<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
AMOCO CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMOCO CORPORATION
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
[LOGO]
OCTOBER 30, 1998
Dear Fellow Shareholders:
Enclosed are a Notice of Special Meeting, a Proxy Statement/Prospectus and a
voting form in connection with a special meeting of shareholders (the "Special
Meeting") of Amoco Corporation ("Amoco") to be held at 3:00 p.m. local time, on
December 10, 1998, at Chicago Hilton & Towers, 720 South Michigan Avenue,
Chicago, Illinois. At the Special Meeting you will be asked to consider and vote
on a proposal to approve the Agreement and Plan of Merger, dated as of August
11, 1998, as amended as of October 22, 1998 (the "Merger Agreement"), among The
British Petroleum Company p.l.c., an English public limited company ("BP"),
Amoco and Eagle Holdings, Inc., an Indiana corporation and wholly owned
subsidiary of BP ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into Amoco, with Amoco continuing as the surviving corporation in the
merger (the "Merger"). Pursuant to the Merger, Amoco will become a direct or
indirect wholly owned subsidiary of BP, and BP will be renamed "BP Amoco p.l.c."
("BP Amoco").
The terms of the Merger Agreement provide that each outstanding share of
Amoco common stock (an "Amoco Share") will, upon the terms and subject to the
conditions set forth in the Merger Agreement, be converted into 3.97 ordinary
shares of BP Amoco ("BP Amoco Ordinary Shares"), which you will receive in the
form of American depositary shares ("BP Amoco ADSs"). Because each BP Amoco ADS
represents six BP Amoco Ordinary Shares, you will receive approximately 0.66167
of a BP Amoco ADS in exchange for each Amoco Share you own. The Depositary (as
defined herein) will not issue fractional BP Amoco ADSs. You will instead be
paid cash for your fractional BP Amoco ADS interests. The closing per share
price on the New York Stock Exchange Composite Tape of the BP American
Depositary Shares on October 26, 1998 was $85.
The Amoco Board of Directors and Amoco management believe that the
combination of the two companies will create a more competitive global energy
and petrochemical company than either Amoco or BP would be on its own. We expect
significant synergies and operating efficiencies to be achieved through the
combination. In addition, we believe that the best investment opportunities, in
terms of rates of return on capital employed, will be ones that, because of
location or complexity, will be available only to companies with the greatest
financial resources. The completion of the Merger would place BP Amoco among the
world's oil "super-majors."
Details of the business to be considered at the Special Meeting are set
forth in the accompanying Notice and Proxy Statement/Prospectus, which you
should read carefully in its entirety. The Board of Directors of Amoco has
established October 19, 1998 as the record date for determining holders of Amoco
Shares entitled to notice of, and to vote at, the Special Meeting, and only
record holders of Amoco Shares at the close of business on such record date are
entitled to notice of, and to vote at, the Special Meeting. Under Indiana law,
holders of Amoco Shares are not entitled to dissenters' rights in connection
with the Merger.
AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF AMOCO, BY A UNANIMOUS
VOTE OF DIRECTORS PRESENT, HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, ARE FAIR TO AND IN THE
BEST INTERESTS OF AMOCO AND SHAREHOLDERS OF AMOCO, HAS ADOPTED THE MERGER
AGREEMENT AND RECOMMENDS THAT ALL SHAREHOLDERS VOTE IN FAVOR OF THE PROPOSAL TO
APPROVE THE MERGER AGREEMENT. THE BOARD OF DIRECTORS OF AMOCO HAS RECEIVED THE
WRITTEN OPINION OF ITS FINANCIAL ADVISOR, MORGAN STANLEY & CO. INCORPORATED,
DATED AUGUST 11, 1998, TO THE EFFECT THAT, AS OF SUCH DATE AND SUBJECT TO
CERTAIN CONSIDERATIONS, THE EXCHANGE RATIO PURSUANT TO THE MERGER AGREEMENT WAS
FAIR FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF AMOCO SHARES.
To be certain that your shares are voted at the Special Meeting, whether or
not you plan to attend in person, please sign, date and return the enclosed
voting form as soon as possible. Your vote is important. By obtaining an
admission ticket, you may attend the Special Meeting and vote in person if you
wish, whether or not you have executed and returned your voting form. You may
revoke your voting form at any time prior to its use.
SINCERELY,
/S/ H.L. FULLER
H. LAURANCE FULLER
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
AMOCO CORPORATION
200 East Randolph Drive
Chicago, Illinois 60601
---------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 10, 1998
---------------------------------------------------
To the Shareholders of Amoco Corporation:
Notice is hereby given that a special meeting of shareholders (the "Special
Meeting") of Amoco Corporation, an Indiana corporation ("Amoco"), will be held
at 3:00 p.m. local time, on December 10, 1998, at Chicago Hilton & Towers, 720
South Michigan Avenue, Chicago, Illinois, to consider and vote on a proposal to
approve the Agreement and Plan of Merger, dated as of August 11, 1998, as
amended as of October 22, 1998 (the "Merger Agreement"), among The British
Petroleum Company p.l.c., an English public limited company ("BP"), Amoco, and
Eagle Holdings, Inc., an Indiana corporation and wholly owned subsidiary of BP
("Merger Sub"), pursuant to which Merger Sub will be merged with and into Amoco,
with Amoco continuing as the surviving corporation in the merger (the "Merger").
Pursuant to the Merger, Amoco will become a direct or indirect wholly owned
subsidiary of BP, and BP will be renamed "BP Amoco p.l.c."
The accompanying Proxy Statement/Prospectus contains information regarding
the business to be considered at the Special Meeting. A copy of the Merger
Agreement is attached as Appendix A to the Proxy Statement/Prospectus.
Only shareholders of record at the close of business on October 19, 1998,
the record date established by the Board of Directors of Amoco in connection
with the Special Meeting, are entitled to notice of, and to vote at, the Special
Meeting. Under Indiana law, holders of Amoco common stock, without par value,
are not entitled to dissenters' rights in connection with the Merger.
Amoco will issue tickets for admission to the Special Meeting. The voting
form provided to shareholders of record, Amoco Direct Access Plan participants
and Amoco employee benefit plan participants should be used to request tickets,
following the instructions shown on the form. Beneficial shareholders who hold
shares through a third party, such as a broker, should send account statements
or similar documentation of ownership to Amoco when requesting tickets.
You are cordially invited to attend the Special Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE
THE ACCOMPANYING VOTING FORM AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. If
you attend the Special Meeting, you may vote in person if you wish, whether or
not you have executed and returned your voting form. A proxy granted by the
voting form may be revoked at any time prior to its use.
THE BOARD OF DIRECTORS OF AMOCO HAS, BY UNANIMOUS VOTE OF DIRECTORS PRESENT,
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF AMOCO AND
SHAREHOLDERS OF AMOCO, AND HAS ADOPTED THE MERGER AGREEMENT. THE BOARD OF
DIRECTORS OF AMOCO RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL TO APPROVE
THE MERGER AGREEMENT.
By Order of the Board of Directors,
/S/ STEPHEN F. GATES
STEPHEN F. GATES
Vice President, General Counsel
and Corporate Secretary
Chicago, Illinois
October 30, 1998
THE INFORMATION AGENT FOR THE MERGER IS:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE: 1-800-628-8532
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR VOTING FORM.
<PAGE>
<TABLE>
<C> <C> <S>
[LOGO] [LOGO]
PROXY STATEMENT PROSPECTUS
AMERICAN DEPOSITARY SHARES, EACH
REPRESENTING SIX ORDINARY SHARES,
OF NOMINAL VALUE $0.50 EACH, OF
THE BRITISH PETROLEUM COMPANY P.L.C.
</TABLE>
--------------------------
This Proxy Statement/Prospectus is being furnished to holders of common
stock, without par value ("Amoco Shares"), of Amoco Corporation, an Indiana
corporation ("Amoco"), in connection with the solicitation of proxies by the
Board of Directors of Amoco (the "Amoco Board") for use at a special meeting of
shareholders (the "Special Meeting") to be held at 3:00 p.m. local time, on
December 10, 1998, at Chicago Hilton & Towers, 720 South Michigan Avenue,
Chicago, Illinois and at any adjournments or postponements thereof.
The purpose of the Special Meeting is to consider and vote on a proposal to
approve the Agreement and Plan of Merger, dated as of August 11, 1998, as
amended as of October 22, 1998 (the "Merger Agreement"), among The British
Petroleum Company p.l.c., an English public limited company ("BP"), Amoco and
Eagle Holdings, Inc., an Indiana corporation and wholly owned subsidiary of BP
("Merger Sub"), pursuant to which Merger Sub will be merged with and into Amoco,
with Amoco continuing as the surviving corporation in the merger (the "Merger").
Pursuant to the Merger, Amoco will become a direct or indirect wholly owned
subsidiary of BP, and BP will be renamed "BP Amoco p.l.c." ("BP Amoco"). See
"THE MERGER AGREEMENT." The Merger Agreement is attached as Appendix A to this
Proxy Statement/Prospectus.
Upon consummation of the Merger, each Amoco Share outstanding immediately
prior to the Effective Time (as defined herein), other than Excluded Amoco
Shares (as defined herein), will be converted into and canceled in exchange for
the right to receive 3.97 (the "Exchange Ratio") ordinary shares, of nominal
value 25p each or, if a proposed redenomination of BP's ordinary share capital
into U.S. dollars is approved by the requisite vote of shareholders of BP at the
shareholder meetings convened for such purpose and otherwise becomes effective
as contemplated by the Merger Agreement, US$0.50 each ("BP Amoco Ordinary
Shares"), of BP Amoco, which will be in the form of American depositary shares
("BP Amoco ADSs"), each representing six BP Amoco Ordinary Shares, and cash in
lieu of each fractional BP Amoco ADS. The Merger Agreement also provides for the
conversion upon consummation of the Merger of all employee stock options to
purchase Amoco Shares (the "Amoco Stock Options") into options to purchase BP
Amoco Ordinary Shares to be issued in the form of BP Amoco ADSs, appropriately
adjusted to reflect the Exchange Ratio and, in the case of certain Amoco Stock
Options, to comply with applicable federal tax laws. See "THE MERGER
AGREEMENT--Consideration to Be Received in the Merger" and "--Stock Options and
Other Stock Plans." The Merger is intended to qualify for federal income tax
purposes as a "reorganization" under the Internal Revenue Code of 1986, as
amended (the "Code"). See "CERTAIN TAX CONSEQUENCES."
This Proxy Statement/Prospectus also constitutes a prospectus of BP in
respect of the BP Amoco ADSs to be issued to holders of Amoco Shares ("Amoco
Shareholders") in connection with the Merger.
Based on the 954,763,126 Amoco Shares outstanding on the Record Date (as
defined herein), the 24,558,903 Amoco Shares issuable upon exercise of
outstanding Amoco Stock Options prior to the expected date of consummation of
the Merger and the Exchange Ratio, up to 3,887,908,458 BP Amoco Ordinary Shares,
and 647,984,743 BP Amoco ADSs representing such BP Amoco Ordinary Shares, will
be issuable upon consummation of the Merger. In accordance with Section
23-1-44-10 of the Indiana Business Corporation Law, as amended ("Indiana Law"),
Amoco Shareholders are not entitled to exercise dissenter's rights in connection
with the Merger.
Currently outstanding ordinary shares, of nominal value 25p each ("BP
Ordinary Shares"), of BP are proposed to be redenominated into ordinary shares,
of nominal value US$0.50 each, prior to the Merger becoming effective, subject
to the approval of the shareholders of BP at the meetings convened for such
purpose and subject to becoming effective as contemplated by the Merger
Agreement (the "Redenomination"). In the event that the BP Ordinary Shares are
not so redenominated, BP Amoco Ordinary Shares, of nominal value 25p each, will
be issued in the Merger and references to BP Ordinary Shares and BP Amoco
Ordinary Shares in this Proxy Statement/Prospectus should in such event be
construed as referring to ordinary shares, of nominal value 25p each.
Amoco Shares are listed and traded on the New York Stock Exchange, Inc. (the
"NYSE") under the symbol "AN." BP Ordinary Shares are listed and traded on the
London Stock Exchange Limited (the "LSE") and the currently outstanding American
depositary shares, each representing six BP Ordinary Shares ("BP ADSs"), are
listed and traded on the NYSE under the symbol "BP." On August 10, 1998, the
last business day prior to public announcement of the execution of the Merger
Agreement, the last reported per share sale price of Amoco Shares on the NYSE
Composite Transactions Reporting System (the "NYSE Composite Tape"), the closing
middle market quotation for BP Ordinary Shares stated on the Daily Official List
of the LSE and the last reported per share sale price of BP ADSs on the NYSE
Composite Tape were $41.00, 773p and $76.00, respectively, and on October 26,
1998, the last practicable date prior to the printing of this Proxy
Statement/Prospectus, such per share prices were $54.00, 838p and $85.00,
respectively. Based on these reported share prices, the applicable Noon Buying
Rate (as defined herein) and the Exchange Ratio, the implied equivalent per
share values for Amoco Shares with reference to the BP Ordinary Shares and BP
ADSs were $50.11 and $50.29, respectively, on August 10, 1998, and $55.99 and
$56.24, respectively, on October 26, 1998. See "COMPARATIVE MARKET PRICE DATA."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is October 30, 1998, and it is being
mailed or otherwise
delivered to Amoco Shareholders on or about such date.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION...................................................................................... vi
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... vi
CURRENCIES AND EXCHANGE RATES.............................................................................. viii
QUESTIONS AND ANSWERS ABOUT THE BP/AMOCO MERGER............................................................ 1
SUMMARY.................................................................................................... 4
COMPARATIVE MARKET PRICE DATA.............................................................................. 12
COMPARATIVE PER SHARE DATA................................................................................. 13
SELECTED HISTORICAL FINANCIAL DATA......................................................................... 16
RECENT DEVELOPMENTS........................................................................................ 21
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA................................................................ 22
THE SPECIAL MEETING........................................................................................ 24
Date, Time and Place; Purpose.......................................................................... 24
Record Date............................................................................................ 24
Voting and Revocation of Proxies....................................................................... 24
Required Vote; Quorum.................................................................................. 25
Dissenters' Rights..................................................................................... 25
Availability of Independent Accountants................................................................ 25
THE BP EXTRAORDINARY GENERAL MEETING AND THE SEPARATE CLASS MEETING........................................ 26
THE MERGER................................................................................................. 28
Background of the Merger............................................................................... 28
Reasons for the Merger................................................................................. 30
Recommendation of the Amoco Board; Additional Considerations of the Amoco Board........................ 31
Additional Considerations of the BP Board.............................................................. 33
Opinions of Financial Advisors......................................................................... 33
Plans for Amoco After the Merger....................................................................... 39
Interests of Certain Persons in the Merger............................................................. 40
Accounting Treatment................................................................................... 42
Inclusion of BP Amoco in the S&P 500 Index and FTSE 100 Index.......................................... 43
Certain Other Effects of the Merger.................................................................... 43
Forward-Looking Statements May Prove Inaccurate........................................................ 44
REGULATORY MATTERS......................................................................................... 45
U.S. Antitrust......................................................................................... 45
Exon-Florio............................................................................................ 45
European Union......................................................................................... 45
Other Laws............................................................................................. 46
General................................................................................................ 46
CERTAIN TAX CONSEQUENCES................................................................................... 46
General................................................................................................ 46
United States Tax Consequences of the Merger to U.S. Holders........................................... 47
United States Tax Consequences of the Ownership of BP Amoco Ordinary Shares and BP Amoco ADSs.......... 48
United Kingdom Tax Consequences of the Ownership of BP Amoco Ordinary Shares and BP Amoco ADSs......... 50
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
THE MERGER AGREEMENT....................................................................................... 53
General................................................................................................ 53
Consideration to Be Received in the Merger............................................................. 53
Exchange of Amoco Shares............................................................................... 54
Certain Representations and Warranties................................................................. 56
Conduct of Business Pending the Merger................................................................. 56
Acquisition Proposals.................................................................................. 57
Indemnification and Insurance.......................................................................... 57
Directors and Management of BP Amoco Following the Merger.............................................. 58
Conditions to Consummation of the Merger............................................................... 59
Employment Agreements and Certain Other Employee Benefits Matters...................................... 61
Stock Options and Other Stock Plans.................................................................... 62
Termination; Effects of Termination.................................................................... 63
Expenses............................................................................................... 64
Amendment; Waiver...................................................................................... 64
THE STOCK OPTION AGREEMENT................................................................................. 65
General................................................................................................ 65
Notice of Exercise..................................................................................... 66
Repurchase of Option................................................................................... 66
Limitation on Total Profit............................................................................. 66
Maximum Option Price; Adjustments to Number of Option Shares........................................... 67
MARKET PRICE AND DIVIDEND DATA............................................................................. 68
Market Prices.......................................................................................... 68
Dividend Data.......................................................................................... 70
DESCRIPTION OF AMOCO....................................................................................... 72
DESCRIPTION OF BP.......................................................................................... 72
BP AMOCO FOLLOWING THE MERGER.............................................................................. 72
Financial Information.................................................................................. 72
Dividends.............................................................................................. 73
DESCRIPTION OF MERGER SUB.................................................................................. 73
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION........................................... 74
DESCRIPTION OF BP AMOCO ORDINARY SHARES.................................................................... 95
Dividends.............................................................................................. 96
Voting Rights.......................................................................................... 96
Liquidation Rights..................................................................................... 97
Pre-emptive Rights and New Issues of Shares............................................................ 97
Disclosure of Interests in Shares...................................................................... 97
Changes in Capital..................................................................................... 97
Transfer of Shares..................................................................................... 98
General Meetings and Notices........................................................................... 98
Liability of Directors and Officers.................................................................... 98
Registrar.............................................................................................. 98
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES......................................................... 99
American Depositary Receipts........................................................................... 99
Deposited Securities................................................................................... 99
Deposit and Withdrawal of Deposited Securities......................................................... 99
Dividends, Other Distributions, Rights and Changes Affecting Deposited Securities...................... 101
Disclosure of Interests................................................................................ 102
Record Dates........................................................................................... 102
Voting of the Underlying Deposited Securities.......................................................... 103
Actions by Holders..................................................................................... 103
Inspection of Transfer Books........................................................................... 104
Reports................................................................................................ 104
Changes Affecting Deposited Securities................................................................. 104
Amendment and Termination of the Deposit Agreement..................................................... 104
Charges of Depositary.................................................................................. 105
Liability of Holder for Taxes.......................................................................... 105
General Limitations.................................................................................... 106
Registrars and Co-Transfer Agents...................................................................... 107
Canadian Holders....................................................................................... 107
Governing Law.......................................................................................... 107
The Depositary......................................................................................... 107
COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO SHAREHOLDERS....................................... 108
Limitations on Enforceability of Civil Liabilities Under U.S. Federal Securities Laws.................. 108
Proxy Statements and Reports........................................................................... 108
Voting Rights.......................................................................................... 109
Action by Written Consent.............................................................................. 109
Shareholder Proposals and Shareholder Nominations of Directors......................................... 110
Sources and Payment of Dividends....................................................................... 110
Rights of Purchase and Redemption...................................................................... 110
General Meeting of Shareholders........................................................................ 111
Special Meeting of Shareholders........................................................................ 111
Dissenters' Rights..................................................................................... 112
Pre-emptive Rights..................................................................................... 112
Amendment of Governing Instruments..................................................................... 112
Preferred Stock and Preference Stock................................................................... 113
Stock Class Rights..................................................................................... 113
Shareholders' Votes on Certain Transactions............................................................ 113
Rights of Inspection................................................................................... 114
Standard of Conduct for Directors...................................................................... 115
Classification of the Board of Directors............................................................... 115
Removal of Directors................................................................................... 116
Vacancies on the Board of Directors.................................................................... 116
Liability of Directors and Officers.................................................................... 116
Indemnification of Directors and Officers.............................................................. 116
Additional Provisions of Indiana Law................................................................... 117
Shareholders' Suits.................................................................................... 117
Certain Provisions Relating to Share Acquisitions...................................................... 118
Anti-Takeover Measures Under English Law............................................................... 118
Disclosure of Interests................................................................................ 119
Certain London Stock Exchange Listing Requirements..................................................... 120
</TABLE>
iv
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<TABLE>
<CAPTION>
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<S> <C>
DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER.................................................. 121
Directors and Executive Officers....................................................................... 121
Directors Designated by Amoco.......................................................................... 121
Continuing BP Directors................................................................................ 122
Meetings of the Board of Directors; Committees of the Board............................................ 123
Stock Ownership of Directors, Executive Officers and Five Percent Shareholders......................... 123
Compensation of Directors and Executive Officers....................................................... 125
FEES AND EXPENSES.......................................................................................... 126
VALIDITY OF SECURITIES..................................................................................... 126
EXPERTS.................................................................................................... 126
U.K. LISTING PARTICULARS AND CIRCULAR...................................................................... 127
FUTURE SHAREHOLDER PROPOSALS............................................................................... 127
DEFINED TERMS INDEX........................................................................................ 128
Appendix A-- Agreement and Plan of Merger.................................................................. A-1
Appendix B-- Opinion of Morgan Stanley & Co. Incorporated.................................................. B-1
Appendix C-- Opinion of Morgan Guaranty Trust Company of New York.......................................... C-1
Appendix D-- Summary Listing Particulars................................................................... D-1
</TABLE>
v
<PAGE>
AVAILABLE INFORMATION
Amoco and BP are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, Amoco files reports, proxy statements and other
information, and BP files annual reports and certain other information, with the
Securities and Exchange Commission (the "SEC"). The reports, proxy statements
and other information filed by Amoco and BP with the SEC can be inspected and
copied at the SEC's public reference room located at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the public reference
facilities in the SEC's regional offices located at: 7 World Trade Center, 13th
Floor, New York, New York 10048, and Suite 1400, Northwestern Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be obtained
by calling the SEC toll free at 1-800-SEC-0330. The SEC maintains an internet
Website that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC,
including Amoco but not BP. The address of such Website is http://www.sec.gov.
Amoco Shares and BP ADSs are listed on the NYSE and the Amoco Shares are also
listed on the Chicago, Pacific, Toronto and Swiss stock exchanges. As such, any
periodic reports, proxy statements and other information filed with the SEC by
Amoco and BP may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005, and, in the case of Amoco, at the other exchanges on which
Amoco Shares are listed. The primary market for BP Ordinary Shares is the LSE,
and BP Ordinary Shares also trade on stock exchanges in France, Germany, Japan
and Switzerland.
BP has filed with the SEC a Registration Statement on Form F-4 to register
the BP Amoco Ordinary Shares underlying the BP Amoco ADSs to be issued to Amoco
Shareholders in the Merger and a Registration Statement on Form F-6 in respect
of such BP Amoco ADSs (together with all amendments and exhibits thereto,
collectively referred to herein as the "Registration Statements" or,
individually, as a "Registration Statement") pursuant to the Securities Act of
1933, as amended (the "Securities Act"). This Proxy Statement/Prospectus is a
part of the Registration Statement on Form F-4 and constitutes a prospectus of
BP in respect of the BP Amoco ADSs to be issued to Amoco Shareholders in
connection with the Merger, in addition to being a proxy statement of Amoco for
the Special Meeting. As allowed by SEC rules, this Proxy Statement/Prospectus
does not contain all the information you can find in the Registration Statements
or the exhibits to the Registration Statements. Statements contained herein
concerning any documents are not necessarily complete and, in each instance,
reference is made to the copies of such documents filed as exhibits to the
Registration Statements. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT BUSINESS
AND FINANCIAL INFORMATION WHICH IS NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
DOCUMENTS RELATING TO SUCH INFORMATION FOR AMOCO, EXCLUDING EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO AMOCO CORPORATION
SHAREHOLDER SERVICES, P.O. BOX 87703, CHICAGO, IL 60680-0703. TELEPHONE REQUESTS
MAY BE DIRECTED TOLL FREE TO 1-800-638-5672. DOCUMENTS RELATING TO SUCH
INFORMATION FOR BP, EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED HEREIN BY REFERENCE, ARE AVAILABLE WITHOUT CHARGE
UPON REQUEST TO THE COMPANY SECRETARY, THE BRITISH PETROLEUM COMPANY P.L.C.,
BRITANNIC HOUSE, 1 FINSBURY CIRCUS, LONDON EC2M 7BA, ENGLAND OR UPON REQUEST TO
THE CORPORATE SECRETARY, BP AMERICA INC., 200 PUBLIC SQUARE, CLEVELAND, OHIO
44114. TELEPHONE REQUESTS MAY BE DIRECTED TO (216) 586-6915. IN ORDER TO ENSURE
TIMELY DELIVERY OF ANY OF SUCH DOCUMENTS IN ADVANCE OF THE SPECIAL MEETING TO
WHICH THIS PROXY STATEMENT/PROSPECTUS RELATES, ANY REQUEST SHOULD BE MADE BY
DECEMBER 3, 1998.
vi
<PAGE>
The following documents filed with the SEC by Amoco (File No. 1-170-2) are
incorporated herein by reference: (a) Amoco's Annual Report on Form 10-K for the
year ended December 31, 1997 (the "1997 Amoco 10-K"); (b) Amoco's Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 1998 and June 30,
1998; (c) Amoco's Current Report on Form 8-K, filed on August 26, 1998; (d)
Amoco's proxy statement for its 1998 annual meeting of shareholders; and (e) the
description of Amoco Shares which is contained in Amoco's Registration
Statement, filed pursuant to Section 12 of the Exchange Act.
The following documents filed with the SEC by BP (File No. 1-6262) are
incorporated herein by reference: (a) BP's Annual Report on Form 20-F for the
year ended December 31, 1997 (the "1997 BP 20-F") and (b) BP's Reports on Form
6-K, filed on July 6, 1998, August 12, 1998, August 18, 1998, September 4, 1998
and October 23, 1998.
All documents filed by either Amoco or BP pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting will be deemed
to be incorporated herein by reference and to be a part hereof from the date of
filing of such document. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein by reference will be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein or in any other subsequently filed document which is, or is
deemed to be, incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed to
constitute a part hereof, except as so modified or superseded.
No person is authorized to give any information or to make any
representations not contained in this Proxy Statement/Prospectus or in the
documents incorporated herein by reference in connection with the solicitation
and the offering made hereby and, if given or made, such information or
representation should not be relied upon as having been authorized by Amoco or
BP. This Proxy Statement/Prospectus does not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this Proxy
Statement/Prospectus, or the solicitation of a proxy from any person, in any
jurisdiction in which it is unlawful to make such offer, solicitation of an
offer or proxy solicitation. Neither the delivery of this Proxy
Statement/Prospectus nor any distribution of the securities made under this
Proxy Statement/Prospectus hereunder will, under any circumstances, create an
implication that there has been no change in the affairs of Amoco or BP since
the date of this Proxy Statement/Prospectus other than as set forth in the
documents incorporated herein by reference.
vii
<PAGE>
CURRENCIES AND EXCHANGE RATES
References in this Proxy Statement/Prospectus to "dollars," "$" or " CENTS"
are to the currency of the United States (the "U.S.") and references to "pounds
sterling," "pounds," "L," "pence" or "p" are to the currency of the United
Kingdom (the "U.K."). There are 100 pence to each pound. Solely for your
convenience, this Proxy Statement/Prospectus contains translations of certain
pounds sterling amounts into U.S. dollars at specified rates. These translations
should not be taken as assurances that the pounds sterling amounts currently
represent such U.S. dollar amounts or could be converted into U.S. dollars at
the rate indicated or at any other rate, at any time.
In this Proxy Statement/Prospectus, unless otherwise stated, pounds sterling
have been translated into U.S. dollars at a rate of $1.67 per L1.00, the noon
buying rate in New York City for cable transfers in pounds sterling as certified
for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate") on June 30, 1998. On October 26, 1998, the latest practicable date for
which exchange rate information was available prior to the printing of this
Proxy Statement/Prospectus, the Noon Buying Rate was $1.68 per L1.00.
The following table sets forth, for each period indicated, the high and low
Noon Buying Rates for one pound sterling expressed in U.S. dollars, the average
Noon Buying Rate during such period, and the Noon Buying Rate at the end of such
period, based upon information provided by the Federal Reserve Bank of New York:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
High....................................... $ 1.6910 $ 1.7035 $ 1.7123 $ 1.6440 $ 1.6368 $ 1.5900
Low........................................ $ 1.6114 $ 1.5775 $ 1.4948 $ 1.5302 $ 1.4615 $ 1.4175
Average.................................... $ 1.6546 $ 1.6397 $ 1.5733 $ 1.5803 $ 1.5392 $ 1.4964
Period End................................. $ 1.6695 $ 1.6427 $ 1.7123 $ 1.5535 $ 1.5665 $ 1.4775
</TABLE>
The following table sets forth, for each period indicated, the high and low
Noon Buying Rates for one U.S. dollar expressed in pounds sterling, the average
Noon Buying Rate during such period, and the Noon Buying Rate at the end of such
period, based upon information provided by the Federal Reserve Bank of New York:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
High....................................... L0.5914 L0.5870 L0.5840 L0.6083 L0.6109 L0.6289
Low........................................ L0.6206 L0.6339 L0.6690 L0.6535 L0.6842 L0.7055
Average.................................... L0.6044 L0.6099 L0.6356 L0.6328 L0.6497 L0.6683
Period End................................. L0.5990 L0.6088 L0.5840 L0.6437 L0.6384 L0.6768
</TABLE>
viii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE BP/AMOCO MERGER
Q. WHY ARE THE TWO COMPANIES PROPOSING TO MERGE? HOW WILL I BENEFIT?
A. Amoco and BP believe that the combination of the two companies will create a
more competitive global energy and petrochemical company than either Amoco or BP
would be on its own. We expect significant synergies and operating efficiencies
to be achieved through the combination. In addition, we believe that the best
investment opportunities, in terms of rates of return on capital employed, will
be ones that, because of location or complexity, will be available only to
companies with the greatest financial resources.
The Merger means that you will have a stake in one of the world's oil
"super-majors," with combined pro forma 1997 earnings in excess of $6 billion
and combined reserves of approximately 14.8 billion barrels of oil and gas
equivalents. BP Amoco will be one of the largest producers of oil and gas in the
U.S., and we believe it will have enhanced opportunities for access to regions
of the world expected to account for a growing share of global energy supply in
the next century. To review the reasons for the Merger in greater detail and
certain related uncertainties, see "THE MERGER--Reasons for the Merger,"
"--Recommendation of the Amoco Board; Additional Considerations of the Amoco
Board," "--Additional Considerations of the BP Board" and "--Forward-Looking
Statements May Prove Inaccurate."
Q. WHAT IS "BP AMOCO P.L.C."?
A. "BP Amoco p.l.c." is the name that Amoco and BP have agreed to use for the
parent company of the combined group after the Merger. The designation "p.l.c."
refers to "public limited company," which is a form of organization used for
publicly-owned English companies. BP Amoco p.l.c. is sometimes referred to in
this Proxy Statement/Prospectus as "BP Amoco."
Q. WHAT WILL I RECEIVE IN THE MERGER?
A. In the Merger, you will be entitled to receive 3.97 BP Amoco Ordinary Shares,
in the form of BP Amoco ADSs, for each Amoco Share you own. Because each BP
Amoco ADS represents six BP Amoco Ordinary Shares, you will receive
approximately 0.66167 of a BP Amoco ADS in exchange for each Amoco Share you
own. The financial institution which acts as depositary for the BP Amoco ADSs
will not issue fractional BP Amoco ADSs. You will instead be paid cash equal to
your proportionate interest in the net proceeds from the sale on the NYSE of the
aggregate of all fractional BP Amoco ADSs that would otherwise be issued to
Amoco Shareholders in the Merger.
EXAMPLE:
IF YOU OWN 100 AMOCO SHARES, THEN PURSUANT TO THE MERGER YOU WILL BE
ENTITLED TO RECEIVE 66 BP AMOCO ADSS AND A CHECK FOR THE SALE PROCEEDS (IN
DOLLARS) WITH RESPECT TO 1/6TH OF ONE BP AMOCO ADS, ROUNDED TO THE NEAREST
ONE CENT.
Q. WHAT IS A BP AMOCO ADS?
A. A BP Amoco ADS (which stands for "American Depositary Share") is a security
created to allow you to more easily hold and trade your interest in BP Amoco in
the United States. BP Amoco will be an English company and will issue "ordinary
shares," which are the equivalent of common stock in a U.S. company. A BP Amoco
Ordinary Share will not be materially different from, and will carry materially
the same rights as, the currently outstanding BP Ordinary Shares, except that it
is proposed that the BP Amoco Ordinary Shares be redenominated into U.S. dollars
and that dividends on them will be announced in U.S. dollars. Dividends on BP
Amoco Ordinary Shares will be paid in pounds sterling (L) and dividends on BP
Amoco ADSs will be paid in U.S. dollars. Each BP Amoco ADS will represent six BP
Amoco Ordinary Shares.
BP Amoco Ordinary Shares will be traded on the LSE and quoted in pounds
sterling just as outstanding BP Ordinary Shares are now. BP ADSs are currently,
and the BP Amoco ADSs issued in the Merger will be, traded on the NYSE and
quoted in U.S. dollars. You will be able to withdraw the BP Amoco Ordinary
Shares underlying your BP Amoco ADSs whenever you want, provided you pay the
financial institution which acts as depositary for the BP Amoco ADSs a fee,
currently $5.00 for every 100 BP Amoco ADSs (or part thereof) you convert,
together with any stamp duty or other expenses. For a more detailed description
of BP Amoco ADSs and BP Amoco Ordinary Shares, see "DESCRIPTION OF BP AMOCO
AMERICAN DEPOSITARY SHARES" and "DESCRIPTION OF BP AMOCO ORDINARY SHARES." For a
description of the rights attaching to BP Amoco Ordinary Shares and BP Amoco
ADSs in comparison to those of Amoco Shares, see "COMPARISON OF RIGHTS OF AMOCO
1
<PAGE>
SHAREHOLDERS AND BP AMOCO SHAREHOLDERS."
Q. HOW AND WHEN ARE DIVIDENDS PAID ON THE BP AMOCO ADSS?
A. BP has agreed to announce all dividends on BP Amoco Ordinary Shares in U.S.
dollars for at least the first five years after the Merger while at the same
time stating an equivalent pounds sterling dividend. As a BP Amoco ADS holder
your dividends will automatically be paid in U.S. dollars. When it announces
dividends on the BP Amoco Ordinary Shares, BP Amoco will announce the amount of
the dividend in U.S. dollars and the date of payment. Holders of BP Amoco ADSs
on the record date for such dividends will receive in cash the full amount of
the dividends paid on the underlying BP Amoco Ordinary Shares. See "BP AMOCO
FOLLOWING THE MERGER--Dividends" and "DESCRIPTION OF BP AMOCO AMERICAN
DEPOSITARY SHARES."
BP expects that BP Amoco will pay dividends four times each year. It is
intended that BP Amoco will continue BP's current dividend policy of paying as
dividends approximately 50% of its estimated average earnings over the course of
the business cycle. BP's dividends for the year ended December 31, 1997 were 22p
per BP Ordinary Share, or $1.43 for every 0.66167 of a BP ADS, without taking
account of any applicable tax credits or withholding tax. Amoco's dividends for
the same year totaled $1.40 per Amoco Share (as adjusted for a two-for-one stock
split in 1998). The expected payment dates for the four BP Amoco dividends to
which Amoco Shareholders will be entitled in 1999 (assuming that the Merger is
completed by December 31, 1998) will be in April, June, September and December.
In subsequent years, it is expected that a dividend will be paid in March, June,
September and December of each year. Amoco expects to pay its regular quarterly
dividend in December, 1998. See "BP AMOCO FOLLOWING THE MERGER--Dividends" and
"MARKET PRICE AND DIVIDEND DATA."
Q. ARE THERE ANY SPECIAL TAX CONSEQUENCES OF RECEIVING DIVIDENDS ON THE BP AMOCO
ADSS?
A. In addition to the payment of the cash dividend, Eligible U.S. Holders (as
defined herein) of BP Amoco ADSs may be eligible for additional tax benefits.
Dividend payments to such holders will carry a U.K. tax credit that is fully
offset by a U.K. withholding tax. Eligible U.S. Holders will be entitled to
credit the amount of the U.K. withholding tax against their U.S. federal income
tax liabilities. The gross taxable amount for U.S. federal income tax purposes
will equal the sum of the base dividend and the tax credit (line 3), as shown in
the example below. The amount that may be available as a U.S. tax credit is
shown on line 2.
EXAMPLE:
<TABLE>
<C> <S> <C>
1. Base Dividend per BP Amoco ADS $2.16
2. Tax credit (1/9th of line 1) .24
---------
3. Gross taxable amount 2.40
4. Less: U.K. withholding tax ( .24)
(15% of line 3, up to a maximum
of the tax credit amount)
---------
5. Net dividend payment $2.16
</TABLE>
For more information, see "CERTAIN TAX CONSEQUENCES."
Q. HOW WILL CHANGES IN THE EXCHANGE RATE BETWEEN THE U.S. DOLLAR AND POUNDS
STERLING AFFECT THE VALUE OF MY DIVIDENDS?
A. Because Amoco and BP have agreed that BP Amoco will announce dividends on the
BP Amoco Ordinary Shares in U.S. dollars for at least five years, the value of
your dividends as a BP Amoco ADS holder will not be affected by the exchange
rate between U.S. dollars and pounds sterling during that period. If at any time
thereafter dividends on the BP Amoco Ordinary Shares are announced only in a
currency other than U.S. dollars, the applicable currency exchange rate at the
close of business on the business day prior to the date of announcement of the
dividend will be used to determine the U.S. dollar dividend amount payable on BP
Amoco ADSs.
Q. WHAT ARE THE TAX CONSEQUENCES TO AMOCO SHAREHOLDERS OF THE MERGER?
A. The exchange of Amoco Shares for BP Amoco ADSs in the Merger is generally on
a tax-free basis. However, if you have a gain on the exchange of Amoco Shares
for BP Amoco ADSs and receive cash in lieu of a fractional BP Amoco ADS in the
Merger, you will be taxed to the extent that the cash you receive represents
gain on the sale of the fractional BP Amoco ADS that would otherwise be issued
to you in the Merger. To review the tax consequences of the Merger to Amoco
Shareholders in greater detail, see "CERTAIN TAX CONSEQUENCES--United States Tax
Consequences of the Merger to U.S. Holders."
2
<PAGE>
Q. WILL AMOCO SHAREHOLDERS BE ADVERSELY AFFECTED IF BP ORDINARY SHARES ARE NOT
REDENOMINATED IN U.S. DOLLARS?
A. If the BP Ordinary Shares are not redenominated into U.S. dollars there will
be no direct effect on Amoco Shareholders. There will be no material differences
between ordinary shares denominated in pence and ordinary shares denominated in
dollars. However, a stamp duty reserve tax liability of 1.5% of the issue price
of the BP Amoco Ordinary Shares issued to Amoco Shareholders (estimated at
approximately $822 million, based on a price per share of 838p (the closing
middle market quotation for BP Ordinary Shares as quoted in the Daily Official
List of the LSE on October 26, 1998, the last practicable date prior to the
printing of this Proxy Statement/ Prospectus)) would arise and be jointly
payable by BP Amoco and Amoco on the issue of BP Amoco ADSs, although this
liability should not occur provided that (i) the BP Amoco Ordinary Shares are
denominated in U.S. dollars; (ii) the directors of BP determine it is
appropriate and, accordingly, the BP Amoco Ordinary Shares being issued as
consideration in the Merger are delivered in bearer form to the Depositary; and
(iii) there is no change in applicable law.
Q. WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A. Amoco and BP hope to complete the Merger by December 31, 1998. In addition to
approvals from the respective shareholders of Amoco and BP, Amoco and BP must
also obtain a number of regulatory approvals, and the timing of those is
uncertain. For a description of the required regulatory approvals and other
conditions to completing the Merger, see "REGULATORY MATTERS" and "THE MERGER
AGREEMENT-- Conditions to Consummation of the Merger."
Q. IF I AM NOT GOING TO ATTEND THE SPECIAL MEETING IN PERSON, SHOULD I RETURN MY
VOTING FORM INSTEAD?
A. Yes. After carefully reading and considering the information contained in
this Proxy Statement/ Prospectus, please fill out and sign your voting form.
Then, return it to Amoco in the enclosed return envelope as soon as possible, so
that your Amoco Shares may be represented at the Special Meeting.
Q. WHAT IF I PLAN TO ATTEND THE SPECIAL MEETING IN PERSON?
A. You may request a ticket for admission to the Special Meeting by marking the
appropriate box on the voting form enclosed with this Proxy Statement/Prospectus
and returning it no later than December 3, 1998. If you hold Amoco Shares
through a third party, such as a broker, you should send an account statement or
similar documentation of ownership to Amoco Corporation Shareholder Services,
200 East Randolph Drive, Mail Code 0404, Chicago, Illinois 60601 requesting a
ticket.
Q. IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A. No. Your broker will not be able to vote your Amoco Shares without
instructions from you. You should instruct your broker to vote your Amoco
Shares, following the directions provided by your broker. Your failure to
instruct your broker to vote your Amoco Shares will be the equivalent of voting
against the Merger.
Q. SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the Merger is completed, we will send you written instructions for
exchanging your stock certificates.
Q. WHAT DO I NEED TO DO NOW?
A. Just indicate on your voting form how you want to vote and mail your signed
and dated form in the enclosed return envelope as soon as possible, so that your
Amoco Shares may be represented at the Special Meeting. The Special Meeting will
take place at 3:00 p.m. local time, on December 10, 1998, at Chicago Hilton &
Towers, 720 South Michigan Avenue, Chicago, Illinois.
WHO CAN HELP ANSWER QUESTIONS?
If you have more questions about the Merger, you should contact:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE: 1-800-628-8532
3
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE
MERGER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS TO
WHICH WE HAVE REFERRED YOU. SEE "AVAILABLE INFORMATION." THE MERGER AGREEMENT IS
ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT/ PROSPECTUS AND IS INCORPORATED
BY REFERENCE HEREIN. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT. IT IS THE
LEGAL DOCUMENT THAT GOVERNS THE MERGER. AS USED IN THIS PROXY
STATEMENT/PROSPECTUS, THE TERM "AMOCO" REFERS TO AMOCO AND ITS SUBSIDIARIES,
"BP" REFERS TO BP AND ITS SUBSIDIARIES AND "BP AMOCO" REFERS TO BP AMOCO AND ITS
SUBSIDIARIES, IN EACH CASE UNLESS THE CONTEXT OTHERWISE REQUIRES.
THE COMPANIES
AMOCO CORPORATION
200 East Randolph Drive
Chicago, Illinois 60601
(312) 856-6111
Amoco was incorporated in Indiana in 1889 and is a large integrated
petroleum and chemical enterprise. Amoco produces and markets crude oil,
petroleum products and natural gas worldwide and has exploration activities in
approximately 20 countries.
THE BRITISH PETROLEUM COMPANY P.L.C.
Britannic House
1 Finsbury Circus
London EC2M 7BA
England
(44-171) 496-4000
BP was incorporated in 1909 and is the parent company of one of the world's
largest petroleum and petrochemical groups. BP has well established operations
in Europe, the U.S., Australia and parts of Africa, and is expanding its
presence in other areas, notably China, Southeast Asia, South America and the
former Soviet Union. BP's main businesses are oil and gas exploration and
production, refining and marketing and petrochemicals manufacturing and
marketing.
THE SPECIAL MEETING
DATE, TIME AND PLACE; PURPOSE
A Special Meeting of Amoco Shareholders will be held at 3:00 p.m., local
time, on December 10, 1998, at Chicago Hilton & Towers, 720 South Michigan
Avenue, Chicago, Illinois. At the Special Meeting, Amoco Shareholders of record
will be asked to consider and vote upon a proposal to approve the Merger
Agreement.
See "THE SPECIAL MEETING--Date, Time and Place; Purpose."
RECORD DATE
The close of business on October 19, 1998 is the record date for the Special
Meeting (the "Record Date"). Only Amoco Shareholders of record at the close of
business on the Record Date are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, there were 954,763,126 outstanding Amoco Shares
held by approximately 134,442 Amoco Shareholders of record.
See "THE SPECIAL MEETING--Record Date."
VOTING AND REVOCATION OF PROXIES
Amoco Shares represented by properly executed voting forms received in time
for the Special Meeting will be voted at the Special Meeting in the manner
specified on the voting form. Voting forms that are properly executed but do not
contain instructions will be voted "FOR" approval of the Merger Agreement. An
Amoco Shareholder may revoke the proxy granted by a voting form at any time
prior to its exercise by (i) delivering to the Corporate Secretary of Amoco,
prior to the Special Meeting, a written notice of revocation having a later date
or time than the voting form; (ii) delivering to the Corporate Secretary of
Amoco a duly executed proxy bearing a later date or time than the previously
executed voting form; or (iii) attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not by itself constitute
revocation of a voting form.
4
<PAGE>
See "THE SPECIAL MEETING--Voting and Revocation of Proxies."
REQUIRED VOTE; QUORUM
Indiana Law and the Amended Articles of Incorporation of Amoco (the "Amoco
Amended Articles") require approval of the Merger Agreement by not less than a
majority of Amoco Shares entitled to vote at the Special Meeting. Each Amoco
Share outstanding on the Record Date is entitled to one vote. There are no other
voting securities of Amoco outstanding. Holders of a majority of the Amoco
Shares outstanding on the Record Date must be present in person or by proxy at
the Special Meeting to constitute a quorum.
See "THE SPECIAL MEETING--Required Vote; Quorum."
WHAT YOU WILL RECEIVE IN THE MERGER
In the Merger, each Amoco Share, other than any Amoco Shares owned by BP or
any subsidiary of BP or Amoco ("Excluded Amoco Shares"), will be converted into
and canceled in exchange for 3.97 BP Amoco Ordinary Shares, in the form of BP
Amoco ADSs, each representing six BP Amoco Ordinary Shares. Amoco Shareholders
will therefore be entitled to receive approximately 0.66167 of a BP Amoco ADS
for each Amoco Share. The BP Amoco ADSs are subject to the terms and conditions
of the Deposit Agreement (as defined herein) relating to BP Amoco ADSs.
Fractional BP Amoco ADSs will not be issued. You will instead be paid cash equal
to your proportionate interest in the net proceeds from the sale on the NYSE of
the aggregate of all fractional BP Amoco ADSs that would otherwise be issued to
Amoco Shareholders in the Merger.
As a BP Amoco ADS holder, you will be entitled to receive all dividends and
distributions payable on BP Amoco ADSs that have a record date after the
Effective Time of the Merger. Therefore, if Amoco and BP complete the Merger
before the record date for BP's dividend for the fourth quarter of the financial
year ending December 31, 1998 (expected to be on or about February 26, 1999),
you, as a BP Amoco ADS holder, will be entitled to that dividend following the
Merger. See "BP AMOCO FOLLOWING THE MERGER--Dividends" and "THE MERGER
AGREEMENT--Consideration to Be Received in the Merger."
BACKGROUND OF THE MERGER
For a description of the events leading up to the execution of the Merger
Agreement, see "THE MERGER--Background of the Merger."
REASONS FOR THE MERGER
The Amoco Board and the board of directors of BP (the "BP Board") each
considered a number of factors in determining to approve the Merger and
recommend it to their respective shareholders. These considerations are
described below under "THE MERGER--Reasons for the Merger," "--Recommendation of
the Amoco Board; Additional Considerations of the Amoco Board" and "--Additional
Considerations of the BP Board."
RECOMMENDATION OF THE AMOCO BOARD
The Amoco Board, by unanimous vote of the directors present, has determined
that the Merger Agreement and the transactions contemplated thereby, including
the Merger, are fair to and in the best interests of Amoco and Amoco
Shareholders. Accordingly, the Amoco Board has, by unanimous vote of the
directors present, adopted the Merger Agreement, and the Amoco Board recommends
that Amoco Shareholders vote "FOR" approval of the Merger Agreement.
See "THE MERGER--Recommendation of the Amoco Board; Additional
Considerations of the Amoco Board."
OPINION OF AMOCO'S FINANCIAL ADVISOR
In deciding to adopt the Merger Agreement, the Amoco Board considered the
oral opinion of its financial advisor, Morgan Stanley & Co. Incorporated
("Morgan Stanley"), that as of August 10, 1998, and subject to the assumptions
made, matters considered and limitations on the review undertaken, the Exchange
Ratio was fair from a financial point of view to Amoco Shareholders. Morgan
Stanley confirmed its opinion with a subsequent written opinion to the Amoco
Board dated August 11, 1998. A copy of
5
<PAGE>
this written opinion is attached as Appendix B to this Proxy
Statement/Prospectus.
In connection with delivering its opinion, Morgan Stanley performed a
variety of financial analyses. These analyses included, among others, a
comparable company analysis, an analysis of selected comparable transactions, a
historical exchange ratio analysis and a pro forma merger analysis. AMOCO
SHAREHOLDERS ARE URGED TO READ THE ENTIRE MORGAN STANLEY OPINION CAREFULLY.
See "THE MERGER--Opinions of Financial Advisors."
OPINION OF BP'S FINANCIAL ADVISOR
In deciding to approve the Merger Agreement, the BP Board considered the
oral opinion of its financial advisor, Morgan Guaranty Trust Company of New York
("J.P. Morgan"), that as of August 10, 1998, and based upon and subject to the
various considerations set forth in its opinion, the Exchange Ratio was fair
from a financial point of view to BP. J.P. Morgan confirmed its oral opinion
with a subsequent written opinion to the BP Board dated August 11, 1998. A copy
of J.P. Morgan's written opinion is attached as Appendix C to this Proxy
Statement/ Prospectus.
In connection with delivering its opinion, J.P. Morgan performed a variety
of financial analyses. These analyses included, among others, an analysis of
selected comparable transactions, an historical contribution analysis and a pro
forma merger analysis.
See "THE MERGER--Opinions of Financial Advisors."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Amoco Board's recommendation that you vote in favor of
approving the Merger, you should be aware that a number of Amoco's directors and
officers have certain interests in the Merger that are different from, or in
addition to, yours as an Amoco Shareholder.
Amoco has entered into employment agreements with certain of its officers,
to be effective as of the closing of the Merger. In addition, certain directors
and officers of Amoco are expected to become directors and officers of BP Amoco
following the Merger.
See "THE MERGER--Interests of Certain Persons in the Merger" and "THE MERGER
AGREEMENT--Directors and Management of BP Amoco Following the Merger."
ACCOUNTING TREATMENT
BP Amoco intends to account for the Merger using the merger method of
accounting under generally accepted accounting principles in the U.K. ("U.K.
GAAP"), and the Merger qualifies for the pooling-of-interests method of
accounting under generally accepted accounting principles in the U.S. ("U.S.
GAAP").
See "THE MERGER--Accounting Treatment" and "UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION--Introductory Note."
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Statements contained in this Proxy Statement/Prospectus or in documents
incorporated by reference herein, particularly those regarding possible or
assumed future performance, costs, dividends, returns, divestments, reserves and
growth of Amoco, BP and BP Amoco, industry growth and other trend projections,
and those regarding synergistic benefits of the Merger and estimated company
earnings, in particular those set forth under "RECENT DEVELOPMENTS," "THE
MERGER--
Reasons for the Merger"; "--Recommendation of the Amoco Board; Additional
Considerations of the Amoco Board," "--Opinions of Financial Advisors"
"--Additional Considerations of the BP Board" and "BP AMOCO FOLLOWING THE
MERGER--Dividends" are or may be forward-looking statements that involve risks
and uncertainties. Actual results may differ materially from those expressed in
such statements, depending on a variety of factors, including the specific
factors identified in the discussions accompanying such forward-looking
statements; future levels of industry product supply, demand and pricing;
political stability and economic growth in relevant areas of the world; the
ability of
6
<PAGE>
Amoco and BP to integrate their businesses successfully after the Merger;
development and use of new technology and successful partnering; the actions of
competitors; natural disasters and other changes to business conditions; and
other factors discussed elsewhere herein and in the documents incorporated by
reference herein.
See "THE MERGER--Forward-Looking Statements May Prove Inaccurate."
LISTING OF BP AMOCO ADSS AND BP AMOCO ORDINARY SHARES
It is a condition to the Merger that the BP Amoco ADSs you receive in the
Merger be authorized for listing on the NYSE, subject to official notice of
issuance. It is also a condition that the BP Amoco Ordinary Shares underlying
your BP Amoco ADSs be admitted to the Official List for trading on the LSE. If
the Merger is completed, you will no longer be able to trade your Amoco Shares.
Application has been made to the LSE for the BP Amoco Ordinary Shares to be
issued in the Merger to be admitted to the Official List. Application has also
been made for the BP Amoco ADSs to be issued in the Merger to be listed on the
NYSE.
See "THE MERGER AGREEMENT-- Conditions to Consummation of the Merger."
DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER
In the Merger Agreement, Amoco and BP have agreed that the Board of
Directors of BP Amoco will consist of 22 directors, 13 to be designated by BP
and nine to be designated by Amoco. The Chairmen of Amoco and BP, H. Laurance
Fuller and Peter Sutherland, respectively, will be Co-Chairmen of BP Amoco, and
the Group Chief Executive of BP, Sir John Browne, will be BP Amoco's Chief
Executive Officer. The remainder of BP Amoco's management team will be composed
of current executives of both Amoco and BP.
See "THE MERGER AGREEMENT-- Directors and Management of BP Amoco Following
the Merger" and "DIRECTORS
AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER."
CONDITIONS TO THE MERGER
Amoco and BP will not complete the Merger unless a number of conditions are
satisfied or waived by them. These include:
- approval of the Merger and certain other transactions contemplated by the
Merger Agreement by the requisite majorities of the respective
shareholders of Amoco and BP (this condition may not be waived by Amoco or
BP);
- there must be no law or order in effect that restrains, enjoins or
otherwise prohibits the Merger and that individually or in the aggregate
with all other such laws or orders is reasonably likely to have a material
adverse effect on Amoco or BP or to materially frustrate the express
intent and purposes of the parties to the Merger Agreement, and there must
be no pending or threatened proceeding by a governmental authority seeking
such an order;
- certain consents and approvals of governmental authorities must be
obtained without conditions relating to the businesses of Amoco or BP that
would be reasonably likely to have a material adverse effect on Amoco or
BP after the Effective Time (and for this purpose materiality is
considered with reference to the total equity market value of Amoco and
BP);
- each of Amoco and BP must have received letters from its independent
accountants concurring with management's view regarding the availability
of the merger method of accounting under U.K. GAAP and
pooling-of-interests accounting under U.S. GAAP for the Merger; and
- the BP Amoco Ordinary Shares to be issued in the Merger must be admitted
to the Official List of the LSE and such listing must have become
effective, and the BP Amoco ADSs to be issued in the Merger must be
authorized for listing on the
7
<PAGE>
NYSE, subject to official notice of issuance.
See "THE MERGER AGREEMENT-- Conditions to Consummation of the Merger."
TERMINATION OF THE MERGER AGREEMENT
Amoco and BP can agree to terminate the Merger Agreement at any time prior
to completing the Merger.
Either one of them can terminate the Merger Agreement if it is not in
material breach of the Merger Agreement and:
- the Merger is not completed by August 31, 1999; or
- the shareholders of Amoco or BP do not approve the Merger; or
- a governmental authority permanently restrains, enjoins or otherwise
prohibits the Merger.
Each of Amoco and BP can terminate the Merger Agreement if:
- the board of directors of the other company withdraws or adversely
modifies its approval or recommendation of the Merger to its shareholders
or fails to reconfirm such recommendation within seven business days of
the terminating company's requesting a reconfirmation; or
- the other company negotiates with or furnishes information to a
third-party acquiror; or
- the other company recommends an acquisition transaction proposed by a
third party; or
- the other company breaches or fails to comply with any of its
representations, warranties or agreements under the Merger Agreement, and
such breach or failure would result in the failure of a condition to the
Merger and cannot be or is not cured prior to August 31, 1999.
See "THE MERGER AGREEMENT-- Termination; Effects of Termination."
TERMINATION PAYMENTS
Amoco is required to pay BP a termination payment of $950 million (making a
total of $1 billion, when considered together with the maximum profit allowed
under the Stock Option Agreement described below), and BP is required to pay
Amoco a termination payment of $1 billion if the other party terminates the
Merger Agreement because:
- the board of directors of the non-terminating party withdraws or adversely
modifies its approval of the Merger or its favorable recommendation of the
Merger to its shareholders or fails to reconfirm such recommendation
within seven business days after a written request to do so by the
terminating party; or
- the board of directors of the non-terminating party recommends to its
shareholders an acquisition transaction proposed by a third party; or
- the non-terminating party willfully and intentionally takes certain
prohibited actions with respect to an acquisition proposal for that
company.
Amoco and BP are each required to pay the other a termination payment of
$500 million plus expenses if the Merger Agreement is terminated because Amoco's
or BP's shareholders, respectively, fail to approve the Merger and, at that
time, there is an offer from a third party to enter into an acquisition
transaction with such company. In addition, BP would be required to pay an
additional $500 million, and Amoco would be required to pay an additional $450
million, if within 12 months of such termination, that company enters into or
consummates an agreement with any third party with respect to an acquisition
transaction.
See "THE MERGER AGREEMENT-- Termination; Effects of Termination."
THE STOCK OPTION AGREEMENT
Immediately following the execution of the Merger Agreement, Amoco and BP
also entered into a Stock Option Agreement, dated as of August 11, 1998 (the
"Stock Option Agreement").
8
<PAGE>
Pursuant to the Stock Option Agreement, Amoco granted BP an option to purchase,
subject to the terms thereof, up to 189,783,270 (subject to possible adjustment)
fully paid and nonassessable Amoco Shares at a price per share in cash equal to
$41.00 (subject to possible adjustment) in the event that the Merger Agreement
is terminated and BP then or thereafter becomes entitled to receive the maximum
termination payment from Amoco. The Stock Option Agreement limits the total
profit that BP can obtain under the Stock Option Agreement and the termination
payment from Amoco, taken together, to $1 billion.
See "THE STOCK OPTION AGREE-
MENT."
DISSENTERS' RIGHTS
Under Indiana Law, Amoco Shareholders are not entitled to exercise
dissenters' rights with respect to the Merger.
See "THE SPECIAL MEETING-- Dissenters' Rights."
REGULATORY MATTERS
U.S. antitrust laws prohibit Amoco and BP from completing the Merger until
the transaction has been notified to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC")
and a required waiting period has expired. On September 9, 1998, Amoco and BP
each filed the required notification and report forms with the Antitrust
Division and the FTC. On October 9, 1998, the FTC issued a request for
additional information and other documentary material to Amoco and BP relating
to the Merger. Under the antitrust laws, the Merger may not be consummated until
20 days after both parties have substantially complied with such request for
additional information.
The President of the United States can prohibit an acquisition of a U.S.
company by a foreign person (such as BP) if, among other things, the acquisition
would impair the national security of the U.S. Amoco and BP will make a
voluntary filing seeking a finding that the Merger does not impair the national
security of the U.S.
The antitrust laws of the European Union (the "EU") prohibit Amoco and BP
from completing the Merger until approval of the Merger by the European
Commission has been obtained. Amoco and BP formally notified the European
Commission of the Merger on September 24, 1998. On October 9, 1998, the European
Commission requested additional information, particularly as to one minor
product market (polyisobutylene) and concluded that the notification was
incomplete. As of October 26, 1998, the last practicable date prior to the
printing of this Proxy Statement/Prospectus, BP and Amoco were in the course of
supplying the requested information and expected to refile the notification
shortly.
One or more Member States of the EU can make a request to the European
Commission that all or part of the Merger be referred back to the requesting
Member State(s) where the Merger affects competition within the requesting
Member State(s). Those aspects of the Merger that are referred back are
investigated under the antitrust laws of the relevant requesting Member State(s)
instead of by the European Commission. The Merger Agreement contemplates the
possibility of a referral back to the U.K. and in such circumstances the Merger
is conditioned upon approval by the U.K. authorities.
The Merger may also be subject to regulatory approvals in jurisdictions
other than the U.S. and the EU.
Amoco and BP are working to obtain the required regulatory approvals and
consents. However, there can be no assurance as to when or whether any of these
approvals and consents will be obtained or the terms and conditions that may be
imposed by such approvals and consents.
See "REGULATORY MATTERS."
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
For United States federal income tax purposes, the parties intend that the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code and that, in general, Amoco Shareholders will not recognize any gain or
loss pursuant to the Merger, except with respect
9
<PAGE>
to cash, if any, received in lieu of fractional BP Amoco ADSs.
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON THE FACTS OF YOUR
OWN SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISORS TO FULLY UNDERSTAND THE TAX
CONSEQUENCES OF THE MERGER TO YOU.
See "CERTAIN TAX CONSEQUENCES-- United States Tax Consequences of the Merger
to U.S. Holders."
COMPARISON OF RIGHTS OF HOLDERS OF BP AMOCO ADSS WITH HOLDERS OF AMOCO SHARES
In the Merger, you will receive BP Amoco ADSs. Each BP Amoco ADS represents
six BP Amoco Ordinary Shares, subject to the terms of the Deposit Agreement.
There are numerous differences between the rights of a shareholder in Amoco, an
Indiana corporation, and the rights of a shareholder in BP, an English company.
In certain circumstances, the rights of a holder of BP Amoco ADSs will be
different from the rights of a holder of BP Amoco Ordinary Shares, some of which
differences are summarized below. Holders of BP Amoco ADSs may generally
withdraw and hold directly the BP Amoco Ordinary Shares underlying the BP Amoco
ADSs at any time.
References in this Proxy Statement/ Prospectus to the "BP Amoco Articles"
shall refer to the Memorandum and Articles of Association of BP, as proposed to
be amended at the extraordinary general meeting of BP referred to herein. The
approval of only some of such amendments is required as a condition to the
Merger. See "THE BP EXTRAORDINARY GENERAL MEETING AND THE SEPARATE CLASS
MEETING."
- VOTING RIGHTS AND SHAREHOLDERS' MEETINGS. Amoco Shareholders are entitled
to attend, and to vote one vote per Amoco Share at, any Amoco
shareholders' meeting. At a general meeting of shareholders of BP Amoco,
holders of BP Amoco Ordinary Shares ("BP Amoco Shareholders") will be
entitled to one vote per BP Amoco Ordinary Share if voting is on a poll
and one vote per holder present in person at the meeting if voting is by a
show of hands (which will be limited to ordinary resolutions). See
"COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO
SHAREHOLDERS--Voting Rights." Subject to the approval of certain
amendments to the BP Articles proposed for approval at BP's scheduled
shareholder meetings (which amendments are not a condition to the Merger),
record holders of BP Amoco ADSs (but not holders who own their BP Amoco
ADSs through brokerage accounts or otherwise in "street name") will be
entitled after the Merger to attend, speak and vote at BP Amoco general
meetings. The BP Amoco Ordinary Shares represented by BP Amoco ADSs,
whether held of record or in street name, may also be voted by instruction
to the Depositary. See "DESCRIPTION OF BP AMOCO ORDINARY SHARES--Voting
Rights" and "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES-- Voting
of the Underlying Deposited Securities."
- PRE-EMPTIVE RIGHTS. Under the Amoco Amended Articles, Amoco Shareholders
have no pre-emptive rights. Under English law, a shareholder is entitled
to pre-emptive rights with respect to new equity issuances for cash unless
a special resolution is passed in a general meeting of shareholders to the
contrary. Under an authority granted to the BP Board at the BP Annual
General Meeting on April 16, 1998, which is proposed to be renewed and
increased at the extraordinary general meeting of BP, as described herein,
and renewable each year, the BP Board is permitted to issue a limited
amount of new equity securities not subject to pre-emptive rights. See
"COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO
SHAREHOLDERS--Pre-emptive Rights." Under the terms of the Deposit
Agreement, holders of BP Amoco ADSs will be entitled to participate
effectively on the same basis in any equity or rights issues offered to BP
Amoco Shareholders.
10
<PAGE>
- ACQUISITIONS OF SHARES. Acquirors of BP Amoco Ordinary Shares will be
subject to different, and in some cases more stringent, notification,
disclosure and other obligations under English law and applicable
regulations of non-governmental authorities than those to which acquirors
of Amoco Shares are subject under Indiana Law and U.S. federal securities
laws. Under the terms of the Deposit Agreement, holders of BP Amoco ADSs
are bound to comply with the same notification and disclosure requirements
as BP Amoco Shareholders. See "COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS
AND BP AMOCO SHAREHOLDERS--Certain Provisions Relating to Share
Acquisitions" and "--Disclosure of Interests" and "DESCRIPTION OF BP AMOCO
AMERICAN DEPOSITARY SHARES-- Disclosure of Interests."
- SHAREHOLDER PROPOSALS. The By-laws of Amoco (the "Amoco By-laws") provide
that a shareholder must submit a notice in proper form to Amoco not less
than 90 nor more than 120 days prior to the next anniversary of Amoco's
prior annual meeting in order to be eligible to be considered at any
annual meeting. Under English law, shareholders representing certain
minimum numbers of shareholders and/or voting rights of a public company
may, subject to certain limitations, require a resolution to be voted on
at a general meeting of shareholders of that company. Subject to certain
conditions, holders of BP Amoco ADSs will be able to participate in any
such requisition with respect to the BP Amoco Ordinary Shares represented
by their BP Amoco ADSs by making an appropriate notification to the
Depositary in accordance with the terms of the Deposit Agreement. See
"COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO
SHAREHOLDERS--Shareholder Proposals and Shareholder Nominations of
Directors" and "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES--
Actions by Holders."
You should also be aware that it may be difficult to effect service of
process to begin a
lawsuit against directors and officers of BP Amoco who are not residents of the
U.S. In addition, holders of BP Amoco ADSs may not be permitted to pursue a
lawsuit on behalf of BP Amoco unless they first withdraw the BP Amoco Ordinary
Shares underlying their BP Amoco ADSs. See "COMPARISON OF RIGHTS OF AMOCO
SHAREHOLDERS AND BP AMOCO SHAREHOLDERS--Limitations on Enforceability of Civil
Liabilities Under U.S. Federal Securities Laws."
11
<PAGE>
COMPARATIVE MARKET PRICE DATA
The following table presents per share closing market prices as reported on
the NYSE Composite Tape for Amoco Shares and BP ADSs and the closing mid-market
quotation for BP Ordinary Shares as quoted in the Daily Official List of the LSE
as of August 10, 1998, the last trading date before public announcement of the
execution of the Merger Agreement, and as of October 26, 1998, the latest
practicable date prior to the printing of this Proxy Statement/Prospectus. The
table also presents implied equivalent per share values for Amoco Shares by
multiplying the price per BP Ordinary Share by the Exchange Ratio and the price
per BP ADS by 0.66167.
Amoco Shareholders are urged to obtain current market quotations for Amoco
Shares, BP Ordinary Shares and BP ADSs before making a decision with respect to
the Merger.
<TABLE>
<CAPTION>
AMOCO SHARE
EQUIVALENT VALUES
-----------------------
<S> <C> <C> <C> <C> <C>
3.97 BP 0.66167 OF
AMOCO SHARE BP ORDINARY ORDINARY A
PRICE SHARE PRICE BP ADS PRICE SHARES(1) BP ADS
------------ ------------------ ------------------- ----------- ----------
August 10, 1998.................. $41.00 773p $76.00 $50.11 $50.29
October 26, 1998................. $54.00 838p $85.00 $55.99 $56.24
</TABLE>
- ------------------------
(1) Converted to U.S. dollars at the Noon Buying Rate of $1.6328 per pound
sterling on August 10, 1998 and of $1.6830 per pound sterling on October 26,
1998.
12
<PAGE>
COMPARATIVE PER SHARE DATA
The following tables present certain unaudited historical and pro forma per
share data that reflect the completion of the Merger based upon the historical
financial statements of Amoco and BP. The pro forma data do not purport to be
indicative of the results of future operations or the actual results that would
have occurred had the Merger been consummated at the beginning of the periods
presented. The data presented below should be read in conjunction with, and are
qualified in their entirety by, the historical consolidated financial
statements, including applicable notes, of Amoco and BP incorporated by
reference in this Proxy Statement/Prospectus, and the Unaudited Pro Forma
Condensed Consolidated Financial Information, and notes thereto, appearing
elsewhere herein.
The first column on the left in the tables below presents certain historical
per share amounts for Amoco. The second column sets forth certain pro forma
equivalent amounts based on the number of BP Amoco Ordinary Shares that will be
issued in the Merger for each Amoco Share. Solely for your convenience, Amoco
pro forma equivalent and BP Amoco pro forma amounts in the second and fifth
columns have been translated into U.S. dollars at the Noon Buying Rate as
described in the Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
Profit and book value per share presented for Amoco, BP and BP Amoco on a
U.S. GAAP basis are not comparable in certain respects. The most significant
difference relates to inventory accounting. Amoco uses the last-in-first-out
("LIFO") method of accounting for certain inventories. BP uses the
first-in-first-out ("FIFO") method required for U.K. GAAP reporting, which is a
permitted basis under U.S. GAAP. Consequently, the Amoco historical information,
which is presented on a LIFO basis, has been adjusted to the FIFO basis to
arrive at the BP Amoco pro forma amounts under U.K. GAAP, and FIFO is also the
basis for the U.S. GAAP pro forma presentation. The differences arising from
these adjustments are set forth in Note 3 to the Unaudited Pro Forma Condensed
Consolidated Financial Information.
<TABLE>
<CAPTION>
SIX MONTHS ENDED AND AT JUNE 30, 1998
---------------------------------------------------------------------
AMOCO PRO
FORMA
EQUIVALENT
(BP AMOCO PRO
FORMA DATA
AMOCO MULTIPLIED BY BP BP AMOCO
HISTORICAL 3.97) HISTORICAL PRO FORMA
----------- --------------- ----------- --------------------------
$ $ P P $
<S> <C> <C> <C> <C> <C>
Amounts under U.K. GAAP
Profit per common (ordinary) share.......... 0.43 0.67 13.0 10.4 0.17
Dividends per common (ordinary) share(a).... 0.75 0.79 11.75 11.75 0.20
Book value per common (ordinary) share...... 18.22 17.03 246.3 256.5 4.29
Amounts under U.S. GAAP
Profit per common (ordinary) share
Basic..................................... 0.70 0.60 10.5 9.2 0.15
Diluted................................... 0.70 0.60 10.5 9.2 0.15
Dividends per common (ordinary) share(a).... 0.75 0.79 11.75 11.75 0.20
Book value per common (ordinary) share...... 16.50 15.05 213.2 226.6 3.79
</TABLE>
- ------------------------
(a) BP Amoco Pro Forma dividends per share represent historical dividends per
share paid by BP.
13
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AMOCO PRO
FORMA
EQUIVALENT
(BP AMOCO PRO
FORMA DATA
AMOCO MULTIPLIED BY BP BP AMOCO
HISTORICAL 3.97) HISTORICAL PRO FORMA
----------- ----------------- ----------- --------------------------
$ $ P P $
Amounts under U.K. GAAP
Profit per common (ordinary) share..................... 0.95 1.19 20.5 18.1 0.30
Dividends per common (ordinary) share(a)............... 0.70 0.71 10.75 10.75 0.18
Amounts under U.S. GAAP
Profit per common (ordinary) share
Basic................................................ 1.31 1.07 17.5 15.9 0.27
Diluted.............................................. 1.30 1.03 17.5 15.9 0.26
Dividends per common (ordinary) share(a)............... 0.70 0.71 10.75 10.75 0.18
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AND AT DECEMBER 31, 1997
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AMOCO PRO
FORMA
EQUIVALENT
(BP AMOCO PRO
FORMA DATA
AMOCO MULTIPLIED BY BP BP AMOCO
HISTORICAL 3.97) HISTORICAL PRO FORMA
----------- ----------------- ----------- --------------------------
$ $ P P $
Amounts under U.K. GAAP
Profit per common (ordinary) share..................... 2.02 2.54 43.3 38.3 0.64
Dividends per common (ordinary) share(a)............... 1.40 1.47 22.00 22.00 0.37
Book value per common (ordinary) share................. 18.97 17.35 244.7 261.9 4.37
Amounts under U.S. GAAP
Profit per common (ordinary) share
Basic................................................ 2.77 2.30 36.3 34.8 0.58
Diluted.............................................. 2.76 2.30 36.1 34.7 0.58
Dividends per common (ordinary) share(a)............... 1.40 1.47 22.00 22.00 0.37
Book value per common (ordinary) share................. 16.89 15.52 215.5 234.0 3.91
</TABLE>
- ------------------------
(a) BP Amoco Pro Forma dividends per share represent historical dividends per
share paid by BP.
14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AMOCO PRO
FORMA
EQUIVALENT
(BP AMOCO PRO
FORMA DATA
AMOCO MULTIPLIED BY BP BP AMOCO
HISTORICAL 3.97) HISTORICAL PRO FORMA
----------- ----------------- ----------- ------------------------
$ $ P P $
Amounts under U.K. GAAP
Profit per common (ordinary) share..................... 3.28 3.22 45.5 48.6 0.81
Dividends per common (ordinary) share(a)............... 1.30 1.31 19.50 19.50 0.33
Amounts under U.S. GAAP
Profit per common (ordinary) share
Basic................................................ 2.84 3.06 41.7 46.3 0.77
Diluted.............................................. 2.83 3.06 41.5 46.1 0.77
Dividends per common (ordinary) share(a)............... 1.30 1.31 19.50 19.50 0.33
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------
AMOCO PRO
FORMA
EQUIVALENT
(BP AMOCO PRO
FORMA DATA
AMOCO MULTIPLIED BY BP BP AMOCO
HISTORICAL 3.97) HISTORICAL PRO FORMA
----------- --------------- ----------- --------------------------
$ $ P P $
<S> <C> <C> <C> <C> <C>
Amounts under U.K. GAAP
Profit per common (ordinary) share.......... 1.85 1.59 20.2 24.1 0.40
Dividends per common (ordinary) share(a).... 1.20 0.99 15.25 15.25 0.25
Amounts under U.S. GAAP
Profit per common (ordinary) share
Basic..................................... 1.88 1.79 23.6 26.7 0.45
Diluted................................... 1.87 1.75 23.5 26.6 0.44
Dividends per common (ordinary) share(a).... 1.20 0.99 15.25 15.25 0.25
</TABLE>
- ------------------------
(a) BP Amoco Pro Forma dividends per share represent historical dividends per
share paid by BP.
