought or threatened relating to or arising out of
this Agreement or any actual or proposed use of proceeds of Loans hereunder;
provided that no Indemnitee shall have the right to be indemnified hereunder for
such Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction. If and to the extent that the foregoing
indemnification is unenforceable for any reason, the Company agrees to make the
maximum contribution to the payment and satisfaction of each of such losses,
liabilities, claims, damages or expenses which is permissible under applicable
law.
Section 10.05. Amendments, Etc. Any provision of this Agreement or the Notes
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Company and the Required Banks (and, if the rights or
duties of the Agent are affected thereby, by the Agent); provided that the Agent
may, with the consent of the Company (which shall not be unreasonably withheld),
specify by notice to the Banks modifications in the procedures set forth in
Section 2.03; and provided further that no such amendment, waiver or
modification shall, unless signed by all the Banks, (i) increase the Commitment
of any Bank or subject any Bank to any additional obligation (except for
increases to the Commitment of any Bank pursuant to Section 8.06 to which such
Bank has agreed in writing), (ii) reduces the principal of or rate of interest
on any Loan or any fees hereunder or the currency of payment thereof, (iii)
postpone the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder, (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement or (v) change Article IX or
Section 10.11 hereof.
Section 10.06. Counterparts; Effectiveness. This Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall become effective
when the Agent shall have received (i) counterparts hereof signed by the
Company, each Bank listed on the signature pages hereof and the Agent and (ii)
evidence satisfactory to it that the commitments under the Existing Credit
Agreement have terminated, all loans thereunder have been repaid in full and all
accrued fees and other amounts payable thereunder (including, without
limitation, any funding costs payable pursuant to the Existing Credit Agreement)
have been paid in full. The Agent shall notify the Company and the Banks of the
effectiveness of this Agreement by delivery of a notice in the form of
Exhibit I
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<PAGE>
hereto. The parties hereto who are also parties to the Existing Credit Agreement
hereby agree that the "Commitments" of the Banks thereunder shall terminate
automatically upon the effectiveness of this Agreement, and waive the notices
requirement under Section 2.09 of the Existing Credit Agreement.
Section 10.07. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Borrower may assign or
otherwise transfer any of its rights under this Agreement (other than pursuant
to a transaction expressly permitted by Section 5.04) without the prior written
consent of all Banks and the Agent.
(b) Any Bank may at any time grant to one or more banks or other institutions
(each a "Participant") participating interests in its Commitment or any or all
of its Loans. In the event of any such grant by a Bank of a participating
interest to a Participant, whether or not upon notices to the Borrowers and the
Agent, such Bank shall remain responsible for the performances of its
obligations hereunder, and the Borrowers and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. Any agreement pursuant to which any Bank may
grant such a participating interest shall provide that such Bank shall retain
the sole right and responsibility to enforce the obligations of the Borrowers
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clause (ii),
(iii) or (v) of Section 10.05 without the consent of the Participant. The
Borrowers agree that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Sections 2.13, 2.15,
2.16, 10.04 and Article VIII with respect to its participating interest, with
such benefits to be determined as if the related Bank had not granted such
participation. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordances with this
subsection (b).
(c) With (and subject to) the subscribed consent of the Company and the
Agent, any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit H hereto executed by
such Assignee and such transferor Bank; provided that if an Assignee is an
affiliate of such transferor Bank or a Bank prior to giving effect to such
assignment, no such consent shall be required (but prompt notices thereof shall
be given to the Agent). Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Bank of an amount equal to the
purchase prices agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have all the rights
and obligations of a Bank with a
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<PAGE>
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Agent and the Borrowers shall make appropriate arrangements so that,
if required, new Notes are issued to the Assignee. In connection with any such
assignment, the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $2,500.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Notes (if any) to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights shall
be entitled to receive any greater payment under Section 2.16, 8.03 or 8.05
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02 or 8.03 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
(f) If any Reference Bank assigns its Loans to an unaffiliated institution,
the Agent shall, in consultation with the Company and with the consent of the
Required Banks, appoint another bank to act as a Reference Bank hereunder.
Section 10.08. Survival. The obligations of the Company and each Subsidiary
Borrower under Article VIII and Sections 2.16, 9.05 and 10.04 shall survive the
repayment of the Loans and the termination of the Commitments.
Section 10.09. Acknowledgment. Each Borrower acknowledges that the Banks
have entered into this Agreement in reliance on each Borrower's assurance that
such Borrower does not intend to use the proceeds of any Borrowings hereunder in
a manner which would violate any applicable law or governmental rule or
regulation.
Section 10.10. Headings. The Table of Contents and Article and Section
headings used herein shall not affect the interpretation of any provision of
this Agreement.
Section 10.11. Sharing of Setoffs. Each Bank agrees that, if it shall, by
exercising any right of setoff or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any of its Loans which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest due with
respect to any Loan made by such other Bank (other than disproportionate
payments to any Bank provided for by this Agreement), the Bank receiving such
proportionately greater payment shall purchase such participations
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<PAGE>
in the Loans made by the other Banks, and such other adjustments shall be made,
as may be required so that all such payments of principal and interest with
respect to the Loans made by the Banks shall be shared by the Banks pro rata;
provided that nothing in this Section shall impair the right of any Bank to
exercise any right of setoff or counterclaim it may have and to apply the amount
recovered thereby to the payment of indebtedness of the relevant Borrower other
than its indebtedness under the Loans. If under any applicable bankruptcy,
insolvency or other similar law, any Bank receives a secured claim in lieu of a
setoff to which this Section applies, such Bank shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Banks entitled under this Section to share in
the benefits of any recovery on such secured claim. Each Borrower agrees, to the
fullest extent it may effectively do so under applicable law, that any Bank
which is a holder of a participation in a Loan of such Borrower, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of setoff
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of such Borrower in the
amount of such participation.
Section 10.12. Collateral. Each of the Banks represents to the Agent and
each of the other Banks (and solely for the benefit of the Agent and each of the
other Banks) that it in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or maintenances of the
credit provided for in this Agreement.
Section 10.13. Consent to Jurisdiction. (a) Each Borrower irrevocably
submits to the jurisdiction of any federal or New York State court sitting in
New York City over any suit, action or proceeding arising out of or relating to
this Agreement or any Note of such Borrower. Each Borrower 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
brought in such court and any claim that any suit, action or proceeding brought
in such a court has been brought in an inconvenient forum. Each Borrower agrees
that a final, nonappealable judgment in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon such Borrower and
may be enforced in any federal or New York State court sitting in New York City
(or any other courts to the jurisdiction of which such Borrower is or may be
subject) by a suit upon such judgment, provided that services of process is
effected upon such Borrower in one of the manners specified in subsection (c) of
this Section or as otherwise permitted by law.
(b) Appointment of Agent. Each Foreign Subsidiary Borrower irrevocably
designates and appoints CT Corporation System, having an office on the date
hereof at 1633 Broadway, New York, New York 10019, as its authorized agent, to
accept and acknowledge on such Foreign Subsidiary Borrower's behalf services of
any and all process which may be served in any suit, action or proceeding of
the nature referred to in subsection (a) of this Section in any federal or New
York State court sitting in New York City. Each such Foreign Subsidiary Borrower
covenants and agrees to maintain the
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<PAGE>
designation and appointment of such an authorized agent until all amounts
payable hereunder shall have been paid in full in accordances with the
provisions hereof or thereof and the Commitments shall have terminated. If any
such agent shall cease so to act, each Foreign Subsidiary Borrower covenants and
agrees to designate and appoint without delay another such agent satisfactory to
the Agent and to promptly deliver to the Agent evidence in writing of such other
agent's acceptances of such appointment.
(c) Service of Process. Each Borrower hereby consents to process being served
in any suit, action or proceeding referred to in the first sentence of
subsection (a) of this Section in any federal or New York State court sitting in
New York City (i) if such Borrower is a Foreign Subsidiary Borrower, by service
of process upon the agent of such Foreign Subsidiary Borrower for service of
process appointed as provided in subsection (b) of this Section (provided that,
to the extent lawful and possible, written notice of said service upon such
agent shall be mailed by registered or certified air mail, postage prepaid,
return receipt requested, to such Foreign Subsidiary Borrower at its address
specified in Section 10.01 or to any other address of which such Foreign
Subsidiary Borrower shall have given written notice to the Agent) and (ii) if
such Borrower is not a Foreign Subsidiary Borrower, by mailing a copy thereof by
registered or certified air mail, postage prepaid, return receipt requested, to
such Borrower at its address specified in Section 10.01 or to any other address
of which such Borrower shall have given written notices to the Agent. Each
Borrower irrevocably waives, to the fullest extent permitted by law, all claim
of error by reason of any such service in any suit, action or proceeding brought
by the Agent or any Bank. Each Borrower agrees that such service shall be deemed
in every respect effective service of process upon such Borrower in any such
suit, action or proceeding and shall, to the fullest extent permitted by law, be
taken and held to be valid and personal service upon and personal delivery to
such Borrower.
(d) No Limitation on Service or Suit. Nothing in this Article shall affect
the right of the Agent or any Bank to serve process in any other manner
permitted by law or limit the right of the Agent or any Bank to bring
proceedings against any Borrower in the courts of the jurisdiction of the Bank's
Lending Office or the courts of any jurisdiction or jurisdictions in which such
Borrower has any assets.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE COMPANY
ATLANTIC RICHFIELD COMPANY
By /s/ Terry G. Dallas
-----------------------------------
Terry G. Dallas
Vice President
and Treasurer
Address for Notices:
Atlantic Richfield Company
515 South Flower Street
Los Angeles, CA 90071
Attention: Assistant Treasurer, Banking
Telex No.: 677415
answerback: ARCO PLAZA LFA
Telephone No.: (213) 486-0641
(213) 486-1776
Telecopier No.: (213) 486-3544
(213) 486-3006
(213) 486-2836
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<PAGE>
COMMITMENTS BANKS
- -----------
$96,666,666.67 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diane H. Imhof
------------------------
Title: Associate
$90,000,000 BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION
By /s/ Vanessa Sheh Meyer
------------------------
Title: Vice President
$90,000,000 CHEMICAL BANK
By /s/ Peter N. Anderson
------------------------
Title: Managing Director
$90,000,000 CITIBANK, N.A.
By /s/ David M. Wheeler
------------------------
Title: Vice President
85
<PAGE>
$90,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ L. Gene Benke
-------------------------------
Title: Senior Vice President
$90,000,000 NATIONSBANK OF TEXAS, N.A.
By /s/ David P. Cagle
-------------------------------
Title: Vice President
$90,000,000 UNION BANK OF SWITZERLAND
By /s/ Peter S. Humber
-------------------------------
Title: Vice President
By /s/ L. Scott Sommers
-------------------------------
Title: Vice President
$80,000,000 NATIONAL WESTMINSTER BANK PLC
By /s/ David L. Smith
-------------------------------
Title: Vice President
$80,000,000 THE TORONTO DOMINION BANK
By /s/ Kimberly Burleson
-------------------------------
Title: Mgr. Cr. Admin.
86
<PAGE>
$80,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ Anthony L. Trunzo
-------------------------------
Title: Vice President
$80,000,000 THE BANK OF NEW YORK
By /s/ William P. Kenney
-------------------------------
Title: Senior Vice President
$80,000,000 FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ Gregory P. Brown
-------------------------------
Title: Vice President
By /s/ Wendy V.C. Purcell
-------------------------------
Title: Assistant Vice President
$80,000,000 THE CHASE MANHATTAN BANK, N.A.
By /s/ Stephen M. Feeney
-------------------------------
Title: Vice President
$66,666,666.67 CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Xavier Ratouis
-------------------------------
Title: Senior Vice President
87
<PAGE>
$66,666,666.66 FUJI BANK, LTD.
By /s/ Takao Endo
-------------------------------
Title: Joint General Manager
$66,666,666.67 THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Tomohiro Nozaki
--------------------
Title: Senior Vice President and
Joint General Manager
$66,666,666.67 INDUSTRIAL BANK OF JAPAN, LTD.
By /s/ Kazutaka Kiyoto
----------------------
Title: Senior Vice President
$66,666,666.66 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
Los Angeles Agency
By /s/ Curt M. Biren
----------------------
Title: Vice President
$40,000,000 THE BANK OF NOVA SCOTIA
By /s/ Norman O. Campbell
----------------------
Title: Assistant Agent
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<PAGE>
$40,000,000 CREDIT SUISSE
By /s/ David J. Worthington
--------------------------------
Title: Member of Senior Management
By /s/ Marilou Palenzuela
--------------------------------
Title: Member of Senior Management
$40,000,000 MELLON BANK, N.A.
By /s/ A. J. Sabatelle
--------------------------------
Title: Vice President
$40,000,000 SOCIETE GENERALE
By /s/ J. Staley Stewart
--------------------------------
Title: Vice President
$40,000,000 THE SUMITOMO BANK, LIMITED
By /s/ Goro Hirai
--------------------------------
Title: Joint General Manager
$40,000,000 BARCLAYS BANK PLC
By /s/ John Sullivan
--------------------------------
Title: Associate Director
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<PAGE>
$40,000,000 THE SANWA BANK, LIMITED
LOS ANGELES BRANCH
By /s/ Gill S. Realon
---------------------------------
Title: Vice President
$40,000,000 UNION BANK
By /s/ Jeffrey Cohen
---------------------------------
Title: Assistant Vice President
$30,000,000 THE FIRST NATIONAL BANK OF BOSTON
By /s/ Heather R. Johnson
---------------------------------
Title: Vice President
$30,000,000 WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Terry R. Akin
--------------------
Title: Senior Vice President
$30,000,000 BANK OF MONTREAL
By /s/ James Whitmore
-------------------------
Title: Director
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<PAGE>
$30,000,000 THE NORTHERN TRUST COMPANY
By /s/ Michelle D. Griffin
---------------------------
Title: Vice President
$30,000,000 SWISS BANK CORPORATION
By /s/ H. Clark Worthley
---------------------------
Title: Associate Director
Merchant Banking
By /s/ Nancy A. Hanrahan
-----------------------
Title: Director
Merchant Banking
$30,000,000 WESTPAC BANKING CORPORATION
By /s/ R. Christopher Noble
-------------------------
Title: Senior Vice President
$30,000,000 NATIONAL AUSTRALIA BANK
LIMITED A.C.N.
By /s/ Harry R. Horowitz
---------------------------
Title: Vice President
$10,000,000 KREDIETBANK N.V.
By /s/ Robert Snauffer
---------------------------
Title: Vice President
By /s/ Diane Grimmig
---------------------------
Title: Vice President
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<PAGE>
$10,000,000 NATIONAL BANK OF ALASKA
By /s/ Patricia Jelley Benz
----------------------------
Title: Vice President
- -------------------
Total Commitments
$2,000,000,000
===================
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MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
----------------------
Title: Associate
60 Wall Street
New York, New York 10260-0060
Attention: Robert M. Osieski
Telephone: 212-648-7173
Telecopier: 212-648-5014
Telex: 177615
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SCHEDULE I
EURO-CURRENCY PAYMENT OFFICES OF THE AGENT
Domestic Lending Office Morgan Guaranty Trust Company
of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713
Attention: Loan Department
Euro-Currency Lending Morgan Guaranty Trust Company
Office of New York
Nassau Bahamas Branch
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713
Attention: Loan Department
Other Euro-Currency Payment Offices for the Agent for other currencies will be
subsequently provided.
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EXHIBIT A
NOTE
New York, New York
________, 19__
For value received, [NAME OF BORROWER], a corporation (the
"Borrower"), promises to pay to the order of (the "Bank"), for the account
of its Applicable Lending Office, the unpaid principal amount of each Loan made
by the Bank to the Borrower pursuant to the Credit Agreement referred to below
on the last day of the Interest Period relating to such Loan. The Borrower
promises to pay interest on the unpaid principal amount of each such Loan on the
dates and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made (i) if in Dollars, in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York or (ii) if in any other currency, in such funds as may then be
customary for the settlement of international transactions in such other
currency at the place specified for the payment thereof pursuant to the Credit
Agreement.
All Loans made by the Bank, the respective maturities thereof and all
repayments of the principal thereof shall be recorded by the Bank and, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note of any Borrower, be endorsed by the Bank on the schedule attached hereto,
or on a continuation of such schedule attached to and made a part hereof;
provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This note is one of the Notes referred to in the $2,000,000,000 Credit
Agreement dated as of December 15, 1994 among Atlantic Richfield Company,
certain subsidiaries of Atlantic Richfield Company, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent
(as the same may be amended from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
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<PAGE>
Pursuant to the Credit Agreement, payment of principal and interest on this
Note is unconditionally guaranteed by Atlantic Richfield Company, a Delaware
corporation.*
[NAME OF BORROWER]
------------------------
By:
Title:
- ---------------------------
*Include this sentence in the Note of each Subsidiary Borrower.
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<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the Agent")
60 Wall Street
New York, New York 10260
From: [Name of Borrower]
Re: $2,000,000,000 Credit Agreement dated as of December 15, 1994 (the
"Credit Agreement") among Atlantic Richfield Company, certain
subsidiaries of Atlantic Richfield Company, the Banks listed on the
signature pages thereof and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit Agreement that
we request Money Market Quotes [from Banks incorporated in, or formed under the
laws of, [name of country] or Banks whose Money Market Lending Office for the
Borrowings(s) set forth below will be located in such country (a "Qualifying
Bank")]* for the following proposed Money Market Borrowing(s):
Date of Borrowing:
----------------
Principal Amount** Interest Period***
- ------------------ ------------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The
applicable base rate is the London Interbank Offered Rate.]
- -----------------------
* Include when Borrower has requested Money Market Quotes only from
Qualifying Banks pursuant to Section 2.03(b)(iii).
** Amount must be $5,000,000 or a larger multiple of $1,000,000.
*** Not less than one month (LIBOR Auction) or not less than 7 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest Period.
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<PAGE>
Capitalized terms used herein have the meanings assigned to them in the
Credit Agreement.
[NAME OF BORROWER]
By:
Title:
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<PAGE>
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
[address of Bank]
[Date]
Re: Invitation for Money Market Quotes
to [Name of Borrower] (the "Borrower")
Pursuant to Section 2.03 of the $2,000,000,000 Credit Agreement dated as of
December 15, 1994 (the "Credit Agreement") among Atlantic Richfield Company,
certain subsidiaries of Atlantic Richfield Company, the Banks listed on the
signature pages thereof and the undersigned, as Agent, we are pleased on behalf
of the Borrower to invite you [in your capacity as a Qualifying Bank]* to submit
Money Market Quotes to the Borrower for the following proposed Money Market
Borrowing(s):
Date of Borrowing:
-----------------
Principal Amount Interest Period
- ---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Rate]. [The
applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [3:00 p.m.] [10:00 a.m.]
[9:30 a.m.] [(London Time)] [(New York City time)] on [date].
- ----------------------
* Include when Borrower has requested Money Market Quotes only from
Qualifying Banks pursuant to Section 2.03(b)(iii).
100
<PAGE>
Capitalized terms used herein have the meanings assigned to them in the
Credit Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
----------------------------------
By: Authorized Officer
101
<PAGE>
EXHIBIT D
Form of Money Market Quote
To: Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Attention: Funding Services -- Loan Sale Group
Re: Money Market Quote to [Name of Borrower] (the "Borrower")
In response to your invitation on behalf of the Borrower dated ,
19 , we hereby make the following Money Market Quote on the following terms:
1. Quoting Bank: _______________________
2. Person to contact at Quoting Bank:
- --------------------------
3. Date of Borrowing: __________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
--------- --------- ------------ --------------------
$
$
[provided, that the aggregate principal amount of Money Market Loans for which
the above offers may be accepted shall not exceed $ .]**
* As specified in the related Invitation for Money Market Quotes.
