SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)
NGC Corporation
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
629121 10 4
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(Cusip Number)
Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022
Attention: Alfred J. Ross, Jr., Esq.
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 29, 1996
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |_|. (A fee is
not required only if the reporting person (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1 and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent or less of such class.) (See Rule
13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
THIS SCHEDULE 13D CONSISTS OF ___ SEQUENTIALLY NUMBERED PAGES
THE EXHIBIT INDEX IS LOCATED ON PAGE 22
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SCHEDULE 13D
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CUSIP No. 629121 10 4 Page 2 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
BG Holdings, Inc.
I.R.S. No. 51-0313219
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 38,623,211*
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -0-
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 38,623,211*
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PERSON WITH 10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
38,623,211*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_|
CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.0%
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14 TYPE OF REPORTING PERSON*
CO
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* See Item 4.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SEC 1746 (9-88) 2 of 7
<PAGE>
SCHEDULE 13D
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CUSIP No. 629121 10 4 Page 3 of Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
British Gas plc
I.R.S. No. None
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 38,623,211*
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
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PERSON WITH 10 SHARED DISPOSITIVE POWER
38,623,211*
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
38,623,211*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_|
CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
35.0%
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14 TYPE OF REPORTING PERSON*
CO
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* See Item 4.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
SEC 1746 (9-88) 2 of 7
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4
With respect to each contract, agreement or other document
referred to herein and filed with the Securities and Exchange Commission as an
exhibit to this report, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $0.01
per share (the "Common Stock"), of NGC Corporation, a Delaware corporation (the
"Issuer"), whose principal executive offices are located at 13430 Northwest
Freeway, Houston, Texas 77040.
Item 2. Identity and Background.
(a), (b), (c) and (f) This statement is filed on behalf of (i)
BG Holdings, Inc., a Delaware corporation (the "Reporting Person"), and (ii)
British Gas plc, a company organized and existing under the laws of England and
Wales ("British Gas"). The Reporting Person's principal business address is 1100
Louisiana, Suite 2500, Houston, Texas 77002. The Reporting Person is an indirect
wholly owned subsidiary of British Gas. The Reporting Person is owned directly
by British Gas International Holdings B.V., which is in turn owned by British
Gas Netherlands Holdings B.V. British Gas Netherlands Holdings B.V. is owned by
British Gas Overseas Holdings Limited, which is in turn directly owned by
British Gas. British Gas' principal business address is Rivermill House, 152
Grosvenor Road, London SWIV 3JL, England. British Gas is involved in gas and oil
activities worldwide.
The Reporting Person's principal business is acting as the
holding company for the operating subsidiaries and investments of British Gas in
the United States, including its ownership of the Common Stock of the Issuer.
Schedules I and II, which are attached hereto and incorporated
herein in their entirety by reference, set forth the name, residence and
business address, citizenship and certain employment information of each of the
officers and directors of the Reporting Person and British Gas.
(d) Neither the Reporting Person, nor British Gas, nor, to the
best knowledge of either the Reporting Person or British Gas, any entity or
person with respect to which information is provided in response to this Item 2
has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) Neither the Reporting Person, nor British Gas, nor, to the
best knowledge of either the Reporting Person or British Gas, any entity or
person with respect to
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5
which information is provided in response to this Item has, during the last five
years, been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person acquired the shares of Common Stock owned
by it as of March 14, 1995 (the "Clearinghouse Effective Time") upon the
consummation of the transactions (the "Clearinghouse Combination") contemplated
by the Combination Agreement and Plan of Merger, dated as of October 21, 1994
(the "Clearinghouse Combination Agreement"), among Natural Gas Clearinghouse a
Colorado general partnership ("Clearinghouse"), British Gas General Partner,
Inc., a Delaware corporation ("BGGP"), British Gas Limited Partner, Inc., a
Delaware corporation ("BGLP"), British Gas NGC L.P., a Delaware limited
partnership ("BGNGC"), NOVA NGC, Inc., a Delaware corporation ("NOVA NGC"),
Participating Employee Partners, a Texas general partnership ("PEP"), David C.
Feldman, Inc., a Texas corporation ("DCF"), Trident NGL Holding, Inc., a
Delaware corporation ("Trident"), and certain other corporations (the "PEP
Partners"). The Clearinghouse Combination Agreement is attached hereto as
Exhibit 2 and is hereby incorporated by reference in its entirety.
In the Clearinghouse Combination, at the Clearinghouse
Effective Time, BGGP, BGLP (which together were the sole partners of BGNGC),
NOVA NGC and the PEP Partners were merged with and into Trident, and DCF
contributed the Clearinghouse partnership interests indirectly owned by it to
Trident, in each case in exchange for Common Stock. BGNGC and PEP were dissolved
by operation of law upon the merger of their respective partners into Trident.
Trident, as the surviving corporation in the Clearinghouse Combination, became
the owner of all of the outstanding equity in Clearinghouse and changed its name
to NGC Corporation. It is the Issuer of the Common Stock.
In connection with the Clearinghouse Combination, Trident
purchased 14,200,000 shares of its voting common stock and nonvoting common
stock (collectively, the "Trident Common Stock") for $11.75 cash per share in a
tender offer (made pursuant to the terms of the Clearinghouse Combination
Agreement) which expired on March 14, 1995.
An aggregate of $16,850,000 was required to pay for the
Trident Common Stock tendered in the offer. The required funds were provided by
The Reporting Person, NOVA Corporation and Clearinghouse. An aggregate of
$67,500,000 of such amount was provided by the Reporting Person, which
contributed such amount from its working capital to the capital of BGGP ad BGLP
(both of which were merged into Trident in the Clearinghouse
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6
Combination). An equal amount was provided by Nova Corporation as a capital
contribution to NOVA NGC. The referenced capital contributions were made
immediately prior to the closing of the Clearinghouse Combination. Clearinghouse
provided an aggregate of $31,850,000 to fund the purchase of Trident Common
Stock from cash on hand and borrowings under a $160 million credit facility.
The Reporting Person, as the sole stockholder of BGGP and
BGLP, received at the Clearinghouse Effective Time an aggregate of 36,766,020
shares of Common Stock in exchange for its indirect interest in Clearinghouse.
On March 22, 1996, the Reporting Person was allocated 1,857,191 Contingent
Shares of Common Stock pursuant to the terms of the Clearinghouse Combination
Agreement relating to Contingent Shares. (See Item 4.)
Item 4. Purpose of Transaction.
Contingent Shares. The Reporting Person has acquired and may
in the future acquire shares of Common Stock for the purpose of investment. The
Clearinghouse Combination Agreement provided for the potential issuance of up to
an aggregate of 5,461,538 shares of Common Stock (the "Contingent Shares") to be
allocated during a period of 465 days following the Effective Time among the
former owners of Trident, on the one hand, and the former owners of
Clearinghouse on the other, based upon the market price of the shares of Common
Stock during a periodic interval selected by Mr. C.L. Watson, the Chairman of
the Board, Chief Executive Officer and President of the Issuer. The selection by
Mr. Watson of the applicable price measurement period is defined to be a
Determination in the relevant agreements (Exhibit 3.5(A) and Exhibit 3.5(B) to
the Clearinghouse Combination Agreement filed herewith as Exhibits 3 and 4,
respectively, and which are hereby incorporated by reference herein in their
entirety). The Reporting Person was entitled to receive a maximum of 2,241,830
additional Contingent Shares of Common Stock if the trading price during the
interval selected averaged $12.25 or more. In general, the lower the trading
price, the fewer Contingent Shares the Reporting Person and the other former
Clearinghouse owners would receive. If the trading price during the interval
chosen in $8.85 or less, the Reporting Person and other former Clearinghouse
owners would receive no additional Contingent Shares of Common Stock. The final
date of the final Determination period was February 29, 1996 and, as a result,
the Reporting Person was allotted 1,857,191 Contingent Shares of Common Stock,
which were issued to it on March 22, 1996.
Lockup Agreements. In connection with the execution and
delivery of the Clearinghouse Combination Agreement, the Reporting Person, NOVA
Gas Services (U.S.), Inc., a Delaware corporation ("NOVA"), and certain other
former Clearinghouse stockholders agreed that, from the Clearinghouse Effective
Time until January 1, 1997, they would not, directly or through affiliates,
acquire any additional shares of Common Stock, except from each other or
pursuant to a purchase from the Issuer in a transaction approved
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7
by 80% of Trident's board of directors, or, in the period from the date of a
Determination until January 1, 1997, in open market transactions involving less
than .5%, in the aggregate, of the outstanding Common Stock, unless such
purchasing owner first makes a tender offer (open to all holders of Common
Stock) to purchase the same number of shares of Common Stock at the same price.
The Reporting Person has no present plan or purpose top sell any of its shares
to NOVA or any other such holder nor to make any such tender offer, although the
Reporting Person reserves the right to make permitted open market purchases or
other permitted acquisitions in the event it deems the price and terms of any
such transaction to be acceptable in view of the Issuer's operating and
financial performance and the conditions of the economy and securities markets
generally. The Reporting Person knows of no plan or proposal of NOVA or any
other such holder to sell any of their respective shares of Common Stock to the
Reporting Person or British Gas or to make any acquisition or tender offer
described above. The lockup agreement of the Reporting Person dated October 21,
1994 (the "Lockup Agreement") is attached hereto as Exhibit 5 and is
incorporated by reference herein in its entirety.
Each of the Reporting Person and NOVA also agreed that, for a
period of 18 months following the Clearinghouse Effective Time, it would not,
directly or through affiliates, transfer or dispose of any shares of Common
Stock, other than transfers (i) in a private transaction among the former
Clearinghouse owners or (after nine months from the Effective Time) to a person
who agrees to be bound by the same provisions or (ii) in a business combination
involving the issuance of securities in exchange for Common Stock and in which
all holders of Common Stock receive identical treatment. The Reporting Person
has no plan or purpose to sell any of its shares of Common Stock.
Ancillary Agreements. New Trident Stockholders Agreement and
Registration Rights. Hicks, Muse, Tate, & Furst Incorporated ("HMTF"), the
Reporting Person, NOVA and certain Trident stockholders who were parties to the
amended and restated stockholders agreement of Trident (the "Stockholders
Agreement") have entered into a Stockholders Agreement dated as of October 21,
1994 (the "New Trident Stockholders Agreement") which became effective as of the
Clearinghouse Effective Time. The terms of the New Trident Stockholders
Agreement provide that HMTF general will be entitled to designate one individual
to serve on the Issuer's Board of Directors during the two years following the
Clearinghouse Effective Time. As a party to the Clearinghouse Owners
Stockholders Agreement (as defined below), the Reporting Person has agreed to
vote its shares of Common Stock in favor of the nominee of HMTF to the issuer's
board of directors.
In addition, the New Trident Stockholders Agreement provides
that certain minority stockholders of the Issuer (including HMTF) may
participate in any sale of shares of Common Stock by specified major
stockholders (including the Reporting Person, British Gas and NOVA) prior to
January 1, 1997, subject to certain specified exceptions. The New Trident
Stockholders Agreement also specifies certain registration rights under the
Securities
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8
Act of 1933 (the "Securities Act") for minority stockholders other than British
Gas and NOVA. The New Trident Stockholders Agreement is attached hereto as
Exhibit 6 hereto and is incorporated herein by reference in its entirety.
Clearinghouse Owners Stockholders Agreement and Registration
Rights Agreement. The Issuer and the former owners of Clearinghouse (including
the Reporting Person and NOVA) have entered into a Stockholders Agreement dated
as of October 21, 1994 (the "Clearinghouse Owners Stockholders Agreement"),
effective as of the Clearinghouse Effective Time, providing that such
stockholders will vote their shares of Common Stock, subject to certain
conditions, to elect as the ten directors of the Issuer three designees of the
Reporting Person, three designees of NOVA, two officers of the Issuer designated
by the former owners of Clearinghouse other than the Reporting Person and NOVA,
and two independent directors, one of whom may be designated by HMTF pursuant to
the New Trident Stockholders Agreement.
The Clearinghouse Owners Stockholders Agreement also provides,
among other things and subject to various conditions, exceptions, restrictions
and limitations, that (i) the former owners of Clearinghouse (including the
Reporting Person) will not vote their shares of Common Stock in favor of any
amendment to the Issuer's Certificate of Incorporation or Bylaws, any merger
involving the Issuer or certain other matters unless the Reporting Person (as
long as it and its affiliates owns at least 10% of the outstanding Common Stock)
and NOVA (as long as it and its affiliates owns at least 10% of the outstanding
Common Stock) are in favor of such action, (ii) the former owners of
Clearinghouse (including the Reporting Person) will not dispose of shares of
Common Stock except as permitted by the Clearinghouse Owners Stockholders
Agreement, and (iii) the former owners of Clearinghouse (including the Reporting
Person) will have the preferential right to purchase a portion, generally equal
to their percentage ownership of the outstanding shares of Common Stock, of
issuances of the Issuer's capital stock by the Issuer.
In addition, if the six month anniversary of the Determination
occurs prior to the first anniversary of the Clearinghouse Effective Time, then
the former owners of Clearinghouse, other than the Reporting Person and NOVA,
after such six month anniversary and prior to such first anniversary may elect,
subject to certain restrictions, to sell to the Reporting Person and NOVA, in
equal proportions, up to an aggregate of 4,412,409 shares of Common Stock (the
"PEP Put"). The price for such shares would be determined based on a weighted
average market price, but in no event may it be higher than $12.25. Such former
Clearinghouse owners also may sell, subject to certain restrictions, after the
later of one year after the Clearinghouse Effective Time and the six month
anniversary of the Determination, up to an aggregate of 6,788,268 shares of
Common Stock (reduced by the number of shares sold in the PEP Put) in certain
public transactions subject to a preferential purchase right in favor of the
Reporting Person and NOVA. Such former Clearinghouse owners may also, subject to
certain restrictions, transfer shares to family members and certain trusts.