15
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth selected historical financial data of Amoco
and BP for each of the last five years and selected unaudited historical
financial data for the six months ended June 30, 1998 and 1997 and have been
adjusted to reflect Amoco's two-for-one stock split which became effective as of
March 31, 1998. The selected historical financial data of each of Amoco and BP
have been derived from, and should be read in conjunction with, the annual
audited consolidated financial statements of Amoco and BP, including the notes
thereto, and the unaudited six-month consolidated financial statements of Amoco
and BP, incorporated by reference in this Proxy Statement/Prospectus.
Amoco reports quarterly and annual earnings results in accordance with U.S.
GAAP. BP reports quarterly and annual earnings results in accordance with U.K.
GAAP. These methods of accounting differ from each other in certain significant
respects. The main differences between U.K. GAAP and U.S. GAAP that are relevant
to BP's consolidated financial statements relate to deferred taxation, severance
and restructuring costs and the treatment of shares held by employee share
ownership plans. See Note 42 to the audited consolidated financial statements of
BP presented in BP's Form 6-K filed on October 23, 1998, which presented
restated financial information for the years ended December 31, 1997, 1996 and
1995 and which is incorporated by reference in this Proxy Statement/Prospectus.
SELECTED HISTORICAL FINANCIAL DATA OF AMOCO (U.S. GAAP)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED AND AT
JUNE 30, YEAR ENDED AND AT DECEMBER 31,
---------------------- -------------------------------------------------------
1998(A) 1997 1997 1996 1995(B) 1994 1993
----------- --------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $ $
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Sales and other operating revenues (excluding
consumer excise taxes)..................... 13,507 15,740 31,910 32,150 27,066 26,048 25,336
Net income................................... 673 1,296 2,720 2,834 1,862 1,789 1,820
Net income per share (basic)................. 0.70 1.31 2.77 2.84 1.88 1.80 1.83
Net income per share (assuming dilution)..... 0.70 1.30 2.76 2.83 1.87 1.79 1.82
Dividends per share.......................... 0.75 0.70 1.40 1.30 1.20 1.10 1.10
BALANCE SHEET DATA
Total assets................................. 32,274 32,666 32,489 32,100 29,845 29,316 28,486
Long-term obligations (excluding current
portion)................................... 5,408 4,544 4,719 4,229 3,962 4,387 4,037
Shareholders' equity......................... 15,744 16,345 16,319 16,408 14,848 14,382 13,665
Book value per share......................... 16.50 16.65 16.89 16.50 14.96 14.49 13.76
</TABLE>
- ------------------------
(a) In the first quarter of 1998, Amoco adopted Statement of Position ("SOP")
98-1, "Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use." The SOP requires costs of computer software developed for
internal use to be capitalized as a long-lived asset. The capitalized costs
are amortized over the estimated useful life of the software. The amount
capitalized, which would have been expensed previously, was approximately
$57 million, or $0.06 per share, after tax in the first six months of 1998.
(b) In 1995, Amoco adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." The results for 1995 included $602 million ($380
million, or $0.38 per share, after tax) for the impairment of long-lived
assets, primarily related to oil and gas producing properties in North
America (approximately $300 million, or $0.30 per share, after tax).
16
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF BP
<TABLE>
<CAPTION>
SIX MONTHS
ENDED AND AT
JUNE 30, YEAR ENDED AND AT DECEMBER 31,
------------------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994
-------------------- --------- -------------------- --------- --------- ---------
L $ L L $ L L L
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN MILLIONS, EXCEPT PER SHARE AND ADS AMOUNTS)
INCOME STATEMENT DATA (A)
U.K. GAAP
Turnover.............................. 17,394 29,048 24,119 46,563 77,760 44,731 36,106 33,116
Less: joint ventures.................. 4,361 7,283 4,877 10,178 16,997 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Group turnover........................ 13,033 21,765 19,242 36,385 60,763 44,731 36,106 33,116
Replacement cost
operating profit (b)................ 1,709 2,854 2,325 4,351 7,266 4,220 3,438 2,753
Replacement cost profit before
exceptional items (c)............... 1,124 1,877 1,495 2,822 4,713 2,620 2,013 1,482
Profit for the period................. 749 1,251 1,165 2,470 4,125 2,552 1,122 1,577
Per BP Ordinary Share
Replacement cost profit before
exceptional items................. 19.5p 0.33 26.4p 49.5p 0.83 46.7p 36.3p 27.1p
Profit for the period............... 13.0p 0.22 20.5p 43.3p 0.72 45.5p 20.2p 28.8p
Dividends (d)....................... 11.75p 0.20 10.75p 22.0p 0.37 19.5p 15.25p 10.5p
U.S. GAAP
Revenues.............................. 13,033 21,765 19,242 36,385 60,763 44,731 36,106 33,116
Profit for the period (e)............. 607 1,014 995 2,070 3,457 2,338 1,310 1,308
Comprehensive income.................. 394 658 821 1,532 2,558 1,520 1,541 1,453
Profit Per BP Ordinary Share (f)
Basic............................... 10.5p 0.18 17.5p 36.3p 0.61 41.7p 23.6p 23.9p
Diluted............................. 10.5p 0.18 17.5p 36.1p 0.60 41.5p 23.5p 23.8p
Profit Per American Depositary Share
(f)(g)
Basic............................... 63.0p 1.05 105.0p 217.8p 3.64 250.2p 141.6p 143.4p
Diluted............................. 63.0p 1.05 105.0p 216.6p 3.62 249.0p 141.0p 142.8p
BALANCE SHEET DATA(A)
U.K. GAAP
Total assets.......................... 31,413 52,460 30,318 32,877 54,905 32,572 32,352 31,088
Shareholders' interest................ 14,354 23,971 13,365 14,112 23,567 12,795 11,814 11,057
Finance debt due after more than one
year................................ 3,181 5,312 3,241 3,211 5,362 3,474 4,760 5,705
Debt to borrowed and invested
capital (h)......................... 18% 18% 19% 18% 18% 21% 29% 34%
U.S. GAAP
Total assets.......................... 31,929 53,321 31,257 33,557 56,361 33,530 33,483 32,329
Shareholders' interest................ 12,424 20,748 12,083 12,429 21,077 11,663 10,833 9,879
<CAPTION>
1993
---------
L
<S> <C>
INCOME STATEMENT DATA (A)
U.K. GAAP
Turnover.............................. 34,950
Less: joint ventures.................. --
---------
Group turnover........................ 34,950
Replacement cost
operating profit (b)................ 2,524
Replacement cost profit before
exceptional items (c)............... 1,125
Profit for the period................. 615
Per BP Ordinary Share
Replacement cost profit before
exceptional items................. 20.7p
Profit for the period............... 11.3p
Dividends (d)....................... 8.4p
U.S. GAAP
Revenues.............................. 34,950
Profit for the period (e)............. 1,184
Comprehensive income.................. 984
Profit Per BP Ordinary Share (f)
Basic............................... 21.8p
Diluted............................. 21.7p
Profit Per American Depositary Share
(f)(g)
Basic............................... 130.8p
Diluted............................. 130.2p
BALANCE SHEET DATA(A)
U.K. GAAP
Total assets.......................... 31,017
Shareholders' interest................ 9,748
Finance debt due after more than one
year................................ 7,144
Debt to borrowed and invested
capital (h)......................... 42%
U.S. GAAP
Total assets.......................... 32,437
Shareholders' interest................ 8,785
</TABLE>
- ------------------------
(a) BP has adopted Financial Reporting Standard No. 9, "Associates and Joint
Ventures," effective as of January 1, 1998 and accordingly has restated its
financial statements for prior periods in its Report on Form 6-K filed on
October 23, 1998. The principal effect was to equity account for the BP
Mobil joint venture, which had previously been accounted for using the
proportional consolidation method.
(b) Operating profit is a U.K. GAAP measure of trading performance. It excludes
profits and losses on the sale or termination of operations and fundamental
restructuring costs, interest expense and taxation.
BP determines operating profit on a replacement cost basis, which eliminates
the effect of inventory holding gains and losses. For the oil and gas
industry, the price of crude oil can vary significantly from
17
<PAGE>
period to period; hence the value of crude oil (and products) also varies.
As a consequence, the amount that would be charged to cost of sales on a
FIFO basis of inventory valuation would include the effect of oil price
fluctuations on oil and products inventories. BP therefore charges cost of
sales with the average cost of supplies incurred during the period rather
than the historical cost of supplies on a FIFO basis. For this purpose,
inventories at the beginning and end of the period are valued at the average
cost of supplies incurred during the period rather than at their historical
cost. These valuations are made quarterly by each business unit, based on
local oil and product price indices applicable to their specific inventory
holdings, following a methodology that has been consistently applied by BP
for many years. Operating profit on the replacement cost basis is used by BP
management as the primary measure of business unit trading performance and
BP management believes that this measure assists investors to assess BP's
underlying trading performance from period to period.
Replacement cost is not a U.S. GAAP measure. The major U.S. oil companies
apply the LIFO basis of inventory valuation. The LIFO basis is not permitted
under U.K. GAAP. The LIFO basis eliminates the effect of price fluctuations
on crude oil and product inventory except where an inventory drawdown occurs
in a period. BP management believes that where inventory volumes remain
constant or increase in a period, operating profit on the LIFO basis will
not differ materially from operating profit on BP's replacement cost basis.
Where an inventory drawdown occurs in a period, cost of sales on a LIFO
basis will be charged with the historical cost of the inventory drawn down,
whereas BP's replacement cost basis charges cost of sales at the average
cost of supplies for the period. To the extent that the historical cost on
the LIFO basis of the inventory drawn down is lower than the current cost of
supplies in the period, operating profit on the LIFO basis will be greater
than operating profit on BP's replacement cost basis. To the extent that the
historical cost on the LIFO basis of the inventory drawdown is greater than
the current cost of supplies in the period, operating profit on the LIFO
basis will be lower than operating profit on BP's replacement cost basis.
(c) Replacement cost profit before exceptional items excludes profits and losses
on the sale or termination of operations and fundamental restructuring
costs, which are defined by U.K. GAAP. This is the measure of profit used by
the BP Board in setting targets for and monitoring performance within BP.
BP's management believes this indicator provides the most relevant and
useful measure for investors because it most accurately reflects underlying
trading performance.
(d) The U.S. dollar equivalents of dividends per BP Ordinary Share for the years
ended 1996, 1995, 1994 and 1993 were $0.31, $0.24, $0.16 and $0.13,
respectively, based on the respective exchange rates prevailing at the close
of business in London on the business day last preceding the announcement of
each quarterly dividend comprising such annual amounts.
(e) Profit for the year ended December 31, 1993 includes the cumulative effect
of accounting changes resulting from the adoption of FASB Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" and of
FASB Statement of Financial Accounting Standards No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions." Profit for 1993
before the cumulative effect of accounting changes was L708 million. Basic
and diluted profit per BP Ordinary Share on that basis was 13.0p. Basic and
diluted profit per BP ADS on that basis was 78.0p.
(f) FASB Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS 128) was adopted for the accounting period ending December 31,
1997. Amounts for prior periods have been restated as required by SFAS 128.
(g) With effect from June 6, 1997, BP split existing BP ADSs on a two-for-one
basis so that a BP ADS is now equivalent to six BP Ordinary Shares.
Comparative figures for 1993 to 1996 inclusive have been restated
accordingly.
(h) Finance debt due after more than one year, compared with such debt plus BP
and minority shareholders' interests.
18
<PAGE>
SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS
Financial results reported in accordance with U.K. GAAP or U.S. GAAP include
the impact of unusual or infrequent events and factors which are not expected to
occur regularly in the future. Examples of these events and factors include
gains or losses on the sale of businesses, the costs of completing major
acquisitions, restructuring charges and other business transactions, as well as
other significant factors and trends, which may be helpful to review in
understanding the past performance and future prospects of Amoco and BP and are
described briefly below. The following discussion should be read in conjunction
with the "Selected Historical Financial Data" of Amoco and BP included in the
previous pages and with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of Amoco and BP that are contained in the
annual reports and other information that Amoco and BP, respectively, have filed
with the SEC. See "AVAILABLE INFORMATION."
SIGNIFICANT FACTORS AFFECTING AMOCO'S OPERATING RESULTS
ASSET DISPOSITIONS
Amoco's earnings in 1997 included $377 million of gains from asset
dispositions, primarily the sale of non-core oil and gas properties in the U.S.
These sales were part of Amoco's strategy to upgrade and refocus the U.S.
portfolio of exploration and production assets. Additional sales in 1998
resulted in a gain of $43 million in the first quarter.
Included in 1996 earnings were gains of $97 million on the sale of Amoco's
polystyrene foam products business and $56 million on the sale of certain
Canadian oil and gas properties. Earnings in 1995 included an $83 million gain
on the sale of Amoco Motor Club.
ACQUISITIONS
New investments in 1997 included approximately $865 million in cash for
interests in Pan American Energy LLC in Argentina and Empresa Petrolera Chaco in
Bolivia. These investments are accounted for by the equity method.
In March 1996, Amoco acquired the alpha-olefins and related businesses of
Albemarle Corporation. The assets and results of operations associated with
these businesses are included in the financial information for Amoco since the
date of acquisition.
SIGNIFICANT FACTORS AFFECTING BP'S OPERATING RESULTS
EXCEPTIONAL ITEMS
In the first six months of 1998 there was a net profit of L7 million before
tax on the sale or termination of operations.
Exceptional items over the period 1995 to 1997 comprise three elements:
losses on sale or termination of operations in all three years; the
implementation costs for the European downstream joint venture with Mobil in
1996; and the refinery network rationalization costs in 1995.
In 1997, there was a net loss of L105 million before tax on the sale or
termination of operations related mainly to the costs of terminating base oil
manufacturing operations at Llandarcy. In 1996 there was a net loss of L175
million before tax on the sale or termination of various operations, including
properties in the U.K. and U.S., the Carborundum businesses and certain upstream
assets. There was a loss of L3 million in 1995.
The implementation costs relating to the European downstream joint venture
with Mobil charged against income in 1996 represent BP's share of severance,
restructuring and rebranding in the joint venture which, together with asset
write-downs and some BP-specific costs, amounted to L341 million before tax.
19
<PAGE>
Cash outflows relating to these costs were L187 million in 1997 and L44 million
in 1996, with most of the remainder expected to occur in 1998.
The rationalization of BP's refining system gave rise to an exceptional
charge before tax of
L965 million in 1995. This comprised losses on sale and closure of L525 million
and provisions for environmental remediation and other costs of L440 million.
These related to the decision to sell or close the refineries at Marcus Hook in
Pennsylvania, Lima in Ohio, Lavera in France and its interest in the Pernis
section of the Nerefco refinery in Rotterdam. In 1997 provisions of L43 million
were written back as a result of the decision to continue operating the Lavera
refinery.
ACQUISITIONS
During the first half of 1998, BP acquired Styrenix Kunststoffe, the styrene
plastics business formerly owned by the German chemical company Huls.
In December 1997, BP acquired a 10% interest in A O Sidanco, a Russian
integrated oil company, for L292 million. This amount is shown as the
acquisition of an associated undertaking within fixed asset investments. Also in
1997, BP acquired an additional 7.4% of the share capital of BP France for a
cash consideration of L56 million.
20
<PAGE>
RECENT DEVELOPMENTS
AMOCO
Selected unaudited consolidated financial results of Amoco for the third
quarter and first nine months of 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
1998 1998
EST. 1997 EST. 1997
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
$ $ $ $
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.............................................................. 7,493 8,983 23,057 26,600
Net income............................................................ 295 635 968 1,931
Net income per share (basic).......................................... 0.31 0.65 1.01 1.96
Net income per share (assuming dilution).............................. 0.31 0.64 1.01 1.95
</TABLE>
The third-quarter 1998 earnings were $295 million or $.31 per share,
assuming dilution. This compared to third-quarter 1997 earnings of $635 million
or $.64 per share, assuming dilution.
The decline in the third-quarter earnings primarily resulted from
significantly lower worldwide crude oil prices compared to the year-earlier
period. Lower petroleum products and chemical margins also contributed to the
decline.
For the first nine months of 1998, Amoco reported earnings of $1,033
million, or $1.07 per share, excluding the second-quarter impairment charges of
$214 million for Colombian assets, favorable second-quarter tax adjustments of
$106 million and a first-quarter gain of $43 million on asset divestitures. This
compared with $1,931 million for the first nine months of 1997, or $1.95 per
share, assuming dilution. The decrease in nine-month 1998 earnings primarily
reflected lower energy prices and lower chemical margins.
The financial information set forth above is preliminary. Final information
will be contained in a Quarterly Report on Form 10-Q to be filed by Amoco on or
about November 13, 1998.
BP
While BP remains confident in its ability to deliver further underlying
performance improvements, a continuation of the current adverse external
environment will affect the oil sector and hence BP's overall results. BP's
results in the near future may be characterized by greater uncertainty than a
year ago. The BP Board believes that the prospects of BP will be significantly
enhanced by the Merger.
21
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
Amoco and BP are providing the following pro forma combined financial
information to give you a better picture of what the results of operations and
financial position of the combined businesses of Amoco and BP might have looked
like had the Merger occurred on an earlier date. This information is provided
for illustrative purposes only and does not show what the results of operations
or financial position of BP Amoco would have been if the Merger had actually
occurred on the dates assumed. This information also does not indicate what BP
Amoco's future operating results or consolidated financial position will be.
Please see "UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION" for a more detailed explanation of this analysis.
BASIS OF PRESENTATION
The pro forma financial information has been prepared in accordance with
U.K. GAAP, which differs from U.S. GAAP. In the pro forma financial information,
Amoco's financial position and results of operations have been adjusted to U.K.
GAAP and translated into pounds sterling, as described in the Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Information contained
herein.
BP Amoco intends to account for the Merger by using the merger method of
accounting under U.K. GAAP and the Merger qualifies for the pooling-of-interests
method of accounting under U.S. GAAP. The pro forma financial information has
been prepared on this basis.
UNAUDITED PRO FORMA INCOME STATEMENT DATA
The pro forma income statement data assumes that the Merger took place on
January 1, 1995. This is the first day of the earliest financial period
presented in the pro forma financial information.
The pro forma income statement data for the six months ended June 30, 1998
and June 30, 1997 combine the unaudited historical condensed consolidated income
statements of Amoco, as adjusted to U.K. GAAP, and BP for those periods, after
giving effect to the pro forma adjustments described in the Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Information.
The pro forma income statement data for the years ended December 31, 1997,
1996 and 1995 combine the respective historical consolidated income statements
of Amoco, as adjusted to U.K. GAAP, and BP for those years after giving effect
to the pro forma adjustments described in the Notes to the Unaudited Pro Forma
Condensed Consolidated Financial Information.
22
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1998 1997 1997 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
L $ L L $ L L
(IN MILLIONS, EXCEPT PER SHARE AND ADS AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BP AMOCO UNAUDITED PRO FORMA INCOME STATEMENT
DATA
U.K. GAAP
Group turnover............................... 21,289 35,553 28,986 55,951 93,438 65,426 53,302
Replacement cost operating profit(a)......... 2,358 3,938 3,575 6,453 10,777 6,759 5,171
Replacement cost profit before exceptional
items(a)................................... 1,440 2,404 2,288 4,054 6,770 4,293 3,140
Profit for the period........................ 999 1,668 1,738 3,677 6,141 4,642 2,280
Profit per BP Amoco Ordinary Share........... 10.4p 0.17 18.1p 38.3p 0.64 48.6p 24.1p
U.S. GAAP
Profit for the period........................ 883 1,475 1,529 3,344 5,584 4,426 2,526
Profit per BP Amoco Ordinary Share...........
Basic...................................... 9.2p 0.15 15.9p 34.8p 0.58 46.3p 26.7p
Diluted.................................... 9.2p 0.15 15.9p 34.7p 0.58 46.1p 26.6p
Profit per BP Amoco ADS......................
Basic...................................... 55.2p 0.92 95.4p 208.8p 3.49 277.8p 160.2p
Diluted.................................... 55.2p 0.92 95.4p 208.2p 3.48 276.6p 159.6p
</TABLE>
UNAUDITED PRO FORMA BALANCE SHEET DATA
The pro forma balance sheet data have been prepared assuming that the Merger
took place on June 30, 1998.
<TABLE>
<CAPTION>
AT
JUNE 30, 1998
--------------------
<S> <C> <C>
L $
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
BP AMOCO UNAUDITED PRO FORMA BALANCE SHEET DATA
U.K. GAAP
Total assets................................................................................... 51,139 85,402
Finance debt due after more than one year...................................................... 6,399 10,687
Shareholders' interest......................................................................... 24,662 41,186
U.S. GAAP
Shareholders' interest......................................................................... 21,788 36,387
</TABLE>
- ------------------------
(a) See Note 1 to the Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
23
<PAGE>
THE SPECIAL MEETING
DATE, TIME AND PLACE; PURPOSE
The Special Meeting of Amoco Shareholders will be held at 3:00 p.m. local
time, on December 10, 1998, at Chicago Hilton & Towers, 720 South Michigan
Avenue, Chicago, Illinois. At the Special Meeting, Amoco Shareholders of record
will be asked to consider and vote upon a proposal to approve the Merger
Agreement.
RECORD DATE
The close of business on October 19, 1998 has been fixed as the Record Date
for the determination of Amoco Shareholders entitled to notice of, and to vote
at, the Special Meeting. Only Amoco Shareholders of record at the close of
business on the Record Date are entitled to notice of and to vote at the Special
Meeting. As of the Record Date, there were 954,763,126 outstanding Amoco Shares
held by approximately 134,442 Amoco Shareholders of record. As of the Record
Date, directors and executive officers of Amoco and their affiliates owned less
than 1% of the Amoco Shares outstanding.
Attendance at the Special Meeting is limited to Amoco Shareholders who owned
Amoco Shares on the Record Date or their authorized representatives. Admission
tickets will be issued in advance of the meeting upon written request.
The voting form provided to Amoco Shareholders of record, Amoco Direct
Access Plan participants and Amoco employee benefit plan participants should be
used to request tickets, following the instructions shown on the form.
Beneficial shareholders who hold shares through a third party, such as a broker,
should send account statements or similar documentation of ownership to Amoco
Corporation Shareholder Services, 200 East Randolph Drive, Mail Code 0404,
Chicago, Illinois 60601 when requesting tickets.
VOTING AND REVOCATION OF PROXIES
Amoco Shares represented by properly executed proxies received in time for
the Special Meeting will be voted at the Special Meeting in the manner specified
on the voting forms. Voting forms that are properly executed but do not contain
instructions will be voted "FOR" approval of the Merger Agreement. An Amoco
Shareholder may revoke the proxy granted by a voting form at any time prior to
its exercise by (i) delivering, prior to the Special Meeting, to the Corporate
Secretary of Amoco, 200 Randolph Drive, Chicago, Illinois 60601, a written
notice of revocation having a later date or time than the voting form; (ii)
delivering to the Corporate Secretary of Amoco a duly executed proxy bearing a
later date or time than the previously executed voting form; or (iii) attending
the Special Meeting and voting in person. Attendance at the Special Meeting will
not by itself constitute revocation of the proxy granted by the voting form.
Whole and fractional Amoco Shares held in participants' accounts in the
Amoco Performance Share Plan and whole and fractional shares representing
participants' proportionate shares of Amoco Shares held in the Amoco Employee
Savings Plan will be voted by such plans' trustees in accordance with
participants' voting directions. Any shares for which voting directions are not
received will be voted in the trustees' discretion. Whole Amoco Shares held in
participants' accounts in the Amoco Direct Access Plan will be voted in
accordance with participants' voting directions. Fractional shares and shares
for which voting directions are not received will not be voted.
STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED VOTING FORM. IF THE
MERGER IS CONSUMMATED, AMOCO SHAREHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR AMOCO SHARES FOR BP AMOCO ADSS AT THAT TIME.
Amoco will bear the costs of the Special Meeting and of soliciting proxies
therefor. Amoco and BP will share equally the amount of the filing fees and the
other expenses incurred in connection with the cost
24
<PAGE>
of filing, printing and distributing this Proxy Statement/Prospectus. D.F. King
& Co., Inc. will assist in the solicitation of proxies by Amoco for a base fee
of $20,000 plus reasonable out-of-pocket expenses.
Additionally, officers and other Amoco employees may solicit proxies by
telephone, telegram, telefax, other electronic means or in person. Upon request,
Amoco will reimburse banks, brokers, nominees and related fiduciaries for
reasonable expenses incurred by them in sending proxy materials to beneficial
owners of Amoco Shares.
REQUIRED VOTE; QUORUM
Indiana Law and the Amoco Amended Articles require approval of the Merger
Agreement by not less than a majority of all of the votes entitled to be cast at
the Special Meeting by Amoco Shareholders. Each Amoco Share outstanding on the
Record Date is entitled to one vote. There are no other voting securities of
Amoco outstanding. Brokers and nominees are precluded from exercising their
voting discretion on the approval of the Merger Agreement and, for this reason,
absent specific instructions from the beneficial owner of the Amoco Shares, are
not permitted to vote such Amoco Shares. Shares that are not voted because
brokers did not receive instructions are referred to as "broker non-votes."
Holders of a majority of the Amoco Shares outstanding on the Record Date must be
present in person or by proxy at the Special Meeting to constitute a quorum.
Abstentions and broker non-votes are counted as present or represented for
purposes of determining a quorum for the Special Meeting. Because the
affirmative vote of Amoco Shareholders holding not less than a majority of the
outstanding Amoco Shares on the Record Date is required for approval of the
Merger Agreement, an abstention, unreturned proxy or broker non-vote will have
the effect of a vote against approval of the Merger Agreement.
THE AMOCO BOARD RECOMMENDS THAT AMOCO SHAREHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT.
DISSENTERS' RIGHTS
Under Indiana Law, Amoco Shareholders are not entitled to exercise
dissenters' rights with respect to the Merger.
AVAILABILITY OF INDEPENDENT ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, independent accountants of
Amoco, will be present at the Special Meeting, will have the opportunity to make
a statement should they desire to do so and are expected to be available to
respond to appropriate questions.
25
<PAGE>
THE BP EXTRAORDINARY GENERAL MEETING AND THE SEPARATE CLASS MEETING
In accordance with the provisions of the Merger Agreement, the BP Board has
convened an extraordinary general meeting of the shareholders of BP (the "BP
Extraordinary General Meeting") and has also convened a separate class meeting
of the holders of BP Ordinary Shares (the "Separate Class Meeting") for November
25, 1998.
At the BP Extraordinary General Meeting, the following resolutions will be
proposed:
(a) Resolution 1 will be proposed to approve the Merger and also to provide for
certain matters which are required to give effect to the Merger or to
satisfy conditions to the Merger, namely:
(i) if Resolution 11 (relating to the Redenomination) does not take effect
in accordance with its terms, (A) to increase the authorized ordinary
share capital of BP Amoco from L2,000,000,000 to L3,000,000,000, by the
creation of an additional 4,000,000,000 BP Amoco Ordinary Shares of
nominal value 25p each, (B) to give the board of directors of BP Amoco
(the "BP Amoco Board") the authority to allot additional BP Amoco
Ordinary Shares up to an aggregate nominal amount of L1,515,000,000,
including the BP Amoco Ordinary Shares to be allotted pursuant to the
Merger, and (C) to give the BP Amoco Board the power to disapply
shareholders' pre-emption rights in respect of relevant securities with a
nominal value of L122,000,000, equal to approximately five percent of BP
Amoco's issued ordinary share capital following the Merger, during a
period commencing on the date that the Merger becomes effective and
expiring on the earlier of the date of BP's next annual general meeting
and July 15, 1999;
(ii) to amend the BP Articles of Association (A) to increase the maximum
number of directors of BP Amoco to 22, (B) to provide for a Co-Chairman
of the BP Amoco Board and (C) to reflect the increase in the authorized
share capital of BP Amoco; and
(iii) to change the name of BP to "BP Amoco p.l.c."
(b) Resolutions 2 to 10 will be proposed to elect as additional directors of BP
Amoco H.L. Fuller, W.G. Lowrie, R.S. Block, J.H. Bryan, E.B. Davis, Jr.,
R.J. Ferris, F.A. Maljers, W.E. Massey and M.H. Wilson. Each of these
proposed directors has been designated by Amoco and will take office if the
Merger becomes effective.
(c) Resolution 11 will be proposed:
(i) to authorize certain transactions required to effect the Redenomination;
(ii) to approve certain amendments to the BP Articles of Association
required to enable the Redenomination to take effect; and
(iii) (A) to increase the authorized ordinary share capital of BP Amoco from
L2,000,000,000 to $6,000,000,000 and L12,750,000, by the creation of
12,000,000,000 BP Amoco Ordinary Shares of nominal value US$0.50 each,
(B) to give the BP Amoco Board the authority to allot BP Amoco Ordinary
Shares up to an aggregate nominal amount of $6,000,000,000, including the
BP Amoco Ordinary Shares to be allotted pursuant to the Merger, and (C)
to give the BP Amoco Board the power to disapply shareholders'
pre-emption rights in respect of relevant securities with a nominal value
of $244,000,000, equal to approximately five percent of BP Amoco's issued
ordinary share capital following the Merger, during a period commencing
on the date that the Merger becomes effective and expiring on the earlier
of the date of BP's next annual general meeting and July 15, 1999.
(d) Resolution 12 will be proposed to increase the aggregate remuneration
authorized to be payable to non-executive directors of BP Amoco to an amount
not exceeding L1,500,000 per annum and to amend the BP Articles of
Association (in relation to determining the remuneration of non-executive
directors by ordinary resolution).
(e) Resolution 13 will be proposed to approve the rules of, and authorize
implementation of, the BP Amoco Share Option Plan and BP Amoco Long Term
Performance Plan, and to authorize the BP Amoco Board to establish further
plans for employees overseas which are based on these plans.
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(f) Resolution 14 will be proposed to amend the BP Articles of Association so as
to provide for the delivery of notices of Board meetings to BP Amoco
directors absent from the U.K.; to provide for the announcement of dividends
in U.S. dollars; to permit certain approved depositaries (including the
Depositary) to appoint multiple proxies who will have the right to attend,
speak and vote at BP Amoco general meetings; to allow such proxies
themselves to appoint a proxy; to enable proxies to vote on a show of hands;
to enable the issue and provide the terms of share warrants to bearer; and
to provide that all special and extraordinary resolutions will be taken on a
poll and all ordinary resolutions will be conducted by show of hands (unless
a poll is requested or taken).
The consummation of the Merger is conditioned on the approval of Resolution
1 (the "BP Requisite Resolution"). The election of the additional directors
nominated by Amoco is a condition to Amoco's obligation to consummate the
Merger, and the Merger will not become effective if such directors are not
elected unless this condition is waived by Amoco. The Merger is not conditioned
on Resolutions 11 to 14 being passed. Resolutions 2 to 13 will not become
effective unless Resolution 1 is passed.
Both Resolutions 1 and 11 provide for the increase in ordinary share
capital, the increase in the BP Amoco Board's allotment authority and the
disapplication of pre-emption rights, so that even if the Redenomination
(Resolution 11) does not take effect, the BP Amoco Ordinary Shares to be issued
in the Merger may be allotted. The increase in authorized share capital will
authorize BP Amoco to allot BP Amoco Ordinary Shares pursuant to the Merger and
maintain a sufficient level of authorized share capital until the next annual
general meeting. The extension of the authority of the BP Amoco directors to
allot BP Amoco Ordinary Shares without further being required to offer them to
existing shareholders of BP will allow the allotment of BP Amoco Ordinary Shares
in connection with the Merger. In addition, the BP Amoco Board will have the
authority to allot additional BP Amoco Ordinary Shares. The disapplication of
shareholders' pre-emption rights will extend the authority of the directors of
BP Amoco to make such allotments of BP Amoco Ordinary Shares for cash without
first offering them to existing BP Amoco Shareholders. Except pursuant to the
Merger, the Redenomination, the issue of shares under BP's share dividend plan
and the exercise of options under BP Amoco's share option schemes, the directors
of BP have no present intention to allot BP Amoco Ordinary Shares and, in any
event, no issue of shares which would result in a change of control will take
effect without the consent of BP Amoco Shareholders in a general meeting.
Resolutions 1, 11, 12 and 14 are special resolutions and require the
approval of not less than 75% of the votes cast in person or on a poll at the BP
Extraordinary General Meeting. The other resolutions are ordinary resolutions,
each of which requires the approval of a majority of the votes cast in person or
on a poll at the meeting. The standard quorum requirement of five members will
apply.
At the Separate Class Meeting, a resolution will be proposed to approve the
Redenomination and any effects it may have on the rights of BP Amoco Ordinary
Shareholders. The Separate Class Meeting has been convened for 11:30 a.m.,
London time, on November 25, 1998 or as soon thereafter as the BP Extraordinary
General Meeting shall have been concluded or adjourned. The resolution to be
proposed at the Separate Class Meeting is an extraordinary resolution and,
accordingly, will require approval of not less than 75% of the votes cast by
holders of BP Ordinary Shares in person or on a poll and a quorum of such
holders representing in person or by proxy one-third of the issued BP Ordinary
Shares.
At the BP Extraordinary General Meeting and the Separate Class Meeting, on a
show of hands every shareholder of BP who is present in person shall have one
vote and on a poll every shareholder of BP who is present in person or by proxy
shall have, in the case of holders of BP Ordinary Shares, one vote for each BP
Ordinary Share and, in the case of holders of BP First Preference Shares and BP
Second Preference Shares (in relation to the BP Extraordinary General Meeting
only), two votes for every five BP First Preference Shares or BP Second
Preference Shares, as the case may be.
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THE MERGER
BACKGROUND OF THE MERGER
In recent years, the managements of each of Amoco and BP have periodically
reviewed their companies' respective competitive positions in the oil and gas
industry, industry trends and strategic initiatives to seek to improve their
competitive positions, including possible business combinations, joint ventures
and other significant transactions. The managements of Amoco and BP each
believed that increased size could enhance their competitive position.
Amoco and BP had previously engaged in preliminary discussions concerning a
possible joint venture involving only the petrochemicals businesses of the two
companies. Those discussions were exploratory in nature and ceased in February
1997 without resulting in any agreement because the companies were unable to
identify adequate synergistic benefits to justify further discussions regarding
a joint venture. In May 1998, H. Laurance Fuller, Chairman and Chief Executive
Officer of Amoco, and Sir John Browne, Group Chief Executive of BP, met, at the
suggestion of Sir John Browne, to discuss the possibility of combining the
businesses of Amoco and BP. In the course of that discussion, BP proposed, as a
possibility, a "dual holding company" structure in which each of Amoco and BP
would continue its existence as a separate public company with its own publicly
traded common stock, but in which the businesses of the two companies would be
managed as a unified enterprise by identical boards of directors and senior
executives. At this meeting Messrs. Fuller and Browne concluded that such a
combination might be beneficial for each of their companies and that further
discussions should be held. Messrs. Fuller and Browne had three further meetings
on June 17, July 8 and July 23, 1998, at which they discussed the terms upon
which a combination could occur and the ways in which a combined BP-Amoco could
build on the strengths of the two companies, achieve operating synergies and
savings and combine the management teams of Amoco and BP. The substance of these
meetings focused on the mutual vision of Messrs. Fuller and Browne for the
combined company, the basis for equalizing the voting rights of, and
distributions to, shareholders of each of BP and Amoco in the dual holding
company structure, the composition of the unified board, targets of achievable
synergies and management responsibilities.
In May 1998, Amoco asked Morgan Stanley to act as its financial advisor in
connection with the potential business combination with BP. Morgan Stanley was a
longtime advisor to Amoco. In May 1998, BP requested that J.P. Morgan act as
BP's financial advisor in connection with a potential business combination with
Amoco. J.P. Morgan had previously acted as financial advisor to BP. In June
1998, at the request of BP and Amoco, representatives of Morgan Stanley met with
their counterparts at J.P. Morgan to discuss the financial aspects of the dual
holding company structure, in particular the ratios of equalizing dividends and
distributions, trading aspects of the two stocks and capital market issues.
Beginning in mid-June 1998, other senior executives of Amoco and BP, along
with outside financial advisors and legal counsel, began to meet to discuss the
possible combination of Amoco and BP. These discussions focused on the relative
ownership by Amoco and BP shareholders of BP Amoco, the achievability of
operating synergies and savings, mutual due diligence and allocation of
management responsibilities. Amoco and BP and their advisors also discussed the
structure for the combination, including the proposed dual holding company
structure. The substance of much of these discussions dealt with specific legal,
accounting and financial issues arising under the dual holding company
structure, which are not settled in such a structure but are relatively
straightforward in the case of a stock-for-stock merger, such as the appropriate
accounting treatment, the tax consequences of such a structure, the
applicability of various antitrust rules and regulations, the compatibility of
differing corporate and stock exchange regulations, and the means of attempting
to equalize the economic interests and trading prices of the shares of the two
companies in accordance with a fixed equalization ratio. The parties considered
the advantages of such a structure to be that each company would maintain its
own identity, listing on its primary stock exchange and access as an individual
company to its primary capital market. The perceived disadvantages were the
complexity of the structure and the possibility that the two companies' stocks
would not trade in their respective markets at prices in line with the agreed
equalization ratio. In these discussions, the parties agreed that in a dual
holding company structure the parties must be able to account
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for the combined entity analogously to a pooling-of-interests for purposes of
U.S. GAAP and to merger accounting treatment under U.K. GAAP in order to be
favorably received in the financial markets and achieve the intended benefits
for shareholders. To assure themselves that this would be the case, the parties
undertook to contact appropriate regulatory authorities with respect to
accounting, tax, antitrust and stock exchange issues.
Amoco and BP executed a confidentiality agreement on July 24, 1998. On July
28, 1998 and July 30, 1998 the Amoco Board and the BP Board, respectively, were
fully briefed of discussions and reviewed relevant financial and legal
considerations, and authorized further discussions. The financial presentations
at these meetings by Morgan Stanley and J.P. Morgan, respectively, were
preliminary analyses similar to the final analyses presented at the August 10,
1998 board meetings of Amoco and BP (see "--Opinions of Financial Advisors"),
but were based on a dual holding company structure. On July 30, 1998, Amoco and
BP agreed to conduct discussions on an exclusive basis until August 18, 1998. On
August 2, 1998, Messrs. Fuller and Browne met again to discuss certain aspects
of the transaction, including the need for adjustment if the two dual holding
company stocks did not trade appropriately on an equalized basis, in particular
if one company's shares traded systematically at a discount to the agreed
equalization ratio. Following such discussion, the parties continued to discuss,
but did not reach final agreement on, the detailed arrangements necessary to
ensure the equality of shareholder interests contemplated by the dual holding
company structure. On August 7, 1998, primarily as a result of discussions with
the SEC concerning the application of U.S. GAAP to the proposed dual holding
company transaction, the status of discussions to date with respect to a dual
holding company structure and the perceived need to proceed to a definitive
agreement expeditiously so as to avoid the potential disruption caused by a long
delay and the risk of possible leaks, Amoco and BP terminated their discussions
with respect to a dual holding company transaction, and on August 8, 1998,
representatives of Amoco and BP began discussions with respect to a
stock-for-stock merger between Amoco and BP. The stock-for-stock merger was
intended to achieve substantially all of the economic benefits of combining both
companies contemplated by the dual holding company transaction. While the
stock-for-stock merger would result in the disappearance of Amoco as a
separately traded entity, this structure would assure the accounting treatment
desired by the parties and would avoid the complexities of the dual holding
company structure. In particular, the economic interests of the shareholders of
BP and Amoco would be fixed by the exchange ratio and their ownership of a fixed
percentage of the shares of BP Amoco. Moreover, the parties determined that they
would be able to reach definitive agreement quickly on a transaction structured
as a stock-for-stock merger.
On August 10, 1998, Messrs. Fuller and Browne tentatively agreed on the
remaining unresolved principal terms of the Merger, including the exchange ratio
and the composition of the BP Amoco Board. Later in the day on August 10, 1998
the Merger was approved by the Amoco Board and the BP Board. Morgan Stanley and
J.P. Morgan made presentations and gave oral fairness opinions to the Amoco
Board and the BP Board, respectively, at these meetings. (The substance of these
opinions and the analyses underlying them is described more fully below under
"--Opinions of Financial Advisors.")
In connection with their negotiations, BP and Amoco agreed to enter into the
Stock Option Agreement. This agreement and the termination fees contemplated by
the Merger Agreement evidenced the parties' commitment to the business
combination between them and the parties believed that they were customary
features of transactions of this nature involving United States companies. The
Stock Option Agreement and the termination provisions of the Merger Agreement
taken together could potentially act as an impediment to an alternative business
combination proposal for Amoco, as it could have the effect of precluding such a
combination with Amoco from being accounted for as a pooling-of-interests under
U.S. GAAP. Amoco requested a parallel stock option from BP, but was advised that
BP was precluded from granting such an option under U.K. regulations.
On August 11, 1998, the Merger Agreement and the Stock Option Agreement were
executed by the parties and the transaction was publicly announced.
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REASONS FOR THE MERGER
Amoco and BP believe that the Merger will create a more competitive, global
energy and petrochemical company than either Amoco or BP would be on its own and
will generate significant opportunities to deliver greater value to
shareholders. The Amoco Board and the BP Board each considered a number of
factors in determining to approve the Merger and recommend it to their
shareholders. The material factors considered are those set forth below:
SCALE, FINANCIAL STRENGTH AND DISTINCTIVE ASSETS. The Merger will create
one of the world's oil "super-majors," with combined pro forma 1997 earnings in
excess of $6 billion and a combined market capitalization of approximately $110
billion (based on the respective share prices just prior to the announcement of
the proposed Merger). On a pro forma basis, the new enterprise would have a net
debt (debt less cash and liquid resources) to net debt plus equity ratio of 24%.
The Amoco and BP Board believe that the Merger will combine in one enterprise
activities that are distinctive in terms of competitive access to investment
opportunities (E.G., BP and Amoco production sharing agreements in the Caspian
region), market presence (E.G., the BP downstream retail position in Europe and
Amoco's leading position in PTA manufacture) and technological skills (E.G.,
deep water drilling and proprietary chemicals processing technologies). The
Amoco Board and the BP Board believe that this combination, taken together with
the merged enterprise's financial strength, will open up the kind of
opportunities which, because of location or complexity, are only available to
the most competitive international energy and petrochemical organizations. The
Boards of the two companies believe there will be increased opportunities for
the merged enterprise in remote regions of the world which have recently become
accessible to the international exploration and production industry and for
satisfying increased energy and petrochemical demand in a number of the emerging
markets. The Amoco Board and the BP Board also believe that combining the two
companies' technical skills and commercial experience will enable BP Amoco to
achieve ongoing performance improvement relative to its main competitors.
STRATEGIC AND GEOGRAPHIC FIT. In reaching their decision, the Amoco Board
and the BP Board considered the complementary nature of the businesses of Amoco
and BP in terms of their commercial strengths and geographic profiles. The
combined asset base of BP and Amoco, more than 70% of which is currently located
in the Organization for Economic Co-operation and Development countries, would
give the merged enterprise a secure base from which to move forward into new
areas. In exploration and production, the Merger would make BP Amoco the largest
producer of oil and gas in the U.S. and the U.K., and a leader in oil and gas
investments in Latin America, the Caspian region, Africa and other frontier
areas. The reserves base of the merged enterprise would be the second largest of
the major international oil companies, comprising 58% oil reserves and 42% gas
reserves. In refining and marketing, the Merger would combine Amoco's market
presence and brand name in the U.S. with BP's top-tier market position in Europe
and elsewhere. The merged enterprise would also be one of the largest
petrochemicals companies in the world, bringing together Amoco's and BP's
leading positions in different product categories and technologies.
SYNERGIES. The Amoco Board and the BP Board believe that the merged
enterprise would be able to achieve an annual rate of $2 billion in (pre-tax)
cost savings by the end of 2000, significantly enhancing the earnings potential
of the merged enterprise over the earnings potential of Amoco and BP as separate
companies. The estimated cost savings, which are in addition to cost savings
previously targeted by the two companies separately, are expected to come from
staff reductions in areas of overlap, more focused exploration efforts,
standardization and simplification of business processes (E.G., information
technology), improved procurement and the elimination of duplicative facilities
(E.G., distribution depots). The Amoco Board and the BP Board expect that the
cost savings will begin to be realized in the first two years but that these are
likely to be offset by special restructuring charges (currently estimated at $2
billion) which will be incurred over the first two years to cover the cost of
achieving these savings.
COMPLEMENTARY MANAGEMENT STRATEGIES. The Amoco Board and the BP Board
considered that the managements of the two companies already share certain
fundamental management philosophies. The new
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BP Amoco enterprise intends to continue to pursue sustainable growth within a
disciplined financial framework, with a target ceiling on net debt to net debt
plus equity of around 30%. In addition, it is expected that the merged
enterprise will adopt a dividend policy in line with the existing policies of BP
and Amoco, and therefore that BP Amoco will pay as dividends approximately 50%
of estimated average earnings over the course of the business cycle.
OTHER FACTORS CONSIDERED. Other positive factors considered by the Amoco
Board and the BP Board include: (i) the terms and conditions of the Merger
Agreement, including the fixed Exchange Ratio and the lack of any conditions to
the Merger considered likely to impede or delay successful completion; (ii) the
intended use of the merger method of accounting under U.K. GAAP and
qualification for the pooling-of-interests method of accounting under U.S. GAAP;
(iii) the expectation that the Merger will generally be a tax-free exchange to
Amoco Shareholders under U.S. tax laws and that no gain or loss will be
recognized by BP for U.K. or U.S. federal income tax purposes; and (iv) the
potential for further consolidation in the oil and gas industry and the
advantage to each company of proceeding with a transaction now which offers an
opportunity to generate significant value for shareholders.
Each company's board of directors also considered certain countervailing
factors in their respective deliberations concerning the Merger including (i)
the facts that the Exchange Ratio will not be adjusted even if the two
companies' share prices diverge in the period prior to completion of the Merger
and that the Merger Agreement does not provide for updated fairness opinions
from the financial advisors of either company, and (ii) the possibility of
encountering difficulties in integrating the operations of BP and Amoco and in
achieving cost savings to the extent currently estimated or in the time
currently contemplated. In addition, the Amoco Board and the BP Board considered
the current conditions in the petroleum and financial markets but did not
determine these to be material countervailing factors in relation to the Merger.
RECOMMENDATION OF THE AMOCO BOARD; ADDITIONAL CONSIDERATIONS OF THE AMOCO BOARD
At its meeting on August 10, 1998, the Amoco Board, by unanimous vote of the
directors present (which did not include Martha R. Seger, who was unavailable on
August 10, but who subsequently indicated her approval of the Merger),
determined that the Merger Agreement and the transactions contemplated thereby,
including the Merger, are fair to and in the best interests of Amoco and Amoco
Shareholders. Accordingly, the Amoco Board has adopted the Merger Agreement, and
the Amoco Board recommends that Amoco Shareholders vote "FOR" approval of the
Merger Agreement.
In the course of reaching its decision to adopt the Merger Agreement, the
Amoco Board consulted with Amoco's management, as well as its outside legal
counsel and its financial advisor, and considered the following factors, in
addition to those set forth above under "--Reasons for the Merger":
- The Amoco Board considered the results of operations and prospects of
Amoco and the nature of its industry; in particular, the Amoco Board
considered Amoco's existing and future competition and the relative sizes
of other participants in the industry in which it operates. The Amoco
Board noted that Amoco and the other so-called "major" oil companies had
different competitive characteristics from the larger
"super-majors"--Exxon Corporation ("Exxon") and the Royal Dutch/Shell
group ("Shell")--and that, in particular, the super-majors appeared to
have an advantage in bidding for large positions in large scale
development and exploration opportunities with their attendant risks.
- The Amoco Board considered, as an alternative to the Merger, continuing to
execute its strategic plan as an independent entity, and the risks and
potential rewards associated therewith. Such risks include, among others,
the risks associated with remaining independent amidst industry-wide
consolidation. The potential rewards include, among others, the ability of
existing Amoco shareholders to wholly partake in the potential future
growth and profitability of Amoco.
- The Amoco Board considered the value of the Exchange Ratio provided for in
the Merger Agreement relative to the then-current market price and
historical trading prices of Amoco Shares
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over the past year and that Amoco Shareholders would hold approximately
40% of the total issued share capital of BP Amoco.
- The Amoco Board considered the role that Amoco's current management is
expected to play in the management of BP Amoco, in particular Amoco
management's participation in the transition and the intention of BP and
Amoco to take advantage of the best management resources of both companies
in BP Amoco.
- The Amoco Board considered the effect on Amoco Shareholders of holding
shares in an English company and having their holdings represented by BP
Amoco ADSs and the possibility that BP Amoco ADSs may not be included in
the S&P 500 stock index. The Amoco Board expected that the BP Amoco ADSs
would have substantial liquidity in the U.S. markets but that the
possibility that they would not be included in the S&P 500 stock index was
a negative factor since a substantial number of Amoco Shares are held by
index funds.
- The Amoco Board considered that typical price-earnings ratios for the
super-majors, Exxon and Shell, have been significantly higher than those
for the integrated oil companies in Amoco's and BP's peer group, and that
if BP Amoco, which will have certain size and operating characteristics
similar to Exxon and Shell, were valued at a price-earnings ratio
comparable to Exxon's or Shell's there would be significant enhancement of
value to the shareholders of BP Amoco. The Amoco Board also considered
that there could be no assurance that such a valuation would be realized.
- The Amoco Board considered the analyses and presentation prepared by
Morgan Stanley and its oral opinion (subsequently confirmed in writing) to
the effect that, as of August 10, 1998, and subject to the assumptions
made, matters considered and limitations on the review undertaken, the
Exchange Ratio was fair from a financial point of view to Amoco
Shareholders.
- The Amoco Board considered the potential effect of the terms of the Merger
Agreement with respect to possible third-party proposals to acquire Amoco
subsequent to the execution of the Merger Agreement. In particular, if any
such proposal were made that the Amoco Board determined to be a Superior
Proposal (as defined herein), the Amoco Board could determine to provide
information to and engage in negotiations with any such third party,
subject to the terms and conditions of the Merger Agreement. In this
respect, the Amoco Board considered that the termination payment
provisions of the Merger Agreement could have the effect of discouraging
alternative proposals for a business combination with Amoco. The Amoco
Board also considered that the Stock Option Agreement could have the
effect of precluding any alternative business combination with Amoco from
being accounted for as a pooling-of-interests under U.S. GAAP, which could
be an additional impediment to certain alternative business combination
proposals. On balance, the Amoco Board determined that agreement to these
provisions, which it considered customary for transactions of this nature
involving United States companies and which BP insisted be included, was a
necessary aspect of assuring BP's commitment to enter into the Merger
Agreement, which provided for a business combination transaction that the
Amoco Board determined was fair to and in the best interests of Amoco and
the Amoco Shareholders.
In view of the wide variety of factors considered by the Amoco Board in
connection with its evaluation of the Merger and the complexity of such matters,
the Amoco Board did not consider it practical to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors it
considered in reaching its decision. The Amoco Board conducted a discussion of
the factors described above, including asking questions of Amoco's management
and Amoco's legal and financial advisors, and reached a general consensus that
the Merger was fair to and in the best interests of Amoco and Amoco
Shareholders. In considering the factors described above, individual members of
the Amoco Board may have given different weight to different factors. The Amoco
Board relied on the experience and expertise of its financial advisor for
quantitative analysis of the financial terms of the Merger. See "--Opinions of
Financial Advisors-- Opinion of Amoco's Financial Advisor."
THE AMOCO BOARD, AT A MEETING DULY CALLED AND HELD, HAS, BY UNANIMOUS VOTE
OF DIRECTORS PRESENT, ADOPTED THE MERGER AGREEMENT, AND HAS DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS
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CONTEMPLATED THEREBY, INCLUDING THE MERGER, ARE FAIR TO AND IN THE BEST
INTERESTS OF AMOCO AND AMOCO SHAREHOLDERS. ACCORDINGLY, THE AMOCO BOARD
RECOMMENDS THAT AMOCO SHAREHOLDERS VOTE IN FAVOR OF THE PROPOSAL TO APPROVE THE
MERGER AGREEMENT.
ADDITIONAL CONSIDERATIONS OF THE BP BOARD
In the course of making its decision to approve the Merger Agreement, the BP
Board consulted with BP's management, as well as outside legal counsel and its
financial advisor, and considered certain factors in addition to those set forth
above under "--Reasons for the Merger." Such additional factors included the
following:
- The BP Board considered the analysis and presentation prepared by J.P.
Morgan and its oral opinion (subsequently confirmed in writing) to the
effect that, as of August 10, 1998, and based upon and subject to the
various considerations set forth in its opinion, the Exchange Ratio was
fair from a financial point of view to BP.
- The BP Board considered that, based on achieving the assumed pre-tax cost
savings in 1999 and 2000, on an equivalent share basis, the Merger would
be broadly neutral to BP earnings per share in 1999 and accretive in 2000
(excluding in each case the effect of special severance and restructuring
costs).
- The BP Board considered the fact that shareholders of BP would hold
approximately 60% of the enlarged total issued share capital of BP Amoco.
- The BP Board considered the role that BP's current management is expected
to play in the management of BP Amoco.
- The BP Board considered the fact that the parent company of the merged
enterprise would be an English company, that the global headquarters of BP
Amoco would be located in London and that BP Amoco Ordinary Shares would
be traded on the LSE.
In determining the fairness of the arrangements for BP Shareholders in
respect of their proposed interest in BP Amoco, the BP Board took into account
comparisons of historical financial and operational measures for BP and Amoco,
including relevant income and cash flow measures, dividends and hydrocarbon
reserves. This comparative information, together with comparisons of relative
market capitalizations and market earnings projections, led the BP Board to
conclude that the BP shareholders' interest of approximately 60% in the combined
group was fair.
In view of the wide variety of factors considered by the BP Board in
connection with its evaluation of the Merger, the BP Board did not consider it
practical to, and did not attempt to, quantify, rank or otherwise assign
relative weights to the specific factors described above, and individual members
of the BP Board may have given different weight to different factors.
OPINIONS OF FINANCIAL ADVISORS
OPINION OF AMOCO'S FINANCIAL ADVISOR
In July 1998, Amoco formally retained Morgan Stanley to act as its financial
advisor in connection with the potential combination with BP. At the August 10,
1998 meeting of the Amoco Board, Morgan Stanley rendered to the Amoco Board an
oral opinion that, as of such date and based upon and subject to the various
considerations set forth in its opinion, the Exchange Ratio was fair from a
financial point of view to Amoco Shareholders. Morgan Stanley subsequently
confirmed its oral opinion by delivering to the Amoco Board its written opinion
dated August 11, 1998.
THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN STANLEY DATED AUGUST 11,
1998, WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW
UNDERTAKEN BY MORGAN STANLEY IN RENDERING ITS OPINION, IS ATTACHED TO THIS PROXY
STATEMENT/ PROSPECTUS AS APPENDIX B AND IS INCORPORATED HEREIN BY REFERENCE.
AMOCO SHAREHOLDERS ARE URGED TO, AND SHOULD, READ THE OPINION CAREFULLY AND IN
ITS ENTIRETY. MORGAN STANLEY'S OPINION ADDRESSES ONLY THE FAIRNESS OF THE
EXCHANGE RATIO TO AMOCO SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW AS OF THE
DATE OF THE OPINION. MORGAN STANLEY'S OPINION DOES NOT ADDRESS ANY OTHER ASPECT
OF THE MERGER AND DOES NOT CONSTITUTE A
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RECOMMENDATION TO ANY AMOCO SHAREHOLDER AS TO HOW TO VOTE WITH RESPECT TO THE
MERGER. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
In connection with rendering its opinion, Morgan Stanley, among other
things: (i) reviewed certain publicly available financial statements and other
information of Amoco and BP, respectively; (ii) reviewed certain internal
financial statements and other financial and operating data concerning Amoco,
and had confirmatory discussions with the management of Amoco regarding their
discussions with the management of BP regarding financial and operating data
concerning BP; (iii) conducted confirmatory discussions with the management of
BP regarding its financial and operating performance; (iv) reviewed information
relating to certain strategic, financial and operational benefits anticipated
from the Merger, prepared by the managements of Amoco and BP; (v) discussed the
past and current operations and financial condition and the prospects of Amoco
with the management of Amoco; (vi) reviewed the reported prices and trading
activity for the Amoco Shares and the BP Ordinary Shares; (vii) compared the
financial performance of Amoco and BP and the prices and trading activity of the
Amoco Shares and the BP Ordinary Shares with that of certain other publicly
traded companies comparable with Amoco and BP; (viii) reviewed the financial
terms, to the extent publicly available, of certain comparable transactions;
(ix) participated in discussions and negotiations among representatives of Amoco
and BP and their financial and legal advisors; (x) reviewed the Merger
Agreement; (xi) reviewed the Stock Option Agreement; and (xii) performed such
other analyses and considered such other factors as Morgan Stanley deemed
appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by it for the purposes of its opinion. With respect to the internal
financial statements and other financial and operating data, including
information relating to certain strategic, financial and operational benefits
anticipated from the Merger, Morgan Stanley assumed that they had been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performance of Amoco and BP. Morgan
Stanley did not make any independent valuation or appraisal of the assets or
liabilities of Amoco or BP, nor was Morgan Stanley furnished with any such
appraisals. Morgan Stanley further assumed that the Merger will be consummated
on the terms set forth in the Merger Agreement and that the Merger will be
accounted for as a pooling-of-interests under generally accepted accounting
principles. Morgan Stanley's opinion is necessarily based on economic, market
and other conditions in effect on, and the information made available to Morgan
Stanley as of, the date of the opinion.
The following is a brief summary of the analyses performed by Morgan Stanley
and reviewed with the Amoco Board in connection with rendering its oral opinion
on August 10, 1998.
COMPARATIVE STOCK PRICE PERFORMANCE. Morgan Stanley reviewed the recent
stock price performance of Amoco and BP and compared such performance with that
of a group of mid-capitalization oil and gas companies consisting of Mobil
Corporation, Chevron Corporation and Texaco Inc. (the "Mid-Majors") and an index
of industrial companies represented by the S&P 500 index (the "S&P 500"). Morgan
Stanley observed that over the period from January 1, 1995 to August 5, 1998,
the market price of Amoco Shares appreciated approximately 38% compared with an
appreciation of approximately 94% for BP Ordinary Shares, appreciation of
approximately 69% for an index of the Mid-Majors and an appreciation of
approximately 135% for the S&P 500.
HISTORICAL TRADING RANGE. Morgan Stanley reviewed the closing prices and
trading volumes of Amoco Shares from August 5, 1997 to August 5, 1998. During
this period, based on closing prices on the NYSE, Amoco Shares achieved a high
of $49.19 and a low of $39.56 per share. Amoco Shares closed at $40.69 per share
on August 5, 1998.
COMPARABLE COMPANY ANALYSIS. Morgan Stanley performed an analysis examining
Amoco's performance relative to BP and the Mid-Majors. Morgan Stanley compared
certain publicly available financial and operating data, projections of future
financial performance and market statistics (based upon closing stock prices on
August 5, 1998) of BP and the Mid-Majors. Morgan Stanley calculated the trading
multiples of
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BP and the Mid-Majors based on earnings estimates by Institutional Brokers
Estimate System ("IBES") and the closing stock price of each company as of
August 5, 1998 and applied such multiples to the estimated 1998 and 1999
earnings per share ("EPS") of Amoco based on IBES estimates in order to derive
an implied value per share of Amoco Shares.
Such analysis indicated (1) BP traded at 19.6 times 1998 estimated EPS based
on estimates adjusted for U.S. GAAP, compared to a multiple range of 17.8x to
23.3x for the Mid-Majors and (2) BP traded at 16.0 times 1999 estimated EPS,
compared to a multiple range of 15.3x to 18.5x for the Mid-Majors. This analysis
indicated that the implied equity value of Amoco ranged from $33.81 to $44.44
per fully diluted Amoco Share.
ANALYSIS OF SELECTED COMPARABLE TRANSACTIONS. Morgan Stanley reviewed
eleven selected comparable merger transactions and compared the implied premium
to the relative market capitalization of the smaller entity. This analysis
evidenced premiums in a range from 5.0% to 15.0% based on closing share prices
on the day before the announcement of the transaction. The implied premium
received by Amoco Shareholders upon receiving 40.0% ownership of the combined
entity is 13.3%, also based on closing share prices on the day before
announcement of the transaction. The premium received by Amoco Shareholders when
measured over different time periods similarly matched the premiums indicated by
comparable transactions when measured over the same time period.
The premium is defined as the increase in percentage ownership in the new
entity over the implied market-based ownership on a specific date (I.E., if the
market-based ownership pretransaction is 36.0% and 40.0% is the agreed
ownership, the premium is 11.1%).
No company or transaction used in the comparable company and comparable
transaction analyses is identical to Amoco or the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning financial and operating characteristics
of Amoco and other factors that could affect the public trading value of the
companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful method of using
comparable transaction data or comparable company data.
HISTORICAL CONTRIBUTION ANALYSIS. Morgan Stanley reviewed certain
historical operating and financial information for Amoco and BP which represent
each company's pro forma contribution to the pro forma combined entity. Morgan
Stanley primarily analyzed historical adjusted net income (defined as net income
before unusual or exceptional gains or losses as reported in each company's
annual report) and historical after-tax operating cash flow (defined as adjusted
net income plus depreciation and amortization but before any changes in working
capital). Financial information for BP was converted into U.S. dollars based on
the historical average exchange rates for the relevant period and reflects
adjustments for U.S. GAAP as reported in the 1997 BP 20-F. Adjusted net income
and after-tax operating cash flow were analyzed as they represent a proxy for
each company's equity based financial contribution to the combined entity
compared to each company's equity ownership in the combined entity. This
analysis indicated that for the period from 1995 to 1997, Amoco would have
contributed a range from 37.2% to 41.5% of adjusted net income to the pro forma
combined entity. For the same period, Amoco would have contributed a range from
38.8% to 42.2% of the after tax operating cash flow.
AMOCO PRO FORMA MERGER ANALYSIS. Morgan Stanley analyzed the pro forma
Amoco EPS for fiscal years 1999 and 2000 based on IBES estimates as of August
10, 1998. The analysis showed, assuming $2 billion in synergies phased in over
three years, on an equivalent share basis, that the Merger would be
significantly accretive to Amoco Shareholders in each of 1999 and 2000,
excluding the effect of special restructuring charges and assuming the use of
the merger method of accounting under U.K. GAAP.
Morgan Stanley was not authorized to solicit, and did not solicit, interest
from any party with respect to an acquisition, business combination or other
extraordinary transaction involving Amoco. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to partial analysis or
summary description. In arriving at its opinion, Morgan Stanley considered the
results of all of its analyses as a whole and did not attribute any particular
weight to any analysis or factor considered by it.
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Furthermore, Morgan Stanley believes that selecting any portion of its analyses,
without considering all analyses, would create an incomplete view of the process
underlying its opinion. In addition, Morgan Stanley may have given various
analyses and factors more or less weight than other analyses and factors, and
may have deemed various assumptions more or less probable than other
assumptions, so that the ranges of valuation resulting from any particular
analysis described should not be taken to be Morgan Stanley's view of the actual
value of Amoco or BP. In performing its analyses, Morgan Stanley made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of Amoco and
BP. Any estimates contained in Morgan Stanley's analyses are not necessarily
indicative of future results or actual values, which may be significantly more
or less favorable than those suggested by such estimates. The analyses performed
were prepared solely as part of Morgan Stanley's analyses of the fairness of the
Exchange Ratio from a financial point of view to Amoco Shareholders and were
conducted in connection with the delivery of Morgan Stanley's opinion to the
Amoco Board. The analyses do not purport to be appraisals or to reflect the
prices at which the Amoco Shares or the BP Amoco Ordinary Shares might actually
trade. The terms of the Merger were determined through arm's-length negotiations
between Amoco and BP and were approved by the Amoco Board.
In addition, as described above, Morgan Stanley's opinion and presentation
to the Amoco Board was one of the many factors taken into consideration by the
Amoco Board in making its determination to adopt the Merger Agreement.
Consequently, the Morgan Stanley analyses summarized above should not be viewed
as determinative of the opinion of the Amoco Board with respect to the value of
Amoco or of whether the Amoco Board would have been willing to agree to a
different consideration. Amoco does not intend to obtain an updated opinion with
regard to the fairness of the Merger Agreement and the transactions contemplated
thereby from Morgan Stanley.
The Amoco Board retained Morgan Stanley based upon Morgan Stanley's
qualifications, experience and expertise. Morgan Stanley is an internationally
recognized investment banking and advisory firm. Morgan Stanley, as part of its
investment banking and financial advisory business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In addition, Morgan Stanley is a
full-service securities firm engaged in securities trading, brokerage and
financing activities. Morgan Stanley makes a market in Amoco Shares. In the
ordinary course of Morgan Stanley's trading and brokerage activities, Morgan
Stanley or its affiliates may at any time hold long or short positions, and may
trade or otherwise effect transactions, for its own account or the accounts of
customers, in debt or equity securities or senior loans of Amoco or BP. In the
past, Morgan Stanley and its affiliates have provided financial advisory and
financing services for Amoco and BP and have received customary fees for the
rendering of these services.
Pursuant to the Morgan Stanley engagement letter, Amoco agreed to pay a
customary transaction fee to Morgan Stanley. Amoco has also agreed to reimburse
Morgan Stanley for reasonable expenses as incurred. In addition, Amoco has also
agreed to indemnify Morgan Stanley and its affiliates, their respective
directors, officers, agents and employees and each person, if any, controlling
Morgan Stanley or any of its affiliates against certain liabilities and
expenses, including certain liabilities under the federal securities laws,
arising out of Morgan Stanley's engagement.
OPINION OF BP'S FINANCIAL ADVISOR
In May 1998, BP requested that J.P. Morgan act as its financial advisor in
connection with the potential combination with Amoco. At the August 10, 1998
meeting of the BP Board, J.P. Morgan rendered to the BP Board an oral opinion
that, as of such date and based upon and subject to the various considerations
set forth in its opinion, the Exchange Ratio was fair from a financial point of
view to BP. J.P. Morgan subsequently confirmed its oral opinion by delivering to
the BP Board its written opinion dated as of August 11, 1998.
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THE FULL TEXT OF THE WRITTEN OPINION OF J.P. MORGAN DATED AUGUST 11, 1998,
WHICH SETS FORTH AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED,
MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN BY J.P.
MORGAN IN RENDERING ITS OPINION, IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS
AS APPENDIX C AND IS INCORPORATED HEREIN BY REFERENCE WITH THE CONSENT OF J.P.
MORGAN. THIS OPINION SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY. J.P. MORGAN'S
OPINION ADDRESSES ONLY THE FAIRNESS OF THE EXCHANGE RATIO FROM A FINANCIAL POINT
OF VIEW TO BP AS OF THE DATE OF THE OPINION, DOES NOT ADDRESS ANY OTHER ASPECT
OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY PERSON AS TO HOW
TO VOTE WITH RESPECT TO THE MERGER. THE SUMMARY OF THE OPINION OF J.P. MORGAN
SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In rendering its opinion, J.P. Morgan reviewed (i) an August 10, 1998 draft
of the Merger Agreement and an August 9, 1998 draft of the Stock Option
Agreement; (ii) certain publicly available information concerning the businesses
of BP and Amoco and certain other companies that J.P. Morgan deemed comparable,
and the reported market prices for the securities of certain other companies
that J.P. Morgan deemed comparable; (iii) publicly available terms of certain
transactions involving companies comparable to BP and Amoco and the
consideration paid in such transactions; (iv) current and historical market
prices of the BP Ordinary Shares and the Amoco Shares; (v) the audited financial
statements of BP and Amoco for the year ended December 31, 1997 and the
unaudited financial statements of BP and Amoco for the periods ended March 31,
1998 and June 30, 1998; (vi) certain presentations to the investor community
regarding the business outlook for each of BP and Amoco; and (vii) certain
internal financial analyses and forecasts prepared by BP and its management,
including a review of expected synergies.
In addition, J.P. Morgan held discussions with certain members of the
management of BP with respect to the past and current business operations of BP
and Amoco, the financial condition and future prospects and operations of BP and
Amoco, the effects of the Merger on the financial condition and future prospects
of BP, and certain other matters J.P. Morgan believed necessary or appropriate
to its inquiry. J.P. Morgan participated in a discussion of certain financial
due diligence matters held between the senior management of BP and Amoco on
August 7, 1998. J.P. Morgan reviewed such other financial studies and analyses
and considered such other information as it deemed appropriate for the purposes
of its opinion.
In performing such analysis, J.P. Morgan used such valuation methodologies
as it deemed necessary or appropriate for the purposes of its opinion. J.P.
Morgan's view was based on (i) its consideration of the information BP and Amoco
and their respective representatives and advisors had supplied to them as of the
date of the opinion, (ii) its understanding of the terms upon which BP and Amoco
intended to consummate the Merger, including, without limitation, those with
respect to governance and control of the new entity after consummation of the
Merger, (iii) the currently contemplated capital structure and the anticipated
credit standing of the new entity and its subsidiaries upon consummation of the
Merger, and (iv) the assumption that the Merger would be consummated within the
time periods contemplated by the Merger Agreement.
In giving its opinion, J.P. Morgan relied upon and assumed, without
independent verification, the accuracy and completeness of all information that
was publicly available or was furnished to it by BP and Amoco and their
respective representatives and advisors or otherwise reviewed by them. J.P.
Morgan has not verified the accuracy or completeness of any such information and
it has not conducted any evaluation or appraisal of any assets or liabilities,
nor have any such valuations or appraisals been provided to J.P. Morgan. In
relying on financial analyses and forecasts provided to it, J.P. Morgan has
assumed that they have been reasonably prepared based on assumptions reflecting
the best currently available estimates and judgments by management of BP as to
the expected future results of operations and financial condition of BP to which
such analyses or forecasts relate. J.P. Morgan also assumed that the Merger will
have the tax and accounting consequences described in discussions with
representatives and advisers of BP. In particular, J.P. Morgan has also assumed
that the Merger will be accounted for as a pooling-of-interests under U.S. GAAP
and using the merger method of accounting under U.K. GAAP. J.P. Morgan relied as
to all legal matters relevant to rendering its opinion upon the advice of
counsel.
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J.P. Morgan's opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to J.P. Morgan as
of, the date of the opinion. In addition, J.P. Morgan has indicated that
subsequent developments may affect its opinion, and J.P. Morgan does not have
any obligation to update, or revise or affirm such opinion.
The following is a brief summary of the analyses performed by J.P. Morgan
and reviewed with the BP Board in connection with rendering its opinion on
August 11, 1998.
No company or transaction used in the analysis referred to below is
identical to BP, Amoco or the Merger. Accordingly, any conclusions with respect
to such analysis necessarily involve complex considerations and judgments
concerning financial and operating characteristics of BP and Amoco and other
factors that could affect the public trading value of the companies to which
they are being compared. Mathematical analysis (such as determining the average
or median) is not in itself a meaningful method of using comparable transaction
data or comparable company data.
COMPARABLE P/E ANALYSIS. J.P. Morgan performed an analysis comparing BP's
and Amoco's price to earnings multiples ("P/E multiple") to those of Exxon and
The Shell Transport & Trading Company plc ("Shell T&T") for the past five years.
The source for these P/E multiples was the one year prospective P/E multiple
estimates by IBES. Such analysis indicated that BP and Amoco had been trading in
the recent past at a 20% to 25% discount to both Exxon and Shell T&T. J.P.
Morgan's analysis indicated that if BP and Amoco were to be valued at P/E
multiples comparable to those of Exxon and Shell T&T there would be significant
enhancement of value to shareholders of BP and Amoco. J.P. Morgan pointed out
that there could be no assurance that this value would be realized.
SHARING OF FUTURE BENEFITS OF THE MERGER. J.P. Morgan pointed out that
because BP shareholders' continuing ownership percentage in BP Amoco would be
approximately 60%, such shareholders' share of the value created through the
Merger (I.E., synergies plus potential for P/E multiple re-rating) would be 1.5
times that of Amoco Shareholders.
HISTORICAL CONTRIBUTION ANALYSIS. J.P. Morgan reviewed and analyzed the
relative historical contribution of both BP and Amoco to a combined pro-forma
entity. The following financial performance measures were reviewed: market
capitalizations on a daily basis over the previous three years, post-tax
earnings pre-extraordinary items, earnings before interest and tax
pre-extraordinary items, earnings before interest, tax, depreciation and
amortization pre-extraordinary items, dividends distributed, earnings before
depreciation and exploration expense pre-extraordinary items, net asset values,
and capital employed at year end since 1991. In addition to these financial
performance measures, relative oil and gas reserves, production and SEC-10
values (a standardized measure of discounted future net cash flows relating to
proved oil and gas reserves) as of December 31, 1997 were also analyzed. J.P.
Morgan observed that the relative contribution to a combined BP Amoco entity in
the most recent full year of BP would have been between 53% and 68% depending on
the measure used, and this and the other matters described here under "--Opinion
of BP's Financial Advisor" contributed to J.P. Morgan's conclusion that 60% was
a fair measure of BP's contribution to the combined BP Amoco entity. Sources for
the historical financial information used in connection with the ratios were
BP's and Amoco's annual reports for the years 1991-1997, inclusive. J.P. Morgan
also reviewed relative contributions of both BP and Amoco for the first six
months of 1998.