(notes continued on following page)
102
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the $2,000,000,000 Credit
Agreement dated as of December 15, 1994 (the "Credit Agreement") among Atlantic
Richfield Company, certain subsidiaries of Atlantic Richfield Company, the Banks
listed on the signature pages thereof and yourselves, as Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part. Capitalized terms used herein have the meanings
assigned to them in the Credit Agreement
Very truly yours,
[NAME OF BANK]
-------------------------------------
By: Authorized Officer
Dated:
- ---------
** Principal amount bid for each Interest Period may not exceed principal amount
requested. Specify aggregate limitation if the sum of the individual offers
exceeds the amount the Bank is willing to lend. Bids must be made for $5,000,000
(or the Approximate Equivalent Amount thereof) or a larger multiple of
$1,000,000 (or the Approximate Equivalent Amount thereof).
*** Not less than one month or not less than 7 days, as specified in the
related Invitation for Money Market Quotes.
**** Margin over or under the London Interbank Offered Rate determined for the
applicable Interest Period. Specify percentage (rounded to the nearest 1/10,000
of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (rounded to the nearest 1/10,000th of
1%). [5. We hereby represent and warrant, as of the date hereof and as of the
Date of Borrowing set forth in clause 3 above, that we are a Qualifying Bank.]
103
<PAGE>
EXHIBIT E
Certificate of Incumbency
I, , [Secretary/Assistant Secretary] of [name of Borrower] (the
"Borrower"), hereby certify as follows:
(1) Each of the following named individuals is an Authorized Officer (as that
term is defined in the $2,000,000,000 Credit Agreement dated as of December 15,
1994 among Atlantic Richfield Company, certain subsidiaries of Atlantic
Richfield Company, the Banks named therein and Morgan Guaranty Trust Company of
New York, as Agent (the "Credit Agreement")) of the Borrower and each has been
duly elected to and is now holding the office indicated, and the signature
appearing opposite each name is the genuine signature of such Authorized
Officer:
Title Name Signature
----- ---- ---------
(2) Each of the following named individuals has been duly designated as an
"Authorized Representative" (as that term is defined in the Credit Agreement) of
the Borrower, and the signature appearing opposite each name is the genuine
signature of such Authorized Representative:
Title Name Signature
----- ---- ---------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Borrower this day of 19 .
----------------------------------
Secretary/Assistant Secretary
[SEAL]
104
<PAGE>
I, [name], [Treasurer/Assistant Secretary] of [name of Borrower], do hereby
certify that is, and at all times since , 19 has been, the duly
elected or appointed, qualified and acting [Secretary/Assistant Secretary] of
the Borrower and that the signature set forth above is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this day of , 19 .
----------------------------------
Treasurer/Assistant Secretary
105
<PAGE>
EXHIBIT F
OPINION OF
COUNSEL FOR THE BORROWER
[Dated as provided in
Section 3.01 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am ___________________ of Atlantic Richfield Company and as such have
acted as counsel for [name of Borrower] (the "Borrower") in connection with the
$2,000,000,000 Credit Agreement dated as of December 15, 1994 (the "Credit
Agreement") among Atlantic Richfield Company, certain subsidiaries of Atlantic
Richfield Company, the banks listed on the signature pages thereof and Morgan
Guaranty Trust Company of New York, as Agent. Terms defined in the Credit
Agreement are used herein as therein defined.
In connection with the opinions expressed below, I have examined originals or
copies, certified or otherwise identified to my satisfaction, of such documents,
instruments and corporate records as I have deemed necessary to express the
opinions hereinafter set forth. As to any facts material to the following
opinions which I did not independently establish or verify, I have relied, to
the extent I deem such reliance proper, upon information obtained from public
officials and officers and employees of the Borrower.
For purposes of this opinion, I have assumed the genuineness of all
signatures, other than signatures of officers and employees of the Borrower or
any of its subsidiaries, appearing on the documents which I have examined, the
authenticity of all documents submitted to me as originals, and the conformity
to the originals of all documents submitted to me as copies and the authenticity
of the originals of such copies.
106
<PAGE>
Upon the basis of the foregoing, I am of the opinion that:
l. (a) The Borrower (i) is a corporation duly incorporated, validly existing
and in good standing under the laws of [the jurisdiction of its incorporation]
and (ii) either is qualified to do business and in good standing in each
jurisdiction where the ownership of its properties or the conduct of its
business requires such qualification or is subject to no material liability or
disability by reason of the failure to be so qualified in any such jurisdiction.
(b) The Borrower has all corporate power and authority, governmental permits,
licenses, consents, authorizations, orders and approvals and other
authorizations as are necessary to carry on its business substantially as
presently conducted.
(c) The execution, delivery and performance of this Agreement [and of the
Notes of the Borrower],* and Borrowings under the Credit Agreement by the
Borrower, are within its corporate power and authority and have been duly
authorized by all necessary corporate proceedings.
(d) Neither such authorization nor the execution, delivery and performance by
the Borrower of the Credit Agreement [or of the Notes of the Borrower
thereunder], nor any Borrowing thereunder by the Borrower when made, will
conflict with, result in a breach of or constitute a default under any of the
terms, conditions or provisions of any law or any regulation, or, to the best of
my knowledge, any order, writ, injunction or decree of any court or governmental
authority or of the Certificate of Incorporation or By-Laws of the Borrower or
result in the violation or contravention of, or the acceleration of any
obligation under, or cause the creation of any Mortgage on any of the properties
of the Borrower pursuant to the provisions of, any indenture, agreement or other
instrument representing Debt, or any other agreement material to the Company and
its Consolidated Subsidiaries, considered as a whole, to which it is a party or
by which it is bound.
(e) Assuming its due execution by the Banks and the Agent, the Credit
Agreement constitutes a valid and binding agreement of the Borrower [and each
Note of the Borrower constitutes a valid and binding obligation of the Borrower,
in each case] enforceable in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
2. Except as disclosed in writing to the Banks, there is no action, suit or
proceeding pending or, to my knowledge, threatened against or affecting the
Borrower
- ------------------------
* References to Notes of the Borrower to be required only if Notes are being
delivered pursuant to the terms of the Credit Agreement.
107
<PAGE>
or any of its subsidiaries in any court or before or by any arbitrator,
governmental department, agency or instrumentality, which is reasonably likely
to materially and adversely affect the ability of the Borrower to perform its
obligations under the Credit Agreement and the Notes of the Borrower or which in
any manner draws into question the validity of the Credit Agreement [or the
Notes of the Borrower].
3. No consent, authorization, order or approval of (or filing or registration
with) any governmental commission, board or other regulatory authority (other
than routine reporting requirements) is required for the execution, delivery and
performance by the Borrower of the Credit Agreement or the Notes of the
Borrower or for Borrowings under the Credit Agreement.
*4. Each of the Borrower's Material Subsidiaries 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 licenses, authorizations, consents or
approvals the absence of which will not materially affect the business of the
Borrower and its Consolidated Subsidiaries taken as a whole.
I am a member of the Bars of the State[s] of ___________ and I do not purport
to be an expert on the laws of any jurisdictions other than the foregoing, the
general corporation law of the State of Delaware, and United States federal law.
This opinion is limited in all respects to such laws.*
This opinion is furnished to you solely for the benefit of you and your
Participants in connection with the transactions contemplated by the Credit
Agreement and may not be used for any other purpose without my prior written
consent.
Very truly yours,
- ---------------------
* Include this paragraph if the Company is the Borrower.
108
<PAGE>
EXHIBIT G
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
[Dated as provided in
Section 3.01 of the
Credit Agreement]
To the Banks and the Agent
Referred to Below
C/O Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the "Credit
Agreement") dated as of December 15, 1994 among Atlantic Richfield Company,
certain subsidiaries of Atlantic Richfield Company, the banks listed on the
signature pages thereof (the "Banks") and Morgan Guaranty Trust Company of New
York, as Agent (the "Agent"), and have acted as special counsel for the Agent
for the purpose of rendering this opinion pursuant to Section 3.01(iv) of the
Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
[1. The execution, delivery and performance by the Borrower of the Credit
Agreement [and its Notes] are within the Borrower's corporate powers and have
been duly authorized by all necessary corporate action.
2.] The Credit Agreement constitutes a valid and binding agreement of the
Borrower [and each Note of the Borrower constitutes a valid and binding
obligation of the Borrower, in each case] enforceable in accordance with its
terms, except as the
109
<PAGE>
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing opinion
is limited to the laws of the State of New York, the federal laws of the United
States of America [and the General Corporation Law of the State of Delaware] .
In giving the foregoing opinion, (i) we express no opinion as to the effect (if
any) of any law of any jurisdiction (except the State of New York) in which any
Bank is located which limits the rate of interest that such Bank may charge or
collect and (ii) we have relied, without independent investigation, as to all
matters governed by the laws of [Borrower's jurisdiction of incorporation], upon
the opinion of , dated 19 , a copy of which has been delivered to you.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by any other person without our prior written consent.
Very truly yours,
110
<PAGE>
EXHIBIT H
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ________, 19__ among [ASSIGNOR] (the "Assignor"),
[ASSIGNEE] (the "Assignee"), ATLANTIC RICHFIELD COMPANY (the "Company") and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the $2,000,000,000 Credit Agreement dated as of December 15, 1994 among the
Company, the Assignor and the other Banks party thereto, as Banks, and the Agent
(the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $___;
WHEREAS, Syndicated Loans made by the Assignor under the Credit Agreement in
the aggregate principal amount of $_________ are outstanding at the date hereof;
and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of
the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $_________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Syndicated Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION l. Definitions. All capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee
all of the rights of the Assignor under the Credit Agreement to the extent of
the Assigned Amount, and the Assignee hereby accepts such assignment from the
Assignor and assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the purchase from the
111
<PAGE>
Assignor of the corresponding portion of the principal amount of the Syndicated
Loans made by the Assignor outstanding at the date hereof. Upon the execution
and delivery hereof by the Assignor, the Assignee, the Company and the Agent and
the payment of the amounts specified in Section 3 required to be paid on the
date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights
and be obligated to perform the obligations of a Bank under the Credit Agreement
with a Commitment in an amount equal to the Assigned Amount, and (ii) the
Commitment of the Assignor shall, as of the date hereof, be reduced by a like
amount and the Assignor released from its obligations under the Credit Agreement
to the extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount equal to $_______*. It is understood that
facility fees with respect to the Assigned Amount accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Company and the Agent. This Agreement is
conditioned upon the consent of the Company and the Agent pursuant to Section
10.07(c) of the Credit Agreement. The execution of this Agreement by the Company
and the Agent is evidence of this consent. Pursuant to Section 10.07(c) the
Company agrees to execute and deliver a Note [and to cause each Subsidiary
Borrower to execute and deliver a Note] payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.**
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect to,
the solvency, financial condition, or statements of any Borrower, or the
validity and enforceability of the obligations of any Borrower in respect of the
Credit Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has
- --------------------
* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
112
<PAGE>
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrowers.
SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 7. Counterparts. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their duly authorized officers as of the date first above written.
[ASSIGNOR]
-------------------------------
By:
Title:
[ASSIGNEE]
-------------------------------
By:
Title:
ATLANTIC RICHFIELD COMPANY
-------------------------------
By:
Title:
113
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent
-------------------------------
By:
Title:
114
<PAGE>
EXHIBIT I
NOTICE OF EFFECTIVENESS
December 15, 1994
Atlantic Richfield Company
515 South Flower Street
Los Angeles, California 90071
Attention: Assistant Treasurer, Banking
Dear Sir or Madam:
We hereby notify you that the $2,000,000,000 Credit Agreement dated as of
December 15, 1994 among Atlantic Richfield Company, the banks listed on the
signature pages thereof and Morgan Guaranty Trust Company of New York, as Agent,
has become effective as of the date hereof in accordance with Section 10.06
thereof.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
By
----------------------------------------
Title:
115
<PAGE>
EXHIBIT (b)(2)
May 4, 1998
Mr. George Davis
Assistant Treasurer
Atlantic Richfield Company
515 South Flower Street
Los Angeles, California 90071
Dear George:
You have requested J.P. Morgan Securities Inc. to arrange ("JPMSI" or the
"Arranger") and BancAmerica Robertson Stephens, Chase Securities Inc. and
Citicorp Securities, Inc. to co-arrange (collectively, the "Co-Arrangers")
financing in the amount of up to $3,000,000,000 for Atlantic Richfield Company
(the "Company"). This l50-day revolving credit facility will be used to backstop
commercial paper. Attached is an outline of the principal terms and conditions
(the "Term Sheet") of proposed loans to be made by Morgan Guaranty Trust Company
of New York ("Morgan"), as Administrative Agent, Bank of America NT & SA ("Bank
of America"), The Chase Manhattan Bank ("Chase") and Citibank, N.A.
("Citibank"), and together with Morgan, Bank of America, and Chase, the
"Banks"), pursuant to loan documentation which will be identical to the credit
agreement dated as of December 15, 1994, as amended, except as outlined in the
Term Sheet, mutually acceptable to the Banks and the Company.
Morgan, Bank of America, Chase and Citibank each hereby commits to lend up to
$750,000,000 on the attached terms and conditions. All commitments will be
subject to the negotiation, execution and delivery of mutually acceptable
definitive loan documentation (to be prepared by Morgan's counsel, Davis Polk &
Wardwell) within 45 days of the date hereof.
The Company by signing below agrees to indemnify and defend the Arranger, each
Co-Arranger, and each Bank, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages or
expenses of any kind, including without limitation the fees and disbursements of
counsel, incurred by any of them arising out of or by reason of their role
hereunder or any investigation, litigation or other judicial or administrative
proceeding brought or threatened relating to any loan made or proposed to be
made to the Company in connection with the matters herein referred to
(including, but without limitation, any use made or proposed to be made by the
Company or any of its affiliates of the proceeds of such loans, but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the indemnitee as determined by a
court of competent jurisdiction).
Finally, the Company hereby agrees to pay the Arranger's, each Co-Arranger's,
and each Bank's reasonable out-of-pocket costs and expenses in connection
herewith, including reasonable fees and disbursements of its counsel, regardless
of whether any loan documents are agreed to and signed by the Banks and the
Company and regardless of whether any loans are actually made.
If you accept and agree to this proposal, please so indicate by signing in the
space provided below and returning a copy of this letter to us. This proposal
will expire at the close of business on May 6, 1998 if not accepted by you in
writing by that time.
<PAGE>
Page 2
Very truly yours
J.P. MORGAN SECURITIES INC. MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Kenneth Pettis By:/s/ Diana H. Imhof
-------------------------- ----------------------------
Title: Vice President Title: Vice President
60 Wall Street 60 Wall Street
New York, New York 10260 New York, New York 10260
Telephone: 212/648-3787 Telephone: 212/648-6948
Telecopier: 212/648-5016 Telecopier: 212/648-5018
BANCAMERICA ROBERTSON STEPHENS BANK OF AMERICA NT & SA
By: /s/ Steven F. Sterling By: /s/ J. Stephen Mernick
-------------------------- ----------------------------
Title: Vice President Title: Senior Vice President
333 Clay Street Suite 4550 333 Clay Street Suite 4550
Houston, Texas 77002 Houston, Texas 77002
Telephone: Telephone: (713) 651-4830
Telecopier: Telecopier: (713) 651-4841
CITICORP SECURITIES, INC. CITIBANK, N,A.
By: /s/ John Mugno By: /s/ William P. Stengal
-------------------------- ----------------------------
Title: Managing Director Title: Managing Director
399 Park Avenue 399 Park Avenue
New York, New York 10043 New York, New York 10043
Telephone: Telephone:
Telecopier: Telecopier:
<PAGE>
Page 3
CHASE SECURITIES INC. THE CHASE MANHATTAN BANK
By: /s/ Mark R. duFour By: /s/ Thomas H. Kozlark
-------------------------- ----------------------------
Vice President Vice President
270 Park Avenue 270 Park Avenue
New York, New York 10017 New York, New York 10017
Telephone: Telephone:
Telecopier: Telecopier:
ACCEPTED AND AGREED TO
this 4th day of May, 1998:
ATLANTIC RICHFIELD COMPANY
By: /s/ Terry G. Dallas
------------------------
Name: Terry G. Dallas
Title: Senior Vice President
and Treasurer
<PAGE>
JP MORGAN
SUMMARY OF TERMS AND CONDITIONS
FOR ATLANTIC RICHFIELD COMPANY
Borrower: Atlantic Richfield Company.
Facility Description: Up to a $3,000,000,000, l50-day revolving
credit facility.
Purpose: To backstop commercial paper.
Lead Arranger: J.P. Morgan Securities Inc.
Co-Arrangers: BancAmerica Robertson Stephens.
Chase Securities Inc.
Citicorp Securities, Inc.
Administrative Agent: Morgan Guaranty Trust Company of New York
("Morgan").
Lenders: Morgan, Bank of America NT & SA, The Chase
Manhattan Bank and Citibank, N.A.
Pricing: Facility Fee -5.0 basis points
LIBOR Margin -15.0 basis points
Documentation: Documentation shall cross-reference the
Borrower's Credit Agreement dated as of December
15, 1994, as amended, except as noted above and
the update of the material adverse change
representation to December 31, 1997.
Page 1
<PAGE>
EXHIBIT 99(c)(1)
CONFORMED COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of May 4, 1998,
Among
ATLANTIC RICHFIELD COMPANY,
VWK ACQUISITION CORP.