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9
Finally, the Clearinghouse Owners Stockholders Agreement gives
the Reporting Person and its affiliates (so long as the Reporting Person owns at
least 10% of the outstanding Common Stock) and NOVA and its affiliates (as long
as NOVA owns at least 10% of the outstanding Common Stock) each the right to
second up to five employees to the Issuer, although the Reporting Person will
remain liable for the employment costs of the seconded employees. The
Clearinghouse Owners Stockholder Agreement is attached hereto as Exhibit 7 and
is incorporated herein by reference in its entirety.
The Issuer and the former owners of Clearinghouse (including
the Reporting Person) have entered into a registration rights agreement dated
October 21, 1994 (the "Clearinghouse Owners Registration Rights Agreement" and,
together with the New Trident Stockholders Agreement and the Clearinghouse
Owners Stockholders Agreement, the "Ancillary Agreements"), effective as of the
Clearinghouse Effective Time, which grants the Reporting Person and NOVA certain
rights to demand registration of their Common Stock under the Securities Act and
grants the other former owners of Clearinghouse the right to have a portion of
their Common Stock included in a shelf registration statement required to be
filed by Trident pursuant to the terms of the Combination Agreement. In
addition, in the event that the Issuer undertakes the registration of shares of
Common Stock for its own account or fore the account of any of its stockholders,
the former owners of Clearinghouse (including the Reporting Person) have certain
rights to have their Common Stock registered in connection therewith. However,
the rights of the former owners of Clearinghouse under the Clearinghouse Owners
Registration Rights Agreement are expressly subordinate to the registration
rights of the minority holders under both the Stockholders Agreement and the New
Trident Stockholders Agreement. The Clearinghouse Owners Registration Rights
Agreement is attached hereto as Exhibit 8 and is incorporated herein by
reference in its entirety.
Other Provisions. Although the stockholder voting provisions
of the Clearinghouse Owners Stockholders Agreement relate only to the election
of directors of the Issuer and certain extraordinary corporate transactions, if
the former owners of Clearinghouse (including the Reporting Person) were to vote
together as a group, they would have the ability to control the outcome of most
matters submitted to a vote of the Issuer's stockholders. The Issuer's bylaws
provide that the Issuer will not take certain actions unless approved by the
affirmative vote of at least eight directors. Accordingly, the directors
designated by the Reporting Person, on the one hand, and NOVA, on the other
hand, will have the ability to block any of these specified actions. These
actions include (i) any business combination or liquidation involving the Issuer
or any of its subsidiaries, (ii) the issuance or purchase by the Issuer or any
subsidiary or any Common Stock or other securities, (iii) the sale of
substantially all of the assets of the Issuer, (iv) the payment of any dividends
or distributions, (v) the amendment of the Issuers's charter or entry into any
new line of business, and (vi) any transaction involving the expenditure or
commitment by the Issuer or more than $5 million. The bylaws of the Issuer are
attached hereto as Exhibit 9
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10
and are incorporated herein by reference in their entirety. Except as required
pursuant to the Ancillary Agreements, the Reporting Person does not have any
formal or informal contract, arrangement understanding or relationship with any
other person, including, without limitation, NOVA or any other stockholder of
the Issuer to act together with respect to any of the matters which may require
the approval of eight of the Issuer's directors as set forth above.
Recent Actions. In connection with the Clearinghouse
Combination, all of the members of the Board of Directors of Trident (except Mr.
Kenneth Harmonay) resigned, effective as of the closing of the Clearinghouse
Combination (except in the case of Mr. Thomas Hannan, whose resignation was
effective as of March 10, 1995) and nine new persons were appointed to the
Issuer's Board of Directors. Immediately following the closing of the
Combination, the holders of a majority of the outstanding shares of Common Stock
removed Mr. Harmonay from the Board of Directors and appointed Mr. Daniel
Dienstbier to the Board of Directors pursuant to a written consent. In addition,
in connection with the Clearinghouse Combination, certain executive officers of
Trident resigned and were replaced by former officers of Clearinghouse.
On January 22, 1996, the Issuer and Chevron Corporation
("Chevron") jointly issued a press release announcing that they have entered
into exclusive negotiations to merge Chevron's natural gas operations with those
of the Issuer pursuant to an Exclusivity Agreement dated January 22, 1996
between the Issuer and Chevron (the "Exclusivity Agreement"). As part of the
proposed agreement, a new company would be formed and merged with the Issuer. As
part of such transaction, Chevron would receive between 23.6% and 25% of the
common stock of the surviving corporation and the Reporting Person would also
own between 23.6% and 25% of the common stock of the surviving corporation.
Pursuant to the Exclusivity Agreement, on May 22, 1996, the
Issuer, Chevron U.S.A. Inc. and Midstream Combination Corp. entered into a
Combination Agreement and Plan of Merger (the "Combination Agreement") providing
for a combination of the Issuer with substantially all of Chevron's midstream
assets and certain strategic alliances.
Copies of the press release, the Exclusivity Agreement and the
Combination Agreement are filed as Exhibits 10, 11 and 12 to this Schedule 13D
and are incorporated herein by reference.
Voting Agreement. In connection with the execution of the
Combination Agreement, on May 22, 1996 the Reporting Person entered into a
Voting Agreement with Chevron U.S.A. Inc., (the "Voting Agreement") pursuant to
which the Reporting Person has agreed to vote its shares at any meeting or
action by written consent, and have agreed to execute a proxy in favor of
Chevron to vote such Shares (i) in favor of the transactions provided for in the
Combination Agreement and (ii) against any proposal (other than pursuant
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11
to the Combination Agreement) for the amendment of the Issuer's Certificate of
Incorporation or Bylaws or any merger, consolidation, sale or purchase of
assets, reorganization, recapitalization, liquidation or winding up of or by the
Issuer or sale of all or substantially all of the stock or assets of a
subsidiary of the Issuer, in any case, other than as permitted or contemplated
by the Combination Agreement. The obligation of the Reporting Person under the
Voting Agreement shall terminate on the earliest of (i) the Effective Time under
and as defined in the Combination Agreement, (ii) the date of termination of the
Combination Agreement in accordance with Article 13 thereof or (iii) December
31, 1996. Any proxy granted to Chevron under any of the Voting Agreement will be
irrevocable for the term of the Voting Agreement and will be coupled with an
interest.
New NGC Stockholders Agreement. Upon consummation of the transactions
provided for in the Combination Agreement, the Clearinghouse Owners Stockholders
Agreement will be terminated. NOVA Gas (U.S.) and Chevron have entered into a
Stockholders Agreement dated May 22, 1996 (the "New NGC Stockholders
Agreement"), which will become effective as of the Effective Time, which relates
to certain voting arrangements, transfer restrictions, corporate governance and
other matters.
Board of Directors. The parties to the New NGC Stockholders
Agreement have agreed to vote their New NGC Common Stock, subject to certain
conditions, to cause the New NGC Board of Directors to consist of 13 directors
to be nominated as follows:
(i) each of the BG Group, NOVA Group and Chevron Group may
nominate (A) three directors as long as it remains a Class A Group (as
defined below); (B) two directors as long as it remains a Class B Group
(as defined below); and (C) one director as long as it remains a Class
C Group (as defined below);
(ii) two members shall be officers of New NGC, the nomination
of whom shall be as follows: (A) so long as his employment agreement so
provides, the Chief Executive Officer of New NGC (1) shall be a member
of the New NGC Board of Directors and (2) shall nominate another
officer of New NGC; (B) if the Chief Executive Officer is no longer
required to be a member of the New NGC Board of Directors pursuant to
his employment agreement, then two officers of New NGC shall be
nominated by the New NGC Board of Directors;
(iii) two members shall be independent directors, the
nomination of whom shall be as follows: (A) one member shall be a
nominee of HMTF to the extent required by the Trident Stockholders
Agreement and one member shall be nominated by the New NGC Board of
Directors; (B) at all other times, both such members shall be nominated
by the New NGC Board of Directors;
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12
(iv) all other members, if any, shall be nominated and
elected in accordance with applicable law.
Pursuant to the New NGC Stockholders Agreement, (i) a "Class A
Group" is defined as a Group that owns collectively at least 34,760,890 shares
of New NGC Common Stock; (ii) a "Class B Group" is defined as a Group that owns
collectively at least 23,173,926 shares of New NGC Common Stock but less than
34,760,890 shares of New NGC Common Stock, and (iii) a "Class C Group" is
defined as a Group that owns collectively at least 11,586,963 shares of New NGC
Common Stock but less than 23,173,926 shares of New NGC Common Stock. Upon
consummation of the Combination, the BG Group, the NOVA Group and the Chevron
Group will each own 38,623,211 shares of New NGC Common Stock and, accordingly,
will each be a Class A Group under the New NGC Stockholders Agreement.
Consequently, the BG Group, NOVA Group and Chevron Group will each be entitled
to designate three directors to serve on the New NGC Board of Directors based
their ownership of New NGC Common Stock upon consummation of the Combination.
Voting Arrangements on Certain Matters. The parties to the New
NGC Stockholders Agreement have agreed not to vote in their capacity as
stockholders in favor of any of the following matters unless each party that is
a Class A Group informs each other Group that such Class A Group is in favor of
such action: (i) any amendment to the New NGC Certificate of Incorporation or
Bylaws; (ii) any sale of all or substantially all of the assets of New NGC,
including any amendment to the terms of such sale; (iii) any merger or
consolidation of New NGC with any person, or any liquidation or dissolution of
New NGC, including any amendment to the terms of such merger, consolidation,
liquidation or dissolution.
Executive Committee. The New NGC Stockholders Agreement
provides that each of the BG Group, the NOVA Group and the Chevron Group, as
long as any such Group is a Class A Group or a Class B Group, may designate one
director as a member of the executive committee of the New NGC Board of
Directors.
Transfers Restrictions. The New NGC Stockholders Agreement
generally prohibits transfers by the parties of shares of New NGC Common Stock
prior to January 1, 1997. On or after January 1, 1997, the parties may transfer
shares subject to certain preferential purchase rights in favor of the other
Groups. Certain indirect transfers of shares of New NGC Common Stock also give
rise to the preferential purchase rights. Transfers among members of a Group and
certain other specified transfers are exempt from the restrictions.
Restrictions on Certain Purchases and Agreements. Subject to
certain exceptions, the parties to the New NGC Stockholders Agreement have
agreed that prior to
<PAGE>
13
January 1, 1997, no party will acquire ownership of any additional shares of New
NGC Common Stock. Any Group that is subject to the New NGC Stockholders
Agreement that is contemplating acquiring additional shares of New NGC Common
Stock must offer the other Groups the opportunity to participate in such
acquisition so that each Group may, if it chooses, stay at the same ownership
level as the other Groups. The parties to the New NGC Stockholders Agreement
have agreed, subject to certain exceptions, not to enter into any voting trust
or agreement or other stockholders agreement (other than the Trident
Stockholders Agreement) with respect to the acquisition, disposition or voting
of New NGC Common Stock.
Term; Termination; Certain Waivers. The New NGC Stockholders
Agreement will have an initial term of ten years commencing at the Effective
Time, which may be extended up to three additional years by any Class A Group
that provides notice to each other Group prior to the date 90 days prior to the
tenth anniversary of the Effective Time. Upon expiration of the initial term (or
any extension thereof, if applicable), the New NGC Stockholders Agreement will
automatically renew on an annual basis for an additional year commencing on the
last day of the initial term or, if extended, the last day of the renewal term,
unless a party to the New NGC Stockholders Agreement objects not less than 90
days prior to the commencement of the renewal period or unless, in each case,
the agreement is terminated earlier in the manner set forth below. The New NGC
Stockholders Agreement shall terminate prior to the expiration of the initial
term or any renewal term on (i) the first date on which all Groups that have
rights under such agreement collectively own less than 30% of the New NGC Common
Stock, (ii) the date of the dissolution, liquidation or winding up of New NGC
without a successor corporation, (iii) ten business days following the date of
the delivery to the other parties of a written termination notice executed by a
Class A Group that then owns a number of shares of New NGC Common Stock in
excess of 50% of the New NGC Common Stock, which notice shall include copies of
a consent to such termination by each other Class A Group and (iv) ten business
days following the date of the delivery to the other parties of a written notice
executed by a Class A Group that owns 75% of the issued and outstanding shares
of New NGC Common Stock. In general, the New NGC Stockholders Agreement may only
be altered, supplemented, amended or waived by the written consent of each
party.
Joint Ventures. For a period of two years from the Effective
Time, the written consent of each Class A Group will be required for the
formation of any partnership or other business arrangement involving shared
ownership between New NGC and any member of a Class A Group, provided that such
consent will not be required for any such arrangement involving crude oil, or
products refined from crude oil or NGLs or LPGs involving Caltex directly or
through one or more members of the Chevron Group. Thereafter, no Group will,
either directly or indirectly, form any partnership or other business
arrangement involving shared ownership between New NGC and any member of such
Group without prior consultation with each Class A Group.
<PAGE>
14
The Reporting Person intends to continually review the
Issuer's business affairs and financial position, as well as conditions in the
securities markets and general economic and industry conditions, including
conditions in the Issuer's areas of operations. Based on such evaluation and
review, the Reporting Person and British Gas will continue to consider various
alternative courses of action, which could include, to the extent permitted by
the agreements and arrangements described herein, purchasing additional Common
Stock or, if circumstances warrant, reducing holdings of Common Stock of the
Reporting Person and British Gas.