FORECAST CONTRIBUTION ANALYSIS. J.P. Morgan reviewed and analyzed the then
most current IBES earnings forecast and J.P. Morgan's equity analyst's latest
earnings and cash flow forecasts for 1998, 1999 and 2000. J.P. Morgan observed
that BP was forecast to contribute between 60% and 68% of the future earnings
and cash flow of a combined BP Amoco entity. This, in addition to the share of
BP shareholders in the benefit of the future synergies, estimated at $2.0
billion per annum, being 1.5 times that of the Amoco Shareholders, reinforced
J.P. Morgan's belief that 60% was a fair measure of BP's contribution to the
combined BP Amoco entity.
BP PRO FORMA MERGER ANALYSIS. J.P. Morgan analyzed the then-current pro
forma BP earnings per share forecasts for 1999 and 2000 based on IBES estimates.
The analysis showed, assuming $2.0 billion in
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synergies phased in over three years, on an equivalent share basis, that the
Merger would be accretive in 2000 to holders of BP Ordinary Shares excluding
special restructuring charges.
On the basis of the foregoing, it was J.P. Morgan's opinion that as of the
date of the opinion that the Exchange Ratio was fair from a financial point of
view to BP.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In arriving
at its opinion, J.P. Morgan considered the results of all of its analyses as a
whole and did not attribute any particular weight to any analysis or factor
considered by it. Furthermore, J.P. Morgan believes that selecting any portion
of its analyses, without considering all analyses, would create an incomplete
view of the process underlying its opinion. In addition, J.P. Morgan may have
given various analyses and factors more or less weight than other analyses and
factors, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuation resulting from any particular
analysis described should not be taken as J.P. Morgan's view of the actual value
of BP or Amoco. In performing its analyses, J.P. Morgan made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of BP and
Amoco. Any estimates contained in J.P. Morgan's analyses are not necessarily
indicative of future results or actual values, which may be significantly more
or less favorable than those suggested by such estimates. The analyses performed
were prepared solely as part of J.P. Morgan's analyses of the fairness of the
Exchange Ratio from a financial point of view to BP and were conducted in
connection with the delivery of J.P. Morgan's opinion to the BP Board. Neither
those analyses nor J.P. Morgan's opinion purport to be appraisals. In addition,
J.P. Morgan has expressed no opinion as to the price at which any securities of
either BP, Amoco or BP Amoco will trade at any time.
In addition, as described above, J.P. Morgan's opinion and presentation to
the BP Board was one of the many factors taken into consideration by the BP
Board in making its determination to approve the Merger Agreement. Consequently,
the J.P. Morgan analyses summarized above should not be viewed as determinative
of the opinion of the BP Board with respect to the value of BP or of whether the
BP Board would have been willing to agree to a different consideration. BP does
not intend to obtain an updated opinion with respect to the fairness of the
Exchange Ratio from J.P. Morgan.
The BP Board retained J.P. Morgan based upon J.P. Morgan's qualifications,
experience and expertise. J.P. Morgan is an internationally recognized
investment banking and advisory firm. J.P. Morgan, as part of its investment
banking and financial advisory business, is continuously engaged in the
valuation of business and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In addition, J.P. Morgan is a
full-service securities firm engaged in securities trading, brokerage and
financing activities, J.P. Morgan makes a market in BP Ordinary Shares. In the
ordinary course of J.P. Morgan's trading and brokerage activities, J.P. Morgan
or its affiliates may at any time hold long or short positions, and may trade or
otherwise effect transactions, for its own account or the accounts of customers,
in debt or equity securities or senior loans of BP or Amoco or their affiliates.
In the past, J.P. Morgan and its affiliates have provided financial advisory and
financing services for BP and Amoco and their respective affiliates and have
received customary fees for the rendering of these services.
Pursuant to an engagement letter with J.P. Morgan, BP agreed to pay
customary transaction fees to J.P. Morgan. BP has also agreed to reimburse J.P.
Morgan for reasonable expenses as incurred. In addition, BP has also agreed to
indemnify J.P. Morgan and its affiliates, their respective directors, officers,
agents and employees and each person, if any, controlling J.P. Morgan or any of
its affiliates against certain liabilities and expenses, including certain
liabilities under the federal securities laws, arising out of J.P. Morgan's
engagement.
PLANS FOR AMOCO AFTER THE MERGER
After the Merger, Amoco will be a direct or indirect wholly owned subsidiary
of BP and will be renamed "BP Amoco Corporation." Except as indicated in this
Proxy Statement/Prospectus, BP does not have any present plans or proposals
which relate to or would result in an extraordinary corporate
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transaction, such as a merger, reorganization or liquidation, involving BP Amoco
Corporation, a sale or transfer of a material amount of its or any of its
subsidiaries' assets or any material change in its capitalization, or any other
material changes in BP Amoco Corporation's business.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the Amoco Board's recommendation to vote in favor of the
proposal to approve the Merger Agreement, Amoco Shareholders should be aware
that a number of directors and officers of Amoco have certain interests in the
Merger that are different from, or in addition to, the interests of Amoco
Shareholders generally. The Amoco Board recognized such interests and determined
that such interests neither supported nor detracted from the fairness of the
Merger to Amoco or Amoco Shareholders.
EMPLOYMENT AGREEMENTS
Amoco has entered into service contracts, to become effective as of the
Effective Time ("Service Contracts"), with Messrs. H. L. Fuller and W. G.
Lowrie. Pursuant to his Service Contract, Mr. H. L. Fuller will be engaged for a
period ending March 31, 2000 at an initial annual base salary of $1,100,000.
Pursuant to his Service Contact, Mr. W. G. Lowrie will be engaged for a period
of three years from the Effective Time at an initial annual base salary of
$720,000. The Service Contracts will remain obligations of Amoco (to be named BP
Amoco Corporation) after the Merger. Messrs. Fuller and Lowrie will be seconded
to BP Amoco while they serve BP Amoco. In addition to a base salary, Messrs.
Fuller and Lowrie are each eligible to receive an annual bonus in each fiscal
year. They will each have a target bonus opportunity, expressed as a percentage
of annual salary (subject to a maximum bonus opportunity of 150%), provided that
certain pre-established performance targets are achieved. During their
employment under the Service Contracts, from the Effective Time, the target
bonus opportunity for each of them will be no less favorable than that available
in the fiscal year immediately preceding the fiscal year in which the Effective
Time occurs. From the Effective Time it is proposed that Messrs. Fuller and
Lowrie will participate in the new discretionary share option plan (the "BP
Amoco Share Option Plan"), which is described below. This will replace their
existing participation in Amoco share option arrangements. In addition, they
will also be eligible to participate in the BP Amoco Long Term Performance Plan
which is described below. Messrs. Fuller and Lowrie participate in Amoco's
corporate retirement plan. Under this retirement plan, the amount of the annuity
which they are eligible to receive on a single-life basis is determined under an
annuity benefit formula. The annuity benefit formula (including a percentage of
U.S. social security benefits) is calculated at 1 2/3% multiplied by the
employee's years of participation, multiplied by the average annual earnings
determined from the three highest consecutive calendar years' salaries and from
the three highest consecutive calendar years' bonus awards during the ten years
preceding retirement. The maximum annuity is 60% of such average annual
earnings, and years of participation in the plan in excess of 36 do not result
in additional benefits. Average annual earnings for retirement plan purposes
include salary and bonus where applicable.
Messrs. Fuller and Lowrie are also eligible to participate in other Amoco
corporate benefit plans generally provided to Amoco employees, including an
employee savings plan, containing a company matching contribution of up to 7% of
annual earnings, and certain health and welfare plans, including medical and
dental coverage, non-contributory group life insurance of one times annual
earnings, additional employee paid group life insurance and short and long-term
sickness and disability coverage. In certain circumstances, Amoco will also
gross up payments made to the executives under their Service Contracts for
related tax liabilities and will indemnify the executives in respect of taxes
and expenses incurred by them as a result of Amoco's decision to contest a tax
claim made by the U.S. Internal Revenue Service (the "IRS").
Messrs. Fuller and Lowrie will also receive expatriate benefits in
accordance with the most favorable policies of Amoco and its affiliated
companies during and after any expatriate assignment. In addition, the
executives will be entitled to fringe benefits such as tax planning services,
payment of club dues and use of
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a car (including driver service) in accordance with the most favorable policies
of Amoco and its affiliated companies in respect of Amoco's U.S. payroll peer
executives.
Pursuant to Messrs. Fuller's and Lowrie's Service Contracts, Amoco must pay
each executive a severance payment calculated in accordance with a formula set
out in the Service Contract if Amoco terminates his employment other than for
cause, disability or death, or if the executive terminates his employment with
Amoco for Good Reason. "Good Reason" is defined as the occurrence of any of the
following without the express written consent of the executive: (i) the
assignment to the executive of duties inconsistent with his position, authority
and duties, in respect of Mr. Fuller as Executive Co-Chairman of the Merger
Transition Committee and Deputy Chairman of the Management Committee of BP Amoco
and, in respect of Mr. Lowrie as President and Deputy Chief Executive Officer,
Refining, Marketing and Chemicals of BP Amoco, or other action by Amoco which
results in a diminution in the executive's position; (ii) failure to be
nominated for and/or elected to be a member and in respect of Mr. Fuller,
Co-Chairman, of the BP Amoco Board; (iii) non-compliance with Amoco's
obligations to provide salary and benefits; (iv) requiring the executive to be
based at a location more than 50 miles from Chicago, Illinois in respect of Mr.
Fuller, and more than 50 miles from London, England, in respect of Mr. Lowrie,
or requesting him to undertake substantially more business travel than before
the Effective Time; (v) any purported termination of the Service Contract by
Amoco in breach of its terms; and (vi) the failure by Amoco to obtain the
agreement of any successor to substantially all of the business or assets of
Amoco to agree to perform the Service Contract. The cash lump sum payment to be
paid by Amoco to the executive on termination by the executive for a Good Reason
or by Amoco for a reason other than for cause, disability or death, would be the
aggregate of the following: (i) accrued salary and benefits to the date of
termination of employment; (ii) an amount equal to three times the sum of the
executive's base salary and the product of the executive's highest target bonus
opportunity percentage during his employment under his Service Contract and his
base salary; (iii) a sum to compensate for pension loss for a three-year period
from the date of termination; and (iv) an amount equal to the product of (x) 3,
(y) the executive's annual base salary and (z) 7%, being the contribution which
Amoco would have made to a savings plan on behalf of the executive for a
three-year period following the date of termination. In addition, Amoco is
contractually obliged to continue to provide benefits to the executive for a
three-year period under the welfare benefit plans provided by Amoco (or longer
if the terms of the welfare benefit plan so provide). Amoco must also provide
executive outplacement services and pay or provide any other amounts and
benefits due under other plans or arrangements.
These payments will only be made upon the effectiveness of a release signed
by the executive in favor of Amoco in respect of his employment with Amoco. The
executive is entitled to these payments whether or not he obtains other
employment. If Amoco terminates the executive's Service Contract due to the
executive's disability the executive will be entitled to receive disability and
other benefits at least as favorable as those provided by Amoco to other
disabled executives immediately preceding the Effective Time or, if more
favorable, as provided to Amoco's U.S. payroll peer executives. Amoco also, to
the extent permitted by law, will pay the executive's legal fees and expenses
reasonably incurred in any contest of the enforceability of, or liability under,
the Service Contract provided the executive has not brought proceedings in bad
faith.
Amoco has entered or is expecting to enter into executive employment
agreements with Messrs. E. J. Sosa, W. D. Ford, S. F. Gates, L. R. Flury, J. E.
Fligg, G. S. Spindler, D. F. Work, J. F. Campbell and J. L. Carl ("Employment
Agreements"), in each case to be effective as of the Effective Time. Each
Employment Agreement will be for a period of three years (other than those of
Mr. Carl, Mr. Fligg and Mr. Spindler, which will terminate on March 31, 1999,
December 31, 1999 and April 30, 2000, respectively), and will provide each
relevant executive with a base salary, incentive compensation and other benefits
which, in the aggregate, will be substantially in line with, but in any event
not less than, such executive's aggregate current compensation and benefits
package, except in the case of Mr. Gates, whose annual base salary will be
increased in connection with an increase in his responsibilities. Each of the
Employment Agreements provides for severance payments in an amount equal to
approximately three
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years of total compensation (including salary, bonus and benefit amounts) to the
relevant executive in the event of termination by BP Amoco Corporation without
"cause" (as defined in the Employment Agreement) or by the relevant executive
with "good reason" (as defined in the Employment Agreement) during the term of
the relevant Employment Agreement. The Employment Agreement with Mr. Carl
differs from the other Employment Agreements in that it will terminate on March
31, 1999; it will provide for a retention payment (additional to salary) of
$1,250,000 intended to induce Mr. Carl to remain at BP Amoco Corporation for the
transition period from the Effective Time until March 31, 1999; and it will
provide for severance payments to Mr. Carl, calculated on the same basis as the
other Employment Agreements and payable without condition at the end of the
term. See "THE MERGER AGREEMENT--Employment Agreements and Certain Other
Employee Benefit Matters." Certain of the executives having Employment
Agreements will be seconded to BP Amoco for the term of their Employment
Agreements.
The BP Amoco Share Option Plan is intended as a vehicle for granting options
on BP Amoco Ordinary Shares to BP Amoco Corporation employees and employees of
BP Amoco. Grants under the plan will be discretionary. The BP Amoco Long Term
Performance Plan will provide for the award of performance units to all BP Amoco
employees who are selected for participation. Performance units give the
participant the right to be considered for an award of BP Amoco Ordinary Shares
at the end of a specified performance period. Although both the BP Amoco Share
Option Plan and the BP Amoco Long Term Performance Plan are discretionary, under
the terms of the Merger Agreement, for at least two years following the
Effective Time, BP Amoco is required to provide current and former employees and
directors of Amoco and its subsidiaries compensation and benefits that are at
least as favorable in the aggregate as the compensation and benefits that they
were entitled to receive immediately prior to the Effective Time (including,
among other things, under incentive plans).
DIRECTOR AND OFFICER INDEMNIFICATION AND INSURANCE
In the Merger Agreement, Amoco and BP have agreed that after the Effective
Time, all rights to indemnification and all limitations on liability existing
under the Amoco Amended Articles and the Amoco By-laws in favor of directors and
officers of Amoco, or under an agreement in effect as of the date of the Merger
Agreement between any such director or officer and Amoco or its subsidiaries,
with respect to actions or omissions by them on or prior to the Effective Time
will continue in full force and effect, and BP Amoco will, for a period of six
years after the Effective Time, procure directors' and officers' liability
insurance with respect to acts or omissions occurring prior to the Effective
Time covering each person currently covered by Amoco's directors' and officers'
liability insurance.
BOARD OF DIRECTORS
As of the date hereof, the BP Board is composed of 16 directors. Pursuant to
the Merger Agreement, BP and Amoco have agreed that at the Effective Time, the
Board of BP Amoco will have 22 directorships, of which nine will be held by
Amoco designees. The Amoco designees are Messrs. Fuller and Lowrie, Ruth S.
Block, John H. Bryan, Erroll B. Davis, Jr., Richard J. Ferris, Floris A.
Maljers, Dr. Walter E. Massey and Michael H. Wilson. See "THE MERGER
AGREEMENT--Directors and Management of BP Amoco Following the Merger."
The Amoco directors who will not be joining the BP Amoco Board will receive
a special payment in recognition of their years of service and contributions to
the Amoco Board, as follows: Donald R. Beall-- $304,000; Martha R.
Seger--$304,000; Arthur C. Martinez--$154,000; and Theodore M. Solso--$124,000.
The decision to make these payments, and the decision as to which Amoco
directors (other than Messrs. Fuller and Lowrie) would join the BP Amoco Board,
were not made until after the Merger Agreement was executed.
ACCOUNTING TREATMENT
BP Amoco intends to account for the Merger using the merger method of
accounting under U.K. GAAP, and the Merger qualifies for the
pooling-of-interests method of accounting under U.S. GAAP. See
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"UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION-- Introductory
Note."
INCLUSION OF BP AMOCO IN THE S&P 500 INDEX AND FTSE 100 INDEX
Amoco Shares are currently included in the S&P 500. Mutual funds and other
pooled investment vehicles that track stock indices such as the S&P 500, or that
use the performance of such indices as a benchmark, typically hold shares in the
companies represented in those indices. The S&P 500 tracks the performance of
500 stocks considered representative of the U.S. economy generally. The S&P 500
includes shares of only a few companies incorporated outside the U.S. and the
index sponsor has refused to admit shares of non-U.S. companies to the index in
the recent past. Representatives of BP and Amoco intend to make a presentation
to the index committee of the S&P 500 explaining the reasons why they believe BP
Amoco ADSs should be included in the S&P 500. If the BP Amoco ADSs are not
included in the S&P 500, certain mutual funds and other investment vehicles
currently holding in the aggregate a substantial number of Amoco Shares would be
required to sell such shares (or the BP Amoco ADSs they receive in the Merger).
Conversely, institutional investors that track the FTSE 100 Index, a
capitalization-weighted index, in the U.K. may be required to increase their
holdings of BP Amoco Ordinary Shares because such shares would after the Merger
constitute a larger share of the FTSE 100 Index. These purchases and sales could
have an effect on the market prices of the BP Amoco Ordinary Shares and/or the
BP Amoco ADSs.
CERTAIN OTHER EFFECTS OF THE MERGER
It is a condition to the Merger that the BP Amoco ADSs issuable in
connection with the Merger be authorized for listing on the NYSE subject to
official notice of issuance, and that the LSE shall have admitted to the
Official List (subject to allotment) the new BP Amoco Ordinary Shares to be
allotted by BP in connection with the Merger and that such admission shall have
become effective in accordance with the rules and regulations of the LSE. If the
Merger is consummated, listing of the newly allotted BP Amoco Ordinary Shares on
the LSE will become effective, and dealings in the BP Amoco Ordinary Shares are
expected to commence, after 9:00 a.m., London time, on the day that the
Effective Time occurs. If the Merger is consummated, Amoco Shares will cease to
be listed on NYSE and the other exchanges on which such securities are listed.
For information concerning the income tax consequences of the ownership of BP
Amoco ADSs, see "CERTAIN TAX CONSEQUENCES." Amoco will have debt securities
outstanding after the Merger. If permitted by applicable law and the terms of
such securities, Amoco may cease filing periodic reports with the SEC under the
Exchange Act after the Merger. BP currently intends that BP Amoco will either
file its Annual Report on Form 20-F and Reports on Form 6-K electronically via
EDGAR or post its periodic reports on the Internet.
The content and timing of reports and notices that BP files, and that BP
Amoco will file, with the SEC will differ in certain respects from the reports
and notices that are currently filed by Amoco. Reporting obligations under the
Exchange Act are different for Amoco, which is a U.S. company, and BP and BP
Amoco, which is and will be a foreign private issuer for the purposes of the
reporting rules under the Exchange Act. As a U.S. company, Amoco must file with
the SEC, among other reports and notices, (i) an Annual Report on Form 10-K
within 90 days after the end of each fiscal year, (ii) Quarterly Reports on Form
10-Q within 45 days after the end of each of the first three quarters of each
fiscal year and (iii) Reports on Form 8-K upon the occurrence of certain
significant corporate events. As a foreign private issuer, BP Amoco, pursuant to
the requirements of the Exchange Act, will be required to file with the SEC an
Annual Report on Form 20-F within six months after the end of each fiscal year
and will be required to file Reports on Form 6-K upon the occurrence of certain
significant corporate events. BP Amoco will not be required under the Exchange
Act to file Quarterly Reports on Form 10-Q after the end of each financial
quarter. Pursuant to the Merger Agreement, however, BP has agreed to use all
reasonable efforts (i) within 45 days after the end of each of its first three
fiscal quarters in each of its fiscal years to file with the SEC quarterly
interim reports containing the principal financial information required by Form
10-Q under cover of a Report on Form 6-K and (ii) within 90 days after the end
of each fiscal year, to file with the SEC its Annual Report on Form 20-F. BP
Amoco's Annual Reports on Form 20-F will contain audited
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financial statements prepared in conformity with U.K. GAAP, with a
reconciliation of profit and shareholders' interest to U.S. GAAP. BP Amoco's
quarterly interim reports will include unaudited interim financial information
prepared in conformity with U.K. GAAP, with a reconciliation of profit and
shareholders' interest to U.S. GAAP.
In addition, the content and timing of reports and notices that holders of
BP Amoco Ordinary Shares and BP Amoco ADSs will receive will differ in certain
respects from the reports and notices that are currently received by Amoco
Shareholders. As a U.S. company, Amoco must mail to its shareholders in advance
of each annual meeting of shareholders (i) an annual report containing audited
financial statements and (ii) a proxy statement that complies with the
requirements of the Exchange Act. As a foreign private issuer, BP Amoco will be
exempt from rules under the Exchange Act prescribing the furnishing and content
of annual reports and proxy statements to its shareholders and rules requiring
directors, officers and certain large shareholders to file public reports
detailing their beneficial ownership of equity securities and requiring such
persons in certain circumstances to forfeit to the relevant company "short
swing" profits (as determined under the Exchange Act and the rules thereunder)
on purchases and sales of such securities. However, Amoco and BP intend that BP
Amoco will furnish to its shareholders after the Merger reports similar to the
reports currently furnished by BP to its shareholders, although BP Amoco could
change or discontinue such practice at any time in the future. BP currently
furnishes to its shareholders an annual review and a half-yearly annual report.
Both the annual review and the half-yearly annual report contain summary
financial information about BP. In addition, shareholders of BP, including
holders of BP ADSs, may request copies of BP's Annual Report and Accounts, which
contains audited financial statements prepared in conformity with U.K. GAAP and
a discussion of BP's financial results that is comparable to the Management's
Discussion and Analysis that is contained in Amoco's Annual Report on Form 10-K.
Shareholders may also request a copy of BP's Form 20-F. BP also furnishes to its
shareholders notices of meetings of shareholders and related documents in
accordance with the rules of the LSE.
BP Amoco will furnish to the Depositary all notices of shareholders'
meetings and other reports and communications that are made generally available
to BP Amoco Shareholders. The Depositary has agreed to make such documents
available for inspection at the Depositary's Office (as defined herein) and to
arrange for the mailing of copies of such documents as are mailed to BP Amoco
Shareholders to holders of BP Amoco ADSs as provided in the Deposit Agreement.
See "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES--Reports."
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Statements contained in this Proxy Statement/Prospectus or in documents
incorporated by reference herein, particularly those regarding possible or
assumed future performance, costs, dividends, returns, divestments, reserves and
growth of Amoco, BP and BP Amoco, industry growth and other trend projections,
and those regarding synergistic benefits of the Merger and estimated company
earnings, in particular those set forth under "RECENT DEVELOPMENTS," "THE
MERGER--Reasons for the Merger," "--Recommendation of the Amoco Board;
Additional Considerations of the Amoco Board," "--Additional Considerations of
the BP Board," "--Opinions of Financial Advisors" and "BP AMOCO FOLLOWING THE
MERGER--Dividends" are or may be forward-looking statements that involve risks
and uncertainties. Actual results may differ materially from those expressed in
such statements, depending on a variety of factors, including the specific
factors identified in the discussions accompanying such forward-looking
statements; future levels of industry product supply, demand and pricing;
political stability and economic growth in relevant areas of the world; the
ability of Amoco and BP to integrate their businesses successfully after the
Merger; development and use of new technology and successful partnering; the
actions of competitors, natural disasters and other changes to business
conditions; and other factors discussed elsewhere herein and in the documents
incorporated by reference herein.
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REGULATORY MATTERS
U.S. ANTITRUST
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules promulgated thereunder, certain transactions,
including the Merger, may not be consummated unless certain waiting period
requirements have been satisfied. On September 9, 1998, Amoco and BP each filed
a Premerger Notification and Report Form pursuant to the HSR Act with the
Antitrust Division and the FTC. On October 9, 1998, the FTC issued a request for
additional information and other documentary materials to Amoco and BP relating
to the Merger. Under the HSR Act, the Merger may not be consummated until 20
days following the substantial compliance with such request by both parties,
unless earlier terminated. At any time before or after the Effective Time, the
Antitrust Division, the FTC, or others could take action under the antitrust
laws with respect to the Merger, including seeking to enjoin the consummation of
the Merger, to rescind the Merger or to conditionally approved of the Merger on
the divestiture of substantial assets of Amoco or BP. There can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, that it would not be successful.
EXON-FLORIO
The provisions of Exon-Florio promulgated under the Omnibus Trade and
Competitiveness Act of 1988 ("Exon-Florio") empower the President of the United
States to prohibit or suspend an acquisition of, or investment in, a U.S.
company by a foreign person if the President finds, after investigation,
credible evidence that the foreign person might take action that threatens to
impair the national security of the U.S. and that other provisions of existing
law do not provide adequate and appropriate authority to protect the national
security. Any determination that an investigation is called for must be made
within 30 days of notice of the proposed transaction. In the event such a
determination is made, any such investigation must be completed within 45 days
of such determination. Thereafter, any decision to take action must be announced
within 15 days of completion of the investigation. Authority under Exon-Florio
has been delegated to the Committee on Foreign Investment in the United States
("CFIUS"), the organization charged with administering Exon-Florio. Amoco and BP
will make a voluntary filing to CFIUS seeking a finding that the Merger does not
impair the national security of the United States.
EUROPEAN UNION
Amoco and BP each conducts business in member states of the EU. EU Council
Regulation 4064/89, as amended, requires notification of and approval by the
European Commission of certain mergers or acquisitions involving parties with
aggregate worldwide sales and individual EU sales exceeding certain thresholds
before such mergers or acquisitions are implemented. Amoco and BP notified the
European Commission of the Merger on September 24, 1998. On October 9, 1998, the
European Commission requested additional information particularly as to one
minor product market (polyisobutylene) and concluded that the notification was
incomplete. As of October 26, 1998, the last practicable date prior to the
printing of this document, BP and Amoco were in the course of supplying the
requested information and expected to refile the notification shortly.
The European Commission must review the Merger to determine whether or not
it is compatible with the common market and, accordingly, whether or not to
permit it to proceed. A merger or acquisition which does not create or
strengthen a dominant position as a result of which effective competition would
be significantly impeded in the common market or in a substantial part of the
common market is considered to be compatible with the common market, and must be
allowed to proceed. If, following a preliminary one month investigation, the
European Commission considers that it needs to examine the Merger more closely
because it raises serious doubts as to its compatibility with the common market,
it must initiate a Phase II investigation. If it initiates a Phase II
investigation, the European Commission must make a final decision as to whether
or not the the Merger is compatible with the common market no
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later than four months after the initiation of the Phase II investigation. If no
Phase II investigation is initiated, the European Commission will issue a
decision that the Merger is compatible with the common market within one month
from notification and if no decision is issued within that time period, the
Merger will be deemed to have been approved. Within three weeks from
notification one or more Member States of the EU may request that the European
Commission refer all or part of the Merger back to the Member State(s) concerned
for investigation under the antitrust laws of the requesting Member State(s), or
where the parties offer commitments to the European Commission during its
preliminary investigation to remedy any antitrust concerns.
Amoco and BP believe that the proposed Merger is compatible with the common
market under EC Council Regulation 4064/89, as amended. Nevertheless, there can
be no assurance that either (i) a Phase II investigation will not be initiated
or, if initiated, what the outcome of such an investigation would be, or (ii) a
challenge to the proposed Merger on the grounds that the proposed Merger is not
compatible with the common market will not be made or, if a challenge is made,
what the result will be.
OTHER LAWS
The other regulatory approvals necessary to consummate the Merger are
described below under "THE MERGER AGREEMENT--Conditions to Consummation of the
Merger." Amoco and BP conduct operations in a number of jurisdictions where
other regulatory filings or approvals may be required or advisable in connection
with the consummation of the Merger. Amoco and BP are currently in the process
of reviewing whether other filings or approvals may be required or desirable in
other jurisdictions which may be material to Amoco and BP and its subsidiaries.
It is recognized that certain of such filings may not be completed and certain
of such approvals (which are not as a matter of practice required to be obtained
prior to effectiveness of a merger transaction) may not be obtained prior to the
Effective Time.
GENERAL
It is possible that any of the governmental entities with which filings are
made may seek, as conditions for granting approval of the Merger, various
regulatory concessions. If any regulatory body's approval contains terms or
imposes conditions or restrictions relating or applying to, or requiring changes
in or limitations on, the operation of any asset or business of Amoco, BP or any
of their subsidiaries which terms, conditions or restrictions, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect
(as defined in the Merger Agreement) on Amoco or BP after the Effective Time
(with materiality to be considered with reference to the total equity market
value of Amoco and BP), either Amoco or BP can refuse to close under the Merger
Agreement. There can be no assurance that Amoco or BP will be able to satisfy or
comply with such conditions or be able to cause their respective subsidiaries to
satisfy or comply with any such conditions or that compliance or non-compliance
will not have adverse consequences for BP Amoco after consummation of the
Merger, or that the required regulatory approvals will be obtained within the
time frame contemplated by Amoco and BP and referred to in this Proxy
Statement/Prospectus or on terms that will be satisfactory to Amoco and BP. See
"THE MERGER AGREEMENT--Conditions to the Consummation of the Merger."
CERTAIN TAX CONSEQUENCES
GENERAL
The following general discussion summarizes (i) the material United States
federal income tax consequences to U.S. Holders (as defined below) of Amoco
Shares who exchange such stock for BP Amoco ADSs pursuant to the Merger and (ii)
the material U.S. and U.K. tax consequences of the ownership and disposition of
BP Amoco ADSs. This discussion is based upon existing U.S. federal income tax
law, including legislation, regulations, administrative rulings and court
decisions, as in effect on the date hereof, all of which are subject to change,
possibly with retroactive effect. For the purposes of this
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discussion, a "U.S. Holder" is (i) an individual citizen or resident of the
United States, (ii) a corporation created or organized in or under the laws of
the United States, any state thereof or the District of Columbia or (iii) a
partnership, trust or estate treated, for U.S. federal income tax purposes, as a
domestic partnership, trust or estate. For the purposes of this Proxy
Statement/Prospectus, the term "Eligible U.S. Holder" means a U.S. person that
is a beneficial owner of BP Amoco Ordinary Shares or BP Amoco ADSs and of the
cash dividend paid with respect thereto and that (i) is an individual or a
corporation resident in the U.S. for purposes of the United Kingdom-United
States Income Tax Convention (the "Treaty") (and, in the case of a corporation,
is not also resident in the U.K. for U.K. tax purposes), (ii) is not a
corporation which, alone or together with one or more associated corporations,
controls, directly or indirectly, 10% or more of the voting stock of BP Amoco,
(iii) holds the BP Amoco Ordinary Shares or BP Amoco ADSs in a manner which is
not effectively connected with a permanent establishment in the U.K. through
which such U.S. person carries on business or with a fixed base in the U.K. from
which such person performs independent personal services, and (iv) is not
otherwise ineligible for benefits under the Treaty with respect to income and
gains derived in connection with the BP Amoco Ordinary Shares or BP Amoco ADSs.
This discussion assumes that U.S. Holders hold Amoco Shares as a capital asset
as of the Effective Time. This discussion does not discuss all aspects of U.S.
federal income taxation or U.K. taxation that may be relevant to all U.S.
Holders in light of their particular circumstances, such as U.S. Holders whose
stock was acquired pursuant to the exercise of an employee stock option or
otherwise as compensation or U.S. Holders who are subject to special treatment
under the U.S. federal income tax laws (for example, U.S. Holders that hold
their stock as part of a straddle, hedge or conversion transaction, financial
institutions, insurance companies, tax-exempt organizations and broker-dealers).
This discussion of the income tax consequences also does not address any aspects
of state or local taxation or foreign taxation (other than certain U.K. tax
consequences). In general, for U.S. tax purposes, U.S. Holders of BP Amoco ADSs
will be treated as the owners of the underlying BP Amoco Ordinary Shares that
are represented by such BP Amoco ADSs and deposits and withdrawals of BP Amoco
Ordinary Shares by U.S. Holders in exchange for BP Amoco ADSs will not be
subject to U.S. federal income tax.
EACH U.S. HOLDER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISORS AS TO THE
U.S. FEDERAL INCOME TAX AND U.K. TAX CONSEQUENCES OF THE MERGER INCLUDING THE
FACTS AND CIRCUMSTANCES THAT MAY BE UNIQUE TO SUCH U.S. HOLDER, AND AS TO ANY
ESTATE, GIFT, STATE, LOCAL OR NON-U.S. TAX CONSEQUENCES OF THE MERGER AND THE
OWNERSHIP AND DISPOSITION OF BP AMOCO ADSS.
UNITED STATES TAX CONSEQUENCES OF THE MERGER TO U.S. HOLDERS
The Merger is intended to qualify as a reorganization within the meaning of
Section 368(a) of the Code. The obligation of Amoco to consummate the Merger is
conditioned upon the receipt by Amoco from its special counsel, Wachtell,
Lipton, Rosen & Katz, of an opinion (the "Amoco Tax Opinion"), based on certain
representations and assumptions, to the effect that for U.S. federal income tax
purposes, (i) the Merger will be treated as a reorganization within the meaning
of Section 368(a) of the Code; and (ii) no gain or loss will be recognized by an
Amoco Shareholder on the exchange of Amoco Shares for BP Amoco ADSs, except with
respect to cash received on the sale of a fractional interest in a BP Amoco ADS.
See "THE MERGER AGREEMENT--Conditions to Consummation of the Merger." The
opinion of Wachtell, Lipton, Rosen & Katz will be expressly based upon the
accuracy of certain representations made to such counsel by Amoco and BP, as
well as upon certain assumptions. The assumptions made by counsel may include
the assumption that a U.S. Holder who is a "5% shareholder" of BP Amoco after
the Merger will, in accordance with applicable Treasury Regulations under
Section 367(a) of the Code, file a "gain recognition agreement" with the IRS, as
explained more fully below. For purposes of this discussion, whether a U.S.
Holder is a "5% shareholder" of BP Amoco after the Merger will be determined in
accordance with applicable Treasury Regulations under Section 367(a) of the
Code.
Amoco is permitted under the Merger Agreement to waive (but does not intend
to waive) the receipt of the Amoco Tax Opinion as a condition to its obligation
to consummate the Merger. Amoco will not
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waive the condition without first recirculating revised proxy materials and
resoliciting the vote of Amoco Shareholders. Furthermore, the Amoco Tax Opinion
is not binding on the IRS or a court and does not preclude the IRS or a court
from adopting a contrary position. Amoco will not seek a ruling from the IRS as
to the tax treatment of the Merger as a reorganization or as a non-recognition
exchange of Amoco Shares for BP Amoco Ordinary Shares represented by BP Amoco
ADSs.
Based upon and subject to the foregoing, in the opinion of Wachtell, Lipton,
Rosen & Katz, for U.S. federal income tax purposes the Merger will be treated as
a reorganization within the meaning of Section 368(a) of the Code and a U.S.
Holder who receives BP Amoco Ordinary Shares represented by BP Amoco ADSs in
exchange for Amoco Shares will not recognize gain or loss upon such exchange
(except as described below with respect to cash that is received with respect to
the sale of a fractional BP Amoco ADS). Accordingly, (i) the aggregate tax basis
of the BP Amoco ADSs (including fractional units) received by the U.S. Holder
will be the same as the aggregate tax basis of the Amoco Shares surrendered in
exchange therefor pursuant to the Merger and (ii) the holding period of the BP
Amoco ADSs (including fractional units) will include the holding period of the
Amoco Shares surrendered in exchange therefor pursuant to the Merger.
In accordance with Treasury Regulations under Section 367(a) of the Code, a
U.S. Holder who is a "5% shareholder" of BP Amoco after the Merger will qualify
for the treatment described in the preceding paragraph only if such U.S. Holder
files a "gain recognition agreement" with the IRS. A U.S. Holder who is not a
"5% shareholder" of BP Amoco after the Merger is not subject to any special
filing requirements under Section 367 of the Code. BP currently intends to treat
the Merger as a reorganization and as a non-recognition transaction for U.S.
federal income tax purposes.
Fractional interests in BP Amoco ADSs will not be issued to Amoco
Shareholders in the Merger. In lieu of the issuance of such fractional interests
in BP Amoco ADSs, the fractional interests Amoco Shareholders would have been
entitled to receive will be sold and the proceeds of such sale will be paid to
such holders. A U.S. Holder who receives cash with respect to the sale of a
fractional BP Amoco ADS will be treated as having received such fractional BP
Amoco ADS pursuant to the Merger and then as having sold such fractional BP ADS
for cash. The amount of any capital gain or loss attributable to such sale will
be equal to the difference between the cash received with respect to the
fractional BP Amoco ADS and the tax basis that is allocated to such fractional
BP Amoco ADS. In the case of an individual U.S. Holder, any such gain will be
subject to U.S. federal income tax at a maximum rate of 20% if such U.S. Holder
has a holding period for such fractional BP Amoco ADS of more than 12 months at
the Effective Time.
As described above, a U.S. Holder of Amoco Shares who (i) receives BP Amoco
ADSs in the Merger, (ii) is a "5% shareholder" of BP Amoco after the Merger and
(iii) fails to file a "gain recognition agreement" with the IRS, will not
qualify for non-recognition treatment and so will recognize gain (but not loss).
In the case of an individual U.S. Holder, any such gain would be subject to U.S.
federal income tax at a maximum rate of 20% if such U.S. Holder has a holding
period in such Amoco Shares of more than 12 months at the Effective Time. ANY
HOLDER OF AMOCO SHARES WHO WILL BE A "5% SHAREHOLDER" OF BP AMOCO AFTER THE
MERGER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR CONCERNING THE
DECISION TO FILE A "GAIN RECOGNITION AGREEMENT" AND THE PROCEDURES TO BE
FOLLOWED IN CONNECTION WITH SUCH FILING.
UNITED STATES TAX CONSEQUENCES OF THE OWNERSHIP OF BP AMOCO ORDINARY SHARES AND
BP AMOCO ADSS
The following is a summary of certain United States federal income tax
consequences of the ownership of BP Amoco Ordinary Shares or BP Amoco ADSs by an
investor that receives BP Amoco ADSs in connection with the Merger and holds BP
Amoco Ordinary Shares or BP Amoco ADSs as capital assets. This summary does not
purport to address all material tax consequences of the ownership of BP Amoco
Ordinary Shares or BP Amoco ADSs, and does not take into account the specific
circumstances of any particular investors (such as tax-exempt entities, certain
insurance companies, broker-dealers, traders in securities that elect to mark to
market, investors liable for alternative minimum tax, investors that
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actually or constructively own 10% or more of the voting stock of BP Amoco,
investors that hold BP Amoco Ordinary Shares or BP Amoco ADSs as part of a
straddle, hedging or conversion transaction or investors whose functional
currency is not the U.S. dollar), some of which may be subject to special rules.
This summary is based on the tax laws of the United States (including the Code,
its legislative history, existing and proposed regulations thereunder, published
rulings and court decisions) as in effect on the date hereof, as well as on the
Treaty, all of which are subject to change (or changes in interpretation),
possibly with retroactive effect. The United States and the United Kingdom have
announced that they intend to enter into negotiations to update the Treaty. In
addition, the summary is based in part upon the representations of the
Depositary and the assumption that each obligation in the Deposit Agreement and
any related agreement will be performed in accordance with its terms.
The foregoing discussion does not address aspects of United States taxation
other than federal income taxation. U.S. Holders are urged to consult their tax
advisors regarding the United States federal, state and local and other tax
consequences of owning and disposing of BP Amoco Ordinary Shares and BP Amoco
ADSs. In particular, U.S. Holders are urged to confirm their status as Eligible
U.S. Holders with their advisors and to discuss with their advisors any possible
consequences of their failure to qualify as Eligible U.S. Holders.
TAXATION OF DIVIDENDS
Under the United States federal income tax laws, Eligible U.S. Holders will
include in gross income the gross amount of any dividend paid (before reduction
for U.K. Withholding Tax (as defined herein)) by BP Amoco out of its current or
accumulated earnings and profits (as determined for United States federal income
tax purposes) as ordinary income when the dividend is actually or constructively
received by the Eligible U.S. Holder, in the case of BP Amoco Ordinary Shares,
or by the Depository, in the case of BP Amoco ADSs. The dividend will not be
eligible for the dividends-received deduction generally allowed to United States
corporations in respect of dividends received from other United States
corporations. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be
treated as a return of capital to the extent of the Eligible U.S. Holder's basis
in the BP Amoco Ordinary Shares or BP Amoco ADSs and thereafter as capital gain.
Subject to certain limitations and the provisions of the next paragraph, the
U.K. Withholding Tax will be creditable against the Eligible U.S. Holder's
United States federal income tax liability. See "--United Kingdom Tax
Consequences of the Ownership of BP Amoco Ordinary Shares and BP Amoco ADSs."
For foreign tax credit limitation purposes, the dividend will be income from
sources without the United States, but generally will be treated separately,
together with other items of "passive income" (or, in the case of certain
holders, "financial services income"). The rules relating to the determination
of the foreign tax credit are complex and U.S. Holders should consult with their
own tax advisors to determine whether and to what extent a credit would be
available. U.S. Holders that do not elect to claim a foreign tax credit may
instead claim a deduction for U.K. Witholding Tax.
It is possible that, after the Merger, BP Amoco will be at least 50% owned
by United States persons. Under Section 904(g) of the Code, dividends paid by a
foreign corporation that is at least 50% owned by United States persons may be
treated as United States source income (rather than foreign source income) for
foreign tax credit purposes to the extent the foreign corporation has more than
an insignificant amount of United States source income, and the effect of this
rule may be to treat a portion of the dividends paid by BP Amoco as United
States source income. Section 904(g)(10) of the Code permits an Eligible U.S.
Holder to elect to treat BP Amoco dividends as foreign source income for foreign
tax credit limitation purposes, if the dividend income is separated from other
income items for purposes of calculating the holder's foreign tax credit.
Although there is no form prescribed for making this election, applicable
Treasury Regulations suggest that the election is made by claiming the credit in
the manner described in this paragraph.
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TAXATION OF CAPITAL GAINS
Upon a sale or other disposition of BP Amoco Ordinary Shares or BP Amoco
ADSs, an Eligible U.S. Holder will recognize gain or loss for United States
federal income tax purposes in an amount equal to the difference between the
U.S. dollar value of the amount realized and the Eligible U.S. Holder's tax
basis (determined in U.S. dollars) in such BP Amoco Ordinary Shares or BP Amoco
Ordinary Shares or BP Amoco ADSs. Generally, such gain or loss will be a
long-term capital gain or loss if the Eligible U.S. Holder's holding period for
such BP Amoco Ordinary Shares or BP Amoco ADSs exceeds one year and any such
gain generally will be income from sources within the United States for foreign
tax credit limitation purposes. It is unclear whether any loss realized by a
U.S. Holder will be treated as from sources within or without the United States
for purposes of the foreign tax credit. Long-term capital gain for a non-
corporate Eligible U.S. Holder is generally subject to a maximum tax rate of
20%.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to dividend
payments (or other taxable distributions) in respect of BP Amoco Ordinary Shares
or BP Amoco ADSs made within the United States to a non-corporate United States
person, and "backup withholding" at the rate of 31% will apply to such payments
if the holder or beneficial owner fails to provide an accurate taxpayer
identification number in the manner required by United States law and applicable
regulations, if there has been notification from the IRS of a failure by the
holder or beneficial owner to report all interest or dividends required to be
shown on its federal income tax returns or, in certain circumstances, if the
holder or beneficial owner fails to comply with applicable certification
requirements.
In general, payment of the proceeds from the sale of BP Amoco Ordinary
Shares or BP Amoco ADSs to or through a United States office of a broker is
subject to both United States backup withholding and information reporting
requirements, unless the holder or beneficial owner certifies its non-United
States status under penalties of perjury or otherwise establishes an exemption.
United States information reporting and backup withholding generally will not
apply to a payment made outside the United States of the proceeds of a sale of
BP Amoco Ordinary Shares or BP Amoco ADSs through an office outside the United
States of a non-United States broker. However, United States information
reporting requirements (but not backup withholding) will apply to a payment made
outside the United States of the proceeds of a sale of BP Amoco Ordinary Shares
or BP Amoco ADSs through an office outside the United States of a broker (i)
that is a United States person, (ii) that derives 50% or more of its gross
income for a specified three-year period from the conduct of a trade or business
in the United States, (iii) that is a "controlled foreign corporation" as to the
United States, or (iv) with respect to payments made after December 31, 1999,
that is a foreign partnership, if at any time during its tax year, one or more
of its partners are U.S. persons (as defined in U.S. Treasury regulations) who
in the aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, such foreign partnership is
engaged in a United States trade or business, unless the broker has documentary
evidence in its files that the holder or beneficial owner is a non-United States
person or the holder or beneficial owner otherwise establishes an exemption.
Amounts withheld under the backup withholding rules may be credited against
a U.S. Holder's U.S. tax liability, and a holder may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the
appropriate claim for refund with the IRS.
UNITED KINGDOM TAX CONSEQUENCES OF THE OWNERSHIP OF BP AMOCO ORDINARY SHARES AND
BP AMOCO ADSS
The tax treatment of dividends paid in respect of the BP Amoco Ordinary
Shares and BP Amoco ADSs will depend upon the U.K. law and practice in force at
the time dividends are paid. The following summary is based upon U.K. law (as it
will have effect from April 6, 1999) and practice, including the
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Treaty and the United Kingdom-United States Estate and Gift Tax Convention (the
"Estate Tax Treaty"), which may change. The United States and the United Kingdom
have announced that they intend to enter into negotiations to update the Treaty.
The summary of U.K. tax matters below does not address the tax consequences for
U.S. Holders that are resident (or, in the case of individuals, ordinarily
resident) in the U.K. for U.K. tax purposes or for the purposes of the Treaty or
that are corporations which, alone or together with one or more associated
companies, control directly or indirectly 10% or more of the voting stock or
power of BP Amoco. For the purposes of the Treaty, U.S. Holders of BP Amoco ADSs
will be treated as owners of the BP Amoco Ordinary Shares underlying the BP
Amoco ADSs.
TAXATION OF DISTRIBUTIONS
An Eligible U.S. Holder who receives as beneficial owner a dividend from BP
Amoco will not be entitled under the Treaty to receive any payment in addition
to the base dividend. An Eligible U.S. Holder that received a dividend payment
of $90 from BP Amoco would be entitled to a tax credit amount of $10 reduced by
the tax credit amount (I.E., $10) ("U.K. Witholding Tax") resulting in a total
receipt (before applicable U.S. taxes) of $90 (I.E., the base dividend).
TAXATION OF CAPITAL GAINS
A U.S. Holder who is not resident or ordinarily resident for tax purposes in
the U.K. will not normally be liable for U.K. tax on capital gains realized on
the disposal of his BP Amoco Ordinary Shares or BP Amoco ADSs unless at the time
of the disposal, such U.S. Holder carries on a trade (which for this purpose
includes a profession or vocation) in the U.K. through a branch or agency and
such BP Amoco Ordinary Shares or BP Amoco ADSs are or have been used, held or
acquired for the purposes of such trade or branch or agency. A U.S. Holder who
is an individual and who has, on or after March 17, 1998, ceased to be resident
or ordinarily resident for tax purposes in the U.K. for a period of less than
five tax years and who disposes of BP Amoco Ordinary Shares or BP Amoco ADSs
during that period may be liable for U.K. tax on capital gains realized (subject
to any available exemption or relief).
INHERITANCE AND GIFT TAXES
BP Amoco Ordinary Shares and BP Amoco ADSs are assets situated in the U.K.
for the purposes of U.K. inheritance tax. A gift of such assets by, or the death
of, an individual holder of such assets may (subject to certain exemptions and
reliefs) give rise to a liability to U.K. inheritance tax even if the holder is
neither domiciled in the U.K. nor deemed to be domiciled there under special
rules relating to long residence or previous domicile. For U.K. inheritance tax
purposes, a transfer of assets at less than full market value may be treated as
a gift and particular rules apply to gifts where the donor reserves or retains
some benefit. Special rules also apply to close companies and to trustees of
settlements holding BP Amoco Ordinary Shares or BP Amoco ADSs, bringing them
within the charge to inheritance tax. An individual who is domiciled in the U.S.
for the purposes of the Estate Tax Treaty and who is not a national of the U.K.
for the purposes of the Estate Tax Treaty will generally not be subject to U.K.
inheritance tax in respect of the BP Amoco Ordinary Shares or BP Amoco ADSs on
the individual's death or on a gift of the BP Amoco Ordinary Shares or BP Amoco
ADSs during the individual's lifetime, provided that any applicable U.S. federal
gift or estate tax liability is paid, unless the BP Amoco Ordinary Shares or BP
Amoco ADSs are part of the business property of a permanent establishment of an
enterprise of the individual in the U.K. or pertain to a fixed base in the U.K.
of the individual used for the performance of independent personal services.
Where the BP Amoco Ordinary Shares or BP Amoco ADSs have been placed in trust by
a settlor who, at the time of settlement, was a U.S. Holder, the BP Amoco
Ordinary Shares or BP Amoco ADSs will generally not be subject to U.K.
inheritance tax if the settlor, at the time of settlement, was domiciled in the
U.S. for the purposes of the Estate Tax Treaty and was not a U.K. national
(provided that the BP Amoco Ordinary Shares or BP Amoco ADSs are not part of the
business property of a permanent establishment in the U.K. and do not pertain to
a fixed base in the U.K., as more fully summarized above).
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In the exceptional case where the BP Amoco Ordinary Shares or BP Amoco ADSs are
subject both to U.K. inheritance tax and to U.S. federal gift or estate tax, the
Estate Tax Treaty generally provides for the tax paid in the U.K. to be credited
against tax paid in the U.S. or for tax paid in the U.S. to be credited against
tax payable in the U.K. based on priority rules set out in the Estate Tax
Treaty.
STAMP DUTY AND STAMP DUTY RESERVE TAX
BP Amoco and Amoco will be jointly and severally liable for all stamp
duties, stamp duty reserve tax ("SDRT") and other similar taxes and governmental
levies imposed in connection with the issuance or creation of the BP Amoco
Ordinary Shares constituting the Merger Consideration and any BP Amoco ADSs in
connection therewith and any other U.K. stamp duty, SDRT or other similar
governmental charge (or any interest or penalties thereon) that may be payable
by BP Amoco and Amoco pursuant to the Deposit Agreement. See "DESCRIPTION OF BP
AMOCO AMERICAN DEPOSITARY SHARES-- Liability of Holder for Taxes."
No stamp duty will be payable on the acquisition or transfer of BP Amoco
ADSs or beneficial ownership of BP Amoco ADSs, provided that any instrument of
transfer or written agreement to transfer remains at all times outside the U.K.,
and provided further that any instrument of transfer or written agreement to
transfer is not executed in the U.K. and the transfer does not relate to any
matter or thing done or to be done in the U.K. An agreement for the transfer of
BP Amoco ADSs or beneficial ownership of BP Amoco ADSs will not give rise to a
liability for SDRT.
A transfer for value of the BP Amoco Ordinary Shares will generally be
subject to AD VALOREM stamp duty or to SDRT. Stamp duty will arise on the
execution of an instrument to transfer BP Amoco Ordinary Shares and SDRT will
arise on the entry into an agreement to sell BP Amoco Ordinary Shares. Stamp
duty and SDRT are normally a liability of the purchaser. Any transfer for value
of the underlying BP Amoco Ordinary Shares represented by BP Amoco ADSs may give
rise to a liability on the transferee to U.K. stamp duty or SDRT. The amount of
stamp duty or SDRT payable is generally calculated at the applicable rate on the
consideration for the transfer of the BP Amoco Ordinary Shares at the rate of
50p, per L100 (or part thereof) in the case of stamp duty, or in the case of
SDRT, at the rate of 0.5%, in either case, of the amount or value of the
consideration. On a transfer of BP Amoco Ordinary Shares from the Custodian (as
defined below) of the Depositary to a holder of a BP Amoco ADS upon cancellation
of the BP Amoco ADS, only a fixed stamp duty of 50p per instrument of transfer
will be payable.
Under provisions contained in the U.K. Finance Act 1990, SDRT and stamp duty
in respect of transactions in shares are to be abolished from a date to be
appointed by Treasury order. No date has yet been appointed.
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THE MERGER AGREEMENT
GENERAL
The Merger Agreement contemplates the merger of Merger Sub with and into
Amoco, with Amoco surviving the Merger as a wholly owned subsidiary of BP (the
"Surviving Corporation"). The Merger will become effective upon the filing of,
or at any subsequent time stated in, the Articles of Merger to be filed with the
Secretary of State of the State of Indiana (the "Effective Time"). It is
anticipated that the Effective Time will occur at the same time as the closing
under the Merger Agreement (the "Closing," and the date on which the Closing is
to occur, being the "Closing Date"), which, unless the parties to the Merger
Agreement otherwise agree, is to occur on the third business day after the
satisfaction or waiver of the conditions set forth in the Merger Agreement. The
Merger Agreement provides that BP will change its name to "BP Amoco p.l.c." at
the Effective Time.
Pursuant to the Merger Agreement, if BP and Amoco determine to effect the
combination contemplated by the Merger Agreement by means of a merger of an
indirect subsidiary of BP with and into Amoco, or of Amoco with and into an
indirect subsidiary of BP, then BP may cause Merger Sub to become an indirect
subsidiary of BP and the Merger will be effected in such manner, provided that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of Amoco Common Shares or Amoco Stock Options as provided
for in the Merger Agreement, (ii) adversely affect the tax treatment to holders
of Amoco Common Shares as a result of such change, (iii) adversely affect the
qualification of the Merger for the merger method of accounting under U.K. GAAP
or for pooling-of-interests treatment under U.S. GAAP, (iv) reasonably be
expected to materially impede or delay the consummation of the Merger, or (v)
constitute a waiver of any condition to the Merger provided in the Merger
Agreement.
The following description of the Merger Agreement is qualified in all
respects by reference to the complete text of the Merger Agreement, which is
incorporated by reference herein in its entirety and is attached to this Proxy
Statement/Prospectus as Appendix A.
CONSIDERATION TO BE RECEIVED IN THE MERGER
As of the Effective Time, (a) each Amoco Share outstanding immediately prior
to the Effective Time (other than Excluded Amoco Shares) will be converted into
and canceled in exchange for 3.97 BP Amoco Ordinary Shares, which shall be
delivered in the form of BP Amoco ADSs (the "Merger Consideration"), (b) each
Excluded Amoco Share will automatically be canceled and retired without any
payment of any consideration therefor and shall cease to exist, and (c) each
Amoco Stock Option then outstanding and unexercised will be converted into the
specific rights described below under "--Stock Options and Other Stock Plans."
Pursuant to the Merger Agreement, as of the Effective Time, each share of
common stock of Merger Sub, no par value ("Merger Sub Common Stock"),
outstanding immediately prior to the Effective Time will be canceled and, in
consideration for the issuance of the BP Amoco Ordinary Shares to be issued as
Merger Consideration, the Surviving Corporation will issue to BP (or the
shareholder(s) of Merger Sub, if other than BP) such number of shares of the
Surviving Corporation's common stock as is equal to the number of shares of
Merger Sub Common Stock, with the same rights, powers and privileges as the
Amoco Shares and which shall constitute the only outstanding shares of common
stock of the Surviving Corporation.
Amoco will act as agent for each holder of record as of the Effective Time
of Amoco Shares (other than Excluded Amoco Shares) (each, a "Record Holder")and
will enter into an agreement (the "Nominee Agreement") with BP and the Boston
EquiServe Limited Partnership. In consideration of the issue to BP (or the
shareholder(s) of Merger Sub, if other than BP) of shares of common stock of the
Surviving Corporation, BP will issue, in the manner described below under
"--Exchange of Amoco Shares," the
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number of BP Amoco Ordinary Shares required to give effect to the delivery of
the Merger Consideration to Amoco Shareholders.
EXCHANGE OF AMOCO SHARES
Prior to the Effective Time, BP will appoint Boston EquiServe Limited
Partnership or another agent acceptable to Amoco as the exchange agent (the
"Exchange Agent") for the purpose of exchanging certificates which immediately
prior to the Effective Time represented outstanding Amoco Shares (the "Amoco
Certificates") or Amoco Shares held through the electronic or "direct
registration system" ("DRS") that were converted into the right to receive the
Merger Consideration pursuant to the Merger Agreement for one or more BP Amoco
ADSs which may be evidenced by American Depositary Receipts ("BP Amoco ADRs").
Promptly after the Effective Time, the Surviving Corporation or the Exchange
Agent will mail to each holder of record of an Amoco Certificate (other than
holders of Certificates representing Amoco Excluded Shares and Amoco
Shareholders holding Amoco Shares only through the DRS) a letter of transmittal
for use in effecting delivery of such Amoco Certificates to the Exchange Agent.
BP will issue the BP Ordinary Shares to be issued as Merger Consideration
(in registered form) to Boston EquiServe or its nominee (the "Nominee"), as
nominee and agent for and on behalf of the Record Holders, for the issuance of
BP ADSs to Amoco Shareholders. If the Redenomination takes effect immediately
prior to the Effective Time, then unless the directors of BP have determined not
to issue such Bearer Shares (as defined below), the Nominee will, as agent for
the Record Holders, instruct BP, and BP will, strike the name of the Nominee
from the BP Shareholders' register, create share warrants to bearer ("Bearer
Shares") in respect of such BP Ordinary Shares and deliver the Bearer Shares to
the Nominee, as agent as aforesaid. Regardless of whether the Redenomination
takes effect and Bearer Shares are delivered to the Nominee, the BP Ordinary
Shares (in registered form) or the Bearer Shares, as the case may be, held by
the Nominee will be deposited by the Nominee or on its behalf with Morgan
Guaranty Trust Company of New York, as Depositary (the "Depositary") (or as it
may direct), as and when required for the issuance of BP Depositary Shares in
accordance with the Merger Agreement. To the extent required, the Exchange Agent
will requisition from the Depositary such number of Depositary Shares, in such
denominations as the Exchange Agent specifies, as are issuable in respect of
Amoco Shares properly delivered to the Exchange Agent or held in the DRS.
The fact that the BP Amoco Ordinary Shares underlying the BP Amoco ADSs may
be evidenced by Bearer Shares will not affect the rights of BP Amoco ADS holders
under the Deposit Agreement to receive BP Amoco Ordinary Shares registered in
their name upon any withdrawal of BP Amoco Ordinary Shares in accordance with
the terms of the Deposit Agreement. No charges will be payable by Amoco
Shareholders in connection with the receipt of BP Amoco ADSs representing Bearer
Shares pursuant to the Merger. See "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY
SHARES."
Upon surrender by an Amoco Shareholder of an Amoco Certificate for
cancellation to the Exchange Agent, together with a duly executed and completed
letter of transmittal, and any other documents required by the Exchange Agent,
or, in the case of an Amoco Shareholder holding Amoco Shares only through DRS,
without further action, each such holder will be entitled to receive (A) the
whole number of BP Amoco ADSs that such holder has the right to receive as
Merger Consideration and (B) a check in the amount (after giving effect to any
required tax withholdings) of (i) any cash in lieu of fractional BP Amoco ADSs
to be paid pursuant to the Merger Agreement on the terms described below plus
(ii) any cash dividends or other distributions that such holder has the right to
receive on the terms described below. The Amoco Certificates so surrendered will
be canceled. No interest will be paid or accrued on any amount payable upon due
surrender of the Amoco Shares. The BP Amoco ADSs to which Amoco Shareholders
will be entitled as Merger Consideration will be delivered through the direct
registration system maintained by the Depositary unless an Amoco Shareholder
requests otherwise in connection with the exchange. Holders of Amoco Shares
through Amoco's Direct Access Plan will be subject to different
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arrangements as set forth in the Plan prospectus. See "--Exchange of Amoco
Shares--Amoco Direct Access Plan."
No fractional BP Amoco ADSs will be issued in the Merger and such fractional
ADS interests will not entitle the owner thereof to vote or to have any rights
of a shareholder of BP Amoco or a holder of BP Amoco ADSs. The Exchange Agent
will aggregate and sell on the NYSE, on behalf of the holders of fractional BP
Amoco ADSs, in round lots to the extent practicable, such fractional BP Amoco
ADSs and will hold the proceeds of such sales in trust for the holders having
the right to receive cash in lieu of the fractional BP Amoco ADSs until such
proceeds are distributed to such holders. Each holder of Amoco Shares exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a BP Amoco ADS (after taking into account all Amoco Certificates and
Amoco Shares held through DRS registered to such holder) will receive, in lieu
thereof, cash (without interest) in an amount equal to such holder's
proportionate interest in the net proceeds from the sale by the Exchange Agent
on behalf of all such holders of the aggregate of all fractional BP Amoco ADSs
that would otherwise be issued to Amoco Shareholders in the Merger. BP will pay
all commissions, transfer taxes and out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent incurred in connection with
the sale of fractional BP Amoco ADSs.
The Merger Agreement further provides that no dividends, interest or other
distributions with respect to securities of BP Amoco issuable with respect to
Amoco Shares shall be paid to the holder of any unsurrendered Amoco Certificates
until all Amoco Certificates registered to such holder are surrendered in
accordance with the terms of the Merger Agreement. Following surrender, there
shall be issued and/or paid to the holder of the BP Amoco ADSs issued in
exchange therefor, without interest, (i) at the time of such surrender, the
dividends or other distributions payable with respect to such BP Amoco ADSs with
a record date after the Effective Time and a payment date on or prior to the
date of such surrender and not previously paid and (ii) at the appropriate
payment date, the dividends or other distributions payable with respect to such
BP Amoco ADSs with a record date after the Effective Time but with a payment
date subsequent to such surrender.
If any BP Amoco ADSs are to be issued to a person other than the registered
holder of any Amoco Certificates, it will be necessary for the Amoco Certificate
or Amoco Certificates to be properly endorsed or otherwise be in proper form for
transfer and the holder requesting such issue will be required to pay the
Exchange Agent any transfer or other taxes required as a result of such issue or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
The Merger Agreement provides that Amoco's stock transfer books will close
on the day prior to the Effective Time and there shall be no further
registration of transfers of Amoco Shares thereafter.
The Merger Agreement provides that Amoco will use its best efforts to cause
each person who may be deemed to be an "affiliate" of Amoco, for purposes of
applicable interpretations regarding pooling-of-interests accounting under U.S.
GAAP or of Rule 145 under the Securities Act, to execute an agreement
restricting the disposition of such affiliate's Amoco Shares, BP Amoco ADSs
received in the Merger or any underlying BP Amoco Ordinary Shares that may be
withdrawn upon surrender of such BP Amoco ADSs. The Merger Agreement further
provides that any transfers of BP Amoco Ordinary Shares or BP Amoco ADSs held by
such an affiliate will not be registered by BP or the Depositary, respectively,
unless such transfer is in compliance with such restrictions.
AMOCO SHARES HELD THROUGH CERTAIN NOMINEES
Beneficial owners of Amoco Shares who hold their Amoco Shares through a
bank, broker or other financial intermediary should contact such financial
intermediary (other than the Amoco Direct Access Plan or employee benefit plans)
for information regarding the surrender of such beneficial owner's Amoco Shares
to the Exchange Agent for cancellation and exchange.
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LOST, STOLEN OR DESTROYED CERTIFICATES
In the event any Amoco Certificate is lost, stolen or destroyed, upon the
holder's compliance with the replacement requirements established by the
Exchange Agent, including, if necessary, the posting by such person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to the rights to BP Amoco ADSs represented by such Amoco Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Amoco Certificate, BP Amoco ADSs and any cash in lieu of fractional BP Amoco
ADSs and any unpaid dividends or other distributions deliverable pursuant to the
terms of the Merger Agreement in respect of the Amoco Shares represented by such
Amoco Certificate.
AMOCO DIRECT ACCESS PLAN
Participants in the Amoco Direct Access Plan will have their Amoco Shares
exchanged for the BP Amoco ADSs to which they are entitled in the Merger through
a direct access plan to be established by BP Amoco from the Effective Time.
Participants who hold their Amoco Shares in certificated form will be required
to complete the exchange procedures applicable to Amoco Certificates, as
described above. BP Amoco will notify such Amoco Shareholders of the
effectiveness of the exchange.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains certain customary representations and
warranties made by Amoco and BP with respect to, among other things: due
organization and good standing; capitalization; corporate authority to enter
into the contemplated transactions and lack of conflicts with corporate
governance documents; reports and financial statements; absence of litigation;
absence of certain changes or events; brokers or finders; and accounting
treatment of the Merger. Amoco has also represented that it has taken or will
take all actions appropriate and necessary to assure that certain provisions
under Indiana Law limiting business combinations will not affect the Merger or
any other transaction contemplated by the Merger Agreement or the Stock Option
Agreement.
The Merger Agreement also contains certain customary representations and
warranties of BP with respect to Merger Sub as to, among other things, corporate
authority to enter into the contemplated transactions and absence of business
activities.
CONDUCT OF BUSINESS PENDING THE MERGER
During the period from the date of the Merger Agreement and continuing until
the Effective Time, each of Amoco and BP has agreed as to itself and its
subsidiaries that (except as expressly contemplated by or provided in the Merger
Agreement or as required by applicable law or to the extent that the other
otherwise approves in writing), among other things: (i) it and its subsidiaries
will carry on their respective businesses in the ordinary and usual course and,
to the extent consistent therewith, will use its and their best reasonable
efforts to preserve intact its business organization and maintain its existing
relations and goodwill with customers, suppliers, creditors, regulators,
lessors, employees and business associates and (ii) neither it nor any of its
subsidiaries shall make any decision or commitment with respect to a significant
investment or divestment except in the ordinary and usual course of business or
pursuant to financial plans previously communicated to the other party, without
first consulting with the other party.
The Merger Agreement contains certain other covenants of Amoco and BP
relating to the conduct of their respective businesses before the Effective
Time, including covenants relating to the declaration and payment of dividends
and changes in share capital (other than, among other things, the
Redenomination, in the case of BP), the issuance of securities, the amendment of
corporate governance documents, the incurrence of indebtedness, benefit plans
and compensation, pooling-of-interests accounting treatment under U.S. GAAP,
merger method of accounting under U.K. GAAP and income tax treatment.
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ACQUISITION PROPOSALS
In the Merger Agreement, Amoco and BP each have agreed that neither it nor
any of its subsidiaries nor any of the officers and directors of it or its
subsidiaries will, and have agreed that it will direct and use its best efforts
to cause its and its subsidiaries' officers, directors, employees, agents and
representatives (including any investment banker, attorney, financial advisor or
accountant retained by it or any of its subsidiaries) not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any Acquisition Proposal (as defined below), or to, directly or
indirectly, have any discussion with or provide any confidential information or
data to any person relating to an Acquisition Proposal or engage in any
negotiations concerning an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. Amoco and BP
have agreed in the Merger Agreement that nothing contained in the Merger
Agreement will prevent either Amoco or BP or their respective boards of
directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
or, in the case of BP, complying with the U.K. City Code on Takeovers and
Mergers (the "City Code") or the obligations placed on it by the U.K. Panel on
Takeovers and Mergers (the "Takeover Panel") with regard to an Acquisition
Proposal; (B) making any disclosure to its shareholders if, in the good faith
judgment of its board of directors, failure so to disclose would be inconsistent
with its obligations under applicable law; (C) negotiating with, or furnishing
information to, any person who has made a BONA FIDE written Acquisition Proposal
that did not result from a breach of the party's obligations under the Merger
Agreement; or (D) recommending such an Acquisition Proposal to the shareholders
of Amoco or BP, as the case may be, if and only to the extent that, in any such
case as is referred to in clause (C) or (D) of this sentence, such Acquisition
Proposal is a Superior Proposal (as defined below).
As used in this Proxy Statement/Prospectus, the term "Acquisition Proposal"
means any proposal or offer with respect to a merger, reorganization, share
exchange, dual-holding company transaction, consolidation, or similar
transaction involving Amoco or BP, or any purchase of, or offer to purchase, all
or substantially all of the equity securities of such party or of such party's
and its subsidiaries' assets taken as a whole.
As used in this Proxy Statement/Prospectus, the term "Superior Proposal"
means an Acquisition Proposal by a third-party (i) on terms which the board of
directors of Amoco or BP, as the case may be, determines in good faith (after
consultation with its financial advisors, whose advice will be communicated to
the other party) to be more favorable from a financial point of view to its
shareholders than the Merger and to be more favorable to such party than the
Merger after taking into account any additional constituencies (including
shareholders) permitted to be considered under the laws of the State of Indiana,
in the case of Amoco, and the laws of England or the requirement of any
regulatory authority therein, in the case of BP, after giving the other party at
least seven business days to respond to the third-party Acquisition Proposal and
(ii) which the Board of Directors of Amoco or BP, as the case may be, determines
in its good faith judgment to constitute a transaction that is reasonably likely
to be consummated on the terms set forth, taking into account all legal,
financial, regulatory and other aspects of such proposal.
In the Merger Agreement, each of Amoco and BP agreed to cease any existing
activities, discussions or negotiations with respect to any Acquisition Proposal
and to promptly request each person that executed a confidentiality agreement
with BP or Amoco within the 12 months prior to the date of the Merger Agreement
in connection with its consideration of an Acquisition Proposal to return or
destroy all confidential information previously furnished to such person.
INDEMNIFICATION AND INSURANCE
In the Merger Agreement, Amoco and BP have agreed that after the Effective
Time, all rights to indemnification and all limitations on liability existing
under the Amoco Amended Articles and the Amoco By-laws in favor of directors and
officers of Amoco, or under an agreement in effect as of the date of the Merger
Agreement between any such director or officer and Amoco or its subsidiaries,
with respect to
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actions or omissions by them on or prior to the Effective Time will continue in
full force and effect, and BP Amoco will, for a period of six years after the
Effective Time, procure directors' and officers' liability insurance with
respect to acts or omissions occurring prior to the Effective Time covering each
person currently covered by Amoco's directors' and officers' liability
insurance.
DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER
Pursuant to the Merger Agreement, at the Effective Time, the Board of
Directors of BP Amoco is to consist of 22 persons, 13 of whom will be designated
by BP (seven of whom will be non-executive directors) and nine of whom will be
designated by Amoco (seven of whom will be non-executive directors). These Amoco
director-designates, whose names are set forth below under "BP AMOCO FOLLOWING
THE MERGER," will be nominated for election by the BP shareholders and will take
office as of the Effective Time. BP has agreed to procure the resignations of
those current directors of BP who will not continue as directors, effective as
of the Effective Time.
H. Laurance Fuller and Peter Sutherland, the current Chairmen of Amoco and
BP, respectively, will serve as Co-Chairmen of BP Amoco following the Merger.
Mr. Fuller will also serve as an executive director on the BP Amoco Board until
his retirement in the first half of 2000. In addition, pursuant to the Merger
Agreement, Amoco and BP have agreed that the following persons shall be
appointed to the indicated offices of BP Amoco:
<TABLE>
<CAPTION>
OFFICER POSITION
- ------------------------------------ -----------------------------------------------------------------
<S> <C>
Sir John Browne..................... Chief Executive Officer
P. G. Backhouse..................... Executive Vice President--Refining and Marketing
P. B. P. Bevan...................... General Counsel
Dr. J. G. S. Buchanan............... Chief Financial Officer
R. F. Chase......................... Deputy Chief Executive Officer & President--Exploration and
Production
L. R. Flury......................... Executive Vice President--Exploration and Production
W. D. Ford.......................... Executive Vice President--Refining and Marketing
S. F. Gates......................... Executive Vice President and Chief of Staff; Chairman of BP Amoco
Solar
Dr. C. S. Gibson-Smith.............. Executive Vice President--Policies and Technology
Dr. B. E. Grote..................... Executive Vice President--Exploration and Production
W. G. Lowrie........................ Deputy Chief Executive Officer & President--Refining, Marketing
and Chemicals
R. L. Olver......................... Executive Vice President--Exploration and Production
B. K. Sanderson..................... Chairman--Global Chemicals
E. J. Sosa.......................... President--Global Chemicals
</TABLE>
If, at or immediately prior to the Effective Time, any of the designated
officers should be unwilling or unable to serve, a person will be designated to
fill that position by mutual agreement of Amoco and BP.
See "DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER" for further
information regarding the management of BP Amoco after the consummation of the
Merger.