And
UNION TEXAS PETROLEUM HOLDINGS, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer................................. 2
SECTION 1.02. Company Actions........................... 4
SECTION 1.03. The Merger................................ 5
SECTION 1.04. Closing................................... 6
SECTION 1.05. Effective Time............................ 6
SECTION 1.06. Effects................................... 6
SECTION 1.07. Certificate of Incorporation and
By-laws.............................. 6
SECTION 1.08. Directors................................. 7
SECTION 1.09. Officers.................................. 7
ARTICLE II
Effect on the Capital Stock of the
----------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock................... 7
SECTION 2.02. Exchange of Certificates.................. 9
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
SECTION 3.01. Organization, Standing and Power.......... 11
SECTION 3.02. Company Subsidiaries; Equity Interests.... 12
SECTION 3.03. Capital Structure......................... 13
SECTION 3.04. Authority; Execution and Delivery;
Enforceability....................... 14
SECTION 3.05. No Conflicts; Consents.................... 15
SECTION 3.06. SEC Documents; Undisclosed Liabilities.... 17
SECTION 3.07. Information Supplied...................... 18
SECTION 3.08. Absence of Certain Changes or Events...... 19
SECTION 3.09. Taxes..................................... 21
SECTION 3.10. Absence of Changes in Benefit Plans....... 23
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments............................. 23
<PAGE>
2
SECTION 3.12. Litigation................................ 26
SECTION 3.13. Environmental Matters; Compliance with
Environmental Laws; Other
Applicable Laws.................. 26
SECTION 3.14. Title to Properties....................... 26
SECTION 3.15. Confidentiality and Other Agreements...... 27
SECTION 3.16. Brokers; Schedule of Fees and Expenses.... 27
SECTION 3.17. Opinion of Financial Advisor.............. 28
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
SECTION 4.01. Organization, Standing and Power.......... 28
SECTION 4.02. Sub....................................... 28
SECTION 4.03. Authority; Execution and Delivery;
Enforceability....................... 28
SECTION 4.04. No Conflicts; Consents.................... 29
SECTION 4.05. Information Supplied...................... 30
SECTION 4.06. Brokers................................... 30
SECTION 4.07. Financing................................. 30
SECTION 4.08. Litigation................................ 30
SECTION 4.09. Interested Stockholder.................... 31
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business....................... 31
SECTION 5.02. No Solicitation........................... 36
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Proxy Statement;
Stockholders Meeting................. 40
SECTION 6.02. Access to Information; Confidentiality.... 41
SECTION 6.03. Reasonable Efforts; Notification.......... 41
SECTION 6.04. Stock Options............................. 42
SECTION 6.05. Benefit Plans............................. 43
SECTION 6.06. Indemnification........................... 46
SECTION 6.07. Fees and Expenses......................... 48
SECTION 6.08. Public Announcements...................... 49
<PAGE>
3
SECTION 6.09. Directors................................. 49
SECTION 6.10. Rights Agreement.......................... 51
SECTION 6.11. Stockholder Litigation.................... 51
SECTION 6.12. Performance by Sub........................ 51
SECTION 6.13. Dual Consolidated Losses.................. 51
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To
Effect the Merger.................... 51
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination............................... 52
SECTION 8.02. Effect of Termination..................... 54
SECTION 8.03. Amendment................................. 54
SECTION 8.04. Extension; Waiver......................... 54
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver.................. 55
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and
Warranties........................... 55
SECTION 9.02. Notices................................... 55
SECTION 9.03. Definitions............................... 56
SECTION 9.04. Interpretation; Disclosure Letters........ 56
SECTION 9.05. Severability.............................. 57
SECTION 9.06. Counterparts.............................. 57
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries........................ 57
SECTION 9.08. Governing Law............................. 57
SECTION 9.09. Assignment................................ 57
SECTION 9.10. Enforcement............................... 58
EXHIBIT A- Conditions of the Offer
EXHIBIT B- Amendment to the Company Rights Agreement
SCHEDULE I- Definitions
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of May 4, 1998, among
ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("Parent"),
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VWK ACQUISITION CORP., a Delaware corporation ("Sub") and a
---
wholly owned subsidiary of Parent, and UNION TEXAS PETROLEUM
HOLDINGS, INC., a Delaware corporation (the "Company").
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WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
-----
shares of common stock, par value $.05 per share, of the Company (the "Company
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Common Stock"), including the associated Company Rights (as defined in Section
- ------------
3.03), at a price per share of Company Common Stock (including the associated
Company Right) of $29.00, net to the seller in cash (such amount, or any greater
amount per share paid pursuant to the Offer, the "Offer Price"), upon the terms
-----------
and subject to the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger (the "Merger") of Sub into the Company, or (at
------
the election of Parent) the Company into Sub, on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned directly or indirectly by Parent or the Company will be
converted into the right to receive the per share consideration paid pursuant to
the Offer;
WHEREAS simultaneously with the execution and delivery of this
Agreement Parent and KKR Partners II, L.P. and Petroleum Associates, L.P., each
a Delaware limited partnership (together, the "Principal Company Stockholder")
-----------------------------
are entering into an agreement (the "Company Stockholder Agreement" and together
-----------------------------
with this Agreement, the "Transaction Agreements") pursuant to which the
----------------------
Principal Company Stockholder has agreed to take specified actions in
furtherance of the Offer and the Merger; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
------------------------
SECTION 1.01. The Offer. (a) Subject to the conditions of this
----------
Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer within the meaning of the applicable rules and regulations of
the Securities and Exchange Commission (the "SEC"). The obligation of Sub to,
---
and of Parent to cause Sub to, commence the Offer and accept for payment, and
pay for, any shares of Company Common Stock tendered pursuant to the Offer shall
be subject to the conditions set forth in Exhibit A (any of which may be waived
by Sub in its sole discretion, provided that, without the consent of the
Company, Sub may not, except as provided below, waive the Minimum Tender
Condition (as defined in Exhibit A)). The initial expiration date of the Offer
shall be the 20th business day following the commencement of the Offer
(determined using Rule 14d-1(e)(6) of the SEC). Sub expressly reserves the
right to modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not, except as provided in the next sentence, (i) reduce the
number of shares of Company Common Stock subject to the Offer, (ii) reduce the
price per share of Company Common Stock to be paid pursuant to the Offer, (iii)
modify or add to the conditions set forth in Exhibit A, (iv) extend the Offer,
(v) change the form of consideration payable in the Offer or (vi) otherwise
amend the Offer in any manner materially adverse to the holders of Company
Common Stock. Notwithstanding the foregoing, Sub may, without the consent of
the Company, (i) extend the Offer, if at the scheduled expiration date of the
Offer any of the conditions to Sub's obligation to purchase shares of Company
Common Stock are not satisfied, until such time as such conditions are satisfied
or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer, (iii) extend the Offer for any reason for a period of
not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of this sentence (a "Parent
------
Extension Period"); provided that if Sub shall extend the Offer pursuant to
- ----------------
this clause (iii), it shall waive during any Parent Extension Period all
conditions of the Offer set
2
<PAGE>
forth in Exhibit A other than the Minimum Tender Condition and the conditions
set forth in paragraphs (d) and (g) in Exhibit A; and (iv) if the option granted
pursuant to Section 4 of the Company Stockholder Agreement is then exercisable,
reduce the number of shares of Company Common Stock necessary to satisfy the
Minimum Tender Condition (as defined in Exhibit A) to that number of shares
which, together with the shares of Company Common Stock that may be purchased by
Parent upon exercise of the option granted pursuant to Section 4 of the Company
Stockholder Agreement, would represent at least a majority of the Fully Diluted
Shares (as defined in Exhibit A). If any of the conditions of the Offer set
forth in Exhibit A (other than the Minimum Tender Condition) is not satisfied on
any scheduled expiration date of the Offer, then, if requested by the Company,
Sub shall extend the Offer one or more times (the period of each such extension
to be determined by Sub) for up to 30 days in the aggregate for all such
extensions, provided that at the time of such extension any such condition is
reasonably capable of being satisfied and the Company has not received a Company
Takeover Proposal (as defined in Section 5.02(a)). On the terms and subject to
the conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, pay for all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer that Sub becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Each of Parent,
---------------
Sub and the Company shall promptly correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Parent and Sub
shall take all steps necessary to amend or supplement the Offer Documents and to
cause the Offer Documents as so amended or supplemented to be filed with the SEC
and to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
3
<PAGE>
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to purchase any shares of Company Common Stock that
Sub becomes obligated to purchase pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company Board (as defined in
----------------
Section 3.04(b)) has approved of and consented to the Offer, the Merger and the
other transactions contemplated by the Transaction Agreements (collectively, the
"Transactions").
------------
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/ Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendations described in
--------------
Section 3.04(b) and shall mail the Schedule 14D-9 to the stockholders of the
Company. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Sub shall hold in confidence the information
contained in any such labels, listings and files, shall use such information
4
<PAGE>
only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
(d) Prior to the expiration of the Offer, the Company (i) shall take
all actions necessary to cause all outstanding Company Stock Options (as defined
in Section 6.04(b)), whether or not otherwise vested pursuant to their terms, to
be fully vested and exercisable in full upon the consummation of the Offer
subject to compliance with applicable law, and (ii) shall, subject to compliance
with applicable law, make an offer to pay each holder of a Company Stock Option
that is not automatically subject to a cash payment upon consummation of the
Offer, promptly after the consummation of the Offer and in exchange for the
cancelation of such Company Stock Option, an amount in cash equal to (x)(1) the
excess, if any, of the Offer Price over the exercise price per share of Company
Common Stock subject to such Company Stock Option multiplied by (2) the number
of shares of Company Common Stock for which such Company Stock Option shall not
theretofore have been exercised, less (y) such amounts as may be required to be
deducted or withheld with respect thereto under the Code (as defined in Section
3.11) or under any provision of state, local or foreign tax law (the amount
determined in accordance with the foregoing clauses (x) and (y), the "Option
------
Spread"). The payments made by the Company to holders of Company Stock Options
- ------
pursuant to clause (ii) of the preceding sentence shall be made automatically
and promptly after the consummation of the Offer; provided, however, that such
-------- -------
holders may request and receive in lieu of such payment and in exchange for
their Company Stock Options the number of shares of Company Common Stock equal
to the aggregate Option Spread for the shares of Company Common Stock for which
such holders' Company Stock Options are then exercisable divided by the Offer
Price. In addition, and subject to compliance with applicable law, the Company
may take any actions necessary to purchase Company Common Stock from those
officers of the Company and members of the Company Board as are designated in
the Company Disclosure Letter (as defined in Section 3.02(a)) by the Company
Board, and such purchase shall take place after the consummation of the Offer at
a price per share equal to the Offer Price.
SECTION 1.03. The Merger. On the terms and subject to the conditions
-----------
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
----
the Effective Time (as defined in Section 1.05). At the Effective Time, the
separate corporate existence of Sub
5
<PAGE>
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). Notwithstanding the foregoing, Parent may elect at
---------------------
any time prior to the Merger, instead of merging Sub into the Company as
provided above, to merge the Company with and into Sub, in which case Sub shall
be the Surviving Corporation; provided, however, that the Company shall not
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be deemed to have breached any of its representations, warranties or covenants
set forth in this Agreement solely by reason of such election. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing. At the election of Parent, any direct or indirect wholly
owned subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the Merger
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shall take place at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue,
New York, New York 10019 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by law, waiver by all parties) of the
conditions set forth in Section 7.01, or as soon as practicable after all the
conditions set forth in Section 7.01 have been satisfied (or, to the extent
permitted by law, waived by the parties entitled to the benefits thereof), or at
such other place, time and date as shall be agreed in writing between Parent and
the Company. The date on which the Closing occurs is referred to in this
Agreement as the "Closing Date".
------------
SECTION 1.05. Effective Time. Prior to the Closing, Parent shall
---------------
prepare, and on the Closing Date or as soon as practicable thereafter Parent
shall file with the Secretary of State for the State of Delaware, a certificate
of merger or other appropriate documents (in any such case, the "Certificate of
--------------
Merger") executed in accordance with the relevant provisions of the DGCL and
- ------
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with such Secretary of State, or at such other time as Parent and the Company
shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time").
--------------
SECTION 1.06. Effects. The Merger shall have the effects set forth
--------
in Section 259 of the DGCL.
SECTION 1.07. Certificate of Incorporation and By-laws. (a) The
-----------------------------------------
Restated Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective
6
<PAGE>
Time, shall be amended at the Effective Time so that the first paragraph of
Article Fourth of such Restated Certifi cate of Incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock which
the corporation shall have authority to issue is (i) 1,000 shares of Common
Stock, par value $0.01 per share and (ii) 1,750,000 shares of Preferred Stock,
par value $0.01 per share, all of which have been designated as 7.14% Series A
Cumulative Preferred Stock, par value $.01 per share.", and, as so amended, such
Certificate of Incorpora tion shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.08. Directors. The directors of Sub immediately prior to
----------
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.09. Officers. The officers of the Company immediately
---------
prior to the Effective Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
----------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
------------------------
virtue and without any action on the part of the holder of any shares of Company
Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
---------------------
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
7
<PAGE>
(b) Cancelation of Treasury Stock and Parent-Owned Stock. Each share
-----------------------------------------------------
of Company Common Stock that is owned by the Company, Parent or Sub or any
wholly owned subsidiary of the Company, Parent or Sub shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Subject to Sections 2.01(b)
-----------------------------------
and 2.01(e), each issued share of Company Common Stock shall be converted into
the Offer Price. The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to as the "Merger
------
Consideration". As of the Effective Time, all such shares of Company Common
- -------------
Stock 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 of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration upon
surrender of such certificate in accordance with Section 2.02, without interest.
(d) Series A Preferred To Remain Outstanding. Each share of the
-----------------------------------------
Company's 7.14% Series A Cumulative Preferred Stock (the "Series A Preferred")
------------------
outstanding at the Effective Time shall remain outstanding and be unaffected by
the Merger, except as provided in Section 2.01(e).
(e) Appraisal Rights. Notwithstanding anything in this Agreement to
-----------------
the contrary, shares ("Appraisal Shares") of Company Common Stock and Series A
----------------
Preferred that are outstanding immediately prior to the Effective Time and
that are held by persons who are entitled to demand and properly demand
appraisal of such Appraisal Shares pursuant to, and who comply in all respects
with, Section 262 of the DGCL ("Section 262") shall not (i) be converted into
-----------
the Merger Consideration as provided in Section 2.01(c), in the case of such
shares of the Company Common Stock, or (ii) remain outstanding, in the case of
such shares of the Series A Preferred, but rather the holders of Appraisal
Shares shall be entitled to payment of the fair market value of such Appraisal
Shares in accordance with Section 262; provided, however, that if any holder of
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Appraisal Shares shall fail to perfect or otherwise shall waive, withdraw or
lose the right to appraisal under Section 262, then the right of such holder to
be paid the fair value of such holder's Appraisal Shares shall cease and such
Appraisal Shares shall be treated as if they had been converted as of the
Effective Time into the Merger Consideration, as
8
<PAGE>
provided in Section 2.01(c) in the case of the Company Common Stock, and shall
remain outstanding, as provided in Section 2.01(d) in the case of the Series A
Preferred. The Company shall serve prompt notice to Parent of any demands
received by the Company for appraisal of any shares of Company Common Stock, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
------------------------- -------------
the Effective Time, Parent shall select a bank or trust company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration upon
------------
surrender of certificates representing Company Common Stock. Parent shall take
all steps necessary to enable and cause the Surviving Corporation to provide to
the Paying Agent immediately following the Effective Time all the cash necessary
to pay for the shares of Company Common Stock converted into the right to the
Merger Consideration pursuant to Section 2.01(c) (such cash being hereinafter
referred to as the "Exchange Fund").
-------------
(b) Exchange Procedure. As soon as reasonably practicable after the
-------------------
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") that immediately prior to the
------------
Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancelation to
the Paying Agent or to such other agent or agents as may be appointed by the
Parent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to Section 2.01, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the
9
<PAGE>
Company, payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01. No interest shall be paid or shall accrue on the cash payable
upon the surrender of any Certificate. If a mutilated Certificate is surrendered
to the Paying Agent or if the holder of a Certificate submits an affidavit to
the Paying Agent stating that the Certificate has been lost, destroyed or
wrongfully taken, such holder shall furnish an indemnity bond sufficient in the
judgment of the Parent to protect the Parent, the Surviving Corporation and the
Paying Agent from any loss which any of them may suffer.
(c) No Further Ownership Rights in Company Common Stock. The Merger
----------------------------------------------------
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time that may
have been declared or made by the Company on such shares in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation or the
Paying Agent for any reason, they shall be canceled and exchanged as provided in
this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
-----------------------------
that remains undistributed to the holders of Company Common Stock as provided in
this Section 2.02 for one year after the Effective Time shall be delivered to
Parent, upon demand, and any holder of Company Common Stock
10
<PAGE>
who has not theretofore complied with this Article II shall thereafter look only
to Parent for payment of its claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying
-------------
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Subject to the last sentence of Section
2.02(b), if any Certificate has not been surrendered prior to the date on which
the Merger Consideration in respect of such Certificate would otherwise escheat
to or become the property of any Governmental Entity (as defined in Section
3.05), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
----------------------------
cash included in the Exchange Fund, as directed by Parent, on a daily basis. If
for any reason (including losses) the Exchange Fund is inadequate to pay the
amounts to which holders of Company Common Stock shall be entitled under this
Section 2.02, Parent and the Surviving Corporation shall in any event be liable
for payment thereof. The Exchange Fund shall not be used except as provided in
this Agreement. Any interest and other income resulting from such investments
shall be paid to Parent.
(g) Withholding Rights. Parent and the Surviving Corporation shall be
-------------------
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code or under any provision of state, local or foreign tax law.
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows
except as set forth in the Filed Company SEC Documents (as defined in Section
3.08):
SECTION 3.01. Organization, Standing and Power. (a) Each of the
---------------------------------
Company and each Significant Company
11
<PAGE>
Subsidiary (as defined below) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
full corporate power and authority and, to the Company's Knowledge, possesses
all governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals, the lack of which,
individually or in the aggregate, would not have a Company Material Adverse
------------------------
Effect (as defined below). The Company and each Significant Company Subsidiary
- ------
is duly qualified to do business in each jurisdiction where the nature of its
business or their ownership or leasing of its properties make such qualification
necessary or the failure to so qualify would reasonably be expected to have a
Company Material Adverse Effect. The Company has made available to Parent true
and complete copies of the Restated Certificate of Incorporation of the Company,
as amended to the date of this Agreement (as so amended, the "Company Charter"),
---------------
and the By-laws of the Company, as amended to the date of this Agreement (as so
amended, the "Company By-laws"), and the comparable charter and organizational
---------------
documents of each Significant Company Subsidiary, in each case as amended
through the date of this Agreement. For purposes of this Agreement, a
"Significant Company Subsidiary" means any subsidiary of the Company that
------------------- ----------
constitutes a significant subsidiary within the meaning of Rule 1-02 of
Regulation S-X of the SEC. As used in this Agreement, "Company Material Adverse
------------------------
Effect" means (a) any materially adverse effect on the business, assets,
- ------
properties, financial condition or results of operations of the Company and the
Company Subsidiaries (as defined in Section 3.02) taken as a whole, or (b) any
prevention or material delay in the ability of the Company to consummate the
Offer, the Merger and the other Transactions, which has occurred or would
reasonably be expected to occur as a result of any change, effect, event,
occurrence or state of facts; provided, however, with respect to clauses (a) and
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(b), other than any change, effect, event, occurrence or state of facts, to the
extent such change, effect, event, occurrence or state of facts is the result of
adverse changes in economic conditions, or of conditions or adverse changes in
or affecting the worldwide energy industry generally, including, but not limited
to, changes in markets and prices for oil, gas and other hydrocarbons or
hydrocarbon products.
SECTION 3.02. Company Subsidiaries; Equity Interests. The letter,
---------------------------------------
dated as of the date of this Agreement, from the Company to Parent and Sub (the
"Company
-------
12
<PAGE>
Disclosure Letter") lists each Significant Company Subsidiary. All the
- -----------------
outstanding shares of capital stock of each Significant Company Subsidiary have
been validly issued and are fully paid and nonassessable and, except as set
forth in the Company Disclosure Letter, are owned by the Company, by another
subsidiary of the Company (a "Company Subsidiary") or by the Company and another
------------------
Company Subsidiary, free and clear of all pledges, liens, charges, mortgages,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens").
-----
SECTION 3.03. Capital Structure. The authorized capital stock of the
------------------
Company consists of 200,000,000 shares of Company Common Stock and 15,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
-----------------
Stock", and together with the Company Common Stock, the "Company Capital
- ----- ---------------
Stock"). At the close of business on (i) March 31, 1998, 85,248,101 shares of
Company Common Stock and 1,750,000 shares of Series A Preferred were issued and
outstanding, (ii) March 31, 1998, 2,581,182 shares of Company Common Stock were
held by the Company in its treasury, (iii) April 20, 1998, 6,033,471 shares of
Company Common Stock were subject to outstanding Company Stock Options and not
more than 4,250,475 additional shares of Company Common Stock were reserved for
issuance pursuant to the Company's 1994 Incentive Plan, as amended, for stock
options, SARs, and other awards of Company Common Stock which had not been
granted as of the date of this Agreement, (iv) March 31, 1998, 45,000,000 shares
of Company Common Stock were reserved for issuance in connection with the
rights (the "Company Rights") issued pursuant to the Company Rights Agreement
--------------
(as defined in Section 6.10) and (v) March 31, 1998, 100,000 shares of Company
Common Stock were reserved for issuance pursuant to the Company's Amended and
Restated Deferred Compensation Plan and 45,000 shares of Company Common Stock
were reserved for issuance pursuant to the defined contribution retirement plan
for employees of Virginia Indonesia Company. Except as set forth above and with
respect to the Company's Savings Plan for Salaried Employees, at the close of
business on May 1, 1998, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding. There are no
outstanding Company SARs (as defined in Section 6.04) that were not granted in
tandem with a related Company Stock Option. All outstanding shares of Company
Capital Stock are, and all such shares that may be issued prior to the Effective
Time will be when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of any purchase option,
call option, right of first refusal, preemptive right, subscription right or any
similar right under any
13
<PAGE>
provision of the DGCL, the Company Charter, the Company By-laws or any Contract
(as defined in Section 3.05) to which the Company is a party or otherwise bound.