Except as set forth above, the Reporting Person does not have
any present plans or proposals which relate to, or would result in: the
acquisition by any person of additional securities of the Issuer, or the
disposition of securities of the Issuer, an extraordinary corporate transaction,
such as a merger, reorganization or liquidation, involving the Issuer or any of
its subsidiaries; a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries; a change in the present board of directors or
management of the Issuer, including plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board; a material
change in the present capitalization or dividend policy of the Issuer or any
other material change in the Issuer's business or corporate structure; a change
in the Issuer's articles of incorporation or bylaws or other actions which might
impede the acquisition of control of the Issuer by any person; causing a class
of securities of the Issuer being delisted from a national securities exchange
or ceasing to be authorized to be quoted in an inter-dealer quotation system of
a registered national securities association; a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934; or any action similar to any of
those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) In computing their respective aggregate percentage
ownership of Common Stock and the percentages of Common Stock owned by the other
parties to the Clearinghouse Owners Stockholder Agreement for purposes of this
Schedule 13D, the Reporting Person and British Gas have relied on the annual
report on Form 10-K for the fiscal year ended December 31, 1995 (file No.
1-11156) in which the Issuer reported that 110,493,411 shares of Common Stock
were outstanding. As of the close of business on March 22, 1996 (the date of
actual issuance of the Contingent Shares of Common Stock), the Reporting Person
is the beneficial owner of 38,623,211 shares of Common Stock, constituting
approximately 35.0% of the shares of Common Stock outstanding.
<PAGE>
15
In addition to the shares of Common Stock owned by the
Reporting Person, an additional 55,470,489 shares of Common Stock (approximately
50.2%) are subject to the Clearinghouse Owners Stockholders Agreement. The
Reporting Person and British Gas disclaim beneficial ownership of any of such
shares of Common Stock.
British Gas does not own any shares of the Issuer directly,
but may be deemed to share beneficial ownership of all of the shares of Common
Stock owned by the Reporting Person, by virtue of the ownership relationship
described in Item 2.
(b) Subject to its obligations under the agreements described
in this Schedule 13D, the Reporting Person has the sole power to vote and
dispose of the 38,623,211 shares of Common Stock owned directly by it. Although
the Reporting Person has sole voting rights, British Gas may be deemed to share
voting and dispositive power with regard to such shares by virtue of its
ownership of 100% of the Reporting Person.
(c) Transaction in the shares of Common Stock by the Reporting
Person in the sixty day periods ended February 29, 1996 and March 22, 1996
include only the issuance of an aggregate of 1,857,191 shares of Common Stock
directly to the Reporting Person on March 22, 1996. The Reporting Person also
provided a portion of the funds utilized by Trident to purchase Trident Common
Stock in the tender offer which was completed immediately prior to the
consummation of the Combination. See the description of such tender offer
contained in Item 3 above, which is hereby incorporated by reference in its
entirety in response to this Item 5.
British Gas acquired no shares of Common Stock directly in the
sixty-day periods ended February 29, 1996 or March 22, 1996.
(d) Except as described above, no other person is known to
have the right to receive or the power to direct the receipt of dividends from
or the proceeds from the sale of such shares of Common Stock beneficially owned
by the Reporting Person and British Gas.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The Reporting Person is a party to the Lockup Agreement and
the Ancillary Agreements, which are attached as exhibits hereto and which are
incorporated by reference in their entirety herein. In addition, the
descriptions of such agreements, the Issuer's bylaws and the other agreements
and arrangements of the Reporting Person with respect to the
<PAGE>
16
Common Stock and the Issuer set forth in Item 4 hereof are hereby incorporated
by reference in their entirety in response to this Item 6.
On January 22, 1996, the Issuer and Chevron jointly issued a
press release announcing that they have entered into exclusive negotiations to
merge Chevron's natural gas operations with those of the Issuer pursuant to the
Exclusivity Agreement. As part of the proposed agreement, a new company would be
formed and merged with the Issuer. As part of such transaction, Chevron would
receive between 23.6% and 25% of the common stock of the surviving corporation
and the Reporting Person would also own between 23.6% and 25% of the common
stock of the surviving corporation.
Pursuant to the Exclusivity Agreement, on May 22, 1996, the
Issuer, Chevron U.S.A. Inc. and Midstream Combination Corp. entered into the
Combination Agreement providing for a combination of the Issuer with
substantially all of Chevron's midstream assets and certain strategic alliances.
(See Item 4.)
Copies of the press release, the Exclusivity Agreement and the
Combination Agreement are filed as Exhibits 10, 11 and 12 to this Schedule 13D
and are incorporated herein by reference.
On May 22, 1996, the Reporting Person entered into (i) the New
NGC Stockholders Agreement, which will become effective at the Effective Time
(under and as defined in the Combination Agreement) and supersede the New
Trident Stockholders Agreement in its entirety, and (ii) the Voting Agreement
pursuant to which the Reporting Person has agreed to vote all of its shares of
Common Stock at any meeting or action by written consent, and agreed to execute
a proxy in favor of Chevron to vote such shares (i) in favor of the transactions
contemplated by the Combination Agreement and (ii) against any other proposal
for the amendment of the Issuer's Certificate of Incorporation or By-laws or any
merger, consolidation, sale or purchase of assets, reorganization,
recapitalization, liquidation or winding up of or by the Issuer or sale of all
or substantially all of the stock or assets of a subsidiary of the Issuer, in
any case other than as permitted or contemplated by the Combination Agreement.
(See Item 4.)
Copies of the Combination Agreement, the Stockholders and the
Voting Agreement are filed as Exhibits 12, 13 and 14 to this Schedule 13D and
are incorporated herein by reference.
At present, there are no other contracts, arrangements,
understandings, or relationships with respect to securities of the Issuer
involving the Reporting Person or British Gas.
<PAGE>
17
Item 7. Materials to be Filed as Exhibits.
1. Agreement of Joint Filing.
2. Clearinghouse Combination Agreement (incorporated by reference
to Exhibit 2.2 to Trident's Registration Statement on Form
S-4, as amended (File No. 33-88902) (the "Registration
Statement")).
3. Exhibit 3.5(A) to the Combination Agreement (incorporated by
reference to Exhibit 4.20 to the Registration Statement).
4. Exhibit 3.5(B) to the Combination Agreement (incorporated by
reference to Exhibit 4.21 to the Registration Statement).
5. Lockup Agreement (incorporated by reference to Exhibit 10.35
to the Registration Statement).
6. New Trident Stockholders Agreement (incorporated by reference
to Exhibit 10.50 to the Registration Statement).
7. Clearinghouse Owners Stockholders Agreement (incorporated by
reference to Exhibit 10.49 to the Registration Statement).
8. Clearinghouse Owners Registration Rights Agreement
(incorporated by reference to Exhibit 10.51 to the
Registration Statement).
9. Amended and Restated Bylaws of NGC Corporation (incorporated
by reference to Exhibit 3.4 to the Registration Statement).
10. Press Release issued by the Issuer and Chevron Corporation on
January 22, 1996.
11. Exclusivity Agreement between the Issuer and Chevron
Corporation dated as of January 22, 1996.
12. Combination Agreement (incorporated by reference to Exhibit
2.1 to the Issuer's Current Report on Form 8-K dated May 22,
1996).
13. Stockholders Agreement.
14. Voting Agreement.
<PAGE>
18
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certify that the information set forth in this
Statement is true, complete and correct.
Date: July 30, 1996 BG HOLDINGS, INC.
By: /s/ Hugh A. Tarpley
-------------------------
Title: Vice President
BRITISH GAS PLC
By: /s/ Cynthia Masters
-------------------------
Title: Attorney-in-Fact
<PAGE>
SCHEDULE I
The names of the directors and executive officers of BG
Holdings, Inc. and their business addresses, principal occupations and
citizenship are set forth below.
PRESENT PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION
---- ---------------- ----------
Richard Vincent Giordano Rivermill House Chairman, Director and
(U.S. citizen) 152 Grosvenor Road President
London SW1V 3JL England
Arthur William Burgess Rivermill House Director, Vice President
(British citizen) 152 Grosvenor Road and Treasurer
London SW1V 3JL England
Cynthia Masters 1100 Louisiana Director, Vice President
(U.S. citizen) Suite 2500 and Secretary
Houston, Texas 77002
Jhan I. Mattox Rivermill House Director and Vice President
(U.S. citizen) 152 Grosvenor Road
London SW1V 3JL England
Thomas Michael Melvin Rivermill House Director and Vice President
(British citizen) 152 Grosvenor Road
London SW1V 3JL England
Michael Sharp 1100 Louisiana Director and Vice President
(British citizen) Suite 2500
Houston, Texas 77002
Hugh A. Tarpley 1100 Louisiana Director and Vice President
(U.S. citizen) Suite 2500
Houston, Texas 77002
<PAGE>
SCHEDULE II
The names of directors and executive officers of British Gas
plc and their business addresses and principal occupations are set forth below.
If no address is given, the director's or executive officer's business address
is that of British Gas plc at Rivermill House, 152 Grosvenor Road, London SW1V
3JL. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to that individual's position with British Gas plc and
each individual is a British citizen.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME BUSINESS ADDRESS OCCUPATION
---- ---------------- ----------
<S> <C> <C>
Richard V. Giordano KBE Rivermill House Chairman and Chief Executive
(U.S. citizen) 152 Grosvenor Road Officer
London SW1V 3JL England
Stephen J. Brandon Executive Director
Roy A. Gardner Executive Director
Philip R. Hampton Executive Director, Finance
Harry Moulson Executive Director
John Wybrew Executive Director
Philip G. Rogerson Executive Director
David Varney Executive Director
David H. Benson Kleinwort Benson Group Chairman
20 Fenchurch Street Kleinwort Charter Investment Trust
London EC3P 3DB PLC
Stanley Kalms Dixons Group plc Chairman
29 Farm Street Dixons Group plc and
London W1X 7RD King's Healthcare NHS Trust
Patricia Mann J. Walter Thompson Co. Ltd. Vice President
40 Berkley Square
London W1X 6AD England
Sir Michael S. Perry Unilever plc Chairman
P.O. Box 68 Unilever plc
Blackfriars
London EC4P 4BQ
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C>
Keith A.V. Mackrell 34 Inner Park Road, Wimbledon Non-Executive Director of Bowater
London SW19 6DD plc, Regalian Properties plc,
Enterprise LSE, Ltd., Fairey Group
plc and Standard Chartered Bank
plc
Michael R. Alexander Managing Director, British Gas
Trading
David R. Brooks Managing Director, Quality and
Customer Services
John H. Jackson Company Secretary
Simon R. Kirk Managing Director, Retail
Roger Wood Managing Director, Service
Peter Lehmann Managing Director, Commercial
Dennis Cottrell Managing Director, Global
Dio Araujo Managing Director, Americas
Edward Tratford Regional Managing Director, Asia
Pacific
Nick Woolacott Managing Director, Power
Generation
William Friedrich General Counsel
Pierre Jungels Managing Director, Exploration and
Production
Edward Thomas Walshe Regional Managing Director,
CISMEA
</TABLE>
<PAGE>
Page of Pages
EXHIBIT INDEX
1. Agreement of Joint Filing.
2. Clearinghouse Combination Agreement (incorporated by reference to
Exhibit 2.2 to Trident's Registration Statement on Form S-4, as amended
(File No. 33-88092) (the "Registration Statement")).
3. Exhibit 3.5(A) to the Combination Agreement (incorporated by reference
to Exhibit 4.20 to the Registration Statement).
4. Exhibit 3.5(B) to the Combination Agreement (incorporated by reference
to Exhibit 4.21 to the Registration Statement).
5. Lockup Agreement (incorporated by reference to Exhibit 10.35 to the
Registration Statement).
6. New Trident Stockholders Agreements (incorporated by reference to
Exhibit 10.50 to the Registration Statement).
7. Clearinghouse Owners Stockholders Agreement (incorporated by reference
to Exhibit 10.49 to the Registration Statement).
8. Clearinghouse Owners Registration Rights Agreement (incorporated by
reference to Exhibit 10.51 to the Registration Statement).
9. Amended and Restated Bylaws of NGC Corporation (incorporated by
reference to Exhibit 3.4 to the Registration Statement).
10. Press Release issued by the Issuer and Chevron Corporation on January
22, 1996.
11. Exclusivity Agreement between the Issuer and Chevron Corporation dated
as of January 22, 1996.
12. Combination Agreement (incorporated by reference to Exhibit 2.1 to the
Issuer's Current Form 8-K dated May 22, 1996).
13. Stockholders Agreement.
14. Voting Agreement.
<PAGE>
EXHIBIT 1
AGREEMENT OF JOINT FILING
Pursuant to Reg. ss. 240.13d-1(F)(I)(iii) adopted under the
Securities and Exchange Act of 1934, the undersigned, British Gas plc and BG
Holdings, Inc. hereby agree to file with the Securities and Exchange Commission
the joint Schedule 13D/A (Amendment No. 2) to which this exhibit is attached,
and that such joint Schedule 13D/A, as so filed, is filed on behalf of each of
them.
This Agreement of Joint Filing may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall continue a single instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement of Joint Filing as of the date set forth below.
Date: July 30, 1996
BG HOLDINGS, INC.