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CONDITIONS TO CONSUMMATION OF THE MERGER
CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE MERGER
The respective obligations of Amoco, BP and Merger Sub to effect the Merger
are subject to the satisfaction or waiver of the following conditions:
- SHAREHOLDER APPROVALS. The Merger and the other transactions contemplated
by the Merger Agreement having been duly approved by the requisite vote of
Amoco Shareholders (see "THE SPECIAL MEETING--Required Vote; Quorum") and
the BP Requisite Resolution having been duly approved by the requisite
vote of the holders of BP Ordinary Shares and holders of BP First
Preference Shares and BP Second Preference Shares (together, the "BP
Preference Shares"), whether in person or by proxy, at the BP
Extraordinary General Meeting (see "THE BP EXTRAORDINARY GENERAL MEETING
AND THE SEPARATE CLASS MEETING");
- STOCK EXCHANGE LISTING. The LSE having admitted to the Official List the
BP Amoco Ordinary Shares to be allotted in connection with the Merger and
such admission having become effective and the BP Amoco ADSs to be issued
in the Merger having been authorized for listing on the NYSE, subject to
official notice of issuance;
- HSR ACT. The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act having been terminated or expired;
- EXON-FLORIO. If applicable, review and investigation under Exon-Florio
having been terminated and the President of the United States having taken
no action authorized under Exon-Florio;
- EFFECTIVE REGISTRATION STATEMENT. The F-4 Registration Statement having
become effective under the Securities Act and no stop order with respect
to such Registration Statement being in effect;
- OTHER REGULATORY APPROVALS. All of the following filings, notices,
approvals, confirmations, consents, declarations and/or decisions required
to be made, given or obtained by Amoco or BP with or from any governmental
or regulatory authority in connection with the consummation of the Merger
and the other transactions contemplated by the Merger Agreement (taken
together with those referred to above under "HSR Act," "Exon-Florio" and
"Effective Registration Statement," the "Required Consents") having been
made, given or obtained, and such Required Consents not containing any
terms or imposing any conditions or restrictions relating or applying to,
or requiring changes in or limitations on, the operation of any asset or
businesses of Amoco, BP or any of their respective subsidiaries which
term, condition or restriction, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect (as defined below) on
BP or Amoco after the Effective Time (with materiality for these purposes
being determined with reference to the total equity market value of Amoco
and BP):
(i) the filing of the Articles of Merger with the Indiana Secretary
of State;
(ii) all necessary state securities law or "Blue Sky" permits or
approvals;
(iii) compliance with the rules and regulations of the NYSE and the
LSE;
(iv) confirmation from the European Commission in accordance with
Article 6(1)(b), 8(2) or 10(6) of Council Regulation (EEC) No 4064/89 as
amended (the "Regulation") that the Merger and any matters arising
therefrom are compatible with the common market (insofar as the Merger
constitutes a concentration with a Community dimension within the scope
of the Regulation);
(v) confirmation from the U.K. Office of Fair Trading that it is not
the intention of the U.K. Secretary for Trade and Industry to refer the
Merger or any matters arising therefrom to the U.K. Monopolies and
Mergers Commission (the "MMC") or approval of the Merger from the
Secretary of State for Trade and Industry in the event that the Merger or
any matters arising therefrom are referred to the MMC (insofar as the
Merger qualifies for investigation by the
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MMC under the U.K. Fair Trading Act 1973 or a referral is made by the
European Commission to the U.K. Competent Authority under Article 9 of
the Regulation); and
(vi) HM Treasury having consented pursuant to Section 765 of the
Income and Corporation Taxes Act 1988, or HM Treasury or Inland Revenue
having confirmed that no such consent is required, to the transactions
contemplated by the Merger Agreement; and
- NO LAWS OR ORDERS. No governmental entity of competent jurisdiction having
enacted, issued, promulgated, enforced or entered any law (whether
temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits the consummation of the Merger or the other
transactions contemplated by the Merger Agreement and that, individually
or in the aggregate with all other such laws, is reasonably likely to have
a Material Adverse Effect on Amoco or BP or that would materially
frustrate the express intent and purposes of the Merger Agreement
(collectively, an "Order"), and no governmental entity having instituted
or threatened any proceeding seeking any such Order.
As used in the Merger Agreement, a "Material Adverse Effect" means, with
respect to any entity, a material adverse effect on the financial condition,
properties, business or results of operations of such entity and its
subsidiaries, taken as a whole.
ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF BP
The obligation of BP to effect the Merger is subject to the satisfaction, or
waiver, by BP of the following additional conditions prior to the Effective
Time:
- REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of Amoco set forth in the Merger Agreement (i) that is
qualified as to materiality (including by Material Adverse Effect) being
true and correct as of the Closing Date, as if made on and as of such date
(except to the extent any such representation or warranty expressly speaks
as of an earlier date), and (ii) each of the representations and
warranties of Amoco that is not so qualified being true and correct as of
the Closing Date as if made on and as of such date (except to the extent
any such representation or warranty expressly speaks as of an earlier
date) (provided that this condition will be deemed satisfied so long as
any failures of such representations and warranties to be true and
correct, taken together, do not have a Material Adverse Effect on Amoco),
and BP having received a certificate signed on behalf of Amoco by an
executive officer to such effect;
- COMPLIANCE WITH COVENANTS. Amoco having performed all material obligations
required to be performed by it under the Merger Agreement at or prior to
the Closing Date, and BP having received a certificate signed on behalf of
Amoco by an executive officer to such effect;
- CONSENTS UNDER AGREEMENTS RECEIVED. BP having obtained the consent or
approval of each person whose consent or approval is required in order to
consummate the Merger and the other transactions contemplated by the
Merger Agreement under any contract or agreement to which BP or any of its
subsidiaries is a party, except those for which the failure to obtain such
consent or approval, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on BP or is not reasonably likely
to prevent or materially impair the ability of BP to consummate the Merger
and the other transactions contemplated by the Merger Agreement; and
- ACCOUNTANTS' LETTERS. BP having received letters from Ernst & Young
confirming that under U.S. GAAP and U.K. GAAP, respectively, Ernst & Young
concurs with BP management's conclusion that no conditions exist that
would preclude BP from being a party to a business combination for which
pooling-of-interests accounting treatment would be available under U.S.
GAAP and that the use of the merger method of accounting would be
available under U.K. GAAP.
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ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF AMOCO
The obligation of Amoco to effect the Merger is subject to the satisfaction,
or waiver, by Amoco of the following additional conditions prior to the
Effective Time:
- REPRESENTATIONS AND WARRANTIES TRUE. Each of the representations and
warranties of BP set forth in the Merger Agreement (i) that is qualified
as to materiality (including by Material Adverse Effect) being true and
correct as of the Closing Date as if made on and as of such date (except
to the extent any such representation or warranty expressly speaks as of
an earlier date), and (ii) each of the representations and warranties of
BP that is not so qualified being true and correct as of the Closing Date
as if made on and as of such date (except to the extent any such
representation or warranty expressly speaks as of an earlier date)
(provided that this condition will be deemed satisfied so long as any
failures of such representations and warranties to be true and correct,
taken together, do not have a Material Adverse Effect on BP), and Amoco
having received a certificate signed on behalf of BP by an executive
officer of BP to such effect;
- COMPLIANCE WITH COVENANTS. BP having performed all material obligations
required to be performed by it under the Merger Agreement at or prior to
the Closing Date, and Amoco having received a certificate signed on behalf
of BP by an executive officer to such effect;
- CONSENTS UNDER AGREEMENTS RECEIVED. Amoco having obtained the consent or
approval of each person whose consent or approval is required in order to
consummate the Merger and the other transactions contemplated by the
Merger Agreement under any contract or agreement to which Amoco or any of
its subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on Amoco or is not
reasonably likely to prevent or materially impair the ability of Amoco to
consummate the Merger and the other transactions contemplated by the
Merger Agreement;
- TAX OPINIONS. Amoco having received the opinion of Wachtell, Lipton, Rosen
& Katz, special counsel to Amoco, dated as of the date on which the
Effective Time occurs, substantially to the effect that, on the basis of
the facts, representations and assumptions set forth in such opinion, (i)
the Merger will be treated for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368 (a) of the Code, and (ii)
no gain or loss will be recognized by the Amoco Shareholders who exchange
Amoco Shares solely for BP Amoco ADSs pursuant to the Merger, except with
respect to cash received in lieu of fractional BP Amoco ADSs;
- ACCOUNTANTS' LETTERS. Amoco having received letters from
PricewaterhouseCoopers LLP confirming that, under U.S. GAAP and U.K. GAAP,
respectively, PricewaterhouseCoopers LLP concurs with Amoco management's
conclusion that no conditions exist that would preclude Amoco from being a
party to a business combination for which pooling-of-interests accounting
treatment would be available under U.S. GAAP and the use of the merger
method of accounting would be available under U.K. GAAP; and
- DIRECTORS. The directors designated by Amoco having been elected directors
of BP Amoco at the BP Extraordinary General Meeting.
EMPLOYMENT AGREEMENTS AND CERTAIN OTHER EMPLOYEE BENEFITS MATTERS
EMPLOYMENT AGREEMENTS
Amoco has entered into Service Contracts with H. L. Fuller and W. G. Lowrie
and has entered or expects to enter into the Employment Agreements with Messrs.
E. J. Sosa, W. D. Ford, S. F. Gates, L. R. Flury, J. E. Fligg, G. S. Spindler,
D. F. Work, J. F. Campbell and J. L. Carl, the terms of which are described
generally above under "THE MERGER--Interests of Certain Persons in the Merger."
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OTHER EMPLOYEE BENEFITS MATTERS
Amoco and BP have agreed in the Merger Agreement that for at least two years
following the Effective Time, BP Amoco will provide or cause to be provided to
current and former employees and directors of Amoco and its subsidiaries
compensation and benefits that are at least as favorable in the aggregate as the
compensation and benefits they were entitled to receive immediately prior to the
Effective Time (including, without limitation, benefits pursuant to qualified
and non-qualified restoration retirement plans, savings plans, medical plans and
programs, deferred compensation arrangements, incentive plans, and retiree
benefit plans, policies and arrangements); provided, however, that, with respect
to employees who are subject to collective bargaining, all benefits shall be
provided in accordance with the applicable collective bargaining or other labor
agreements; and provided, further, that all incentive, bonus and similar plans
shall after the Effective Time be substantially performance-based. BP will also
cause Amoco's general severance program as in effect immediately prior to the
Effective Time to continue without any reduction in benefits for at least two
years following the Effective Time.
Following the Effective Time, BP Amoco will recognize, and cause its
subsidiaries to recognize, service with Amoco and its subsidiaries and any
predecessor entities (and any other service credited by Amoco under similar
benefit plans) prior to the Effective Time for all purposes (including, without
limitation, eligibility to participate, vesting, benefit accrual, eligibility to
commence benefits and severance) under any benefit plans of BP Amoco or its
subsidiaries in which the particular employee or former employee of Amoco (or
its respective subsidiaries) participates; provided, however, that the foregoing
shall not result in any duplication of benefits. From and after the Effective
Time, BP Amoco will recognize any and all appropriate out-of-pocket expenses of
each employee or former employee of Amoco and its subsidiaries for purposes of
determining such employee's and former employee's (including their beneficiaries
and dependents) deductible and copayment expenses.
From and after the Effective Time, BP Amoco will honor, and will cause its
subsidiaries to honor, in accordance with its terms, each existing employment,
change of control, severance and termination agreement between Amoco or any of
its subsidiaries, and any officer, director or employee of such company,
including without limitation all legal and contractual obligations pursuant to
outstanding restoration plans, bonus deferral plans, vested and accrued benefits
and similar employment and benefit arrangements and agreements in effect as of
the Effective Time.
STOCK OPTIONS AND OTHER STOCK PLANS
Pursuant to the Merger Agreement, at the Effective Time, all Amoco Stock
Options which are then outstanding and unexercised will cease to represent a
right to acquire Amoco Shares and will be converted automatically into options
to purchase BP Amoco Ordinary Shares, and BP Amoco will assume each such Amoco
Stock Option subject to the terms of the applicable Amoco compensation or
benefit plan or agreement, except that from and after the Effective Time, (i)
the number of BP Amoco Ordinary Shares purchasable upon exercise of each such
Amoco Stock Option will be equal to the number of Amoco Shares that were
purchasable under such Amoco Stock Option immediately prior to the Effective
Time multiplied by 3.97, subject to any adjustments provided for in the Merger
Agreement, and rounding down to the nearest whole BP Amoco Ordinary Share (or,
if issued in the form of BP Amoco ADSs, the nearest whole BP ADS), and (ii) the
per BP Amoco Ordinary Share exercise price under each such Amoco Stock Option
will be obtained by dividing the per share exercise price of each such Amoco
Stock Option by 3.97, subject to any adjustment provided for in the Merger
Agreement, and rounding down to the nearest cent. Notwithstanding the foregoing,
the number of BP Amoco Ordinary Shares and the per BP Amoco Ordinary Share
exercise price of each Amoco Stock Option which is intended to be an "incentive
stock option" (as defined in Section 422 of the Code) will be adjusted in
accordance with the requirements of Section 424 of the Code. Accordingly, with
respect to any incentive stock options, fractional BP Amoco Ordinary Shares will
be rounded down to the nearest whole number of BP Amoco Ordinary Shares (or, if
applicable, BP Amoco ADS) and, where necessary, the per BP Amoco Ordinary Share
exercise price shall be rounded up to the nearest cent. BP Amoco Ordinary Shares
to be issued upon the exercise of Amoco
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Stock Options, will, at the election of the holders of such Amoco Stock Options,
be delivered in the form of BP Amoco ADSs through the direct registration system
maintained by the Depositary or evidenced by BP Amoco ADRs. BP Amoco will pay
all stamp duties, SDRT and all other similar taxes or levies, if any, in
connection with the exercise after the Effective Time of Amoco Stock Options
that have been converted into options to purchase BP Amoco Ordinary Shares as
described above.
TERMINATION; EFFECTS OF TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by Amoco Shareholders and by the shareholders of BP, by the
mutual written consent of Amoco and BP, by action of their respective boards of
directors.
The Merger Agreement may be terminated at any time prior to the Effective
Time by action of the Board of Directors of either Amoco or BP, so long as such
party has not breached in any material respect its obligations under the Merger
Agreement in any manner that proximately contributed to the failure of the
Merger to be consummated, if (i) the Merger has not been consummated by August
31, 1999 (the "Termination Date"), (ii) any Order permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger has become
final and non-appealable, whether before or after the approval by Amoco
Shareholders or shareholders of BP, (iii) the requisite vote of Amoco
Shareholders was not obtained at the Special Meeting, including any adjournments
or postponements thereof, or (iv) the requisite approvals of shareholders of BP
were not obtained at the BP Extraordinary General Meeting, including any
adjournments or postponements thereof.
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after the approval by Amoco Shareholders, by action of
the Amoco Board if (i) the BP Board withdraws or adversely modifies its approval
or recommendation to shareholders of BP of the Merger (a "BP Withdrawal"), (ii)
the BP Board fails to reconfirm such recommendation within seven business days
after a written request by Amoco to do so (a "BP Failure to Reconfirm"), (iii)
BP or its Board of Directors either negotiates with or furnishes information to
a person who has made a bona fide written Superior Proposal or recommends such a
Superior Proposal to its shareholders, or (iv) BP has breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement which would result in a failure of either the condition to the
obligations of Amoco relating to the representations and warranties of BP or the
condition relating to the performance by BP of its obligations and such failure
cannot be or is not cured prior to the Termination Date.
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after the approval by BP Shareholders, by action of the
BP Board, if (i) the Amoco Board withdraws or adversely modifies its approval or
recommendation to Amoco Shareholders of the Merger (an "Amoco Withdrawal"), (ii)
the Amoco Board fails to reconfirm such recommendation within seven business
days after a written request by BP to do so (an "Amoco Failure to Reconfirm") or
(iii) Amoco or its Board of Directors either negotiates with or furnishes
information to a person who has made a bona fide written Superior Proposal or
recommends such a Superior Proposal to Amoco Shareholders, or (iv) Amoco has
breached any representation, warranty, covenant or agreement contained in the
Merger Agreement which would result in a failure of either the condition to the
obligations of BP relating to the representations and warranties of Amoco or the
condition relating to the performance by Amoco of its obligations and such
failure cannot be or is not cured prior to the Termination Date.
TERMINATION PAYMENTS PAYABLE BY AMOCO
Pursuant to the Merger Agreement, (i) if either Amoco or BP terminates the
Merger Agreement because the requisite approval of Amoco Shareholders is not
obtained at the Special Meeting and, at the time of the Special Meeting, there
exists an Acquisition Proposal with respect to Amoco or (ii) if BP terminates
the Merger Agreement due to an Amoco Withdrawal, an Amoco Failure to Reconfirm,
a recommendation by Amoco or its Board of Directors of an Acquisition Proposal
or a willful and
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intentional breach by Amoco regarding its obligations with respect to
Acquisition Proposals, then Amoco will be required to pay to BP an amount equal
to (a) $950,000,000, if the Merger Agreement is terminated on account of a
reason described in clause (ii) of this sentence, or (b) $500,000,000, if the
Merger Agreement is terminated on account of the reason described in clause (i)
of this sentence, plus an additional $450,000,000 if, within 12 months of the
date the Merger Agreement is terminated for the reason described in clause (i),
Amoco executes and delivers an agreement with respect to any Acquisition
Proposal or an Acquisition Proposal with respect to Amoco is consummated (the
"Amoco Termination Amount"). In the event that the Amoco Board recommends the
acceptance by Amoco Shareholders of a third-party tender or exchange offer for
the Amoco Shares, such recommendation will be treated as though Amoco executed
and delivered an agreement with respect to an Acquisition Proposal.
TERMINATION PAYMENTS PAYABLE BY BP
Pursuant to the Merger Agreement, (i) if either Amoco or BP terminates the
Merger Agreement because the requisite approval of shareholders of BP is not
obtained at the BP Extraordinary General Meeting and, at the time of the BP
Extraordinary General Meeting there exists an Acquisition Proposal with respect
to BP or (ii) Amoco terminates the Merger Agreement due to a BP Withdrawal, a BP
Failure to Reconfirm, a recommendation by BP or its Board of Directors of an
Acquisition Proposal or a willful and intentional breach by BP regarding its
obligations with respect to Acquisition Proposals, then BP will be required to
pay to Amoco an amount equal to (a) $1,000,000,000, if the Merger Agreement is
terminated on account of a reason described in clause (ii) of this sentence, or
(b) $500,000,000, if the Merger Agreement is terminated on account of the reason
described in clause (i) of this sentence, plus, an additional $500,000,000 if
within 12 months of the date the Merger Agreement is terminated for the reason
described in clause (i), BP executes and delivers an agreement with respect to
any Acquisition Proposal or an Acquisition Proposal with respect to BP is
consummated (the "BP Termination Amount"). In the event that the BP Board
recommends the acceptance by shareholders of BP of a third-party tender or
exchange offer for the BP Ordinary Shares, such recommendation will be treated
as though BP executed and delivered an agreement with respect to an Acquisition
Proposal.
EXPENSES
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement, the Stock Option Agreement, the Merger and
the other transactions contemplated by the Merger Agreement and the Stock Option
Agreement will be paid by the party incurring such expenses, except as described
above under "--Termination; Effects of Termination--Termination Payments Payable
by Amoco" and "--Termination Payments Payable by BP" and except that Amoco and
BP will share equally the costs and expenses of filing, printing and
distributing the F-4 Registration Statement, this Proxy Statement/Prospectus and
the circular to be distributed to shareholders of BP and the listing particulars
relating to the BP Amoco Ordinary Shares.
AMENDMENT; WAIVER
The Merger Agreement may be amended by the parties thereto at any time prior
to the Effective Time, but, after any approval by Amoco Shareholders or
shareholders of BP, no amendment may be made which by law requires further
approval by such shareholders without such further approval. The Merger
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties to the Merger Agreement.
Pursuant to the Merger Agreement, at any time prior to the Effective Time,
any provision of the Merger Agreement may be waived if, and only if, such waiver
is in writing and signed by the party against whom the waiver is to be
effective. Pursuant to the Merger Agreement, the failure or delay of any party
to the Merger Agreement to assert any of its rights under the Merger Agreement
will not constitute a waiver of those rights.
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<PAGE>
THE STOCK OPTION AGREEMENT
GENERAL
Immediately following the execution of the Merger Agreement, Amoco and BP
also entered into the Stock Option Agreement. The following description sets
forth the material provisions of the Stock Option Agreement but is qualified in
its entirety by reference to the Stock Option Agreement, which is filed as an
exhibit to the F-4 Registration Statement and incorporated herein by reference
in its entirety.
Pursuant to the Stock Option Agreement, Amoco granted BP an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms thereof, up
to 189,783,270 Amoco Shares (the "Option Shares") at a price per share in cash
equal to $41.00 (the "Option Price"). The number of Option Shares and the Option
Price are each subject to possible adjustment, as described below under
"--Maximum Option Price; Adjustments to Number of Option Shares." In no event
will the number of Option Shares exceed 19.9% of the Amoco Shares issued and
outstanding at the time of exercise (without giving effect to the Amoco Shares
issued or issuable under the Option).
The Stock Option Agreement provides that BP may exercise the Option, in
whole but not in part, by delivering a written notice thereof (in accordance
with the terms of the Stock Option Agreement) within 180 days following the
occurrence of a Triggering Event (as defined below), unless the Effective Time
has occurred prior to the giving of such notice. For purposes of the Stock
Option Agreement, a "Triggering Event" will be deemed to have occurred if the
Merger Agreement is terminated and BP then or thereafter becomes entitled to
receive the maximum amount of the Amoco Termination Amount payable pursuant to
the Merger Agreement. Accordingly, subject to the notice provisions described
above and the possible earlier termination of the Option, the Option will become
exercisable on the occurrence of any of the events that would cause BP to become
entitled to a termination payment from Amoco (described above under "THE MERGER
AGREEMENT--Termination; Effects of Termination"), except in the event that
either Amoco or BP terminates the Merger Agreement because the requisite
approval of the Amoco Shareholders is not obtained at the Special Meeting and,
at the time of the Special Meeting, there exists an Acquisition Proposal with
respect to Amoco, BP would not be entitled to exercise the Option, unless within
twelve months of the date of such termination by Amoco or BP, Amoco executes and
delivers an agreement with respect to, or consummates, any Acquisition Proposal.
The Option will terminate upon either (i) the occurrence of the Effective
Time or (ii) the close of business on the earlier of (x) the day 180 days after
the date that Amoco has paid to BP the maximum amount of the Amoco Termination
Amount payable pursuant to the Merger Agreement or (y) the date that BP is no
longer potentially entitled to receive the Amoco Termination Amount, in each
case under the Merger Agreement.
Arrangements such as the Stock Option Agreement are customarily entered into
in connection with corporate mergers and acquisitions in an effort to increase
the likelihood that the transactions will be consummated in accordance with
their terms, and to compensate the grantee for the efforts undertaken and the
expenses, losses and opportunity costs incurred by it in connection with the
transactions if they are not consummated under certain circumstances involving
an acquisition or potential acquisition of the issuer by a third party. The
Stock Option Agreement was entered into to accomplish these objectives. The
Stock Option Agreement may have the effect of discouraging offers by third
parties to acquire Amoco prior to the Effective Time, even if such persons were
prepared to offer to pay consideration to Amoco Shareholders which has a higher
current market price than the BP ADSs to be received by Amoco Shareholders
pursuant to the Merger Agreement.
The Stock Option Agreement is not subject to the approval of Amoco
Shareholders, and is effective whether or not Amoco Shareholders approve the
Merger Agreement at the Special Meeting. To the best knowledge of Amoco and BP,
no event giving rise to the right to exercise the Option has occurred as of the
date of this Proxy Statement/Prospectus.
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<PAGE>
NOTICE OF EXERCISE
Pursuant to the Stock Option Agreement, if BP is entitled to and wishes to
exercise the Option, it has agreed to send Amoco a written notice (the date of
which is referred to as the "Notice Date") specifying (i) the total amount
payable to Amoco on the exercise of the Option in respect of the Option Shares
and (ii) a place and date (the "Option Closing Date") not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase. However, the Stock Option Agreement provides that if a
filing is required under the HSR Act, or prior notification to or approval of
any other regulatory authority in the United States, the United Kingdom or
elsewhere is required in connection with such purchase, Amoco and BP, as
required, have agreed to promptly after the giving of such notice file any and
all required notices, applications or other documents necessary for approval and
expeditiously process the same. If any such filing is required, the period of
time referred to in clause (ii) above will commence on the date on which BP
furnishes to Amoco a supplemental written notice setting forth the Option
Closing Date, which BP is required to furnish as promptly as practicable after
all required notification periods have expired or been terminated and all
required approvals have been obtained and all requisite waiting periods have
expired or been terminated. Each of Amoco and BP has agreed to use all
reasonable efforts to cooperate with and provide information to Amoco or BP, as
the case may be, with respect to any such required notice, application or other
document for approval.
REPURCHASE OF OPTION
The Stock Option Agreement further provides that following the occurrence of
a Triggering Event (i) at the request of BP, given in writing within 180 days of
such occurrence (or later period if a notice, application or other document
described above is required or if requested by BP to the extent necessary to
avoid liability by BP under Section 16(b) of the Exchange Act by reason of such
exercise) (the "Repurchase Notice"), Amoco will repurchase the Option from BP,
in whole but not in part, at a price equal to the number of Option Shares then
purchasable upon exercise of the Option multiplied by the amount by which the
"market/offer price" (as defined below) exceeds the Option Price, giving effect
to the Maximum Option Price (as defined below), and (ii) at the request of BP,
given in writing within 180 days of such occurrence (or later period if a
notice, application or other document described above is required or if
requested by BP to the extent necessary to avoid liability by BP under Section
16(b) of the Exchange Act by reason of such exercise) Amoco will repurchase all
Option Shares then owned by BP at a price equal to the number of such shares
multiplied by the market/offer price. For purposes of the Stock Option
Agreement, the term "market/offer price" means the highest of (x) the price per
Amoco Share at which a tender or exchange offer for Amoco Shares has been made,
(y) the price per Amoco Share to be paid by any third party pursuant to an
agreement with Amoco and (z) the highest trading price for Amoco Shares on the
NYSE (or, if the Amoco Shares are not then listed on the NYSE, any other
national securities exchange or automated quotation system on which the Amoco
Shares are then listed or quoted) within the six-month period immediately
preceding the delivery of the Repurchase Notice.
LIMITATION ON TOTAL PROFIT
The Stock Option Agreement provides that, notwithstanding any other
provision of the Stock Option Agreement, in no event will BP's Total Profit (as
defined below) plus any Amoco Termination Amount paid by Amoco to BP (pursuant
to the provision of the Merger Agreement described above under "THE MERGER
AGREEMENT--Termination; Effects of Termination") exceed in the aggregate $1
billion, and, if it otherwise would exceed such amount, BP, at its sole
election, is required to (a) reduce the number of Amoco Shares subject to the
Option, (b) deliver to Amoco for cancellation Option Shares previously purchased
by BP, (c) pay cash to Amoco, or (d) any combination thereof, so that BP's
actually realized Total Profit plus the Amoco Termination Amount (or part
thereof) so paid to BP does not exceed $1 billion after taking into account the
foregoing actions. For purposes of the Stock Option Agreement, "Total Profit"
means the aggregate amount (before taxes) of the following: (i) (x) the amount
received by
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<PAGE>
BP pursuant to Amoco's repurchase of the Option or any Option Shares, less, in
the case of any repurchase of Option Shares, (y) BP's purchase price for such
Option Shares, as the case may be, and (ii) (x) the net cash amounts or the fair
market value of any property received by BP pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanged), but in no case less than the fair market value of such Option Shares
less (y) BP's purchase price of such Option Shares.
The Stock Option Agreement also provides that, notwithstanding any other
provision of the Stock Option Agreement to the contrary, the Option may not be
exercised for a number of Amoco Shares as would, as of the date of exercise,
result in a Notional Total Profit (as described below) which, together with any
Amoco Termination Amount (or part thereof) theretofore paid to BP, would exceed
$1 billion. For purposes of the Stock Option Agreement, the term "Notional Total
Profit" with respect to the Option Shares as to which BP may propose to exercise
the Option will be the Total Profit determined as of the date of such proposal
assuming that the Option was exercised on such date for such number of Option
Shares and assuming that such Option Shares were sold for cash at the closing
market price on the NYSE for Amoco Shares as of the close of business on the
preceding trading day (less customary brokerage commissions).
MAXIMUM OPTION PRICE; ADJUSTMENTS TO NUMBER OF OPTION SHARES
The Option Price with respect to the Option Shares as to which BP may
propose to exercise the Option or to request the repurchase of the Option will
be adjusted downward to the extent necessary to be the Maximum Option Price. The
"Maximum Option Price" is that price per Amoco Share in cash at which the Option
must be exercisable in order to result in profit to BP, determined as of the
date of such proposed exercise, of $50 million, assuming that the Option were
exercised on such date for all Option Shares subject to the Option and assuming
that all of such Option Shares were sold for cash at the closing market price on
the NYSE for Amoco Shares as of the close of business on the preceding trading
date (less customary brokerage commissions).
The Stock Option Agreement provides that in the event that any additional
Amoco Shares are issued or otherwise become outstanding after the date of the
Stock Option Agreement (other than pursuant to the Stock Option Agreement), the
aggregate number of Option Shares purchasable upon exercise of the Option shall
automatically be increased (without any further action on the part of Amoco or
BP being necessary) so that, taking into consideration any such issuance, such
aggregate number equals 19.9% of the Amoco Shares then issued and outstanding.
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<PAGE>
MARKET PRICE AND DIVIDEND DATA
As of October 19, 1998 (the Record Date for the Special Meeting), there were
approximately 134,442 Amoco Shareholders of record. As of October 26, there were
approximately 367,147 holders of BP Ordinary Shares of record and 11,391 holders
of record of BP ADSs.
The market prices for, and dividends paid on, Amoco Shares, BP Ordinary
Shares and BP ADSs shown below are the market prices and dividends paid for each
security without adjustments to give effect to the Merger. Such market prices
are not necessarily indicative of what the market value of BP Amoco Ordinary
Shares or BP Amoco ADSs will be after the Merger.
MARKET PRICES
AMOCO
The principal trading market for Amoco Shares is the NYSE. Their ticker
symbol is "AN." Amoco Shares are also traded on the Chicago, Pacific, Toronto
and Swiss Stock Exchanges. The table below sets forth, for the calendar quarters
indicated, the high and low sale prices of the Amoco Shares as reported on NYSE
Composite Tape, as adjusted to reflect the two-for-one split of Amoco Shares
effective as of March 31, 1998.
<TABLE>
<CAPTION>
AMOCO SHARES
------------------
<S> <C> <C>
HIGH LOW
------- -------
<CAPTION>
($ PER SHARE)
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter....................................................................................... 37 1/16 33 3/4
Second Quarter...................................................................................... 37 9/16 34 3/4
Third Quarter....................................................................................... 36 5/16 32 1/2
Fourth Quarter...................................................................................... 41 3/4 35 1/8
YEAR ENDED DECEMBER 31, 1997
First Quarter....................................................................................... 45 13/16 40 1/8
Second Quarter...................................................................................... 45 31/32 39 5/8
Third Quarter....................................................................................... 49 1/2 43 1/2
Fourth Quarter...................................................................................... 49 3/16 40 29/32
YEAR ENDING DECEMBER 31, 1998
First Quarter....................................................................................... 44 23/32 38 5/8
Second Quarter...................................................................................... 47 1/16 40 3/16
Third Quarter....................................................................................... 57 15/16 39 1/2
Fourth Quarter (until October 26, 1998)............................................................. 56 3/8 51 1/16
</TABLE>
The last sale price of an Amoco Share as reported on the NYSE Composite Tape
(i) on August 10, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, was $41.00 per Amoco
Share and (ii) on October 26, 1998, the last practicable trading day for which
information was available prior to the printing of this Proxy
Statement/Prospectus, was $54.00 per Amoco Share.
AMOCO SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
AMOCO SHARES.
BP
The primary trading market for the BP Ordinary Shares is, and the primary
trading market for the BP Amoco Ordinary Shares will be, the LSE. The BP
Ordinary Shares are, and the BP Amoco Ordinary Shares will be, also traded on
stock exchanges in France, Germany, Japan and Switzerland. BP ADSs, each
representing six BP Ordinary Shares, have been issued by the Depositary and are
listed on the NYSE,
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where their ticker symbol is "BP." BP Amoco ADSs, each representing six BP Amoco
Ordinary Shares, will be issued by the Depositary and will be listed on the
NYSE, with the same ticker symbol.
The table below sets forth, for the periods indicated, the highest and
lowest middle-market quotations for the BP Ordinary Shares as derived from the
Daily Official List of the LSE and the highest and lowest sales prices of BP
ADSs on the NYSE Composite Tape.
<TABLE>
<CAPTION>
BP ORDINARY SHARES
BP ADSS (1)
---------------------- ------------------
<S> <C> <C> <C> <C>
HIGH LOW HIGH LOW
----- --- ------- -------
<CAPTION>
(PENCE PER BP ($ PER BP ADS)
ORDINARY SHARE)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter.......................................................... 577 514 54 47 1/4
Second Quarter......................................................... 599 555 55 1/4 51 9/16
Third Quarter.......................................................... 663 570 62 11/16 54 5/16
Fourth Quarter......................................................... 701 634 71 7/8 62 3/8
YEAR ENDED DECEMBER 31, 1997
First Quarter.......................................................... 748 663 73 1/2 64 7/8
Second Quarter......................................................... 759 670 75 3/8 65 11/16
Third Quarter.......................................................... 956 756 93 74 5/8
Fourth Quarter......................................................... 939 797 91 7/8 79
YEAR ENDING DECEMBER 31, 1998
First Quarter.......................................................... 934 746 96 73 3/4
Second Quarter......................................................... 968 833 97 5/16 82 7/8
Third Quarter.......................................................... 910 737 91 3/4 73
Fourth Quarter (until October 26, 1998)................................ 868 815 89 1/8 81 7/16
</TABLE>
- ------------------------
(1) Each BP ADS represents six BP Ordinary Shares.
The last middle market quotation of the BP Ordinary Shares on the Daily
Official List of the LSE and the last sales price of the BP ADSs on the NYSE
Composite Tape at the close of business (i) on August 10, 1998, the last full
trading day on the LSE and the NYSE prior to the public announcement of the
execution of the Merger Agreement, were 773p per BP Ordinary Share and $76.00
per BP ADS and (ii) on October 26, 1998, the last practicable trading day for
which information was available prior to the printing of this Proxy
Statement/Prospectus, were 838p per BP Ordinary Share and $85.00 per BP ADS.
AMOCO SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE BP
ORDINARY SHARES AND THE BP ADSS.
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<PAGE>
DIVIDEND DATA
AMOCO
Amoco has historically declared and paid dividends quarterly. The following
table sets forth the quarterly dividends in respect of the Amoco Shares declared
and paid in each of the past five years. Amoco expects to pay its regular
quarterly dividend in December of 1998.
<TABLE>
<CAPTION>
DIVIDENDS ($) PER AMOCO SHARE (1)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ----------- ----------- ----------- ---------
YEAR ENDED DECEMBER 31,
1993............................................................... 0.275 0.275 0.275 0.275 1.10
1994............................................................... 0.275 0.275 0.275 0.275 1.10
1995............................................................... 0.300 0.300 0.300 0.300 1.20
1996............................................................... 0.325 0.325 0.325 0.325 1.30
1997............................................................... 0.350 0.350 0.350 0.350 1.40
1998............................................................... 0.375 0.375 0.375 -- --
</TABLE>
- ------------------------
(1) Amoco per share data reflects a two-for-one stock split of Amoco Shares
outstanding on March 31, 1998. All per share dividend amounts for prior
periods have been restated accordingly.
BP
The following table sets forth dividends announced and paid in respect of BP
Ordinary Shares, on a per BP ADS basis, for the periods indicated, including the
associated U.K. tax credit available to certain beneficial owners of BP Ordinary
Shares or BP ADSs who are resident in the U.S. for tax purposes, but before
deduction of U.K. withholding taxes. See "CERTAIN TAX CONSEQUENCES--United
Kingdom Tax Consequences of the Ownership of BP Amoco Ordinary Shares and BP
Amoco ADSs." Therefore, the amounts shown are not those that were actually paid
to holders of BP Ordinary Shares and BP ADSs. It should be noted that the
percentage of any dividend represented by the associated U.K. tax credit has
varied over the periods indicated and that, on and after April 6, 1999, the U.K.
tax credit will effectively be completely set off by the amount of applicable
U.K. withholding taxes. Dividends have been translated from pounds sterling per
BP ADS into U.S. dollars using the exchange rate at the close of business in
London on the business day last preceding the day when the BP directors
announced their intention to pay quarterly dividends for such period. Dividends
have historically been announced quarterly in August, November, February and
May. See "CURRENCIES AND EXCHANGE RATES," "DESCRIPTION OF BP AMOCO ORDINARY
SHARES--Dividends," "BP AMOCO FOLLOWING THE MERGER-- Dividends" and "DESCRIPTION
OF BP AMOCO AMERICAN DEPOSITARY SHARES--Dividends, Other Distributions, Rights
and Changes Affecting Deposited Securities."
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<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS PER BP ORDINARY SHARE AND BP ADS (1)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
----------- ----------- ----------- ----------- ---------
YEAR ENDED DECEMBER 31,
1993
Ordinary Share................................................. 2.10p 2.10p 2.10p 2.10p 8.40p
ADS............................................................ $ 0.25 $ 0.24 $ 0.23 $ 0.23 $ 0.95
1994
Ordinary Share................................................. 2.50p 2.50p 2.50p 3.00p 10.50p
ADS............................................................ $ 0.28 $ 0.29 $ 0.31 $ 0.35 $ 1.23
1995
Ordinary Share................................................. 3.00p 4.00p 4.00p 4.25p 15.25p
ADS............................................................ $ 0.36 $ 0.48 $ 0.47 $ 0.49 $ 1.80
1996
Ordinary Share................................................. 4.25p 5.00p 5.00p 5.25p 19.50p
ADS............................................................ $ 0.48 $ 0.58 $ 0.62 $ 0.64 $ 2.32
1997
Ordinary Share................................................. 5.25p 5.50p 5.50p 5.75p 22.00p
ADS............................................................ $ 0.64 $ 0.67 $ 0.69 $ 0.71 $ 2.71
1998
Ordinary Share................................................. 5.75p 6.00p -- -- --
ADS............................................................ $ 0.61 $ 0.62 -- -- --
</TABLE>
- ------------------------
(1) With effect from June 6, 1997, BP split existing ADSs on a two-for-one basis
so that a BP ADS is now equivalent to six BP Ordinary Shares. Comparative
figures for prior periods have been restated accordingly.
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<PAGE>
DESCRIPTION OF AMOCO
Amoco produces and markets crude oil and petroleum products and natural gas
worldwide and has exploration activities in approximately 20 countries. Amoco
and its consolidated subsidiaries form a large integrated petroleum and chemical
enterprise. Amoco's main businesses are as follows:
<TABLE>
<S> <C>
Exploration and Production........ Exploration and Production is engaged in exploring for,
developing and producing crude oil and natural gas,
extraction of natural gas liquids ("NGL") and
marketing of natural gas.
Petroleum Products................ Petroleum Products is responsible for petroleum refining
operations, marketing of all petroleum products, the
transportation of crude oil and petroleum products,
associated supply and trading activities (primarily in
the United States), and wholesale marketing of
Canadian crude oil, sulfur and NGL.
Chemicals......................... Chemicals is engaged in the manufacture and sale of
various petroleum-based chemical products.
</TABLE>
DESCRIPTION OF BP
BP is one of the world's largest petroleum and petrochemical groups, with a
wide operational and geographic scope. It has well established operations in
Europe, the United States, Australia and parts of Africa, and is expanding its
presence in other areas, notably China, Southeast Asia, South America and the
former Soviet Union. BP's main businesses are as follows:
<TABLE>
<S> <C>
Exploration and Production........ Exploration and Production is engaged in oil and gas
exploration and field development and production
(upstream activities), together with pipeline
transportation, gas processing and gas marketing
(midstream activities).
Refining and Marketing............ The activities of Refining and Marketing include oil
supply and trading as well as refining and marketing
(downstream activities).
Chemicals......................... Chemicals activities include petrochemicals
manufacturing and marketing.
</TABLE>
BP AMOCO FOLLOWING THE MERGER
Upon consummation of the Merger, BP will be renamed "BP Amoco p.l.c." The
worldwide headquarters of BP Amoco will be in London. Amoco's head office in
Chicago will be the headquarters for BP Amoco's North American refining,
marketing and transportation business and is expected, after a transition
period, to be the headquarters for the worldwide chemicals business. The head
office for exploration and production operations for the Western hemisphere is
expected to be in Houston, Texas, where both Amoco and BP currently have
offices. The Amoco brand is expected to be extended over time to all of BP's
retail gasoline and convenience store outlets in the United States. Retail sites
elsewhere in the world will carry the BP brand.
Information regarding the management of BP Amoco after the Merger is
contained under the caption "DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE
MERGER" and additional information regarding the expected synergies to be
achieved in connection with the Merger is contained under the caption "THE
MERGER--Reasons for the Merger."
FINANCIAL INFORMATION
BP Amoco will, like Amoco and BP currently, have a financial year-end of
December 31. BP's business is already substantially U.S. dollar-based. This will
be accentuated by the Merger, with BP Amoco having an overwhelmingly U.S.
dollar-based business, with substantial U.S. dollar assets and U.S. dollar
income streams. Accordingly, the financial statements of BP Amoco will be
presented in U.S. dollars and
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<PAGE>
prepared in accordance with U.K. GAAP. Also presented will be a reconciliation
of certain financial information, such as profit and shareholders' interest, to
U.S. GAAP.
DIVIDENDS
BP has historically paid dividends on a quarterly basis and expects that BP
Amoco will continue to pay quarterly dividends on BP Amoco Ordinary Shares. The
future dividends of BP Amoco will be dependent on its future earnings and
financial condition and other factors affecting its businesses, but it is
intended that BP Amoco will pay dividends equal to approximately 50% of its
estimated average earnings over the course of the business cycle. The expected
payment dates for the four BP Amoco dividends to which Amoco Shareholders will
be entitled in 1999 (assuming that the Merger is completed by December 31, 1998)
will be in April, June, September and December. In subsequent years, BP's
schedule of dividend payments will be changed to payments in March, June,
September and December of each year in order to harmonize dividend payment dates
for both Amoco Shareholders and shareholders of BP.
If the Merger becomes effective, Amoco and BP currently expect that the
timetable for dividends to be paid in the remainder of 1998 and in 1999 will be
as set forth below, assuming that the Effective Time occurs on or prior to
December 31, 1998.
<TABLE>
<CAPTION>
DATE OF ANNOUNCEMENT RECORD DATE PAYMENT DATE
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
Amoco Shareholders only October 27, 1998 November 11, 1998 December 10, 1998
BP Shareholders only November 3, 1998 November 13, 1998 February 1, 1999
BP Amoco Shareholders February 16, 1999 February 26, 1999 April 6, 1999
BP Amoco Shareholders May 4, 1999 May 14, 1999 June 10, 1999
BP Amoco Shareholders August 3, 1999 August 13, 1999 September 10, 1999
BP Amoco Shareholders November 2, 1999 November 12, 1999 December 10, 1999
</TABLE>
The timetable set forth above represents the current expectations of Amoco's
and BP's Boards. The announcement of a dividend in any quarter is not assured,
and is ultimately within the discretion of the board of directors of the
relevant company.
For a period of at least five years following the Merger, BP Amoco will
announce dividends on BP Amoco Ordinary Shares in U.S. dollars and state an
equivalent pounds sterling dividend. Holders of BP Amoco Ordinary Shares will
receive dividends in pounds sterling and holders of BP Amoco ADSs will receive
such dividends in U.S. dollars. Since BP Amoco dividends will be determined by
reference to projected earnings calculated in U.S. dollars, BP Amoco
Shareholders who receive dividends in pounds sterling can expect fluctuation
between the amounts of one receipt and the next because of U.S. dollar/ pounds
sterling exchange rate fluctuation. See "DESCRIPTION OF BP AMOCO AMERICAN
DEPOSITARY SHARES--Dividends, Other Distributions, Rights and Changes Affecting
Deposited Securities."
BP currently has in place a share dividend plan that gives BP Shareholders
the opportunity to elect to receive fully paid BP Ordinary Shares in lieu of
cash dividends. Holders of BP ADSs are currently permitted to participate in the
share dividend plan through the Depositary, on the instruction of BP. However,
following the decision of the U.K. government to abolish advance corporation
tax, this share dividend plan will no longer be available for any dividends
payable to holders of BP Amoco Ordinary Shares on or after April 6, 1999. It is
anticipated that a dividend reinvestment program for holders of BP Ordinary
Shares and, after the Effective Time, BP Amoco Ordinary Shares, will be
introduced. It is also anticipated that a direct access plan will be established
from the Effective Time whereby United States and Canadian residents can acquire
BP Amoco ADSs. This plan will replace the Amoco Direct Access Plan.
DESCRIPTION OF MERGER SUB
Merger Sub is a wholly owned subsidiary of BP organized under the laws of
Indiana. It was incorporated in August 1998 solely for use in the Merger, and is
engaged in no other business. Its executive offices are located at Britannic
House, 1 Finsbury Circus, London, EC2M 7BA England.
73
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
INTRODUCTORY NOTE
The following Unaudited Pro Forma Condensed Consolidated Financial
Information gives pro forma effect to the Merger, after giving effect to the pro
forma adjustments described in the accompanying notes. The Unaudited Pro Forma
Condensed Consolidated Financial Information has been prepared from, and should
be read in conjunction with, the respective historical consolidated financial
statements and notes thereto of Amoco and BP, which are incorporated by
reference in this Proxy Statement/Prospectus. See "AVAILABLE INFORMATION."
The Unaudited Pro Forma Condensed Consolidated Financial Information is
provided for illustrative purposes only and does not purport to represent what
the actual results of operations or the financial position of BP Amoco would
have been had the Merger occurred on the respective dates assumed, nor is it
necessarily indicative of BP Amoco's future operating results or consolidated
financial position.
The Unaudited Pro Forma Condensed Consolidated Financial Information has
been prepared in accordance with U.K. GAAP, which differs in certain respects
from U.S. GAAP. Note 42 to the consolidated financial statements of BP included
in BP's Form 6-K filed on October 23, 1998, which presented restated financial
information for the years ended December 31, 1997, 1996 and 1995 provides a
description of the principal differences between U.K. GAAP and U.S. GAAP as they
relate to BP. A reconciliation of the pro forma profit and pro forma ordinary
shareholders' interest to U.S. GAAP is included in Note 10 to the Unaudited Pro
Forma Condensed Consolidated Financial Information.
BP's use of the replacement cost basis for inventory accounting is explained
in Note 1 to the Notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information. The replacement cost basis is generally similar to the
LIFO basis.
BP Amoco intends to account for the Merger using the merger method of
accounting under U.K. GAAP and the Merger qualifies for pooling-of-interests
method of accounting under U.S. GAAP. The pro forma financial information has
been prepared on this basis.
The historical financial statements of Amoco have been prepared in
accordance with U.S. GAAP. For purposes of presenting the Unaudited Pro Forma
Condensed Consolidated Financial Information, financial information relating to
Amoco has been adjusted to conform with BP's accounting policies under U.K. GAAP
as described in Notes 3 and 6 to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
The unaudited historical financial statements of Amoco are presented in U.S.
dollars. For purposes of presenting the Pro Forma Condensed Consolidated
Financial Information, the adjusted Amoco results of operations for all periods
presented have been translated into pounds sterling at the average exchange rate
used by BP in the preparation of its unaudited historical condensed consolidated
income statement for the period concerned (see Note 4). The unaudited historical
condensed consolidated balance sheet of Amoco at June 30, 1998 has been
translated into pounds sterling at the effective exchange rate ruling on the
date used by BP in the preparation of its unaudited historical condensed
consolidated balance sheet at June 30, 1998 (see Note 7). The use of these
exchange rates in the Unaudited Pro Forma Condensed Consolidated Financial
Information should not be construed to signify that the U.S. dollar amounts
actually represent such pounds sterling amounts or could be converted into
pounds sterling at the rate indicated or at any other rate, at any time.
The pro forma merger adjustments reflected in the accompanying Unaudited Pro
Forma Condensed Consolidated Balance Sheet and described in Note 8 reflect
estimates made by BP management and assumptions that it believes to be
reasonable. There are no pro forma merger adjustments in the accompanying
Unaudited Pro Forma Condensed Consolidated Income Statements to eliminate
transactions between Amoco and BP because such amounts are considered to be
immaterial. No account has been
74
<PAGE>
taken, within the Unaudited Pro Forma Condensed Consolidated Financial
Information, of any synergies (including cost savings) or any severance and
restructuring costs, which may or are expected to occur as a result of the
Merger. See "THE MERGER--Reasons for the Merger."
Amoco Shareholders will be entitled to receive for each Amoco Share held as
of the Effective Time 3.97 BP Amoco Ordinary Shares. Such BP Amoco Ordinary
Shares will be delivered in the form of BP Amoco ADSs, each of which represents
six BP Amoco Ordinary Shares. The precise number of Amoco Shares to be cancelled
and exchanged in the Merger cannot be determined until the Effective Time.
The pro forma amounts pertaining to the consolidated BP Amoco entity in the
Unaudited Pro Forma Condensed Consolidated Financial Information are presented
in pounds sterling and are also expressed in U.S. dollars, the latter being
presented solely for convenience and translated at the Noon Buying Rate on June
30, 1998, which was $1.67 to L1.00.
75
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998
The following unaudited pro forma condensed consolidated income statement
for the six months ended June 30, 1998 is derived from the unaudited historical
condensed consolidated income statements of Amoco and BP for the six months then
ended, after giving effect to the pro forma adjustments described in the Notes
to the Unaudited Pro Forma Condensed Consolidated Financial Information. Such
adjustments have been determined as if the Merger took place on January 1, 1995,
the first day of the earliest financial period presented in the Unaudited Pro
Forma Condensed Consolidated Financial Information. The Unaudited Pro Forma
Condensed Consolidated Financial Information has been prepared from, and should
be read in conjunction with, and supplemental to, the respective historical
consolidated financial statements and notes thereto of Amoco and BP, which are
incorporated by reference in this Proxy Statement/Prospectus. The pro forma
amounts for BP Amoco conveyed in U.S. dollars have been adjusted to comply with
U.K. GAAP.
<TABLE>
<CAPTION>
BP AMOCO
BP AMOCO PRO FORMA
----------- ---------------------------------------------------- -----------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP U.K. GAAP
----------- ----------- ------------- ----------- ----------- -----------
L $ $ $ L L
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
<S> <C> <C> <C> <C> <C> <C>
Turnover........................................ 17,394 13,696 89(a) 13,785 8,355 25,749
Less: joint ventures............................ 4,361 139 25(a) 164 99 4,460
----------- ----------- ----- ----------- ----------- -----------
Group turnover.................................. 13,033 13,557 64 13,621 8,256 21,289
Replacement cost of sales....................... 10,567 11,039 61(b) 11,100 6,728 17,295
Production taxes................................ 153 85 2(c) 87 53 206
----------- ----------- ----- ----------- ----------- -----------
Gross profit.................................... 2,313 2,433 1 2,434 1,475 3,788
Distribution and administration expenses........ 1,036 1,294 56(d) 1,350 818 1,854
Exploration expense............................. 77 314 -- (e) 314 190 267
----------- ----------- ----- ----------- ----------- -----------
1,200 825 (55) 770 467 1,667
Other income.................................... 144 297 (59)(f) 238 144 288
----------- ----------- ----- ----------- ----------- -----------
Group replacement cost operating profit......... 1,344 1,122 (114) 1,008 611 1,955
Share of profits of joint ventures.............. 229 8 36(g) 44 27 256
Share of profits of associated undertakings..... 136 (6) 24(h) 18 11 147
----------- ----------- ----- ----------- ----------- -----------
Total replacement cost operating profit......... 1,709 1,124 (54) 1,070 649 2,358
Profit (loss) on sale or termination of
operations.................................... 7 -- 66(i) 66 40 47
----------- ----------- ----- ----------- ----------- -----------
Replacement cost profit before interest and
tax........................................... 1,716 1,124 12 1,136 689 2,405
Inventory holding gains (losses)................ (386) -- (151)(j) (151) (92) (478)
----------- ----------- ----- ----------- ----------- -----------
Historical cost profit before interest and
tax........................................... 1,330 1,124 (139) 985 597 1,927
Interest expense................................ 158 186 46(k) 232 141 299
----------- ----------- ----- ----------- ----------- -----------
Profit before taxation.......................... 1,172 938 (185) 753 456 1,628
Taxation........................................ 422 266 44(l) 310 188 610
----------- ----------- ----- ----------- ----------- -----------
Profit after taxation........................... 750 672 (229) 443 268 1,018
Minority shareholders' interest (MSI)........... 1 (1) 30(m) 29 18 19
----------- ----------- ----- ----------- ----------- -----------
Profit for the period........................... 749 673 (259) 414 250 999
----------- ----------- ----- ----------- ----------- -----------
Profit for the period applicable to ordinary
shares........................................ 749 673 (259) 414 250 999
----------- ----------- ----- ----------- ----------- -----------
----------- ----------- ----- ----------- ----------- -----------
Profit per ordinary share
Profit for the period......................... 13.0p 0.43 26.1p 10.4p
Replacement cost profit before exceptional
items....................................... 19.5p 0.54 33.0p 15.0p
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Average number outstanding shares (in
millions)..................................... 5,765 959 959 9,572
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Reconciliation of replacement cost results
Profit for the period........................... 749 414 250 999
Inventory holding (gains) losses................ 386 151 92 478
----------- ----------- ----------- -----------
Replacement cost profit for the period.......... 1,135 565 342 1,477
Exceptional items net of tax and MSI............ (11) (43) (26) (37)
----------- ----------- ----------- -----------
Replacement cost profit before exceptional
items......................................... 1,124 522 316 1,440
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
U.K. GAAP
-----------
$
<S> <C>
Turnover........................................ 43,001
Less: joint ventures............................ 7,448
-----------
Group turnover.................................. 35,553
Replacement cost of sales....................... 28,883
Production taxes................................ 344
-----------
Gross profit.................................... 6,326
Distribution and administration expenses........ 3,096
Exploration expense............................. 446
-----------
2,784
Other income.................................... 481
-----------
Group replacement cost operating profit......... 3,265
Share of profits of joint ventures.............. 428
Share of profits of associated undertakings..... 245
-----------
Total replacement cost operating profit......... 3,938
Profit (loss) on sale or termination of
operations.................................... 78
-----------
Replacement cost profit before interest and
tax........................................... 4,016
Inventory holding gains (losses)................ (798)
-----------
Historical cost profit before interest and
tax........................................... 3,218
Interest expense................................ 499
-----------
Profit before taxation.......................... 2,719
Taxation........................................ 1,019
-----------
Profit after taxation........................... 1,700
Minority shareholders' interest (MSI)........... 32
-----------
Profit for the period........................... 1,668
-----------
Profit for the period applicable to ordinary
shares........................................ 1,668
-----------
-----------
Profit per ordinary share
Profit for the period......................... 0.17
Replacement cost profit before exceptional
items....................................... 0.25
-----------
-----------
Average number outstanding shares (in
millions)..................................... 9,572
-----------
-----------
Reconciliation of replacement cost results
Profit for the period........................... 1,668
Inventory holding (gains) losses................ 798
-----------
Replacement cost profit for the period.......... 2,466
Exceptional items net of tax and MSI............ (62)
-----------
Replacement cost profit before exceptional
items......................................... 2,404
-----------
-----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
76
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1997
The following unaudited pro forma condensed consolidated income statement
for the six months ended June 30, 1997 is derived from the unaudited historical
condensed consolidated income statements of Amoco and BP for the six months then
ended, after giving effect to the pro forma adjustments described in the Notes
to the Unaudited Pro Forma Condensed Consolidated Financial Information. Such
adjustments have been determined as if the Merger took place on January 1, 1995,
the first day of the earliest financial period presented in the Unaudited Pro
Forma Condensed Consolidated Financial Information. The Unaudited Pro Forma
Condensed Consolidated Financial Information has been prepared from, and should
be read in conjunction with, and supplemental to, the respective historical
consolidated financial statements and notes thereto of Amoco and BP, which are
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
BP AMOCO
----------- --------------------------------------------------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP
----------- ----------- ----------- ----------- -----------
L $ $ $ L
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
<S> <C> <C> <C> <C> <C>
Turnover.................................................... 24,119 15,806 78(a) 15,884 9,744
Less: joint ventures........................................ 4,877 -- -- (a) -- --
----------- ----------- ----------- ----------- -----------
Group turnover.............................................. 19,242 15,806 78 15,884 9,744
Replacement cost of sales................................... 15,586 12,329 53(b) 12,382 7,596
Production taxes............................................ 351 150 5(c) 155 95
----------- ----------- ----------- ----------- -----------
Gross profit................................................ 3,305 3,327 20 3,347 2,053
Distribution and administration expenses.................... 1,267 1,207 56(d) 1,263 775
Exploration expense......................................... 101 294 --(e) 294 180
----------- ----------- ----------- ----------- -----------
1,937 1,826 (36) 1,790 1,098
Other income................................................ 89 188 23(f) 211 130
----------- ----------- ----------- ----------- -----------
Group replacement cost operating profit..................... 2,026 2,014 (13) 2,001 1,228
Share of profits of joint ventures.......................... 160 -- -- (g) -- --
Share of profits of associated undertakings................. 139 6 30(h) 36 22
----------- ----------- ----------- ----------- -----------
Total replacement cost operating profit..................... 2,325 2,020 17 2,037 1,250
----------- ----------- ----------- ----------- -----------
Profit (loss) on sale or termination of operations.......... (5) -- -- (i) -- --
----------- ----------- ----------- ----------- -----------
Replacement cost profit before interest and tax............. 2,320 2,020 17 2,037 1,250
Inventory holding gains (losses)............................ (325) -- (358)(j) (358) (220)
----------- ----------- ----------- ----------- -----------
Historical cost profit before interest and tax.............. 1,995 2,020 (341) 1,679 1,030
Interest expense............................................ 164 162 18(k) 180 111
----------- ----------- ----------- ----------- -----------
Profit before taxation...................................... 1,831 1,858 (359) 1,499 919
Taxation.................................................... 659 562 (53)(l) 509 312
----------- ----------- ----------- ----------- -----------
Profit after taxation....................................... 1,172 1,296 (306) 990 607
Minority shareholders' interest (MSI)....................... 7 -- 55(m) 55 34
----------- ----------- ----------- ----------- -----------
Profit for the period....................................... 1,165 1,296 (361) 935 573
----------- ----------- ----------- ----------- -----------
Profit for the period applicable to ordinary shares......... 1,165 1,296 (361) 935 573
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Profit per ordinary share
Profit for the period..................................... 20.5p 0.95 58.1p
Replacement cost profit before exceptional items.......... 26.4p 1.31 80.3p
----------- ----------- -----------
----------- ----------- -----------
Average number outstanding of ordinary shares (in
millions)................................................. 5,671 987 987
----------- ----------- -----------
----------- ----------- -----------
Reconciliation of replacement cost results
Profit for the period....................................... 1,165 935 573
Inventory holding (gains) losses............................ 325 358 220
----------- ----------- -----------
Replacement cost profit for the period...................... 1,490 1,293 793
Exceptional items net of tax and MSI........................ 5 -- --
----------- ----------- -----------
Replacement cost profit before exceptional items............ 1,495 1,293 793
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
BP AMOCO
PRO FORMA
-----------
U.K. GAAP
-----------
L
<S> <C>
Turnover.................................................... 33,863
Less: joint ventures........................................ 4,877
-----------
Group turnover.............................................. 28,986
Replacement cost of sales................................... 23,182
Production taxes............................................ 446
-----------
Gross profit................................................ 5,358
Distribution and administration expenses.................... 2,042
Exploration expense......................................... 281
-----------
3,035
Other income................................................ 219
-----------
Group replacement cost operating profit..................... 3,254
Share of profits of joint ventures.......................... 160
Share of profits of associated undertakings................. 161
-----------
Total replacement cost operating profit..................... 3,575
-----------
Profit (loss) on sale or termination of operations.......... (5)
-----------
Replacement cost profit before interest and tax............. 3,570
Inventory holding gains (losses)............................ (545)
-----------
Historical cost profit before interest and tax.............. 3,025
Interest expense............................................ 275
-----------
Profit before taxation...................................... 2,750
Taxation.................................................... 971
-----------
Profit after taxation....................................... 1,779
Minority shareholders' interest (MSI)....................... 41
-----------
Profit for the period....................................... 1,738
-----------
Profit for the period applicable to ordinary shares......... 1,738
-----------
-----------
Profit per ordinary share
Profit for the period..................................... 18.1p
Replacement cost profit before exceptional items.......... 23.9p
-----------
-----------
Average number outstanding of ordinary shares (in
millions)................................................. 9,589
-----------
-----------
Reconciliation of replacement cost results
Profit for the period....................................... 1,738
Inventory holding (gains) losses............................ 545
-----------
Replacement cost profit for the period...................... 2,283
Exceptional items net of tax and MSI........................ 5
-----------
Replacement cost profit before exceptional items............ 2,288
-----------
-----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
77
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
The following unaudited pro forma condensed consolidated income statement
for the year ended December 31, 1997 is derived from the historical condensed
consolidated income statements of Amoco and BP for the year then ended, after
giving effect to the pro forma adjustments described in the Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Information. Such
adjustments have been determined as if the Merger took place on January 1, 1995,
the first day of the earliest financial period presented in the Pro Forma
Condensed Consolidated Financial Information. The Unaudited Pro Forma Condensed
Consolidated Financial Information has been prepared from, and should be read in
conjunction with, and supplemental to, the respective historical consolidated
financial statements and notes thereto of Amoco and BP, which are incorporated
by reference in this Proxy Statement/ Prospectus. The pro forma amounts for BP
Amoco conveyed in U.S. dollars have been adjusted to comply with U.K. GAAP.
<TABLE>
<CAPTION>
BP AMOCO
----------- ------------------------------------------------------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP
----------- ----------- --------------- ----------- -----------
L $ $ $ L
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
<S> <C> <C> <C> <C> <C>
Turnover........................................... 46,563 32,103 98(a) 32,201 19,635
Less: joint ventures............................... 10,178 71 41(a) 112 69
----------- ----------- --- ----------- -----------
Group turnover..................................... 36,385 32,032 57 32,089 19,566
Replacement cost of sales.......................... 29,624 25,304 41(b) 25,345 15,454
Production taxes................................... 617 286 9(c) 295 180
----------- ----------- --- ----------- -----------
Gross profit....................................... 6,144 6,442 7 6,449 3,932
Distribution and administration expenses........... 2,432 2,633 120(d) 2,753 1,679
Exploration expense................................ 199 635 1(e) 636 388
----------- ----------- --- ----------- -----------
3,513 3,174 (114) 3,060 1,865
Other income....................................... 205 902 (574)(f) 328 200
----------- ----------- --- ----------- -----------
Group replacment cost operating profit............. 3,718 4,076 (688) 3,388 2,065
Share of profits of joint ventures................. 317 5 19(g) 24 15
Share of profits of associated undertakings........ 316 19 17(h) 36 22
----------- ----------- --- ----------- -----------
Total replacement cost operating profit............ 4,351 4,100 (652) 3,448 2,102
Profit (loss) on sale or termination of
operations....................................... (105) -- 612(i) 612 373
Refinery network rationalization................... 43 -- -- -- --
----------- ----------- --- ----------- -----------
Replacement cost profit before interest and tax.... 4,289 4,100 (40) 4,060 2,475
Inventory holding gains (losses)................... (317) -- (419)(j) (419) (255)
----------- ----------- --- ----------- -----------
Historical cost profit before interest and tax..... 3,972 4,100 (459) 3,641 2,220
Interest expense................................... 326 339 34(k) 373 227
----------- ----------- --- ----------- -----------
Profit before taxation............................. 3,646 3,761 (493) 3,268 1,993
Taxation........................................... 1,168 1,046 105(l) 1,151 702
----------- ----------- --- ----------- -----------
Profit after taxation.............................. 2,478 2,715 (598) 2,117 1,291
Minority shareholders' interest (MSI).............. 8 (5) 143(m) 138 84
----------- ----------- --- ----------- -----------
Profit for the year................................ 2,470 2,720 (741) 1,979 1,207
Dividend requirements on preference shares......... 1 -- -- --
----------- ----------- --- ----------- -----------
Profit for the year applicable to ordinary
shares........................................... 2,469 2,720 (741) 1,979 1,207
----------- ----------- --- ----------- -----------
----------- ----------- --- ----------- -----------
Profit per ordinary share
Profit for the year.............................. 43.3p 2.02 123.2p
Replacement cost profit before exceptional
items.......................................... 49.5p 2.06 125.7p
-----------
-----------
Average number outstanding of ordinary shares (in
millions)........................................ 5,702 980 980
----------- ----------- -----------
----------- ----------- -----------
Reconciliation of replacement cost results
Profit for the year................................ 2,470 1,979 1,207
Inventory holding (gains) losses................... 317 419 255
----------- ----------- -----------
Replacement cost profit for the year............... 2,787 2,398 1,462
Exceptional items net of tax and MSI............... 35 (377) (230)
----------- ----------- -----------
Replacement cost profit before exceptional items... 2,822 2,021 1,232
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
BP AMOCO PRO FORMA
------------------------
U.K. GAAP U.K. GAAP
----------- -----------
L $
<S> <C> <C>
Turnover........................................... 66,198 110,551
Less: joint ventures............................... 10,247 17,113
----------- -----------
Group turnover..................................... 55,951 93,438
Replacement cost of sales.......................... 45,078 75,280
Production taxes................................... 797 1,331
----------- -----------
Gross profit....................................... 10,076 16,827
Distribution and administration expenses........... 4,111 6,865
Exploration expense................................ 587 980
----------- -----------
5,378 8,982
Other income....................................... 405 677
----------- -----------
Group replacment cost operating profit............. 5,783 9,659
Share of profits of joint ventures................. 332 554
Share of profits of associated undertakings........ 338 564
----------- -----------
Total replacement cost operating profit............ 6,453 10,777
Profit (loss) on sale or termination of
operations....................................... 268 447
Refinery network rationalization................... 43 72
----------- -----------
Replacement cost profit before interest and tax.... 6,764 11,296
Inventory holding gains (losses)................... (572) (955)
----------- -----------
Historical cost profit before interest and tax..... 6,192 10,341
Interest expense................................... 553 924
----------- -----------
Profit before taxation............................. 5,639 9,417
Taxation........................................... 1,870 3,122
----------- -----------
Profit after taxation.............................. 3,769 6,295
Minority shareholders' interest (MSI).............. 92 154
----------- -----------
Profit for the year................................ 3,677 6,141
Dividend requirements on preference shares......... 1 2
----------- -----------
Profit for the year applicable to ordinary
shares........................................... 3,676 6,139
----------- -----------
----------- -----------
Profit per ordinary share
Profit for the year.............................. 38.3p 0.64
Replacement cost profit before exceptional
items.......................................... 42.3p 0.71
Average number outstanding of ordinary shares (in
millions)........................................ 9,593 9,593
----------- -----------
----------- -----------
Reconciliation of replacement cost results
Profit for the year................................ 3,677 6,141
Inventory holding (gains) losses................... 572 955
----------- -----------
Replacement cost profit for the year............... 4,249 7,096
Exceptional items net of tax and MSI............... (195) (326)
----------- -----------
Replacement cost profit before exceptional items... 4,054 6,770
----------- -----------
----------- -----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
78
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
The following unaudited pro forma condensed consolidated income statement
for the year ended December 31, 1996 is derived from the historical condensed
consolidated income statements of Amoco and BP for the year then ended, after
giving effect to the pro forma adjustments described in the Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Information. Such
adjustments have been determined as if the Merger took place on January 1, 1995,
the first day of the earliest financial period presented in the Unaudited Pro
Forma Condensed Consolidated Financial Information. The Unaudited Pro Forma
Condensed Consolidated Financial Information has been prepared from, and should
be read in conjunction with, and supplemental to, the respective historical
consolidated financial statements and notes thereto of Amoco and BP, which are
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
BP AMOCO
----------- ------------------------------------------------------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP
----------- ----------- --------------- ----------- -----------
L $ $ $ L
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
<S> <C> <C> <C> <C> <C>
Turnover...................................................... 44,731 32,284 -- (a) 32,284 20,695
Less: joint ventures.......................................... -- -- -- (a) -- --
----------- ----------- --- ----------- -----------
Group turnover................................................ 44,731 32,284 -- 32,284 20,695
Replacement cost of sales..................................... 36,325 25,062 193(b) 25,255 16,189
Production taxes.............................................. 823 327 -- (c) 327 210
----------- ----------- --- ----------- -----------
Gross profit.................................................. 7,583 6,895 (193) 6,702 4,296
Distribution and administration expenses...................... 3,704 2,646 (56)(d) 2,590 1,660
Exploration expense........................................... 203 680 -- (e) 680 436
----------- ----------- --- ----------- -----------
3,676 3,569 (137) 3,432 2,200
Other income.................................................. 233 432 (82)(f) 350 225
----------- ----------- --- ----------- -----------
Group replacement cost operating profit....................... 3,909 4,001 (219) 3,782 2,425
Share of profits of joint ventures............................ -- -- -- (g) -- --
Share of profits of associated undertakings................... 311 144 34(h) 178 114
----------- ----------- --- ----------- -----------
Total replacement cost operating profit....................... 4,220 4,145 (185) 3,960 2,539
Profit (loss) on sale or termination of operations............ (175) -- 102(i) 102 65
European refining and marketing joint venture
implementation.............................................. (341) -- -- -- --
----------- ----------- --- ----------- -----------
Replacement cost profit before interest and tax............... 3,704 4,145 (83) 4,062 2,604
Inventory holding gains (losses).............................. 402 -- 545(j) 545 349
----------- ----------- --- ----------- -----------
Historical cost profit before interest and tax................ 4,106 4,145 462 4,607 2,953
Interest expense.............................................. 439 295 24(k) 319 204
----------- ----------- --- ----------- -----------
Profit before taxation........................................ 3,667 3,850 438 4,288 2,749
Taxation...................................................... 1,107 1,016 12(l) 1,028 659
----------- ----------- --- ----------- -----------
Profit after taxation......................................... 2,560 2,834 426 3,260 2,090
Minority shareholders' interest (MSI)......................... 8 -- -- (m) -- --
----------- ----------- --- ----------- -----------
Profit for the year........................................... 2,552 2,834 426 3,260 2,090
Dividend requirements on preference shares.................... 1 -- -- --
----------- ----------- --- ----------- -----------
Profit for the year applicable to ordinary shares............. 2,551 2,834 426 3,260 2,090
----------- ----------- --- ----------- -----------
----------- ----------- --- ----------- -----------
Profit per ordinary share
Profit for the year......................................... 45.5p 3.28 210.3p
Replacement cost profit before exceptional items............ 46.7p 2.62 168.3p
----------- ----------- -----------
----------- ----------- -----------
Average number outstanding of ordinary shares (in
millions)................................................... 5,613 994 994
----------- ----------- -----------
----------- ----------- -----------
Reconciliation of replacement cost results
Profit for the year........................................... 2,552 3,260 2,090
Inventory holding (gains) losses.............................. (402) (545) (349)
----------- ----------- -----------
Replacement cost profit for the year.......................... 2,150 2,715 1,741
Exceptional items net of tax and MSI.......................... 470 (106) (68)
----------- ----------- -----------
Replacement cost profit before exceptional items.............. 2,620 2,609 1,673
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
BP AMOCO
PRO FORMA
-----------
U.K. GAAP
-----------
L
<S> <C>
Turnover...................................................... 65,426
Less: joint ventures.......................................... --
-----------
Group turnover................................................ 65,426
Replacement cost of sales..................................... 52,514
Production taxes.............................................. 1,033
-----------
Gross profit.................................................. 11,879
Distribution and administration expenses...................... 5,364
Exploration expense........................................... 639
-----------
5,876
Other income.................................................. 458
-----------
Group replacement cost operating profit....................... 6,334
Share of profits of joint ventures............................ --
Share of profits of associated undertakings................... 425
-----------
Total replacement cost operating profit....................... 6,759
Profit (loss) on sale or termination of operations............ (110)
European refining and marketing joint venture
implementation.............................................. (341)
-----------
Replacement cost profit before interest and tax............... 6,308
Inventory holding gains (losses).............................. 751
-----------
Historical cost profit before interest and tax................ 7,059
Interest expense.............................................. 643
-----------
Profit before taxation........................................ 6,416
Taxation...................................................... 1,766
-----------
Profit after taxation......................................... 4,650
Minority shareholders' interest (MSI)......................... 8
-----------
Profit for the year........................................... 4,642
Dividend requirements on preference shares.................... 1
-----------
Profit for the year applicable to ordinary shares............. 4,641
-----------
-----------
Profit per ordinary share
Profit for the year......................................... 48.6p
Replacement cost profit before exceptional items............ 44.9p
-----------
-----------
Average number outstanding of ordinary shares (in
millions)................................................... 9,559
-----------
-----------
Reconciliation of replacement cost results
Profit for the year........................................... 4,642
Inventory holding (gains) losses.............................. (751)
-----------
Replacement cost profit for the year.......................... 3,891
Exceptional items net of tax and MSI.......................... 402
-----------
Replacement cost profit before exceptional items.............. 4,293
-----------
-----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
79
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
The following unaudited pro forma condensed consolidated income statement
for the year ended December 31, 1995 is derived from the historical condensed
consolidated income statements of Amoco and BP for the year then ended, after
giving effect to the pro forma adjustments described in the Notes to the
Unaudited Pro Forma Condensed Consolidated Financial Information. Such
adjustments have been determined as if the Merger took place on January 1, 1995,
the first day of the earliest financial period presented in the Unaudited Pro
Forma Condensed Consolidated Financial Information. The Unaudited Pro Forma
Condensed Consolidated Financial Information has been prepared from, and should
be read in conjunction with, and supplemental to, the respective historical
consolidated financial statements and notes thereto of Amoco and BP, which are
incorporated by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
BP AMOCO
BP AMOCO PRO FORMA
----------- -------------------------------------------------- -----------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP U.K. GAAP
----------- ----------- ----------- ----------- ----------- -----------
L $ $ $ L L
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
<S> <C> <C> <C> <C> <C> <C>
Turnover............................................. 36,106 27,169 -- (a) 27,169 17,196 53,302
Less: joint ventures................................. -- -- -- (a) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Group turnover....................................... 36,106 27,169 -- 27,169 17,196 53,302
Replacement cost of sales............................ 28,648 21,642 (39)(b) 21,603 13,673 42,321
Production taxes..................................... 673 213 -- (c) 213 135 808
----------- ----------- ----------- ----------- ----------- -----------
Gross profit......................................... 6,785 5,314 39 5,353 3,388 10,173
Distribution and administration expenses............. 3,768 2,542 (52)(d) 2,490 1,576 5,344
Exploration expense.................................. 177 643 -- (e) 643 407 584
----------- ----------- ----------- ----------- ----------- -----------
2,840 2,129 91 2,220 1,405 4,245
Other income......................................... 180 429 (130)(f) 299 189 369
----------- ----------- ----------- ----------- ----------- -----------
Group replacment cost operating profit............... 3,020 2,558 (39) 2,519 1,594 4,614
Share of profits of joint ventures................... -- -- -- (g) -- -- --
Share of profits of associated undertakings.......... 418 170 49(h) 219 139 557
----------- ----------- ----------- ----------- ----------- -----------
Total replacement cost operating profit.............. 3,438 2,728 10 2,738 1,733 5,171
Profit (loss) on sale or termination of operations... (3) 132(i) 132 83 80
Refinery network rationalization..................... (965) -- -- -- -- (965)
----------- ----------- ----------- ----------- ----------- -----------
Replacement cost profit before interest and tax...... 2,470 2,728 142 2,870 1,816 4,286
Inventory holding gains (losses)..................... 2 (35)(j) (35) (22) (20)
----------- ----------- ----------- ----------- ----------- -----------
Historical cost profit before interest and tax....... 2,472 2,728 107 2,835 1,794 4,266
Interest expense..................................... 526 306 9(k) 315 199 725
----------- ----------- ----------- ----------- ----------- -----------
Profit before taxation............................... 1,946 2,422 98 2,520 1,595 3,541
Taxation............................................. 829 560 131(l) 691 437 1,266
----------- ----------- ----------- ----------- ----------- -----------
Profit after taxation................................ 1,117 1,862 (33) 1,829 1,158 2,275
Minority shareholders' interest (MSI)................ (5) -- -- (m) -- -- (5)
----------- ----------- ----------- ----------- ----------- -----------
Profit for the year.................................. 1,122 1,862 (33) 1,829 1,158 2,280
Dividend requirements on preference shares........... 1 -- -- -- -- 1
----------- ----------- ----------- ----------- ----------- -----------
Profit for the year applicable to ordinary shares.... 1,121 1,862 (33) 1,829 1,158 2,279
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Profit per ordinary share
Profit for the year................................ 20.2p 1.85 116.9p 24.1p
Replacement cost profit before exceptional items... 36.3p 1.80 113.7p 33.1p
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Average number outstanding of ordinary shares (in
millions).......................................... 5,538 991 991 9,472
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Reconciliation of replacement cost results
Profit for the year.................................. 1,122 1,829 1,158 2,280
Inventory holding (gains) losses..................... (2) 35 22 20
----------- ----------- ----------- -----------
Replacement cost profit for the year................. 1,120 1,864 1,180 2,300
Exceptional items net of tax and MSI................. 893 (83) (53) 840
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Replacement cost profit before exceptional items..... 2,013 1,781 1,127 3,140
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
80
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT JUNE 30, 1998
The following unaudited pro forma condensed consolidated balance sheet
consolidates the respective unaudited historical condensed consolidated balance
sheets of Amoco and BP as of June 30, 1998 and has been prepared to reflect the
Merger after giving effect to the pro forma adjustments described in the Notes
to the Unaudited Pro Forma Condensed Consolidated Financial Information. The
Unaudited Pro Forma Condensed Consolidated Financial Information has been
prepared from, and should be read in conjunction with, and supplemental to, the
respective historical consolidated financial statements and notes thereto of
Amoco and BP, which are incorporated by reference in this Proxy
Statement/Prospectus. The pro forma amounts for BP Amoco conveyed in U.S.
dollars have been adjusted to comply with U.K. GAAP.