There are not any bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote ("Voting Company Debt"). Except as set forth above, as of the date
-------------------
of this Agreement, there are not any options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings of any kind to which the Company or any Company Subsidiary is a
party or by which any of them is bound (i) obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity interests in, or any security
convertible or exercisable for or exchangeable into any capital stock of or
other equity interest in, the Company or of any Company Subsidiary or any Voting
Company Debt, (ii) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right, security,
commitment, Contract, arrangement or undertaking or (iii) that give any person
the right to receive any economic benefit or right similar to or derived from
the economic benefits and rights accruing to holders of Company Capital Stock.
As of the date of this Agreement, except as disclosed in the Company Disclosure
Letter and as contemplated by Section 1.02(d), there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
--------------------------------------------------
The Company has all requisite corporate power and authority to execute this
Agreement and to consummate the Transactions, subject to compliance with the HSR
Act (as defined in Section 3.05(a)) and the EC Regulations (as defined in
Section 3.05(a)). The execution and delivery by the Company of each Transaction
Agreement to which it is a party and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to receipt of the
Company Stockholder Approval (as defined in Section 3.04(c)). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation of each of the other
parties hereto, this Agreement constitutes a valid and binding agreement of the
14
<PAGE>
Company, enforceable against the Company, except as the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(b) The Board of Directors of the Company (the "Company Board"), at a
-------------
meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement and the Company Stockholder Agreement, the Offer, the
Merger and the other Transactions, (ii) determining that the terms of the Offer,
the Merger and the other Transactions are fair to and in the best interests of
the Company and its stockholders, (iii) recommending that the holders of Company
Common Stock accept and tender their shares of Company Common Stock pursuant to
the Offer and (iv) recommending that the Company's stockholders adopt this
Agreement. Such resolutions are sufficient to render Section 203 of the DGCL
inapplicable (A) to Parent and Sub by reason of their entering into this
Agreement and the Company Stockholder Agreement or consummating any of the
Transactions and (B) to the Offer, the Merger and the other Transactions. To
the Company's Knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement and the Company Stockholder Agreement, the Offer, the Merger or any
other Transaction. Each of the Company's directors and principal executive
officers named in the Company Disclosure Letter either (x) has advised the
Company that such person intends to tender all shares of Company Common Stock
owned by such person pursuant to the Offer or (y) has been designated in the
Company Disclosure Letter pursuant to Section 1.02(d).
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the adoption of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "Company Stockholder Approval"). The affirmative vote
----------------------------
of any holders of Company Capital Stock is not necessary to approve any
Transaction Agreement other than this Agreement or to consummate the Offer or
any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) Except as disclosed in the
-----------------------
Company Disclosure Letter, the execution and delivery by the Company of this
Agreement do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof
15
<PAGE>
and thereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a "Contract") to which the Company or any
--------
Company Subsidiary is a party or by or to which any of their respective
properties or assets is bound or subject, except for such conflicts, violations
or defaults (or rights of termination, cancelation or acceleration) as to which
requisite waivers or consents have been obtained or will be obtained prior to
acceptance for payment of shares of Company Common Stock by Sub pursuant to the
Offer or which would not in the aggregate have a Company Material Adverse
Effect; or (iii) subject to the filings and other matters referred to in the
following sentence, to the Knowledge of the Company, any judgment, order or
decree ("Judgment") or statute, law, ordinance, rule or regulation ("Applicable
-------- ----------
Law") applicable to the Company or any Company Subsidiary or their respective
- ---
properties or assets, including, without limitation, the Applicable Law of any
foreign country, except for such conflicts, violations or defaults which would
not in the aggregate have a Company Material Adverse Effect and would not
prevent or delay in any material respect the consummation of the Transactions.
To the Knowledge of the Company, no consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with,
-------
any Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity"), is
------------ ------
required to be obtained or made by or with respect to the Company or any Company
Subsidiary in connection with the execution, delivery and performance of any
Transaction Agreement to which it is a party or the consummation of the
Transactions, other than (i) compliance with and filings under (A) the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and (B) the
--- ---
rules and regulations of the Council of the European Communities (the "European
--------
Council") and of the Commission of the European Communities (the "European
-------- ---------- --------
Commission"), including, without limitation, Council Regulation (EEC) No 4064/89
- ----------
of 21 December 1989 on the control of concentration between undertakings (as
amended) (OJ L 257/14, 21.9.90) and Commission Regulation (EC)
16
<PAGE>
No 447/98 of 1 March 1998 on the notifications, time limits and hearings
provided for Council Regulation (EEC) No 4064/89 on the control of
concentrations between undertakings (OJ L 61/1/, 2.3.98) (the "EC Regulations")
-- -----------
and the rules and regulations of any Governmental Entity to which a reference is
made pursuant to the EC Regulations, (ii) the filing with the SEC of (A) the
Schedule 14D-9, (B) a proxy or information statement relating to the approval
and adoption of this Agreement and the Merger by the Company's stockholders (the
"Proxy Statement"), (C) any information statement (the "Information Statement")
----- --------- ----------- ---------
required under Rule 14f-1 in connection with the Offer and (D) such reports and
statements under Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement and
-------- ---
the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is qualified to do
business, (iv) compliance with and such filings as may be required under
applicable U.S. Federal, state or local environmental laws, (v) such filings as
may be required in connection with any taxes, (vi) filings under any applicable
state takeover law, (vii) where the failure to obtain such consent, approval or
authorization, or to make such filing or notification, would not in the
aggregate have a Company Material Adverse Effect and (viii) such other items (A)
required solely by reason of the participation of Parent (as opposed to any
third party) in the Transactions or (B) as are set forth in the Company
Disclosure Letter.
(b) The Company and the Company Board have taken all action necessary
to (i) render the Company Rights inapplicable to this Agreement, the Company
Stockholder Agreement, the Offer, the Merger and the other Transactions and (ii)
ensure that (A) neither Parent nor any of its affiliates or associates is or
will become an "Acquiring Person" (as defined in the Company Rights Agreement)
by reason of this Agreement or the Company Stockholder Agreement, the Offer, the
Merger or any of the other Transactions, (B) a "Distribution Date" (as defined
in the Company Rights Agreement) shall not occur by reason of this Agreement or
the Company Stockholder Agreement, the Offer, the Merger or any of the other
Transactions and (C) the Company Rights shall expire immediately prior to the
consummation of the Offer.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. The Company
---------------------------------------
has filed all reports, schedules, forms, statements and other documents required
to be filed
17
<PAGE>
by the Company with the SEC since January 1, 1996, pursuant to Sections 13(a)
and 15(d) of the Exchange Act (the "Company SEC Documents"). As
---------------------
of its respective date, each Company SEC Document complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as the case may be, and the rules and
--------------
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 Company 10-K"), has been revised or superseded by a Company SEC Document
- ------------------
filed prior to the date of this Agreement, and except as disclosed in the
Company Disclosure Letter, as of the date of this Agreement, the 1997 Company
10-K does not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles ("GAAP") (except, in the case of
----
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Filed Company SEC Documents, as of the
date of this Agreement neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes thereto and
that, individually or in the aggregate, would reasonably be expected to have a
Company Material Adverse Effect. None of the Company Subsidiaries is, or has at
any time since January 1, 1996, been, subject to the reporting requirements of
Sections 13(a) and 15(d) of the Exchange Act.
18
<PAGE>
SECTION 3.07. Information Supplied. None of the information supplied
---------------------
or to be supplied by the Company for inclusion or incorporation by reference in
(i) Offer Documents, the Schedule 14D-9 or any Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, 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, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or, unless promptly
corrected, at the time of the Company Stockholders Meeting (as defined in
Section 6.01) or, unless promptly corrected, at the time of any action by
written consent in lieu of a meeting pursuant to Section 228 of the DGCL with
respect to this Agreement and the Merger, as applicable, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-
9, the Information Statement and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
SECTION 3.08. Absence of Certain Changes or Events. Except as
-------------------------------------
contemplated by or expressly permitted in this Agreement and as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
agreement (the "Filed Company SEC Documents") or in the Company Disclosure
---------------------------
Letter, since December 31, 1997, the Company has conducted its business only in
the ordinary course, and during such period there has not been:
(i) any change (which would reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect) in the Company's
interest (as of December 31, 1997) in any oil and gas exploration license,
lease, area of mutual interest agreement, concession agreement, production
sharing contract, operating service agreement or other agreement or
arrangement evidencing an interest in hydrocarbons (an "Oil and Gas
-----------
Interest"), or in any corporation, partnership or joint venture arrangement
--------
which holds an Oil and Gas Interest, including, without limitation, the
imposition of any Lien on any Oil and
19
<PAGE>
Gas Interest other than (A) the terms and conditions of all leases,
contracts for sale, purchase, exchange, refining or processing of
hydrocarbons, unitization and pooling designations, declarations, orders
and agreements, gas balancing or deferred production agreements, processing
agreements and plant agreements, pipeline, gathering and transportation
agreements, (B) easements, rights of way, servitudes, permits, surface
leases and other rights with respect to surface obligations, (C) Liens for
taxes or assessments not yet delinquent or being protested in good faith by
appropriate action brought in the normal course, and (D) materialmen's,
mechanic's, repairman's, employee's, contractor's, operator's and other
similar Liens or charges, in all cases arising in the ordinary course of
business and which were not made in violation of Section 5.01
(collectively, "Permitted Encumbrances");
----------------------
(ii) any acquisition of, or any ongoing negotiations to acquire, any
Oil and Gas Interest, or any interest in a corporation, partnership or
joint venture arrangement which holds an Oil and Gas Interest, that,
individually or in the aggregate, involves or would involve a required
commitment by the Company to make an investment or expenditure in excess of
$10,000,000;
(iii) any change in the Company's petrochemical business (as in
existence on December 31, 1997), including, without limitation, the
Company's interest in the Geismar, Louisiana, olefins plant and the
Company's role as operator thereof (the Company's petrochemical business
being collectively referred to herein as the "Petrochemicals Interests"),
------------------------
the acquisition or building of new petrochemicals capacity or expansion of
existing petrochemicals capacity, or disposition of (including by way of a
contribution of assets or otherwise), all or any portion of the
Petrochemical Interests or the alteration or amendment of any contracts
relating to any Petrochemicals Interests but excluding, in each case, any
change that would not reasonably be expected to have a Company Material
Adverse Effect;
(iv) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock (other than regular quarterly cash dividends not in
excess of $.05 per share of Company Common Stock with usual record and
payment dates and in accordance with the Company's present dividend policy
and regular
20
<PAGE>
quarterly cash dividends with respect to the Series A Preferred), or any
repurchase for value by the Company of any Company Capital Stock;
(v) any split, combination or reclassification of any Company Capital
Stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock;
(vi) (A) any granting by the Company or any Company Subsidiary to any
director or executive officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment
agreements in effect as of December 31, 1997, (B) any granting by the
Company or any Company Subsidiary to any such director or executive officer
of any increase in severance or termination pay, except as was required
under any employment, severance or termination agreements in effect as of
December 31, 1997, or (C) any entry by the Company or any Company
Subsidiary into any employment, severance or termination agreement with any
such director or executive officer;
(vii) any change in accounting methods, principles or practices by the
Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar
as may have been required by a change in GAAP; or
(viii) unless Parent has otherwise agreed pursuant to Section 5.01(a),
any action taken by the Company or any Company Subsidiary that would be
prohibited after the date of this Agreement by Section 5.01(a) hereof,
other than any of clauses (iv), (v), (xi), and (xvii) (insofar as clause
(xvii) relates to clauses (iv), (v) and (xi)) of Section 5.01(a).
SECTION 3.09. Taxes. (a) Each of the Company, each Company
------
Subsidiary and each affiliated, combined, consolidated or unitary group of which
the Company or any Company Subsidiary is or has been a member (a "Company
-------
Affiliated Group") has timely filed, or has caused to be timely filed on its
- ----------------
behalf, all Tax Returns required to be filed by it, and all such Tax Returns are
true, complete and accurate, except to the extent any failure to file or any
inaccuracies in any filed Tax Returns would not, individually or in the
aggregate, have a Company Material
21
<PAGE>
Adverse Effect. All Taxes shown to be due on such Tax Returns, or otherwise owed
by the Company, any Company Subsidiary or any Company Affiliated Group, have
been timely paid, except to the extent that any failure to pay would not,
individually or in the aggregate, have and would not reasonably be expected to
have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the Filed
Company SEC Documents reflect an adequate reserve for all Taxes payable by the
Company and the Company Subsidiaries (including by virtue of being or having
been a member of a Company Affiliated Group) for all Taxable periods and
portions thereof through the date of such financial statements. No deficiency
with respect to any Taxes has been proposed, asserted or assessed against the
Company or any Company Subsidiary, and no requests for waivers of the time to
assess any such Taxes are pending, except to the extent any such deficiency or
request for waiver, individually or in the aggregate, would not have and would
not reasonably be expected to have a Company Material Adverse Effect. There is
no audit, examination, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company, any Company
Subsidiary or any Company Affiliated Group which matter would, individually or
in the aggregate, have or would reasonably be expected to have a Company
Material Adverse Effect.
(c) The Company and each Company Subsidiary have complied with all
rules and regulations relating to the withholding of Taxes, except to the extent
failure to comply would not, individually or in the aggregate, have and would
not reasonably be expected to have a Company Material Adverse Effect.
(d) For purposes of this Agreement:
"Taxes" shall include all forms of taxes, levies, imposts, duties,
-----
charges or withholdings, whenever created or imposed, and whether of the United
States or elsewhere, and whether imposed by a local, municipal, governmental,
state, foreign, Federal or other Governmental Entity, or in connection with any
agreement with respect to Taxes, including all interest, penalties and additions
imposed with respect to such amounts.
"Tax Return" shall mean all Federal, state, local, provincial and
----------
foreign Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
22
<PAGE>
SECTION 3.10. Absence of Changes in Benefit Plans. Except as
------------------------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, from December 31, 1997 to the date of this Agreement, there has not been
any adoption or amendment in any material respect by the Company or any Company
Subsidiary of any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, welfare, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any Company
Subsidiary except any such plan, arrangement or understanding the Company has
adopted as required by law (collectively, "Company Benefit Plans"). Except as
---------------------
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, to the Knowledge of the Company, as of the date of this Agreement
there are not any employment, consulting, indemnification severance or
termination agreements or arrangements between the Company or any Company
Subsidiary and any current or former employee, officer or director of the
Company or any Company Subsidiary.
SECTION 3.11. ERISA Compliance; Excess Parachute Payments. (a) The
--------------------------------------------
Company Disclosure Letter contains a list of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Company
----- -------
Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of
- -------------
ERISA) and all other Company Benefit Plans maintained, or contributed to, by the
Company or any Company Subsidiary for the benefit of any current or former
employees, officers or directors of the Company or any Company Subsidiary. The
Company has used its best efforts to make available to Parent true, complete and
correct copies in all material respects of (i) each Company Benefit Plan (or, in
the case of any unwritten Company Benefit Plan, a description thereof), (ii) the
most recent annual report on Form 5500 and Schedule B thereto (including any
related actuarial valuation report) filed with the Internal Revenue Service with
respect to each Company Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each Company Benefit Plan for which
such summary plan description is required and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter, all Company
Pension Plans intended to be qualified
23
<PAGE>
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") have been the subject of determination letters from the Internal Revenue
Service to the effect that such Company Pension Plans are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor, to the Knowledge of
the Company, has revocation been threatened, nor has any such Company Pension
Plan been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs. The Company has made available
to Parent true, complete and correct copies of the determination letters
referred to herein.
(c) Except as disclosed in the Company Disclosure Letter with respect
to ENSTAR Corporation, no Company Pension Plan, other than any Company Pension
Plan that is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA (a "Company Multiemployer Pension Plan"), had, as of the respective last
annual valuation date for each such Company Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on
actuarial assumptions that have been furnished to Parent. None of the Company
Pension Plans has an "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA or Section 412 of the Code), whether or not waived. None
of the Company, any Company Subsidiary, any officer of the Company or any
Company Subsidiary or any of the Company Benefit Plans which are subject to
ERISA, including the Company Pension Plans, any trusts created thereunder or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject the Company, any
Company Subsidiary or any officer of the Company or any Company Subsidiary to
the tax or penalty on prohibited transactions imposed by such Section 4975 or to
any liability under Section 502(i) or 502(1) of ERISA. None of such Company
Benefit Plans and trusts has been terminated, nor has there been any "reportable
event" (as that term is defined in Section 4043 of ERISA) for which the
disclosure requirements of Section 4043.1 et seq., promulgated by the Pension
-- ---
Benefit Guaranty Corporation, have not been waived with respect to any Company
Benefit Plan during the last five years. Neither the Company nor any Company
Subsidiary has incurred a "complete withdrawal" or a "partial withdrawal" (as
such terms are defined in Sections 4203 and 4205, respectively, of ERISA) since
the
24
<PAGE>
effective date of such Sections 4203 and 4205 with respect to any of the
Multiemployer Pension Plan.
(d) Except as disclosed in the Company Disclosure Letter, to the
Knowledge of the Company, each Company Benefit Plan complies in all material
respects with and has been administered, operated and maintained in all material
respects in compliance with all applicable provisions of ERISA, the Code and
other applicable laws.
(e) With respect to each Company Benefit Plan, no action, suit,
grievance, claim, arbitration or other manner of litigation with respect to the
assets of such Plan (other than routine claims for benefits made in the ordinary
course of plan administration for which plan administrator review procedures
have not been exhausted) is pending, or to the Company's Knowledge, threatened
or imminent against or with respect to the Company Benefit Plans or any Company
Benefit Plan sponsor or fiduciary (as defined in Section 3(21) of ERISA).
(f) With respect to any Company Benefit Plan that is an employee
welfare benefit plan, except as disclosed in the Company Disclosure Letter, (i)
no such Company Benefit Plan is unfunded or funded through a "welfare benefits
fund" (as such term is defined in Section 419(e) of the Code), (ii) each such
Company Benefit Plan that is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code), complies with the applicable requirements of
Section 4980B(f) of the Code and (iii) each such Company Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended or
terminated without material liability to the Company and the Company Subsidiary
on or at any time after the Effective Time except as otherwise provided in this
Agreement.
(g) Other than payments that may be made to the persons listed in the
Company Disclosure Letter (the "Primary Company Executives"), any amount that
--------------------------
could be received (whether in cash or property or the vesting of property) as a
result of the Offer, the Merger or any other Transaction by any employee,
officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently in
effect would not be characterized as an "excess parachute payment" (as defined
in Section 280G(b)(1) of the Code). Set forth in the Company Disclosure Letter
is (i) the estimated maximum amount that could be paid to each Primary Company
Executive
25
<PAGE>
as a result of the Offer, the Merger and the other Transactions under
all employment, severance and termination agreements, other compensation
arrangements and Company Benefit Plans currently in effect and (ii) the "base
amount" (as defined in Section 280G(b)(3) of the Code) for each Primary Company
Executive calculated as of the date of this Agreement.