By: /s/ Hugh A. Tarpley
-------------------------
Title: Vice President
BRITISH GAS PLC
By: /s/ Cynthia Masters
-------------------------
Title: Attorney-in-Fact
EXHIBIT 13
STOCKHOLDERS AGREEMENT
among
BG HOLDINGS, INC.,
NOVA GAS SERVICES (U.S.) INC.
and
CHEVRON U.S.A. INC.
Dated May 22, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
1.1 Certain Terms........................................................ 1
1.2 Representations and Warranties....................................... 7
ARTICLE II
BOARD OF DIRECTORS; VOTING OF CAPITAL STOCK;
CERTAIN OTHER MATTERS
2.1 Board of Directors and Executive Committee........................... 8
2.2 Certain Transactions................................................. 10
ARTICLE III
RESTRICTIONS ON TRANSFER AND ACQUISITION
3.1 General Provisions................................................... 10
3.2 Permitted Transfers; Transfers Not Subject to Preferential Right..... 10
3.3 Transfers Subject to Preferential Right.............................. 12
3.4 Procedures with Respect to Transfers Subject to Section 3.3.......... 15
3.5 Conditions to Transfer of Rights In Connection with a Permitted
Transfer............................................................. 18
3.6 Restrictions on Certain Acquisitions................................. 18
3.7 Effect of Distributions and Certain Transactions..................... 19
ARTICLE IV
EFFECTIVENESS; TERMINATION
4.1 Effectiveness and Term............................................... 20
4.2 Termination.......................................................... 20
<PAGE>
Page
----
ARTICLE V
AGREEMENTS OF GENERAL EFFECT
5.1 Shares Subject to this Agreement..................................... 20
5.2 Legends.............................................................. 21
5.3 Rights and Duties.................................................... 21
5.4 Designated Parties; Change in Number of Shares Owned................. 21
5.5 Taking of Necessary Action........................................... 21
5.6 Restrictions on Other Agreements..................................... 22
5.7 Other Activities of the Parties; Fiduciary Duties.................... 22
5.8 Late Payment......................................................... 22
5.9 U.S. Currency........................................................ 22
5.10 International Joint Ventures......................................... 22
ARTICLE VI
MISCELLANEOUS
6.1 Amendment; Waivers................................................... 23
6.2 Assignment........................................................... 23
6.3 Notices.............................................................. 23
6.4 Counterparts......................................................... 23
6.5 Headings............................................................. 24
6.6 Choice of Law........................................................ 24
6.7 Entire Agreement..................................................... 24
6.8 Construction......................................................... 24
6.9 No Partnership....................................................... 24
6.10 Number; Gender; Without Limitation; Interpretation of Certain Defined
Terms................................................................ 24
6.11 Severability......................................................... 24
6.12 Indemnification...................................................... 24
6.13 Specific Performance................................................. 25
Exhibit A - Form of Adoption Agreement.......................................A-1
ii
<PAGE>
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered
into as of May 22, 1996 among BG Holdings, Inc., a Delaware corporation, NOVA
Gas Services (U.S.) Inc., a Delaware corporation and Chevron U.S.A. Inc., a
Pennsylvania corporation.
WITNESSETH:
WHEREAS, pursuant to a Combination Agreement and Plan of
Merger (the "Combination Agreement") dated as of the date hereof among NGC
Corporation, a Delaware corporation ("Old NGC"), Chevron U.S.A. Inc. and
Midstream Combination Corp., a Delaware corporation (the "Corporation"), Old NGC
will be merged with and into the Corporation (the "Merger") and the Corporation
will change its name to "NGC Corporation";
WHEREAS, it is a condition to the consummation of the
transactions provided for in the Combination Agreement, including the Merger,
that the parties hereto enter into this Agreement; and
WHEREAS, the parties believe that the Merger and the terms set
forth in this Agreement with respect to their ownership of shares of Capital
Stock of the Corporation will foster conditions that promote the long-term best
interests of the Corporation.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
1.1 Certain Terms. (a) When used herein the following terms
shall have the meanings indicated:
"Acquisition," including the correlative term "Acquire,"
means any purchase or other acquisition of Common Stock (or any interest therein
or right thereto) or Common Stock Equivalents other than the conversion of
shares of Series A Preferred Stock; provided, however, that an exchange, merger,
recapitalization, consolidation or reorganization involving the Corporation in
which securities of the Corporation or any other Person are issued in respect of
shares of Common Stock of the Corporation shall not be deemed an Acquisition if
all shares of Common Stock are treated identically in such transaction.
<PAGE>
2
"Adoption Agreement" means an agreement in the form of
Exhibit A hereto or in such other form that is reasonably satisfactory to the
Parties.
"Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under the Securities Exchange Act of 1934.
"Applicable Interest Rate" means the lesser of (i) the prime
rate announced from time to time by The First National Bank of Chicago, N.A. or
its successor (the "Prime Rate") or (ii) the highest rate permitted by
applicable law, from the date due until paid in full.
"Board" means the board of directors of the Corporation.
"British Gas" means BG Holdings, Inc., a Delaware
corporation.
"business day" means any day other than (i) a Saturday or
Sunday or (ii) a day that is a banking holiday in any of the United States, the
United Kingdom or Canada.
"Capital Stock" means any and all shares, interests,
participations, or other equivalents (however designated) of capital stock of a
corporation, any and all similar ownership interests in a Person (other than a
corporation), and any and all warrants, options, or other rights to purchase or
acquire any of the foregoing.
"Chevron" means Chevron U.S.A. Inc., a Pennsylvania
corporation.
"Class A Group" means a Group that continuously from the time
that such Group becomes a Group under this Agreement owns not less than a number
of shares of Common Stock equivalent to 34,760,890 shares of Original Stock.
"Class B Group" means a Group that continuously from the time
that such Group becomes a Group under this Agreement owns a number of shares of
Common Stock equivalent to at least 23,173,926 shares of Original Stock but less
than 34,760,890 shares of Original Stock.
"Class C Group" means a Group that continuously from the time
that such Group becomes a Group under this Agreement owns a number of shares of
Common Stock equivalent to at least 11,586,963 shares of Original Stock but less
than 23,173,926 shares of Original Stock.
"Common Stock" means shares of the common stock, par value
$.01 per share, of the Corporation issued and outstanding from time to time
after the consummation of the Merger (including, without limitation, shares of
Common Stock issued upon conversion of shares of Series A Preferred Stock of the
Corporation) and all securities of the
<PAGE>
3
Corporation or any other Person issued in respect of shares of such common stock
in connection with any exchange, merger, recapitalization, consolidation,
reclassification, reorganization or other transaction to which the Corporation
is a party, but excluding any shares or securities which cease to be
outstanding.
"Common Stock Equivalents" means any and all rights, warrants,
options, convertible securities, or exchangeable securities or indebtedness of
the Corporation including, without limitation, the Series A Preferred Stock of
the Corporation, or other rights, exercisable for or convertible into or
exchangeable for, directly or indirectly, Common Stock, whether at the time of
issuance or upon the passage of time or the occurrence of some future event, but
does not include Common Stock.
"Corporation" shall have the meaning set forth in the recitals
and includes any successor corporation.
"Designated Party" means a Party designated by all Parties of
a Group to represent such Parties under this Agreement and bind such Parties as
contemplated in this Agreement.
"Director" means a member of the Board.
"Duties" means all obligations of a Party and its Group under
this Agreement, including, without limitation, the obligation to vote shares of
Common Stock in accordance with Article II and the obligation to comply with the
restrictions on Transfer and Acquisition of shares of Common Stock set forth in
Article III.
"Effective Time" shall have the meaning set forth in the
Combination Agreement.
"Group" means one or more Persons, at least one of which is a
Party to this Agreement, including only one Ultimate Parent Entity and any
direct or indirect wholly owned Subsidiaries of the Ultimate Parent Entity.
"HM" means Hicks, Muse, Tate & Furst Incorporated, a Delaware
corporation.
"HM Stockholders Agreement" means that certain Stockholders
Agreement dated as of October 21, 1994 among HM, Old NGC and certain other
persons.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended from time to time.
<PAGE>
4
"Independent Director" means a natural person who is not a
Party or an Affiliate of a Party, or an officer or employee thereof or of the
Corporation.
"Market Price" means, as of any trading day, the closing
price, regular way, of a share or unit of the subject security on the principal
securities exchange on which such security is listed, or if such security shall
not be then listed, the last sales price on the Nasdaq Stock Market, or if such
security shall not be quoted in the Nasdaq Stock Market, the average of the high
and low bid and asked prices in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any similar successor
organization.
"Marketable Securities" means equity securities of a class
listed for trading on The New York Stock Exchange, the American Stock Exchange,
the International Stock Exchange of the United Kingdom and the Republic of
Ireland or the Nasdaq Stock Market of an issuer with total market capitalization
(excluding shares held by affiliates of the issuer) of not less than $1 billion
calculated by determining the Volume Weighted Market Price for the equity
securities of such issuer that are also so listed for trading as of the date of
the relevant Offer Date, and provided, that, if the equity securities of such
issuer to be received by the Offeror have a total market capitalization of less
than $1 billion (excluding any shares held by affiliates of the issuer and
calculated based on the Volume Weighted Market Price for such securities), the
shares to be received by the Offeror do not constitute more than 1/3 of the
aggregate number of shares of such class of securities to be outstanding
immediately following the issuance thereof (excluding any shares held by
affiliates of the issuer).
"NOVA" means NOVA Gas Services (US) Inc., a Delaware
corporation.
"Offer Expiration Time" means (i) with respect to any Offer
made pursuant to Section 3.3 in which the Purchase Price for all Shares Subject
to the Offer is less than $10,000,000, 5:30 p.m. Houston Time on the 10th
business day following the Offer Date; (ii) with respect to any Offer made
pursuant to Section 3.3 in which the Purchase Price for all Shares Subject to
the Offer is greater than $50,000,000, 5:30 p.m. Houston time on the 40th
business day following the Offer Date; and (iii) with respect to any other Offer
made pursuant to Section 3.3, 5:30 p.m. Houston time on the 20th business day
following the Offer Date; provided, however, that in the case of an Offer for
which the Purchase Price is based on the Volume Weighted Market Price of any
security other than the Common Stock or is determined, in whole or in part, by
an investment banking firm pursuant to Section 3.4(f), the Offer Expiration Time
shall be the number of business days set forth above, in each case following the
date of determination of the Purchase Price pursuant to Section 3.4(f).
"Officer" means an officer of the Corporation elected by the
Board.
<PAGE>
5
"Original Stock" means Common Stock outstanding immediately
after the Effective Time, as adjusted (i) to reflect any reclassification,
subdivision or combination of the outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock and (ii) to give effect to
any recapitalization, merger or consolidation in which all of the outstanding
shares of Common Stock are exchanged for Capital Stock.
"Other Securities" means debt securities rated "A-" or higher
(or equivalent) by Standard & Poor's Corporation or Moody's Investors Services,
Inc. of an issuer that has a class of equity securities listed for trading on
The New York Stock Exchange, the American Stock Exchange, the International
Stock Exchange of the United Kingdom and the Republic of Ireland or the Nasdaq
Stock Market with total market capitalization (excluding shares held by
affiliates of the issuer) of not less than $1 billion calculated by determining
the Volume Weighted Market Price for the equity securities of such issuer that
are also so listed for trading as of the date of the relevant Offer Date.
"Party" means any party to this Agreement during the period in
which it is a party.
"Person" means any natural person, corporation, limited
partnership, limited liability company, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust, or other organization, whether or not a legal entity, and
any government or agency or political subdivision thereof.
"Private Transaction" means any voluntary Transfer other than
a Public Transaction.
"Public Transaction" means (i) a public offering and sale of
Common Stock registered under the Securities Act, (ii) a sale of Common Stock
pursuant to Rule 144 promulgated under the Securities Act, or (iii) if the Party
making such sale is not an Affiliate of the Corporation, a sale of Common Stock
on the New York Stock Exchange or any other exchange on which the Common Stock
may be traded or through any inter-dealer quotation system; provided, that, in
the case of a sale pursuant to clause (i), to the knowledge, after reasonable
investigation, of the Party making such sale, as of the time of such sale, no
sales of Common Stock are made to any Person (other than, if applicable, the
underwriters that are underwriting such public offering) who would immediately
thereafter own more than 4.9% of the Common Stock.
"Rights" means all rights and benefits of a Party and its
Group under this Agreement, including, without limitation, the ability to
nominate and select Directors and approve certain transactions in accordance
with Article II and the preferential rights to acquire shares of Common Stock in
accordance with Article III.
<PAGE>
6
"Series A Preferred Stock" shall mean the Series A
Participating Preferred Stock, par value $.01 per share, of the Corporation.
"Shares" means shares of Common Stock and/or Common Stock
Equivalents.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, joint venture, business trust, limited liability
company or similar entity, in which such Person holds a majority interest with
respect to the right to receive dividends and distributions and the right to
elect the governing body of such entity.
"trading day" means a day on which trading in the Common Stock
occurs, if the Common Stock is listed on a securities exchange, on the principal
securities exchange on which Common Stock is listed, or, if the Common Stock is
not listed on a securities exchange but is quoted in the Nasdaq Stock Market, in
the Nasdaq Stock Market, or if the Common Stock is not quoted in the Nasdaq
Stock Market, in the domestic over-the-counter market.