<TABLE>
<CAPTION>
BP AMOCO
----------- ----------------------------------------------------
U.K. GAAP U.S. GAAP ADJUSTMENTS U.K. GAAP U.K. GAAP
----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
L $ $ $ L
<CAPTION>
(IN MILLIONS)
(NOTE 1) (NOTE 2) (NOTE 6) (NOTE 7)
<S> <C> <C> <C> <C> <C>
ASSETS
Fixed assets
Intangible assets................................... 1,267 874 (17)(a) 857 513
Tangible assets..................................... 18,060 22,652 (88)(b) 22,564 13,511
Investments.........................................
Joint Ventures
Gross assets...................................... 4,188 1,920 418 2,338 1,400
Gross liabilities................................. (1,744) (809) (9) (818) (490)
----------- ----------- ------ ----------- -----------
Net investment.................................... 2,444 1,111 409 1,520 910
Associated undertakings........................... 2,092 1,178 (214) 964 578
Other............................................. 376 -- -- -- --
----------- ----------- ------ ----------- -----------
4,912 2,289 195(c) 2,484 1,488
----------- ----------- ------ ----------- -----------
Total fixed assets.................................. 24,239 25,815 90 25,905 15,512
----------- ----------- ------ ----------- -----------
Current assets
Inventories......................................... 1,456 1,220 740(d) 1,960 1,174
Trade receivables................................... 2,261 2,338 1(e) 2,339 1,401
Other receivable falling due
Within one year................................... 1,666 1,188 10(f) 1,198 717
After more than one year.......................... 1,544 583 50(g) 633 379
Investments......................................... 47 769 -- 769 460
Cash in bank and in hand............................ 200 143 (5)(h) 138 83
----------- ----------- ------ ----------- -----------
Total current assets................................ 7,174 6,241 796 7,037 4,214
----------- ----------- ------ ----------- -----------
Current liabilities falling due within one year
Finance debt...................................... 1,541 1,520 -- 1,520 910
Trade payables.................................... 2,331 962 1(i) 963 577
Other creditors................................... 4,678 3,304 (73)(j) 3,231 1,935
----------- ----------- ------ ----------- -----------
Net current (liabilities) assets.................... (1,376) 455 868 1,323 792
----------- ----------- ------ ----------- -----------
Total assets less current liabilities............... 22,863 26,270 958 27,228 16,304
----------- ----------- ------ ----------- -----------
Noncurrent liabilities
Finance debt...................................... 3,181 5,373 1(k) 5,374 3,218
Accounts payable and accrued liabilities.......... 1,175 207 -- 207 124
Provisions for liabilities and charges
Deferred taxation................................. 506 2,072 (1,471)(l) 601 360
Other provisions.................................. 3,612 2,711 (70)(m) 2,641 1,581
----------- ----------- ------ ----------- -----------
Net assets.......................................... 14,389 15,907 2,498 18,405 11,021
Minority shareholders' interest..................... 35 163 857(n) 1,020 611
----------- ----------- ------ ----------- -----------
Shareholders' interest.............................. 14,354 15,744 1,641 17,385 10,410
----------- ----------- ------ ----------- -----------
----------- ----------- ------ ----------- -----------
REPRESENTED BY
Capital shares
Preference........................................ 12 -- -- -- --
Ordinary.......................................... 1,456 2,542 -- 2,542 1,522
Paid in surplus..................................... 2,282 -- -- -- --
Merger reserve...................................... -- -- -- -- --
Retained earnings................................... 10,604 13,202 1,641(o) 14,843 8,888
----------- ----------- ------ ----------- -----------
14,354 15,744 1,641 17,385 10,410
----------- ----------- ------ ----------- -----------
<CAPTION>
MERGER BP AMOCO
ADJUSTMENTS PRO FORMA
--------------- ------------------------
U.K. GAAP U.K. GAAP U.K. GAAP
--------------- ----------- -----------
<S> <C> <C> <C>
L L $
(NOTE 8)
<S> <C> <C> <C>
ASSETS
Fixed assets
Intangible assets................................... -- 1,780 2,973
Tangible assets..................................... -- 31,571 52,723
Investments.........................................
Joint Ventures
Gross assets...................................... -- 5,588 9,332
Gross liabilities................................. -- (2,234) (3,731)
--- ----------- -----------
Net investment.................................... -- 3,354 5,601
Associated undertakings........................... -- 2,670 4,459
Other............................................. -- 376 628
--- ----------- -----------
-- 6,400 10,688
--- ----------- -----------
Total fixed assets.................................. -- 39,751 66,384
--- ----------- -----------
Current assets
Inventories......................................... -- 2,630 4,392
Trade receivables................................... -- 3,662 6,115
Other receivable falling due
Within one year................................... -- 2,383 3,980
After more than one year.......................... -- 1,923 3,211
Investments......................................... -- 507 847
Cash in bank and in hand............................ -- 283 473
--- ----------- -----------
Total current assets................................ -- 11,388 19,018
--- ----------- -----------
Current liabilities falling due within one year
Finance debt...................................... -- 2,451 4,093
Trade payables.................................... -- 2,908 4,856
Other creditors................................... 102 6,715 11,214
--- ----------- -----------
Net current (liabilities) assets.................... (102) (686) (1,145)
--- ----------- -----------
Total assets less current liabilities............... (102) 39,065 65,239
--- ----------- -----------
Noncurrent liabilities
Finance debt...................................... -- 6,399 10,687
Accounts payable and accrued liabilities.......... -- 1,299 2,169
Provisions for liabilities and charges
Deferred taxation................................. -- 866 1,446
Other provisions.................................. -- 5,193 8,672
--- ----------- -----------
Net assets.......................................... (102) 25,308 42,265
Minority shareholders' interest..................... -- 646 1,079
--- ----------- -----------
Shareholders' interest.............................. (102) 24,662 41,186
--- ----------- -----------
--- ----------- -----------
REPRESENTED BY
Capital shares
Preference........................................ -- 12 20
Ordinary.......................................... (101) 2,877 4,805
Paid in surplus..................................... (287) 1,995 3,331
Merger reserve...................................... 388 388 648
Retained earnings................................... (102) 19,390 32,382
--- ----------- -----------
(102) 24,662 41,186
--- ----------- -----------
</TABLE>
The Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Information
are an integral part of the Statement.
81
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 1--REPLACEMENT COST PROFIT
Operating profit is a U.K. GAAP measure of trading performance. It excludes
profits and losses on the sale or termination of operations and fundamental
restructuring costs, interest expense and taxation.
BP determines operating profit on a replacement cost basis, which eliminates
the effect of inventory holding gains and losses. For the oil and gas industry,
the price of crude oil can vary significantly from period to period, hence the
value of crude oil (and products) also varies. As a consequence, the amount that
would be charged to cost of sales on a FIFO basis of inventory valuation would
include the effect of oil price fluctuations on oil and products inventories. BP
therefore charges cost of sales with the average cost of supplies incurred
during the period rather than the historical cost of supplies on a FIFO basis.
For this purpose, inventories at the beginning and end of the period are valued
at the average cost of supplies incurred during the period rather than at their
historical cost. These valuations are made quarterly by each business unit,
based on local oil and product price indices applicable to their specific
inventory holdings, following a methodology that has been consistently applied
by BP for many years. Operating profit on the replacement cost basis is used by
BP management as the primary measure of business unit trading performance and BP
management believes that this measure assists investors to assess the Group's
underlying trading performance from period to period.
Replacement cost is not a U.S. GAAP measure. The major U.S. oil companies
apply the LIFO basis of inventory valuation. The LIFO basis is not permitted
under U.K. GAAP. The LIFO basis eliminates the effect of price fluctuations on
crude oil and product inventory except where an inventory drawdown occurs in a
period. BP management believes that where inventory volumes remain constant or
increase in a period, operating profit on the LIFO basis will not differ
materially from operating profit on BP's replacement cost basis.
Where an inventory drawdown occurs in a period, cost of sales on a LIFO
basis will be charged with the historical cost of the inventory drawn down,
whereas BP's replacement cost basis charges cost of sales at the average cost of
supplies for the period. To the extent that the historical cost on the LIFO
basis of the inventory drawn down is lower than the current cost of supplies in
the period, operating profit on the LIFO basis will be greater than operating
profit on BP's replacement cost basis. To the extent that the historical cost on
the LIFO basis of the inventory drawdown is greater than the current cost of
supplies in the period, operating profit on the LIFO basis will be lower than
operating profit on BP's replacement cost basis.
Replacement cost profit before exceptional items excludes profits and losses
on the sale or termination of operations and fundamental restructuring costs,
which are defined by U.K. GAAP. This is the measure of profit used by the BP
Board in setting targets for and monitoring performance within BP. BP's
management believes this indicator provides the most relevant and useful measure
for investors because it most accurately reflects underlying trading
performance.
NOTE 2--RECLASSIFICATION
Reclassifications have been made to the Amoco historical financial
information presented under U.S. GAAP to conform to BP's presentation under U.K.
GAAP.
NOTE 3--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO INCOME STATEMENTS
Amoco prepares its financial statements in accordance with U.S. GAAP. For
purposes of preparing the Unaudited Pro Forma Condensed Consolidated Income
Statements, the income statements of Amoco have been restated to conform with BP
accounting policies under U.K. GAAP by giving effect to the adjustments
described below.
82
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 3--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO INCOME STATEMENTS (CONTINUED)
(a) CONSOLIDATION BASES
Under U.S. GAAP, certain oil and gas joint ventures are proportionately
consolidated, whereas under U.K. GAAP the joint ventures would either be
equity accounted or completely consolidated depending on the ownership
interest. Amoco's joint ventures were set up in early 1997.
(b) INVENTORY ACCOUNTING
Amoco carries inventories at the lower of current market value or cost. Cost
is determined under the LIFO method for the majority of inventories of crude
oil, petroleum products and chemical products. The costs of remaining
inventories are determined on the FIFO or average cost methods.
BP carries inventories at the lower of cost or net realizable value. Cost to
BP is determined using the FIFO method. Cost of sales determined on a FIFO
basis is adjusted to a replacement cost basis, I.E., to reflect the average
cost of supplies incurred during the year, by excluding inventory holding
gains and losses.
(c) DEFERRED TAXATION
Under the U.K. GAAP restricted liability method, deferred taxation is only
provided for where timing differences are expected to reverse in the
foreseeable future. For U.S. GAAP under the liability method, deferred
taxation is provided for temporary differences between the financial
reporting basis and the tax basis of assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled.
(d) FOREIGN CURRENCY TRANSLATION
BP considers that the functional currency of its non-U.K. operations is the
local currency except for certain exploration and production operations
where the U.S. dollar is the functional currency. Amoco considers the
functional currency of substantially all of its operations to be the U.S.
dollar. Where there is a difference between the two companies in terms of
functional currency, the functional currency of Amoco's operations has been
changed to the local currency.
The retranslation of Amoco's assets and liabilities resulting from this
gives rise to currency translation differences.
(e) EXCEPTIONAL ITEMS
Under U.K. GAAP, certain exceptional items should be shown separately on the
face of the income statement after operating profit. These items are profits
or losses on the sale or termination of an operation, fundamental
restructuring charges and profits and losses on the disposal of fixed
assets. Under U.S. GAAP these items would be classified as operating income
or expenses.
(f) EQUITY ACCOUNTING
U.K. GAAP requires the investor's share of operating profit or loss,
exceptional items and interest expense of associated undertakings and joint
ventures to be shown separately from those of the group on the face of the
income statement. The charge for taxation for associated undertakings and
joint ventures may be aggregated with the amounts shown on the face of the
income statement, but must be disclosed in the notes to the accounts. For
U.S. GAAP, the after-tax profits or losses (I.E., operating results after
exceptional items, interest expense and taxation) should be included in the
income statement as a single line item.
U.K. GAAP requires the investor's share of the gross assets and gross
liabilities of the joint venture to be shown on the face of the balance
sheet, whereas under U.S. GAAP the net investment should be included as a
single line item.
83
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 3--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO INCOME STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------- -------------------------------
INCREASE (DECREASE) IN CAPTION HEADING 1998 1997 1997 1996 1995
- ---------------------------------------------------------------------------- --------- --------- --------- --------- ---------
($ MILLIONS)
<S> <C> <C> <C> <C> <C>
Consolidation bases
Turnover................................................................ 89 78 98 -- --
Joint ventures.......................................................... 25 -- 41 -- --
Replacement cost of sales............................................... 47 18 (65) -- --
Production taxes........................................................ 2 5 9 -- --
Distribution and administration costs................................... 1 -- -- -- --
Exploration expense..................................................... -- -- 1 -- --
Share of profits of joint ventures...................................... 12 -- 19 -- --
Other income............................................................ 4 -- 12 -- --
Minority shareholders' interest......................................... 30 55 143 -- --
Profit for the period................................................... -- -- -- -- --
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Inventory accounting
Replacement cost of sales................................ 33 43 130 195 11
Inventory holding gains (losses)......................... (151) (358) (419) 545 (35)
Profit for the period.................................... (184) (401) (549) 350 (46)
Deferred taxation
Taxation................................................. 43 (64) 110 (3) 92
Profit for the period.................................... (43) 64 (110) 3 (92)
Foreign currency translation
Replacement cost of sales................................ (19) (8) (24) (2) (50)
Distribution and administration costs.................... 55 56 120 (56) (52)
Share of profits of associated undertakings.............. -- 1 (17) -- --
Other income............................................. 3 23 26 20 2
Taxation................................................. (1) -- (5) 5 (1)
Profit for the period.................................... (32) (24) (82) 73 105
Exceptional items
Other income............................................. (66) -- (612) (102) (132)
Profit (loss) on the sale or termination of operations... 66 -- 612 102 132
Profit for the period.................................... -- -- -- -- --
Equity accounting
Share of profits of joint ventures....................... 24 -- -- -- --
Share of profits of associated undertakings.............. 24 29 34 34 49
Interest expense......................................... 46 18 34 24 9
Taxation................................................. 2 11 -- 10 40
Profit for the period.................................... -- -- -- -- --
</TABLE>
84
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 3--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO INCOME STATEMENTS (CONTINUED)
These adjustments may be summarized by caption heading as set out below.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31,
ENDED JUNE 30,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
($ MILLIONS)
<S> <C> <C> <C> <C> <C>
(a) Turnover
Consolidation bases................................................... 89 78 98 -- --
Joint ventures
Consolidation bases................................................... 25 -- 41 -- --
--- --- --- --- ---
(b) Replacement cost of sales
Consolidation bases..................................................... 47 18 (65) -- --
Inventory accounting.................................................... 33 43 130 195 11
Foreign currency translation............................................ (19) (8) (24) (2) (50)
--- --- --- --- ---
61 53 41 193 (39)
--- --- --- --- ---
--- --- --- --- ---
(c) Production taxes
Consolidation bases..................................................... 2 5 9 -- --
--- --- --- --- ---
--- --- --- --- ---
(d) Distribution and administration expenses
Consolidation bases..................................................... 1 -- -- -- --
Foreign currency translation............................................ 55 56 120 (56) (52)
--- --- --- --- ---
56 56 120 (56) (52)
--- --- --- --- ---
--- --- --- --- ---
(e) Exploration expense
Consolidation bases..................................................... -- -- 1 -- --
--- --- --- --- ---
--- --- --- --- ---
(f) Other income
Consolidation bases..................................................... 4 -- 12 -- --
Foreign currency translation............................................ 3 23 26 20 2
Exceptional items....................................................... (66) -- (612) (102) (132)
--- --- --- --- ---
(59) 23 (574) (82) (130)
--- --- --- --- ---
--- --- --- --- ---
(g) Share of profits of joint ventures
Consolidation bases..................................................... 12 -- 19 -- --
Equity accounting....................................................... 24 -- -- -- --
--- --- --- --- ---
36 -- 19 -- --
--- --- --- --- ---
--- --- --- --- ---
(h) Share of profits of associated undertakings
Equity accounting....................................................... 24 29 34 34 49
Foreign currency translation............................................ -- 1 (17) -- --
--- --- --- --- ---
24 30 17 34 49
--- --- --- --- ---
--- --- --- --- ---
(i) Profit (loss) on sale or termination of operations
Exceptional items....................................................... 66 -- 612 102 132
--- --- --- --- ---
--- --- --- --- ---
(j) Inventory holding gains (losses)
Inventory accounting.................................................... (151) (358) (419) 545 (35)
--- --- --- --- ---
--- --- --- --- ---
(k) Interest expense
Equity accounting....................................................... 46 18 34 24 9
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
85
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 3--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO INCOME STATEMENTS (CONCLUDED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31,
ENDED JUNE 30,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
($ MILLIONS)
<S> <C> <C> <C> <C> <C>
(l) Taxation
Deferred taxation...................................................... 43 (64) 110 (3) 92
Foreign currency translation........................................... (1) -- (5) 5 (1)
Equity accounting...................................................... 2 11 -- 10 40
--- --- --- --- ---
44 (53) 105 12 131
--- --- --- --- ---
--- --- --- --- ---
(m) Minority shareholders' interest
Consolidation bases.................................................... 30 55 143 -- --
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
NOTE 4--TRANSLATION OF AMOCO INCOME STATEMENTS
Amoco presents its financial statements in U.S. dollars. The results of
Amoco, as restated under U.K. GAAP, have been translated into pounds sterling at
the average rates of $1.65 to L1.00 for the six months ended June 30, 1998,
$1.63 to L1.00 for the six months ended June 30, 1997, $1.64 to L1.00 for the
year ended December 31, 1997, $1.56 to L1.00 for the year ended December 31,
1996, and $1.58 to L1.00 for the year ended December 31, 1995.
NOTE 5--MERGER ADJUSTMENTS TO THE CONSOLIDATED INCOME STATEMENT
The Unaudited Pro Forma Condensed Consolidated Income Statements do not
include adjustments to eliminate transactions between Amoco and BP, because such
amounts are not considered material.
NOTE 6--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO BALANCE SHEET
Amoco presents its financial statements in accordance with U.S. GAAP. For
purposes of preparing the Unaudited Pro Forma Condensed Consolidated Balance
Sheet, the balance sheet of Amoco has been restated to conform with BP
accounting policies under U.K. GAAP by giving effect to the adjustments
described below.
(a) CONSOLIDATION BASES
Under U.S. GAAP, certain oil and gas joint ventures are proportionately
consolidated, whereas under U.K. GAAP the joint ventures would either be
equity accounted or completely consolidated depending on the ownership
interest. Amoco's joint ventures were set up in early 1997.
(b) INVENTORY ACCOUNTING
Amoco carries inventories at the lower of current market value or cost. Cost
is determined under the LIFO method for the majority of inventories of crude
oil, petroleum products and chemical products. The costs of remaining
inventories are determined on the FIFO or average cost methods.
BP carries inventories at the lower of cost or net realizable value. Cost to
BP is determined using the FIFO method. Cost of sales determined on a FIFO
basis is adjusted to a replacement cost basis, I.E., to reflect the average
cost of supplies incurred during the year, by excluding inventory holding
gains and losses.
(c) DEFERRED TAXATION
Under the U.K. GAAP restricted liability method, deferred taxation is only
provided for where timing differences are expected to reverse in the
foreseeable future. For U.S. GAAP under the liability method, deferred
taxation is provided for temporary differences between the financial
reporting basis and the tax basis of assets and liabilities at enacted tax
rates expected to be in effect when such amounts are realized or settled.
86
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 6--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO BALANCE SHEET (CONTINUED)
(d) FOREIGN CURRENCY TRANSLATION
BP considers that the functional currency of its non-U.K. operations is the
local currency except for certain exploration and production operations
where the U.S. dollar is the functional currency. Amoco considers the
functional currency of substantially all of its operations to be the U.S.
dollar. Where there is a difference between the two companies in terms of
functional currency, the functional currency of Amoco's operations has been
changed to the local currency.
The retranslation of Amoco's assets and liabilities resulting from this
gives rise to currency translation differences.
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CAPTION HEADING AT JUNE 30, 1998
- ------------------------------------------------------------------------------------------------- -----------------
<S> <C>
($ MILLIONS)
Consolidation bases
Intangible assets............................................................................ 3
Tangible assets.............................................................................. 414
Investments.................................................................................. 409
Inventories.................................................................................. (2)
Trade receivables............................................................................ 1
Other receivables falling due
Within one year............................................................................ 10
After more than one year................................................................... 50
Cash at bank and in hand..................................................................... (5)
Trade payables............................................................................... 1
Other accounts payable and accrued liabilities............................................... 21
Finance debt................................................................................. 1
Minority shareholders' interest.............................................................. 857
Retained earnings............................................................................ --
Inventory accounting
Inventories.................................................................................. 763
Retained earnings............................................................................ 763
Deferred taxation
Investments.................................................................................. (34)
Other accounts payable and accrued liabilities............................................... (94)
Deferred taxation............................................................................ (1,469)
Other provisions for liabilities and charges................................................. (48)
Retained earnings............................................................................ 1,577
Foreign currency translation
Intangible assets............................................................................ (20)
Tangible assets.............................................................................. (502)
Investments.................................................................................. (180)
Inventories.................................................................................. (21)
Deferred taxation............................................................................ (2)
Other provisions for liabilities and charges................................................. (22)
Retained earnings............................................................................ (699)
</TABLE>
87
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 6--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO BALANCE SHEET (CONTINUED)
These adjustments may be summarized by caption heading as set out below.
<TABLE>
<CAPTION>
AT JUNE 30, 1998
-----------------
<S> <C>
($ MILLIONS)
(a) Intangible assets
Consolidation bases......................................................................... 3
Foreign currency translation................................................................ (20)
------
(17)
------
------
(b) Tangible assets
Consolidation bases......................................................................... 414
Foreign currency translation................................................................ (502)
------
(88)
------
------
(c) Investments
Consolidation bases......................................................................... 409
Deferred taxation........................................................................... (34)
Foreign currency translation................................................................ (180)
------
195
------
------
</TABLE>
<TABLE>
<S> <C>
(d) Inventories
Consolidation bases...................................................... (2)
Inventory accounting..................................................... 763
Foreign currency translation............................................. (21)
------
740
------
------
(e) Trade receivables
Consolidation bases...................................................... 1
------
------
</TABLE>
<TABLE>
<S> <C>
(f) Other receivables falling due within 1 year
Consolidation bases...................................................... 10
------
------
(g) Other receivables falling due after 1 year
Consolidation bases...................................................... 50
------
------
(h) Cash at bank and in hand
Consolidation bases...................................................... (5)
------
------
(i) Trade payables
Consolidation bases...................................................... 1
------
------
(j) Other creditors
Consolidation bases...................................................... 21
Deferred taxation........................................................ (94)
------
(73)
------
------
(k) Finance debt
Consolidation bases...................................................... 1
------
------
</TABLE>
88
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 6--U.K. GAAP ADJUSTMENTS TO HISTORICAL AMOCO BALANCE SHEET (CONCLUDED)
<TABLE>
<CAPTION>
AT JUNE 30,
1998
---------------
($ MILLIONS)
<S> <C> <C>
(l) Deferred taxation
Deferred taxation........................................................................... (1,469)
Foreign currency translation................................................................ (2)
------
(1,471)
------
------
(m) Other provisions
Deferred taxation........................................................................... (48)
Foreign currency translation................................................................ (22)
------
(70)
------
------
(n) Minority shareholders' interest
Consolidation bases......................................................................... 857
------
------
(o) Retained earnings
Consolidation bases......................................................................... --
Inventory accounting........................................................................ 763
Deferred taxation........................................................................... 1,577
Foreign currency translation................................................................ (699)
------
1,641
------
------
</TABLE>
NOTE 7--TRANSLATION OF AMOCO BALANCE SHEET
Amoco's balance sheet at June 30, 1998 in U.S. dollars, as restated into
U.K. GAAP, has been translated into pounds sterling at $1.67 to L1.00, the
effective Noon Buying Rate at June 30, 1998.
NOTE 8--MERGER ADJUSTMENTS TO THE CONSOLIDATED BALANCE SHEET
The Unaudited Pro Forma Condensed Consolidated Balance Sheet does not
include adjustments to eliminate amounts payable and receivable between Amoco
and BP, because such amounts are not considered material.
In connection with the Merger, BP Amoco will incur fees and expenses of
approximately L102 million. These costs relate principally to investment banking
fees as well as legal, accounting and regulatory filing fees. The pro forma
adjustments represent BP management's best estimate based on available
information at this time. Actual amounts will differ from those reflected in the
Unaudited Pro Forma Condensed Consolidated Financial Information.
BP Amoco expects to incur significant severance and other restructuring
costs as a result of the Merger. Preliminary estimates indicate that these costs
will be approximately $2 billion and will be charged to income as and when the
criteria for recognition of such costs under U.K. GAAP are met. As management
will not be able to estimate these pre-tax costs with sufficient degree of
confidence until after the Merger has occurred, no amount has been included in
the Unaudited Pro Forma Condensed Consolidated Financial Information. Most of
these costs will be incurred in the two years following the Effective Time.
89
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 8--MERGER ADJUSTMENTS TO THE CONSOLIDATED BALANCE SHEET (CONTINUED)
Amoco Shareholders will be entitled to receive for each Amoco Share held as
of the Effective Time 3.97 BP Amoco Ordinary Shares. Such BP Amoco Ordinary
Shares will be delivered in the form of BP Amoco ADSs. The precise number of
Amoco Shares to be canceled and exchanged in the Merger cannot be determined
until the Effective Time. For purposes of the Merger adjustments within the
Unaudited Pro Forma Condensed Consolidated Financial Information at June 30,
1998, the number of Amoco Shares issued and outstanding on June 30, 1998 (954
million shares) has been used, which would result in the issue of approximately
631 million BP Amoco ADSs.
Assuming the Redenomination takes place, immediately prior to the Effective
Time the issued BP Ordinary Shares with nominal value of 25p each will be
cancelled and an equivalent number of BP Ordinary Shares with nominal value of
US$0.50 each will be issued. The precise number of such shares cannot be
determined until the Effective Time. For the purposes of the merger adjustments
within the Unaudited Pro Forma Condensed Consolidated Financial Information at
June 30, 1998, the number of BP Ordinary Shares outstanding on June 30, 1998
(5,824 million) has been used and the resulting U.S. dollar nominal value amount
converted to pounds sterling at $1.67 per L1.00, the closing rate on June 30,
1998. This results in the capitalization of L287 million of the share premium
account.
NOTE 9--STAMP DUTY RESERVE TAX
SDRT liability of 1.5% of the issue price of BP Amoco Ordinary Shares
(estimated at US$822 million (L489 million), assuming a price per share of 838p
and applying the Noon Buying Rate of $1.68 per L1.00 at October 26, 1998) would
arise and be jointly payable by BP Amoco and Amoco on the issue of BP Amoco ADSs
although this liability should not occur provided that (i) the BP Amoco Ordinary
Shares are redenominated in U.S. dollars; (ii) the directors of BP determine it
is appropriate and, accordingly, the BP Amoco Ordinary Shares are delivered in
bearer form to the Depositary; and (iii) there is no change in applicable law.
Amoco Shareholders will be entitled to receive for each Amoco Share held at
the Effective Time, 3.97 BP Amoco Ordinary Shares. Such BP Amoco Ordinary Shares
will be delivered in the form of BP Amoco ADSs. The precise number of Amoco
Shares to be cancelled and exchanged in the Merger cannot be determined until
the Effective Time. The merger adjustments within the Unaudited Pro Forma
Financial Information at June 30, 1998 are based on 954 million Amoco Shares
being in issue, the number of Amoco Shares issued and outstanding on June 30,
1998, which would result in the issue of approximately 631 million BP Amoco
ADSs.
NOTE 10--NET DEBT TO NET DEBT PLUS EQUITY RATIO
This is calculated as debt (L8,850 million) less cash (L283 million) and
liquid resources (L507 million) to net debt (L8,060 million) plus equity
(L25,308 million). At June 30, 1998, based on the pro forma balance sheet, this
gives a ratio of 24%.
NOTE 11--OPERATING COST SAVINGS
BP Amoco expects to achieve pre-tax cost savings of approximately $2 billion
annually by the end of 2000, through staff reductions in areas of overlap, more
focused exploration efforts, streamlining of business processes, improved
procurement and the rationalization of duplicative operations. No adjustment has
been included in the Unaudited Pro Forma Consolidated Financial Information for
the anticipated benefits of these operating cost savings. There can be no
assurance that anticipated cost savings will be achieved in the expected amounts
or at the times anticipated.
90
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 12--SIGNIFICANT DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP
The Unaudited Pro Forma Condensed Consolidated Financial Information has
been prepared in accordance with U.K. GAAP, which differs in certain respects
from U.S. GAAP.
The main differences between U.K. GAAP and U.S. GAAP that are relevant to BP
Amoco's Unaudited Pro Forma Condensed Consolidated Financial Information relate
to deferred taxation, the recognition of severance and restructuring costs and
the treatment of shares held by employee share ownership plans.
DEFERRED TAXATION
Under the U.K. GAAP restricted liability method, deferred taxation is only
provided where timing differences are expected to reverse in the foreseeable
future. For U.S. GAAP under the liability method, deferred taxation is provided
for temporary differences between the financial reporting basis and the tax
basis of assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled.
For purchase business combinations occurring prior to the year in which the
statement is first applied, SFAS 109 requires that, where practicable, remaining
balances of assets and liabilities acquired in such combinations be adjusted
from a net-of-tax amount to a pre-tax amount. In adopting SFAS 109 for U.S. GAAP
purposes, BP increased the carrying amounts at January 1, 1993 of certain fixed
assets acquired prior to 1993, with a corresponding increase in the deferred
taxation liability.
The adjustments for fixed assets, depreciation and deferred taxation arise
from the difference between the U.K. GAAP and U.S. GAAP bases for deferred
taxation.
SEVERANCE COSTS
Under the provision of U.S. GAAP (FASB Emerging Issues Task Force Abstract
No. 94-3), the cost of certain employee termination benefits is recognized (i)
when specific conditions exist, in the period management approves of the plan of
termination, or (ii) in such later accounting period when the specified
conditions have been satisfied. Under U.S. GAAP severance costs of L90 million
were not recognized in 1995. Of these costs L13 million was recognized in 1996
and L24 million in 1997.
JOINT VENTURE IMPLEMENTATION COSTS
Under the provisions of U.S. GAAP (FASB Emerging Issues Task Force Abstract
No. 94-3), certain restructuring costs are not recognized until incurred.
Certain costs associated with the implementation of the European joint venture
accrued in 1996 would not have been recognized under U.S. GAAP. These costs
relate to rebranding, relocation and systems development costs and amount to
L170 million. Of these costs, L157 million was recognized in 1997.
ORDINARY SHARES HELD FOR FUTURE AWARDS TO EMPLOYEES
BP has established Employee Share Ownership Plans (ESOPs) to acquire BP
shares to satisfy requirements of certain employee share schemes and the
long-term performance plan. The ESOPs are funded by BP to make purchases. U.K.
GAAP requires the assets and liabilities of ESOPs to be recognized as assets and
liabilities of BP, and any shares held by the ESOPs to be disclosed as owning
shares within fixed asset investments. At December 31, 1997 BP held 22,064,000
shares acquired for a total cost of L192 million. Under U.S. GAAP, such shares
are recorded in the balance sheet as a reduction of shareholders' interest.
91
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 12--SIGNIFICANT DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP (CONCLUDED)
The following statements summarize the material adjustments, gross of their
tax effect, which reconcile the BP Amoco pro forma profit and ordinary
shareholders' interest under U.K. GAAP to the amounts that would have been
reported had U.S. GAAP been applied.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
-------------------- -------------------------------
PROFIT FOR THE PERIOD 1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
(L MILLIONS)
<S> <C> <C> <C> <C> <C>
Profit as reported under U.K. GAAP............................... 999 1,738 3,677 4,642 2,280
Adjustments
Depreciation charge............................................ (32) (33) (99) (113) (110)
Deferred taxation.............................................. (85) (110) (65) (262) 261
Severance costs................................................ -- (15) (24) (13) 90
European joint venture implementation costs.................... (5) (56) (157) 170 --
Other.......................................................... 6 5 12 2 7
Minority shareholders interest................................. -- -- -- -- (2)
--------- --------- --------- --------- ---------
Profit for the year as adjusted to accord with U.S. GAAP......... 883 1,529 3,344 4,426 2,526
Dividend requirements on preference shares....................... -- -- 1 1 1
--------- --------- --------- --------- ---------
Profit for the period applicable to Ordinary Shares as adjusted
to accord with U.S. GAAP....................................... 883 1,529 3,343 4,425 2,525
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Profit for the year as adjusted:
Per ordinary share
Basic.......................................................... 9.2p 15.9p 34.8p 46.3p 26.7p
Diluted........................................................ 9.2p 15.9p 34.7p 46.1p 26.6p
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Per ADS..........................................................
Basic.......................................................... 55.2p 95.4p 208.8p 277.8p 160.2p
Diluted........................................................ 55.2p 95.4p 208.2p 276.6p 159.6p
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
BP AMOCO SHAREHOLDERS' INTEREST
<TABLE>
<CAPTION>
AT JUNE 30,
1998
---------------
<S> <C>
(L MILLIONS)
Shareholders' interest as reported in the consolidated balance sheet............................. 24,662
Adjustments
Fixed assets................................................................................... 837
Deferred taxation.............................................................................. (3,338)
Severance costs................................................................................ 41
Ordinary shares held for future awards to employees............................................ (321)
Other.......................................................................................... (93)
------
Shareholders' interest as adjusted to accord with US GAAP........................................ 21,788
------
------
</TABLE>
NOTE 13--PROFIT PER ORDINARY SHARE ON A U.S. GAAP BASIS
<TABLE>
<CAPTION>
AMOCO BP
PERIOD ENDED JUNE 30, 1998 HISTORICAL HISTORICAL BP AMOCO PRO FORMA
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ L L $
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AND ADS AMOUNTS)
<S> <C> <C> <C> <C>
Profit for the period applicable to common (ordinary) shares...... 673 607 883 1,475
--- ----------- ----------- -----------
--- ----------- ----------- -----------
</TABLE>
92
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 13--PROFIT PER ORDINARY SHARE ON A U.S. GAAP BASIS (CONTINUED)
<TABLE>
<CAPTION>
AMOCO BP BP AMOCO BP AMOCO
PERIOD ENDED JUNE 30, 1998 HISTORICAL HISTORICAL PRO FORMA PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ L L $
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AND ADS AMOUNTS)
<S> <C> <C> <C> <C>
Profit for the period:
Per common (ordinary) share
Basic......................................................... 0.70 10.5p 9.2p 0.15
Diluted....................................................... 0.70 10.5p 9.2p 0.15
Per ADS
Basic......................................................... 63.0p 55.2p 0.92
Diluted....................................................... 63.0p 55.2p 0.92
----------- ----------- -----------
----------- ----------- -----------
Average number of common (ordinary) shares outstanding (in
millions)
Basic........................................................... 959 5,765 9,572 9,572
Assuming dilution............................................... 964 5,787 9,614 9,614
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
PERIOD ENDED JUNE 30, 1997
Profit for the period applicable to common (ordinary) shares...... 1,296 995 1,529
----------- ----------- -----------
----------- ----------- -----------
Profit for the period:
Per common (ordinary) share
Basic......................................................... 1.31 17.5p 15.9p
Diluted....................................................... 1.30 17.5p 15.9p
Per ADS
Basic......................................................... 105.0p 95.4p
Diluted....................................................... 105.0p 95.4p
----------- -----------
----------- -----------
Average number of common (ordinary) shares outstanding (in
millions)
Basic......................................................... 987 5,671 9,589
Assuming dilution............................................. 993 5,701 9,643
----------- ----------- -----------
----------- ----------- -----------
YEAR ENDED DECEMBER 1997
Profit for the year applicable to ordinary shares 2,720 2,069 3,343 5,583
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Profit for the year:
Per common (ordinary) share
Basic......................................................... 2.77 36.3p 34.8p 0.58
Diluted....................................................... 2.76 36.1p 34.7p 0.58
Per ADS
Basic......................................................... 217.8p 208.8p 3.49
Diluted....................................................... 216.6p 208.2p 3.48
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
93
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
NOTE 13--PROFIT PER ORDINARY SHARE ON A U.S. GAAP BASIS (CONCLUDED)
<TABLE>
<CAPTION>
AMOCO BP BP AMOCO BP AMOCO
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
----------- ----------- ----------- -----------
$ L L $
(IN MILLIONS, EXCEPT PER SHARE AND ADS AMOUNTS)
<S> <C> <C> <C> <C>
Average number of common (ordinary) shares
outstanding (in millions)
Basic.............................................. 980 5,702 9,593 9,593
Assuming dilution.................................. 986 5,727 9,641 9,641
----- ----------- ----------- -----------
----- ----------- ----------- -----------
YEAR ENDED DECEMBER 1996
Profit for the year applicable to common (ordinary)
shares.............................................. 2,834 2,337 4,425
----- ----------- -----------
----- ----------- -----------
Profit for the year:
Per common (ordinary) share
Basic............................................ 2.85 41.7p 46.3p
Diluted.......................................... 2.83 41.5p 46.1p
Per ADS
Basic............................................ 250.2p 277.8p
Diluted.......................................... 249.0p 276.6p
----------- -----------
----------- -----------
Average number of common (ordinary) shares
outstanding (in millions)
Basic.............................................. 994 5,613 9,559
Assuming dilution.................................. 998 5,637 9,599
YEAR ENDED DECEMBER 1995
Profit for the year applicable to common (ordinary)
shares.............................................. 1,862 1,309 2,525
----- ----------- -----------
----- ----------- -----------
Profit for the year:
Per common (ordinary) share
Basic............................................ 1.88 23.6p 26.7p
Diluted.......................................... 1.87 23.5p 26.6p
Per ADS
Basic............................................ 141.6p 160.2p
Diluted.......................................... 141.0p 159.6p
----------- -----------
----------- -----------
Average number of common (ordinary) shares
outstanding (in millions)
Basic.............................................. 991 5,538 9,472
Assuming dilution.................................. 994 5,560 9,506
----- ----------- -----------
----- ----------- -----------
</TABLE>
94
<PAGE>
DESCRIPTION OF BP AMOCO ORDINARY SHARES
The following information is a summary of the material terms of the BP Amoco
Ordinary Shares as specified in the BP Articles as presently in effect and in
certain amendments to the BP Articles proposed for adoption at the BP
Extraordinary General Meeting, which would take effect as of the Effective Time.
This summary is qualified in its entirety by reference to the full BP Amoco
Articles, which are filed as an exhibit to the Registration Statement of which
this Proxy Statement/Prospectus forms a part. See also "DESCRIPTION OF BP AMOCO
AMERICAN DEPOSITARY SHARES" and "COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND
BP AMOCO SHAREHOLDERS."
BP Amoco Ordinary Shares issued in exchange for Amoco Shares in the Merger
will be delivered in the form of BP Amoco ADSs which will each represent six BP
Amoco Ordinary Shares. The rights of holders of BP Amoco ADSs will be governed
by the Deposit Agreement and such rights differ in certain respects from the
rights of the holders of BP Amoco Ordinary Shares. See "DESCRIPTION OF BP AMOCO
AMERICAN DEPOSITARY SHARES."
All of the existing issued BP Ordinary Shares are fully paid. BP Ordinary
Shares are represented in certificated form and also in uncertificated form
under CREST. "CREST" is an electronic settlement system in the U.K. which
enables BP Ordinary Shares to be evidenced otherwise than by a physical
certificate and transferred electronically rather than by delivery of a physical
certificate. BP Amoco Ordinary Shares (i) may be represented by certificates in
registered form issued (subject to the terms of issue of such shares) following
allotment or receipt of the form of transfer bearing the appropriate stamp duty
by BP Amoco's registrars, Lloyds Bank Registrars, The Causeway, Worthing, West
Sussex, BN99 6DA, England, (ii) may be in uncertificated form with the relevant
CREST member account being credited with the BP Amoco Ordinary Shares allotted
or transferred, or (iii) may be in the form of Bearer Shares if the amendments
described below are adopted at the BP Extraordinary General Meeting. BP Amoco
ADS holders shall have the same rights in respect of the BP Amoco Ordinary
Shares represented by their ADSs, irrespective of whether those Ordinary Shares
are in registered, bearer or uncertificated form. Under English law, persons who
are neither residents nor nationals of the U.K. may freely hold, vote and
transfer BP Amoco Ordinary Shares in the same manner and subject to the same
terms as U.K. residents or nationals.
Immediately prior to the Effective Time, BP proposes to redenominate the
nominal value of the ordinary share capital of BP from a nominal value of 25p to
a nominal value of US$0.50. The Redenomination will require confirmation by the
High Court of England, and the approval of BP shareholders at the BP
Extraordinary General Meeting and holders of BP Ordinary Shares at the Separate
Class Meeting. A quorum of persons holding or representing by proxy one-third of
the issued BP Ordinary Shares and the approval of not less than 75% of the votes
cast by such holders in person or on a poll are required at the Separate Class
Meeting. Approval by not less than 75% of the votes cast by BP shareholders
present in person or on a poll is required at the BP Extraordinary General
Meeting for the redenomination of BP's ordinary share capital and the amendments
to the BP Articles required to effect it.
The Merger is not conditioned upon the Redenomination being approved. If the
BP Ordinary Shares are not redenominated into U.S. dollars there will be no
direct effect on Amoco Shareholders. There are no material differences between
ordinary shares denominated in pounds sterling and ordinary shares denominated
in U.S. dollars.
At October 26, 1998, 5,856,526,887 BP Ordinary Shares were issued and
outstanding. At the BP Extraordinary General Meeting to be held on November 25,
1998, shareholders of BP will, in addition to voting with respect to approval of
the Merger and certain other matters, vote on proposals to increase the
authorized share capital of BP from L2,000,000,000 to $6,000,000,000 and
L12,750,000 or, if the Redenomination does not come into effect, to
L3,000,000,000 and to authorize the directors of BP Amoco to allot shares up to
certain specified values and for cash, disapplying shareholder rights of
pre-emption. The approval of the foregoing proposals (but not the
Redenomination) is required as a condition to the
95
<PAGE>
Merger. See "THE BP EXTRAORDINARY GENERAL MEETING AND THE SEPARATE CLASS
MEETING."
DIVIDENDS
BP Amoco Shareholders may, by ordinary resolution, declare dividends but no
such dividend may be declared in excess of the amount recommended by the
directors. The directors may also pay interim dividends. No dividend may be paid
otherwise than out of profits available for distribution under the Companies Act
1985 (the "Companies Act"). Dividends on BP Amoco Ordinary Shares are payable
only after payment of dividends on the BP Amoco Preference Shares. BP and Amoco
have agreed that for at least the five years following the Merger, BP Amoco will
announce dividends for BP Amoco Ordinary Shares in U.S. dollars and state an
equivalent pounds sterling dividend. Dividends on BP Amoco Ordinary Shares will
be paid in pounds sterling and on BP Amoco ADSs in dollars.
The BP Articles permit a share dividend plan or plans under which holders of
BP Ordinary Shares may be given the opportunity to elect to receive fully paid
BP Ordinary Shares instead of cash, or a combination of such shares and cash, in
respect of future dividends. Because of the U.K. government's decision to
abolish the Advance Corporation Tax, BP presently intends to discontinue the
share dividend plan for dividends to be paid on BP Amoco Ordinary Shares on or
after April 6, 1999. See "BP AMOCO FOLLOWING THE MERGER--Dividends." In its
announcement of interim results for the quarterly period ended June 30, 1998, BP
announced that it anticipated that a dividend reinvestment program for holders
of BP Ordinary Shares would be introduced. In addition, it is anticipated that a
direct access plan will be made available to Canadian and U.S. investors from
the Effective Time. This will replace the Amoco Direct Access Plan.
The BP Articles will be amended to permit the directors to make provision
for such shareholders (including an approved depositary) as they may determine
to receive a dividend duly announced in any currency or currencies other than
pounds sterling. For the purposes of the calculation of the amount receivable in
respect of any dividend, the rate of exchange generally used to determine the
foreign currency equivalent of any sum payable as a dividend is such market rate
selected by the directors, as they consider appropriate, at the close of
business in London on the business day last preceding the date when they
announce their intention to pay that dividend. For additional information, see
"COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO SHAREHOLDERS--Sources
and Payment of Dividends."
VOTING RIGHTS
The BP Articles are intended to be amended to provide that voting at a
general meeting shall be decided by reference to the shares held by each
shareholder who is present or represented at the meeting (on a poll) in relation
to special and extraordinary resolutions (as defined in "COMPARISON OF RIGHTS OF
AMOCO SHAREHOLDERS AND BP AMOCO SHAREHOLDERS--Special Meeting of Shareholders").
Ordinary resolutions will be decided on a show of hands (where each shareholder
who is present at the meeting will have one vote, regardless of the number of
shares held), unless a poll is requested or demanded.
Unless, before or on the declaration of the result, voting on a poll is
demanded in accordance with the BP Amoco Articles, shareholders present will be
entitled to vote on a show of hands on an ordinary resolution and they have one
vote each. If voting is on a poll, every shareholder who is present in person or
by proxy has two votes for every L5 in nominal amount of the BP Preference
Shares held, and one vote for every BP Amoco Ordinary Share. BP Amoco
Shareholders will not have cumulative voting rights. An extraordinary resolution
(requiring an affirmative vote of at least 75% of the votes cast in person or on
a poll) is necessary under the BP Amoco Articles in respect of any proposal at a
meeting of the BP Amoco Shareholders for a variation of the rights of such
holders.
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Record holders of BP Amoco ADSs will be entitled to attend, speak and vote,
on a poll or a show of hands, at any general meeting of BP Amoco by the
Depositary's appointment of them as proxies in respect of the underlying BP
Amoco Ordinary Shares represented by their BP Amoco ADSs. Each such proxy may
also appoint a proxy. Alternatively, holders of BP Amoco ADSs are entitled to
vote on a poll by supplying their voting instructions to the Depositary, who
will vote the BP Amoco Ordinary Shares underlying their BP Amoco ADSs on their
behalf. See "COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO
SHAREHOLDERS--Voting Rights."
LIQUIDATION RIGHTS
In the event of the liquidation of BP Amoco, after payment of all
liabilities and the deduction of any provision made under Section 719 of the
Companies Act or Section 187 of the Insolvency Act 1986 (which enables a
liquidator to make payments to employees or former employees on the cessation or
transfer of BP's business), the holders of the BP Preference Shares would be
entitled to a sum equal to the capital paid up on such shares plus an amount in
respect of accrued and unpaid dividends and a premium equal to the higher of (i)
10% of the capital paid up on the Preference Shares or (ii) the excess of the
average market price over par value of such shares on the LSE during the
previous six months. The remaining assets would be divided among the BP Amoco
Shareholders in order of rank, including holders of BP Amoco Ordinary Shares.
PRE-EMPTIVE RIGHTS AND NEW ISSUES OF SHARES
Under Section 80 of the Companies Act the directors are, with certain
exceptions, unable to allot relevant securities (relevant securities as defined
in the Companies Act include BP Amoco Ordinary Shares or securities convertible
into BP Amoco Ordinary Shares) without the authority of the shareholders in
general meeting. In addition, Section 89 of the Companies Act imposes further
restrictions on the issue of equity securities (equity securities as defined in
Section 94 of the Companies Act, which includes BP Amoco Ordinary Shares or
securities convertible into BP Amoco Ordinary Shares) which are, or are to be,
paid up wholly in cash. The BP Articles provide for the shareholders to
authorize the directors to allot relevant securities generally up to an
aggregate nominal amount (the "Section 80 Amount") and equity securities for
cash otherwise than in connection with a rights issue (the "Section 89 Amount"),
of up to 5% of the issued share capital. The Section 80 Amount and the Section
89 Amount set at the annual general meeting in 1998 were L480 million and L72
million, respectively. This authority expires at the annual general meeting in
1999 or July 15, 1999, whichever is earlier. At the BP Extraordinary General
Meeting, the shareholders of BP will be asked to set the Section 80 amount at
$6,000,000,000, or if the Redenomination does not come into effect,
L1,515,000,000 and the Section 89 amount at $244,000,000, or if the
Redenomination does not come into effect, L122,000,000. It is normal practice to
renew the Section 80 amount and Section 89 amount at each annual general
meeting.
DISCLOSURE OF INTERESTS IN SHARES
The Companies Act gives BP Amoco power to require persons who it believes to
be, or to have been within the previous three years, interested in its voting
shares, to disclose prescribed particulars of those interests. Failure to supply
the information required may lead to disenfranchisement of the relevant shares
and a prohibition on their transfer and on dividend and other payments in
respect of them. In this context the term "interest" is widely defined and will
generally include an interest of any kind whatsoever in voting shares, including
the interest of a holder of a BP Amoco ADS. See "COMPARISON OF RIGHTS OF AMOCO
SHAREHOLDERS AND BP AMOCO SHAREHOLDERS--Disclosure of Interests."
CHANGES IN CAPITAL
The BP Amoco Articles will permit BP Amoco to:
(i) consolidate and divide all or any of its share capital into shares
of larger amounts than its existing shares;
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(ii) cancel any shares which have not, at the date of the relevant
resolution, been taken or agreed to be taken by any person and diminish the
amount of its authorised share capital by the amount of the shares so
cancelled;
(iii) sub-divide all or any part of its share capital into shares of a
smaller amount; and
(iv) increase its share capital.
BP may also:
(i) with the authority of shareholders by ordinary or special
resolution, purchase its own shares; and
(ii) by special resolution and with the sanction of the court, reduce
its share capital, any capital redemption reserve, share premium account or
any other undistributable reserve.
TRANSFER OF SHARES
Except as described in this paragraph, the BP Amoco Articles will not in any
way restrict the transferability of BP Amoco Ordinary Shares. BP Amoco Ordinary
Shares may be transferred by an instrument in any usual form or in any other
form acceptable to the directors. The directors may refuse to register a
transfer if it is (i) of shares which are not fully paid, (ii) not stamped and
duly presented for registration together with the share certificate and such
other evidence of title as the directors reasonably require, (iii) in respect of
more than one class of share, or (iv) in favor of more than four persons
jointly. The refusal to register transfers of BP Amoco Ordinary Shares must also
be exercised in such a way as to ensure that dealings in such shares on the LSE
can take place on an open and proper basis. The registration of transfers may be
suspended at such times and for such periods as the directors may determine. The
register of shareholders may not be closed for more than 30 days in any year.
GENERAL MEETINGS AND NOTICES
A shareholder who is not registered on BP Amoco's register of shareholders
with an address in the U.K. and who has not supplied to BP Amoco an address
within the U.K. for the purpose of the giving of notice is not entitled to
receive notices from BP Amoco. In certain circumstances, BP Amoco may give
notices to shareholders by advertisement in newspapers in the U.K. Holders of BP
Amoco ADSs will be entitled to receive notices under the terms of the Deposit
Agreement. See "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES--Voting of
the Underlying Deposited Securities." Under the BP Amoco Articles, the annual
general meeting of shareholders shall be held at such time (within a period of
not more than 15 months after the last preceding annual general meeting) and at
such place in England as the directors shall determine.
LIABILITY OF DIRECTORS AND OFFICERS
See "COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS AND BP AMOCO
SHAREHOLDERS--Liability of Directors and Officers" for a discussion of the
inability of an English company to exempt directors and other officers from
certain liabilities.
REGISTRAR
The registrar for BP Amoco Ordinary Shares after the Merger will be Lloyds
Bank Registrars, The Causeway, Worthing, West Sussex, BN99 6DA, England.
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DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES
The following is a summary of the material provisions of the Amended and
Restated Deposit Agreement, dated as of August 1, 1992, as amended as of June 5,
1997 among BP, Morgan Guaranty Trust Company of New York, as Depositary (such
term to include any successor Depositary referred to therein), and each holder
from time to time of BP Amoco ADRs issued thereunder. Such Amended and Restated
Deposit Agreement, as it is proposed to be amended with effect from the
Effective Time (including the addition of Amoco as a party thereto), is referred
to herein as the "Deposit Agreement." This summary does not purport to be
complete and is qualified in its entirety by reference to the Deposit Agreement,
a copy of which has been filed as an exhibit to the F-6 Registration Statement,
and to the BP Amoco Articles, a copy of which has been filed as an exhibit to
the F-4 Registration Statement, in each case filed with the SEC. Copies of the
Deposit Agreement and the BP Amoco Articles are available for inspection at the
office of the Depositary (the "Depositary's Office") currently located at 60
Wall Street, New York, New York 10260, and at the London office of the
Depositary, as custodian (the "Custodian"), and at the principal offices of the
co-registrar and co-transfer agent, The Royal Trust Company, in Toronto,
Halifax, Montreal, Winnipeg, Regina, Calgary and Vancouver.
AMERICAN DEPOSITARY RECEIPTS
BP Amoco ADRs evidencing BP Amoco ADSs are issuable in certificated or
book-entry form by the Depositary pursuant to the terms of the Deposit
Agreement. Each BP Amoco ADS represents six BP Amoco Ordinary Shares (or
evidence of rights to receive six BP Amoco Ordinary Shares, in registered form),
deposited with the Custodian, currently the London office of the Depositary
located at 60 Victoria Embankment, London, EC4Y 0JP, England. A BP Amoco ADR may
evidence any number of BP Amoco ADSs. Only persons in whose names BP Amoco ADRs
are registered on the books of the Depositary will be treated by the Depositary
and BP Amoco as holders thereof ("Holders").
DEPOSITED SECURITIES
As used herein, "Deposited Securities" means, at any time, all BP Amoco
Ordinary Shares, whether in registered form or in the form of Bearer Shares (or
evidence of rights to receive BP Amoco Ordinary Shares), at such time deposited
under the Deposit Agreement and any and all other BP Amoco Ordinary Shares,
securities, property and cash received at any time by the Depositary or the
Custodian in respect of or in lieu of such deposited BP Amoco Ordinary Shares
and other BP Amoco Ordinary Shares (or evidence of rights to receive the same),
securities, property and cash at such time held under the Deposit Agreement.
The Deposit Agreement will provide for the Depositary to accept for deposit
Bearer Shares (defined above under "THE MERGER AGREEMENT--Consideration to Be
Received in the Merger") against the issuance to Amoco Shareholders of the BP
Amoco ADSs which they are entitled to receive in the Merger. Notwithstanding the
allotment and issue of the Bearer Shares to the Depositary, upon any withdrawal
by a Holder of the BP Amoco Ordinary Shares represented by such Holder's BP
Amoco ADSs, as described below under "--Deposit and Withdrawal of Deposited
Securities," certificates for such BP Amoco Ordinary Shares in registered form
will be delivered. Except with respect to the Deposited Securities, which may at
any time include the Bearer Shares, references in this section to "BP Amoco
Ordinary Shares" are in each case to such registered BP Amoco Ordinary Shares.
DEPOSIT AND WITHDRAWAL OF DEPOSITED SECURITIES
In connection with the deposit of BP Amoco Ordinary Shares under the Deposit
Agreement, the Custodian shall have delivered to it a duly executed instrument
or instruments of transfer in form satisfactory to it (other than in respect of
Bearer Shares), together with any payments required under the Deposit Agreement,
and a written order directing the Depositary to execute and deliver to, or upon
the written order of, the person or persons stated in such order a BP Amoco ADR
or BP Amoco ADRs evidencing the number of BP Amoco ADSs representing such
Deposited Securities (a "Delivery Order").
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At the request, risk and expense of any Holder, the Depositary may receive
certificates or other instruments of title for BP Amoco Ordinary Shares to be
deposited, together with any other documents and payments required under the
Deposit Agreement, for the purpose of forwarding such certificates to the
Custodian for deposit. The Depositary may require the following in a form
satisfactory to it: (a) an agreement or assignment, or other instrument
satisfactory to the Depositary, which will provide for the transfer to the
Custodian or its nominee of any dividend or right to subscribe for additional BP
Amoco Ordinary Shares or to receive other property which any person who holds BP
Amoco Ordinary Shares may be entitled to receive upon or in respect of such
deposited BP Amoco Ordinary Shares, or such agreement of indemnity or other
agreement in respect thereof as shall be satisfactory to the Depositary, and (b)
if BP Amoco Ordinary Shares are registered in the name of the person on whose
behalf they are presented for deposit, a proxy or proxies entitling the
Custodian to vote such deposited BP Amoco Ordinary Shares until the BP Amoco
Ordinary Shares are registered in the name of the Custodian or its nominee. As
soon as practicable after the Custodian receives Deposited Securities in
registered form, together with any other documents and payments required under
the Deposit Agreement, pursuant to any such deposit, the Custodian shall present
such Deposited Securities for registration of transfer into the name of the
Custodian or its nominee, at the cost and expense of the person making such
deposit (or for whose benefit such deposit is made) and shall obtain evidence
satisfactory to it of such registration. Deposited Securities shall be held by
the Custodian for the account and to the order of the Depositary at such place
or places and in such manner as the Depositary shall determine.
After the deposit of any BP Amoco Ordinary Shares, the Custodian shall
notify the Depositary of such deposit and the person or persons to whom or upon
whose written order a BP Amoco ADR or BP Amoco ADRs are deliverable in respect
thereof and the number of BP Amoco ADSs to be evidenced thereby. Such
notification shall be made by letter, first class airmail postage prepaid, or,
at the request, risk and expense of the person making the deposit, by cable,
telex, electronic or facsimile transmission. After receiving such notice from
the Custodian, the Depositary, subject to the Deposit Agreement, shall issue in
book-entry form or, if specifically requested in the Delivery Order, execute and
deliver in certificated form at the Depositary's Office to or upon the order of
the person or persons named in the Delivery Order, a BP Amoco ADR or BP Amoco
ADRs, registered in the name or names requested by such person or persons, and
evidencing in the aggregate the number of BP Amoco ADSs to which such person or
persons are entitled.
Subject to the terms and conditions of the Deposit Agreement, upon receipt
at the Depositary's Office or at such other office as the Depositary may
designate of a Holder's written order directing the Depositary to cause the
Deposited Securities represented by the BP Amoco ADSs evidenced by a BP Amoco
ADR to be withdrawn and delivered to or upon the written order of the person or
persons designated in such order together with, in the case of a BP Amoco ADR in
book-entry form, proper instruments of transfer to the extent required by the
Depositary or, in the case of a BP Amoco ADR in certificated form, the surrender
of such BP Amoco ADR (properly endorsed in blank or accompanied by proper
instruments of transfer in blank, to the extent required by the Depositary), the
Depositary will direct the Custodian to deliver the Deposited Securities without
unreasonable delay to or upon the written order of the person or persons
designated in that order. Delivery of Deposited Securities consisting of BP
Amoco Ordinary Shares will be made by delivery of BP Amoco Ordinary Shares in
registered form only. To the extent that Deposited Securities consist of Bearer
Shares, such Bearer Shares will be delivered to BP Amoco or to the registrar of
BP Amoco Ordinary Shares in exchange for a like number of BP Amoco Ordinary
Shares in registered form in the name of the Custodian or the Custodian's
nominee prior to delivering such BP Amoco Ordinary Shares to, or upon the order
of, the person or persons so designated. In each case, such Holder is entitled
to delivery of Deposited Securities at the Custodian's office or, at the
request, risk and expense of the Holder, the Depositary may deliver such
Deposited Securities without unreasonable delay at such other place as may have
been requested by the Holder. Notwithstanding any other provision of the Deposit
Agreement or the BP Amoco ADRs, the withdrawal of Deposited Securities may be
restricted in connection with (i) temporary delays caused by closing the
transfer books of
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the Depositary or BP Amoco or the deposit of shares in connection with voting at
a shareholders' meeting, or the payment of dividends, (ii) the payment of fees,
taxes and similar charges, or (iii) compliance with any laws or governmental
regulations relating to BP Amoco ADRs or to the withdrawal of Deposited
Securities.
DIVIDENDS, OTHER DISTRIBUTIONS, RIGHTS AND CHANGES AFFECTING DEPOSITED
SECURITIES
Holders will receive cash dividends payable on Deposited Securities in U.S.
dollars. Whenever BP Amoco shall make cash dividends or other cash distributions
on Deposited Securities available in U.S. dollars and it is possible, whether by
election or other action, for the Depositary to receive such dividends or
distributions in U.S. dollars, the Depositary will take any action required to
enable it to receive such dividends or distributions in U.S. dollars. In respect
of any other cash dividend or cash distribution by BP Amoco upon any Deposited
Securities, whenever the Depositary or the Custodian receives any cash dividend
or cash distribution upon any Deposited Securities, the Depositary will convert
such dividend or distribution into U.S. dollars. After fixing a record date in
respect thereof as described below under "--Record Dates," subject to the terms
and conditions of the Deposit Agreement, the Depositary shall distribute the
amount thus received in U.S. dollars, by checks drawn on or electronic transfers
from a bank in the U.S., to the Holders of record on such record date in
proportion to the number of BP Amoco ADSs representing such Deposited Securities
held by each of them respectively. The Depositary shall make appropriate
adjustments in the amounts so distributed in respect of (a) any of such
Deposited Securities being not entitled, by reason of its date of issuance or
otherwise, to receive all or any portion of such distribution or (b) any amounts
required to be withheld from any such distribution on account of taxes, or
charged by the Depositary in connection with the conversion of foreign currency
into U.S. dollars, provided that if BP Amoco announces any cash dividend on
Deposited Securities in U.S. dollars, BP Amoco will cause the amount of U.S.
dollars paid to the Depositary to be such that, subject to withholding of taxes
as provided in this clause (b), the amount paid in respect of each Deposited
Security will be equal to the amount of the cash dividend per Deposited Security
as so announced.
The Depositary will distribute only such amounts as can be distributed
without distributing a fraction of a cent, and any balance not so distributable
will be held by the Depositary (without liability for interest thereon) and
shall be added to future cash distributions.
If a distribution of any Deposited Securities consists of a dividend in, or
free distribution of, BP Amoco Ordinary Shares, the Depositary may, in
accordance with the provisions of the Deposit Agreement, distribute to the
Holders, in proportion to their holdings of BP Amoco ADSs, additional BP Amoco
ADRs evidencing an aggregate number of BP Amoco ADSs that represent the number
of BP Amoco Ordinary Shares received as such dividend or free distribution. In
lieu of delivering BP Amoco ADRs for fractional BP Amoco ADSs in the event of
any such distribution, the Depositary will sell the number of BP Amoco Ordinary
Shares represented by the aggregate of such fractions and distribute the net
proceeds to Holders in accordance with the Deposit Agreement. If additional BP
Amoco ADRs are not so distributed, each BP Amoco ADS shall thenceforth also
represent the additional BP Amoco Ordinary Shares distributed in respect of the
BP Amoco Ordinary Shares represented by such BP Amoco ADS prior to such
distribution.
If BP Amoco offers or causes to be offered to the holders of Deposited
Securities any rights to subscribe for additional BP Amoco Ordinary Shares or
any rights of any other nature, the Depositary will have discretion after
consultation with BP Amoco as to the procedure to be followed in making such
rights available to Holders or in disposing of such rights for the benefit of
such Holders and making the net proceeds available in U.S. dollars to such
Holders; provided that the Depositary will, at the request of BP Amoco, either
(a) after consultation with BP Amoco make such rights available to Holders by
means of warrants or otherwise, if lawful and feasible, or (b) if making such
rights available by means of warrants or otherwise is not lawful or not
feasible, or if the rights represented by such warrants or other instruments are
not exercised and appear to be about to lapse, sell such rights or warrants or
other instruments by public or private sale, at such place or places and upon
such terms as the Depositary may deem proper, and allocate the proceeds of such
sales for the account of the Holders otherwise entitled thereto upon an
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averaged or other practicable basis without regard to any distinctions among
such Holders because of exchange restrictions or the date of delivery of any BP
Amoco ADR or BP Amoco ADRs, or otherwise. The Depositary will not offer to
Holders in the U.S. any right to subscribe for or to purchase any securities
unless a required registration statement is in effect under the Securities Act
or such offer is exempt from registration.
If the Depositary shall receive a distribution other than cash, BP Amoco
Ordinary Shares or rights upon any Deposited Securities, the Depositary shall
cause securities or property to be distributed proportionately to Holders by any
means that the Depositary may deem equitable and practicable; provided that if
the Depositary deems that such distribution cannot be made proportionately among
the Holders entitled thereto, or if for any other reason (including any tax
withholding or securities laws requirements) the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including the sale of the securities or property thus received and the
distribution to the Holders of the net proceeds of any such sale.
If the Depositary determines that in its judgment any foreign currency
received by it cannot be converted on a reasonable basis into U.S. dollars
transferrable into the U.S., or if any approval or license of any governmental
authority or agency thereof that is required for such conversion is denied or in
the opinion of the Depositary is not obtainable at a reasonable cost or within a
reasonable period, the Depositary shall, in its discretion, but subject to
applicable laws and regulations, either distribute the foreign currency to, or
hold such foreign currency (without liability for interest thereon) for the
respective accounts of, the Holders entitled to receive the same for whom such
conversion and distribution is not practicable.
DISCLOSURE OF INTERESTS
Notwithstanding any other provision of the Deposit Agreement, each Holder
agrees to comply with requests from BP Amoco which are made under statutory
provisions in the U.K. to provide information as to the capacity in which such
Holder owns BP Amoco ADRs and regarding the identity of any other person
interested in such BP Amoco ADRs and the nature of such interest and may,
pursuant to such statutory provisions and any provisions of the BP Amoco
Articles, forfeit the right to vote and to direct the voting of, and be
prohibited from transferring, BP Amoco ADRs as to which compliance is not made,
all as if such BP Amoco ADRs were to the extent practicable the BP Amoco
Ordinary Shares represented thereby, and the Depositary will use its reasonable
efforts to comply with any instructions received from BP Amoco requesting that
the Depositary take the reasonable actions specified therein to obtain such
information.
Sections 198 and 212 of the Companies Act impose certain notification and
information reporting obligations on holders of an English public limited
company's share capital (including that held through American Depositary
Receipts). A person who fails to fulfill the obligations imposed by such
provisions is subject to criminal penalties. See "COMPARISON OF RIGHTS OF AMOCO
SHAREHOLDERS AND BP AMOCO SHAREHOLDERS--Disclosure of Interests."
RECORD DATES
Whenever any distribution upon Deposited Securities shall be made or
whenever the Depositary shall receive notice of any meeting of holders of
Deposited Securities, or in connection with the giving of any notice,
solicitation of any consent or any other matter, the Depositary will, after
consultation with BP Amoco, fix a record date for the determination of the
Holders who shall be entitled to receive such distribution or the net proceeds
of the sale thereof, to vote or to give instructions for the exercise of voting
rights at any such meeting, to receive such notice or solicitation or to act in
respect of such other matter which shall, to the extent practicable, be the same
record date as that fixed by BP Amoco for the Deposited Securities, in each case
subject to the provisions of the Deposit Agreement.
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VOTING OF THE UNDERLYING DEPOSITED SECURITIES
Pursuant to the Deposit Agreement and subject to and in accordance with the
BP Amoco Articles, the Depositary or, if the Deposited Securities are registered
in the name of or held by its nominee, its nominee irrevocably appoints each
Holder for the time being on the record date fixed by the Depositary in respect
of any meeting (at which holders of Deposited Securities are entitled to vote)
as its proxy to attend, vote and speak at the relevant meeting (or any
adjournment thereof) in respect of the Deposited Securities represented by the
BP Amoco ADRs held by such Holder on the record date. In respect of any such
meeting, each such Holder can appoint either the Depositary or any other person
as its substitute proxy to attend, vote and speak on its behalf subject to and
in accordance with the provisions of the Deposit Agreement and the BP Amoco
Articles. The Depositary will fix the record date as soon as practicable after
receipt of notice of any meeting at which the holders of Deposited Securities
are entitled to vote, or of solicitation of consents or proxies from holders of
Deposited Securities. The Depositary or BP Amoco will mail to Holders of record
on the record date: (a) such information as is contained in such notice of
meeting or in the solicitation materials, (b) a BP Amoco ADR proxy card, (c) a
statement that each Holder at the close of business on the specified record date
will be entitled, subject to any applicable law, the provisions of the BP Amoco
Articles and the provisions of or governing the Deposited Securities, either (i)
to use such proxy card in order to attend, vote and speak at such meeting as the
proxy of the Depositary or its nominee solely with respect to the BP Amoco
Ordinary Shares or other Deposited Securities represented by such Holder's BP
Amoco ADSs or (ii) to appoint any other person as its substitute proxy solely
with respect to the BP Amoco Ordinary Shares or other Deposited Securities
represented by such Holder's BP Amoco ADSs or (iii) to appoint the Depositary as
its substitute proxy and to instruct the Depositary as to the exercise of the
voting rights pertaining to the BP Amoco Ordinary Shares or other Deposited
Securities represented by such Holder's BP Amoco ADSs, and (d) if the Depositary
is to be appointed a substitute proxy, a brief statement as to the manner in
which voting instructions may be given to the Depositary.
Upon the written request of a Holder of record on such record date received
on or before the date established by the Depositary for such purpose, the
Depositary shall endeavor, insofar as practicable and permitted under applicable
law, and the provisions of the BP Amoco Articles and the provisions of the
Deposited Securities, to vote or cause to be voted the Deposited Securities in
accordance with the instructions set forth in such request.
Neither the Depositary nor the Custodian shall exercise any discretion as to
voting and neither the Depositary nor the Custodian shall vote or attempt to
exercise the right to vote the BP Amoco Ordinary Shares or other Deposited
Securities represented by BP Amoco ADSs except pursuant to and in accordance
with such written instructions from Holders. BP Amoco Ordinary Shares or other
Deposited Securities represented by BP Amoco ADSs for which no specific voting
instructions are received by the Depositary from the Holder shall not be voted
by the Depositary but may be directly voted by Holders in attendance at meetings
of shareholders as proxy for the Depositary subject to, and in accordance with,
the Deposit Agreement and the BP Amoco Articles.
ACTIONS BY HOLDERS
The Depositary will cause its nominee, Guaranty Nominees Limited, or a
successor nominee, in its capacity as a member of BP Amoco in respect of the BP
Amoco Ordinary Shares and other Deposited Securities, from time to time, to take
such limited actions as may be reasonably requested in writing by a Holder, to
the extent practicable and subject to any applicable law, regulation, stock
exchange requirement or the BP Amoco Articles, solely to enable such Holder to
exercise those rights to which Guaranty Nominees Limited or such successor
nominee is entitled by virtue of being a member of BP Amoco in respect of the BP
Amoco Ordinary Shares or other Deposited Securities represented by the BP Amoco
ADSs evidenced by such Holder's BP Amoco ADRs; provided, however, that with
respect to rights other than those set forth in "--Voting of the Underlying
Deposited Securities," Guaranty Nominees Limited or such successor nominee will
take such action only to the extent that (a) it has been fully indemnified to
its
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reasonable satisfaction by the Holder against any and all loss, liability, or
expense which it shall suffer or reasonably incur, (b) such Holder has provided
and will continue to provide as reasonably requested from time to time security
in the form of a bond or otherwise in relation to such action reasonably
satisfactory to the Depositary, and (c) any legal proceeding or similar action
brought on behalf of such Holder pursuant to the exercise of such rights shall
be brought in the name of Guaranty Nominees Limited or a successor nominee and
not in the name of the Depositary and shall state that Guaranty Nominees Limited
or such successor nominee is involved solely for the purpose of enabling the
Holder to establish a right of action and for no other purpose and that Guaranty
Nominees Limited or such successor nominee has no other interest in such matter.