SECTION 3.12. Litigation. Except as disclosed in the Filed Company
-----------
SEC Documents, there is no suit, action or proceeding not disclosed in the
Company Disclosure Letter pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any Company Subsidiary that,
individually or in the aggregate, has had or would reasonably be expected to
have a Company Material Adverse Effect, nor is there any Judgment outstanding
against the Company or any Company Subsidiary that has had or would reasonably
be expected to have a Company Material Adverse Effect.
SECTION 3.13. Environmental Matters; Compliance with Laws. (a)
-------------------------------------------
Except as disclosed in the Filed Company SEC Documents, there are no claims,
investigations or administrative actions not disclosed in the Company Disclosure
Letter pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any Company Subsidiary arising from or related to the
harmful effects of, or the removal or remediation of, hazardous substances or
pollutants that has had or would be reasonably expected to have a Company
Material Adverse Effect.
(b) Except as disclosed in the Filed Company SEC Documents or in the
Company Disclosure Letter, to the Knowledge of the Company, the Company and the
Company Subsidiaries are in compliance with all Applicable Laws, except for
instances of noncompliance that, individually and in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
This Section 3.13 does not relate to matters with respect to Taxes, which are
the subject of Section 3.09.
SECTION 3.14. Title to Properties. Except as set forth in the
--------------------
Company Disclosure Letter, as of the date of this Agreement, each of the Company
and each of the Significant Company Subsidiaries has good title to, or valid
leasehold or other ownership interests or rights in, all its properties and
assets except:
(i) for such interest or rights as are no longer used or useful in the
conduct of its businesses or as
26
<PAGE>
have been disposed of in the ordinary course of business, and
(ii) for defects in title, easements, restrictive covenants and
similar encumbrances or impediments that, in the aggregate, do not and will
not interfere with its ability to conduct its business as currently
conducted to the extent that such interference would not reasonably be
expected to have a Company Material Adverse Effect.
As of the date of this Agreement, none of the Company and the Significant
Company Subsidiaries' properties and assets are subject to any Liens (other than
Permitted Encumbrances) that, in the aggregate, interfere with the ability of
the Company and the Company Subsidiaries to conduct business as currently
conducted to an extent that have had or would reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.15. Confidentiality and Other Agreements. (a) The Company
-------------------------------------
has no confidentiality agreement or standstill agreement with any third party
with respect to a Company Takeover Proposal by such third party (each, a
"Company Confidentiality Agreement") in effect as of the date of this Agreement
- ----------------------------------
that has not been provided to Parent or Sub, other than those Company
Confidentiality Agreements that are prohibited by their terms from being
disclosed to Parent or Sub.
(b) Except as set forth in the Company Disclosure Letter, none of the
Company or any of its subsidiaries is subject to any noncompetition or similar
agreement that prohibits or restricts the Company or any of its affiliates from
engaging in any business or other activities.
SECTION 3.16. Brokers; Schedule of Fees and Expenses. No broker,
---------------------------------------
investment banker, financial advisor or other person, other than Salomon
Brothers Inc, Smith Barney Inc. and Petrie Parkman & Co., Inc. (the "Financial
---------
Advisors"), the fees and expenses of which will be paid by the Company, is
- --------
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger or any of the other
Transactions based upon arrangements made by or on behalf of the Company or any
Company Subsidiary or affiliate of the Company. The estimated fees and expenses
incurred and to be incurred by the Company in connection with the Offer, the
Merger and the other Transactions (including the fees of the Financial Advisors
and the fees of the Company's legal counsel) are set forth in the Company
Disclosure Letter.
27
<PAGE>
The Company has furnished to Parent a true and complete copy of all agreements
between the Company and the Financial Advisors relating to the Offer, the Merger
and the other Transactions.
SECTION 3.17. Opinion of Financial Advisor. The Company has received
-----------------------------
the opinion of each of the Financial Advisors, dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Offer and the Merger by the holders of the shares of Company Common Stock is
fair to the Company's stockholders from a financial point of view, a signed copy
of which opinion has been delivered to Parent.
ARTICLE IV
Representations and Warranties of Parent and Sub
------------------------------------------------
Parent and Sub, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.01. Organization, Standing and Power. (a) Each of Parent
---------------------------------
and Sub is duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its businesses as presently conducted.
SECTION 4.02. Sub. (a) Since the date of its incorporation, Sub has
----
not carried on any business or conducted any operations other than the execution
of the Transaction Agreements to which it is a party, the performance of its
obligations hereunder and thereunder and matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which have been validly issued,
are fully paid and nonassessable and are owned by Parent free and clear of any
Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
--------------------------------------------------
Each of Parent and Sub has all requisite corporate power and authority to
execute each Transaction Agreement to which it is a party and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of each
Transaction Agreement to which it is a party and the consummation by it of the
Transactions have been duly authorized by all necessary corporate action as the
part of Parent and Sub. Parent, as sole stockholder of Sub, has approved and
adopted this Agreement. Each of Parent and
28
<PAGE>
Sub has duly executed and delivered each Transaction Agreement to which it is a
party, and each Transaction Agreement to which it is a party constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
SECTION 4.04. No Conflicts; Consents. The execution and delivery by
-----------------------
each of Parent and Sub of each Transaction Agreement to which it is a party, do
not, and the consummation of the Offer, the Merger and the other Transactions
and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of Parent or
any of its subsidiaries under, any provision of (i) the charter or
organizational documents of Parent or any of its subsidiaries, (ii) any Contract
to which Parent or any of its subsidiaries is a party or by or to which any of
their respective properties or assets is bound or subject or (iii) subject to
the filings and other matters referred to in the following sentence, any
Judgment or Applicable Law applicable to Parent or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii) above, any such items that, individually or in the aggregate, have not
had and could not reasonably be expected to prevent or materially delay the
ability of Parent to consummate the Offer, the Merger and the other Transactions
(a "Parent Material Adverse Effect"). No Consent of, or registration,
------------------------------
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Parent or any of its subsidiaries in connection
with the execution, delivery and performance of any Transaction Agreement to
which Parent or Sub is a party or the consummation of the Transactions, other
than (i) compliance with and filings under (A) the HSR Act and (B) the EC
Regulations and the rules and regulations of any Governmental Entity to which a
reference is made pursuant to the EC Regulations, (ii) the filing with the SEC
of (A) the Offer Documents and (B) such reports and statements under Sections 13
and 16 of the Exchange Act as may be required in connection with this Agreement
and the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iv) compliance with and such filings as may
be required under applicable environmental laws, (v) such filings as may be
required in connection with the taxes described in Section 6.09, (vi) filings
under any applicable state takeover law and
29
<PAGE>
(vii) such other items (A) required solely by reason of the participation of the
Company (as opposed to any third party) in the Transactions, (B) that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect or (C) as are set forth in the
letter, dated as of the date of this Agreement, from Parent to Sub.
SECTION 4.05. Information Supplied. None of the information supplied
---------------------
or to be supplied by Parent or Sub for inclusion or incorporation by reference
in (i) Offer Documents, the Schedule 14D-9 or the Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, 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, or (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting (if applicable), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 4.06. Brokers. No broker, investment banker, financial
--------
advisor or other person, other than Morgan Stanley & Co. Incorporated, the fees
and expenses of which will be paid by Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Offer, the Merger and the other Transactions based upon arrangements
made by or on behalf of Parent.
SECTION 4.07. Financing. Parent and Sub have funds available
----------
sufficient to consummate the Offer and the Merger on the terms contemplated by
this Agreement, and, at the expiration of the Offer and the Effective Time,
Parent and Sub will have available all of the funds necessary for the
acquisition of all shares of Common Stock pursuant to the Offer and the Merger,
as the case may be, and to perform their respective obligations under this
Agreement.
30
<PAGE>
SECTION 4.08. Litigation. As of the date hereof, to the knowledge of
-----------
Parent, no person has filed any action or suit against Parent with respect to
this Agreement and the Transactions.
SECTION 4.09. Interested Stockholder. Immediately prior to the
----------------------
execution and delivery of this Agreement and the Company Stockholder Agreement,
neither Parent nor Sub was an "interested stockholder" of the Company, as such
term is defined in Section 203(c)(5) of the DGCL.
ARTICLE V
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 5.01. Conduct of Business. (a) Except for matters set forth
--------------------
in the Company Disclosure Letter or otherwise contemplated by the Transaction
Agreements, unless Parent shall otherwise agree, from the date of this Agreement
to the Effective Time or earlier termination of this Agreement, the Company
shall, and shall cause each Company Subsidiary to, conduct its business in the
usual, regular and ordinary course consistent with past practice except as
required to comply with changes in applicable law occurring after the date
hereof (subject to the express restrictions set forth below in this Section
5.01, including, without limitation, the restrictions of clauses (iv) and (v)
below) and, to the extent consistent therewith, use all commercially reasonable
efforts to preserve intact its current business organization and keep available
the services of its current officers and employees to maintain its goodwill and
ongoing business. In addition, and without limiting the generality of the
foregoing, except for matters set forth in the Company Disclosure Letter or
otherwise contemplated by the Transaction Agreements, unless Parent shall
otherwise agree, and except as required to comply with changes in applicable law
occurring after the date hereof, from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any Company
Subsidiary to, do any of the following without the prior written consent of
Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (other than regular
quarterly cash dividends not in excess of $.05 per share of Company Common
Stock with usual record and payment dates and in accordance with the
Company's present dividend policy and regular quarterly cash dividends with
respect to
31
<PAGE>
the Series A Preferred), other than dividends and distributions by a direct
or indirect wholly owned subsidiary of the Company to its parent, (B)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (C) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, voting securities or convertible or
exchangeable securities or (D) any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units, other than the
issuance of Company Common Stock (and associated Company Rights) upon the
exercise of Company Stock Options outstanding on the date of this Agreement
or under the Company's Savings Plan for Salaried Employees, Deferred
Compensation Plan or the defined contribution retirement plan for employees
of Virginia Indonesia Company, and in accordance with their present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) enter into, or amend, any material technical contract, long-term
drilling rig contract, agreement to sell, purchase or share seismic and
other geological or geophysical data, or any material contract for the
purchase or sale of oil, gas, LPG, LNG, ethylene, propylene or other
hydrocarbon or petrochemical products, other than in the ordinary course of
business consistent with past practice;
(v) (A) enter into, or amend, or negotiate to enter into or amend, any
farm-out or farm-in arrangement, area of mutual interest agreement,
exploration license, lease, concession agreement, production sharing
contract, operating service agreement or similar agreement or arrangement
evidencing an interest in hydrocarbons, or participate in any bidding
group, bidding round or public hearing with respect thereto, (B) acquire,
or negotiate to
32
<PAGE>
acquire, any interest in a corporation, partnership or joint venture
arrangement which holds an oil and gas interest of the type described in
the foregoing clause (A), (C) sell, transfer, assign, relinquish or
terminate (other than relinquishments or terminations required by the terms
of existing agreements) or negotiate to take any such action with respect
to, the Company's interest (as of the date of this Agreement) in any oil
and gas exploration license, lease, area of mutual interest agreement,
concession agreement, production sharing contract, operating service
agreement or other agreement or arrangement evidencing an interest in
hydrocarbons, or in the equity or debt securities of any corporation,
partnership or joint venture arrangement which holds such an interest,
including, without limitation, the imposition of any Lien (other than
Permitted Encumbrances) on any of the foregoing, (D) give, or negotiate to
give, any approvals relating to development plans, work plans, budgets or
capital expenditure commitments in connection with any oil and gas
interests of the type described in the foregoing clause (C), other than
expenditures in the existing capital expenditure budget disclosed in the
Company Disclosure Letter, or (E) make any change in the Petrochemical
Interests, including, without limitation, the imposition of any Lien (other
than Permitted Encumbrances) thereon, or enter into any agreements or
negotiations to acquire or build new petrochemicals capacity or expand
existing petrochemicals capacity, or dispose of (including, by way of a
contribution of assets or otherwise), all or any portion of the
Petrochemical Interests, or to alter or amend, in any material respect, any
contracts relating to the Petrochemical Interests, other than in the
ordinary course of business consistent with past practice;
(vi) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and the Company Subsidiaries taken as a whole;
(vii) (A) grant to any officer or director of the Company or any
Company Subsidiary any increase in compensation, except in the ordinary
course of business consistent with prior practice or to the extent required
under employment agreements in effect as of
33
<PAGE>
the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (B) grant to any employee, officer or director
of the Company or any Company Subsidiary any increase in severance or
termination pay, except to the extent required under any agreement in
effect as of December 31, 1997, (C) enter into any employment, consulting,
indemnification, severance or termination agreement with any such employee,
officer or director, (D) establish, adopt, enter into or amend in any
material respect any collective bargaining agreement or Company Benefit
Plan or (E) take any action to accelerate any rights or benefits, or make
any material determinations not in the ordinary course of business
consistent with prior practice, under any collective bargaining agreement
or Company Benefit Plan;
(viii) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP or by operation of law;
(ix) sell, lease, license or otherwise dispose of or subject to any
Lien any properties or assets, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent with past
practice;
(x) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings or trade obligations incurred in the ordinary course of business
consistent with past practice, or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than to or in
the Company or any direct or indirect wholly owned subsidiary of the
Company;
(xi) make or agree to make any new capital expenditure or expenditures
(other than expenditures in the existing capital expenditure budget
disclosed in the Company Disclosure Letter) that, individually, is
34
<PAGE>
in excess of $1,500,000 or, in the aggregate, are in excess of $5,000,000;
(xii) make any material Tax election or settle or compromise any
material Tax liability or refund, consent to any extension or waiver of the
statute of limitations period applicable to any Tax claim or action, if any
such election, settlement, compromise, consent or other action would have
the effect of increasing the Tax liability or reducing any net operating
loss, foreign tax credit, net capital loss or any other credit or tax
attribute of the Company or any of the Company Subsidiaries (including,
without limitation, deductions and credits related to alternative minimum
Taxes);
(xiii) enter into any hedging agreement or other financial agreement
or arrangement designed to protect the Company against fluctuations in
commodities prices or currency exchange rates, except agreements or
arrangements entered into in the ordinary course of business consistent
with past practice;
(xiv) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms or the terms of this Agreement, of liabilities reflected
or reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Filed Company SEC Documents or incurred in the ordinary course of business
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any Company Subsidiary is a party;
(xv) make any material change (including failing to renew) in the
amount or nature of the insurance policies covering the Company and the
Company Subsidiaries, other than pursuant to the terms of such existing
policies as of the date of this Agreement;
(xvi) enter into any agreements in connection with, or negotiate to
give any approvals to, the amendment, extension, modification or waiver of
any of
35
<PAGE>
the terms and conditions (as in effect on the date of this Agreement) of the
Indonesian Participating Units issued by Unimar Company, or any guarantee or
"keep well" or other agreement to maintain any financial condition with respect
thereto; or
(xvii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) The Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, take any action that would, or that would
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in any Transaction Agreement to which it is a
party that is qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that is not so qualified becoming untrue in any
material respect or (iii) except as otherwise permitted by Section 5.02, any
condition to the Offer set forth in Exhibit A, or any condition to the Merger
set forth in Article VII, not being satisfied.
(c) The Company shall promptly advise Parent orally and in writing of
any change or event having, or which, insofar as can reasonably be foreseen,
would have, a Company Material Adverse Effect.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall
----------------
it permit any Company Subsidiary to, nor shall it authorize any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any Company Subsidiary (collectively, "Company
-------
Representatives") to, and will use its reasonable best efforts to ensure that
- ---------------
none of the Company Representatives shall, (i) solicit, initiate or encourage
the submission of, any Company Takeover Proposal, (ii) enter into any agreement
with respect to any Company Takeover Proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, a Company Takeover Proposal; provided,
--------
however, that, at any time during the period following the execution of the
- -------
Agreement and prior to the consummation of the Offer (the "Applicable Period"),
-----------------
the Company may, in response to a Company Superior Proposal (as defined in
Section 5.02(b), including the determination by the Company Board set forth in
such definition) that was not solicited by the Company or any Company
Representative and that did not otherwise result from a breach or a deemed
breach of this Section 5.02(a), and subject to providing prior written notice of
its
36
<PAGE>
decision to take such action to Parent (the "Company Notice") and compliance
--------------
with Section 5.02(c), for a period of no more than ten business days following
delivery of the Company Notice (which period shall be extended to the end of the
48-hour period following the receipt by Parent of the notice from the Company
that it is prepared to accept a Company Superior Proposal referred to in Section
5.02(b)), (x) furnish information with respect to the Company to any
person making a Company Superior Proposal pursuant to a customary
confidentiality agreement as determined by the Company after consultation with
its outside counsel, and (y) participate in discussions or negotiations
regarding such Company Superior Proposal. Without limiting the foregoing, it is
agreed that any action that is in violation of or inconsistent with the
restrictions set forth in the preceding sentence by any executive officer of the
Company or any Company Subsidiary or any Company Representative or affiliate of
the Company, whether or not such person is purporting to act on behalf of the
Company or any Company Subsidiary or otherwise, shall be deemed to be a breach
of this Section 5.02(a) by the Company. For purposes of this Agreement, "Company
-------
Takeover Proposal" means any inquiry, proposal or offer from any person relating
- -------- --------
to any direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or the assets of the Company and the
Company Subsidiaries taken as a whole, or 15% or more of any class of equity
securities of the Company or any Significant Company Subsidiary, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the Company
or any Company Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any Company Subsidiary, other than the transactions contemplated by
this Agreement. The Company shall be permitted to deliver only one Company
Notice with respect to each person making a Company Superior Proposal.
(b) Except as expressly permitted by this Section 5.02, neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by the Company Board or any such committee of this Agreement, the
Offer or the Merger, (ii) approve or cause the Company to enter into any letter
of intent, agreement in principle or any legally binding acquisition agreement
or similar agreement (any such legally binding agreement, a "Company Acquisition
-------------------
Agreement") relating to any Company Takeover Proposal or (iii) approve or
- ---------
recommend, or propose to publicly approve or recommend, any Company
37
<PAGE>
Takeover Proposal. Notwithstanding the foregoing, if the Company has received a
Company Superior Proposal and if Sub has not accepted for payment any shares of
Company Common Stock tendered pursuant to the Offer, the Company Board may
(subject to this and the following sentences) terminate this Agreement, but only
at a time that is during the Applicable Period and is more than 48 hours
following Parent's receipt of written notice advising Parent that the
Company Board is prepared to accept such Company Superior Proposal, specifying
the material terms and conditions of such Company Superior Proposal and
identifying the person making such Company Superior Proposal; provided, however,
-------- -------
that (x) at the time of such termination, such Proposal continues to be a
Company Superior Proposal, taking into account any amendment of the terms of the
Offer or the Merger by Parent or any proposal by Parent to amend the terms of
this Agreement, the Offer or the Merger or any other Company Takeover Proposal
made by Parent (a "New Parent Proposal"), and (y) concurrently with or
--- ------ --------
immediately after such termination, the Company Board shall cause the Company to
enter into a Company Acquisition Agreement with respect to such Company Superior
Proposal. For purposes of this Agreement, a "Company Superior Proposal" means
------- -------- --------
any proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction,
for consideration consisting of cash and/or securities, more than 50% of the
outstanding shares of Company Common Stock or all or substantially all the
assets of the Company and otherwise on terms which the Company Board determines
in its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation) (x) is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other aspects of the
proposal and the third party making such proposal, and (y) provides greater
value to the holders of Company Common Stock (specifically taking into account
the expected value of the consideration to be received by the holders of Company
Common Stock on the date such consideration is expected to be received by such
holders) than the cash consideration to be received by such stockholder pursuant
to the Offer and the Merger, as the Offer and the Merger may be amended from
time to time, or the value to the holders of Company Common Stock to be provided
by any New Parent Proposal (specifically taking into account the expected value
of the consideration expected to be received in the Offer, the Merger or any New
Parent Proposal by the holders of Company Common Stock on the date such
consideration is expected to be received by such holders).