"Transfer", including the correlative terms "Transferring" and
"Transferred", means any transfer, assignment, sale, gift, pledge, hypothecation
or other encumbrance, or any other disposition (whether voluntary or involuntary
or by operation of law), of Common Stock (or any interest therein or right
thereto) or Common Stock Equivalents other than the conversion of shares of
Series A Preferred Stock; provided, however, that an exchange, merger,
recapitalization, consolidation or reorganization involving the Corporation in
which securities of the Corporation or any other Person are issued in respect of
shares of the Common Stock of the Corporation shall not be deemed a Transfer if
all shares of Common Stock are treated identically in such transaction.
"Ultimate Parent Entity" means, with respect to any Party,
that Person that is the "ultimate parent entity" of such Party under Rule ss.
801.1(a)(3) promulgated under the HSR Act.
"Volume Weighted Average Market Price" means, as of a
specified date, the volume weighted average of the Market Price of the subject
security for the 20 consecutive trading days immediately preceding such date, in
the case of shares of Common Stock, or following such date, in the case of any
other security (with such volume weighted average calculated by (i) multiplying
the Market Price as of the end of each such trading day by the number of shares
or units of the subject security traded on such day (on the principal securities
exchange on which such security is listed, or if such security shall not be then
listed, on the Nasdaq Stock Market, or if such security shall not be quoted on
the Nasdaq Stock Market, then in the domestic over-the-counter market), (ii)
totaling the sum of such calculations for all 20 such trading days and (iii)
then dividing the result by the total number of shares or units of the subject
security traded during such 20 days).
<PAGE>
7
(b) In addition, the following terms shall have the meaning
specified in the Section of this Agreement identified below:
Term Section
- ---- -------
Acquisition Agreement 3.3(b)
Acquisition Proposal 3.3(c)
Agreement Opening paragraph
Closing 3.4(c)
Combination Agreement Recitals
Indemnitees 6.12
Indemnitor 6.12
Invalid Transfer 3.3(g)
Merger Recitals
notice 6.3
Offer The applicable paragraph of Section 3.3
Offer Date 3.4(a)
Offeror The applicable paragraph of Section 3.3
Offer Price The applicable paragraph of Section 3.3
Participating Offerees 3.4(c)
Positive Receipt Notice 3.4(c)
Purchase Price 3.4(f)
Record Date 3.7
Shares Subject to the Offer The applicable paragraph of Section 3.3
Subject Shares 3.6(b)
Third Party Sale 3.3(b)
1.2 Representations and Warranties. (a) Each Party represents
and warrants to the other Parties that as of the date hereof:
(i) such Party has full power and authority to execute and
deliver this Agreement and the execution and delivery by such Party of
this Agreement have been duly authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and
delivered by such Party and constitutes the binding obligation of such
Party, enforceable against such Party in accordance with its terms, and
does not conflict with any other agreement or arrangement with respect
to Common Stock or Common Stock Equivalents of such Party, including,
without limitation, agreements or arrangements
<PAGE>
8
with respect to the acquisition, disposition or voting of shares of
Common Stock or Common Stock Equivalents;
(iii) assuming that the Common Stock to be issued to it
pursuant to the Combination Agreement is duly and validly issued free
and clear of all liens and other encumbrances, immediately after the
consummation of the Combination, such Party shall own the number and
kind of shares of Common Stock and the Common Stock Equivalents, if
any, as set forth on Schedule I, and such Shares shall be owned by such
Party free and clear of all liens and other encumbrances arising by,
through or under such Party except for this Agreement and security
interests in favor of commercial lending institutions if Section 3.2(b)
has been complied with; and
(iv) such Party is not a party to any agreement or arrangement
with respect to the acquisition, disposition or voting of shares of
Common Stock or Common Stock Equivalents, other than as contemplated by
the Combination Agreement or, if applicable, the HM Stockholders
Agreement.
(b) British Gas represents and warrants to the other Parties
that, as of the date hereof, it is a direct or indirect wholly owned subsidiary
of British Gas plc, an English company, its Ultimate Parent Entity, and that
British Gas is the Designated Party of its Group.
(c) Chevron represents and warrants to the other Parties that,
as of the date hereof, it is a direct or indirect wholly owned subsidiary of
Chevron Corporation, a Delaware corporation, its Ultimate Parent Entity, and
that Chevron is the Designated Party of its Group.
(d) NOVA represents and warrants to the other Parties that, as
of the date hereof, it is a direct or indirect wholly owned subsidiary of NOVA
Corporation, an Alberta corporation, its Ultimate Parent Entity, and that NOVA
is the Designated Party of its Group.
ARTICLE II
BOARD OF DIRECTORS; VOTING OF CAPITAL STOCK;
CERTAIN OTHER MATTERS
2.1 Board of Directors and Executive Committee. (a) The
Parties shall take all action within their respective power, including the
voting of Capital Stock of the Corporation, as is necessary to cause the Board
at all times from and after the Effective Time to consist of 13 Directors and to
elect the Directors nominated as follows:
<PAGE>
9
(i) Class A Group Nominees: Each Class A Group shall
nominate three Directors.
(ii) Class B Group Nominees: Each Class B Group shall
nominate two Directors.
(iii) Class C Group Nominees: Each Class C Group shall
nominate one Director.
(iv) Management Nominees: The Board shall nominate two
Directors from among the Officers, except that the Chief Executive
Officer of the Corporation shall nominate such Officer Directors as
long as his employment agreement with the Corporation so provides.
(v) Independent Director Nominees: The Board shall nominate
two Independent Directors, except that prior to March 14, 1997, one
member shall be a nominee of HM to the extent provided in the HM
Stockholders Agreement.
(vi) Other Directors: All other Directors, if any, shall be
nominated and elected in accordance with applicable law, and this
Agreement shall not limit or otherwise restrict any Party's actions
with respect to the nomination or election of such Directors.
(b) Executive Committee. Each Class A Group and each Class B
Group, if any, shall select one Director to be a member of the Executive
Committee of the Board or any similar committee. Each of the other Directors
selected by such Class A Group or Class B Group, as the case may be, shall be
designated as alternative members of each such committee to serve in the place
and stead of the member who is a Director designated by such Class A Group or
Class B Group. Any such alternate member may replace any absent or disqualified
member at any meeting of such committee.
(c) Removal or Resignation. With respect to any Person
nominated by a Group in accordance with paragraphs (a) and (b) above as a
Director or a member of any committee of the Board:
(i) such Person shall be removed at the request of such
Group, and may be removed for cause or because such Group is no longer
entitled to make such nomination; and
(ii) if such Person is unable to serve, or once having
commenced to serve, is removed or resigns such Group shall nominate a
replacement unless such Group is no longer entitled to make such
nomination.
<PAGE>
10
(d) Neither the Board nor any committee thereof shall take any
action without first giving effect to any nomination of Directors by a Group in
accordance with this Section, provided, however, that if a Group fails to make a
nomination within 10 business days after receipt of notice from the Corporation
or another Party requesting that such Group make a nomination, the Board may
fill the vacancy and the Board or committee thereof may then take action;
provided further that the Director so appointed by the Board shall be removed if
the Group entitled to select the Director to fill such vacancy subsequently
makes a nomination.
2.2 Certain Transactions. No Party shall vote, or permit any
member of its Group to vote, any shares of Common Stock in favor of, or consent
in its capacity as a stockholder of the Corporation to, any actions listed
below, unless each Class A Group has provided notice to the other Groups of its
approval of the proposed action:
(i) Any amendment to the Certificate of Incorporation or
Bylaws of the Corporation;
(ii) Any sale of all or substantially all of the assets of
the Corporation, including any amendment to the terms of such sale; and
(iii) Any merger or consolidation of the Corporation with any
Person, or any liquidation or dissolution of the Corporation, including
any amendment to the terms of such merger, consolidation, liquidation
or dissolution.
Notwithstanding the foregoing, this Section 2.2 shall not require that any of
the actions listed above be approved by the stockholders of the Corporation if
such approval would not be required in the absence of this Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFER AND ACQUISITION
3.1 General Provisions. No Party shall make any Transfer or
any Acquisition, directly or indirectly, through an Affiliate or otherwise,
except as expressly permitted herein.
3.2 Permitted Transfers; Transfers Not Subject to
Preferential Right.
(a) Transfers Within a Group. Any member of a Group may, from
time to time, make a Transfer to any other member of the same Group, provided
that the transferee becomes a Party to this Agreement by executing an Adoption
Agreement.
<PAGE>
11
(b) Certain Pledges. Any Party may pledge Common Stock and/or
Common Stock Equivalents such Party owns to a commercial lending institution as
security for indebtedness of such Party if prior to any such pledge, the pledgee
shall deliver to the other Parties its written agreement, in form and substance
satisfactory to the other Parties, (i) that such lender will not Transfer such
Common Stock and/or Common Stock Equivalents except in compliance with the
provisions of this Agreement, (ii) that the pledgee or its assignee must offer
to sell the stock pursuant to Section 3.3(e)(ii) before it may accept any offer
at foreclosure or in lieu of foreclosure or before it or its assignee may
acquire such shares and (iii) that the lender or any Person acquiring such
stock, whether by foreclosure or otherwise, will assume and be bound by all of
the obligations of the pledging Party under this Agreement; provided, however,
that prior to January 1, 1997, no Party may pledge pursuant to this Section
3.2(b) more than 20% of the Common Stock and Common Stock Equivalents such Party
owns.
(c) Limited Transfers in Public Transaction. After January 1,
1997, a Party may Transfer up to that number of shares of Common Stock that is
equivalent to 3,862,321 shares of Original Stock in one or more Public
Transactions.
(d) Certain Indirect Transfer Transactions. An Ultimate Parent
Entity of any Party may cease to control such Party provided such cessation of
control is a result of a reorganization or other transaction (i) in which one
Person becomes the Ultimate Parent Entity of such Party and such former Ultimate
Parent Entity, or (ii) in which the former Ultimate Parent Entity is merged or
otherwise combined with the new Ultimate Parent Entity or (iii) in which all
Parties which are members of a Group become members of a new Group with a new
Ultimate Parent Entity through a spinoff in which all Shares held by any member
of such Group are, directly or indirectly, distributed to the former Ultimate
Parent Entity's shareholders, or through a widely distributed public offering,
or through a similar transaction so long as the book value of the Shares is less
than 50% of the book value of all assets of the new Ultimate Parent Entity (on a
consolidated basis) as of the date of such transaction, in which event the
applicable Group shall be deemed to be the new Ultimate Parent Entity and all of
its direct and indirect wholly owned Subsidiaries.
(e) Sale of Common Stock Received on Conversion of Series A
Preferred Stock. In addition to any Shares which it may Transfer pursuant to
Section 3.2(c) above, Chevron may Transfer in a Public Transaction any shares of
Common Stock received on conversion of shares of the Series A Preferred Stock at
any time on or after January 1, 1997.
(f) Transfers Not Subject To Preferential Rights. Any Transfer
pursuant to this Section 3.2 will not be subject to the preferential rights set
forth in Section 3.3.
<PAGE>
12
3.3 Transfers Subject to Preferential Right.
(a) Other Transfers in a Public Transaction and Transfer in a
Private Transaction After January 1, 1997. Except as may otherwise be expressly
permitted herein, on or after January 1, 1997, a Party may make a Transfer in a
Public Transaction in excess of that number of shares of Common Stock permitted
pursuant to Section 3.2(c) and 3.2(e), or a Party may make a Transfer in a
Private Transaction, in each case to a transferee, but only in compliance with
this Section 3.3.
(b) Right of First Offer. The Designated Party for any Group
that wishes to make a Transfer, other than pursuant to a transaction permitted
under Section 3.2 hereof, may, at its option, make a written offer (the "Offer")
to sell to the other Groups all of such Shares. The Offer shall (i) be executed
by each Party desiring to make a Transfer (the "Offeror"), (ii) specify the
number of Shares the Group desires to sell (the "Shares Subject to the Offer")
and (iii) specify the price (the "Offer Price") and other material terms on
which the other Groups may purchase the Shares Subject to the Offer. If the
other Groups fail to elect timely to purchase all of the Shares Subject to the
Offer prior to the Offer Expiration Time as set forth in Section 3.4, the
Offeror may enter into an agreement (an "Acquisition Agreement") within 60 days
after the Offer Expiration Time to sell all but not less than all of the Shares
Subject to the Offer and may consummate such sale (the "Third Party Sale") at
any time on or prior to the date that is 90 days after the Offer Expiration
Time; provided, however, that (i) if the Purchase Price determined in accordance
with Section 3.4(f) with respect to such Third Party Sale is equal to or less
than 10% higher than the Offer Price, the other Groups will have a right of
first refusal pursuant to Section 3.3(c) below to buy such shares at such
Purchase Price; and (ii) in all other cases, the other Groups shall have the
right to consent to the identity of the proposed purchaser, such consent not to
be unreasonably withheld; and provided, further, that if such consent has not
been given on or prior to the Offer Expiration Time, the 60 day period during
which the Offeror may enter into an Acquisition Agreement and the 90 day period
during which the Third Party Sale may be consummated shall begin on the date
such consent is given by the other Groups. The other Groups shall have a period
of 10 business days after notice of the identity of a proposed purchaser with
which the Offeror has entered into discussions with respect to an Acquisition
Agreement, to request reasonable information with respect to, and consultation
or a meeting with, such proposed purchaser in connection with exercising its
right to consent to the identity of such proposed purchaser. The other Groups
shall exercise such consent right as soon as practicable and in no event later
than 10 business days after the later of the date of such consultation or
meeting, if any, and the date of receipt of all material information reasonably
requested by such other Groups with respect to such proposed purchaser;
provided, however, that if during such 10 business day period such other Groups
reasonably request supplemental information after review of the information
initially furnished, such right shall be exercised within 5 business days after
receipt of such supplemental information.