Any exercise of such rights or powers shall be for the sole benefit of, and at
the cost and expense of, such Holder.
INSPECTION OF TRANSFER BOOKS
The Depositary will keep books at its transfer office in The City of New
York for the registration and transfer of BP Amoco ADRs such that at all
reasonable times, the books will be open for inspection by Holders and BP Amoco,
provided that such inspection shall not be for the purpose of communicating with
Holders in the interest of a business or object other than the business of BP
Amoco or a matter related to the Deposit Agreement or the BP Amoco ADRs.
REPORTS
The Depositary will make available for inspection by Holders at the
Depositary's Office, at the office of the Custodian and at any other designated
transfer offices any reports and other communications received from BP Amoco
which are both (a) received by the Depositary, the Custodian or the nominee of
either as the holder of the Deposited Securities, and (b) made generally
available to the holders of such Deposited Securities by BP Amoco. The
Depositary will also mail or, when requested by BP Amoco, otherwise make
available to Holders copies of such reports and communications as provided in
the Deposit Agreement. In addition, the Depositary will furnish such information
to the SEC and to any other securities regulatory authority or stock exchange to
the extent received by the Depositary as holder of Deposited Securities and not
otherwise furnished or filed.
CHANGES AFFECTING DEPOSITED SECURITIES
Upon any change in par value, split-up, consolidation, cancellation or any
other reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting BP Amoco or
to which it is a party, any securities that shall be received by the Depositary
or the Custodian in exchange for or in conversion, replacement or otherwise in
respect of Deposited Securities shall be treated as new Deposited Securities
under the Deposit Agreement, and BP Amoco ADRs shall thenceforth represent the
new Deposited Securities so received, unless additional BP Amoco ADRs are
delivered as in the case of a stock dividend, or unless the Depositary calls for
the surrender of outstanding BP Amoco ADRs to be exchanged for new BP Amoco ADRs
representing the new Deposited Securities.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of the BP Amoco ADRs and the Deposit Agreement may at any time be
amended by agreement between BP Amoco and the Depositary. Any amendment that
imposes or increases any fees or charges (other than the fees and charges listed
in clauses (i) through (iv) under "--Charges of Depositary"), or that otherwise
prejudices any substantial existing right of Holders, will not take effect as to
outstanding BP Amoco ADRs until the expiration of 30 days after notice of such
amendment has been given to the Holders. Every Holder at the expiration of 30
days after such notice will be deemed by continuing to hold such BP Amoco ADR to
consent and agree to such amendment and to be bound by the Deposit Agreement or
BP Amoco ADR, or both of them, as applicable, as amended thereby. In no event
may any amendment impair the right of any Holder to surrender the BP Amoco ADRs
held by such
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Holder and receive therefor the Deposited Securities represented thereby, except
in order to comply with mandatory provisions of applicable law.
Whenever so directed by BP Amoco, the Depositary will terminate the Deposit
Agreement by mailing notice of such termination to the Holders of all BP Amoco
ADRs then outstanding at least 30 days prior to the date fixed in such notice
for such termination. The Depositary may terminate the Deposit Agreement at any
time 90 days after the Depositary shall have delivered to BP Amoco a notice of
its election to resign provided that a successor depositary has not been
appointed and accepted its appointment. After the date so fixed for termination,
the Depositary and its agents shall perform no further acts under the Deposit
Agreement, except to advise Holders of such termination, to receive and hold
distributions on Deposited Securities (or sell property or rights or convert
Deposited Securities into cash as provided in the Deposit Agreement) and to
deliver Deposited Securities in exchange for BP Amoco ADRs in book-entry form or
surrendered to the Depositary. As soon as practicable after the expiration of
six months from the date fixed for termination, the Depositary shall sell the
Deposited Securities and shall thereafter hold the net proceeds, together with
any other cash then held, without liability for interest, for the PRO RATA
benefit of the Holders that have not theretofore surrendered their ADRs.
CHARGES OF DEPOSITARY
The Depositary will charge each person to whom BP Amoco ADRs are delivered
against deposits of BP Amoco Ordinary Shares, and each person surrendering BP
Amoco ADRs for delivery of Deposited Securities, $5.00 for each 100 BP Amoco
ADSs (or portion thereof) evidenced by the BP Amoco ADRs delivered or
surrendered. BP Amoco will pay such other charges and expenses of the Depositary
and any agent of the Depositary (except the Custodian, other than as provided in
the Deposit Agreement) as may be provided pursuant to agreements from time to
time between BP Amoco and the Depositary, except (i) stock transfer or other
taxes and other governmental charges (which are payable by Holders or persons
depositing BP Amoco Ordinary Shares or other Deposited Securities) (other than
Additional Costs described under "--Liability of Holder for Taxes"), (ii) cable,
telex, electronic and facsimile transmission and delivery charges incurred at
the request of persons depositing BP Amoco Ordinary Shares or Holders delivering
BP Amoco Ordinary Shares, BP Amoco ADRs or Deposited Securities (which are
payable by such Holders or persons), (iii) transfer or registration fees for the
registration of transfers of Deposited Securities on any applicable register in
the name of the Custodian or its nominee in connection with the deposit of BP
Amoco Ordinary Shares or in the name of such person as a Holder may direct in
connection with the withdrawal of Deposited Securities (which are payable by
persons depositing BP Amoco Ordinary Shares and Holders withdrawing Deposited
Securities; there will be no such fees in respect of the BP Ordinary Shares as
of the date of the Deposit Agreement) and (iv) expenses of the Depositary in
connection with the conversion of foreign currency into U.S. dollars (which are
paid out of such foreign currency).
No charges will be payable by Amoco Shareholders or by holders of Amoco
Stock Options outstanding as of the Effective Time in connection with their
receipt of BP Amoco ADSs, or BP Amoco ADRs in connection therewith, pursuant to
the Merger.
LIABILITY OF HOLDER FOR TAXES
Any tax or other governmental charge (including any interest or penalties
thereon) payable by the Custodian, the Depositary or the nominee of either of
them with respect to any BP Amoco ADR or any Deposited Securities, shall be
payable by the Holder in whose name such BP Amoco ADR is registered at the time
such tax or other governmental charge is incurred, who shall pay the amount
thereof to the Depositary; provided that to the extent that any U.K. stamp duty,
SDRT or other similar U.K. governmental charge (or any interest or penalties
thereon) (each, an "Additional Cost") arises in connection with (a) the deposit
of BP Amoco Ordinary Shares, whether in registered or bearer form (the "Exchange
Shares"), in connection with (i) the exchange of BP Amoco ADRs for Amoco Shares
pursuant to the Merger Agreement or (ii) the issue upon the exercise of Amoco
Stock Options outstanding as of the Effective
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Time, into the facility established by the Deposit Agreement, including but not
limited to the agreement to transfer, the transfer and the delivery of Exchange
Shares to the Depositary, the Custodian or the nominee of either of them and any
issue of BP Amoco ADSs by the Depositary in respect thereof or (b) the holding
of Bearer Shares, the transfer of BP Amoco ADRs representing Bearer Shares or
the exchange of Bearer Shares for BP Amoco Ordinary Shares in registered form by
the Depositary, the Custodian or the nominee of either of them, but only, in the
case of this clause (b), to the extent that such Additional Cost arises out of,
or is imposed as a consequence of, the fact that Exchange Shares were deposited
in bearer form as referred to in clause (a), such Additional Cost will be
payable by BP Amoco or Amoco (BP Amoco Corporation after the Merger) and not by
the Holder, and BP Amoco and Amoco will be jointly and severally liable for such
payment. The Depositary may refuse to effect any registration of transfer of
such BP Amoco ADR or any split-up or combination thereof or any withdrawal of
such Deposited Securities until such payment is made, and may withhold or deduct
from any distributions on such Deposited Securities or may sell for the account
of the Holder thereof any part or all of such Deposited Securities, and may
apply such cash or the proceeds of any such sale in payment of any such tax or
other governmental charge (and any taxes or expenses arising out of such sale),
the Holder of such BP Amoco ADR remaining liable for any deficiency. No such tax
will be payable by Amoco Shareholders or by holders of Amoco Stock Options
outstanding as of the Effective Time in connection with their receipt of BP
Amoco ADRs in the Merger.
If the Depositary determines that any distribution of property other than
cash (including BP Amoco Ordinary Shares or rights to subscribe therefor) is
subject to any tax that the Depositary or the Custodian is obligated to
withhold, the Depositary may dispose of all or a portion of such property in
such amounts and in such manner, by public or private sale, as the Depositary
deems necessary and practicable, and the Depositary will distribute the net
proceeds of any such sale or the balance of any such property after deduction of
such taxes to the Holders entitled thereto.
GENERAL LIMITATIONS
The Depositary, its agents and BP Amoco shall each: (a) incur no liability
(i) if any law, the provisions of or governing any Deposited Securities, act of
God, war or other circumstances beyond its control shall prevent, delay, forbid
or subject to any civil or criminal penalty any act or thing which the Deposit
Agreement provides shall be done or performed by it, or (ii) by reason of any
exercise or failure to exercise any discretion given it in the Deposit
Agreement; (b) assume no obligation and shall be subject to no liability, except
to perform its obligations to the extent they are specifically set forth in the
Deposit Agreement without negligence or bad faith; (c) be under no obligation to
appear in, prosecute or defend any action, suit or other proceeding in respect
of any Deposited Securities or BP Amoco ADRs, which in its opinion may involve
it in expense or liability, unless an indemnity satisfactory to it against all
expense and liability be furnished as often as may be required; or (d) not be
liable for any action or inaction by it in reliance upon the advice of or
information from legal counsel, accountants, any person presenting BP Amoco
Ordinary Shares for deposit, any Holder, or any other person believed by it to
be competent to give such advice or information. Each of the Depositary, its
agents and BP Amoco may rely and shall be protected in acting upon any written
notice, request, direction or other document believed by it to be genuine and to
have been signed or presented by the proper party or parties. The Depositary and
its agents will not be responsible for any failure to carry out any instructions
to vote any of the Deposited Securities, for the manner in which any such vote
is cast or for the effect of any such vote. The Depositary and its agents may
own and deal in any class of securities of BP Amoco and its affiliates and in BP
Amoco ADRs. BP Amoco has agreed to indemnify the Depositary and its agents in
certain circumstances, and the Depositary has agreed to indemnify BP Amoco and
Amoco in certain circumstances. No disclaimer of liability under the Securities
Act is intended by any provision of the Deposit Agreement.
Prior to the issue, execution, delivery, registration, registration of
transfer, split-up or combination of any BP Amoco ADR, the delivery of any
distribution in respect thereof or, subject to the terms and conditions of the
Deposit Agreement, the withdrawal of any Deposited Securities, BP Amoco, the
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Depositary or the Custodian may require of the Holder, the presenter of the BP
Amoco ADR or the depositor of BP Amoco Ordinary Shares: (a) payment with respect
thereto of (i) any stock transfer or other tax or other governmental charge
other than Additional Costs payable by BP Amoco or Amoco, (ii) any stock
transfer or registration fees for the registration of transfers of BP Amoco
Ordinary Shares or other Deposited Securities upon any applicable register and
(iii) any charges of the Depositary upon delivery of BP Amoco ADRs against
deposits of BP Amoco Ordinary Shares and upon withdrawal of Deposited Securities
against surrender of BP Amoco ADRs set forth in "--Charges of Depositary"; (b)
the production of proof satisfactory to it as to (i) the identity and
genuineness of any signature and (ii) such other information, including, without
limitation, information as to citizenship, residence, exchange control approval,
legal or beneficial ownership of any securities, and compliance with applicable
laws, regulations, provisions of or governing Deposited Securities and terms of
the Deposit Agreement, as the Depositary or BP Amoco may deem necessary or
proper; and (c) compliance with such reasonable regulations as the Depositary
and BP Amoco may establish consistent with the Deposit Agreement. The issuance
of BP Amoco ADRs, the acceptance of deposits of BP Amoco Ordinary Shares, the
registration of transfer, split-up or combination of BP Amoco ADRs or, subject
to the terms of the Deposit Agreement, the withdrawal of Deposited Securities
may be suspended, generally or in particular instances, when the BP Amoco ADR
register or any register for Deposited Securities is closed or when any such
action is deemed necessary or advisable by the Depositary or BP Amoco.
REGISTRARS AND CO-TRANSFER AGENTS
If any BP Amoco ADRs or the BP Amoco ADSs evidenced thereby are listed on
one or more stock exchanges in the U.S., the Depositary or its agent will act as
registrar or, upon the written request or with the written approval of BP Amoco,
appoint a registrar, or one or more co-registrars, for registry of the BP Amoco
ADRs in accordance with any requirements of such exchanges.
The Depositary, upon the request or with the approval of BP Amoco, may
appoint one or more co-transfer agents for the purpose of effecting transfers,
combinations and split-ups of BP Amoco ADRs at designated transfer offices on
behalf of the Depositary. In carrying out its functions, a co-transfer agent may
require evidence of authority and compliance with applicable laws and other
requirements by Holders of BP Amoco ADRs or persons entitled thereto and will be
entitled to protection and indemnity to the same extent as the Depositary.
CANADIAN HOLDERS
The co-transfer agent and co-registrar for the BP Amoco ADRs in Canada is
CIBC Mellon Trust at its principal offices in Toronto, Halifax, Montreal,
Winnipeg, Regina, Calgary and Vancouver. Holders who are registered on the books
of the Depositary with an address in Canada will receive cash dividends and
distributions in Canadian dollars, unless any such Holder has filed a timely
election to receive such dividends and distributions in U.S. dollars.
GOVERNING LAW
The Deposit Agreement is governed by the laws of the State of New York.
THE DEPOSITARY
The Depositary is Morgan Guaranty Trust Company of New York, a New York
banking corporation, which has its principal office located in New York, New
York.
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COMPARISON OF RIGHTS OF AMOCO SHAREHOLDERS
AND BP AMOCO SHAREHOLDERS
As a result of the Merger, Amoco Shareholders will receive BP Amoco ADSs,
each of which represents six BP Amoco Ordinary Shares of BP Amoco, a public
limited company incorporated under the laws of England and Wales. The following
is a summary of material differences between the rights of Amoco Shareholders
and the rights of BP Amoco Shareholders arising from the differences between the
corporate laws of Indiana and England, the governing instruments of the two
companies, and as a result of certain LSE requirements. For information as to
where the governing instruments of Amoco and BP (which, upon the Merger becoming
effective and including the amendments proposed for adoption at the BP
Extraordinary General Meeting by the shareholders of BP, will be the governing
instruments of BP Amoco) may be obtained, see "AVAILABLE INFORMATION."
LIMITATIONS ON ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. FEDERAL SECURITIES
LAWS
BP is, and BP Amoco will be, an English company. Most of BP's directors and
officers and certain of the experts named in this Proxy Statement/Prospectus are
residents of the U.K. and not the U.S. In addition, a majority of BP Amoco's
directors and officers will be residents of the U.K. and not the U.S. A large
portion of the assets of BP and of such other persons are and, in the case of BP
Amoco, after completion of the Merger, will be located outside of the U.S.,
although BP Amoco will have very substantial assets in the U.S. following the
completion of the Merger. As a result, it may be difficult for investors to
effect service within the U.S. upon such persons located outside the U.S. or to
enforce in U.S. courts or outside the U.S. judgments obtained against such
persons in U.S. courts, or to enforce in U.S. courts judgments obtained against
such persons in courts in jurisdictions outside the U.S., in each case, in any
action, including actions predicated upon the civil liability provisions of U.S.
securities laws. BP believes that there may be doubt as to the enforceability
against such persons in the U.K., whether in original actions or in actions for
the enforcement of judgments of U.S. courts, of civil liabilities predicated
solely upon the laws of the U.S., including its federal securities laws. Unlike
directors and officers of Amoco presently, directors and officers of BP Amoco, a
foreign private issuer under the Exchange Act, will not be subject to rules
under the Exchange Act that under certain circumstances would require directors
and officers to forfeit to BP Amoco any "short swing" profits realized from
purchases and sales (as determined under the Exchange Act and the rules
thereunder) of BP Amoco equity securities.
Individual shareholders of an English company (including U.S. persons and
depositary shareholders) have the right under English law to bring lawsuits on
behalf of the company in which they are a shareholder, and on their own behalf
against the company, in certain limited circumstances. Except in limited
circumstances, English law does not permit class action lawsuits by
shareholders. See "--Shareholders' Suits."
PROXY STATEMENTS AND REPORTS
Pursuant to Section 14(a) of the Exchange Act and the rules promulgated
thereunder (the "Proxy Rules"), Amoco is required to comply with certain notice
and disclosure requirements relating to the solicitation of proxies in respect
of shareholder meetings. As a foreign private issuer, BP is not subject to the
Proxy Rules. However, BP is, and BP Amoco will be, subject to the Companies Act
and the Listing Rules regulating notices of shareholder meetings. Under the
applicable Companies Act and LSE requirements, notice of a shareholder meeting
is normally accompanied by a shareholder circular containing an explanation of
the purpose of the meeting and the BP Board's recommendations with respect to
actions to be taken. BP Amoco Shareholders will be sent a summary of the BP
Amoco annual report and accounts, although a full BP Amoco annual report and
accounts is available to BP Amoco Shareholders who so request. All such
communications will be sent by BP Amoco to the Depositary at the same time as
they are sent to BP Amoco Shareholders. As a foreign private issuer with
securities listed on the NYSE and registered under Section 12 of the Exchange
Act, BP Amoco will also be required under the Exchange Act to publicly file with
the SEC and the NYSE, as the case may be, annual reports and other information.
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Pursuant to the Merger Agreement, BP has agreed to use all reasonable efforts
(i) within 45 days after the end of its first three fiscal quarters in each of
its fiscal years to file quarterly interim reports containing the principal
financial information contained in Form 10-Q with the SEC under cover of a
Report on Form 6-K, and (ii) within 90 days after the end of each fiscal year to
file with the SEC its Annual Report on Form 20-F.
VOTING RIGHTS
Under Indiana Law, each shareholder is entitled to one vote per share unless
the articles of incorporation provide otherwise. In addition, the articles of
incorporation may provide for class voting. The Amoco Amended Articles provide
that Amoco Shareholders have the right, voting separately by class, to cast one
vote for each share held by that shareholder upon each question or matter in
respect of which, under Indiana Law, such holder is entitled to vote by class.
Shareholders elect directors by a plurality. A quorum consists of a majority of
the shares entitled to vote, unless otherwise required by law. Amoco has only
one class of shares issued and outstanding.
Under English law, the voting rights of shareholders are governed by a
company's articles of association, subject to the statutory right of
shareholders to demand a poll (in the case of BP, a vote where ordinary
shareholders have one vote for each share held and preference shareholders have
two votes for every five shares held) at a general meeting. The BP Amoco
Articles will provide that all special and extraordinary resolutions (as defined
below under "--Special Meeting of Shareholders") shall be conducted on a poll.
The BP Amoco Articles will also provide that ordinary resolutions (as defined
below under "-- Special Meeting of Shareholders") will be conducted on a show of
hands, unless a poll is demanded by the Chairman of the meeting, or by at least
five shareholders present in person or by proxy and having the right to vote at
the meeting, or by any shareholder or shareholders representing at least 10% of
the voting rights of all shareholders having the right to vote at the meeting or
by any shareholder or shareholders holding shares conferring a right to vote at
the meeting on which the aggregate sum paid up on such shares is equal to not
less than 10% of the total sum paid upon all the shares conferring such right.
See "DESCRIPTION OF BP AMOCO ORDINARY SHARES--Voting Rights." Cumulative voting
is essentially unknown under English law. Under English law, two shareholders
present in person constitute a quorum for purposes of a general meeting, unless
the company's articles of association specify otherwise. The BP Amoco Articles
specify that five shareholders present in person or by proxy and entitled to
vote constitute a quorum for a general meeting of shareholders, except in
certain specific circumstances.
See "--Special Meeting of Shareholders" for a discussion of who may call
meetings of shareholders of Amoco and BP Amoco.
Under the terms of the BP Amoco Articles (subject to certain related
amendments proposed for approval at the BP Extraordinary General Meeting) and
the Deposit Agreement, record holders of BP Amoco ADSs may attend, speak and
vote in respect of the BP Amoco Ordinary Shares represented by their BP Amoco
ADSs at any general meeting in person in their capacity as proxies for the
Depositary in respect of the BP Amoco ADSs held by them. Holders of BP Amoco
ADSs may also appoint a representative to act as their agent at a general
meeting. Alternatively, they may appoint the Depositary to vote on their behalf.
See "DESCRIPTION OF BP AMOCO AMERICAN DEPOSITARY SHARES-- Voting of the
Underlying Deposited Securities."
ACTION BY WRITTEN CONSENT
Under Indiana Law and the Amoco Amended Articles, Amoco Shareholders may act
by written consent in lieu of a meeting only if, prior to the action, all
shareholders entitled to vote on the action sign a written consent setting forth
the action.
Under English law, a company's articles of association may provide that a
resolution in writing executed by or on behalf of each shareholder who would
have been entitled to vote upon it if it had been proposed at a general meeting
at which he was present will be as valid and effectual as if it had been passed
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at a general meeting properly convened and held. Such a written resolution
requires the unanimous consent of all such shareholders entitled to attend and
vote. The BP Amoco Articles do not contain such a provision.
SHAREHOLDER PROPOSALS AND SHAREHOLDER NOMINATIONS OF DIRECTORS
Generally, Indiana Law allows only certain matters to be submitted to
shareholders, typically based on prior action by the board of directors. The
SEC, under its rules, allows even precatory resolutions to be included in
management's proxy statement for annual meetings of shareholders if certain
conditions are met, including advance notice to the corporation. The Amoco
By-laws provide that no vote on any shareholder proposal, including nomination
of directors, will be permitted unless proper notice thereof is received by
Amoco not less than 90 or more than 120 days before the next anniversary of
Amoco's previous annual meeting.
Under English law, shareholders may requisition a resolution to be voted on
at a general meeting if (a) the requisition is made by the holders of shares
which represent not less than one twentieth of the voting rights of all
shareholders having at the date of the requisition a right to vote at the
meeting to which the requisition relates; or (b) the requisition is made by not
less than 100 shareholders holding shares on which there has been paid up an
average sum, per shareholder, of not less than L100. The requisition must be
deposited at the company's registered office not less than six weeks before the
general meeting to which it relates. At a general meeting a resolution to
appoint two or more directors by a single resolution may not be proposed unless
a resolution approving that it may be proposed is passed by the general meeting
with no dissenting votes.
SOURCES AND PAYMENT OF DIVIDENDS
Under Indiana Law, the payment of dividends is permitted if, after giving
effect to such action, the corporation is able to pay its debts as they become
due in the ordinary course of business and the corporation's total assets exceed
its total liabilities plus the amount that would be needed for preferential
rights upon dissolution. The board of directors may base its determination that
these requirements have been met on the corporation's financial statements
prepared on the basis of accounting practices and principles that are reasonable
under the circumstances or on a fair valuation or other method that is
reasonable under the circumstances.
Under English law, a company may pay dividends on its ordinary shares,
subject to the prior rights of holders of its preferred shares, only out of its
distributable profits (accumulated, realized profits less accumulated, realized
losses) and not out of share capital, which includes share premiums (paid-in
surplus). Amounts credited to the share premium account (representing the excess
of the consideration for the issue of shares over the aggregate nominal amount
of such shares) may not be paid out as cash dividends but may be used, among
other things, to pay up unissued shares which may then be distributed to
shareholders in proportion to their holdings. In addition, an English public
company such as BP Amoco may make a distribution at any time only if, at that
time, the amount of its net assets is not less than the aggregate of its
called-up (I.E., issued and paid-up) share capital and undistributable reserves.
BP has historically paid four dividends per year. BP Amoco's Board will have the
power under the BP Amoco Articles to pay dividends.
RIGHTS OF PURCHASE AND REDEMPTION
Under Indiana Law, the repurchase and redemption of stock are subject to the
same limitations as payment of dividends. See "--Sources and Payment of
Dividends."
Under English law, a company may issue redeemable shares if authorized by
its articles of association and subject to the conditions stated therein. The BP
Amoco Articles will permit the issue of redeemable shares. A company may
purchase its own shares, including any redeemable shares, if authorized by its
articles of association and provided that such purchase has been previously
approved by an ordinary
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resolution of its shareholders in the case of an on-market purchase (which, in
the case of BP Amoco, means on the LSE only) or a special resolution in other
cases. Such shares may be redeemed or repurchased only if fully paid and, in the
case of public companies, only, subject as provided below, out of distributable
profits or the proceeds of a new issue of shares issued for the purpose of the
repurchase or redemption. When a company purchases its own shares wholly out of
profits, an amount equal to the nominal amount of the shares purchased and
subsequently cancelled must be transferred to the capital redemption reserve,
which is generally treated as paid-up share capital. In addition, any amount
payable by the company on purchase of its shares in excess of the par value
thereof may be paid out of the proceeds of a new issue of shares up to an amount
equal to whichever is the lesser of the aggregate of the original premiums
received by the company on the issue of those shares or the amount of the
company's share premium account as at the time of the repurchase including any
sum transferred to that account in respect of premiums on the new issue. The
LSE, on which the BP Amoco Ordinary Shares will be listed, requires that
purchases within a period of 12 months of 15% or more of a company's share
capital must be made by way of either a tender or partial offer to all
shareholders, and in the case of a tender offer, at a stated maximum or fixed
price. Notice of a tender offer must be given by advertising in two U.K.
national newspapers at least seven days before the offer closes. Purchases
within a period of 12 months below the 15% threshold may be made through the
market in the ordinary way provided that the price is not more than 5% above the
average of the middle market quotations taken from the Daily Official List of
the LSE for the five trading days before the purchase date or by way of an
off-market purchase negotiated with one or more shareholders.
GENERAL MEETING OF SHAREHOLDERS
The Amoco Amended Articles provide that the Amoco Board will determine the
location of annual meetings.
Under the BP Amoco Articles, all general meetings are to be held in England.
See "DESCRIPTION OF BP AMOCO ORDINARY SHARES--General Meetings."
SPECIAL MEETING OF SHAREHOLDERS
The Amoco By-laws provide that special meetings of shareholders can be
called upon notice only by the Chairman of the Board or a majority of the number
of directors elected and qualified. Shareholders are not permitted to call a
special meeting or to require that the Board call a special meeting of
shareholders. Moreover, the business permitted to be conducted at any special
meeting of shareholders is limited to the business specified in the notice of
the meeting.
Under English law, an extraordinary general meeting of shareholders may be
called by the board of directors or (notwithstanding any provision to the
contrary in a company's articles of association) by a requisition of
shareholders holding not less than one-tenth of the paid-up capital of the
company carrying voting rights at general meetings. An ordinary resolution (as
defined below) requires 14 clear days' notice (as defined below), and a majority
vote of those present and voting. An extraordinary resolution (as defined below)
also requires 14 clear days' notice. A special resolution (as defined below)
requires 21 clear days' notice. Both an extraordinary resolution and a special
resolution require a three-quarters majority vote of those present (in person or
by proxy) and voting. General meetings may be called at shorter notice if (a) in
the case of an annual general meeting, all the shareholders who are permitted to
attend and vote agree to the shorter notice; or (b) in the case of an
extraordinary general meeting, a majority of the shareholders holding at least
95% by nominal value of the shares which can be voted at such meeting so agree.
The term "clear days' notice" means calendar days and excludes the date of
mailing, the deemed date of receipt of such notice (which is provided for in the
articles of association when first-class mail is employed with an extra day's
notice required where second-class mail is employed), and the date of the
meeting itself. "Extraordinary resolutions" are relatively unusual and are
confined to certain matters out of the ordinary course of business such as a
proposal to wind up the affairs of the company. "Special resolutions" generally
involve proposals to change the name of the company, to alter its capital
structure,
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to change or amend the rights of shareholders, to permit the company to issue
new shares for cash without applying the shareholders' pre-emptive rights, to
amend the company's objects (purpose) clause in its memorandum of association,
to amend the company's articles of association and to carry out certain other
matters where either the company's articles of association or the Companies Act
prescribe that a "special resolution" is required. All other proposals relating
to the ordinary course of the company's business, such as the election of
directors, would be the subject of an "ordinary resolution."
DISSENTERS' RIGHTS
Under Indiana Law, shareholders who follow prescribed statutory procedures
are entitled to dissent from certain mergers or consolidations and to receive
fair value for their shares in lieu of the consideration they would otherwise
receive in the transaction. There are no dissenters' rights for shareholders of
a company which has shares of stock (or depositary receipts in respect thereof)
registered on a national securities exchange or traded on the NASDAQ National
Market System. Amoco Shares are listed on the NYSE and, therefore, Amoco
Shareholders have no dissenters' rights of appraisal with respect to the Merger.
While English law does not generally provide for dissenters' rights, if a
shareholder applies to a court as described under "--Shareholders' Votes on
Certain Transactions" below, the court may specify such terms for the
acquisition as it considers appropriate.
PRE-EMPTIVE RIGHTS
Unless the articles of incorporation expressly provide otherwise,
shareholders of an Indiana corporation do not have pre-emptive rights. The Amoco
Amended Articles do not provide for pre-emptive rights.
Under English law, the issue for cash of equity securities (securities which
with respect to dividends or capital carry a right to participate beyond a
specified amount) or rights to subscribe for or convert into equity securities
must be offered in the first instance to the existing equity shareholders in
proportion to the respective nominal values of their holdings, unless a special
resolution has been passed in a general meeting of shareholders to the contrary.
As is the custom of many English companies listed on the LSE, at its annual
general meeting each year, BP proposes a resolution to authorize the BP Board to
allot up to a specified amount of share capital otherwise than PRO RATA to its
existing shareholders. See "DESCRIPTION OF BP AMOCO ORDINARY SHARES."
AMENDMENT OF GOVERNING INSTRUMENTS
Under Indiana Law, a corporation's board of directors may propose, and its
shareholders may adopt, one or more amendments to the corporation's articles of
incorporation. The Amoco Amended Articles also provide that amending, altering
or repealing any provision of the Amended Articles relating to the Amoco Board
requires the affirmative vote of holders of at least 75% of the shares entitled
to vote on the amendment to the Amoco Amended Articles. Under Indiana law, the
power to amend or repeal the by-laws of a corporation is vested solely in the
board of directors unless the articles of incorporation provide otherwise. The
Amoco By-laws provide that only the Amoco Board has the power to amend the Amoco
By-laws.
Under English law, the shareholders have the authority to alter, delete,
substitute or add to the objects clause in a company's memorandum of association
and all provisions of its articles of association by a vote of not less than
three-quarters of the shareholders entitled to vote and who do vote, either in
person or by proxy, at a general meeting subject, in the case of certain
alterations to the memorandum of association, to the right of dissenting
shareholders to apply to the courts to cancel the alterations. Under English
law, the board of directors is not authorized to change the memorandum of
association or the articles of association. Amendments affecting the rights of
the holders of any class of shares may, depending on the rights attached to such
class and the nature of the amendments, also require approval of the classes
affected in separate class meetings.
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PREFERRED STOCK AND PREFERENCE STOCK
The Amoco Amended Articles authorize the Amoco Board to establish series of
either voting preferred stock or non-voting preferred stock and to determine,
with respect to any series of voting or non-voting preferred stock, the
designations and the relative rights, preferences, qualifications, limitations
and restrictions (other than voting rights) of each such series by the adoption
and filing in accordance with Indiana Law of an appropriate resolution of the
Amoco Board. Voting preferred stock is entitled to vote with the Amoco Shares
upon each question or matter submitted generally to Amoco Shareholders in
respect of which voting by class or series is not required under Indiana Law.
Both the voting preferred stock and the non-voting preferred stock is entitled
to vote separately as a class upon each question or matter in respect of which
such stock is entitled to vote by class or by series under Indiana Law.
The BP Amoco Articles specify two types of preference shares that have been
or may be issued with rights which entitle the holders, INTER ALIA, to a fixed
cumulative preferential dividend.
STOCK CLASS RIGHTS
Under the BP Amoco Articles, the rights attached to any class of shares may
only be varied with the sanction of an extraordinary resolution passed at a
separate general meeting of the holders of the relevant class of shares. The
quorum for the separate general meetings is specified in the BP Amoco Articles
as being persons holding or representing by proxy one-tenth of the issued shares
of one class (in respect of the two types of preference shares) and one-third of
the issued shares of any other class of share. A poll may be demanded at a
separate class meeting by not less than five members present in person or by
proxy and entitled to vote.
SHAREHOLDERS' VOTES ON CERTAIN TRANSACTIONS
Under Indiana Law, the vote of a majority of the outstanding shares of
capital stock entitled to vote thereon generally is necessary to approve a
merger or other reorganization or a sale of all or substantially all of the
assets of the corporation out of the ordinary course of business. After adoption
by the board of directors, the Merger Agreement must be submitted to the
shareholders for approval.
Under the rules of the NYSE, acquisitions involving substantial security
holders or the issuance of additional shares of common stock of a listed company
aggregating 20% or more of the outstanding shares of common stock require the
approval of the holders of a majority of the shares voting thereon. Other
transactions do not require shareholder approval.
Indiana Code SectionSection 23-1-43-1 ET SEQ. (the "Indiana Business
Combination Law") generally prohibits a "resident domestic corporation" of
Indiana, such as Amoco, from engaging in certain business combinations with an
interested shareholder for a period of five years from the date the person
becomes an interested shareholder unless, before such person became an
interested shareholder, the board of directors of the corporation approved
either the business combination or the purchase of more than 10% of the
corporation's voting securities by the interested shareholder. "Interested
shareholder" is defined as any person that is the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the corporation's outstanding
voting securities, or an affiliate or associate of the corporation who within
the past five years was such a beneficial owner of 10% or more of the voting
power of the corporation's outstanding voting securities. The Indiana Business
Combination Law also provides that a resident domestic corporation may not
engage in a merger or other business combination with an interested shareholder
at any time unless one of three conditions is satisfied: (i) the board of
directors of the corporation had, before such person became an interested
shareholder, approved either the business combination or the purchase of more
than 10% of the corporation's voting securities by the interested shareholder,
(ii) certain "fair price" criteria are satisfied (including a requirement that
the interested shareholder and its affiliates and associates have not purchased
any additional shares after first acquiring 10% of the corporation's voting
securities), or (iii) five years have passed since the interested shareholder
acquired more than 10% of the corporation's voting securities and the business
combination is approved by
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a majority of the "disinterested" voting securities of the corporation. Although
an Indiana corporation may elect, pursuant to its articles of incorporation or
by-laws, not to be governed by this provision, neither the Amoco Amended
Articles nor the Amoco By-laws contain such an election.
Shareholder approval is usually required under the rules of the LSE for an
acquisition or disposition by a listed company, if the net assets of the company
or business to be acquired or disposed of represent 25% or more of the net asset
value of the company or of various other ratios prescribed by the listing rules
of the LSE. Where the size of the acquisition or disposal falls below that
level, certain information may nevertheless be required to be published or
circulated to shareholders. Shareholder approval may also be required for an
acquisition or disposal of assets between a listed company and certain parties
including (i) directors of the company or its subsidiaries, (ii) holders of 10%
of the nominal value of any class of the company's or any holding company's or
subsidiary's shares having the right to vote in all circumstances at general
meetings of the relevant company or (iii) any associate of persons described in
(i) or (ii) above.
The Companies Act provides for schemes of arrangement, which are
arrangements or compromises between a company and (any class of) its
shareholders (or (any class of) its creditors) and are used for certain types of
reconstructions, amalgamations, capital reorganizations or takeovers. They
require the approval at a special meeting of the company convened by order of
the court of a majority in number of the shareholders representing 75% in value
of the capital or debt owed to the class of creditors or shareholders or class
of shareholders present and voting, either in person or by proxy, and the
sanction of the court. Once so approved and sanctioned, all creditors and
shareholders (of the relevant class) are bound by the terms of the scheme; a
dissenting shareholder would have no rights comparable to dissenters' rights
described above. The Companies Act also provides that where a takeover offer (as
defined therein) is made for the shares of a company incorporated in the U.K.
and, within four months of the date of the offer the offeror has, by virtue of
acceptances of the offer, acquired or contracted to acquire not less than
nine-tenths in value of the shares of any class to which the offer relates, the
offeror may, within two months of reaching the nine-tenths level, by notice
require shareholders who do not accept the offer to transfer their shares on the
terms of the offer. A dissenting shareholder may apply to the court within six
weeks of the date on which such notice was given objecting to the transfer or
its proposed terms. The court is unlikely (absent fraud or oppression) to
exercise its discretion to order that the acquisition not take effect, but it
may specify such terms of the transfer as it finds appropriate. A minority
shareholder is also entitled in these circumstances to require the offeror to
acquire his shares on the terms of the offer.
RIGHTS OF INSPECTION
Indiana Law allows any shareholder, upon five days' written notice to the
board of directors, to have the right during the usual hours for business to
inspect the corporation's shareholder list, minutes of board and shareholder
meetings, records of action taken by the board or shareholders without a
meeting, accounting records and other corporate records. With respect to records
of director and shareholder actions, the shareholder list and accounting
records, the shareholder's notice must be made in good faith and for a proper
purpose, and the records must be connected with the shareholder's purpose.
Except when closed in accordance with the provisions of the Companies Act,
the register and index of names of shareholders of an English company may be
inspected during business hours by its shareholders including, in the case of BP
Amoco, holders of BP Amoco ADSs, without charge and by other persons upon
payment of a fee, and copies may be obtained on payment of a fee. The
shareholders of an English public company may, without charge, also inspect the
minutes of meetings of the shareholders during business hours and obtain copies
on payment of a fee. The published annual accounts of a public company are
required to be laid before the shareholders in a general meeting and a
shareholder is entitled to a copy of such accounts. The shareholders of BP Amoco
have no rights to inspect its accounting records or minutes of meetings of its
directors. Certain registers required to be kept by the company are open to
public inspection and service contracts of directors of the company (which have
more than 12 months unexpired or require more than 12 months' notice to
terminate) must be available for inspection during business hours. Rights of
inspection during business hours mean that the company must make the register,
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index or document available for inspection for not less than two hours during
the period between 9:00 a.m. and 5:00 p.m. on each business day. The rules of
the LSE require the service contracts of directors, whether or not they have
less than 12 months unexpired or require more than 12 months' notice to
terminate, to be open for inspection during normal business hours and each
business day at certain times for periods longer than two hours.
STANDARD OF CONDUCT FOR DIRECTORS
Indiana Law requires that directors, in performing their duties, are
obligated as fiduciaries to exercise their business judgment and act in what
they reasonably determine in good faith, after appropriate consideration, to be
the best interests of the corporation. Decisions made on that basis are
protected by the so-called "business judgment rule." In performing their duties,
directors are entitled to rely on information prepared and presented by certain
officers and employees of the corporation, legal counsel, accountants and
certain other professionals as to matters within the person's professional or
expert competence and any committee of the board of directors if the director
reasonably believes the committee merits confidence.
Under English law, directors are under fiduciary duties to act in a
company's best interest. Such duties include the obligation of a director not to
put himself in a position where there is an actual or potential conflict between
his duty to his company and duties to any other person or his personal interests
and the obligation to exercise his powers only in accordance with the articles
of association of the company. In addition, the standard of skill required of
directors is judged on a subjective basis; directors are required to exercise
the degree of competence which could reasonably be expected from someone with
their degree of knowledge and experience. The standard of care required is,
however, judged on an objective basis; directors are expected to exercise the
degree of care which a reasonable person would exercise on his own behalf.
Various duties are also imposed upon directors of a company by English
statute in that they are required to disclose certain information (E.G.,
personal interests in contracts with the company) to the company.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Under Indiana Law, the articles of incorporation of an Indiana corporation
may provide for the classification of the board of directors in order to stagger
the terms of directors. The term "classified board" generally means the
specification of selected board seats for a term of more than one year (but not
more than three years), with different classes of board seats coming up for
election each year. The Amoco Amended Articles and Amoco By-laws provide for a
classified board of directors consisting of three classes of directors, each
class elected for a term of three years.
English law permits a company to provide for the classification of the board
of directors with respect to the time for which directors severally hold office.
The BP Articles provide that there shall not be less than three directors and
not more than eighteen. Pursuant to the Merger Agreement and subject to the
approval of amendments to the BP Articles to be proposed at the BP Extraordinary
General Meeting, the BP Amoco Articles will provide that there shall be not less
than three and not more than twenty-two directors. All directors are subject to
the general corporate law requirements concerning the removal of directors. See
"--Removal of Directors." It is proposed to amend the BP Articles at the BP
Extraordinary General Meeting to provide that all directors who have been in
office for three years or more since they were elected or re-elected shall
retire from office by rotation. Such retired directors are eligible for re-
election. Any director appointed by the directors since the last annual general
meeting is required to retire at the next following annual general meeting and
is then eligible for election.
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REMOVAL OF DIRECTORS
Under Indiana Law, directors may be removed in any manner provided in the
articles of incorporation. In addition, directors may be removed by the
shareholders or directors with or without cause unless the articles of
incorporation specify otherwise. The Amoco Amended Articles provide that
directors may be removed only for cause and only by a vote, at a meeting of
shareholders called for that purpose, of 75% of the outstanding shares entitled
to vote at an election of directors.
Under the Companies Act, shareholders have the right to remove a director
without cause by ordinary resolution of which special notice (28 clear days'
notice) has been given to the company, irrespective of the provisions of the
articles of association of the company or of any service contract the director
has with the company.
VACANCIES ON THE BOARD OF DIRECTORS
Under Indiana Law, the board of directors of a corporation may fill any
vacancy on the board, including vacancies resulting from an increase in the
number of directors. Under the Amoco Amended Articles and the Amoco By-laws, in
case of a vacancy among the directors, the remaining directors, although less
than a quorum, by an affirmative vote of a majority thereof, may fill such
vacancy.
Under English law, shareholders of an English public company may, by
ordinary resolution at a meeting at which any director retires by rotation,
appoint a person who is willing to be a director either to fill a vacancy or
(subject to any maximum provided in the company's articles of association) as an
additional director. The board of directors also has the power to appoint a
director to fill a vacancy or as an additional director, subject to such
conditions as may be set out in the company's articles of association, provided
that such appointment will only last until the next following general meeting of
the company, at which the director concerned may be reelected.
LIABILITY OF DIRECTORS AND OFFICERS
Under Indiana Law, a director is not liable for any action taken as a
director, or any failure to take any action, unless (i) the director has
breached or failed to perform the duties of the director's office in compliance
with Indiana law and (ii) the breach or failure to perform constitutes willful
misconduct or recklessness.
English law does not permit a company to exempt any director or other
officer of the company or any person employed by the company as auditor from any
liability which by virtue of any rule of law would otherwise attach to him in
respect of any negligence, default, breach of duty or breach of trust of which
he may be guilty in relation to the company.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indiana Law permits indemnification of directors, officers, employees and
agents against liabilities and expenses incurred in proceedings if the
individual acted in good faith and reasonably believed (1) in the case of
conduct in his official capacity with the corporation, that his conduct was in
its best interests, and (2) in all other cases, that his conduct was at least
not opposed to its best interests. In the case of any criminal proceeding, the
individual must either have had reasonable cause to believe the conduct was
lawful or had no reasonable cause to believe such individual's conduct was
unlawful. Indiana Law provides that statutory indemnification is not exclusive
of rights to indemnification provided in the articles of incorporation or
by-laws, or through resolutions of its board of directors or shareholders.
The Amoco By-laws provide that to the extent not inconsistent with Indiana
Law, every director or officer will be indemnified against any and all liability
and reasonable expense incurred by him in connection with a claim, action, suit
or proceeding, provided such person is wholly successful and satisfied
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the statutory provisions set forth above. In addition, the Amoco Board may
approve indemnification of persons to the full extent permitted by Indiana Law
on account of past or future transactions.
English law does not permit a company to indemnify a director or an officer
of the company or any person employed by the company as auditor against any
liability which by virtue of any rule of law would otherwise attach to him in
respect of negligence, default, breach of duty or breach of trust in relation to
the company, except liability incurred by such director, officer or auditor in
defending any legal proceedings (whether civil or criminal) in which judgment is
given in his favor or in which he is acquitted or in certain instances where,
although he is liable, a court finds that such director, officer or auditor
acted honestly and reasonably and that having regard to all the circumstances he
ought fairly to be excused and relief is granted by the court. Section 310 of
the Companies Act enables companies to purchase and maintain insurance for
directors, officers and auditors against any liability which would otherwise
attach to them in respect of any negligence, default, breach of duty or breach
of trust in relation to the company. Both Amoco and BP maintain directors' and
officers' insurance.
ADDITIONAL PROVISIONS OF INDIANA LAW
Indiana Law specifically authorizes directors, in considering the best
interest of a corporation, to consider the effects of any action on
shareholders, employees, suppliers, and customers of the corporation and
communities in which offices or other facilities of the corporation are located
and any other factors the directors consider pertinent. Under Indiana Law,
directors are not required to approve a proposed business combination or other
corporate action if the directors determine in good faith that such approval is
not in the best interests of the corporation. In addition, Indiana Law states
that directors are not required to redeem any rights under or render
inapplicable a shareholder rights plan or to take or decline to take any other
action solely because of the effect such action might have on a proposed change
of control of the corporation or the amounts to be paid to shareholders upon
such a change of control. Indiana Law explicitly provides that the different or
higher degree of scrutiny imposed in certain other jurisdictions upon director
actions taken in response to potential changes in control will not apply.
In taking or declining to take any action or in making any recommendation to
a corporation's shareholders with respect to any matter, directors are
authorized under Indiana Law to consider both the short-term and long-term
interests of the corporation as well as interests of other constituencies and
other relevant factors. Any determination made with respect to the foregoing by
a majority of the disinterested directors shall conclusively be presumed to be
valid unless it can be demonstrated that such determination was not made in good
faith.
SHAREHOLDERS' SUITS
Under Indiana Law, a shareholder may institute a lawsuit against one or more
directors, either on his own behalf or derivatively on behalf of the
corporation. A shareholder's derivative complaint must include details of any
demand made on the board of directors, or the reason or reasons why a demand was
not made. The board may (unless the articles of incorporation provide otherwise)
establish a committee of disinterested board members to conduct an investigation
of any action. The committee's determination is conclusive on all shareholders
unless the shareholders can show that the members were not disinterested or the
investigation was not conducted in good faith. If reasonable cause does not
exist for the action, a plaintiff can be ordered to pay the defendant's
reasonable expenses. No discontinuance or settlement of the proceeding may occur
without court approval.
In addition to having the right to institute a lawsuit on behalf of the
company in certain limited circumstances under English law, Section 459 of the
Companies Act permits a shareholder whose name is on the register of
shareholders of the company (including U.S. persons) to apply for a court order
when the company's affairs are being or have been conducted in a manner unfairly
prejudicial to the interests of the shareholders generally or some part of the
shareholders, including at least such shareholder, or when
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any actual or proposed act or omission of the company is or would be so
prejudicial. A court when granting relief has wide discretion, including
authorizing civil proceedings to be brought in the name of the company by a
shareholder on such terms as the court may direct. Except in these limited
respects, English law does not permit class action lawsuits by shareholders on
behalf of the company or on behalf of other shareholders. In order to become a
shareholder and enforce such rights under English law, holders of BP Amoco ADSs
will be required to convert at least one of such BP Amoco ADS into BP Amoco
Ordinary Shares in accordance with the terms of the Deposit Agreement.
CERTAIN PROVISIONS RELATING TO SHARE ACQUISITIONS
Indiana has a control share acquisition statute, which generally provides
that any person or group of persons that acquires the power to vote more than
specified levels (one-fifth, one-third, or a majority) of certain domestic
corporations' shares in a transaction not approved by the corporation's board of
directors will not have the right to vote such shares unless granted voting
rights by the holders of a majority of the votes entitled to be cast, excluding
"interested shares." Interested shares are those shares held by the acquiring
persons and by officers of the corporation and employees of the corporation who
are also directors of the corporation. If the approval of voting power for the
shares is obtained at one of the specified levels, additional shareholder
approvals are required when a shareholder seeks to acquire the power to vote
shares at the next level. In the absence of such approval, the additional shares
acquired by the shareholder may not be voted. The Indiana control share
acquisition statute is applicable only to corporations that have (a) one hundred
or more shareholders; (b) its principal place of business, its principal office,
or substantial assets within Indiana; and (c) either (i) more than ten percent
of its shareholders resident in Indiana; (ii) more than ten percent of its
shares owned by Indiana residents; or (iii) ten thousand shareholders resident
in Indiana. Although an Indiana corporation may elect, pursuant to its articles
of incorporation or by-laws, not to be governed by this provision, neither the
Amoco Amended Articles nor the Amoco By-laws contains such an election.
In the case of a company listed on the LSE, shareholder approval must be
obtained for certain acquisitions or disposals of assets involving directors or
substantial shareholders or their associates. See "--Shareholders' Votes on
Certain Transactions." In addition, takeovers of public companies are regulated
by the City Code, non-statutory rules not enforceable at law but administered by
the Takeover Panel, a body comprising representatives of certain City of London
financial and professional institutions which oversees the conduct of such
takeovers. One of the provisions of the City Code is to the effect that, (i)
when any person acquires, whether by a series of transactions over a period of
time or not, shares which (taken together with shares held or acquired by
persons acting in concert with him) carry 30% or more of the voting rights of a
public company; or (ii) when any person, together with persons acting in concert
with him, holds not less than 30% but not more than 50% of the voting rights and
such person, or any person acting in concert with him, acquires any additional
shares, such person must generally make an offer for all of the equity shares of
the company (whether voting or non-voting) and any class of voting non-equity
shares of the company held by such person or any person acting in concert with
him, for cash, or accompanied by a cash alternative, at not less than the
highest price paid for the relevant shares during the 12 months preceding the
date of the offer.
ANTI-TAKEOVER MEASURES UNDER ENGLISH LAW
Under English law, directors of a company have a fiduciary duty to take only
those actions which are in the interests of the company. Generally speaking,
anti-takeover measures are not actions which under English law fall within this
category. Under the City Code, a company is prohibited from taking any action
without the approval of its shareholders at a general meeting held at any time
after a BONA FIDE offer has been communicated to its board of directors or after
its board of directors has reason to believe that a bona fide offer might be
imminent which action could effectively result in a bona fide offer being
frustrated or in the shareholders being denied an opportunity to decide on its
merits.
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DISCLOSURE OF INTERESTS
Acquirors of Amoco Shares are subject to disclosure requirements under
Section 13(d)(1) of the Exchange Act and Rule 13d-1 thereunder, which provide
that any person who becomes the beneficial owner of more than 5% of the issued
and outstanding Amoco Shares shall, within 10 days after such acquisition, file
a Schedule 13D with the SEC disclosing certain specified information, and send a
copy of the Schedule 13D to Amoco and to the securities exchange on which the
security is traded.
After the Merger, acquirors of BP Amoco ADSs will be required to comply
with, among other things, the provisions of Section 13(d) of the Exchange Act
and Rule 13d-1 thereunder with respect to their attributed ownership of the
underlying BP Amoco Ordinary Shares.
Section 198 of the Companies Act provides that a person (including a company
and other legal entities) who acquires a material interest or becomes aware that
he has acquired a material interest of 3% or more of any class of shares
comprised in a public company's "relevant share capital" (which, for these
purposes, means that company's issued share capital carrying rights to vote in
all circumstances at general meetings of the company) is obliged to notify that
company in writing of his interest within two days following the day on which
the obligation arises. Thereafter, any changes in respect of whole percentage
figure increases or decreases, rounded down to the next whole number or which
reduce such interest below 3%, must be notified in writing to the company. The
BP Amoco Ordinary Shares are "relevant share capital" for this purpose.
In addition, the Companies Act provides that a public company may, by notice
in writing (a "Section 212 Notice"), require a person whom the company knows or
has reasonable cause to believe to be, or to have been at any time during the
three years immediately preceding the date on which the notice is issued,
interested in shares comprised in the company's "relevant share capital" to
confirm that fact or (as the case may be) to indicate whether or not that is the
case, and when he holds or has during the relevant time period held an interest
in such shares, to give such further information as may be required by BP Amoco
relating to his interest and any other interest in the company's shares of which
he is aware. The disclosure must be made within such reasonable period as may be
specified in the relevant notice (which may, depending on the circumstances, be
as short as one or two days).
For the purpose of the above obligations, the interest of a person in shares
means any kind of interest in shares including interests in any shares (i) in
which his spouse, his child or his stepchild is interested, (ii) if a corporate
body is interested in them and either (a) that corporate body is or its
directors are accustomed to act in accordance with that person's directions or
instructions or (b) that person is entitled to control or controls one-third or
more of the voting power of that corporate body or (iii) if another party is
interested in shares and the person and that other party are parties to a
"concert party" agreement under Section 204 of the Companies Act (being an
agreement which provides for one or more parties to it to acquire interests in
shares of a particular public company, which imposes obligations or restrictions
on any one or more of the parties as to the use, retention or disposal of such
interests acquired pursuant to such agreement and any interest in the company's
shares is in fact acquired by any of the parties pursuant to the agreement). The
holding of a BP Amoco ADR or a BP Amoco ADS would generally constitute an
interest in the underlying BP Amoco Ordinary Shares.
When a Section 212 Notice is served by a company on a person who is or was
interested in shares of the company and that person fails to give the company
any information required by the notice within the time specified in the notice,
the company may apply to the court for an order directing that the shares in
question be subject to restrictions prohibiting, INTER ALIA, any transfer of
those shares, the exercise of voting rights in respect of such shares, the issue
of further shares in respect of such shares and, other than in a liquidation,
payments, including dividends, in respect of such shares. Such restrictions may
also void any agreement to transfer such shares. In respect of an interest in
shares that is less than 0.25% of the relevant class of shares in a company
listed on the LSE, the restrictions extend only to a prohibition on attending
and voting at general meetings. In addition, a person who fails to fulfill the
obligations described above is
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subject to criminal penalties in the U.K. Under the BP Amoco Articles, certain
of the powers of imposing restrictions granted to the courts may be imposed by
the BP Amoco Board in certain circumstances.
CERTAIN LONDON STOCK EXCHANGE LISTING REQUIREMENTS
In addition to the provisions of the BP Amoco Articles and the Companies
Act, BP Amoco will be subject to the Listing Rules of the LSE ("Listing Rules")
made under Section 142 of the U.K. Financial Services Act 1986 and in particular
to the continuing obligations under those rules. Among other things, these
require a listed company to notify the LSE of any major new developments in its
sphere of activities which are not public knowledge which may by virtue of the
effect of these developments on its assets and liabilities or financial position
or in the general course of its business, lead to a substantial movement in the
price of its listed securities. The company must ensure equality of treatment
for all holders of listed securities who are in the same position and, when its
securities are listed on more than one stock exchange, must ensure that
equivalent information is made available to the market on each exchange on which
its securities are listed. In addition, the BP Amoco Articles, the general law
and/or the Listing Rules impose obligations on listed companies to send the
following information to shareholders:
(i) details relating to certain acquisitions, disposals, takeovers,
mergers and offers either made by or in respect of the company, and
(ii) an explanatory circular, whenever a general meeting of the
shareholders is convened. If the meeting includes any business other than
routine business at an annual general meeting, it must specify the general
nature of such business (routine business means declarations of dividends,
considering the report and accounts, election of directors in place of those
retiring, and appointment and fixing remuneration of auditors or approving
the manner in which fixed).
In addition to the above requirements, a listed company is required to
notify the LSE of certain notifications received by the company of persons
holding an interest in 3% or more of (any class of) the company's relevant share
capital, any changes on the company's board of directors, any purchase or
redemption by the company of its own equity securities, any directors' interests
(including changes) in the shares or the debentures of their company and changes
in the capital structure of the company. Unaudited half yearly reports of
results for the first six months of any fiscal year and an unaudited preliminary
announcement of results for each full fiscal year must also be published. BP
Amoco will also publicly announce unaudited results for quarterly periods. See
"THE MERGER--Certain Other Effects of the Merger."
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<PAGE>
DIRECTORS AND MANAGEMENT OF BP AMOCO FOLLOWING THE MERGER
DIRECTORS AND EXECUTIVE OFFICERS
Pursuant to the Merger Agreement, at the Effective Time, the BP Amoco Board
will consist of twenty-two directors, nine of whom will be designated by Amoco
and thirteen of whom will be designated by BP. The name, age, current position
and business experience of the twenty-two persons who have been designated to
serve on the BP Amoco Board are set forth below. For a listing of those
individuals who have been designated to serve as executive officers of BP Amoco,
see "THE MERGER AGREEMENT-- Directors and Management of BP Amoco Following the
Merger."
DIRECTORS DESIGNATED BY AMOCO
H. LAURANCE FULLER, age 59, has been a director of Amoco since 1981. He was
elected Chairman and Chief Executive Officer of Amoco in February 1991 and
served as President of Amoco from 1983 through 1995. Mr. Fuller is a director of
Chase Manhattan Corporation, Chase Manhattan Bank, Motorola, Inc., Security
Capital Group and Abbott Laboratories. He also serves on the boards of directors
of Catalyst, the American Petroleum Institute and the Rehabilitation Institute
of Chicago and is a trustee of The Orchestral Association.
WILLIAM G. LOWRIE, age 54, has been a director of Amoco and has served as
President since 1996. He is a director of Bank One Corporation and First
National Bank of Chicago. He is also a board member of Northwestern Memorial
Corporation, Chicago United, the American Petroleum Institute, Junior
Achievement and the Lyric Opera of Chicago. Mr. Lowrie also serves as a member
of the University of Illinois at Chicago Chancellor's Corporate Advisory Board
and is a vice chairman of the Ohio State University Foundation.
RUTH S. BLOCK, age 67, has been a director of Amoco since 1986. Mrs. Block
retired as executive vice president and chief insurance officer of The Equitable
(insurance and financial services) in 1987. She served as chairman and chief
executive officer of the Equitable Variable Life Insurance Company from
1980-1984. She is also a director of Ecolab, Inc. and 39 Alliance Capital Mutual
Funds.
JOHN H. BRYAN, age 62, has been a director of Amoco since 1982. He is
Chairman and Chief Executive Officer of Sara Lee Corporation, a global
manufacturer and retailer of packaged foods and consumer products, and also
serves on the boards of Bank One Corporation, The First National Bank of Chicago
and General Motors Corporation.
ERROLL B. DAVIS, JR., age 54, has been a director of Amoco since 1991. He is
President and Chief Executive Officer and a director of Interstate Energy
Corporation, a regulated utility and environmental, energy, transportation and
real estate development services company. Mr. Davis served as President and
Chief Executive Officer and director of WPL Holdings from 1990-1998 and is a
director of PPG Industries, Inc., the Wisconsin Utilities Association, the
Wisconsin Association of Manufacturers and Commerce, the Iowa Business Council
and the Edison Electric Institute. He is a member of the Board of Trustees of
Carnegie-Mellon University.
RICHARD J. FERRIS, age 62, has been a director of Amoco since 1981. He
retired in 1997 as a Co-chairman and director of Doubletree Corporation, a hotel
property management company. He is a director of The Proctor & Gamble Company
and Candlewood Hotel Corporation. He currently serves on the Executive Committee
of the board of directors of Promus Hotel Corporation.
FLORIS A. MALJERS, age 65, has been a director of Amoco since 1994. He is a
member of the Supervisory Boards of SHV Holding, Vendex N.V. and KLM Royal Dutch
Airlines. Mr. Maljers is Chairman of the Supervisory Boards of Philip
Electronics N.V. and the Amsterdam Concertgebouw N.V. and Chairman of
121
<PAGE>
the Board of Trustees of the Utrecht University Hospital and Governor of the
London-based European Policy Forum.
DR. WALTER E. MASSEY, age 60, has been a director of Amoco since 1993 and
was also on the Amoco Board from 1983 to 1991. Dr. Massey is President of
Morehouse College, and is a director of Motorola, Inc., Bank of America,
McDonald's Corporation and the Mellon Foundation. He has been a member of the
National Science Board and the President's Council of Advisors on Science and
Technology.
MICHAEL H. WILSON, age 60, has been a director of Amoco since 1993. He is
Vice Chairman and a director of RBC Dominion Securities Inc., a Canadian
investment bank, and is also a director of Manufacturers Life Insurance Company,
Rio Algom Limited and several other technology and finance enterprises. Mr.
Wilson is also a member of the board of trustees of The Aspen Institute, the
Institute of the Americas and the advisory committee of the Clarke Institute of
Psychiatry.
CONTINUING BP DIRECTORS
PETER D. SUTHERLAND, age 52, became chairman of BP in May 1997, having
rejoined the BP Board in 1995 as deputy chairman following service as
director-general of the GATT and the World Trade Organization. He is chairman of
Goldman Sachs International and a non-executive director of Telefonaktiebolaget
LM Ericsson, Investor AB and ABB Asea Brown Boveri. Mr. Sutherland will serve as
a co-chairman on the BP Amoco Board.
SIR JOHN BROWNE, age 50, became group chief executive of BP in 1995, having
been a managing director since 1991. He is a non-executive director of
SmithKline Beecham and the Intel Corporation, a trustee of the British Museum
and a member of the supervisory board of Daimler-Benz. He is also Vice President
and a member of the Board of the Prince of Wales Business Leaders Forum.
DR. JOHN G. S. BUCHANAN, age 55, became group chief financial officer and a
managing director of BP in 1996. He was formerly group treasurer and chief
executive, BP Finance. He is a non-executive director of Boots and a member of
the UK Accounting Standards Board.
RODNEY F. CHASE, age 55, is the president and deputy chief executive officer
of BP. He became a managing director of BP in 1992 and is currently chief
executive of BP's refining and marketing business. He is a non-executive
director of the BOC Group.
DR. CHRISTOPHER S. GIBSON-SMITH, age 53, became a managing director of BP in
1997. He is currently responsible for regional management and for BP policies on
ethical conduct, employees, relationships and health, safety and environment.
RICHARD L. OLVER, age 51, became a managing director of BP in January 1998.
He is currently chief executive of BP's exploration and production business. He
is a non-executive director of Reuters Holdings.
BRYAN K. SANDERSON, age 57, became a managing director of BP in 1992. He is
currently chief executive of BP's chemicals business. He is chairman of
Sunderland p.l.c., a non-executive director of British Steel and president of
CEFIC, the European Chemical Industry Council.
CHARLES F. KNIGHT, age 62, became a director of BP in 1987. He is chairman
and chief executive officer of Emerson Electric and is a director of
Anheuser-Busch, SBC Communications Inc. and IBM.
H. MICHAEL P. MILES, age 62, became a director of BP in 1994. He is chairman
of Johnson Matthey and a director of John Swire & Sons, ING Baring Holdings and
BICC.
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<PAGE>
SIR ROBIN NICHOLSON, age 64, became a director of BP in 1987. He is chairman
of Pilkington Optronics, a non-executive director of Rolls-Royce and a member of
the U.K. Government's Council for Science and Technology.
SIR IAN PROSSER, age 55, became a director of BP in 1997. He is chairman and
chief executive of Bass, a non-executive director of Lloyds TSB and vice
president of the council of the Brewers and Licensed Retailers Association.
ROBERT P. WILSON, age 55, became a director of BP in July 1998. He is
chairman of Rio Tinto plc, a non-executive director of Diageo plc and a trustee
of the Camborne School of Mines.
THE LORD WRIGHT OF RICHMOND, age 67, became a director of BP in 1991, having
been Permanent Under-Secretary and Head of the U.K. Diplomatic Service. He is
chairman of the Royal Institute of International Affairs and is a non-executive
director of De La Rue and an advisory director of Unilever.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES OF THE BOARD
The Merger Agreement provides that a majority of the meetings of the BP
Amoco Board will be held in London. The committees of the BP Amoco Board will
initially be the same as the current standing committees of the BP Board, which
are: the Audit Committee, the Chairman's Committee, the Ethics and Environment
Assurance Committee, the Nominations Committee, the Remuneration Committee, the
Results Committee and the Equity Committee. The Audit Committee will review the
application and effectiveness of the policies and processes of BP Amoco on
matters of internal financial policy, control and risk. It will review all group
financial statements and other related documents to be sent to shareholders
prior to their submission to the BP Amoco Board. The auditors and the chief
financial officer will regularly attend the committee's meetings.
The Chairman's Committee will review the structure and effectiveness of BP
Amoco's organization and overall performance of the Chief Executive Officer. It
will also review the succession plans for all executive directors and any other
matters which are appropriate for the non-executive directors to consider.
The Ethics and Environment Assurance Committee will review policies and
processes which bear upon BP Amoco's reputation and its community, customer,
employee, health, safety, environmental and other relationships.
The Remuneration Committee will determine on behalf of the BP Amoco Board
the terms of engagement and remuneration of the Chief Executive Officer and
Managing Directors. It also establishes the principles of the remuneration of
other senior executives.
The Nominations Committee will recommend to the BP Amoco Board candidates
for appointment as directors.
The Results Committee will be authorized on behalf of the BP Amoco Board to
release financial statements and dividend announcements, and the Equity
Committee will exercise the BP Amoco Board's authority to issue and allot
shares.
The initial members and chairmen of these Committees will be determined by
the new BP Amoco Board on the recommendation of the Co-Chairmen.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND FIVE PERCENT SHAREHOLDERS
The directors and executive officers of BP Amoco as a group are expected to
beneficially own less than 1.0% of the issued BP Amoco Ordinary Shares
(including interests therein represented by BP Amoco ADSs) after giving effect
to the Merger. No person is expected to beneficially own more than five per cent
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<PAGE>
of the outstanding BP Amoco Ordinary Shares (including interests therein
represented by BP Amoco ADSs) after giving effect to the Merger.
The following table summarizes as of October 26, 1998, the latest
practicable date prior to the printing of this Proxy Statement/Prospectus, the
stock ownership of the proposed directors of BP Amoco designated by Amoco and
the continuing BP directors, before the Merger and after giving effect to the
Merger (assuming no changes in ownership between the date of this Proxy
Statement/Prospectus and the Effective Time). This stock ownership information
does not include any options to purchase Amoco Shares or options to purchase BP
Amoco Ordinary Shares.
<TABLE>
<CAPTION>
AFTER THE MERGER(A)
-----------------------
BEFORE THE MERGER NUMBER OF
--------------------------------- BP AMOCO NUMBER OF
NUMBER OF BP NUMBER OF ORDINARY BP AMOCO
ORDINARY SHARES AMOCO SHARES(A) SHARES ADSS
--------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
DIRECTORS DESIGNATED BY AMOCO
H.L. Fuller.......................................... -- 171,996(b) -- 113,804
W.G. Lowrie.......................................... -- 85,621(b) -- 56,652
R.S. Block........................................... -- 10,233 -- 6,770
J.H Bryan............................................ -- 12,448 -- 8,236
E.B. Davis, Jr....................................... -- 7,566 -- 5,006
R.J. Ferris.......................................... -- 32,848 -- 21,734
F.A. Maljers......................................... -- 4,224 -- 2,794
Dr. W.E. Massey...................................... -- 5,715 -- 3,781
M.H. Wilson.......................................... -- 5,448 -- 3,604
CONTINUING BP DIRECTORS
P.D. Sutherland...................................... 3,318 -- 3,318 --
Sir John Browne...................................... 422,115(c) -- 398,017 4,016
Dr. J.G.S. Buchanan.................................. 151,702 -- 151,702 --
R.F. Chase........................................... 274,064 -- 274,064 --
Dr. C.S. Gibson-Smith................................ 118,132 -- 118,132 --
C.F. Knight.......................................... 13,851(d) -- -- 2,309
H.M.P. Miles......................................... 4,516 -- 4,516 --
Sir Robin Nicholson.................................. 1,670 -- 1,670 --
R.L. Olver........................................... 115,924 -- 115,924 --
Sir Ian Prosser...................................... 413 -- 413 --
B.K. Sanderson....................................... 269,742 -- 269,742 --
R.P. Wilson.......................................... 2,739 -- 2,739 --
The Lord Wright of Richmond.......................... 1,964 -- 1,964 --
</TABLE>
- ------------------------
NOTES:
(a) Does not include fractional shares, if any.
(b) Includes share equivalents held in the Amoco Stock Fund of the Amoco
Employee Savings Plan as of September 30, 1998.
(c) Includes 24,098 BP Ordinary Shares held in American Depositary Share form.
(d) Held in American Depositary Share form.
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As of October 26, 1998 (the latest practicable date prior to the printing of
this Proxy Statement/ Prospectus) the directors designated by Amoco and the
continuing BP directors owned the following outstanding options on Amoco Shares
and BP Ordinary Shares:
<TABLE>
<CAPTION>
NUMBER OF BP NUMBER OF AMOCO
ORDINARY SHARES SHARES UNDER
UNDER OPTION OPTION
--------------- ----------------
<S> <C> <C>
DIRECTORS DESIGNATED BY AMOCO
H.L. Fuller................................................................... -- 1,860,000(a)
W.G. Lowrie -- 922,000(b)
CONTINUING BP DIRECTORS
Sir John Browne............................................................... 2,984(c) --
Dr. J.G.S. Buchanan........................................................... 48,000(d) --
11,600(d) --
1,071(c) --
1,490(c) --
928 --
R.F. Chase.................................................................... 4,662(c) --
R.L. Olver.................................................................... 741(e) --
2,235(c) --
1,193(c) --
B.K. Sanderson................................................................ 2,142(c) --
932(c) --
1,193(c) --
</TABLE>
- ------------------------
NOTES:
(a) Includes 1,420,000 currently exercisable options.
(b) Includes 687,000 currently exercisable options.
(c) Options granted under the savings related share option schemes. All other
options were granted under the BP Group Executive Share Option Scheme 1984.
(d) Dr. J.G.S. Buchanan has notified BP of his intention to exercise his options
to acquire 59,600 BP Ordinary Shares in the period between February 16, 1999
and March 8, 1999.
(e) Options granted under the BP Group Overseas Share Option Scheme
(Supplemental) 1988.
As of October 26, 1998, the directors and executive officers of Amoco held
options to purchase an aggregate of 6,069,200 Amoco Shares, of which 4,430,200
are currently exercisable.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The BP Amoco Board will rely on its Remuneration Committee, which will be
composed of non-executive directors, to determine the form and amount of
compensation to be paid to BP Amoco's executive directors, subject to the
Employment Agreements which Amoco has entered into with certain Amoco officers.
See "THE MERGER--Interests of Certain Persons in the Merger."
For information regarding the compensation paid to certain executive
officers of BP, see the 1997 BP 20-F. Since December 31, 1997, BP has not
entered into or amended any service agreements with its directors or officers.
BP has agreed that Dr. J.G.S. Buchanan's service agreement should not expire
automatically on September 30, 2000, unless terminated on 12 months' notice from
BP Amoco. On October 21, 1998, he signed a revised service agreement
incorporating this change,effective as of October 6, 1998.
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<PAGE>
FEES AND EXPENSES
Pursuant to the Merger Agreement, Amoco and BP have agreed to each pay half
of certain expenses. See "THE MERGER AGREEMENT--Expenses."
Estimated fees and expenses incurred or to be incurred by Amoco in
connection with the Merger are approximately $90 million.
Estimated fees and expenses incurred or to be incurred by BP in connection
with the Merger are approximately $80 million.
All fees or expenses will be furnished from available general funds at Amoco
and BP or from borrowings of Amoco or BP, which may be made under existing
short-term credit facilities or may take the form of larger indebtedness on
terms to be determined, or any combination thereof.
Neither Amoco nor BP will pay any fees or commissions to any broker or
dealer or any other person (other than Morgan Stanley, J.P. Morgan, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Cazenove & Co., D.F. King & Co. and
the Exchange Agent) for soliciting Amoco Shares pursuant to the Merger. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Amoco for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers.
VALIDITY OF SECURITIES
The validity under English law of the BP Amoco Ordinary Shares to be issued
pursuant to the Merger will be passed upon for BP by Peter B.P. Bevan, Group
General Counsel of BP. As of the date of this Proxy Statement/Prospectus, Mr.
Bevan owned less than 0.1% of BP Ordinary Shares outstanding (including options
representing certain rights to purchase such shares).
EXPERTS
The consolidated financial statements of Amoco Corporation incorporated in
this Proxy Statement/ Prospectus by reference to the 1997 Amoco 10-K have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of BP as of December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997
incorporated in this Proxy Statement/Prospectus by reference to the 1997 BP Form
20-F, as restated and presented in the Form 6-K filed on October 23, 1998 and
incorporated herein by reference, have been audited by Ernst & Young,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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<PAGE>
U.K. LISTING PARTICULARS AND CIRCULAR
A copy of a document comprising the U.K. listing particulars relating to BP
Amoco in accordance with the Listing Rules will be delivered to the Registrar of
Companies in England and Wales for registration and will be available for
inspection at the offices of Linklaters & Paines, One Silk Street, London, EC2Y
8HQ, England, until the date on which the Effective Time occurs. Summary listing
particulars are attached as Appendix D to this Proxy Statement/Prospectus.
Neither the listing particulars nor the documents listed in the summary listing
particulars as available for inspection form part of, or are incorporated into,
this Proxy Statement/Prospectus, except to the extent specifically provided
herein. In addition, BP is convening the BP Extraordinary General Meeting and
the Separate Class Meeting, and distributing to its shareholders a Circular
relating to the Merger, a copy of which will also be available for inspection at
the offices of Linklaters & Paines until the date on which the Effective Time
occurs and at the BP Extraordinary General Meeting. The contents of such
Circular do not form part of, nor are they incorporated into, this Proxy
Statement/Prospectus.