38
<PAGE>
(c) In addition to the obligations of the Company set forth in
Sections 5.02(a) and 5.02(b), the Company promptly shall advise Parent orally
and in writing of any Company Takeover Proposal or any inquiry or request for
information with respect to or that could reasonably be expected to lead to any
Company Takeover Proposal, the identity of the person making any such Company
Takeover Proposal or inquiry or request for information and the material terms
of any such Company Takeover Proposal or inquiry or request for information. The
Company shall (i) keep Parent fully informed of the status including any change
to the material terms of any such Company Takeover Proposal or inquiry or
request for information and (ii) provide to Parent as soon as practicable after
receipt or delivery thereof with copies of all correspondence and other written
material sent or provided to the Company or any Company Representative or any
affiliate of the Company from any third party in connection with any Company
Takeover Proposal or inquiry or request for information or sent or sent or
provided by the Company or any Company Representative or any affiliate of the
Company to any third party in connection with any Company Takeover Proposal or
inquiry or request for information; provided, however, that the Company shall
-------- -------
not be required to provide any nonpublic information specified in this clause
(ii) regarding the business or financial condition or prospects of such third
party if the Company is prohibited from disclosing such information pursuant to
a legally binding confidentiality agreement.
(d) Nothing contained in this Section 5.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Company Board,
after consultation with outside counsel, failure so to disclose would be
inconsistent with its obligations under applicable law; provided, however, that
-------- -------
neither the Company nor its Board nor any committee thereof shall withdraw or
modify, or propose publicly to withdraw or modify, its position with respect to
this Agreement or in connection with the Offer or the Merger, or approve or
recommend, or propose publicly to approve or recommend, a Company Takeover
Proposal.
39
<PAGE>
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
-----------------------------------------------------
(a) If the approval and adoption of this Agreement by the Company's
stockholders is required by law, the Company shall, at Parent's request, as soon
as practicable following the expiration of the Offer, prepare and file with the
SEC the Proxy Statement in preliminary form, and the Company shall use its best
efforts to respond as promptly as practicable to any comments of the SEC with
respect thereto. The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. If at any time
prior to receipt of the Company Stockholder Approval there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects. The Company
shall use its best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) If the approval and adoption of this Agreement by the Company's
stockholders is required by law, the Company shall, if requested by Parent and
as soon as practicable following the expiration of the Offer, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
-------
Stockholders Meeting") for the purpose of seeking the Company Stockholder
- --------------------
Approval. The Company shall, through the Company Board, recommend to its
stockholders that they give the Company Stockholder Approval. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 6.01(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Company Takeover Proposal. Notwithstanding the foregoing, if Sub
or any other subsidiary of Parent shall acquire at least 90% of the outstanding
shares of each class of Company Capital Stock, the parties shall, at the request
of Parent, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration
40
<PAGE>
of the Offer without a stockholders meeting in accordance with Section 253 of
the DGCL.
(c) Subject to any restrictions imposed by Applicable Law, Parent
shall cause all shares of Common Stock purchased pursuant to the Offer and all
other shares of Common Stock owned by Sub or any other subsidiary of Parent to
be voted to adopt and approve this Agreement and the Merger at the Company
Stockholders Meeting or, at the election of Parent, shall consent in writing to
adoption and approval of this Agreement and the Merger pursuant to Section 228
of the DGCL.
SECTION 6.02. Access to Information; Confidentiality. The Company
---------------------------------------
shall, and shall cause each of its subsidiaries to, afford to Parent, and to
Parent's directors, officers, employees, accountants, counsel, financial
advisers, financing sources and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, subject to legally binding confidentiality restrictions with third
parties. All nonpublic information exchanged pursuant to this Section 6.02
shall be subject to the confidentiality agreement dated as of April 25, 1998
between the Company and Parent (the "Confidentiality Agreement").
-------------------------
SECTION 6.03. Reasonable Efforts; Notification. (a) Upon the terms
---------------------------------
and subject to the conditions set forth in this Agreement, each of the parties
shall use all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining
41
<PAGE>
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the Company Stockholder Agreement
or the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements. In connection with and without limiting
the foregoing, the Company and the Company Board shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to any Transaction or this Agreement or the
Company Stockholder Agreement and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to this Agreement or the Company
Stockholder Agreement, take all action necessary to ensure that the Offer, the
Merger and the other Transactions may be consummated as promptly as practicable
on the terms contemplated by the Transaction Agreements and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other Transactions. Nothing in this Agreement shall be deemed to require any
party to waive any substantial rights or agree to any substantial limitation on
its operations or to take any action that would result in any of the
consequences referred to in paragraph (a) of Exhibit A.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in any Transaction Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; provided,
--------
however, that no such notification shall affect the representations, warranties,
- -------
covenants or agreements of the parties or the conditions to the obligations of
the parties under any Transaction Agreement.
SECTION 6.04. Stock Options. (a) Prior to the consummation of the
--------------
Offer, the Company Board (or, if appropriate, any committee administering the
Company Stock Plans) shall have adopted such resolutions or taken such other
actions as are required to ensure that all Company Stock Options and all Company
SARs heretofore granted under any Company Stock Plan that are outstanding at the
Effective
42
<PAGE>
Time shall not give the holder thereof the right to receive any capital stock of
Parent, the Company or the Surviving Corporation after the Effective Time or to
receive from Parent, the Company or the Surviving Corporation any consideration
other than an amount of cash equal to the Option Spread.
(b) In this Agreement:
"Company Stock Option" means any option to purchase Company Common
--------------------
Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right linked to the price
-----------
of Company Common Stock and granted under any Company Stock Plan.
"Company Stock Plans" means the plans providing for the grant of
-------------------
Company Stock Options or any other issuance of Company Capital Stock and
listed in the Company Disclosure Letter.
SECTION 6.05. Benefit Plans. (a) Parent shall cause the Surviving
--------------
Corporation to (i) maintain for a period of one year after the Effective Time
the Company Benefit Plans (other than plans providing for the issuance of
Company Capital Stock or based on the value of Company Capital Stock) in effect
on the date of this Agreement or (ii) make available to employees of the Company
and the Company Subsidiaries (including employees transferred to employment with
Parent or other subsidiaries of Parent) the employee benefit plans of Parent and
its subsidiaries that are provided to similarly situated employees of Parent and
its subsidiaries.
(b) Following the Effective Time, Parent shall cause the Company and
its subsidiaries to honor (subject to this Section 6.05 and Section 6.06) all
obligations under any contracts, agreements and commitments of the Company and
its subsidiaries prior to the date hereof (or as established or amended in
accordance with or permitted by this Agreement) the existence of which does not
constitute a violation of the terms of this Agreement, which apply to any
current or former employee, or current or former director of the parties hereto
or any of their subsidiaries; provided, however, that this undertaking is not
-------- -------
intended to prevent the Company or any subsidiary of the Company from enforcing
such contracts, agreements and commitments in accordance with their terms,
including, any reserved right to amend, modify, suspend, revoke or terminate any
such contract, agreement or commitment.
43
<PAGE>
(c) Nothing herein shall be construed as giving any employee of the
Company or any Company Subsidiary any right to continued employment following
the Effective Time.
(d) Parent agrees that for purposes of any of the Company Benefit
Plans conferring rights on a current or former employee, officer or director as
a result of a change of control of the Company, the consummation of the Merger
shall be deemed to constitute a "Change of Control" (as that term is defined in
such Company Benefit Plans).
(e) If any employee or officer of the Company or any of the Company
Subsidiaries becomes a participant in any employee benefit plan, program,
practice or policy of Parent or any subsidiary of Parent or the Surviving
Corporation, such employee or officer shall be given credit thereunder for all
service prior to the Effective Time with the Company and the Company
Subsidiaries or any predecessor employer (to the extent such credit was given by
the Company) for purposes of eligibility and vesting (but not for benefit
accrual purposes), except to the extent that crediting such service would result
in duplication of benefits.
(f) For a period of two years from the consummation of the Offer, if
any segment or business of the Company or the Company Subsidiaries (a "Segment")
-------
is sold or otherwise disposed of, Parent agrees, and shall cause the Surviving
Corporation to agree, to provide, or cause the buyer of or other successor to
such Segment to provide, each employee whose employment is involuntarily
terminated after such sale or other disposition with severance benefits which
are no less favorable than the severance benefits to which such employee would
have been entitled had such employee's employment instead then been
involuntarily terminated by the Company or the Company Subsidiaries, pursuant to
the Company Benefit Plans existing as of the date hereof, but only to the extent
that the obligations of the Company and the Company Subsidiaries under the
Company Benefit Plans have not been discharged prior to such involuntary
termination of employment. For the purposes of this Section 6.05(f) the term
"involuntarily terminated" shall be used as such term is used in the relevant
Company Benefit Plans.
(g) On or before 90 days after the Closing Date, Parent shall (i)
notify each management employee who is a participant in the Company's Executive
Severance Plan (a "Participant") as to whether Parent intends to continue the
employment of such Participant or to terminate the employment of such
Participant, (ii) with respect to each Participant whose employment Parent
intends to terminate, notify such Participant of the effective date of such
44
<PAGE>
termination and the details of the terms and conditions of such Participant's
employment intended by Parent to be applicable prior to the date of such
termination, and (iii) with respect to each Participant to whom Parent intends
to offer continued employment, notify such Participant of any desired changes
Parent would make in the terms and conditions of such Participant's employment.
(h) Parent shall maintain, or shall cause the Surviving Corporation or
its successors to maintain, with respect to employees and former employees (and
their eligible dependents) of the Company and the Company Subsidiaries who are
participating in the Company's retiree medical plan as of the Effective Time or
who should be eligible to participate in the Company's retiree medical plan if
they retired as of the later of (i) the Effective Time or (ii) in the case of an
employee who is involuntarily terminated for purposes of any Company severance
plan (as currently in effect), as of the end of the salary continuation period
under such severance plan, retiree medical coverage that is consistent with the
retiree medical coverage provided to similarly situated employees and former
employees of the Parent and its subsidiaries at such time.
(i) Without regard to whether the Company's Salaried Employees'
Pension Plan (the "CSEPP") or the Company's Supplemental Retirement Plan II (the
-----
"SERP") are continued following the Effective Time, Parent shall cause the
----
benefits provided by Section 1.01(30)(C) of the CSEPP and Paragraphs (iv), (v)
and (vi) of Article V of the SERP (pertaining to additional service credit under
such plans for certain participants who are involuntarily terminated), with
respect to employees of the Company as of the Effective Time who are
involuntarily terminated from employment with Parent or any subsidiary of Parent
within two years after the Effective Time, to be continued for a period of not
less than two years following the Effective Time.
(j) At Parent's election, the Company shall amend the CSEPP and
Savings Plan for Salaried Employees to cause all employees of the Company and
the Company Subsidiaries to become 100% vested in their accrued benefits under
such plans as of the Effective Time. In all cases, any employee of the Company
or a Company Subsidiary who is a participant in the CSEPP or the Savings Plan
for Salaried Employees as of the Effective Time shall become 100% vested in his
or her accrued benefits under such plans if and when such employee is
involuntarily terminated within two years of the Effective Time.
45
<PAGE>
SECTION 6.06. Indemnification. (a) Parent shall, to the fullest
----------------
extent permitted by law, cause the Surviving Corporation to honor all the
Company's obligations to indemnify (including any obligations to advance funds
for expenses) the current or former directors or officers of the Company and the
Company Subsidiaries for acts or omissions by such directors and officers
occurring at or prior to the Effective Time to the extent that such obligations
of the Company exist on the date of this Agreement, whether pursuant to the
Company Charter, the Company By-laws, individual indemnity agreements or
otherwise, and such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the terms of the Company Charter, the
Company By-laws and such individual indemnity agreements from the Effective Time
until the expiration of the applicable statute of limitations with respect to
any claims against such directors or officers arising out of such acts or
omissions.
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company (provided that Parent
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amounts containing terms and conditions which
are no less advantageous) with respect to claims arising from or related to
facts or events which occurred at or before the Effective Time; provided,
--------
however, that Parent shall not be obligated to make annual premium payments for
- -------
such insurance to the extent such premiums exceed 300% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 300% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all,
---------------
or can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium;
provided further, if such insurance coverage cannot be obtained at all, Parent
- -------- -------
shall purchase all available extended reporting periods with respect to pre-
existing insurance in an amount which, together with all other insurance
purchased pursuant to this Section 6.06(b), does not exceed the Maximum Premium.
The Company represents to Parent that the Maximum Premium is $1,899,000. Parent
agrees, and will cause the Company, not to take any action that would have the
effect of limiting the aggregate amount of insurance coverage required to be
maintained for the individuals referred to in this Section 6.06(b).
46
<PAGE>
(c) From and after the consummation of the Offer, to the full extent
permitted by the law, Parent shall, and shall cause the Company (or any
successor to the Company) to, indemnify, defend and hold harmless the present
officers and directors of the Company and its subsidiaries (each an "Indemnified
-----------
Party") against all losses, claims, damages, liabilities, fees and expenses
- -----
(including attorneys' fees and disbursements), judgments, fines and amounts paid
in settlement (collectively, "Losses") arising out of actions or omissions
occurring at or prior to the Effective Time in connection with this Agreement,
the Company Stockholder Agreement, the Offer, the Merger and the other
Transactions; provided, however, that an Indemnified Party shall not be entitled
-------- -------
to indemnification under this Section 6.06(c) for Losses arising out of actions
or omissions by the Indemnified Party constituting (i) a breach of this
Agreement or the Company Stockholder Agreement, (ii) criminal conduct or (iii)
any violation of federal, state or foreign securities laws. In order to be
entitled to indemnification under this Section 6.06(c), an Indemnified Party
must give Parent and the Company prompt written notice of any third party claim
which may give rise to any indemnity obligation under this Section 6.06(c), and
Parent and the Company shall have the right to assume the defense of any such
claim through counsel of their own choosing, subject to such counsel's
reasonable judgment that separate defenses that would create a conflict of
interest on the part of such counsel are not available. If Parent and the
Company do not assume any such defense, they shall be liable for all reasonable
costs and expenses of defending such claim incurred by the Indemnified Party,
including reasonable fees and disbursements of counsel and shall advance such
reasonable costs and expenses to the Indemnified Party; provided, however, that
-------- -------
such advance shall be made only after receiving an undertaking from the
Indemnified Party that such advance shall be repaid if it is determined that
such Indemnified Party is not entitled to indemnification therefor. Neither
Parent nor the Company shall be liable under this Section 6.06(c) for any Losses
resulting from any settlement, compromise or offer to settle or compromise any
such claim or litigation or other action, without the prior written consent of
Parent and the Company.
(d) The Company shall not, and Parent shall not permit the Company to,
amend or repeal any provision of the certificate of incorporation or by-laws of
the Company after the consummation of the Offer if such action would adversely
affect the rights of individuals who on or prior to the consummation of the
Offer were entitled to advances, indemnification or exculpation thereunder, for
actions or omissions by such individuals prior to the Effective Time.
47
<PAGE>
The individuals referred to in the preceding sentence shall include any
individuals serving as directors or officers of any subsidiaries of the Company
at the Company's request, it being acknowledged by the parties hereto that each
director or officer of the Company who is currently serving as a director or
officer of a subsidiary of the Company is doing so at such request of the
Company.
(e) In the event the Surviving Corporation or any successor to the
Surviving Corporation (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successors of the Surviving Corporation honor the
obligations of the Company set forth in this Section 6.06.
SECTION 6.07. Fees and Expenses. (a) Except as provided below, all
-----------------
fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses, whether
or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $85,000,000 if:
(i) the Company terminates this Agreement pursuant to Section 8.01(d);
(ii) (A) after the date of this Agreement and prior to the termination
of this Agreement, any person makes a Company Takeover Proposal, (B) the
Offer shall have remained open until the scheduled expiration date
immediately following the date such Company Takeover Proposal is made, (C)
the Minimum Tender Condition is not satisfied at the expiration of the
Offer, (D) this Agreement is terminated pursuant to Section 8.01(b)(iii)
and (E) within 12 months of the date of termination of this Agreement, the
Company executes a legally binding agreement or an agreement in principle
pursuant to which any person, entity or group (other than Parent, Sub or
any of their affiliates), in one transaction or a series of transactions,
will acquire more than 50% of the outstanding Company Common Stock or
assets of the Company through any open market purchases, merger,
consolidation, tender or exchange offer, recapitalization, reorganization
or other business combination (an "Acquisition Event"); or
-----------------
48
<PAGE>
(iii) (A) after the date of this Agreement and prior to the
termination of this Agreement, any person makes a Company Takeover
Proposal, (B) this Agreement is terminated pursuant to Section 8.01(b)(iii)
as a result of the failure of any condition set forth in paragraph (f) or
(g) of Exhibit A, and (C) an Acquisition Event occurs within 12 months of
the date of termination of this Agreement.
Any fee due under this Section 6.07(b) shall be paid by wire transfer
of same-day funds on the date of termination of this Agreement in the case of a
fee due under clause (i) of the preceding sentence, or on the date such
Acquisition Event is consummated in the case of a fee due under clause (ii) or
(iii) of the preceding sentence. The payment of a fee pursuant to the foregoing
clause (iii) as a result of any wilful breach by the Company of its
representations, warranties or covenants shall in no way limit any remedy
available to Parent or Sub for such breach, except that the receipt by Parent of
such fee shall be taken into account in calculating any damages suffered by
Parent or Sub as a result of such breach.
SECTION 6.08. Public Announcements. (a) Parent and Sub, on the one
---------------------
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
(b) The Company shall give prior notice (which to the extent
practicable shall be given in writing and on 24 hours' prior notice) to Parent
and Sub of any proposed press release or other public statement not relating to
the Offer, the Merger or any of the other Transactions, which notice shall
include the text of such press release or public statement.
SECTION 6.09. Directors. (a) Promptly upon the acceptance for
----------
payment of, and payment by Sub for, any shares of Common Stock pursuant to the
Offer, Sub shall be entitled to designate such number of directors on the
Company Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to at least that number
of directors, rounded up to the next whole number, which is the product of
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<PAGE>
(a) the total number of directors on the Company Board (giving effect
to the directors elected pursuant to this sentence) multiplied by (b) the
percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Sub plus the number of shares of Company
Common Stock otherwise owned by Sub or any other subsidiary of Parent bears to
(ii) the number of such shares outstanding, and the Company shall, at such time,
cause Sub's designees to be so elected; provided, however, that in the event
-------- -------
that Sub's designees are appointed or elected to the Company Board, until the
Effective Time the Company Board shall have at least three directors who are
Directors on the date of this Agreement and who are not officers of the Company
(the "Independent Directors"); and provided further that, in such event, if the
----------- --------- -------- -------
number of Independent Directors shall be reduced below three for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) shall be entitled to designate persons to
fill such vacancies who shall be deemed to be Independent Directors for purposes
of this Agreement or, if no Independent Directors then remain, the other
directors shall designate three persons to fill such vacancies who shall not be
officers, stockholders or affiliates of the Company, Parent or Sub, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company shall promptly,
at the option of Sub, use its best efforts to either increase the size of the
Company Board or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company Board as provided above.