<PAGE>
13
In granting or withholding such consent, each of the other Groups may consider
the following factors, among others:
(i) the creditworthiness of such proposed purchaser,
(ii) whether such proposed purchaser is an owner or operator
of a significant amount of assets or businesses which are the same as
or substantially similar to a line of business of the Corporation and
such proposed purchaser competes with the Corporation,
(iii) any material conflicts of interest between such proposed
purchaser and the Corporation, and
(iv) the general business reputation of such proposed
purchaser in the industries in which it is a participant.
(c) Right of First Refusal. If required pursuant to Section
3.3(b) or upon a Party's receipt of an acquisition proposal from a bona fide
creditworthy purchaser that is subject only to (i) customary closing conditions
(such as receipt of governmental and third party consents, bring-down of
representations and absence of litigation, etc.) and (ii) non-exercise of the
right of first refusal provided for in this Section 3.3(c), which such Party
desires to accept (an "Acquisition Proposal"), such Party (the "Offeror") shall
offer (the "Offer"), by written notice to each other Group, to sell the Shares
referred to in the Acquisition Proposal (the "Shares Subject to the Offer") to
the other Groups for the Purchase Price determined in accordance with Section
3.4(f) (the "Offer Price") and on the terms set forth in the Acquisition
Proposal. Any Offer under this Section 3.3(c) shall be irrevocable for so long
as any Group has the right to purchase any Shares Subject to the Offer. The
Offer shall be delivered to each other Group, and shall (i) state the Shares
Subject to the Offer, the consideration to be paid therefor, the Offer Date and
the Offer Expiration Time and (ii) contain a true and complete copy of the
Acquisition Proposal. If the Offer is not accepted to the extent required by
Section 3.4(b), the Offeror shall be permitted at any time within 90 days after
the Offer Expiration Time to make a Transfer of all (but not less than all) of
the Shares Subject to the Offer in accordance with Section 3.4(d) of this
Agreement.
(d) Transfer in Excess of Permitted Amount in Public
Transaction. Except as may otherwise be expressly permitted herein, a Party that
desires to make a Transfer in a Public Transaction of a number of Shares of
Common Stock that exceeds the amount permitted pursuant to Section 3.2(c) (the
"Offeror") must offer (the "Offer"), by written notice to each other Group, to
sell the Shares that it desires to Transfer (the "Shares Subject to the Offer")
to the other Groups. Offers under this Section 3.3(d) shall be irrevocable for
so long as any Group has the right to purchase any Shares Subject to the Offer.
Offers shall be delivered by the Offeror to each other Group and shall state (i)
the number of shares of
<PAGE>
14
Common Stock that the Offeror proposes to Transfer, (ii) whether or not the
intended method of Transfer is by underwritten public offering, (iii) the price
per share at which the Offeror proposes to sell the Shares Subject to the Offer
in a Public Transaction and (iv) the Offer Expiration Time.
(e) Bankruptcy and Certain Other Events. If any of the
following events occur:
(i) the filing of a petition in bankruptcy by a Party, the
filing of a petition in bankruptcy against a Party that is not
dismissed within 90 days, the appointment of a receiver of a Party's
property or the admission by a Party of its inability to pay its debts
generally; or
(ii) any involuntary Transfer by a Party (including by
operation of law);
then such Party, or its transferee, as the case may be (the "Offeror"), shall be
deemed to have made an Offer (the "Offer") to sell all Shares owned by such
Party, in the case of an event under clause (i) above, or all Shares so
Transferred, in the case of an event under clause (ii) above (the "Shares
Subject to the Offer") to the other Groups for the Purchase Price determined
pursuant to Section 3.4(f), and such Party shall promptly deliver written notice
of the Offer to the other Groups. If the Offer is not accepted to the extent
required by Section 3.4(b) prior to the Offer Expiration Time, the Offeror (or
in the case of clause (ii) of this Section, the Offeror's transferee) may retain
such Shares, but such Shares shall remain subject to this Agreement.
(f) Certain Indirect Transfer Transactions. If (i) any Party
ceases to be a member of its Group, other than pursuant to Section 3.2(d), such
Party shall be deemed to have Transferred all of its Shares, and such Party
("Offeror") shall promptly notify each other Group of such event and offer (the
"Offer"), by written notice to each other Group, to sell all Shares owned by
such Party (the "Shares Subject to the Offer") to the other Groups for the
Purchase Price determined pursuant to Section 3.4(f). Offers under this Section
3.3(f) shall (i) be in writing, (ii) be irrevocable for so long as any Group has
the right to purchase any Shares Subject to the Offer, (iii) be sent by the
Offeror to each other Group, (iv) contain a description of the event resulting
in the Offer, (v) contain the name and address of the new Ultimate Parent Entity
of the Offeror, and (vi) state the Offer Expiration Time.
(g) Invalid Transfers. Any Transfer or attempted Transfer in
breach of this Agreement ("Invalid Transfer") shall be void and of no effect;
provided that one or more Parties who own at least a majority of the Common
Stock owned by all Parties may determine to treat any Invalid Transfer as an
involuntary Transfer pursuant to
<PAGE>
15
Section 3.3(e)(ii), in which event all of the other Groups shall have the Rights
provided in Section 3.3(e)(ii).
3.4 Procedures with Respect to Transfers Subject to Section
3.3.
(a) Offer Date; Shares Subject to the Offer; Election
Procedure. The first date an Offer pursuant to Section 3.3 has been deemed
received pursuant to Section 6.3 by all other Groups (or, in the case of a
deemed Offer pursuant to Section 3.3(e) or (f), if no such written notice is
delivered by the Offeror, on the date the other Groups receive evidence,
satisfactory to them, of such deemed Transfer by the Offeror) shall be the
"Offer Date." With respect to any Offer made or deemed made pursuant to Section
3.3 (b), (c), (d), (e) or (f), the other Groups shall have the option and
preferential right, but shall not be obligated, to elect by the Offer Expiration
Time, to purchase the Shares Subject to the Offer. Each Group desiring to
purchase Shares Subject to the Offer shall, prior to the Offer Expiration Time,
deliver a written notice to the Offeror with a copy to each other Group stating
that such Group elects to purchase up to one-half of the Shares Subject to the
Offer. If the other Groups elect to purchase some but not all of the Shares
Subject to the Offer, the Group, if any, that elected to purchase all of the
Shares Subject to the Offer that it was eligible to purchase (the "Electing
Offeree") shall have 10 business days to deliver a written notice to the Offeror
with a copy to each other Group stating the number of additional Shares Subject
to the Offer, if any, that such Electing Offeree elects to purchase, and the
Offer Expiration Time shall be extended for such period.
(b) Requirement to Purchase Some or All. With respect to
Offers made, or deemed made, pursuant to Section 3.3 (d), (e) or (f), the other
Groups shall not be required to elect collectively to purchase all of the Shares
Subject to the Offer, but instead may elect to purchase a portion thereof, in
which event the Offeror shall be obligated to sell that portion to the other
Groups and shall be entitled to Transfer only that portion of the Shares Subject
to the Offer that are not purchased by the other Groups. With respect to Offers
made pursuant to Section 3.3(b) or (c), if the other Groups fail to elect to
purchase all of the Shares Subject to the Offer, then the other Groups shall be
deemed not to have accepted the Offer and the Offeror shall be permitted to
Transfer all of the Shares Subject to the Offer on the terms set forth in the
applicable paragraph of Section 3.2 and subject to the provisions of Section
3.4(d).
(c) Election to Purchase. If one or more of the other Groups
elect to purchase the Shares Subject to the Offer to the extent required by
Section 3.4(b), then the Offer shall be deemed accepted to such extent, and the
Offeror shall promptly notify in writing (the "Positive Receipt Notice") each
Group electing to purchase Shares Subject to the Offer (the "Participating
Offerees"). The Positive Receipt Notice shall specify the number of Shares that
each Participating Offeree is obligated to purchase and the time, date and place
of
<PAGE>
16
the closing of the acquisition of Shares Subject to the Offer by the
Participating Eligible Offerees (the "Closing").
(d) Election Not to Purchase; Terms of Transfer to Third
Party. If the other Groups do not elect to purchase all of the Shares Subject to
the Offer made under Section 3.3, the Offeror desiring to make the Transfer
pursuant to Section 3.3 shall be permitted at any time within, but not after,
the time period specified in the applicable paragraph of Section 3.3 or, if no
time period is specified, 90 days after the Offer Expiration Time, to make a
Transfer of all (but not less than all) of the Shares Subject to the Offer,
other than the Shares, if any, to be purchased by the other Groups pursuant to
Section 3.4(c); provided, however, that no such Transfer shall be made (i) on
more favorable terms (including lower price) than the terms specified in the
Offer, (ii) in the case of an Offer pursuant to Section 3.3(b) or (c), to a
Person other than the proposed transferee consented to by the other Groups or
specified in the Acquisition Proposal, as the case may be or (iii) in the case
of an Offer pursuant to Section 3.3(d), in a manner other than that specified in
the Offer.
(e) Closing. Unless otherwise agreed to by the Offeror and
each Participating Offeree, the Closing shall be at 9:00 a.m., on (i) with
respect to any Offer made pursuant to Section 3.3 in which the Purchase Price
for all Shares Subject to the Offer is less than $10,000,000, the 10th business
day following the date of the applicable Positive Receipt Notice; and (ii) with
respect to any other Offer made pursuant to Section 3.3, the 40th business day
following the date of the applicable Positive Receipt Notice, subject to any
delay in the Closing permitted pursuant to Section 3.4(g). At the Closing, the
Purchase Price (if cash, in the form of a cashier's check or by wire transfer in
same day funds) shall be delivered to the Offeror or its designee, and the
Offeror shall deliver to the Participating Offerees such certificates
representing the Shares so purchased, duly endorsed for transfer or accompanied
by duly executed stock powers, free and clear of all liens, encumbrances and
adverse claims with respect thereto and such other documents, if any, as are
necessary for the proper Transfer of the Shares so purchased to the
Participating Offerees on the books of the Corporation. For the purpose of the
foregoing, fractional interests shall be sold into the public market with the
net proceeds allocated pro rata among the Participating Offerees.
(f) Amount and Form of Payment. The purchase price with
respect to any Shares Subject to the Offer (the "Purchase Price") shall be equal
to (i) the purchase price specified in the Offer (or if an Acquisition Agreement
is entered into by the Offeror and a third party, the purchase price proposed to
be paid by the applicable third party purchaser under an Acquisition Agreement)
pursuant to Section 3.3(b) or an Acquisition Proposal pursuant to Section
3.3(c), as the case may be, calculated in accordance with this Section 3.4(f),
(ii) the price set forth in the Offer pursuant to Section 3.3(d) or (iii) in the
case of an Offer or deemed Offer pursuant to Section 3.3(e) or (f), 98.5% of the
Volume Weighted Market Price as of the applicable Offer Date of the Shares
Subject to the Offer.
<PAGE>
17
The following additional provisions shall apply to any
proposed Transfer pursuant to Section 3.3(b) or (c): In the case of a proposed
Transfer to a third party for consideration payable solely in cash, the Purchase
Price shall equal the aggregate amount of such cash. In the case of a proposed
Transfer to a third party for consideration consisting either solely of
Marketable Securities or of cash and Marketable Securities, the Purchase Price
shall be equal to the amount of the cash component, if any, and 98.5% of the
Volume Weighted Average Market Price as of the applicable Offer Date of the
Marketable Securities included as consideration. In the case of a proposed
Transfer to a third party for consideration consisting either solely of Other
Securities or of cash and/or Marketable Securities and Other Securities, the
Purchase Price shall be equal to (i) the amount of the cash component, if any,
(ii) 98.5% of the Volume Weighted Average Market Price as of the applicable
Offer Date of the Marketable Securities included as consideration, if any, and
(iii) the fair market value of such Other Securities as determined by an
investment banking firm of national reputation selected by the Participating
Offerees and reasonably acceptable to the Offeror, it being understood that, in
determining the fair market value thereof, such investment banking firm shall
take into account any discount, commission and other direct selling expenses
that the Offeror would incur in selling such Other Securities. In the case of a
proposed Transfer to a third party for which at least 80% of the aggregate
consideration is to be paid in assets related to the businesses operated by the
Offeror, the Purchase Price shall be equal to the sum of (a) the fair market
value of such assets as determined by an investment banking firm of national
reputation selected by the Participating Offerees and reasonably acceptable to
the Offeror and (b) the value of the remaining consideration, valued in
accordance with clauses (i), (ii) and (iii) of the preceding sentence. In the
case of any other proposed Transfer to a third party, the Purchase Price shall
be equal to 90% of the Volume Weighted Average Market Price of the Shares
Subject to the Offer (or the underlying shares of Common Stock, in the case of
Common Stock Equivalents). The Purchase Price of all Shares Subject to the Offer
purchased by any Group pursuant to an Offer made or deemed made under Section
3.3(b) through 3.3(f) shall be paid in cash.