FUTURE SHAREHOLDER PROPOSALS
If the Merger is consummated as expected, Amoco will not hold an annual
meeting of Amoco Shareholders (the "Annual Meeting") in 1999. If the Merger
Agreement is not approved by Amoco Shareholders or is not consummated for any
other reason, Amoco will hold a 1999 Annual Meeting. Shareholder proposals
submitted for inclusion in the proxy statement for the 1999 Annual Meeting must
comply with the requirements of the SEC. A shareholder proposal generally will
be voted on only if the shareholder or the shareholder's representative attends
the 1999 Annual Meeting and presents the proposal. In the event that such a
meeting is held, shareholder proposals submitted for inclusion in the proxy
statement for the 1999 Annual Meeting must be received no later than November
16, 1998, at Amoco's executive offices to the attention of:
Stephen F. Gates
Vice President, General Counsel
and Corporate Secretary
Amoco Corporation
Mail Code 2106A
200 E. Randolph Drive
Chicago, IL 60601-7125
Any other proposal which a shareholder desires to be presented for action at
an Annual Meeting must be received by the Chairman or the Corporate Secretary no
more than 120 and no fewer than 90 days prior to the relevant meeting date and
must include a brief description of the business desired to be brought before
the meeting, the shareholder's name and address, evidence of share ownership,
the number of shares owned and disclosure of any interest or benefit which the
proponent may have in the matter proposed that is not shared with the
shareholders at large.
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<PAGE>
DEFINED TERMS INDEX
<TABLE>
<CAPTION>
TERMS PAGE
- ------------------------------------------ ---------
<S> <C>
1997 Amoco 10-K........................... vii
1997 BP 20-F.............................. vii
Acquisition Proposal...................... 57
Additional Costs.......................... 105
American Depositary Share................. 1
Amoco..................................... Cover
Amoco Amended Articles.................... 5
Amoco Board............................... Cover
Amoco By-laws............................. 11
Amoco Certificates........................ 54
Amoco Failure to Reconfirm................ 63
Amoco Shareholders........................ Cover
Amoco Shares.............................. Cover
Amoco Stock Options....................... Cover
Amoco Tax Opinion......................... 47
Amoco Termination Amount.................. 64
Amoco Withdrawal.......................... 63
Annual Meeting............................ 127
Antitrust Division........................ 9
Bearer Shares............................. 54
BP........................................ Cover
BP ADSs................................... Cover
BP Amoco.................................. Cover
BP Amoco ADRs............................. 54
BP Amoco ADSs............................. Cover
BP Amoco Articles......................... 10
BP Amoco Board............................ 26
BP Amoco Corporation...................... 39
BP Amoco Ordinary Shares.................. Cover
BP Amoco Share Option Plan................ 40
BP Amoco Shareholders..................... 10
BP Board.................................. 5
BP Extraordinary General Meeting.......... 26
BP Failure to Reconfirm................... 63
BP Ordinary Shares........................ Cover
BP Preference Shares...................... 59
BP Requisite Resolution................... 27
BP Termination Amount..................... 64
BP Withdrawal............................. 63
City Code................................. 57
CFIUS..................................... 45
classified board.......................... 115
clear days' notice........................ 111
Closing................................... 53
Closing Date.............................. 53
Code...................................... Cover
Companies Act............................. 96
CREST..................................... 95
<CAPTION>
TERMS PAGE
- ------------------------------------------ ---------
<S> <C>
Custodian................................. 99
Delivery Order............................ 100
Deposit Agreement......................... 99
Depositary................................ 54
Depositary's Office....................... 99
Deposited Securities...................... 99
DRS....................................... 54
Effective Time............................ 53
Eligible U.S. Holder...................... 47
Employment Agreements..................... 41
EPS....................................... 35
Estate Tax Treaty......................... 51
EU........................................ 9
Exchange Act.............................. vi
Exchange Agent............................ 54
Exchange Ratio............................ Cover
Exchange Shares........................... 105
Excluded Amoco Shares..................... 5
Exon-Florio............................... 45
extraordinary resolutions................. 111
Exxon..................................... 31
FIFO...................................... 13
FTC....................................... 9
Holders................................... 99
HSR Act................................... 45
IBES...................................... 35
IRS....................................... 40
Indiana Business Combination Law.......... 113
Indiana Law............................... Cover
interested shareholder.................... 113
J.P. Morgan............................... 6
LIFO...................................... 13
LSE....................................... Cover
Listing Rules............................. 120
market/offer price........................ 66
Material Adverse Effect................... 60
Maximum Option Price...................... 67
Merger.................................... Cover
Merger Agreement.......................... Cover
Merger Consideration...................... 53
Merger Sub................................ Cover
Merger Sub Common Stock................... 53
Mid-Majors................................ 34
MMC....................................... 59
Morgan Stanley............................ 5
NGL....................................... 72
Nominee................................... 54
Nominee Agreement......................... 53
</TABLE>
128
<PAGE>
<TABLE>
<CAPTION>
TERMS PAGE
- ------------------------------------------ ---------
<S> <C>
Noon Buying Rate.......................... viii
Notification and Report Form.............. 45
Notice Date............................... 66
Notional Total Profit..................... 67
NYSE...................................... Cover
NYSE Composite Tape....................... Cover
Option.................................... 65
Option Closing Date....................... 66
Option Price.............................. 65
Option Shares............................. 65
Order..................................... 60
ordinary resolution....................... 112
P/E multiple.............................. 38
Proxy Rules............................... 108
Record Date............................... 4
Redenomination............................ Cover
Registration Statements................... vi
Regulation................................ 59
Repurchase Notice......................... 66
Required Consents......................... 59
S&P 500................................... 34
SDRT...................................... 52
SEC....................................... vi
Section 212 Notice........................ 119
<CAPTION>
TERMS PAGE
- ------------------------------------------ ---------
<S> <C>
Section 80 Amount......................... 97
Section 89 Amount......................... 97
Securities Act............................ vi
Separate Class Meeting.................... 26
Service Contracts......................... 40
Shell..................................... 31
Shell T&T................................. 38
SOP....................................... 16
Special Meeting........................... Cover
special resolutions....................... 111
Stock Option Agreement.................... 8
Superior Proposal......................... 57
Surviving Corporation..................... 53
Takeover Panel............................ 57
Termination Date.......................... 63
Total Profit.............................. 66
Treaty.................................... 47
Triggering Event.......................... 65
U.K....................................... viii
U.K. GAAP................................. 6
U.K. Withholding Tax...................... 51
U.S....................................... viii
U.S. GAAP................................. 6
U.S. Holder............................... 47
</TABLE>
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<PAGE>
APPENDIX A
AGREEMENT AND PLAN
OF MERGER
AMONG
THE BRITISH PETROLEUM COMPANY P.L.C.,
AMOCO CORPORATION
AND
EAGLE HOLDINGS, INC.
DATED AS OF AUGUST 11, 1998,
AS AMENDED AS OF OCTOBER 22, 1998
<PAGE>
This AGREEMENT AND PLAN OF MERGER, dated as of August 11, 1998 , as amended
as of October 22, 1998 (this "AGREEMENT"), among THE BRITISH PETROLEUM COMPANY
p.l.c. ("BP"), an English public limited company, AMOCO CORPORATION, an Indiana
corporation ("AMOCO"), and EAGLE HOLDINGS, INC., an Indiana corporation and a
direct, wholly owned subsidiary of BP ("MERGER SUB" and, together with Amoco,
the "CONSTITUENT CORPORATIONS");
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of each of Amoco, BP and Merger
Sub (each, a "PARTY" and, together, the "PARTIES") have each determined that it
is in the best interest of their respective companies and shareholders to
combine their respective businesses as BP Amoco p.l.c. to conduct their
operations on a unified basis, under the governance arrangements set forth
herein;
WHEREAS, in furtherance of such combination, the respective Boards of
Directors of Amoco and Merger Sub have each adopted this Agreement and approved
the merger (the "MERGER") of Merger Sub with and into Amoco in accordance with
the Indiana Business Corporation Law, as amended (the "BCL"), and upon the terms
and subject to the conditions set forth herein;
WHEREAS, it is intended that, for U.S. federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "CODE");
WHEREAS, it is intended that, for financial accounting purposes, the Merger
shall be accounted for as a "pooling of interests" under generally accepted
accounting principles in the United States ("U.S. GAAP"), and using merger
accounting methods under generally accepted accounting principles in the United
Kingdom ("U.K. GAAP");
WHEREAS, as an inducement to the willingness of BP to enter into this
Agreement, the Board of Directors of Amoco has approved the grant to BP of an
option to purchase shares of common stock, without par value, of Amoco ("AMOCO
COMMON SHARES") pursuant to a stock option agreement, dated as of August 11,
1998, between Amoco and BP (the "STOCK OPTION AGREEMENT"), and each of Amoco and
BP has duly authorized, executed and delivered the Stock Option Agreement as of
August 11, 1998; and
WHEREAS, Amoco and BP desire to make certain representations, warranties,
covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE CLOSING AND THE MERGER
1.1. CLOSING. The closing of the Merger (the "CLOSING") shall take place
(i) at 9:00 A.M. (New York time) at the offices of Sullivan & Cromwell, 125
Broad Street, New York, New York, on the third business day after the day on
which the last to be fulfilled or waived of the conditions set forth in Article
IV (other than those conditions that by their nature are to be fulfilled at the
Closing, but subject to the fulfillment or waiver of such conditions) shall be
fulfilled or waived in accordance with this Agreement or (ii) at such other
places and time and/or on such other date as Amoco and BP may agree in writing
(the "CLOSING DATE"). It is the intention of the Parties to target December 31,
1998 as the Closing Date, based on the currently anticipated timetable for the
Merger.
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1.2. THE MERGER.
1.2.1. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.2.2), Merger Sub
shall be merged with and into Amoco in accordance with the BCL, whereupon
the separate existence of Merger Sub shall cease, and Amoco shall be the
surviving corporation in the Merger (the "SURVIVING CORPORATION").
1.2.2. As soon as practicable after satisfaction or waiver (to the
extent herein permitted) of the conditions to the obligations of the Parties
to consummate the Merger set forth in Article IV, Amoco and Merger Sub will
file articles of merger (the "ARTICLES OF MERGER") with the Secretary of
State of the State of Indiana and make all other filings or recordings
required by applicable law in connection with the Merger. The Merger shall
become effective at such time as the Articles of Merger are duly filed with
the Secretary of State of the State of Indiana or at such later time as is
specified in the Articles of Merger (the "EFFECTIVE TIME").
1.2.3. From and after the Effective Time, title to all real estate and
other property owned by each of the Constituent Corporations shall be vested
in the Surviving Corporation and the Surviving Corporation shall have all
liabilities of the Constituent Corporations, all as provided under the BCL.
1.3. CONVERSION AND EXCHANGE OF SHARES. At the Effective Time:
1.3.1. Each Amoco Common Share owned by BP or any Subsidiary (as defined
in Section 2.1.1) of BP or Amoco immediately prior to the Effective Time
(each, an "EXCLUDED AMOCO SHARE") shall, by virtue of the Merger, and
without any action on the part of the holder thereof, no longer be
outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
1.3.2. Each Amoco Common Share outstanding immediately prior to the
Effective Time, other than Excluded Amoco Shares, shall be converted into
and shall be canceled in exchange for the right to receive 3.97 (the
"EXCHANGE RATIO") ordinary shares of BP ("BP ORDINARY SHARES"), of nominal
value 25p each or, if the redenomination of BP's ordinary share capital from
pounds sterling into U.S. dollars (the "REDENOMINATION") is approved by the
requisite vote of shareholders of BP at the meetings convened for such
purpose as contemplated by Section 3.4 and otherwise becomes effective,
US$0.50 each, which shall be delivered to the holders of Amoco Common Shares
(other than Excluded Amoco Shares) in the form of American depositary
shares, each representing the right to receive six BP Ordinary Shares (the
"BP DEPOSITARY SHARES") (the "MERGER CONSIDERATION"). The BP Depositary
Shares may be evidenced by one or more receipts ("BP ADRS") issued in
accordance with the Amended and Restated Deposit Agreement, dated as of
August 1, 1992, among BP, Morgan Guaranty Trust Company of New York, as
Depositary (the "DEPOSITARY"), and the holders from time to time of BP ADRs,
as amended and restated as of the date on which the Effective Time occurs
(the "Deposit Agreement"). At the Effective Time, all Amoco Common Shares
shall no longer be outstanding, shall be canceled and retired and shall
cease to exist, and each certificate (a "CERTIFICATE") formerly representing
any of such Amoco Common Shares (other than Excluded Amoco Shares) and each
uncertificated Amoco Common Share (other than Excluded Amoco Shares) held
through the electronic or "direct registration system" (the "DRS") shall
thereafter represent only the right to the Merger Consideration and the
right, if any, to receive pursuant to Section 1.6 cash in lieu of fractional
BP Depositary Shares, and any distribution or dividend pursuant to Section
1.4.6, in each case without interest. The BP Ordinary Shares issued in
accordance with Section 1.4.1, and the BP Depositary Shares issued as
provided in this Section 1.3.2 shall be of the same class and shall have the
same rights as the currently outstanding BP Ordinary Shares and the
currently outstanding BP Depositary Shares, respectively (other than in
relation to the nominal value of all BP Ordinary Shares, which may be US
$0.50 each, provided that the Redenomination takes effect). Following the
Closing, BP and Amoco shall be jointly and severally liable for all stamp
duties, stamp duty reserve tax and other similar taxes and similar levies
imposed in connection with the issuance or creation of the BP
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Depositary Shares constituting the Merger Consideration and any BP ADRs in
connection therewith and any other United Kingdom stamp duty, stamp duty
reserve tax or other similar United Kingdom governmental charge (or any
interest or penalties thereon) that may be payable by BP and Amoco pursuant
to the Deposit Agreement.
1.3.3. Each share of common stock of Merger Sub, no par value ("MERGER
SUB COMMON STOCK"), outstanding immediately prior to the Effective Time
shall be canceled and, in consideration for the issuance, in accordance with
Section 1.4.1, of the BP Ordinary Shares referred to in Section 1.3.4 below,
the Surviving Corporation shall issue to BP (or the shareholder(s) of Merger
Sub, if other than BP) at the Effective Time such number of shares of common
stock as is equal to the number of shares of Merger Sub Common Stock with
the same rights, powers and privileges as the Amoco Common Shares and shall
constitute the only outstanding shares of common stock of the Surviving
Corporation.
1.3.4. In consideration of the issue to BP (or the shareholder(s) of
Merger Sub, if other than BP) by the Surviving Corporation of shares of
common stock of the Surviving Corporation pursuant to Section 1.3.3 hereof,
BP shall issue, in accordance with Section 1.4.1, such number of BP Ordinary
Shares as is equal to the number of Amoco Common Shares outstanding as of
the Effective Time (other than the Excluded Amoco Shares) multiplied by the
Exchange Ratio to permit the issuance of BP Depositary Shares to the holders
of such Amoco Common Shares for the purpose of giving effect to the delivery
of the Merger Consideration referred to in Section 1.3.2 of this Agreement.
1.3.5. In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, Amoco changes the number of Amoco Common
Shares, or BP changes the number of BP Ordinary Shares, issued and
outstanding as a result of a stock split, reverse stock split, stock
dividend, recapitalization, redenomination of share capital (other than the
Redenomination) or other similar transaction, the Exchange Ratio and other
items dependent thereon shall be appropriately adjusted.
1.4. SURRENDER AND PAYMENT.
1.4.1. Prior to the Effective Time, BP shall appoint Boston EquiServe
Limited Partnership or, failing Boston EquiServe Limited Partnership,
another agent acceptable to Amoco as exchange agent (the "EXCHANGE AGENT")
for the purpose of exchanging Certificates or Amoco Common Shares held
through DRS for BP Depositary Shares. Promptly after the Effective Time, the
Surviving Corporation will send, or will cause the Exchange Agent to send,
to each holder of record as of the Effective Time of Amoco Common Shares
(other than holders of Excluded Amoco Shares and Amoco Shareholders holding
Amoco Common Shares only through the DRS) a letter of transmittal, in such
form as Amoco and BP may reasonably agree, for use in effecting delivery of
Amoco Common Shares to the Exchange Agent. Amoco shall act as agent for each
holder of record as of the Effective Time of Amoco Common Shares (other than
Excluded Amoco Shares) (each, a "RECORD HOLDER") and shall enter into an
agreement (the "NOMINEE AGREEMENT") with BP and Boston EquiServe Limited
Partnership. BP shall issue the BP Ordinary Shares referred to in Section
1.3.4 in registered form to Boston EquiServe Limited Partnership or its
nominee (the "NOMINEE"), as nominee and agent for and on behalf of the
Record Holders for the issuance of BP Depositary Shares in accordance with
this Article I, subject to the terms and conditions of this Agreement and
the Nominee Agreement. If the Redenomination shall take effect immediately
prior to the Effective Time, then, unless the directors of BP shall
determine not to issue Bearer Shares, the Nominee shall, as agent for the
Record Holders, instruct BP, and BP shall, strike the name of the Nominee
from the BP Shareholders' register, create share warrants to bearer ("BEARER
SHARES") in respect of such BP Ordinary Shares and deliver the Bearer Shares
to the Nominee, as agent as aforesaid. Regardless of whether the
Redenomination takes effect and the Bearer Shares are delivered to the
Nominee, the BP Ordinary Shares in registered form or the Bearer Shares, as
the case may be, held by the Nominee shall be deposited by the Nominee or on
its behalf with the Depositary (or as it may direct) as and when required
for the issuance of BP Depositary Shares in accordance with this Article I.
To the extent required, the
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Exchange Agent will requisition from the Depositary, from time to time, such
number of BP Depositary Shares, in such denominations as the Exchange Agent
shall specify, as are issuable in respect of Amoco Common Shares properly
delivered to the Exchange Agent or held in the DRS.
1.4.2. Each holder of any Amoco Common Shares that have been converted
into a right to receive the consideration set forth in Section 1.3.2 shall,
upon surrender to the Exchange Agent of a Certificate or Certificates,
together with a properly completed letter of transmittal covering the Amoco
Common Shares represented by such Certificate or Certificates, or, in the
case of Amoco shareholders holding Amoco Common Shares only through the DRS,
without further action, be entitled to receive (i) the number of whole BP
Depositary Shares included in the Merger Consideration in respect of such
Amoco Common Shares, and (ii) a check in the amount (after giving effect to
any required tax withholdings) of (A) any cash in lieu of fractional shares
to be paid pursuant to Section 1.6, plus (B) any cash dividends or other
distributions that such holder has the right to receive pursuant to Section
1.4.6. Until so surrendered, each Certificate shall, after the Effective
Time, represent for all purposes only the right to receive the number of
whole BP Depositary Shares included in the Merger Consideration and the
applicable amounts provided in the foregoing clause (ii).
1.4.3. If any BP Depositary Shares are to be issued to a person other
than the registered holder of the Amoco Common Shares represented by a
Certificate or Certificates surrendered with respect thereto, it shall be a
condition to such issue that the Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such issue shall pay to the Exchange Agent any
transfer or other taxes required as a result of such issue to a person other
than the registered holder of such Amoco Common Shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
1.4.4. After the close of the stock transfer books of Amoco on the day
prior to the Effective Time, there shall be no further registration of
transfers of Amoco Common Shares that were outstanding prior to the
Effective Time. After the Effective Time, Certificates presented to the
Surviving Corporation for transfer shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth,
in this Article I.
1.4.5. Any BP Ordinary Shares issued and delivered in respect of Amoco
Common Shares pursuant to this Article I and any cash in lieu of fractional
interests in BP Depositary Shares to be paid pursuant to Section 1.6, plus
any cash dividend or other distribution that such holder has the right to
receive pursuant to Section 1.4.6, that remains unclaimed by any holder of
Amoco Common Shares six months after the Effective Date shall be held by the
Exchange Agent (or a successor agent appointed by BP) or shall be delivered
to the Depositary upon the instruction of BP and held by the Depositary, in
either case subject to the instruction of BP in an account or accounts
designated for the purpose. BP shall not be liable to any holder of Amoco
Common Shares for any securities delivered or any amount paid by the
Depositary, the Exchange Agent or its nominee, as the case may be, to a
public official pursuant to applicable abandoned property laws. Any cash
remaining unclaimed by holders of Amoco Common Shares three years after the
Effective Time (or such earlier date immediately prior to such time as such
cash would otherwise escheat to or become property of any governmental
entity or as is otherwise provided by applicable Law (as defined herein))
shall, to the extent permitted by applicable Law, become the property of the
Surviving Corporation or BP, as BP may determine.
1.4.6. No dividends, interest or other distributions with respect to
securities of BP or the Surviving Corporation issuable with respect to Amoco
Common Shares shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered as provided in this Section. Subject
to the effect of applicable Law, upon such surrender, there shall be issued
and/or paid to the holder of the BP Depositary Shares issued in exchange
therefor, without interest, (A) at the time of
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such surrender, the dividends or other distributions payable with respect to
such BP Depositary Shares with a record date after the Effective Time and a
payment date on or prior to the date of such surrender and not previously
paid and (B) at the appropriate payment date, the dividends or other
distributions payable with respect to such BP Depositary Shares with a
record date after the Effective Time but with a payment date subsequent to
such surrender. For purposes of dividends or other distributions in respect
of BP Depositary Shares, all BP Depositary Shares to be issued pursuant to
the Merger shall be deemed issued and outstanding as of the Effective Time.
1.5. AMOCO STOCK OPTIONS.
1.5.1. At the Effective Time, all employee and director stock options to
purchase Amoco Common Shares (each, an "AMOCO STOCK OPTION") which are then
outstanding and unexercised shall cease to represent a right to acquire
Amoco Common Shares and shall be converted automatically into options to
purchase BP Ordinary Shares, and BP shall assume each such Amoco Stock
Option subject to the terms of any of the Amoco Stock Plans (as defined in
Section 2.1.2.1), and the agreements evidencing grants thereunder; PROVIDED,
HOWEVER, that from and after the Effective Time, (i) the number of BP
Ordinary Shares purchasable upon exercise of each such Amoco Stock Option
shall be equal to the number of Amoco Common Shares that were purchasable
under such Amoco Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, subject to adjustment as provided in
Section 1.3.5, and rounding down to the nearest whole BP Ordinary Share (or,
if issued in the form of BP Depositary Shares, the nearest whole BP
Depositary Share), and (ii) the per BP Ordinary Share exercise price under
each such Amoco Stock Option shall be obtained by dividing the per share
exercise price of each such Amoco Stock Option by the Exchange Ratio,
subject to adjustment as provided in Section 1.3.5, and rounding down to the
nearest cent. Notwithstanding the foregoing, the number of BP Ordinary
Shares and the per BP Ordinary Share exercise price of each Amoco Stock
Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. Accordingly, with respect to any
incentive stock options, fractional BP Ordinary Shares shall be rounded down
to the nearest whole number of BP Ordinary Shares (or, if applicable, BP
Depositary Shares) and where necessary the per BP Ordinary Share exercise
price shall be rounded up to the nearest cent. BP Ordinary Shares to be
issued upon the exercise of Amoco Stock Options, shall, at the election of
the holders of such Amoco Stock Options, be delivered in the form of BP
Depositary Shares through the direct registration system maintained by the
Depositary or evidenced by BP ADRs.
1.5.2. Prior to the Effective Time, BP shall make available for
issuance in accordance with Section 1.4.1 the number of BP Ordinary Shares
necessary to satisfy BP's obligations under Section 1.5.1. At the Effective
Time, BP shall file with the Securities and Exchange Commission (the "SEC")
a registration statement on an appropriate form or a post-effective
amendment to a previously filed registration statement under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), with respect to the BP
Ordinary Shares and the BP Depositary Shares subject to options issued
pursuant to Section 1.5.1, and shall use its best reasonable efforts to
maintain the current status of the prospectus contained therein, as well as
comply with any applicable state securities or "blue sky" laws, for so long
as such options remain outstanding.
1.6. FRACTIONAL BP DEPOSITARY SHARES. No fraction of a BP Depositary Share
will be issued, but in lieu thereof each holder of Amoco Common Shares otherwise
entitled to receive a fraction of a BP Depositary Share will be entitled to
receive in accordance with the provisions of this Section 1.6 from the Exchange
Agent a cash payment in lieu of such fraction of a BP Depositary Share
representing such holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent on behalf of all such holders of the aggregate of the
fractions of BP Depositary Shares which would otherwise be issued ("EXCESS
SHARES"). The sale of the Excess Shares by the Exchange Agent shall be executed
on the New York Stock Exchange, Inc. (the "NYSE") through one or more member
firms of the NYSE and shall be
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executed in round lots to the extent practicable. Until the net proceeds of such
sale or sales have been distributed to the holders of Amoco Common Shares, the
Exchange Agent will hold such proceeds in trust for the holders of Amoco Common
Shares (the "COMMON SHARES TRUST"). BP shall pay all commissions, transfer taxes
and other out-of-pocket transaction costs, including the expenses and
compensation, of the Exchange Agent incurred in connection with such sale of the
Excess Shares. The Exchange Agent shall determine the portion of the Common
Shares Trust to which each holder of Amoco Common Shares shall be entitled, if
any, by multiplying the amount of the aggregate net proceeds comprising the
Common Shares Trust by a fraction the numerator of which is the amount of the
fractional BP Depositary Share interest to which such holder of Amoco Common
Shares is entitled and the denominator of which is the aggregate amount of
fractional share interests to which all holders of Amoco Common Shares are
entitled. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Amoco Common Shares in lieu of any fractional
BP Depositary Share interests, the Exchange Agent shall make available such
amounts to such holders of Amoco Common Shares without interest.
1.7. THE SURVIVING CORPORATION.
1.7.1. The articles of incorporation of Amoco in effect at the Effective
Time shall be the articles of incorporation of the Surviving Corporation
until amended in accordance with applicable law.
1.7.2. The bylaws of Amoco in effect at the Effective Time shall be the
bylaws of the Surviving Corporation until amended in accordance with
applicable law.
1.7.3. From and after the Effective Time, until successors are duly
elected or appointed and qualified in accordance with applicable law, (i)
the directors of Merger Sub at the Effective Time shall be the directors of
the Surviving Corporation, and (ii) the officers of Amoco at the Effective
Time shall be the officers of the Surviving Corporation.
1.8. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificate
shall have been lost, stolen or destroyed, upon the holder's compliance with the
replacement requirements established by the Exchange Agent, including, if
necessary, the posting by such Person of a bond in customary amount as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate, BP Depositary Shares and any cash payable in lieu of fractional BP
Depositary Shares and any unpaid dividends or other distributions deliverable
pursuant to Section 1.4.6 in respect of the Amoco Common Shares represented by
such Certificate pursuant to this Agreement.
1.9. RESERVATION OF RIGHT TO REVISE TRANSACTION. If and to the extent that
BP and Amoco determine that it would be beneficial to the Parties to effect the
combination contemplated by this Agreement by means of a merger of an indirect
subsidiary of BP with and into Amoco, or of Amoco with and into an indirect
subsidiary of BP, then BP may cause Merger Sub to become an indirect subsidiary
of BP and the Merger shall be effected in such manner as is so determined by BP
and Amoco, PROVIDED, HOWEVER, that no such change shall (i) alter or change the
amount or kind of consideration to be issued to holders of Amoco Common Shares
or Amoco Stock Options as provided for in this Agreement, (ii) adversely affect
the tax treatment to holders of Amoco Common Shares as a result of such change,
(iii) adversely affect the qualification of the Merger for the merger method of
accounting under U.K. GAAP or for pooling-of-interests treatment under U.S.
GAAP, (iv) reasonably be expected to materially impede or delay the consummation
of the Merger or (v) constitute a waiver of any condition to the Merger provided
in the Merger Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF AMOCO AND BP. Except as set forth
in the corresponding sections or subsections of the disclosure letter, dated the
date hereof and signed by an authorized officer, delivered by Amoco to BP or by
BP to Amoco (each a "DISCLOSURE LETTER," and the "AMOCO DISCLOSURE LETTER" and
the "BP DISCLOSURE LETTER," respectively), as the case may be, Amoco (except for
subparagraphs 2.1.2.2, 2.1.3.2, 2.1.5.2, 2.1.9(ii), 2.1.11.2 and 2.1.12 below
and references in paragraph 2.1.1 below to documents made available by BP to
Amoco) hereby represents and warrants to BP, and BP (except for subparagraphs
2.1.2.1, 2.1.3.1, 2.1.5.1, 2.1.8, 2.1.9(i) and 2.1.11.1 below and references in
paragraph 2.1.1 below to documents made available by Amoco to BP), hereby
represents and warrants to Amoco, that:
2.1.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of it and
its Subsidiaries (as defined below) is duly organized, validly existing and
in good standing (with respect to jurisdictions that recognize the concept
of good standing) under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority,
and has been duly authorized by all necessary approvals and orders, to own,
operate and lease its properties and assets and to carry on its business as
presently conducted and is duly qualified to do business and is in good
standing in each jurisdiction where the ownership, operation or leasing of
its assets or properties or conduct of its business requires such
qualification, except where the failure to be so organized, qualified or in
good standing, or to have such power or authority, when taken together with
all other such failures, is not reasonably likely to have a Material Adverse
Effect (as defined below) on it. Amoco has made available to BP complete and
correct copies of its articles of incorporation and by-laws, and BP has made
available to Amoco complete and correct copies of its memorandum and
articles of association, in all cases as amended to date. Such articles of
incorporation and by-laws or memorandum and articles of association, as the
case may be, as so made available are in full force and effect.
As used in this Agreement, the term (i) "SUBSIDIARY" means, with respect
to Amoco, any entity, whether incorporated or unincorporated, in which Amoco
owns, directly or indirectly, more than fifty percent of the securities or
other ownership interests having by their terms ordinary voting power to
elect more than fifty percent of the directors or other persons performing
similar functions, or the management and policies of which Amoco otherwise
has the power to direct, and, with respect to BP, any body corporate which
is a subsidiary or subsidiary undertaking, in each case within the meaning
of the Companies Act of 1985 of the United Kingdom, as amended (the
"COMPANIES ACT"), (ii) "MATERIAL ADVERSE EFFECT" means, with respect to any
Person (as defined below), a material adverse effect on the financial
condition, properties, business or results of operations of such Person and
its Subsidiaries taken as a whole, (iii) "PERSON" shall mean any individual,
corporation (including not-for-profit), general or limited partnership,
limited liability or unlimited liability company, joint venture, estate,
trust, association, organization, Governmental Entity (as defined in
paragraph 2.1.4 (Governmental Filings; No Violations)) or other entity of
any kind or nature, and (iv) "AFFILIATE" shall have the meaning specified in
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
2.1.2. CAPITAL STRUCTURE.
2.1.2.1. The authorized capital stock of Amoco consists of 1,600,000,000
Amoco Common Shares, of which 953,684,773 Amoco Common Shares were issued
and outstanding as of the close of business on August 4, 1998, 50,000,000
shares of Voting Preferred Stock, without par value ("AMOCO VOTING PREFERRED
SHARES"), and 50,000,000 shares of Non-Voting Preferred Stock, without par
value ("AMOCO NON-VOTING PREFERRED SHARES"), none of which Amoco Voting
Preferred Shares or Amoco Non-Voting Preferred Shares is outstanding as of
the date hereof. All of the outstanding Amoco Common Shares have been duly
authorized and validly issued and are fully paid and nonassessable. Amoco
has no Amoco Common Shares, Amoco Voting Preferred Shares or Amoco
Non-Voting Preferred Shares
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reserved for or otherwise subject to issuance, except that (i) as of the
close of business on August 4, 1998, there were 36,319,340 Amoco Common
Shares subject to issuance pursuant to options outstanding under the plans
of Amoco identified in paragraph 2.1.2.1 of the Amoco Disclosure Letter as
being the only compensation or benefit plans or agreements pursuant to which
Amoco Common Shares may be issued (the "AMOCO STOCK PLANS") and (ii) as of
the date hereof, there are not less than 189,783,270 Amoco Common Shares
reserved for issuance pursuant to the Stock Option Agreement. Each of the
outstanding shares of capital stock or other ownership interests of each of
Amoco's Subsidiaries that constitutes a "SIGNIFICANT SUBSIDIARY" (as defined
in Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act) is
duly authorized, validly issued, fully paid and nonassessable and owned by
Amoco or a direct or indirect wholly owned subsidiary of Amoco, in each case
free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements,
calls, commitments or rights of any kind which obligate Amoco or any of its
Subsidiaries to issue or sell any shares of capital stock or other
securities of Amoco or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire from Amoco or any of its
Subsidiaries, any securities of Amoco or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Amoco Common Shares issuable pursuant to the Stock Option
Agreement have been duly reserved for issuance by Amoco, and upon any
issuance of such Amoco Common Shares in accordance with the terms of the
Stock Option Agreement, such Amoco Common Shares will be duly authorized,
validly issued, fully paid and nonassessable and free and clear of any lien,
pledge, security interest, claim or other encumbrance. Amoco does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the shareholders of Amoco on
any matter.
2.1.2.2. The authorized share capital of BP is L2,000 million. As of the
close of business on August 4, 1998, the allotted share capital of BP
consisted of 5,851,031,121 ordinary shares of nominal value 25p each ("BP
ORDINARY SHARES"), not more than 7,232,838 shares of 8% cumulative first
preference shares, of nominal value L1 each ("BP FIRST PREFERENCE SHARES"),
and not more than 5,473,414 9% cumulative second preference shares, of
nominal value L1 each ("BP SECOND PREFERENCE SHARES"). All of the
outstanding BP Ordinary Shares, BP First Preference Shares and BP Second
Preference Shares have been, and the BP Ordinary Shares to be issued as
Merger Consideration shall be, duly authorized and validly issued and are or
will be, as the case may be, fully paid or credited as fully paid. BP has no
BP Ordinary Shares, BP First Preference Shares, or BP Second Preference
Shares reserved for or otherwise subject to issuance. Of the BP Ordinary
Shares described in the first sentence of this paragraph, as of the close of
business on August 4, 1998, there were 37,956,426 BP Ordinary Shares held by
trusts operated by the BP Employee Share Scheme (Jersey) Ltd. in relation to
the option schemes identified in subparagraph 2.1.2.2 of the BP Disclosure
Letter as being the only compensation or benefit plans or agreements
pursuant to which BP Ordinary Shares may be issued (the "OPTION SCHEMES").
Each of the outstanding shares of capital stock or other ownership interests
of each of BP's Significant Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and owned by BP or a direct or indirect wholly
owned Subsidiary of BP, in each case free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth above or
as contemplated by this Agreement, there are no pre-emptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements,
calls, commitments or rights of any kind which obligate BP or any of its
Subsidiaries to issue or to sell any shares of capital stock or other
securities of BP or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire from BP or any of its Subsidiaries, any
securities of BP or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized,
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issued or outstanding. BP does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the shareholders of BP on any matter.
2.1.3. CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
2.1.3.1. Amoco has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and the Stock Option Agreement
and to consummate the Merger and the other transactions contemplated hereby
and thereby, subject only to the approval of the Merger by the vote of the
holders of not less than a majority of all of the votes entitled to be cast
at the Amoco Shareholders Meeting (as defined in Section 3.4 (Shareholders
Meetings)) by holders of Amoco Common Shares (the "AMOCO REQUISITE VOTE").
The execution and delivery of this Agreement and the Stock Option Agreement
have been duly authorized by all necessary corporate action on the part of
Amoco and, assuming the due authorization, execution and delivery of this
Agreement and the Stock Option Agreement by BP, this Agreement and the Stock
Option Agreement constitute valid and binding agreements of Amoco
enforceable against Amoco in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (the "BANKRUPTCY AND EQUITY
EXCEPTION"). The Board of Directors of Amoco (A) has approved this
Agreement, the Stock Option Agreement, the Merger and the other transactions
contemplated hereby and thereby and (B) has received the opinion of its
financial advisor, Morgan Stanley & Co. Incorporated, to the effect that, as
of the date of this Agreement, the Exchange Ratio is fair to the holders of
Amoco Common Shares from a financial point of view.
2.1.3.2. BP has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and the Stock Option Agreement
and to consummate the Merger and the other transactions contemplated hereby
and thereby, subject only to the approval of the resolution set forth in
clause (i) of the third sentence of Section 3.4 (the "BP REQUISITE
RESOLUTION") by, on a show of hands, not less than the requisite majority of
the holders of the outstanding BP Ordinary Shares, BP First Preference
Shares and BP Second Preference Shares (collectively, the "BP SHARES")
present in person or, on a poll, by the holders of not less than the
requisite majority of the votes attaching to the BP Shares who vote in
person or by proxy at the BP Shareholders Meeting (as defined in Section 3.4
(Shareholders Meetings)) (the "BP REQUISITE VOTE"). The execution and
delivery of this Agreement and the Stock Option Agreement have been duly
authorized by all necessary corporate action on the part of BP, and,
assuming the due authorization, execution and delivery of this Agreement and
the Stock Option Agreement by Amoco, this Agreement and the Stock Option
Agreement constitute valid and binding agreements of BP, enforceable against
BP in accordance with their terms, subject to the Bankruptcy and Equity
Exception. The Board of Directors of BP has approved this Agreement, the
Stock Option Agreement, the Merger and the other transactions contemplated
hereby and thereby and the Board of Directors has received the opinion of
its financial advisor, Morgan Guaranty Trust Company of New York, to the
effect that, as of the date of this Agreement, the Exchange Ratio is fair,
from a financial point of view, to BP.
2.1.4. GOVERNMENTAL FILINGS; NO VIOLATIONS.
2.1.4.1. Other than the necessary filings, notices, approvals,
confirmations, consents, declarations and/or decisions (A) pursuant to
Sections 1.2.2 and 3.3.1, (B) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the Exchange Act, the
Securities Act of 1933, as amended (the "SECURITIES ACT") and the
Exon-Florio provisions of the Omnibus Trade and Competitiveness Act of 1988
("EXON-FLORIO"), (C) to comply with the rules and regulations of the NYSE or
the London Stock Exchange Limited (the "LSE"), (D) from the European
Commission, in
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accordance with Article 6(1)(b), 8(2) or 10(6) of Council Regulation (EEC)
No 4064/89 as amended (the "REGULATION") (insofar as the Merger constitutes
a concentration with a Community dimension within the scope of the
Regulation), (E) from the UK Office of Fair Trading that it is not the
intention of the UK Secretary of State for Trade and Industry to refer the
Merger or any matters arising therefrom to the UK Monopolies and Mergers
Commission (the "MMC") or from the Secretary of State for Trade and Industry
in the event that the Merger or any matters arising therefrom are referred
to the MMC (insofar as the Merger qualifies for investigation by the MMC
under the UK Fair Trading Act 1973 or a referral is made by the European
Commission to the UK Competent Authority under Article 9 of the Regulation)
and (F) from H.M. Treasury pursuant to section 765 of the Income and
Corporation Taxes Act 1988 (or the confirmation from H.M. Treasury or the
Inland Revenue that no such consent is required to the transactions
contemplated by this Agreement) (such filings, notices, approvals,
confirmations, consents, declarations and/or decisions to be made, given or
obtained by Amoco being, if any, the "AMOCO REQUIRED CONSENTS" and by BP
being the "BP REQUIRED CONSENTS"), no filings, notices, declarations and/or
decisions are required to be made by it with, nor are any approvals or other
confirmations or consents required to be obtained by it from, any
governmental or regulatory (including stock exchange) authority, agency,
court, commission, body or other governmental entity (including the Panel on
Takeovers and Mergers) ("GOVERNMENTAL ENTITY"), in connection with the
execution and delivery by it of this Agreement and the Stock Option
Agreement and the consummation by it of the Merger and the other
transactions contemplated hereby and thereby, except those the failure of
which to make, give or obtain, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on it or prevent,
materially delay or materially impair its ability to consummate the Merger
and the other transactions contemplated by this Agreement and the Stock
Option Agreement.
2.1.4.2. The execution, delivery and performance of this Agreement and
the Stock Option Agreement by it do not, and the consummation by it of the
Merger and the other transactions contemplated hereby and thereby
(including, in the case of BP, the issue of BP Ordinary Shares, including
the Bearer Shares, if any, the delivery by BP of BP Ordinary Shares to the
Nominee and the deposit of BP Ordinary Shares by the Nominee with the
Depositary against issuance of BP Depositary Shares in accordance with the
Deposit Agreement) will not, constitute or result in (A) a breach or
violation of, or a default under, its articles of incorporation or by-laws,
in the case of Amoco, or memorandum or articles of association, in the case
of BP, or the comparable governing instruments of any of the Significant
Subsidiaries of Amoco and BP (in each case as amended from time to time),
(B) subject to making, giving or obtaining all necessary filings, notices,
approvals, confirmations, declarations and/or decisions in Subparagraph
2.1.4.1 and all other necessary third-party consents as set forth in
Subparagraph 2.1.4.2 of its Disclosure Letter, a breach or violation of, or
a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest, right of purchase, sale or termination or
other encumbrance on the assets of it or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to any agreement, lease,
license, contract, note, mortgage, indenture, arrangement or other
obligation ("CONTRACTS") binding upon it or any of its Subsidiaries or any
law, ordinance, regulation, judgment, order, decree, arbitration, award,
license or permit of any Governmental Entity ("LAW") or governmental or
non-governmental permit or license to which it or any of its Subsidiaries is
subject, or (C) any change in the rights or obligations of either Party
under any of its Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on it or prevent, materially delay or materially
impair its ability to consummate the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreement.
2.1.5. REPORTS; FINANCIAL STATEMENTS.
2.1.5.1. Amoco has made available to BP copies of each registration
statement, report, proxy statement or information statement prepared by it
or its Subsidiaries and filed with the SEC since
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December 31, 1997 (December 31, 1997 being the "AMOCO AUDIT DATE"),
including Amoco's Annual Report on Form 10-K for the year ended December 31,
1997, each in the form (including exhibits, annexes and any amendments
thereto) filed with the SEC (collectively, including any such registration
statement, report, proxy statement or information statement filed with the
SEC subsequent to the date hereof, the "AMOCO REPORTS"). As of their
respective dates, the Amoco Reports did not, and any Amoco Reports filed
with the SEC subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Each
of the consolidated statements of financial condition included in or
incorporated by reference into the Amoco Reports (including the related
notes and schedules) fairly presents, or will fairly present, in all
material respects, the consolidated financial position of Amoco and its
Subsidiaries as of its date and each of the related consolidated statements
of income, shareholders' equity and cash flows included in or incorporated
by reference into the Amoco Reports (including any related notes and
schedules) fairly presents, or will fairly present in all material respects,
the consolidated results of operations, retained earnings and changes in
financial position, as the case may be, of Amoco and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements,
to notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with U.S. GAAP consistently
applied during the periods involved except as may be noted therein.
2.1.5.2. BP has made available to Amoco copies of (A) each registration
statement, report or annual report prepared by it or its Subsidiaries and
filed with the SEC since December 31, 1997 (the "BP AUDIT DATE," with the BP
Audit Date and the Amoco Audit Date each being referred to herein as the
relevant Party's "AUDIT DATE"), including BP's Annual Report on Form 20-F
for the year ended December 31, 1997, each in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC and each quarterly
report distributed by BP to its shareholders (collectively, including any
such registration statement, report or annual report filed with the SEC or,
in the case of quarterly reports, distributed to BP shareholders subsequent
to the date hereof, the "BP REPORTS"); and (B) all circulars, reports and
other documents distributed by BP to its shareholders since its Audit Date.
As of their respective dates, the BP Reports did not, and any BP Report
filed, distributed or delivered subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the audited consolidated balance sheets of BP and its
Subsidiaries included in or incorporated by reference into the BP Reports
(including the related notes and schedules) fairly presents, or will fairly
present, in all material respects, the consolidated financial position of BP
and its Subsidiaries as of its date, and each of the related consolidated
statements of income, changes in shareholders' interest, total recognized
gains and losses and cash flows included in or incorporated by reference
into the BP Reports (including any related notes and schedules) fairly
presents, or will fairly present, in all material respects, the consolidated
results of its operations, retained earnings and cash flows of BP and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that
will not be material in amount or effect), in each case in accordance with
U.K. GAAP consistently applied during the periods involved except as may be
noted therein. The related notes reconciling to U.S. GAAP such consolidated
balance sheet, consolidated statement of income, statement of changes in
shareholders' interest, and statement of cash flows comply in all material
respects with the requirements of the SEC applicable to such reconciliation.
The Amoco Reports and the BP Reports are collectively referred to herein as
the "REPORTS."
2.1.6. ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Reports
filed prior to the date hereof, or as expressly contemplated by this
Agreement, since its respective Audit Date it and its Subsidiaries have
conducted their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course
of such businesses, and there has
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not been (i) any change in the financial condition, properties, business or
results of operations of it and its Subsidiaries except those changes that,
individually or in the aggregate, have not had and are not reasonably likely
to have a Material Adverse Effect on it; (ii) any declaration, setting aside
or payment of any dividend or other distribution in cash, stock or property
in respect of its capital stock, except for dividends or other distributions
on its capital stock publicly announced prior to the date hereof and except
as expressly permitted hereby; (iii) any split in its capital stock,
combination, subdivision or reclassification of any of its capital stock or
issuance or authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, except as
expressly contemplated hereby or, in the case of Amoco, in the Stock Option
Agreement; or (iv) any change by it in accounting principles, practices or
methods except as required by changes in U.S. GAAP or U.K. GAAP, as the case
may be. Since its respective Audit Date, except as provided for herein or as
disclosed in the Reports filed prior to the date hereof, there has not been
any increase in the compensation payable or that could become payable by it
or any of its Subsidiaries to officers or key employees or any amendment of
any of its compensation or benefit plans or agreements other than increases
or amendments in the ordinary course or as contemplated by this Agreement.
2.1.7. LITIGATION AND LIABILITIES. Except as disclosed in the Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of, in the case of Amoco, its Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer or
General Counsel ("AMOCO OFFICERS"), and, in the case of BP, its Chief
Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer
or General Counsel ("BP OFFICERS"), threatened against it or any of its
Affiliates or (ii) obligations or liabilities, whether or not accrued,
contingent or otherwise and whether or not required to be disclosed, or any
other facts or circumstances of which, in the case of Amoco, the Amoco
Officers, and, in the case of BP, the BP Officers, have knowledge that would
reasonably be expected to result in any claims against, or obligations or
liabilities of, it or any of its Affiliates, except, in each case, for those
that, individually or in the aggregate, have not had and are not reasonably
likely to have a Material Adverse Effect on it or prevent, materially delay
or materially impair its ability to consummate the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement.
2.1.8. TAKEOVER STATUTES. The board of directors of Amoco has taken or
will take all appropriate and necessary action such that the "Business
Combinations" provisions of the BCL (SectionSection 23-1-43-1 ET SEQ.) will
not have any effect on the Merger or the other transactions contemplated by
this Agreement, and the Stock Option Agreement. No other "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover
statute or regulation, including such Business Combinations provisions of
the BCL (each, a "TAKEOVER STATUTE"), and no anti-takeover provision in the
amended articles of incorporation or by-laws of Amoco is, or at the
Effective Time will be, applicable to the Merger or any of the other
transactions contemplated by this Agreement and the Stock Option Agreement.
2.1.9. BROKERS AND FINDERS. Neither it nor any of its Subsidiaries,
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the execution and delivery of this Agreement, the Stock
Option Agreement, the Merger or the other transactions contemplated by this
Agreement and the Stock Option Agreement, except that (i) Amoco has retained
Morgan Stanley & Co. Incorporated as its financial advisors, the
arrangements with which have been disclosed to BP prior to the date hereof
and (ii) BP has employed Morgan Guaranty Trust Company of New York, Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Cazenove & Co. as its
financial advisors, the arrangements with which have been disclosed to Amoco
prior to the date hereof.
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2.1.10. ACCOUNTING TREATMENT. It is not aware of any fact or
circumstance with respect to itself or the Merger that would cause the
Merger to fail to (i) qualify as a pooling of interests under U.S. GAAP or
(ii) be accounted for using merger accounting methods under U.K. GAAP.
2.1.11. OWNERSHIP OF OTHER PARTY'S COMMON STOCK.
2.1.11.1. Neither Amoco nor any of its Subsidiaries "beneficially owns"
(as such term is defined in Rule 13d-3 under the Exchange Act) any BP
Ordinary Shares or BP Depositary Shares.
2.1.11.2. Neither BP nor any of its Subsidiaries "beneficially owns" (as
such term is defined in Rule 13d-3 under the Exchange Act) any Amoco Common
Shares.
2.1.12. MERGER SUB'S OPERATIONS. Merger Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not (i)
engaged in any business activities, (ii) conducted any operations other than
in connection with the transactions contemplated hereby or (iii) incurred
any liabilities other than in connection with the transactions contemplated
hereby. The execution and delivery of this Agreement has been duly
authorized by all necessary corporate action on the part of Merger Sub and,
assuming the due authorization, execution and delivery of this Agreement by
Amoco, this Agreement constitutes a valid and binding agreement of Merger
Sub enforceable against Merger Sub in accordance with its terms, subject to
the Bankruptcy and Equity Exception. BP, as Merger Sub's sole stockholder,
has approved Merger Sub's execution of this Agreement.
ARTICLE III
COVENANTS
3.1. INTERIM OPERATIONS. Each of Amoco and BP covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and until the Effective
Time (unless the other Party shall otherwise approve in writing and except as
otherwise expressly contemplated by or provided in this Agreement, or as
required by applicable Law):
3.1.1. the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and
each of its Subsidiaries shall use its best reasonable efforts to preserve
its business organization intact and maintain its existing relations and
goodwill with customers, suppliers, creditors, regulators, lessors,
employees and business associates;
3.1.2. it shall not (i) amend its articles of incorporation or by-laws,
in the case of Amoco, or memorandum and articles of association, in the case
of BP; (ii) split, combine, subdivide or reclassify its outstanding shares
of capital stock; (iii) subject to Section 3.10.2, declare, set aside or pay
any dividend or distribution payable in cash, stock or property in respect
of any capital stock other than (A) in the case of Amoco, regular quarterly
cash dividends consistent with past practice, including periodic dividend
increases and (B) in the case of BP, regular quarterly cash dividends and
scrip alternative in respect thereof payable under BP's gross scrip dividend
scheme, in each case, consistent with past practice, including periodic
dividend increases, and regular cash dividends on the issued and outstanding
BP First Preference Shares and BP Second Preference Shares; or (iv)
repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries
to purchase or otherwise acquire (except for repurchases, redemptions or
acquisitions (A) required by the terms of its capital stock or securities
outstanding on the date hereof, (B) required by or in connection with the
respective terms as of the date hereof of, any Amoco Stock Plans, in the
case of Amoco, or Option Schemes, in the case of BP, or any dividend
reinvestment plans as in effect on the date hereof in the ordinary course of
the operation of such plans or (C) in the case of BP, required to effect the
Redenomination), any shares of the capital stock of BP or Amoco, as the case
may be, or any securities convertible into or exchangeable or exercisable
for any shares of its capital stock;
3.1.3. neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into
or exchangeable or exercisable for, or rights, options, warrants,
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conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements, calls, commitments or rights of any kind
to acquire, the capital stock of BP or Amoco, as the case may be, of any
class (other than (x) in the case of Amoco, Amoco Common Shares issuable
pursuant to options outstanding on the date hereof under the Amoco Stock
Plans or pursuant to the Stock Option Agreement, additional options or
rights to acquire Amoco Common Shares granted under the terms of any Amoco
Stock Plan as in effect on the date hereof in the ordinary course of the
operation of such Amoco Stock Plan, (y) in the case of BP, BP Ordinary
Shares issuable or transferable pursuant to options outstanding on the date
hereof under the Option Schemes and additional options or rights to acquire
BP Ordinary Shares granted under the terms of any Option Scheme as in effect
on the date hereof in the ordinary course of the operation of such Option
Scheme and the BP Ordinary Shares to be issued in February, 1999, in lieu of
dividends pursuant to BP's gross scrip dividend scheme, and (z) issuances of
securities in connection with grants or awards of stock-based compensation
made in accordance with paragraph 3.1.4 hereof); (ii) incur or modify any
significant indebtedness or other liability except in the ordinary and usual
course of business, pursuant to financial plans previously communicated to
the other Party, or for long-term indebtedness incurred in connection with
the refinancing of existing indebtedness, without first consulting with the
other Party; or (iii) make any decision or commitment with respect to a
significant investment or divestment except in the ordinary and usual course
of business or pursuant to financial plans previously communicated to the
other Party without first consulting with the other Party;
3.1.4. neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards of stock-based
compensation or other benefits under, amend or otherwise modify any
compensation or benefit plan or agreement or increase the salary, wage,
bonus or other compensation of any directors, officers or employees except
for grants or awards to directors, officers and employees of it or its
Subsidiaries under existing compensation or benefit plans or agreements in
the normal and usual course of business (which shall include normal periodic
performance reviews) and related compensation and benefit increases, annual
reestablishment of compensation or benefit plans or agreements and the
provision of individual compensation or benefit plans or agreements for
newly hired or appointed officers and employees and the adoption of
compensation or benefit plans or agreements for employees of new
Subsidiaries or for actions necessary to satisfy existing contractual
obligations under compensation or benefit plans or agreements existing as of
the date hereof;
3.1.5. neither it nor any of its Subsidiaries shall take any action or
omit to take any action for the purpose of preventing, delaying or impeding
the consummation of the Merger or the other transactions contemplated by
this Agreement and the Stock Option Agreement including any action or
omission that would cause (i) the Merger to (A) fail to qualify as a
"pooling of interests" under U.S. GAAP or fail to be accounted for using
merger accounting methods under U.K. GAAP (and each Party agrees to use its
best reasonable efforts to remove any impediment that would cause the Merger
to fail to qualify as a "pooling-of-interests" under U.S. GAAP or fail to be
accounted for using merger accounting methods under U.K. GAAP) or (B) fail
to qualify as a reorganization under Section 368(a) of the Code or (ii) the
exchange of Amoco Common Stock for BP Ordinary Shares in the Merger to fail
to qualify for nonrecognition of gain (except with respect to cash received
in lieu of fractional BP Depositary Shares); and
3.1.6. neither it nor any of its Subsidiaries shall authorize or enter
into an agreement to do any of the foregoing.
3.2. ACQUISITION PROPOSALS.
3.2.1. Each of Amoco and BP agrees that, subject to paragraph 3.2.3 and
except as expressly contemplated by this Agreement, neither it nor any of
its Subsidiaries nor any of the officers or directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' officers, directors, employees, investment
bankers, attorneys, accountants, financial advisors, agents or other
representatives (collectively, with respect to each of Amoco and BP, such
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Person's "REPRESENTATIVES") not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to a merger, reorganization, share
exchange, dual-holding company transaction, consolidation or similar
transaction involving Amoco or BP, or any purchase of, or offer to purchase,
all or substantially all of the equity securities of Amoco or BP, as the
case may be, or of its and its Subsidiaries' assets taken as a whole (any
such proposal or offer being hereinafter referred to as an "ACQUISITION
PROPOSAL"). Each of Amoco and BP further agrees that neither it nor any of
its Subsidiaries nor any of its or its Subsidiaries' officers or directors
shall, and that it shall direct and use its best efforts to cause its
Representatives not to, directly or indirectly, have any discussions with or
provide any confidential information or data to any Person relating to an
Acquisition Proposal or engage in any negotiations concerning an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent either Amoco or BP or its board of directors from
(i) making any disclosure to its shareholders if, in the good faith judgment
of its board of directors, failure so to disclose would be inconsistent with
its obligations under applicable Law; (ii) negotiating with or furnishing
information to any Person who has made a bona fide written Acquisition
Proposal which did not result from a breach of this Section 3.2.1; or (iii)
recommending such an Acquisition Proposal to its shareholders, if and only
to the extent that, in the case of actions referred to in clause (ii) or
clause (iii), such Acquisition Proposal is a Superior Proposal (as defined
below). For purposes of this Agreement, a "SUPERIOR PROPOSAL" means in
respect of Amoco or BP, as applicable, any Acquisition Proposal by a third
party (y) on terms which the board of directors of such Party determines in
its good faith judgment (i) after consultation with its financial advisors
(whose advice shall be communicated to the other Party), to be more
favorable from a financial point of view to its shareholders than the Merger
and the other transactions contemplated hereby and (ii) to be more favorable
to such Party than the Merger and the other transactions contemplated hereby
after taking into account any additional constituencies (including
shareholders) and other relevant factors permitted under the Laws of the
State of Indiana, in the case of Amoco, and the Laws of England or any
requirement of any regulatory authority therein (including the City Code on
Takeovers and Merger (the "CITY CODE")), in the case of BP, and after giving
the other Party at least seven business days to respond to such third party
Acquisition Proposal and (z) which the board of directors of such Party
determines in its good faith judgment to constitute a transaction that is
reasonably likely to be consummated on the terms set forth, taking into
account all legal, financial, regulatory and other aspects of such proposal.
Each of Amoco and BP agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
Person conducted heretofore with respect to any Acquisition Proposal. Each
of Amoco and BP also agrees that if it has not already done so, it will
promptly request each Person, if any, that has heretofore executed a
confidentiality agreement within the 12 months prior to the date hereof in
connection with its consideration of any Acquisition Proposal to return or
destroy all confidential information heretofore furnished to such Person by
or on behalf of it or any of its Subsidiaries.
3.2.2. Each of Amoco and BP agrees that it will take the necessary steps
promptly to inform its Subsidiaries and its and its Subsidiaries'
Representatives of the obligations undertaken in this Section 3.2
(Acquisition Proposals). Each of Amoco and BP agrees that it will notify the
other promptly if any such inquiries, proposals or offers relating to or
constituting an Acquisition Proposal are received by, any such information
is requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its or its Subsidiaries' Representatives
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers and thereafter
shall keep the other informed, on a current basis, of the status and
material terms of any such proposals or offers.
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3.2.3. Nothing contained herein shall prohibit a Party from taking and
disclosing to its shareholders a position contemplated by Rule 14e-2(a)
under the Exchange Act with respect to an Acquisition Proposal by means of a
tender or exchange offer or, in the case of BP, taking such action and
making such recommendations as the directors of BP reasonably consider
necessary so as to comply with any obligations imposed on them or BP by the
City Code or the Takeover Panel in relation to any Acquisition Proposal
(provided that it is hereby acknowledged, for the avoidance of doubt, that
no provision of the City Code requires BP or its directors to solicit or
initiate any Acquisition Proposal).
3.3. INFORMATION SUPPLIED.
3.3.1. REGISTRATION STATEMENT.
3.3.1.1. Each of BP and Amoco shall cooperate and promptly prepare and
BP shall file with the SEC as soon as practicable a Registration Statement
on Form F-4 (the "FORM F4") under the Securities Act, with respect to the
issuance of the BP Depositary Shares and the BP ADRs in the Merger and, if
applicable, the allotment and issue of BP Ordinary Shares in the Merger, a
portion of which Form F-4 shall also serve as the Amoco Proxy Statement (as
defined in Section 3.3.1.2), the prospectus with respect to the BP
Depositary Shares and BP ADRs issuable in the Merger and, so far as
appropriate, the BP Documents (as defined in Section 3.3.2). The Parties
will cause the Form F-4 to comply as to form in all material respects with
the applicable provisions of the Securities Act and the rules and
regulations thereunder. Each of BP and Amoco shall use its respective best
reasonable efforts to have the Form F-4 declared effective by the SEC as
promptly as practicable after such filing. BP shall use its reasonable
efforts to obtain, prior to the effective date of the Form F-4, all
necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement. BP will advise
Amoco, promptly after it receives notice thereof, of the time when the Form
F-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the BP
Depositary Shares or BP Ordinary Shares issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Amoco Proxy Statement or the Form F-4 or comments
thereon and responses thereto or requests by the SEC for additional
information.
3.3.1.2. Amoco and BP each agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it or its
Subsidiaries for inclusion or incorporation by reference in the Form F-4,
including, without limitation the proxy statement/prospectus constituting a
part thereof (the "AMOCO PROXY STATEMENT"), and any amendment or supplement
thereto will, at the time the Form F-4 becomes effective under the
Securities Act, at the date of mailing to shareholders and at the time or
times of the Amoco Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If at any
time prior to the date of the Amoco Shareholders Meeting any information
relating to Amoco or BP, or any of their respective Affiliates, officers or
directors, should be discovered by Amoco or BP which should be set forth in
an amendment to the Form F-4 or a supplement to the Amoco Proxy Statement,
so that such document would not include any misstatement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the Party which discovers such
information shall promptly notify the other Party and, to the extent
required by Law, an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required
by law, disseminated to the Amoco shareholders.
3.3.1.3. Each of BP and Amoco will use its best reasonable efforts to
cause the BP Documents and the Amoco Proxy Statement, respectively, to be
mailed to its shareholders as promptly as practicable after the date hereof.
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3.3.2. Amoco and BP shall cooperate and promptly prepare and BP shall
file with the LSE (a) a circular to be sent to BP shareholders in connection
with the BP Shareholders Meeting (as defined in Section 3.4 (Shareholders
Meetings)) (the "BP CIRCULAR"), containing (i) a notice convening the BP
Shareholders Meeting, (ii) such other information (if any) as may be
required by the LSE and (iii) such other information as BP and Amoco shall
agree to include therein; and (b) listing particulars relating to BP and its
Subsidiaries and the BP Ordinary Shares (the "BP LISTING PARTICULARS," and
the BP Circular and the BP Listing Particulars together being the "BP
DOCUMENTS"). Amoco and BP each agrees, as to itself and its Subsidiaries,
that the BP Documents and any supplements thereto and any other circulars or
documents issued to shareholders, employees or debentureholders of BP, will
contain all particulars relating to Amoco and BP required to comply in all
material respects with all United Kingdom statutory and other legal
provisions (including, without limitation, the Companies Act, the Financial
Services Act 1986 (the "FSA") and the rules and regulations made thereunder,
and the rules and requirements of the LSE) and all such information
contained in such documents will be substantially in accordance with the
facts and will not omit anything material likely to affect the import of
such information.
3.4. SHAREHOLDERS MEETINGS. Amoco will take all action necessary to
convene a meeting of the holders of Amoco Common Shares at which the holders of
Amoco Common Shares shall consider approval of the Merger and the other
transactions contemplated hereby (the "AMOCO SHAREHOLDERS MEETING") as promptly
as practicable after the Form F-4 has been declared effective by the SEC. BP
will take all action necessary to convene an extraordinary general meeting of BP
shareholders at which resolutions will be proposed to approve the Merger and the
other matters specified in the next succeeding sentence (the "BP SHAREHOLDERS
MEETING") and a separate class meeting of the holders of BP Ordinary Shares as
promptly as practicable after the BP Documents are cleared by the LSE and the
Form F-4 has been declared effective by the SEC. BP shall propose at the BP
Shareholders Meeting referred to above the following resolutions: (i) a
resolution to approve all of the following transactions or matters: (A) the
Merger, (B) an increase in the authorized ordinary share capital of BP, (C) the
authorization of the BP Board to allot securities, including to Amoco
shareholders pursuant to the Merger, and to disapply shareholders' pre-emption
rights, (D) amendments to the BP Articles of Association to increase the maximum
number of Directors of BP to 22 and to provide for the appointment of a
Co-Chairman of the BP Board and (E) an amendment to change the name of BP to "BP
Amoco p.l.c."; (ii) resolutions to elect the New Directors (as defined in
Section 3.8.3) designated by Amoco as directors of BP, subject to the Merger
becoming effective; (iii) a resolution to approve amendments to the BP Articles
of Association and other transactions necessary to effect the Redenomination;
(iv) resolutions to increase the ordinary remuneration of directors of BP, to
approve the rules of the BP Amoco Share Option Plan and BP Amoco Long Term
Incentive Plan and other compensation or benefits for employees overseas which
are based on the BP Amoco Share Option Plan or the BP Amoco Long Term Incentive
Plan; (v) resolutions to amend the BP Articles of Association to provide for the
delivery of notice of BP Board meetings to Directors outside the U.K., to
provide for the announcement of dividends in U.S. dollars, to provide for the
appointment of multiple proxies by certain types of shareholders, to permit the
appointment of substitutes instead of the proxies and to provide that special
and extraordinary resolutions shall be taken on a poll, to allow the issue of
Bearer Shares, and to make certain other minor amendments; and (vi) subject to
the provisions of Section 3.1, such other resolutions as BP may determine to
propose to BP shareholders. BP and Amoco each agrees to use all reasonable
efforts such that, to the extent practical, the Amoco Shareholders Meeting and
the BP Shareholders Meeting shall be held as promptly as practicable after the
conditions precedent to holding such meetings have been fulfilled. Subject to
fiduciary obligations and the requirements of applicable Law and the terms of
this Agreement, including the provisions of Section 3.2 (Acquisition Proposals),
the board of directors of each of BP and Amoco shall recommend to its respective
shareholders the approval of the Merger and the other transactions contemplated
hereby and shall use best reasonable efforts to solicit such approval.
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3.5. FILINGS; OTHER ACTIONS; NOTIFICATION.
3.5.1. Amoco and BP shall each cooperate with the other and (i) use (and
shall use best reasonable efforts to cause their respective Subsidiaries to
use) all their respective best reasonable efforts promptly to take or cause
to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable under this Agreement, the Stock Option Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement
as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary filings, notices,
petitions, statements, registrations, submissions of information,
applications and other documents, (ii) use (and shall use best reasonable
efforts to cause their respective Subsidiaries to use) all their respective
best reasonable efforts to obtain as promptly as practicable all approvals,
consents, registrations, permits, authorizations and other confirmations
required to be obtained from any third party (other than Amoco Required
Consents and BP Required Consents) necessary, proper or advisable to
consummate the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement, and (iii) use (and shall use best
reasonable efforts to cause their respective Subsidiaries to use) their
respective best efforts to take or cause to be taken all actions, and do or
cause to be done all things, necessary, proper or advisable to obtain the
Amoco Required Consents or BP Required Consents, as the case may be;
PROVIDED that neither Party shall be required by this Section 3.5.1(iii) to
accept or agree to any conditions, terms or restrictions in connection with
any such Amoco Required Consent or BP Required Consent, as the case may be,
which, individually or in the aggregate, would be reasonably likely to have
a Material Adverse Effect on BP or Amoco after the Effective Time (it being
understood that, for this purpose, materiality shall be considered with
reference to the total equity market value of BP and Amoco). Subject to
applicable Laws relating to the exchange of information, Amoco and BP shall
have the right to review in advance, and to the extent practicable each will
consult the other on, all the information relating to Amoco and its
Subsidiaries or BP and its Subsidiaries, as the case may be, that appears in
any filing made with, or written materials submitted to, any third party
and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement.
In exercising the foregoing right, each of Amoco and BP shall act reasonably
and as promptly as practicable.
3.5.2. Amoco and BP each shall, upon request by the other, furnish the
other with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Form F-4, the Amoco Proxy
Statement, the BP Documents or any other necessary or appropriate filing,
notice, statement, registration, submission of information or application
made by or on behalf of Amoco or BP or any of their respective Subsidiaries
to any third party and/or any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreement.
3.5.3. Amoco and BP each shall keep the other apprised of the status of
matters relating to completion of the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreement, including
promptly furnishing the other with copies of notices or other communications
received by Amoco or BP, as the case may be, or any of its Subsidiaries,
from any third party and/or any Governmental Entity with respect to the
Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreement. Amoco and BP each shall give prompt notice to the
other of any change that is reasonably likely to result in a Material
Adverse Effect on it or of any failure of any condition set forth in Article
IV to the other Party's obligations to effect the Merger.
3.5.4. Prior to making any filing, notice, petition, statement,
registration, submission of information or application to or with any third
party and/or Governmental Entity (including any domestic or foreign national
securities exchange) in connection with the consummation of the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement and except as may be required by Law or by obligations pursuant to
any listing agreement with or rules of any
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domestic or foreign national securities exchange, each Party shall make all
reasonable efforts to consult with the other Party with respect to the
content of such filing, notice, petition, statement, registration,
submission of information or application and to provide the other Party with
copies of the proposed filing, notice, petition, statement, registration,
submission of information or application. Amoco and BP each shall not agree
to participate in any meeting with any Governmental Entity in respect of any
filings, investigation or other inquiry relating to the Merger and the other
transactions contemplated by this Agreement unless it consults with the
other Party in advance and, to the extent practicable and permitted by such
Governmental Entity, gives the other Party the opportunity to attend and
participate thereat.
3.5.5. In the event any claim, action, suit, investigation or other
proceeding by any Governmental Entity or other Person or other legal or
administrative proceeding is commenced that questions the validity or
legality of this Agreement, the Stock Option Agreement, or the Merger or the
other transactions contemplated by this Agreement and the Stock Option
Agreement or claims damages in connection therewith, the Parties agree to
cooperate and use their best efforts, subject to the limitations set forth
in Section 3.5.1, to defend against and respond thereto.
3.6. ACCESS. In order to facilitate consummation of the Merger and the
other transactions contemplated by this Agreement, the Parties hereby agree that
upon reasonable request to any executive officer of BP or Amoco, as the case may
be, designated for the purpose, and except as may otherwise be required by
applicable Law, Amoco and BP each shall (and shall cause its Subsidiaries to)
afford the other's Representatives access, during normal business hours
throughout the period prior to the Effective Time, to its properties, books,
contracts and records and, during such period, each shall (and shall cause its
Subsidiaries to) furnish promptly to the other all information concerning its
business, properties and personnel as may reasonably be requested, PROVIDED that
no receipt of information pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by Amoco or BP hereunder, and
PROVIDED, FURTHER, that the foregoing shall not require Amoco or BP to permit
any inquiry, or to disclose any information, that in the reasonable judgment of
Amoco or BP, as the case may be, would (i) violate any antitrust or competition
Law or (ii) result in the disclosure of any trade secrets of third parties or
violate any of its obligations with respect to confidentiality to third parties
if Amoco or BP, as the case may be, shall have used reasonable efforts to obtain
the consent of such third party to such inspection or disclosure. All such
information shall be governed by the terms of the Confidentiality Agreement,
dated July 24, 1998, between the Parties (the "CONFIDENTIALITY AGREEMENT"),
including without limitation all such information disclosed in the Disclosure
Letters, and Amoco and BP, and each of their respective Subsidiaries, shall use
their respective best reasonable efforts to maintain the confidentiality of all
such information disclosed in the Disclosure Letters.
3.7. PUBLICITY. The initial press release concerning this Agreement, the
Merger and the other transactions contemplated by this Agreement and the Stock
Option Agreement shall be a joint press release, and thereafter Amoco and BP
shall consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement.
3.8. BENEFITS AND OTHER MATTERS.
3.8.1. EMPLOYEE BENEFITS.
3.8.1.1. It is the specific intention that the compensation and
benefit programs (including annual and long-term incentive programs) to
be provided by BP and its Subsidiaries for current and former employees
and directors of Amoco will be competitive with those provided generally
by large industrial companies for each respective home-country market,
both with respect to the type and variety of programs as well as the
level of compensation and benefits afforded.
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3.8.1.2. (a) For at least two years following the Effective Time
(such period, the "INITIAL PERIOD"), BP shall provide or cause to be
provided to current and former employees and directors of Amoco and its
Subsidiaries compensation and benefits that are at least as favorable in
the aggregate as the compensation and benefits they were entitled to
receive immediately prior to the Effective Time (including, without
limitation, benefits pursuant to qualified and non-qualified restoration
retirement plans, savings plans, medical plans and programs, deferred
compensation arrangements, incentive plans, and retiree benefit plans,
policies and arrangements); PROVIDED, HOWEVER, that, with respect to
employees who are subject to collective bargaining, all benefits shall be
provided in accordance with the applicable collective bargaining or other
labor agreements; and PROVIDED, FURTHER, that all incentive, bonus and
similar plans shall after the Effective Time be substantially
performance-based. BP shall cause Amoco's general severance program as in
effect immediately prior to the Effective Time to continue without any
reduction in benefits for at least two years following the Effective
Time.
(b) Following the Effective Time, BP shall, and shall cause its
Subsidiaries to, recognize service with Amoco and its Subsidiaries and
any predecessor entities (and any other service credited by Amoco under
similar benefit plans) prior to the Effective Time for all purposes
(including, without limitation, eligibility to participate, vesting,
benefit accrual, eligibility to commence benefits and severance) under
any benefit plans of BP or its Subsidiaries in which the particular
employee or former employee of Amoco (or its respective Subsidiaries)
participates; PROVIDED, HOWEVER, that the foregoing shall not result in
any duplication of benefits. From and after the Effective Time, BP shall,
and shall cause its Subsidiaries to, recognize any and all appropriate
out-of-pocket expenses of each employee or former employee of Amoco and
its Subsidiaries for purposes of determining such employee's and former
employee's (including their beneficiaries and dependents) deductible and
copayment expenses.
3.8.1.3. (a) At or prior to the Effective Time, Amoco shall enter
into employment agreements with certain Amoco officers on the principal
terms agreed between BP and Amoco and having a comparable financial
effect to that identified in the Amoco Disclosure Letter, to take effect
from the Effective Time, from which date certain such officers will be
seconded to BP Amoco.
(b) From and after the Effective Time, BP shall honor, and shall
cause its Subsidiaries to honor, in accordance with its terms, each
existing employment, change of control, severance and termination
agreement between Amoco or any of its Subsidiaries, and any officer,
director or employee of such company, including without limitation all
legal and contractual obligations pursuant to outstanding restoration
plans, bonus deferral plans, vested and accrued benefits and similar
employment and benefit arrangements and agreements in effect as of the
Effective Time.
3.8.2. DIRECTOR AND OFFICER LIABILITY.
(a) BP agrees that all rights to indemnification and all limitations on
liability existing in favor of any Indemnitee (as defined below) in respect
of acts or omissions of such Indemnitees on or prior to the Effective Time
as provided in the articles of incorporation and by-laws of Amoco or an
agreement between an Indemnitee and Amoco or its Subsidiaries in effect as
of the date hereof shall continue in full force and effect in accordance
with the terms thereof.