(b) Following the election or appointment of Sub's designees pursuant
to this Section 6.09 and prior to the Effective Time, any amendment or
termination of this Agreement, extension for the performance or waiver of the
obligations of Parent or Sub or waiver of the Company's rights hereunder shall
require the concurrence of a majority of the Independent Directors.
50
<PAGE>
SECTION 6.10. Rights Agreement. The Rights Agreement dated as of
-----------------
September 12, 1997, between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Company Rights Agreement"), has been amended as
------------------------
provided in Exhibit B. Except as approved in writing by Parent, neither the
Company nor the Company Board shall (i) amend the Company Rights Agreement, (ii)
redeem the Company Rights or (iii) take any action with respect to, or make any
determination under, the Company Rights Agreement.
SECTION 6.11. Stockholder Litigation. The Company shall give Parent
-----------------------
the opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any Transaction;
provided, however, that no such settlement shall be agreed to without Parent's
- -------- -------
consent, which shall not be unreasonably withheld.
SECTION 6.12. Performance by Sub. Parent shall cause Sub to comply
-------------------
with each of its obligations hereunder and pursuant to the Offer, including,
without limitation, causing Sub to consummate the Offer and the Merger as
contemplated herein, and Parent hereby guarantees the performance by Sub of such
obligations.
SECTION 6.13. Dual Consolidated Losses. If the Company or any
-------------------------
Company Subsidiary has any dual consolidated loss that would be subject to
recapture under Treasury Regulation Section 1.1503-2(g)(2) as a result of the
Offer, the Merger or the other Transactions, the Company or such Company
Subsidiary shall use its best efforts in conjunction with Parent to file, prior
to the date that the Company becomes a member of Parent's consolidated group, a
request with the Internal Revenue Service to enter into a closing agreement
under Treasury Regulation Section 1.1503-2(g)(2)(iv)(B) to avoid such recapture.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger is subject
- -------
to the
51
<PAGE>
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. If required by law, the Company shall have
---------------------
obtained the Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
----------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired. Any consents, approvals and filings under any foreign antitrust
law (including, without limitation, the EC Regulations), the absence of which
would prohibit the consummation of the Merger, shall have been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
-----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
-------- -------
the parties shall have used all reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Purchase of Stock. Sub shall have previously accepted for
------------------
payment and paid for Company Common Stock pursuant to the Offer.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated at any
------------
time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before January 31,
1999 (the "Outside Date"), unless the failure to consummate the Merger
------------
is the result of a wilful and material breach of any Transaction
Agreement by the party seeking to terminate this Agreement; provided,
--------
however, that the passage of such period shall be tolled for any
-------
52
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part thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the consummation of the Merger;
(ii) if any Governmental Entity issues an order, decree or ruling
or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(iii) if as the result of the failure of any of the conditions
set forth in Exhibit A to this Agreement, the Offer shall have
terminated or expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the Offer;
(c) by Parent, if, prior to the consummation of the Offer (and other
than during any Parent Extension Period), the Company shall be in breach of
any of its representations and warranties or fail to perform in any
material respect any of its covenants and obligations contained in any
Transaction Agreement, which breach or failure to perform would give rise
to the failure of a condition set forth in Exhibit A (provided that Parent
--------
is not then in wilful and material breach of any representation, warranty
or covenant contained in any Transaction Agreement, and provided further,
-------- -------
that such breach or failure to perform is not capable of being cured by the
earlier of 15 days from the time it came to the Knowledge of the Company
and the then scheduled expiration date of the Offer);
(d) by the Company in accordance with Section 5.02(b); provided,
--------
however, that, in order for the termination of this Agreement pursuant to
-------
this clause (d) to be deemed effective, the Company shall have complied
with all provisions contained in Section 5.02(b), including the notice
provisions therein and with applicable requirements of Section 6.07,
including the payment of the fee pursuant to Section 6.07(b);
(e) by the Company, if, prior to the consummation of the Offer, the
Parent or Sub shall be in breach of any of their representations and
warranties or fail to perform in any material respect any of their
covenants and obligations contained herein (provided, that the
--------
53
<PAGE>
Company is not then in wilful and material breach of any representation,
warranty or covenant contained in this Agreement and provided further, that
-------- -------
such breach or failure to perform is not capable of being cured by the
earlier of 15 days from the time it came to the knowledge of the Parent and
the then scheduled expiration date of the Offer);
(f) by the Company if the Offer has not been made in accordance with
Section 1.01; or
(g) by the Company if any event occurs which would result in the
condition set forth in paragraph (e) of Exhibit A not being satisfied, and
five business days have elapsed since such occurrence, unless Parent shall
have waived its right to terminate this Agreement in accordance with
Section 8.04 and its right not to consummate the Offer for the failure of
such condition resulting from such event.
SECTION 8.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than Section
3.16, Section 4.06, Section 6.02, Section 6.07, this Section 8.02 and Article IX
and except to the extent that such termination results from the wilful and
material breach by a party of any representa tion, warranty, covenant or
obligation set forth in any Transaction Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
----------
parties at any time before or after receipt of the Company Stockholder Approval;
provided, however, that after receipt of the Company Stockholder Approval, there
- -------- -------
shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
SECTION 8.04. Extension; Waiver. Subject to the provisions of
------------------
Section 6.09(b), at any time prior to the Effective Time, the parties may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 8.03, waive compliance
with any of the agreements or conditions contained in this
54
<PAGE>
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
---------------------------------------------------
Waiver. A termination of this Agreement pursuant to Section 8.01, an amendment
- -------
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
--------
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Atlantic Richfield Company
515 South Flower Street
Los Angeles, CA 90071
Attention: John R. Lucas, Esq.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Alan C. Stephenson, Esq.
55
<PAGE>
(b) if to the Company, to
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Boulevard
Houston, TX 77056
Attention: Alan Crain, Jr. Esq.
with a copy to:
King & Spalding
1185 Avenue of the Americas
New York, NY 10036
Attention: Mark Zvonkovic, Esq.
SECTION 9.03. Definitions. For purposes of this Agreement:
------------
An "affiliate" of any person means another person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Knowledge of the Company" or "Company's Knowledge" means, when used
------------------------ -------------------
in any representation, covenant or warranty of the Company contained herein, the
actual knowledge of or what should reasonably have been known by any officer or
director of the Company.
A "person" means any individual, firm, corporation, partnership,
------
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "subsidiary" of any person means another person, an amount of the
----------
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. Interpretation; Disclosure Letter. When a reference is
----------------------------------
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this
56
<PAGE>
Agreement, they shall be deemed to be followed by the words "without
limitation". Any matter disclosed in any section of the Company Disclosure
Letter shall be deemed disclosed for all purposes and all sections of the
Company Disclosure Letter.
SECTION 9.05. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect 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 determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries. The
-----------------------------------------------
Transaction Agreements, taken together, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the Transactions and (b) except for the provisions
of Article II, Section 6.04 and Section 6.06, are not intended to confer upon
any person other than the parties any rights or remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed by,
--------------
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent formed solely for the purpose of engaging in the
57
<PAGE>
transactions contemplated hereby, which has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby, but no such assignment shall relieve Sub of
any of its obligations under this Agreement. Any purported assignment without
such consent shall be void. Subject to the preceding sentences, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of any Transaction Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of any Transaction Agreement and
to enforce specifically the terms and provisions of each Transaction Agreement
in any Delaware state court or any Federal court located in the State of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Delaware state court or any
Federal court located in the State of Delaware in the event any dispute arises
out of any Transaction Agreement or any Transaction, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to any Transaction Agreement or any Transaction in any court other than
any Delaware state court or any Federal court sitting in the State of Delaware
and (d) waives any right to trial by jury with respect to any action related to
or arising out of any Transaction Agreement or any Transaction.
58
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
ATLANTIC RICHFIELD COMPANY,
by
/s/ Terry G. Dallas
-----------------------
Name: Terry G. Dallas
Title:Senior Vice
President and
Treasurer
VWK ACQUISITION CORP.,
by
/s/ Terry G. Dallas
----------------------
Name: Terry G. Dallas
Title:President
UNION TEXAS PETROLEUM
HOLDINGS, INC.,
by
/s/ John L. Whitmire
--------------------
Name:John L. Whitmire
Title:Chairman and Chief
Executive Officer
<PAGE>
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Company Common Stock which would represent at
least a majority of the Fully Diluted Shares (the "Minimum Tender Condition"),
------------------------
(ii) any waiting period under the HSR Act applicable to the purchase of shares
of Company Common Stock pursuant to the Offer shall have expired or been
terminated and (iii) any waiting or other period under the EC Regulations
applicable to the Offer or the Merger, or the exercise by Parent or Sub of full
ownership and voting rights with respect to such shares of Company Common Stock
acquired pursuant to the Offer and the Merger, shall have expired or been
terminated, and the European Commission shall have taken all such action as
shall be required so that Parent and Sub may consummate the Offer and the Merger
and exercise full ownership and voting rights with respect to the shares of
Company Common Stock to be acquired pursuant to the Offer and the Merger. The
term "Fully Diluted Shares" means all outstanding securities entitled generally
--------------------
to vote in the election of directors of the Company on a fully diluted basis,
after giving effect to the exercise or conversion of all options, rights and
securities exercisable or convertible into such voting securities, other than
potential dilution attributable to the Rights. Furthermore, notwithstanding any
other term of the Offer or this Agreement, Sub shall not be required to commence
the Offer, accept for payment or, subject as aforesaid, to pay for any shares of
Company Common Stock not theretofore accepted for payment or paid for, and may
terminate or amend the Offer, with the consent of the Company or if, at any time
on or after the date of this Agreement and before the acceptance of such shares
for payment or the payment therefor, any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity in any of the significant
geographical regions in which the Company or any of the Company
Subsidiaries operates or by or before the European Commission (i)
challenging the acquisition by Parent or Sub of any Company Common
Stock, seeking to restrain or prohibit the making or
<PAGE>
consummation of the Offer or the Merger or any other Transaction, or
seeking to obtain from the Company, Parent or Sub any damages in connection
with the Offer, the Merger or this Agreement that are material in relation
to the Company and its subsidiaries taken as whole, (ii) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, or
to compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, as a result
of the Offer, the Merger or any of the other Transaction, (iii) seeking to
impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock,
including the right to vote the Company Common Stock purchased by it on all
matters properly presented to the stockholders of the Company, (iv) seeking
to prohibit Parent or any of its subsidiaries from effectively controlling
in any material respect the business or operations of the Company and the
Company Subsidiaries in connection with the Offer, the Merger or this
Agreement, or (v) which otherwise is reasonably likely to have a Company
Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or issued in any of the significant geographical
regions in which the Company or any of the Company Subsidiaries operates or
by the European Council or the European Commission with respect to, or
shall be deemed applicable to, or any consent or approval shall be withheld
with respect to, (i) Parent, the Company or any of their respective
subsidiaries or (ii) the Offer, the Merger or any of the other
Transactions, by any Governmental Entity that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
paragraph (a) above;
(c) since the date of this Agreement, there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or would be reasonably expected to have a Company
Material Adverse Effect, and if a Company Material Adverse Effect has
occurred, it shall be continuing;
2
<PAGE>
(d) there shall be any temporary, preliminary or permanent restraining
order or injunction or other legal restraint or prohibition by any
Governmental Entity that prevents or makes illegal the consummation of the
Offer, the Merger or any of the other Transactions;
(e) there shall have occurred and continued for at least three
calendar days: (i) a general suspension of trading in, or limitation on
prices for, securities on the New York Stock Exchange, any national
securities exchange or the NASDAQ National Market System (excluding
suspensions or limitations resulting from physical damage or interference
with such exchanges not related to market conditions); (ii) a decline of at
least 30% in the Dow Jones Industrial Index; (iii) a declaration of a
banking moratorium or suspension of payments in respect of banks in the
United States; (iv) a mandatory limitation by the United States Government
or a change in the general financial, banking or capital markets which
materially and adversely affects the ability of major financial
institutions in the United States to extend credit; (v) a commencement of
war, armed hostilities or other major national or international crisis
directly involving the United States (other than an action involving
personnel of the United Nations) or (vi) in the case of any of the
foregoing existing on the date of this Agreement, a material acceleration
or worsening thereof;
(f) any representation and warranty of the Company or any other party
(other than Parent and Sub) in this Agreement or the Company Stockholder
Agreement shall not be true and correct in all material respects (provided
that any representation or warranty of the Company or any other party
(other than Parent and Sub) contained herein or therein that is qualified
by a materiality standard or a Material Adverse Effect qualification shall
not be further qualified hereby) as of the date of this Agreement and
(except with respect to Section 3.14 and to the extent such representations
or warranties expressly relate to an earlier date) as of the scheduled or
extended expiration of the Offer;
(g) the Company shall have failed to comply with the provisions of
Section 5.01(a)(v) of this Agreement, or the Company or any other party
(other than Parent and Sub) shall have failed to comply with any agreement
or covenant in any material respect of the Company or any other party
(other than Parent and Sub) to be
3
<PAGE>
performed or complied with by any of them under this Agreement or the
Company Stockholder Agreement; or
(h) there shall have been issued, delivered, sold or granted any
Company Common Stock pursuant to the Company Rights Agreement; or
(i) this Agreement shall have been terminated in accordance with its
terms;
which in the sole judgment of Sub or Parent, in the case of any such condition,
and regardless of the circumstances giving rise to any such condition (including
any action or inaction by Parent or any of its affiliates), makes it
inadvisable, to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub or Parent regardless of the circumstances giving rise
to such condition or may be waived by Sub and Parent in whole or in part at
any time and from time to time in their sole discretion. The failure by Parent,
Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
4
<PAGE>
EXHIBIT B
AMENDMENT TO RIGHTS AGREEMENT BETWEEN
UNION TEXAS PETROLEUM HOLDINGS, INC. AND
FIRST CHICAGO TRUST COMPANY OF NEW YORK
THIS AMENDMENT TO RIGHTS AGREEMENT (this "Amendment") is made as of
this third day of May, 1998 by and between Union Texas Petroleum Holdings, Inc.,
a Delaware corporation (the "Company"), and First Chicago Trust Company of New
York, a New York corporation, as rights agent (the "Rights Agent"). Capitalized
terms used but not defined herein shall have the meanings give to such terms in
the Merger Agreement (as defined below).
WHEREAS, the Corporation is entering into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger Agreement")
among the Company, Atlantic Richfield Company, a Delaware corporation
("Parent"), and VWK Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("the Sub"), providing for transactions (collectively, the
"Merger") pursuant to which, among other things, the Company will become a
wholly-owned subsidiary of Parent and the former stockholders of the Company
will receive the Merger Consideration;
WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement dated as of September 12, 1997 (the "Rights Agreement"); and
<PAGE>
WHEREAS, the parties desire to amend the Rights Agreement in
connection with the execution and delivery of the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. The definition of "Acquiring Person" set forth in Section 1
of the Rights Agreement is hereby amended by adding the following sentence to
the end of that definition:
Notwithstanding the foregoing, no Person shall be or become
an Acquiring Person by reason of (i) the execution and delivery
of the Agreement and Plan of Merger dated as of May 4, 1998 among
the Company, Atlantic Richfield Company, a Delaware corporation
("Parent"), and , a Delaware corporation ("Sub"), (the "Merger
Agreement") or the execution of any amendment thereto, (ii) the
purchase of Common Stock by Parent or Sub pursuant to (A) the
Offer or (B) Section 4 of the Stockholder Agreement dated May 4,
1998 among Parent, KKR Partners II, L.P., a Delaware limited
partnership, and Petroleum Associates, L.P., a Delaware limited
partnership (the "Stockholder Agreement") or (iii) the
consummation of the other Transactions.
2. Section 7(a)(i) of the Rights Agreement shall be amended to
read in its entirety as follows:
(i) the earlier of (1) the consummation of the Offer (as
defined in the Merger Agreement) or (2) the Close of
Business on September 30, 2007.
3. The definition of "Stock Acquisition Date" included in
Section 1 of the Rights Agreement shall be
2
<PAGE>
amended by adding the following sentence to the end of such definition:
Notwithstanding anything else set forth in this Agreement, a
Stock Acquisition Date shall not be deemed to have occurred by
reason of (i) the public announcement, public disclosure,
execution and delivery or amendment of the Merger Agreement, (ii)
the public announcement, public disclosure, execution and
delivery or amendment of the Stockholder Agreement, (iii) the
purchase of Common Stock by Parent or Sub pursuant to (A) Section
4 of the Stockholder Agreement or (B) the consummation of the
Offer or (iv) the consummation of any of the other Transactions.
4. Section 3(a) of the Rights Agreement shall be amended by
adding the following sentence to the end thereof:
Notwithstanding anything else set forth in this Agreement,
no Distribution Date shall be deemed to have occurred by reason
of (i) the execution and delivery or amendment of the Merger
Agreement, (ii) the execution and delivery or amendment of the
Stockholder Agreement, (iii) the purchase of Common Stock by
Parent or Sub pursuant to (A) Section 4 of the Stockholder
Agreement or (B) the consummation of the Offer or (iv) the
consummation of any of the other Transactions.
5. The first paragraph of Section 13(c) of the Rights Agreement
shall be amended to read in its entirety as follows:
The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) (other than any
such transaction contemplated by the Merger Agreement or the
Stockholder Agreement) unless the Principal Party shall have a
sufficient number of authorized shares of its
3
<PAGE>
Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal
Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Section 13(a)
and (b) shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not
result in a default by the Principal Party under this Agreement as the
same shall have been assumed by the Principal Party pursuant to
Sections 13(a) and (b) hereof and further providing that, as soon as
practicable after executing such agreement pursuant to this Section
13, the Principal Party will:
6. The Rights Agreement, as amended by this Amendment, shall remain in
full force and effect in accordance with its terms.
7. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State. This Amendment may be executed in any
number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument. If any term, provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions,
4
<PAGE>
covenants and restrictions of this Amendment shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties herein have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.,
by
-----------------------
Name:
Title:
Attest: _________________
Name:
Title:
FIRST CHICAGO TRUST COMPANY OF NEW
YORK, RIGHTS AGENT,
5
<PAGE>
by
-----------------------
Name:
Title:
Attest:
-----------------
Name:
Title:
6
<PAGE>
SCHEDULE I
Definitions
-----------
Term Defined in Section
- ---- ------------------
"Acquisition Event" 6.07(b)
"affiliate" 9.03
"Applicable Law" 3.05(a)
"Applicable Period" 5.02(a)
"Appraisal Shares" 2.01(e)
"Certificate of Merger" 1.05
"Certificates" 2.02(b)
"Closing" 1.04
"Closing Date" 1.04
"Code" 3.11(b)
"Company" Recitals
"Company Acquisition Agreement" 5.02(b)
"Company Affiliated Group" 3.09(a)
"Company Benefit Plans" 3.10
"Company Board" 3.04(b)
"Company By-Laws" 3.01
"Company Capital Stock" 3.03
"Company Charter" 3.01
"Company Common Stock" Recitals
"Company Confidentiality Agreement" 3.15(a)
"Company Disclosure Letter" 3.02(a)
"Company Material Adverse Effect" 3.01
"Company Multiemployer Pension Plan" 3.11(c)
"Company Notice" 5.02(a)
"Company Pension Plans" 3.11(a)
"Company Preferred Stock" 3.03
"Company Representatives" 5.02(a)
"Company Rights" 3.03
"Company Rights Agreement" 3.03
"Company SAR" 6.04(b)
"Company SEC Documents" 3.06
"Company Stockholder Agreement" Recitals
"Company Stockholder Approval" 3.04(c)
"Company Stockholder Meeting" 6.01(b)
"Company Stock Option" 6.04(b)
"Company Stock Plans" 6.04(b)
"Company Subsidiary" 3.02(a)
"Company Superior Proposal" 5.02(b)
"Company Takeover Proposal" 5.02(a)
"Company's Knowledge 9.03
"Confidentiality Agreement" 6.02(b)
"Contract" 3.05(a)
"Consent" 3.05(a)
"CSEPP" 6.05(i)
"DGCL" 1.03
"EC Regulations" 3.05(a)
"Effective Time" 1.05
<PAGE>
2
"ERISA" 3.11(a)
"European Commission" 3.05(a)
"Exchange Act" 3.05(a)
"Exchange Fund" 2.02(a)
"Filed Company SEC Documents" 3.08
"Financial Advisors" 3.16
"Fully Diluted Shares" Exhibit A
"GAAP" 3.06
"Governmental Entity" 3.05(a)
"HSR Act" 3.05(a)
"Indemnified Party" 6.06(a)
"Independent Directors" 6.10
"Information Statement" 3.05(a)
"Judgment" 3.05(a)
"Knowledge" 9.03
"Liens" 3.02(a)
"Losses" 6.06(c)
"Maximum Premium" 6.06(b)
"Merger" Recitals
"Merger Consideration" 2.01(c)
"Minimum Trade Condition" Exhibit A
"New Parent Proposal" 5.02(b)
"1997 Company 10-K" 3.06
"Offer" Recitals
"Offer Documents" 1.01(b)
"Oil and Gas Interest" 3.08
"Offer Price" Recitals
"Option Spread 1.02(d)
"Outside Date" 8.01(b)
"Parent" Recitals
"Parent Extension Period" 1.01(a)
"Parent Material Adverse Effect" 4.04
"Participant" 6.05(g)
"Paying Agent" 2.02(a)
"Permitted Encumbrances" 3.02
"person" 9.03
"Petrochemicals Interests" 3.08
"Primary Company Executives" 3.11(g)
"Principal Company Stockholder" Recitals
"Proxy Statement" 3.05(a)
"SEC" 1.01(a)
"Section 262" 2.01(e)
"Securities Act" 3.06
"SERP" 6.05(i)
"Schedule 14D-9" 1.02(b)
"Segment" 6.05(f)
"Series A Preferred" 2.01(d)
"Significant Company Subsidiary" 3.01
"Sub" Recitals
"subsidiary" 9.03
"Surviving Corporation" 1.03
<PAGE>
3
"Taxes" 3.09(f)
"Tax Return" 3.01(f)
"Transaction Agreements" Recitals
"Transactions" 1.02(a)
"Voting Company Debt" 3.03
<PAGE>
EXHIBIT 99(c)(2)
CONFORMED COPY
STOCKHOLDER AGREEMENT dated as of May 4, 1998, among ATLANTIC
RICHFIELD COMPANY, a Delaware corporation ("Parent"), and PETROLEUM
------
ASSOCIATES, L.P., a Delaware limited partnership, and KKR PARTNERS
II, L.P., a Delaware limited partnership, such partnerships together,
the "Stockholder").
-----------
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, Sub and Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
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(as the same may be amended or supplemented, the "Merger Agreement"; capitalized
----------------
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement) providing for the merger of Sub with and into the Company (the
"Merger");
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WHEREAS the Stockholder owns or has sole authority with respect to the
voting and disposition of 21,833,334 shares of Company Common Stock (such shares
of Company Common Stock, together with any other shares of capital stock of the
Company as to which ownership or voting or dispositive control is acquired by
the Stockholder after the date hereof and during the term of this Agreement,
being collectively referred to herein as the "Subject Shares");
--------------
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) from the
announcement of the execution of the Merger Agreement, Sub shall commence a cash
tender offer (the "Offer") to purchase at a price of $29.00 per share all
-----
outstanding shares of Company Common Stock, including the Subject Shares, on the
terms and subject to the conditions provided in the Merger Agreement; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholder. The
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Stockholder hereby represents and warrants to Parent as of the date hereof as
follows:
(a) Authority; Execution and Delivery; Enforce ability. The
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Stockholder has all requisite partnership power and authority to execute this
Agreement and to
<PAGE>
consummate the transactions contemplated hereby. The execution and delivery by
the Stockholder of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary partnership
action on the part of the Stockholder. The Stockholder has duly executed and
delivered this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought. Except as would not materially impair or
delay the ability of the Stockholder to consummate the transactions contemplated
hereby, the execution and delivery by the Stockholder of this Agreement do not,
and the consummation of the trans actions contemplated hereby and compliance
with the terms hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, can celation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any Lien upon any
of the properties or assets of the Stockholder under, any provision of any
Contract to which the Stock holder is a party or by which any properties or
assets of the Stockholder are bound or, subject to the filings and other matters
referred to in the next sentence, any provi sion of any Judgment or Applicable
Law applicable to the Stockholder or the properties or assets of the
Stockholder. Except as would not materially impair or delay the ability of the
Stockholder to consummate the transactions contemplated hereby, no Consent of,
or registration, declaration or filing with, any Governmental Entity is required
to be obtained or made by or with respect to the Stockholder in connection with
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, other than such reports under Sections
13(d) and 16 of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby.
(b) The Subject Shares. The Stockholder is the record holder of and
-------------------
has the sole authority to transfer, dispose of, sell and convey the Subject
Shares and the sole power to convey good and valid title to, the Subject Shares,
free and clear of any Liens except for encumbrances or
<PAGE>
proxies arising pursuant to this Agreement. Neither the Stockholder nor any of
its affiliates owns, of record or beneficially, or has voting or dispositive
control over, any shares of capital stock of the Company other than the Subject
Shares. The Stockholder has the sole right to vote the Subject Shares, and none
of the Subject Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of the Subject Shares,
except as contemplated by this Agreement.
SECTION 2. Representations and Warranties of Parent. Parent hereby
-----------------------------------------
represents and warrants to the Stock holder as follows: Parent has all
requisite corporate power and authority to execute this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
Parent of this Agreement and consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of Parent.
Parent has duly executed and delivered this Agreement, and this Agreement
constitutes the legal, valid and binding obliga tion of Parent, enforceable
against Parent in accordance with its terms. The execution and delivery by
Parent of this Agreement do not, and the consummation of the trans actions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, can celation
or acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Parent under, any provision of any Contract to which Parent is a party or by
which any properties or assets of Parent are bound or, subject to the filings
and other matters referred to in the next sentence, any provision of any
Judgment or Applicable Law applicable to Parent or the properties or assets of
Parent. No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Parent in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contem plated hereby, other
than (i) compliance with and filings under the HSR Act in connection with the
exercise of the Option (as defined in Section 4) and (ii) such reports under
Section 13(d) of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby.
<PAGE>
SECTION 3. Covenants of the Stockholder. Until such time as this
-----------------------------
Agreement is terminated pursuant to Section 5 hereof, the Stockholder covenants
and agrees as follows:
(a) (1) At any meeting of the stockholders of the Company called to
seek the Company Stockholder Approval or in any other circumstances upon which a
vote, consent or other approval (including by written consent in lieu of a
meeting of stockholders) with respect to the Merger Agreement, any other
Transaction Agreement, the Merger or any other Transaction is sought, the
Stockholder shall, including by executing a written consent if requested by
Parent, vote (or cause to be voted) the Subject Shares in favor of granting the
Company Stockholder Approval.
(2) The Stockholder hereby grants to and appoints Parent, and the
President of Parent and the Treasurer of Parent, in their respective capacities
as officers of Parent, and any individual who shall hereafter succeed to any
such office of Parent, and any other designee of Parent, each of them
individually, the Stockholder's proxy and attorney-in-fact (with full power of
substitution) to vote or act by written consent with respect to the Subject
Shares in accordance with this Section 3. This proxy is coupled with an
interest and shall be irrevocable during the term of this Agreement, and the
Stockholder will take such further action or execute such other instruments as
may be necessary to effectuate the intent of this proxy and hereby revokes any
proxy previously granted by it with respect to the Subject Shares.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder shall vote (or cause
to be voted) the Subject Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization, dissolution,
liquidation or winding up of or by the Company, (ii) any Company Takeover
Proposal and (iii) any amendment of the Company Charter or the Company By-laws
or other proposal or trans action involving the Company or any Company
Subsidiary, which amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify any provi sion of the Merger Agreement or
any other Transaction Agreement, the Merger or any other Transaction or change
in any manner the voting rights of any class of Company Capital
<PAGE>
Stock. The Stockholder shall not commit or agree to take any action inconsistent
with the foregoing.
(c) In order to induce Parent and Sub to enter into the Merger
Agreement, the Stockholder shall validly tender (or cause the record owner of
such shares to validly tender), and not to withdraw, pursuant to and in
accordance with the terms of the Offer, in a timely manner for acceptance by Sub
in the Offer, the Subject Shares; provided that there has been no modification
or amendment to the terms of the Offer which would require the consent of the
Company pursuant to Section 1.01 of the Merger Agreement as in effect on the
date hereof, including, without limitation, any waiver or reduction of the
Minimum Tender Condition which would require the consent of the Company pursuant
to such Section 1.01. The Stockholder acknowledges and agrees that Parent's and
Sub's obligation to accept for payment and pay for the Company Common Stock in
the Offer, including the Subject Shares, is subject to the terms and conditions
of the Offer.
(d) The Stockholder shall permit Parent and Sub to publish and
disclose in the Offer Documents and, if approval of the Company's stockholders
is required under applicable law, the Proxy Statement (including all documents
and schedules filed with the SEC) its identity and ownership or other rights
with respect to the Company Common Stock and the nature of its commitments,
arrangements and under standings under this Agreement.
(e) Except as contemplated by this Agreement and the Merger
Agreement, the Stockholder shall not (i) transfer (which term shall include,
without limitation, any sale, gift, pledge or other disposition), or consent to
any transfer of, any or all of the Subject Shares or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Subject Shares or any interest therein,
(iii) grant any proxy, power-of-attorney or other authorization in or with
respect to the Subject Shares, (iv) deposit the Subject Shares into a voting
trust or enter into a voting agreement or arrangement with respect to the
Subject Shares or (v) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(f) The Stockholder shall not, nor shall it authorize or permit any
officer, director, partner, affiliate or employee of, or any investment banker,
attorney
<PAGE>
or other advisor or representative of, the Stockholder to, (i) solicit,
initiate or encourage the submission of, any Company Takeover Proposal, (ii)
enter into any agreement with respect to any Company Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Company Takeover Proposal. If the Company is
engaged in discussions or negotiations with, or has furnished information to, a
person making a Company Superior Proposal as permitted by Section 5.02(a) of the
Merger Agreement, the foregoing provisions of this Section 3(f) shall not
prohibit or restrict the Stockholder or any of its officers, directors,
partners, affiliates or employees, or investment bankers, attorneys or other
advisors or representatives, from participating in discussions or negotiations
regarding, or furnishing any person any information with respect to, a Company
Superior Proposal or any agreement (an "Alternative Stockholder Agreement")
---------------------------------
regarding the voting or disposition of the Subject Shares proposed or requested
by the person making such Company Superior Proposal to be entered into in
connection with such Company Superior Proposal, during such time as the Company
is permitted to furnish information and participate in discussions or
negotiations regarding such Company Superior Proposal in accordance with Section
5.02(a) of the Merger Agreement; provided, however, that the Stockholder shall
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promptly advise Parent orally and in writing of the material terms of any
Alternative Stockholder Agreement being proposed or requested by the Person
making such Company Superior Proposal; and provided further that any information
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relating to the Company furnished pursuant to this sentence shall be subject to
a customary confidentiality agreement if such an agreement would be required
under Section 5.02(a) of the Merger Agreement. The Stockholder promptly shall
advise Parent orally and in writing of any Company Takeover Proposal or any
inquiry or request for information made to the Stockholder with respect to or
that could reasonably be expected to lead to any Company Takeover Proposal and
the identity of the person making any such Company Takeover Proposal or inquiry
or request for information and the material terms of any such Company Takeover
Proposal or inquiry or request for information.
(g) The Stockholder shall not issue any press release or make any
other public statement with respect to the Offer, the Merger and the other
Transactions without the
<PAGE>
prior consent of Parent, except as may be required by applicable law.
(h) The Stockholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions.
(i) The Stockholder hereby consents to and approves the actions taken
by the Company Board in approving the Transaction Agreements, the Merger and the
other Trans actions. The Stockholder hereby waives, and agrees not to exercise
or assert, any appraisal rights under Section 262 of the DGCL in connection with
the Merger.
(j) Notwithstanding anything in this Agreement to the contrary, the
covenants and agreements set forth herein shall not prevent (i) any of the
Stockholder's designees, partners or affiliates serving on the Company's Board
of Directors from taking any action, subject to applicable provisions of the
Merger Agreement, while acting in such capacity as a director of the Company, or
(ii) the Stockholder entering into an Alternative Stockholder Agreement in
connection with a Company Superior Proposal at such time as the Company enters
into a Company Acquisition Agreement with respect to such Company Superior
Proposal in accordance with Section 5.02(b) of the Merger Agreement.
SECTION 4. Option. (a) The Stockholder hereby grants to Parent an
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irrevocable option (the "Option") to purchase all the Subject Shares at a
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purchase price per share (the "Purchase Price") equal to the Offer Price in
--------------
cash. The Option will become exercisable, in whole but not in part, by Parent
if, and only if, the Stockholder shall have breached or otherwise failed to
comply with Section 3(c) and Sub shall otherwise have accepted shares of Company
Common Stock for purchase pursuant to the Offer. If the Option becomes
exercisable, the Option may be exercised at any time during the period
commencing with the acceptance by Sub of shares of Company Common Stock for
purchase pursuant to the Offer and ending 30 days thereafter (the "Option
------
Period"), so long as there shall not be in effect any preliminary or permanent
- ------
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Option pursuant to this Agreement; provided, however, that if
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there shall be in effect any such injunction or order, in each case on the
expiration of the Option Period,
<PAGE>
the Option Period shall be extended until five business days after the date of
removal or lifting of such injunction or order.
(b) If Parent wishes to exercise the Option, it may do so by giving
written notice (the date of such notice being herein called the "Notice Date")
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to the Stockholder (in the manner set forth in Section 8(b)) specifying that all
the Subject Shares are to be purchased and specifying the place, time and date
(not earlier than one business day, nor later than 10 business days, from the
Notice Date) for the closing of the purchase of the Subject Shares by Parent
pursuant to such exercise. Such notice may be given prior to the commencement
of the Option Period if the Option shall have become exercisable as provided in
Section 4(a).
(c) Parent represents that any Subject Shares purchased by Parent
pursuant to the Option will be acquired for investment only and not with a view
to any public distribution thereof, and Parent will not offer to sell or
otherwise dispose of any Subject Shares so acquired by it in violation of the
registration requirements of the Securities Act.
SECTION 5. Termination. (a) This Agreement (including the Option)
------------
shall terminate upon the earlier of (i) the Effective Time and (ii) the
termination of the Merger Agreement in accordance with its terms.
(b) Upon any termination of this Agreement, this Agreement (including
the Option) shall thereupon become void and of no further force and effect, and
there shall be no liability in respect of this Agreement or of any transactions
contemplated hereby or by the Merger Agreement on the part of any party hereto
or any of its directors, officers, partners, stockholders, employees, agents,
advisors, representatives, or affiliates; provided, however, that nothing herein
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shall relieve any party from any liability for such party's willful breach of
this Agreement.
SECTION 6. Additional Matters. The Stockholder shall, from time to
-------------------
time, execute and deliver, or cause to be executed and delivered, such
additional or further consents, documents and other instruments as Parent may
reasonably request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
SECTION 7. Stop Transfer. The Stockholder shall not request that the
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Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated
<PAGE>
interest representing any of the Subject Shares unless such transfer is made in
compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Subject Shares" shall refer to and include the Subject Shares as
well as all such stock divi dends and distributions and any shares into which or
for which any or all of the Subject Shares may be changed or exchanged.
SECTION 8. General Provisions.
-------------------
(a) Amendments. This Agreement may not be amended except by an
-----------
instrument in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be
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in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to Parent in accordance with
Section 9.02 of the Merger Agreement and to the Stockholder at its address set
forth below:
Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, NY 10019
Attention of Sal Badalamenti
Copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071
Attention of Edward Sonnenschein, Jr.
(c) Interpretation. When a reference is made in this Agreement to a
---------------
Section, such reference shall be to a Section to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference pur
poses only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Severability. If any term or other provision of this Agreement
-------------
is invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall neverthe-
<PAGE>
less remain in full force and effect 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 determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(e) Counterparts. This Agreement may be executed in one or more
-------------
counterparts, all of which shall be consid ered one and the same agreement.
This Agreement shall become effective against Parent when one or more counter
parts have been signed by Parent and delivered to the Stock holder. This
Agreement shall become effective against the Stockholder when one or more
counterparts have been executed by the Stockholder and delivered to Parent.
Each party need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
-----------------------------------------------
(i) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
(h) Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise, by Parent without the prior written
consent of the Stockholder or by the Stockholder without the prior written
consent of Parent, and any purported assignment without such consent shall be
void; provided, however, that Parent may assign any of its rights, interests or
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obligations under this Agreement to any wholly owned subsidiary of Parent
without the consent of the Stockholder, but no such assignment shall relieve
Parent of its obligations hereunder. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns. If for any reason any
of the
<PAGE>
Subject Shares are distributed or otherwise transferred to any general or
limited partner of the Stockholder in violation of Section 3(e), such partner
shall succeed to, and become bound by, the provisions of this Agreement with
respect to such Subject Shares.
(i) Enforcement. The parties agree that irreparable damage would
------------
occur in the event that any of the provi sions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provi sions of this Agreement in any Delaware state court or any
Federal court located in the State of Delaware or the State of Delaware or in
any Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware or any Delaware
state court in the event any dispute arises out of this Agreement or any Trans
action, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that it will not bring any action relating to this Agreement or any Trans
action in any court other than a Delaware state court or any Federal court
sitting in the State of Delaware and (iv) waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any transaction contemplated hereby.
(j) Limited Liability of Partners. Notwithstanding any provisions
------------------------------
hereof (but subject to the last sentence of Section 8(h)), (1) none of the
obligations of the Stockholder under or contemplated by this Agreement shall be
an obligation of any limited partner or general partner of the Stockholder, or
any of their respective officers, directors, stockholders, limited partners,
general partners or owners, or successors or assigns, (2) the Stockholders shall
be the only person or entity liable with respect to such obligations, and (3)
any monetary liability of the Stockholder under this Agreement shall be
satisfied solely out of the assets of the Stockholder.
<PAGE>
IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of
the date first written above.
ATLANTIC RICHFIELD COMPANY,
by
/s/ Terry G. Dallas
-------------------
Name: Terry G. Dallas
Title:Senior Vice
President and
Treasurer
PETROLEUM ASSOCIATES, L.P.,
by KKR Associates
Its General Partner
by
/s/ Michael W. Michelson
------------------------
Name: Michael W. Michelson
Title: General Partner
KKR PARTNERS II, L.P.,
by KKR Associates
Its General Partner
by
/s/ Michael W. Michelson
------------------------
Name: Michael W. Michelson
Title: General Partner