(g) Delay for Approvals. If any Positive Receipt Notice is
delivered by the Offeror, the Offeror and the Participating Offerees shall
cooperate in good faith in obtaining all necessary governmental and other third
party approvals, waivers and consents. Any Closing pursuant to Section 3.4(e)
shall be delayed, to the extent required, until the date that is 5 business days
following the expiration of any required waiting periods under the HSR Act and
the obtaining of all necessary governmental approvals; provided, however, that
in the case of such delay, the Purchase Price shall be increased by the
Applicable Interest Rate from the date that the Closing would have otherwise
occurred; and provided, further, however, such delay shall not exceed 90 days,
if the Purchase Price for all Shares Subject to the Offer is less than
$50,000,000 or 180 days, if the Purchase Price for all shares Subject to the
Offer is $50,000,000 or more, and if governmental approvals and waiting periods
shall not have been obtained or expired, as the case may be, by such 90th or
180th day, as the case may be, following the applicable Preferential Purchase
Closing Date, then the other
<PAGE>
18
Groups shall be deemed to have elected not to purchase any of the Shares Subject
to the Offer and the Offeror shall be entitled to Transfer the Shares Subject to
the Offer in accordance with Section 3.4(d) (except that such 90th or 180th day,
as the case may be, shall be deemed to be the applicable Offer Expiration Time).
3.5 Conditions to Transfer of Rights In Connection with a
Permitted Transfer. In connection with a Transfer permitted hereunder, a Group
may transfer all, but not less than all, of its Rights under this Agreement to
the transferee of shares of Common Stock; provided, however, that any such
transferee shall be required to become a Party to this Agreement by executing an
Adoption Agreement, and shall have all the Duties of a Party hereunder and the
Rights that are expressly provided for herein.
3.6 Restrictions on Certain Acquisitions. (a) Except for the
Acquisitions taking place at the Effective Time pursuant to the Combination
Agreement and as permitted by Section 3.2(a), each Party agrees that neither
such Party nor any member of such Party's Group will Acquire any Shares prior to
January 1, 1997 unless the Designated Parties for each of the other Groups agree
in writing to such Acquisition.
(b) For the entire term of this Agreement, each Party agrees
that neither such Party nor any member of such Party's Group will Acquire
ownership of any Shares (the "Subject Shares") unless (i) such Party gives
notice and an opportunity to participate in such Acquisition to the Designating
Parties for each of the other Groups and (ii) at the time of or prior to such
Acquisition by any member of such Party's Group that is not a Party to this
Agreement, such member executes and delivers an Adoption Agreement. Any notice
pursuant to clause (i) of the preceding sentence shall be in writing and shall
(i) be executed by the Party desiring to Acquire Shares, (ii) specify the type
and number of Shares which such Party desires to Acquire and the purchase price
or range of prices at which such Party desires to Acquire Shares and (iii) the
identity of the persons from whom such Party desires to Acquire such Shares, if
known. Each of the other Parties shall have ten business days after receipt of
such notice to elect to participate in such Acquisition. If any Party elects to
so participate, it shall provide a written acceptance notice to the Party
proposing such Acquisition and to each other Party prior to the expiration of
such 10 business day period specifying the number of Shares that it elects to
purchase, which number shall not exceed (i) 1/3 of the Subject Shares if there
are three Groups at the time of such proposed Acquisition or (ii) 1/2 of the
Subject Shares if there are two Groups at the time of such proposed Acquisition;
provided, however, that if there are three Groups at the time of such proposed
Acquisition and one Group does not elect to purchase all of the shares that it
could elect to Acquire pursuant to this Section 3.6(b), then the other Group
making an election to Acquire Shares hereunder shall have an additional 5
business days after the expiration of such 10 business day period to elect to
Acquire up to 1/2 of the Subject Shares that the other Group could have, but did
not, elect to Acquire. For greater certainty, the Parties intend by
<PAGE>
19
this Section 3.6(b) to provide a mechanism by which no Group will Acquire any
Shares without offering the other Groups the opportunity to participate equally.
(c) In the event Chevron or any member of its Group elects to
convert shares of Series A Preferred Stock into Common Stock pursuant to Section
4(C)6(A)(i)(a) of the Certificate of Incorporation of the Corporation, then at
any time thereafter, each of the other Groups will be permitted to acquire an
equivalent number of shares of Common Stock in the open market pursuant to this
Section 3.6(c) and neither Chevron nor any member of its Group will be entitled
to participate in such purchase under Section 3.6(b). Chevron agrees that it
will not convert any shares of Series A Preferred Stock pursuant to Section
4(C)(6)(A)(i)(a) of the Certificate of Incorporation of the Corporation unless
(i) it shall have given each of the Parties hereto at least 20 business days'
prior written notice of its intention to make such conversion, which notice
shall set forth the number of shares of Series A Preferred Stock that Chevron
intends to convert, the basis under the Certificate of Incorporation of the
Corporation for such conversion and the date of such conversion and (ii) none of
the other Parties hereto shall have notified Chevron in writing prior to the
conversion date specified in Chevron's notice that such Party desires to Acquire
a number of shares of Common Stock up to the number of shares to be received by
Chevron on such conversion. Chevron agrees that, if any Party gives the notice
referred to in clause (ii) of the previous sentence, Chevron shall not effect
such conversion until the earlier of the date on which such other Party can
effect the purchase referred to in its notice or the date that is 70 days after
the conversion date specified in Chevron's notice.
3.7 Effect of Distributions and Certain Transactions. If, in
connection with any Offer, any record date for any dividend or distribution by
the Corporation (other than any regular quarterly cash dividend) or any record
date for the issuance of any securities of the Corporation or any other Person
in respect of Common Stock of the Corporation in connection with any exchange,
merger, recapitalization, consolidation, reorganization or other transaction
involving the Corporation (in any such case, a "Record Date") occurs on or after
the date on which the Purchase Price is determined and prior to the Closing,
then the Participating Offeree shall be entitled to receive any such dividends,
distributions or securities, as the case may be, in respect of the Common Stock
they acquire pursuant to such Offer and appropriate documentation shall be
delivered at the Closing by the Offeror to evidence the Participating Offerees'
right to receive such dividends, distributions or securities.
<PAGE>
20
ARTICLE IV
EFFECTIVENESS; TERMINATION
4.1 Effectiveness and Term. The provisions of this Agreement
shall become effective at the Effective Time and no Party shall have any Duties
or Rights hereunder prior to such time. If the Combination Agreement is
terminated in accordance with its terms, the provisions of this Agreement shall
be null and void and of no further force or effect and this Agreement shall be
deemed terminated. Following the Effective Time, this Agreement shall continue
for an initial term of 10 years. Such term shall be extended for a period of up
to 3 additional years if any Class A Group so elects by notice to the Designated
Party for each other Group at any time prior to the date that is 90 days prior
to the tenth anniversary of the Effective Time, and will automatically renew on
an annual basis for an additional year commencing on the last day of the initial
term or, if extended, the last day of the renewal term, unless a Party objects
to such renewal not less than 90 days prior to commencement of a renewal period
or unless, in each case, the Agreement is terminated earlier pursuant to Section
4.2.
4.2 Termination. This Agreement shall terminate and no Party
shall have any further Duties or Rights hereunder upon the earliest to occur of
(i) the date on which all Groups having Rights under this Agreement collectively
own less than 30% of the Common Stock, (ii) the date of the dissolution,
liquidation or winding-up of the Corporation without creation of a successor
corporation, (iii) 10 business days following the date of the delivery to the
other Parties of a written termination notice executed by the Designated Party
of a Class A Group that owns in excess of 50% of the Common Stock, which notice
shall include copies of a consent to such termination by each other remaining
Class A Group and (iv) 10 business days following the date of the delivery to
the other Parties of a written termination notice executed by the Designated
Party of a Class A Group that owns at least 75% of the Common Stock.
ARTICLE V
AGREEMENTS OF GENERAL EFFECT
5.1 Shares Subject to this Agreement. Except as otherwise
provided for herein, all Shares now or hereafter owned by any Party hereto or
any member of its Group shall be subject to the terms of this Agreement. For
purposes of determining the Common Stock owned by a Group, such determination
shall be made by aggregating the ownership of all members of such Group but
without duplication so that a share of Common Stock will be deemed owned by only
one member of the Group.
<PAGE>
21
5.2 Legends. (a) A copy of this Agreement shall be filed with
the Secretary of the Corporation. At the Effective Time, each Party shall
request that the Corporation cause each certificate representing Shares to carry
a legend as follows:
THIS SECURITY IS SUBJECT TO CERTAIN VOTING AGREEMENTS,
RESTRICTIONS ON TRANSFER, AND OTHER TERMS AND CONDITIONS SET
FORTH IN A STOCKHOLDERS AGREEMENT, DATED AS OF MAY 22, 1996, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE CORPORATION.
(b) Upon the acquisition of additional Shares after the date
hereof, each Party shall cause each certificate representing such shares to
carry the above legend.
5.3 Rights and Duties. Each Party acknowledges and agrees
that: (i) as of the time the first member of its Group becomes a Party to this
Agreement, such Group acquires Rights which may be transferred only in
accordance with the terms of this Agreement; and (ii) notwithstanding any such
transfer of Rights, such Party remains bound by and continues to have Duties
under this Agreement until such Party ceases to be a Party hereto in accordance
with this Agreement. A Party which is a member of a Group that has transferred
all of its Rights under this Agreement shall remain subject to all of its Duties
under this Agreement until such time as its Group ceases to own Shares
representing at least 5% of the outstanding shares of Common Stock, at which
time all members of such Group shall cease to be Parties to this Agreement.
Except as provided in Section 3.5, no transferee of Shares shall accede to any
of the Rights of any Group hereunder or shall be required to become a Party to
this Agreement.
5.4 Designated Parties; Change in Number of Shares Owned. The
Designated Party of each Group shall have exclusive authority to act and receive
notices on behalf of such Group under this Agreement. Each Party shall provide
all necessary cooperation and information to its Designated Party to enable such
Designated Party to fulfill such Party's Duties, but no failure of a Designated
Party to fulfill a Party's Duties shall excuse the Party from any
non-performance of such Duties. A Designated Party shall notify the other
Designated Parties if it ceases to be the Designated Party of its Group; such
notice shall name and be subscribed to by the new Designated Party of such
Group. A Designated Party shall notify the other Designated Parties if any Party
ceases to be a member of its Group. Each Party agrees to notify each of the
other Parties in writing promptly after a change in such Party's ownership of
Common Stock and Common Stock Equivalents and after any event that would result
in such Party ceasing to be a member, or becoming a member, of any Group.
5.5 Taking of Necessary Action. Each Party shall, and shall
cause each member of its Group to perform its Duties hereunder and to take all
reasonable efforts to
<PAGE>
22
influence those individuals whom its Group has nominated as Directors, if any,
to vote as a Director in such a manner as to ensure that the Rights of each
Group under this Agreement are fully effectuated; provided, however, that
nothing in this Agreement, express or implied, shall relieve any director of the
Corporation or any of its Subsidiaries, as such, of any fiduciary duties they
may have to the Corporation or its stockholders.
5.6 Restrictions on Other Agreements. Except as otherwise
expressly provided herein, no Party shall grant any proxy or enter into or agree
to be bound by any voting trust with respect to its Shares nor shall any Party
enter into any stockholder agreement or arrangements of any kind (other than the
HM Stockholders Agreement) with any Person with respect to Shares (whether or
not such agreements and arrangements are with other Parties), including, without
limitation, agreements or arrangements with respect to the acquisition,
disposition or voting of Shares.
5.7 Other Activities of the Parties; Fiduciary Duties. It is
understood and accepted that the Parties and their Affiliates have or may
hereafter have interests in other business ventures that are or may be
competitive with the activities of the Corporation and its Subsidiaries and
that, to the fullest extent permitted by law, nothing in this Agreement shall
limit the current or future business activities of any of the Parties or any of
their respective Affiliates, whether or not such activities are competitive with
those of the Corporation or any of its Subsidiaries or otherwise. Except as
expressly provided herein, nothing in this Agreement shall limit in any manner
the ability of any Party to exercise its Rights under this Agreement or as a
stockholder of the Corporation and this Agreement shall not create, or be deemed
or interpreted to create, any fiduciary or similar duty of any Party owing to
any other Party or the Corporation; provided, however, that nothing in this
Agreement, express or implied, shall relieve any officer or director of the
Corporation or any of its Subsidiaries, as such, of any fiduciary duties they
may have to the Corporation or its stockholders.
5.8 Late Payment. If any Party does not timely pay in full any
amount required of it under this Agreement, interest shall accrue on the amount
of such payment not timely made, from the day such amount is owed until paid in
full, at the Applicable Interest Rate.
5.9 U.S. Currency. All payments required or permitted
hereunder shall be paid in U.S. dollars or other lawful currency constituting
legal tender of the United States of America.
5.10 International Joint Ventures. For a period of two years
from the Effective Time, the written consent of each Class A Group will be
required for the formation of any partnership or other business arrangement
involving shared ownership between the Corporation and any member of a Class A
Group, provided that such consent will not be required for any such arrangement
involving crude oil, or products refined from crude oil or
<PAGE>
23
natural gas liquids or liquified petroleum gases involving Caltex Petroleum
Corporation directly or through one or more members of the Chevron Group.
Thereafter, no Group will, either directly or indirectly, form any partnership
or other business arrangement involving shared ownership between the Corporation
and any member of such Group without prior consultation with each Class A Group.
ARTICLE VI
MISCELLANEOUS
6.1 Amendment; Waivers. This Agreement may only be altered,
supplemented, amended or waived by the written consent of each Party under this
Agreement; provided, however, that no consent will be required to be obtained
from a Party with Duties but not Rights under this Agreement if such Party is
released from its Duties upon the effectiveness of such alteration, supplement,
amendment or waiver. Any Group may (without the consent of any other Person)
waive, in writing, any Duty owed to it hereunder by any other Group and any
Group may (without the consent of any other Person) waive, in writing, any Right
it has hereunder. Any waiver permitted hereunder may be made prospectively or
retroactively.
6.2 Assignment. Except as otherwise expressly provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the Parties and their permitted assigns; provided, however, assigns
shall only have those Rights that are expressly provided for herein in
accordance with Section 3.5. No such assignment shall relieve the assignor from
any liability accruing hereunder prior to an assignment permitted hereunder.
6.3 Notices. Any and all notices, designations, consents,
offers, acceptances, or other communications provided for herein (each a
"notice") shall be given in writing by overnight courier, telegram, or telecopy
which shall be addressed, or sent, to the respective addresses or telecopy
numbers of the Designated Parties set forth on Schedule I (or such other address
or telecopy number as any Designated Party may specify by notice). All notices
shall be deemed effective, delivered and received (a) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified above and receipt
thereof is confirmed; (b) if given by overnight courier, on the business day
immediately following the day on which such notice is delivered to a reputable
overnight courier service; or (c) if given by telegram, when such notice is
delivered at the address specified above.
6.4 Counterparts. This Agreement may be executed in two or
more counterparts and each counterpart shall be deemed to be an original and
which counterparts together shall constitute one and the same agreement of the
parties hereto.
<PAGE>
24
6.5 Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, or extend
the scope or intent of this Agreement or any provisions hereof.
6.6 Choice of Law. This Agreement shall be governed by the
internal laws of the State of Delaware without regard to the principles of
conflicts of laws thereof.
6.7 Entire Agreement. This Agreement contains the entire
understanding of the parties hereto respecting the subject matter hereof and as
of the Effective Time will supersede all prior agreements, discussions and
understandings with respect thereto, including, without limitation, the
Stockholders Agreement dated as of October 21, 1994 among British Gas, NOVA, Old
NGC and certain other parties.
6.8 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
6.9 No Partnership. No term or provision of this Agreement
shall be construed to establish any relationship of partnership, agency or joint
venture between the parties hereto.
6.10 Number; Gender; Without Limitation; Interpretation of
Certain Defined Terms. Pronouns, wherever used in this Agreement, and of
whatever gender, shall include Persons of every kind and character, and the
singular shall include the plural whenever and as often as may be appropriate.
Any reference herein to "including" and words of similar import refer to
"including without limitation". When reference is made herein to one or more
Groups or other specified Parties or Persons, the determination as to which
Persons are thereby referenced shall be made as of the time in question.
6.11 Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties hereto shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which approximates as nearly as possible that
of the invalid, illegal or unenforceable provisions.
6.12 Indemnification. Each Party (the "Indemnitor") hereby
agree to protect, defend, indemnify and hold harmless all other Parties and
their respective successors, heirs and assigns (the "Indemnitees") against any
and all claims, lawsuits,
<PAGE>
25
damages and other liabilities and expenses (including reasonable attorneys'
fees) suffered or incurred by any of the Indemnitees and which arise out of any
breach by the Indemnitor of its representations, warranties, covenants or other
obligations hereunder.
6.13 Specific Performance. The Parties hereto acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions to prevent or cure any
breach of this Agreement and to enforce specifically the provisions of this
Agreement, this being in addition to any other remedy to which any Party may be
entitled by law or equity. The Parties further agree that none of the Parties
hereto shall raise the defense that there is an adequate remedy at law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written, but effective for all purposes as
of the Effective Time.
BG HOLDINGS, INC.
By: /S/ Hugh A. Tarpley
Printed Name: Hugh A. Tarpley
Title: President - BG Americas
NOVA GAS SERVICES (U.S.) INC.
By: /s/ Jack S. Mustoe
Printed Name: Jack S. Mustoe
Title: Director
CHEVRON U.S.A. INC.
By: /s/ B.J. Koc
Printed Name: B.J. Koc
Title: Vice President - Finance
<PAGE>
EXHIBIT "A"
ADOPTION AGREEMENT (form)
This Adoption Agreement ("Adoption") is executed pursuant to
the terms of the Stockholders Agreement dated as of ___________, 1996, a copy of
which is attached hereto and is incorporated herein by reference (the
"Stockholders Agreement"), by the transferee ("Transferee") executing this
Adoption. By the execution of this Adoption, the Transferee agrees as follows:
1. Acknowledgment; Representations and Warranties. (a)
Transferee acknowledges that Transferee is acquiring _____ [number of shares to
be acquired to be inserted] shares of the Common Stock from a Party, subject to
the terms and conditions of the Stockholders Agreement. Capitalized terms used
herein without definition are defined in the Stockholders Agreement and are used
herein with the same meanings set forth therein. Transferee represents and
warrants to the other Parties to the Stockholders Agreements that as of the date
hereof (i) Transferee has full power and authority to execute and deliver this
Adoption Agreement and the execution and delivery by such Transferee of this
Adoption Agreement have been duly authorized by all necessary action; (ii) this
Adoption Agreement has been duly and validly executed and delivered by
Transferee and constitutes the binding obligation of Transferee, enforceable
against Transferee in accordance with its terms and does not conflict with any
other agreement or arrangement with respect to Common Stock or Common Stock
Equivalents, including, without limitation, agreements or arrangements with
respect to the acquisition, disposition or voting of shares of Common Stock or
Common Stock Equivalents; (iii) Transferee owns the number of shares of Common
Stock and Common Stock Equivalents, if any, indicated below their signature, and
such shares are owed by Transferee free and clear of all liens and other
encumbrances arising by, through or under Transferee except for this Adoption
Agreement; and (iv) Transferee is not a party to any agreement or arrangement
with respect to the acquisition, disposition or voting of Shares of Common Stock
or Common Stock Equivalents.
(b) Transferee represents and warrants to the other Parties
that as of the date hereof it is a direct or indirect wholly owned subsidiary of
[name of Ultimate Parent Entity], its Ultimate Parent Entity, and that
[_______________] is the Designated Party of its Group. Transferee further
represents that the total number of shares owned by its Group is _____________.
2. Agreement. Transferee (i) agrees that the shares of the
Common Stock acquired by Transferee, and shares of Common Stock and Common Stock
Equivalents that are currently owned or that may be acquired by Transferee in
the future, shall be bound by and subject to the terms of the Stockholders
Agreement pursuant to the terms hereof, and (ii) hereby adopts the Stockholders
Agreement with the same force and effect as if it were originally a Party
thereto.
<PAGE>
A-2
3. Notice. Any notice required as permitted by the
Stockholders Agreement shall be given to Transferee at the address listed below
Transferee's signature below.
[4. Joinder. The spouse of the undersigned Transferee, if
applicable, executes this Adoption to acknowledge its fairness and that it is in
such spouse's best interests, and to bind such spouse's community interest, if
any, in the shares of common stock and other securities referred to above and in
the Stockholders Agreement to the terms of the Stockholders Agreement.]
<PAGE>
A-3
EXECUTED AND DATED this the ___ day of __________, 19__.
TRANSFEREE:
By:___________________________
Title:________________________
Address:______________________
With a copy to _______________
Number of Shares:_____________
TRANSFEROR:
By:___________________________
Title:________________________
Address:______________________
Acknowledged:
BG Holdings, Inc.
By:___________________________
NOVA Gas Services (U.S.) Inc.
By:___________________________
Chevron U.S.A. Inc.
By:___________________________
<PAGE>
Schedule I
<TABLE>
<CAPTION>
Effective Time Common Stock and
NGC Party Common Stock Equivalents Ownership
- --------- ----------------------------------
<S> <C>
BG Holdings, Inc. 38,623,211 shares of Common Stock
Address:
1100 Louisiana, Ste 2500
Houston, TX 77002
Attn: Hugh Tarpley, President - BG Americas
Telecopier: (713) 754-7785
with copies to:
British Gas plc
Rivermill House
152 Grosvenor Road
London SW1V 3JL England
Attn: William M. Friedrich, General Counsel
Telecopier: 011-44-171-269-4891
and:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attn: Alfred J. Ross, Jr.
Telecopier: (212) 848-7179
NOVA Gas Services (U.S.) Inc. 38,623,211 shares of Common Stock
Address: 690 Mechanic Street
Leominster, MA 01453
Attn: Dave Carpenter, Secretary
Telecopier: (508) 840-6683
with copies to:
Jack S. Mustoe
Senior Vice President and General Counsel
NOVA Corporation
801 Seventh Avenue, S.W.
Calgary, Alberta CANADA T2P 3P7
Telecopier: (403) 261-3557
and:
Alan Talkington
Orrick Herrington & Sutcliffe
400 Sansome Street
San Francisco, CA 94111
Telecopier: (415) 773-5759
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Chevron U.S.A. Inc. 38,623,211 shares of Common Stock and
Address: 1301 McKinney Street 7,815,363 shares of Series A Preferred Stock
Houston, TX 77010
Attn: President of Chevron U.S.A. Production
Company
With copies to:
Harvey D. Hinman
Vice President and General Counsel
Chevron Corporation
575 Market Street
San Francisco, CA 94105
Telecopier: (415) 894-6017
and:
Terry Michael Kee
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier: (415) 982-1200
</TABLE>
I-2
EXHIBIT 14
VOTING AGREEMENT
VOTING AGREEMENT ("Agreement") dated as of May 22, 1996, by
and between the undersigned stockholder (the "Stockholder") of NGC CORPORATION,
a Delaware corporation ("NGC") and CHEVRON U.S.A. INC., a Pennsylvania
corporation ("Chevron").
W I T N E S S E T H:
WHEREAS, contemporaneously with the delivery of this
Agreement, NGC, Chevron and Midstream Combination Corp. ("Newco") are entering
into that certain Combination Agreement and Plan of Merger dated as of May 22,
1996 (the "Combination Agreement"), providing for, among other items, the merger
of NGC with and into Newco (the "Merger");
WHEREAS, Stockholder owns the number of shares of NGC
Corporation Stock shown on Schedule I hereto (the "Shares");
WHEREAS, in order to induce Chevron to enter into the
Combination Agreement, Stockholder agrees to vote the Shares in favor of the
proposed Merger and the transactions contemplated by the Combination Agreement,
upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of Chevron's entering into
the Combination Agreement and the mutual covenants and agreements set forth
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Voting. Stockholder hereby revokes any and all previous
voting agreements and proxies granted with respect to the Shares which
are inconsistent with this Agreement. Stockholder agrees to vote the
Shares at any meeting or action by written consent at which a vote is
taken or requested (i) in favor of the Merger pursuant to the
Combination Agreement and the transactions contemplated thereby and
(ii) in opposition to any proposal (other than pursuant to the
Combination Agreement) for the amendment of NGC's Certificate of
Incorporation or Bylaws or any merger, consolidation, sale, or purchase
of any assets, reorganization, recapitalization, liquidation or winding
up of or by NGC or sale of all or substantially all of the stock or
assets of a subsidiary of NGC, in any case, other than as permitted or
contemplated by the Combination Agreement (an "Other Proposal"). Upon
the
<PAGE>
2
request of Chevron, Stockholder will execute a proxy, in favor of
Chevron, to vote the Shares (i) in favor of the Merger pursuant to the
Combination Agreement and transactions contemplated thereby and (ii) in
opposition to any Other Proposal. Any such proxy will be irrevocable
for the term of this Agreement and will be coupled with any interest.
2. No Grant of Other Proxies. Except pursuant to this
Agreement or as permitted or contemplated by the Combination Agreement,
Stockholder shall not, without the prior written consent of Chevron,
directly or indirectly grant any proxies or enter into any voting trust
or other agreement or arrangement with respect to the voting of the
Shares inconsistent with this Agreement.
3. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by an court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns, but except as otherwise specifically provided, neither this
Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by any of the parties without the prior
written consent of the other.
(c) Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution
and delivery of a written agreement executed by the parties hereto.
(d) Specific Performance. The parties hereto acknowledge that
Chevron will be irreparably harmed and that there will be no adequate
remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition
to any other remedies which may be available to Chevron upon any such
violation, Chevron shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other
means available to Chevron at law or in equity.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if
delivered in person, by
<PAGE>
3
cable, telecopy, telegram or telex, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) to the
respective parties as follows:
If to Chevron:
Chevron U.S.A. Inc.
1301 McKinney
Houston, Texas 77010
Attention: Mr. David Stevenson
Facsimile No.: (713) 754-5777
With a copy to:
Mr. Terry Michael Kee
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Facsimile No.: (415) 983-1200
If to Stockholder, to the address set forth on Schedule I,
or to such other address any party may have furnished to the other in
writing in accordance herewith, except that notices of change of
address shall only be effective upon receipt.
(f) Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Delaware as applied to contracts entered into solely between residents
of, and to be performed entirely in, such state.
(g) Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof,
and supersedes all prior negotiations and understandings between the
parties with respect to such subject matters.
(h) Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or
interpretation of this Agreement.
(i) Definitions. All capitalized terms used herein shall have
the meanings defined in the Combination Agreement, unless otherwise
defined herein.
(j) Term and Effect. The obligation of Stockholder under this
Agreement shall terminate on the earliest of (i) the effective date of
the Merger as provided in the
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4
Combination Agreement, (ii) the date of termination of the Combination
Agreement in accordance with Article 13 thereof or (iii) December 31,
1996.
(k) Counterparts. This Agreement shall be executed in one or
more counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed on the date first above written.
CHEVRON U.S.A. INC.
By: /s/ B. J. Koc
-------------------------------
Title: Vice President Finance
BG HOLDINGS, INC.
By: /s/ Hugh A. Tarpley
-------------------------------
Title: Senior Vice President
<PAGE>
Schedule I
Name and Address of NGC Stockholder Number of Shares
BG Holdings, Inc. 38,623,211
1100 Louisiana
Suite 2500
Houston, Texas 77002