(b) For six years after the Effective Time, BP shall indemnify and hold
harmless the individuals who on or prior to the Effective Time were officers
or directors of Amoco or any of its Subsidiaries (the "INDEMNITEES") to the
same extent as set forth in Subsection (a) above with respect to all actions
or omissions by them in their capacities as officers or directors of Amoco,
or taken by them at the request of, Amoco or any of its Subsidiaries. In the
event any claim in respect of which indemnification is available pursuant to
the foregoing provisions is asserted or made within such six-year period,
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all rights to indemnification shall continue until such claim is disposed of
or all judgments, orders, decrees or other rulings in connection with such
claim are duly satisfied.
(c) For six years after the Effective Time, BP shall procure the
provision of officers' and directors' liability insurance in respect of acts
or omissions occurring prior to the Effective Time covering each such Person
currently covered by Amoco's officers' and directors' liability insurance
policy on terms with respect to coverage and in amounts no less favorable
than those of such policy in effect on the date hereof; PROVIDED, HOWEVER,
that during such period, BP shall not be required to procure any coverage in
excess of the amount that can be obtained for the remainder of such period
for an annual premium of 300% of the current annual premium paid by Amoco
for its existing coverage.
(d) The obligations of BP under this Section 3.8.2 shall not be
terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 3.8.2 applies without the consent of such
affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 3.8.2 applies shall be third party beneficiaries of this
Section 3.8.2).
3.8.3. DIRECTORS OF BP. At the Effective Time, the board of directors
of BP shall consist of 22 directors, 13 of which shall be directors
designated prior to the Effective Time by BP, of which seven shall be
non-executive directors, and nine of which shall be directors designated by
Amoco, of which seven shall be non-executive directors, and such Amoco and
BP director designees shall be the "NEW DIRECTORS." Those New Directors
designated by Amoco shall be nominated for election as directors of BP with
effect from the Effective Time. BP agrees to procure such resignations of
its respective directors as may be necessary so that at the Effective Time
the New Directors are the only directors of BP. BP shall be entitled to
designate the chairman of each of the nominating, compensation and policy
committees of the BP board of directors. Following the Effective Time, a
majority of the meetings of the board of directors of BP in each year shall
be held in London.
3.8.4. OFFICERS. At the Effective Time, the following persons, so long
as they are willing and able to serve, shall be duly appointed to the
following offices: (A) Peter Sutherland and Larry Fuller to the office of
Co-Chairman, (B) Sir John Browne to the office of Chief Executive Officer of
BP Amoco p.l.c., and (C) such persons as are as set forth in Section 3.8.4
of the Amoco Disclosure Letter (the "LIST OF NEW OFFICERS"), to the offices
set forth therein. If at or immediately prior to the Effective Time, any
person designated on the List of New Officers shall be unwilling or unable
to serve, a person to fill such position shall be designated by mutual
agreement of BP and Amoco.
3.9. EXPENSES. Except as otherwise provided in Section 5.5 (Effect of
Termination and Abandonment), whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement, the Stock Option
Agreement, the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement shall be paid by the party incurring such
expense, except that the parties shall share equally the costs and expenses of
filing, printing and distributing the Form F-4, the Amoco Proxy Statement, the
BP Documents and related documents.
3.10. OTHER ACTIONS BY AMOCO AND BP.
3.10.1. TAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement and the Stock Option Agreement, each of Amoco and BP and its board
of directors shall, subject to applicable Law, grant such approvals and take
such actions as are necessary so that the Merger and the other transactions
contemplated by this Agreement and the Stock Option Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Stock Option Agreement, and otherwise act to eliminate or
minimize the effects of such Takeover Statute on such transactions.
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3.10.2. DIVIDENDS. For a period of at least five years after the
Closing, dividends on the BP Ordinary Shares will be declared in U.S.
dollars. After the date of this Agreement, each of BP and Amoco shall
coordinate with the other the declaration of any dividends in respect of BP
Ordinary Shares and Amoco Common Shares and the record dates and payment
dates related thereto, it being the intention of the Parties that record
dates with respect to such dividends do not occur more or less frequently
than once each calendar quarter with respect to BP Ordinary Shares or Amoco
Common Shares.
3.11. LISTING APPLICATIONS/ESTABLISHMENT OF BP DEPOSITARY SHARES. BP shall
promptly prepare and submit to the LSE a listing application with respect to the
BP Ordinary Shares, and to the NYSE a listing application in respect of the BP
Depositary Shares issuable in the Merger, and shall use its best efforts to
obtain, prior to the Effective Time, approval for the listing of such BP
Ordinary Shares, in the case of the LSE, subject to allotment, and such BP
Depositary Shares, in the case of the NYSE, subject to official notice of
issuance under the symbol "BPA", or such other symbol as the Parties agree. BP
will enter into all necessary agreements with the Depositary and other parties
to establish the BP Depositary Shares issuable pursuant to the Merger.
3.12. LETTERS OF ACCOUNTANTS.
(a) Amoco shall use its best reasonable efforts to cause to be delivered to
BP "comfort" letters of PricewaterhouseCoopers LLP, Amoco's independent public
accountants, dated the effective date of the Form F-4 and the Closing Date,
respectively, and addressed to BP and its directors, in form reasonably
satisfactory to BP and customary in scope and substance for "comfort" letters
delivered by independent public accountants in connection with registration
statements similar to the Form F-4.
(b) BP shall use its best reasonable efforts to cause to be delivered to
Amoco "comfort" letters of Ernst & Young, BP's independent public accountants,
dated the effective date of the Form F-4 and the Closing Date, respectively, and
addressed to Amoco and its directors, in form reasonably satisfactory to Amoco
and customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Form F-4.
3.13. AGREEMENTS OF RULE 145 AFFILIATES.
3.13.1. Prior to the date of the Amoco Shareholders Meeting, Amoco shall
cause to be prepared and delivered to BP a list identifying all persons who,
at the time of the Amoco Shareholders Meeting, Amoco believes may be deemed
to be "affiliates" of Amoco for purposes of applicable interpretation
regarding use of the "pooling-of-interests" accounting method or for
purposes of Rule 145 under the Securities Act (the "AMOCO RULE 145
AFFILIATES"). BP shall be entitled to place restrictive legends on any BP
ADRs (or any underlying BP Ordinary Shares that may be withdrawn upon
surrender of such BP ADRs) received by such Amoco Rule 145 Affiliates. Amoco
shall use its best efforts to cause each person who is identified as an
Amoco Rule 145 Affiliate in such list to deliver to BP, at or prior to the
date of the Amoco Shareholders Meeting, a written agreement, in the form to
be approved by the Parties, that such Amoco Rule 145 Affiliate will not
sell, pledge, transfer or otherwise dispose of any BP Depositary Shares
issued to such Amoco Rule 145 Affiliate pursuant to the Merger (or any
underlying BP Ordinary Shares that may be withdrawn upon surrender of such
BP Depositary Shares), except pursuant to an effective registration
statement or in compliance with Rule 145 or an exemption from the
registration requirements of the Securities Act. Amoco shall use its best
efforts to cause each person who is identified as an Amoco Rule 145
Affiliate in such list to sign on or prior to the date of the Amoco
Stockholders Meeting a written agreement, in the form to be approved by
Amoco and BP, that such party will not sell or in any other way reduce such
party's risk relative to any Amoco Common Shares held prior to the Closing
or BP Depositary Shares received in the Merger (within the meaning of
Section 201.01 of the SEC's Codification of Financial Policies) (or any
underlying BP Ordinary Shares that may be withdrawn upon surrender of such
BP Depositary Shares), until such time as financial results (including
combined sales and net income) covering at
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least 30 days of post-merger operations have been published, except as
permitted by and in accordance with Staff Accounting Series Release 135 and
SEC Staff Accounting Bulletins Nos. 65 and 76 (or any successor thereto)
issued by the SEC. Any BP Ordinary Shares or BP Depositary Shares held by
any Amoco Rule 145 Affiliate shall not be transferable, regardless of
whether such affiliate has provided the applicable written agreement
referred to in this Section, if such transfer, either alone or in the
aggregate with other transfers by affiliates, would preclude BP's ability to
account for the business combination to be effected by the Merger as a
pooling of interests. BP shall not register the transfer of any BP Ordinary
Shares and shall cause the Depositary not to register the transfer of any BP
Depositary Shares unless such transfer is made in compliance with the
foregoing.
3.13.2. Prior to the Effective Time, BP shall cause to be prepared and
delivered to Amoco a list identifying all persons who, at the time of the BP
Shareholders Meeting, BP believes may be deemed to be "affiliates" of BP for
purposes of applicable interpretation regarding use of the "pooling-of-
interests" accounting method (the "BP AFFILIATES"). BP shall use its best
efforts to cause each person who is identified as a BP Affiliate in such
list to sign on or prior to the thirtieth day prior to the Effective Time a
written agreement, in the form to be approved by Amoco and BP, that such
party will not sell or in any other way reduce such party's risk relative to
any BP Ordinary Shares or BP Depositary Shares owned by such party (within
the meaning of Section 201.01 of the SEC's Codification of Financial
Policies, until such time as financial results (including combined sales and
net income) covering at least 30 days of post-merger operations have been
published, except as permitted by and in accordance with Staff Accounting
Series Release 135 and SEC Staff Accounting Bulletins Nos. 65 and 76 (or any
successor thereto) issued by the SEC. Any BP Ordinary Shares or BP
Depositary Shares held by any BP Affiliate shall not be transferable,
regardless of whether such affiliate has provided the applicable written
agreement referred to in this Section, if such transfer, either alone or in
the aggregate with other transfers by affiliates, would preclude BP's
ability to account for the business combination to be effected by the Merger
as a pooling of interests. BP shall not register the transfer of any BP
Ordinary Shares and shall cause the Depositary not to register the transfer
of any BP Depositary Shares unless such transfer is made in compliance with
the foregoing.
3.14. ACCOUNTING AND TAX MATTERS. The Parties agree that after the Closing
the primary consolidated financial statements of BP shall be prepared in
accordance with U.K. GAAP in U.S. dollars. Further, for a period of time not
less than five years from the date of the Closing, BP shall prepare supplemental
consolidated financial statements, which include a reconciliation to U.S. GAAP
in U.S. dollars. Subsequent to the Closing, neither Party shall take any action
that would cause, or omit to take any action the omission of which would cause,
(i) the Merger to fail to qualify as a pooling of interests under U.S. GAAP or
fail to be accounted for using merger accounting methods under U.K. GAAP, (ii)
the Merger to fail to qualify as a reorganization under Section 368(a) of the
Code or (iii) the conversion of Amoco Common Stock into BP Ordinary Shares to
fail to qualify for nonrecognition of gain (except with respect to cash received
in lieu of fractional BP Depositary Shares) and in connection therewith shall
satisfy the tax reporting and filing requirements contained in the Code.
3.15. BP SEC FILINGS. Within 45 days after the end of each of its first
three fiscal quarters in each of its fiscal years, BP agrees that it will use
all reasonable efforts to make filings with the SEC on Form 6-K, containing the
principal financial information required by Form 10-Q. BP further agrees that it
will use all reasonable efforts to make any requisite filings on Form 20-F with
the SEC within 90 days after the end of each of its fiscal years.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of BP, Merger Sub and Amoco to effect the Merger are
subject to the satisfaction or waiver of each of the following conditions:
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4.1.1. SHAREHOLDER APPROVALS. The Merger and the other transactions
contemplated by this Agreement shall have been duly approved by holders of
Amoco Common Shares constituting the Amoco Requisite Vote and the Merger and
the BP Requisite Resolution shall have been duly approved by the
shareholders of BP constituting the BP Requisite Vote.
4.1.2. REGULATORY CONSENTS. All Amoco Required Consents and BP
Required Consents from or with any Governmental Entity (collectively,
"GOVERNMENTAL CONSENTS") in connection with the consummation of the Merger
and the other transactions contemplated hereby shall have been made or
obtained, and such Governmental Consents shall not contain any terms or
impose any condition or restriction relating or applying to, or requiring
changes in or limitations on, the operation of any asset or businesses of
Amoco, BP or any of their respective Subsidiaries which term, condition or
restriction, individually or in the aggregate, would be reasonably likely to
have a Material Adverse Effect on BP or Amoco after the Effective Time (it
being understood that, for this purpose, materiality shall be considered
with reference to the total equity market value of BP and Amoco).
4.1.3. LAWS AND ORDERS. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any Law (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits the consummation of the Merger or
the other transactions contemplated by this Agreement and that, individually
or in the aggregate with all other such Laws, is reasonably likely to have a
Material Adverse Effect on Amoco or BP or that would materially frustrate
the express intent and purposes of this Agreement (collectively, an
"ORDER"), and no Governmental Entity shall have instituted or threatened any
proceeding seeking any such Order.
4.1.4. EFFECTIVENESS OF FORM F-4. The Form F-4 shall have become
effective and no stop order with respect thereto shall be in effect.
4.1.5. EXCHANGE LISTING. The BP Ordinary Shares to be issued pursuant
to the Merger shall have been admitted to the Official List of the LSE and
such admission shall have become effective in accordance with the rules and
regulations of the LSE and the BP Depositary Shares shall have been
authorized for listing on the NYSE, subject to official notice of issuance.
4.2. CONDITIONS TO OBLIGATIONS OF BP. The obligation of BP to effect the
Merger is also subject to the satisfaction or waiver by BP prior to the
Effective Time of the following conditions:
4.2.1. REPRESENTATIONS AND WARRANTIES OF AMOCO. The representations
and warranties of Amoco set forth in this Agreement (i) to the extent
qualified by Material Adverse Effect or any other materiality qualification
shall be true and correct and (ii) to the extent not qualified by Material
Adverse Effect or any other materiality qualification shall be true and
correct (provided that this clause (ii) shall be deemed satisfied so long as
any failures of such representations and warranties to be true and correct,
taken together, do not have a Material Adverse Effect on Amoco) as of the
Closing Date as though made on and as of the Closing Date (except to the
extent any such representation or warranty expressly speaks as of an earlier
date), and BP shall have received a certificate signed on behalf of Amoco by
an executive officer of Amoco to such effect.
4.2.2. PERFORMANCE OF OBLIGATIONS OF AMOCO. Amoco shall have performed
all material obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and BP shall have received a certificate
signed on behalf of Amoco by an executive officer of Amoco to such effect.
4.2.3. CONSENTS UNDER AGREEMENTS. BP shall have obtained the consent
or approval of each Person whose consent or approval shall be required in
order to consummate the Merger and the other transactions contemplated by
this Agreement under any Contract to which BP or any of its Subsidiaries is
a party, except those for which the failure to obtain such consent or
approval, individually or in the aggregate, is not reasonably likely to have
a Material Adverse Effect on BP or is not reasonably likely to prevent or
materially impair the ability of BP to consummate the Merger and the other
transactions contemplated by this Agreement.
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4.2.4. ACCOUNTING LETTERS. BP shall have received letters from Ernst &
Young confirming that under U.S. GAAP and U.K. GAAP, respectively, they
concur with BP management's conclusion that no conditions exist that would
preclude BP from being a party to a business combination for which
pooling-of-interests accounting would be available under U.S. GAAP and the
use of merger accounting methods would be available under U.K. GAAP.
4.3. CONDITIONS TO OBLIGATION OF AMOCO. The obligation of Amoco to effect
the Merger is also subject to the satisfaction or waiver by Amoco prior to the
Effective Time of the following conditions:
4.3.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BP set forth in this Agreement (i) to the extent qualified by
Material Adverse Effect or any other materiality qualification shall be true
and correct, and (ii) to the extent not qualified by Material Adverse Effect
or any other materiality qualification shall be true and correct (provided
that this clause (ii) shall be deemed satisfied so long as any failures of
such representations and warranties to be true and correct, taken together,
do not have a Material Adverse Effect on BP) as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date), and
Amoco shall have received a certificate signed on behalf of BP by an
executive officer of BP to such effect.
4.3.2. PERFORMANCE OF OBLIGATIONS OF BP. BP shall have performed all
material obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Amoco shall have received a certificate
signed on behalf of BP by an executive officer of BP to such effect.
4.3.3. CONSENTS UNDER AGREEMENTS. Amoco shall have obtained the
consent or approval of each Person whose consent or approval shall be
required in order to consummate the Merger and the other transactions
contemplated by this Agreement under any Contract to which Amoco or any of
its Subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on Amoco or is not
reasonably likely to prevent or materially impair the ability of Amoco to
consummate the Merger and the other transactions contemplated by this
Agreement.
4.3.4. TAX OPINION. Amoco shall have received an opinion from
Wachtell, Lipton, Rosen & Katz, dated as of the Effective Time,
substantially to the effect that, on the basis of the facts, representations
and assumptions set forth in such opinion, the Merger will be treated for
U.S. federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that no gain or loss will be recognized by
the stockholders of Amoco who exchange Amoco Common Stock solely for BP
Depositary Shares pursuant to the Merger (except with respect to cash
received in lieu of fractional BP Depositary Shares). Such opinion may note
that "5% shareholders" will qualify for such nonrecognition treatment only
if they enter into a "gain recognition agreement" under regulations
promulgated under Section 367 of the Code. In rendering such opinion,
counsel may require and rely upon certain representations of BP and Amoco
reasonably requested by such counsel.
4.3.5. ACCOUNTING LETTERS. Amoco shall have received letters from
PricewaterhouseCoopers LLP confirming that under U.S. GAAP and U.K. GAAP,
respectively, they concur with Amoco management's conclusion that no
conditions exist that would preclude Amoco from being a party to a business
combination for which pooling-of-interests accounting would be available
under U.S. GAAP and the use of merger accounting methods would be available
under U.K. GAAP.
4.3.6. NEW DIRECTORS. Those New Directors designated by Amoco shall
have been elected as directors of BP Amoco at the BP Shareholders Meeting.
ARTICLE V
TERMINATION
5.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approvals by shareholders
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of Amoco and BP referred to in paragraph 4.1.1 (Shareholder Approvals), by
mutual written consent of Amoco and BP, by action of their respective boards of
directors.
5.2. TERMINATION BY EITHER BP OR AMOCO. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time by
action of the board of directors of either BP or Amoco if (i) the Merger shall
not have been consummated by August 31, 1999, whether such date is before or
after the date of approval by the shareholders of Amoco or BP (the "TERMINATION
DATE"), (ii) any Order permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger shall have become final and
non-appealable, whether before or after the approval by the shareholders of
Amoco or BP, (iii) the Amoco Requisite Vote shall not have been obtained at the
duly held Amoco Shareholders Meeting, including any adjournments or
postponements thereof, or (iv) the BP Requisite Vote shall not have been
obtained at the duly held BP Shareholders Meeting, including any adjournments or
postponements thereof; PROVIDED that the right to terminate this Agreement shall
not be available to a Party that has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure of the Merger to be consummated.
5.3. TERMINATION BY AMOCO. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after the approval by shareholders of Amoco referred to in paragraph 4.1.1
(Shareholder Approvals), by action of the board of directors of Amoco, if (i)
the board of directors of BP shall have withdrawn or adversely modified its
approval or recommendation to shareholders of the Merger or failed to reconfirm
such recommendation within seven business days after a written request by Amoco
to do so; or (ii) BP or its board of directors shall take any of the actions
described in clause (ii) or clause (iii) of the proviso to Section 3.2.1
(Acquisition Proposals); or (iii) there shall be a breach by BP of any
representation, warranty, covenant or agreement contained in this Agreement
which would result in a failure of a condition set forth in paragraph 4.3.1 or
4.3.2 and cannot be or is not cured prior to the Termination Date.
5.4. TERMINATION BY BP. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after the approval by the shareholders of BP referred to in paragraph 4.1.1
(Shareholder Approvals), by action of the board of directors of BP, if (i) the
board of directors of Amoco shall have withdrawn or adversely modified its
approval or recommendation to shareholders of the Merger or failed to reconfirm
such recommendation within seven business days after a written request by BP to
do so; or (ii) Amoco or its board of directors shall take any of the actions
described in clause (ii) or clause (iii) of the proviso to Section 3.2.1
(Acquisition Proposals); or (iii) there shall be a breach by Amoco of any
representation, warranty, covenant or agreement contained in this Agreement
which would result in a failure of a condition set forth in paragraph 4.2.1 or
4.2.2 and cannot be or is not cured prior to the Termination Date.
5.5. EFFECT OF TERMINATION AND ABANDONMENT.
5.5.1. In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article V, this Agreement (other than as set
forth in Section 6.1 (Survival)) shall become void and of no effect with no
liability on the part of either Party (or of any of its Representatives);
PROVIDED, HOWEVER, that no such termination shall relieve either Party of
any liability for damages resulting from any willful and intentional breach
of this Agreement or from any obligation to pay, if applicable, the amounts
payable pursuant to Section 5.5.2 or 5.5.3.
5.5.2. In the event that (i) this Agreement is terminated by either
Amoco or BP pursuant to Section 5.2(iii) and at the time of the Amoco
Shareholders Meeting (or at any adjournment thereof) an Acquisition Proposal
exists with respect to Amoco or (ii) this Agreement is terminated by BP
pursuant to Section 5.4(i), 5.4(ii) (solely with respect to the
recommendation by Amoco or the Board of Directors of Amoco of an Acquisition
Proposal with respect to Amoco) or 5.4(iii) (solely with respect to a
willful and intentional breach of Section 3.2), then Amoco shall promptly,
but in no event later than two days after the date of such termination, pay
to BP a termination payment equal to the Amoco Termination Amount (as
defined below), which amount shall be exclusive of any expenses to
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be paid pursuant to Section 3.9 (Expenses), payable by wire transfer of same
day funds. The term "AMOCO TERMINATION AMOUNT" shall mean, in the case of
termination by BP pursuant to clause (ii) of the preceding sentence,
$950,000,000 or, in the case of termination by Amoco or BP pursuant to
clause (i) of the preceding sentence, "Amoco Termination Amount" shall mean
$500,000,000, PLUS, if (x) Amoco executes and delivers an agreement with
respect to any Acquisition Proposal (an "AMOCO ALTERNATIVE AGREEMENT") or
(y) an Acquisition Proposal with respect to Amoco is consummated, in any
such case, within 12 months from the date of termination, an additional
$450,000,000 (which additional amount shall be paid promptly by wire
transfer in same day funds, and in no event later than two days after the
earliest date on which the event requiring Amoco to pay such additional sum
occurs). In the event that the board of directors of Amoco recommends the
acceptance by Amoco shareholders of a third-party tender or exchange offer
for the Amoco Common Shares, such recommendation shall be treated for
purposes of this paragraph as though an Amoco Alternative Agreement had been
executed. Amoco acknowledges that the agreements contained in this Section
5.5.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, BP would not enter into this
Agreement; accordingly, if Amoco fails promptly to pay any amount due
pursuant to this Section 5.5.2, and, in order to obtain such payment, BP
commences a suit which results in a judgment against Amoco for the payment
set forth in this Section 5.5.2, Amoco shall pay to BP its costs and
expenses (including attorneys' fees) in connection with such suit, together
with interest on the Amoco Termination Amount from each date for payment
until the date of such payment at the prime rate of Citibank N.A. in effect
on the date such payment was required to be made plus 2 percent.
5.5.3. In the event that (i) this Agreement is terminated by either
Amoco or BP pursuant to Section 5.2(iv) and at the time of the BP
Shareholders Meeting (or at any adjournment thereof) an Acquisition Proposal
exists with respect to BP or (ii) this Agreement is terminated by Amoco
pursuant to Section 5.3(i), 5.3(ii) (solely with respect to the
recommendation by BP or the board of directors of BP of an Acquisition
Proposal with respect to BP) or 5.3(iii) (solely with respect to a willful
and intentional breach of Section 3.2), then BP shall promptly, but in no
event later than two days after the date of such termination, pay to Amoco a
termination payment equal to the BP Termination Amount (as defined below),
which amount shall be exclusive of any expenses to be paid pursuant to
Section 3.9 (Expenses), payable by wire transfer of same day funds. The term
"BP Termination Amount" shall mean, in the case of termination by Amoco
pursuant to clause (ii) of the preceding sentence, $1,000,000,000 or, in the
case of termination by Amoco or BP pursuant to clause (i) of the preceding
sentence, "BP Termination Amount" shall mean $500,000,000, plus, if (x) BP
executes and delivers an agreement with respect to any Acquisition Proposal
(a "BP ALTERNATIVE AGREEMENT") or (y) an Acquisition Proposal with respect
to BP is consummated, in any such case, within 12 months from the date of
termination, an additional $500,000,000 (which additional amount shall be
paid promptly by wire transfer in same day funds, and in no event later than
two days after the earliest date on which the event requiring BP to pay such
additional sum occurs). In the event that the board of directors of BP
recommends the acceptance by BP shareholders of a third-party tender offer
or exchange offer for the BP Ordinary Shares, such recommendation shall be
treated for purposes of this paragraph as though a BP Alternative Agreement
had been executed. BP acknowledges that the agreements contained in this
Section 5.5.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Amoco would not enter into
this Agreement; accordingly, if BP fails promptly to pay any amount due
pursuant to this Section 5.5.3, and, in order to obtain such payment, Amoco
commences a suit which results in a judgment against BP for the payment set
forth in this Section 5.5.3, BP shall pay to Amoco its costs and expenses
(including attorneys' fees) in connection with such suit, together with
interest on the BP Termination Amount from each date for payment until the
date of such payment at the prime rate of Citibank N.A. in effect on the
date such payment was required to be made plus 2 percent.
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ARTICLE VI
MISCELLANEOUS AND GENERAL
6.1. SURVIVAL. This Article VI and the agreements of Amoco and BP
contained in Sections 3.8 (Benefits and Other Matters), 3.9 (Expenses), 3.10.2
(Dividends), 3.14 (Accounting and Tax Matters) and 3.15 (BP SEC Filings) shall
survive the Effective Time. This Article VI (other than Section 6.2
(Modification or Amendment), Section 6.3 (Waiver of Conditions) and Section 6.12
(Assignment)), the representations and warranties contained in Section 2.1.3
(Corporate Authority; Approval and Fairness), the agreements of Amoco and BP
contained in Section 3.9 (Expenses), Section 5.5 (Effect of Termination and
Abandonment), and the last sentence of Section 3.6 (Access) shall survive the
termination of this Agreement. All other representations, warranties, agreements
and covenants in this Agreement shall not survive the Effective Time or the
termination of this Agreement.
6.2. MODIFICATION OR AMENDMENT. This Agreement may be modified or amended
by agreement of the Parties, by action taken or authorized by their respective
boards of directors, at any time prior to the Effective Time; PROVIDED, HOWEVER,
that, after approval by shareholders of the matters presented at the Amoco
Shareholders Meeting or the BP Shareholders Meeting, no modification or
amendment shall be made which under applicable Law requires further approval by
such shareholders without such further approval. This Agreement may not be
modified or amended except by an instrument in writing executed and delivered by
duly authorized officers of each of the Parties.
6.3. WAIVER OF CONDITIONS. Any provision of this Agreement may be waived
prior to the Effective Time if, and only if, such waiver is in writing and
signed by the Party against whom the waiver is to be effective.
6.4. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. Except as otherwise herein provided, the rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
6.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
6.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
6.6.1. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS TO BE
PERFORMED WHOLLY IN SUCH STATE, EXCEPT TO THE EXTENT THAT IN THE CASE OF
AMOCO OR MERGER SUB, THE INDIANA BUSINESS CORPORATION LAW AND, IN THE CASE
OF BP, THE COMPANIES ACT AND ENGLISH LAW ARE APPLICABLE. The parties hereby
irrevocably submit to the jurisdiction of the federal courts of the United
States of America located in the Borough of Manhattan, New York State solely
in respect of the interpretation and enforcement of the provisions of this
Agreement and the Stock Option Agreement and in respect of the transactions
contemplated hereby and thereby and hereby waive, and agree not to assert,
as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or
that the venue thereof may not be appropriate or that this Agreement may not
be enforced in or by such courts, and the Parties irrevocably agree that all
claims with respect to such action or proceeding shall be heard and
determined in such a federal court. The parties hereby consent to and grant
any such court jurisdiction over the person of such Parties and over the
subject matter of such dispute and agree that
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mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 6.7 (Notices), or in such other
manner as may be permitted by Law, shall be valid and sufficient service
thereof.
6.6.2. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE STOCK OPTION AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6.
6.7. NOTICES. Notices, requests, instructions or other documents to be
given under this Agreement shall be in writing and shall be deemed given, (i)
when sent if sent by facsimile, provided that the facsimile is promptly
confirmed by telephone confirmation thereof, (ii) when delivered, if delivered
personally to the intended recipient, and (iii) one business day later, if sent
by overnight delivery via a national courier service, and in each case,
addressed to a Party at the following address for such Party:
IF TO AMOCO:
Amoco Corporation
200 East Randolph Drive
Chicago, IL 60601
Attention: Stephen F. Gates, Esq.
Telecopier: (312) 856-2039
with copies to
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Telecopier: (212) 403-2000
and
Freshfields
65 Fleet Street
London EC4Y 1HS
Attention: William P.L. Lawes, Esq.
Telecopier: (44) 171-832-7001
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IF TO BP OR MERGER SUB:
The British Petroleum Company p.l.c.
Britannic House
1 Finsbury Circus
London EC2M 7BA
Attention: Peter B.P. Bevan, Esq.
Telecopier: (44) 171-496-4571
with copies to
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Benjamin F. Stapleton, Esq.
Telecopier: (212) 558-3588
and
Linklaters & Paines
One Silk Street
London EC2Y 8HQ
Attention: David W. Cheyne, Esq.
Telecopier: (44) 171-456-2222
or to such other Persons or addresses as may be designated in writing by the
Party to receive such notice as provided above.
6.8. ENTIRE AGREEMENT. This Agreement (including any exhibits hereto), the
Amoco Disclosure Letter, the BP Disclosure Letter, the Stock Option Agreement
and the Confidentiality Agreement constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties both
written and oral, between the Parties with respect to the subject matter hereof.
References herein to this Agreement shall for all purposes be deemed to include
references to the Amoco Disclosure Letter and the BP Disclosure Letter. Except
as set forth in Section 3.8.2 (Director and Officer Liability), this Agreement
is not intended to confer upon any Person other than the Parties any rights or
remedies hereunder. No employee or former employee of Amoco or BP who is not a
director of Amoco or BP shall be deemed a third party beneficiary with respect
to any provision of this Agreement. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE STOCK OPTION
AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED HEREBY OR THEREBY, NONE OF AMOCO,
BP OR MERGER SUB MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
6.9. OBLIGATIONS OF BP AND OF AMOCO. Whenever this Agreement requires a
Subsidiary of BP to take any action, such requirement shall be deemed to include
an undertaking on the part of BP to use best reasonable efforts to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
Amoco to take any action, such requirement shall be deemed to include an
undertaking on the part of Amoco to use best reasonable efforts to cause such
Subsidiary to take such action.
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<PAGE>
6.10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision unless the substitution of such provision would materially frustrate
the express intent and purposes of this Agreement and (b) the remainder of this
Agreement and the application of such provision to other Persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
6.11. INTERPRETATION. The headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section or Exhibit, such reference shall be to a Section
of or Exhibit to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
6.12. ASSIGNMENT. This Agreement shall not be assignable by operation of
law or otherwise, and any purported assignment in violation of this provision
shall be void.
A-31
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of BP, Amoco and Merger Sub as of the date hereof.
THE BRITISH PETROLEUM COMPANY p.l.c.
By: /s/ PETER D. SUTHERLAND
------------------------------------------
Name: Peter D. Sutherland
Title: CHAIRMAN
By: /s/ JOHN BROWNE
------------------------------------------
Name: John Browne
Title: CHIEF EXECUTIVE OFFICER
AMOCO CORPORATION
By: /s/ H. LAURANCE FULLER
------------------------------------------
Name: H. Laurance Fuller
Title: CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
EAGLE HOLDINGS, INC.
By: /s/ PETER B. P. BEVAN
------------------------------------------
Name: Peter B. P. Bevan
Title: PRESIDENT
A-32
<PAGE>
APPENDIX B
[LOGO]
August 11, 1998
Board of Directors
Amoco Corporation
200 East Randolph Dr.
Chicago, IL 60601
Members of the Board:
We understand that Amoco Corporation ("Amoco"), an Indiana Corporation, The
British Petroleum Company p.l.c. ("BP"), an English public limited company, and
Eagle Holdings, Inc. (the "Merger Sub"), an Indiana corporation and a wholly
owned subsidiary of BP, have entered into an Agreement and Plan of Merger, dated
as of August 11, 1998 (the "Agreement"), which provides, among other things, for
the merger of Merger Sub with and into Amoco (the "Merger"). Pursuant to the
Merger, each issued and outstanding share of common stock, without par value, of
Amoco (the "Amoco Common Stock"), other than shares held by BP or any subsidiary
of BP or Amoco, will be converted into the right to receive either (i) 3.97 (the
"Exchange Ratio") ordinary shares, of nominal value 25p each, of BP (the "BP
Ordinary Shares"), which shall be in the form of American Depositary Receipts
(the "ADRs"), or (ii) a form of BP Ordinary Shares, as BP and Amoco may agree in
accordance with the terms of the Agreement. We further understand that BP and
Amoco have entered into a Stock Option Agreement, dated as of August 11, 1998
(the "Stock Option Agreement"), pursuant to which Amoco has agreed to grant to
BP an option to purchase a certain number of shares of Amoco Common Stock (the
"Option"). The terms and conditions of the Merger and the Option are more fully
set forth in the Agreement and the Stock Option Agreement, respectively.
You have asked for our opinion as to whether the Exchange Ratio is fair from
a financial point of view to the holders of shares of Amoco Common Stock (other
than BP and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Amoco and BP, respectively;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning Amoco, and had confirmatory discussions with
the management of Amoco regarding their discussions with the
management of BP regarding financial and operating data concerning BP;
(iii) conducted confirmatory discussions with management of BP regarding its
financial and operating performance;
(iv) reviewed information relating to certain strategic, financial and
operational benefits anticipated from the Merger, prepared by the
management of Amoco and BP;
(v) discussed the past and current operations and financial condition and
the prospects of Amoco with management of Amoco;
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<PAGE>
(vi) reviewed the reported prices and trading activity for Amoco Common
Stock and BP Ordinary Shares;
(vii) compared the financial performance of Amoco and BP and the prices and
trading activity of Amoco Common Stock and BP Ordinary Shares with
that of certain other publicly traded companies comparable with Amoco
and BP;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable transactions;
(ix) participated in discussions and negotiations among representatives of
Amoco and BP and their financial and legal advisors;
(x) reviewed the Agreement, Stock Option Agreement and certain related
documents; and
(xi) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the internal financial statements and other
financial and operating data, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of the future financial
performance of Amoco and BP. We have not made any independent valuation or
appraisal of the assets or liabilities of Amoco or BP, nor have we been
furnished with any such appraisals. We have further assumed that the Merger will
be consummated on the terms set forth in the Agreement and that the Merger will
be accounted for as a pooling-of-interests under generally accepted accounting
principles. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of Amoco in
connection with this transaction and will receive a fee for our services,
including a transaction fee, which is contingent upon the consummation of the
Merger. In the past, Morgan Stanley & Co. Incorporated and its affiliates have
provided financial advisory and financing services for Amoco and BP and have
received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Amoco and may not be used for any other purpose without our prior
written consent; except that this opinion may be included in its entirety in any
filing made by Amoco with the Securities and Exchange Commission in connection
with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio is fair from a financial point of view to the
holders of Amoco Common Stock (other than BP and its affiliates).
Very truly yours,
/s/ MORGAN STANLEY
B-2
<PAGE>
APPENDIX C
[LOGO]
August 11, 1998
[LOGO]
The Board of Directors
The British Petroleum Company p.l.c.
Britannic House
1 Finsbury Circus
London EC2M 7BA
Attn: Peter Sutherland, Chairman
Ladies and Gentlemen:
You have requested our opinion as to the fairness,
from a financial point of view to The British
Petroleum Company p.l.c. (the "Company"), of the
Exchange Ratio (as defined below) negotiated between
the Company and Amoco Corporation (the "Counterparty"
and together with the Company, the "Parties"), with
respect to the proposed merger to be implemented by
the Parties (the "Transaction") pursuant to the
Agreement and Plan of Merger proposed to be dated
August 11, 1998 (the "Merger Agreement") between the
Parties and the Stock Option Agreement to be dated
August 11, 1998 (the "Option Agreement") (together
the "Agreements").
Under the terms of the Agreements, Sub Corporation, a
wholly owned subsidiary of the Company, will merge
with and into the Counterparty, whereupon the
Counterparty will be the surviving corporation in the
merger and will become a wholly owned subsidiary of
the Company. Each share of Common Stock of the
Counterparty will be converted into 3.97 (the
"Exchange Ratio") ordinary shares of the Company
which, unless otherwise agreed, will be in the form
of American Depositary Shares.
Please be advised that while certain provisions of
the Transaction are summarized above, the terms of
the Transaction are more fully described in the
Agreements. As a result, the description of the
Transaction and certain other information contained
herein is qualified in its entirety by reference to
the Agreements.
In arriving at our opinion, we have reviewed (i) an
August 10, 1998 draft of the Merger Agreement and an
August 9, 1998 draft of the Option Agreement; (ii)
certain publicly available information concerning the
businesses of the Parties and certain other companies
that we have deemed comparable, and the reported
market prices for the securities of certain other
companies that we have deemed comparable; (iii)
publicly available terms of certain transactions
involving companies comparable to the Parties and the
consideration paid in such transactions; (iv) current
and historical market prices of the common stock of
the Parties; (v) the audited financial statements of
the Parties for the fiscal year ended December 31,
1997, the unaudited financial statements of the
Parties for the periods ended March 31, 1998, and for
the periods ended June 30, 1998; (vi) certain
presentations to the investor community regarding the
business outlook for each of the Parties; and (vii)
certain internal financial analyses and forecasts
prepared by the Company and its management, including
a review of expected synergies.
[LOGO]
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[LOGO]
In addition, we have held discussions with certain
members of the management of the Company with respect
to the past and current business operations of the
Parties, the financial condition and future prospects
and operations of the Company, the effects of the
Transaction on the financial condition and future
prospects of the Company, and certain other matters
we believed necessary or appropriate to our inquiry.
We participated in a discussion of certain financial
due diligence matters held between the senior
management of the Parties on August 7 1998. We have
reviewed such other financial studies and analyses
and considered such other information as we have
deemed appropriate for the purposes of this opinion.
In performing such analysis, we have used such
valuation methodologies as we have deemed necessary
or appropriate for the purposes of this opinion. Our
view is based on (i) our consideration of the
information the Parties and their respective
representatives and advisors have supplied to us to
date, (ii) our understanding of the terms upon which
the Company and the Counterparty intend to consummate
the Transaction, including, without limitation, those
with respect to governance and control of the Company
after consummation of the Transaction, (iii) the
currently contemplated capital structure and the
anticipated credit standing of the Company and its
subsidiaries upon consummation of the Transaction,
and (iv) the assumption that the Transaction will be
consummated within the time periods contemplated by
the Agreements.
In giving our opinion, we have relied upon and
assumed, without independent verification, the
accuracy and completeness of all information that was
publicly available or was furnished to us by the
Company and the Counterparty and their respective
representatives and advisors or otherwise reviewed by
us. We have not verified the accuracy or completeness
of any such information and we have not conducted any
evaluation or appraisal of any assets or liabilities,
nor have any such valuations or appraisals been
provided to us. In relying on financial analyses and
forecasts provided to us, we have assumed that they
have been reasonably prepared based on assumptions
reflecting the best currently available estimates and
judgments by management of the Company as to the
expected future results of operations and financial
condition of the Company to which such analyses or
forecasts relate. We have also assumed that the
transaction will have the tax and accounting
consequences described in discussions with
representatives and advisers of the Company. In
particular we have also assumed that the Transaction
will be accounted for as a "pooling of interests"
under generally accepted accounting principles in the
United States and using merger accounting methods
under generally accepted accounting principles in the
United Kingdom. We have relied as to all legal
matters relevant to rendering our opinion upon the
advice of counsel.
Our opinion is necessarily based on economic, market
and other conditions as in effect on, and the
information made available to us as of, the date
hereof. It should be understood that subsequent
developments may affect this opinion and that we do
not have any obligation to update, revise or reaffirm
this opinion. In the ordinary course of their
businesses, affiliates of the undersigned may
actively trade the debt and equity securities of the
Parties and their respective affiliates, for their
own accounts, or for the accounts of customers, and
accordingly, may at any time hold a long or short
position in such securities.
We are expressing no opinion herein as to the price
at which any securities of either of the Parties will
trade at any time. Other factors after the date
hereof may affect the value of the businesses of the
Parties either before or after consummation of the
Transaction, including but not limited to (i) the
total or partial disposition of the equity securities
of the Company by shareholders of the Parties within
a short period of time after the effective date of
the Transaction, (ii) changes in prevailing interest
rates and other factors which generally influence the
price of securities, (iii) adverse changes in the
current capital markets, (iv) the occurrence of
adverse changes in the financial condition, business,
assets, results of operations or prospects of the
Parties, (v) any actions taken or restrictions
imposed by federal, state or other governmental
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<PAGE>
[LOGO]
agencies or regulatory authorities, and (vi) timely
execution of all necessary agreements to complete the
Transaction on terms and conditions that are
acceptable to all parties at interest. No opinion is
expressed whether any alternative transaction might
be more beneficial to the Company.
We have acted as financial advisor to the Company
with respect to the proposed Transaction and will
receive a fee from the Company for our services. We
will also receive an additional fee if the proposed
Transaction is consummated or in certain other
circumstances. Please be advised that we have had and
continue to have significant and on-going financial
advisory and other relationships with the Company and
the Counterparty.
On the basis of and subject to the foregoing, it is
our opinion as of the date hereof that the Exchange
Ratio in the proposed Transaction is fair, from a
financial point of view, to the Company.
It is understood that this letter is for the
information of the Board of Directors of the Company
and may not be used for any other purpose without our
prior written consent.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ J.R. WILSON
----------------------------------------
Name: J.R. Wilson
Title: Vice President
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APPENDIX D
SUMMARY LISTING PARTICULARS
1. LISTING PARTICULARS
Listing Particulars dated 30 October 1998 and prepared in accordance with
the Listing Rules made under Section 142 of the Financial Services Act 1986
have been published and alone contain full details relating to BP and the BP
Amoco Ordinary Shares to be issued in connection with the Merger (the
"Consideration Shares").
The Directors and the Proposed Directors, whose names appear in paragraph 2
below, accept responsibility for the information contained in the Listing
Particulars and these Summary Listing Particulars. To the best of the
knowledge and belief of the Directors and the Proposed Directors (who have
taken all reasonable care to ensure that such is the case), such information
is in accordance with the facts and does not omit anything likely to affect
the import of such information.
The Directors are satisfied that these Summary Listing Particulars contain a
fair summary of the key information set out in the Listing Particulars.
Unless otherwise defined herein, terms defined in the Proxy
Statement/Prospectus, to which these Summary Listing Particulars are
appended, shall apply herein.
These Summary Listing Particulars have been authorised for issue by the
London Stock Exchange without approval of their contents.
2. DIRECTORS AND REGISTERED OFFICE
2.1 The Directors of BP and their current functions are as follows:
<TABLE>
<S> <C>
Peter D Sutherland Non-Executive Chairman
Sir John Browne Group Chief Executive
Dr John G S Buchanan Chief Financial Officer
Rodney F Chase Deputy Group Chief Executive and Managing Director
Dr Christopher S Gibson-Smith Managing Director
Richard L Olver Managing Director
Bryan K Sanderson Managing Director
Sir James Glover* Non-Executive Director
Dr Karen N Horn* Non-Executive Director
Charles F Knight Non-Executive Director
H Michael P Miles Non-Executive Director
Sir Robin Nicholson Non-Executive Director
Sir Ian Prosser Non-Executive Director
Sir Patrick Sheehy* Non-Executive Director
Robert P Wilson Non-Executive Director
The Lord Wright of Richmond Non-Executive Director
</TABLE>
The registered office and the principal place of business of BP is at
Britannic House, 1 Finsbury Circus, London EC2M 7BA, England.
Directors who will resign with effect from the Effective Time and
therefore not become Directors of BP Amoco are marked with an asterisk
(*).
D-1
<PAGE>
2.2 The Proposed Directors of BP Amoco designated by Amoco pursuant to
the Merger Agreement and their functions will be as follows:
<TABLE>
<S> <C>
H Laurance Fuller....... Executive Co-Chairman
William G Lowrie........ President and Deputy Chief Executive
Officer, Refining, Marketing and
Chemicals
Ruth S Block............ Non-Executive Director
John H Bryan............ Non-Executive Director
Erroll B Davis, Jr...... Non-Executive Director
Richard J Ferris........ Non-Executive Director
Floris A Maljers........ Non-Executive Director
Dr Walter E Massey...... Non-Executive Director
Michael H Wilson........ Non-Executive Director
</TABLE>
The business address of the Proposed Directors is 200 East Randolph
Drive, Chicago, Illinois 60601, United States.
3. INFORMATION ON BP
BP was incorporated in 1909 and is one of the world's largest petroleum and
petrochemical groups. The BP Group (being BP and its subsidiary undertakings
and, where the context requires, its interests in joint ventures and
associated undertakings) has well established operations in Europe, the
U.S., Australasia and parts of Africa, and is expanding its presence in
other areas, notably China, South East Asia, South America and the former
Soviet Union.
BP's main businesses are exploration and production, refining and marketing
and chemicals. Exploration and production's activities include oil and gas
exploration and field development and production (upstream activities),
together with pipeline transportation, gas processing and gas marketing
(midstream activities). The activities of refining and marketing include oil
supply and trading as well as refining and marketing (downstream
activities). Chemicals activities include petrochemicals manufacturing and
marketing. The BP Group provides high quality technological support for all
its businesses through its research and engineering activities.
Over the five years to 31 December 1997 BP made significant investments in
its core activities. Between 1993 and the end of 1997, BP has invested in
aggregate almost L16 billion on capital expenditure and acquisitions. At the
same time, BP reduced its net debt (that is, debt less cash and liquid
resources) from U.S.$15.1 billion (L10.0 billion) at the beginning of 1993
to U.S.$6.9 billion (L4.2 billion) at 31 December 1997.
During the period 1993 to 1997, the exploration and production business
pursued a strategy of maximising the value realisable from existing assets
and providing for the growth of the business by concentrating on areas where
BP believes substantial volumes of low cost, high value reserves can be
found. Accordingly, decline management and improved recovery techniques have
been undertaken to improve the quality of the portfolio. Large new
discoveries have been made across the world. The combination of the focus on
acreage of good potential and the application of new technology has enabled
BP to achieve a record of more than one productive exploration well for each
two wells drilled over the five years to 31 December 1997.
Refining and marketing has been reducing costs and improving BP's asset
portfolio. Over the five years to 31 December 1997, the Ferndale, Lima and
Marcus Hook refineries in the U.S. were sold and crude oil processing ceased
at the Pernis refinery, Rotterdam. The remaining refineries are the object
of an investment program aimed at improving their competitive position in
their local markets. Similarly, the portfolio of marketing assets has been
continually reshaped through a process of selected investment, swaps and
divestments in order to concentrate on areas where strong market shares can
be built.
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In 1996, BP and Mobil Corporation ("Mobil") announced their intention to
create a joint venture by combining their respective European operations in
the refining and marketing of fuels and lubricants. Under the joint venture
which has now been implemented, BP operates and has a 70 per cent. interest
in the fuels refining and marketing operations, and a 49 per cent. interest
in the lubricants business which Mobil operates.
Chemicals has been investing in sites which offer competitive advantages
such as access to lower-cost feedstocks or to markets, and disposing of
assets which are no longer seen as being in the core of the business. It has
also been reducing its cash fixed costs. Chemicals' asset base is located
principally in the U.K., Europe and the U.S. but the BP Group is building up
chemicals' presence in the Far East through a series of joint ventures.
Whilst BP remains confident in the ability of the BP Group to deliver
further underlying performance improvements, a continuation of the current
adverse external environment will affect the oil sector and hence BP's
overall results. BP's results in the near future may be characterised by
greater uncertainty than a year ago.
4. INFORMATION ON AMOCO
Amoco has been in business for 109 years. It has operations in approximately
30 countries and employs some 43,400 people worldwide. As at 31 December
1997, it had more than $32 billion in assets, and generated more than $2.7
billion net income in 1997. Amoco's business is conducted primarily in three
sectors:
(a) The exploration and production sector explores for, develops and
produces crude oil and natural gas worldwide.
(b) The petroleum products sector is one of the largest sellers of gasoline
in the United States with approximately 9,300 retail outlets. It has five
refineries and owns or operates about 15,000 miles of pipelines for
transportation of crude oil, refined products, natural gas and carbon
dioxide.
(c) The chemicals sector is a major producer of chemicals, including PTA,
poly alpha-olefins, linear alpha-olefins, polybutene and polypropylene.
The mid-to-late 1990s have been highlighted by increased partnering and
international growth. Perhaps the most innovative customer offerings can be
seen through alliances and partnerships. For example, in 1997 Amoco entered
into a joint venture with Shell Oil Company and Sonat Exploration to deliver
natural gas from new, deepwater Gulf of Mexico fields.
In 1997 Amoco and Shell Oil Company established Altura Energy Ltd to operate
their oil and gas properties in Texas and New Mexico. Other alliances
include the purchase of an interest in and role as operator of Empresa
Petrolera Chaco, S.A., formed in the privatisation of Bolivia's state oil
company, and the formation in 1997 of Pan American Energy LLC ("Pan American
Energy") by combining the assets of Amoco Argentina Oil Company and Bridas
Corporation to become one of the largest energy companies in Argentina.
Early in 1998, Pan American Energy was selected as a partner to build, own
and operate a natural gas pipeline connecting Argentina and Uruguay. Amoco's
presence is strengthening in other areas of Latin America, including the
construction of a liquified natural gas plant in Trinidad, scheduled to come
on stream next year. Recently, a significant offshore crude oil discovery
was made in Trinidad and Tobago, and crude oil extraction began from
Azerbaijan's Aseri-Chirag-Guneshli development in the Caspian Sea, in which
Amoco has 17 per cent. interest.
5. PROPOSED MERGER WITH AMOCO
BP and Amoco have entered into an Agreement and Plan of Merger, dated as of
11 August 1998, as amended (the "Merger Agreement"), together with Eagle
Holdings, Inc. ("Merger Sub") pursuant to which they agreed that Merger Sub
would be merged with and into Amoco, with Amoco being the
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<PAGE>
surviving corporation in the merger (the "Merger"). Pursuant to the Merger,
Amoco will become a wholly owned subsidiary of BP and BP will be renamed "BP
Amoco p.l.c." ("BP Amoco").
The terms of the Merger Agreement provide that each outstanding share of
Amoco common stock, without par value (an "Amoco Share"), will, upon the
terms and subject to the conditions set forth in the Merger Agreement, be
cancelled and Amoco Shareholders will receive for each Amoco Share 3.97
Consideration Shares, in the form of BP Amoco American depositary shares
("BP Amoco ADSs"). Because each BP Amoco ADS represents six Consideration
Shares, Amoco Shareholders will receive approximately 0.66167 of a BP Amoco
ADS in exchange for each Amoco Share owned by them at the Effective Date.
Fractional BP Amoco ADSs will not be issued in connection with the Merger.
Amoco Shareholders will instead be paid cash equal to their proportionate
interest in the net proceeds from the sale on the NYSE of the aggregate of
all fractional BP Amoco ADSs that would otherwise be issued to Amoco
Shareholders in the Merger.
The Merger is subject to the approval of the shareholders of BP and Amoco at
general meetings of the respective companies, together with the fulfillment
of certain other conditions, including obtaining regulatory consents.
The Merger Agreement may be terminated by either party in certain
circumstances before the Merger becomes effective and in certain
circumstances a termination payment of up to U.S.$1 billion may be payable
by BP to Amoco or an equivalent sum will be paid by Amoco to BP pursuant to
the Merger Agreement and received by BP pursuant to the Stock Option
Agreement.
The Merger will become effective only following the receipt of shareholder
approvals and the satisfaction of the other conditions to the Merger. BP and
Amoco hope to complete the Merger by 31 December 1998.
6. PROCEDURE FOR RECEIVING BP ADSS
Promptly after the Effective Time, the Surviving Corporation or the Exchange
Agent will mail to each Amoco Shareholder of record (other than Amoco
Shareholders who hold certificates representing Amoco Excluded Shares or who
hold Amoco Shares only in DRS) a letter of transmittal for use in effecting
delivery of Amoco Certificates to the Exchange Agent. Upon surrender by an
Amoco Shareholder of an Amoco Certificate for cancellation to the Exchange
Agent, together with a duly executed and completed letter of transmittal,
and any other documents required by the Exchange Agent or, in the case of an
Amoco Shareholder holding Amoco Shares only through DRS, without further
action, each such holder will be entitled to receive (A) the whole number of
BP Amoco ADSs that such holder has the right to receive as Merger
Consideration and (B) a check in the amount (after giving effect to any
required tax withholdings) of (i) cash in lieu of fractional BP Amoco ADSs
to be paid pursuant to the terms of the Merger Agreement and (ii) any cash
dividends or other distributions payable in respect of BP Amoco Ordinary
Shares with a record date between the Effective Time and the date of the
surrender of the Amoco Certificate and delivery of other documents required
by the Exchange Agent. The Amoco Certificates so surrendered will be
cancelled. No interest will be paid or accrued on any amount payable upon
surrender of the Amoco Shares.
The Exchange Agent for the purpose of the Merger is Boston EquiServe Limited
Partnership or another agent acceptable to Amoco. The Registrar of BP Amoco
will be Lloyds Bank Registrars, The Causeway, Worthing, West Sussex BN99
6DA, England.
Application has been made to the London Stock Exchange for the Consideration
Shares to be admitted to the Official List. Application has also been made
to the NYSE for the BP Amoco ADSs issuable in the Merger to be listed.
Admission is expected to take place and dealings commence on the Effective
Date.
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7. REDENOMINATION, ACCOUNTING AND DIVIDENDS
It is proposed to redenominate the existing BP Ordinary Shares of 25p each
(the "BP Ordinary Shares") into ordinary shares of U.S.$0.50 each (the
"Redenomination"). The Merger is not conditional upon the Redenomination. If
the Redenomination does not take effect, the Consideration Shares will have
a nominal value of 25p each, not U.S.$0.50 each.
For a period of at least five years following the Merger, BP Amoco will
announce dividends on BP Amoco Ordinary Shares in US dollars and state an
equivalent pounds sterling dividend. BP Amoco Ordinary Shareholders will
receive dividends in sterling and holders of BP Amoco ADSs will receive
dividends in U.S. dollars.
8. EXTRAORDINARY GENERAL MEETING ("EGM") AND SEPARATE CLASS MEETING
The EGM and Separate Class Meeting have been convened for 25 November 1998.
At the EGM the following resolutions will be proposed:
(a) Resolution 1 will be proposed to approve the Merger and also to give
effect to certain matters required to implement the Merger or to satisfy
conditions to the Merger Agreement, namely:
(i) to increase the authorised share capital of BP Amoco;
(ii) to authorise the BP Amoco Board to allot shares (including the
Consideration Shares) and to disapply shareholders' pre-emption
rights in each case in respect of a certain amount of share capital;
(iii) to amend BP's Articles of Association to increase the maximum
number of directors of BP to twenty-two, provide for a Co-Chairman of
the BP Amoco Board and reflect the increase in the authorised share
capital of the Company; and
(iv) to change the name of BP to BP Amoco p.l.c.
(b) Resolutions 2 to 10 will be proposed to appoint as additional directors
of BP Amoco H L Fuller, W G Lowrie, R S Block, J H Bryan, E B Davis, Jr,
R J Ferris, F A Maljers, Dr W E Massey and M H Wilson. Each of these
proposed directors has been designated by Amoco and will take up office
only if the Merger becomes effective.
(c) Resolution 11 will be proposed to give effect to the Redenomination and
to approve the amendments to BP's Articles of Association required to
enable the Redenomination to take effect. Resolution 11 also increases
the authorised share capital of BP, permits the directors to allot BP
Amoco Ordinary Shares of US$0.50 each in connection with the
Redenomination and the Merger, and disapplies shareholders' pre-emption
rights up to a certain amount. The equivalent provisions of Resolution 1
in respect of increases in share capital, authority to allot shares and
disapplication of pre-emption rights will be ineffective if the
Redenomination comes into effect.
(d) Resolution 12 will be proposed to set the maximum remuneration
authorised to be payable to BP Directors in their non-executive capacity
and to amend the Articles of Association relating to how this
remuneration is determined.
(e) Resolution 13 will be proposed to approve the rules of the new Option
Plan and the LTPP, respectively.
(f) Resolution 14 will be proposed to amend the Articles of Association so
as to enable BP Amoco Ordinary Shares to be issued in bearer form, to
provide that the dividends on BP Amoco Ordinary Shares be announced in US
dollars, to enable certain BP Amoco ADS holders to attend, vote and speak
at general meetings by providing for the appointment of multiple proxies
by certain approved depositaries (including the Depositary), to allow
such proxies themselves to
D-5
<PAGE>
appoint a proxy, to provide that special or extraordinary resolutions may
only be approved by a vote on a poll and to make certain other minor
amendments.
The Merger is conditional on the approval of Resolution 1. The approval of
Resolutions 2 to 10 (the election of additional directors designated by
Amoco), is a condition to Amoco's obligation to complete the Merger. The
Merger will not become effective if such directors are not appointed unless
this condition is waived by Amoco. The Merger is not conditional on
Resolutions 11 to 14 being passed. Resolutions 2 to 13 will not be effective
unless Resolution 1 is passed.
Resolutions 1, 11, 12 and 14 are being proposed as special resolutions and
require the approval of a majority of not less than 75 per cent. of the
votes cast in person or on a poll at the EGM. The other resolutions are
being proposed as ordinary resolutions which require the approval of a
majority of the votes cast in person or on a poll at the meeting.
The Separate Class Meeting of Ordinary Shareholders of the Company to
approve the Redenomination has been convened for 11:30 a.m. on 25 November
1998 or as soon thereafter as the EGM shall have been concluded or
adjourned. The resolution to be proposed at the Separate Class Meeting is
being proposed as an extraordinary resolution and, accordingly, will require
approval of not less than 75 per cent. of the votes cast in person or on a
poll and a quorum of Ordinary Shareholders representing in person or by
proxy one third of the issued ordinary share capital.
9. BP CRUDE OIL AND NATURAL GAS RESERVES
The BP Group's U.K. and U.S. fields are the main sources of its production
of crude oil and natural gas.
9.1 CRUDE OIL AND NATURAL GAS PRODUCTION
9.1.1 CRUDE OIL PRODUCTION
A total of 950,000 b/d of crude oil was produced from these two
regions in the year ended December 1997, with the total produced
worldwide, in that period, being 1,251,000 b/d.
9.1.2 NATURAL GAS PRODUCTION
In 1997, the BP Group's natural gas production in the UK totalled
1,189 mmcf/d. This is compared with the BP Group's worldwide
natural gas production of 1,663 mmcf/d. The production from U.S.
gas fields in 1997 was 92 mmcf/d.
9.2 CRUDE OIL AND NATURAL GAS RESERVES
The BP Group has crude oil and natural gas reserves in 12 countries.
9.2.1 NET PROVED RESERVES
The estimated net proved reserves of the BP Group at 31 December
1997 are summarized below:
<TABLE>
<CAPTION>
CRUDE OIL(A)
(MILLIONS OF
REST OF REST OF BARRELS) REST OF
U.K. EUROPE U.S. WORLD TOTAL U.K. EUROPE U.S.
--------- ----------- --------- ----------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Proved developed............... 699 172 1,853 324 3,048 2,482 17 2,510
Proved undeveloped............. 723 14 987 258 1,982 1,787 7 714
--------- ----- --------- --- ----- --------- ----- ---------
1,422 186 2,804(c) 582 5,030 4,269 24 3,224
--------- ----- --------- --- ----- --------- ----- ---------
Associated Undertakings(e)..... 1,825(f)
-----
Total group and BP share of
associated undertakings...... 6,855
-----
-----
<CAPTION>
NATURAL
GAS(B)
(BILLIONS OF
REST OF CUBIC FEET)
WORLD TOTAL
----------- -------------
<S> <C> <C>
Proved developed............... 1,566 6,575
Proved undeveloped............. 1,421 3,929
----- ------
2,987(d) 10,504
----- ------
Associated Undertakings(e).....
Total group and BP share of
associated undertakings...... 10,504
------
------
</TABLE>
D-6
<PAGE>
Notes:
(a) Crude oil includes natural gas liquids and condensate. Net proved
reserves of crude oil exclude production royalties due to others.
(b) Net proved reserves of natural gas exclude production royalties due
to others.
(c) Proved reserves in the Prudhoe Bay field in Alaska include an
estimated 65 million barrels upon which a net profits royalty will be
payable over the life of the field under the terms of the BP Prudhoe Bay
Royalty Trust.
(d) Includes reserves located in Australia totaling 1,830 bcf.
(e) Excludes reserves in AO Sidanco and AO Rusia Petroleum.
(f) The BP Group holds proportionate interests, through associated
undertakings, in onshore and offshore concessions in Abu Dhabi expiring
in 2014 and 2018, respectively. If recent production levels were to
continue, these reserves would not be fully recovered during the period
of the concessions.
9.2.2 CHANGES IN RESERVES SINCE 31 DECEMBER 1997
As at 26 October 1998 no major discovery or significant event has
occurred that would have a material effect on the estimated proved
reserves reported at 31 December 1997.
Current levels of reserves are expected to substantially support
current levels of production for the foreseeable future.
10. AMOCO CRUDE OIL AND NATURAL GAS RESERVES
10.1 CRUDE OIL AND NATURAL GAS RESERVES
The estimated net proved reserves of the Amoco Group (being Amoco and
its subsidiaries) at 31 December 1997 are summarized below:
<TABLE>
<CAPTION>
BILLIONS OF
CUBIC FEET
MILLIONS OF BARRELS -----------
-------------------------------------------------------------------------------------------
CRUDE OIL AND NGL NATURAL GAS
UNITED STATES ----------------------------------------------------------------- -----------
------------- TRINIDAD & REST OF UNITED
CRUDE OIL NGL CANADA TOBAGO EUROPE WORLD TOTAL STATES
----------- ----------- ----------- --------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Proved developed.... 638 267 284 65 149 243 1,646 8,017
Proved undeveloped.. 151 24 122 111 179 20 607 1,080
--- ----- --- --- --- --- --------- -----
789 291 406 176 328 263 2,253 9,097
--- ----- --- --- --- --- --------- -----
Associated
Undertakings...... 164
---------
Total Group and
Amoco share of
associated
undertakings...... 2,417
---------
---------
<CAPTION>
TRINIDAD & REST OF
CANADA TOBAGO EUROPE WORLD(A) TOTAL
----------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Proved developed.... 1,980 1,510 1,034 556 13,097
Proved undeveloped.. 217 5,295 124 275 6,991
----- ----- ----- ----- ---------
2,197 6,805 1,158 831 20,088
----- ----- ----- ----- ---------
Associated
Undertakings...... 1,368
---------
Total Group and
Amoco share of
associated
undertakings...... 21,456
---------
---------
</TABLE>
10.2 CRUDE OIL AND NATURAL GAS PRODUCTION
The Amoco Group's net production of crude oil and natural gas for the
year ended 31 December 1997, which includes applicable volumes produced
under service contracts and production sharing agreements is summarized
below:
<TABLE>
<CAPTION>
TRINIDAD &
UNITED STATES CANADA TOBAGO EUROPE
--------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Crude oil and natural gas liquids(a) (thousands of barrels
per day).................................................. 274 61 51 65
Natural gas (millions of cubic feet per day)................ 2,368 761 330 390
<CAPTION>
REST OF
WORLD TOTAL
----------- ---------
<S> <C> <C>
Crude oil and natural gas liquids(a) (thousands of barrels
per day).................................................. 186 637
Natural gas (millions of cubic feet per day)................ 293 4,142
</TABLE>
NOTES:
(A) Includes the Amoco Group's interest in affiliates' production. U.S.
production includes NGL from processing plants in which Amoco has an
ownership interest 62,000 barrels of oil per day.
D-7
<PAGE>
The major areas of Amoco's crude oil and gas production are the United
States, Canada, the U.K., Norway, Trinidad and Tobago, Venezuela, the
Southern cone of South America, Azerbaijan and Egypt.
10.3 RECENT DEVELOPMENTS
New wells in Wyoming, United States and in the Alberta Foothills,
Canada recently began production, totaling 60 mmcf/d in May 1998. An
oil and gas discovery approximately 200 km off the coast of Helgeland,
North Norway has been estimated to produce approximately 200-500
million barrels of oil equivalent. Other discoveries include a crude
oil discovery in January 1998 in Trinidad (with estimated resources of
50 to 100 millions barrels) and in the Gulf of Suez, Egypt (which
produces 18,000 b/d).
Amoco has also announced an intention to form an alliance with Repsol
S.A. to pursue natural gas growth opportunities in a number of
countries, which will include the future expansion of a liquified
natural gas plant currently under construction in Trinidad and Tobago.
Amoco has also entered into an agreement with Sonatrach Inc. for the
development of gas fields in Southern Algeria.
As of 1 October 1998, no major discovery or significant event had
occurred that would have a material effect on the estimated proved
reserves reported at 31 December 1997.
11. DIRECTORS' SERVICE ARRANGEMENTS
(a) Amoco has entered into service contracts with Messrs H L Fuller and W G
Lowrie to be effective as of the Effective Date. They will be seconded
to BP Amoco while they serve BP Amoco.
Pursuant to his service contract, Mr H L Fuller will be engaged for a
period ending 31 March 2000 at an initial annual base salary of
$1,100,000. Pursuant to his service contact, Mr W G Lowrie will be
engaged for a period of three years from the Effective Date at an
initial annual base salary of $720,000.
(b) In addition to a base salary, Mr Fuller and Mr Lowrie are eligible to
receive an annual bonus in each fiscal year. They will each have a
target bonus opportunity, expressed as a percentage of annual salary
(subject to a maximum bonus opportunity of 150 per cent.), provided
that pre-established performance targets are achieved. During their
employment under the service contracts from the Effective Date their
target bonus opportunity will be no less favorable than that available
in the fiscal year immediately preceding the fiscal year in which the
Effective Date occurs. From the Effective Date it is proposed that Mr
Fuller and Mr Lowrie will participate in the new Option Plan, details
of which are set out in paragraph 5.4.2 of Part VIII of the Listing
Particulars. This will replace their existing participation in Amoco
share option arrangements. In addition, they will also be eligible to
participate in the LTPP, details of which are set out in paragraph
5.4.1 at Part VIII of the Listing Particulars. Mr Fuller and Mr Lowrie
participate in Amoco's corporate retirement plan. Under this retirement
plan, the amount of the annuity which they are eligible to receive on a
single-life basis is determined under an annuity benefit formula. The
annuity benefit formula (including a percentage of US social security
benefits) is calculated at 1 2/3 per cent. multiplied by the employee's
years of participation, multiplied by the average annual earnings
determined from the three highest consecutive calendar years' salaries
and the three highest consecutive calendar years' bonus awards during
the ten years preceding retirement. The maximum annuity is 60 per cent.
of such average annual earnings, and years of participation in the plan
in excess of 36 do not result in additional benefits. Average annual
earnings for retirement plan purposes include salary and bonus where
applicable. Mr Fuller and Mr Lowrie are also eligible to participate in
other Amoco corporate benefit plans generally provided to Amoco
employees, including an employee savings plan, containing a company
matching contribution of up to 7 per cent. of annual earnings, and
certain health and welfare
D-8
<PAGE>
plans, including medical and dental coverage, non-contributory group
life insurance of one times annual earnings, additional employee paid
group life insurance and short and long term sickness and disability
coverage. In certain circumstances Amoco will also gross up payments
made to the executives under their service contracts and will indemnify
the executives in respect of taxes and expenses incurred by them as a
result of Amoco's decision to contest a tax claim made by the IRS.
Mr Fuller and Mr Lowrie will also receive expatriate benefits in
accordance with the most favourable policies of Amoco and its affiliated
companies during and after any expatriate assignment. In addition, the
executives will be entitled to fringe benefits such as tax planning
services, payment of club dues and use of a car (including driver
service) in accordance with the most favorable policies of Amoco and its
affiliated companies in respect of Amoco's U.S. payroll peer executives.
(c) Pursuant to Mr Fuller's and Mr Lowrie's service contracts, Amoco must
pay each executive a severance payment calculated in accordance with a
formula set out in the service contract if Amoco terminates his
employment other than for cause, disability or death, or if the
executive terminates his employment with Amoco for Good Reason. "Good
Reason" is defined as any of the following without the express written
consent of the executive: (i) the assignment to the executive of duties
inconsistent with his position, authority and duties in respect of Mr
Fuller, as Executive Co-Chairman and, in respect of Mr Lowrie as Deputy
Chief Executive Officer, Refining, Marketing and Chemicals of BP Amoco,
or other action by Amoco which results in a diminution in the
executive's position; (ii) failure to be nominated for and/or elected
to be a member and in respect of Mr Fuller, Co-Chairman, of the BP
Amoco Board; (iii) non compliance with Amoco's obligations to provide
salary and benefits; (iv) requiring the executive to be based at a
location more that 50 miles from Chicago, Illinois in respect of Mr
Fuller, and more than 50 miles from London, England, in respect of Mr
Lowrie, or requesting him to undertake substantially more business
travel than before the Effective Date; (v) any purported termination of
the service contract by Amoco in breach of its terms; and (vi) the
failure by Amoco to obtain the agreement of any successor to
substantially all of the business or assets of Amoco to agree to
perform the service contract.
(d) The cash lump sum payment to be paid by Amoco to the executive on
termination by the executive for a Good Reason or by Amoco for a reason
other that for cause, disability or death, would be the aggregate of
the following: (i) accrued salary and benefits to the date of
termination of employment; (ii) an amount equal to three times the sum
of the executive's base salary and the product of the executive's
highest target bonus opportunity percentage during his employment under
his service contract and his base salary; (iii) a sum to compensate for
pension loss for a three year period from the date of termination; and
(iv) an amount equal to the product of three, seven per cent., and the
executive's annual base salary, being the contribution which Amoco
would have made to a savings plan on behalf of the executive for a
three year period following the date of termination.
(e) In addition, Amoco is contractually obliged to continue to provide
benefits to the executive for a three year period under the welfare
benefit plans provided by Amoco (or longer if the terms of the welfare
benefit plan so provide). Amoco must also provide executive
outplacement services and pay or provide any other amounts and benefits
due under other plans or arrangements.
These payments will only be made upon the effectiveness of a release
signed by the executive in favour of Amoco in respect of his employment
with Amoco. The executive is entitled to these payments whether or not
he obtains other employment. If Amoco terminates the executive's service
contract due to the executive's disability the executive will be
entitled to receive disability and other benefits at least as favorable
as those provided by Amoco to other disabled executives immediately
preceding the Effective Date or, if more favorable, as provided for
Amoco's US
D-9
<PAGE>
payroll peer executives. Amoco also, to the extent permitted by law,
will pay the executive's legal fees and expenses reasonably incurred in
any contest of the enforceability of, or liability under, the service
contract provided the executive has not brought proceedings in bad
faith.
12. INDEBTEDNESS
On 30 September 1998 the borrowings and indebtedness of the BP Group and the
Amoco Group (excluding their respective intra group borrowings) were as
follows:
<TABLE>
<CAPTION>
BP AMOCO TOTAL TOTAL
--------- --------- ----------- -----------
$ $ $ L
<S> <C> <C> <C> <C>
Loans and other borrowings (unsecured)
- -Bonds, debentures and notes............................ 4,296 5,469 9,765 5,744
- -Finance leases......................................... 1,800 88 1,888 1,111
Other borrowings........................................ 1,386 755 2,141 1,259
--------- --------- ----------- -----------
TOTAL................................................... 7,482 6,312 13,794 8,114
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
Of the BP Group indebtedness set forth above, $7,101 million has been
guaranteed by BP. Of the Amoco Group indebtedness, $5,140 million has been
guaranteed by Amoco.
Save as disclosed above and in respect of the litigation disclosed in
paragraph 16 below and apart from their respective intra-group liabilities,
neither the BP Group nor the Amoco Group had outstanding as at 30 September
1998 any loan capital issued, or created but unissued, term loans, other
borrowings or indebtedness in the nature of borrowings, including bank
overdrafts and liabilities under acceptances (other than normal trade
bills), acceptance credits or hire purchase commitments, or obligations
under finance leases, mortgages, charges, guarantees or other material
contingent liabilities.
In addition, as at 30 September 1998 the BP Group had cash and listed
investments of $334 million and the Amoco Group had cash and listed
investments of $657 million.
Foreign currency amounts have been translated into US dollars at the
exchange rates prevailing on 30 September 1998. US dollar amounts have been
translated into sterling at the exchange rates prevailing on 30 September
1998, being a rate of $1.70:L1.
At 30 September 1998, the BP Group had bank facilities of $2000 million.
These facilities are mainly with a number of international banks and expire
in 2001. Any borrowings under these facilities would be at prevailing money
market rates. Certain of these facilities support the BP Group's $3,000
million commercial paper programme. In addition, in March 1998, BP set up a
$2,000 million debt issuance programme. As at 30 September 1998, $933
million had been issued under this programme.
At 30 September 1998, the Amoco Group had bank facilities of $790 million.
These facilities are mainly with a number of international banks and expire
in 1999. Any borrowings under these facilities would be at prevailing money
market rates. These facilities support the Amoco Group's $3,000 million
commercial paper programme.
13. WORKING CAPITAL
BP is of the opinion that, taking into account bonds in issue, available
bank facilities and assuming future utilisation of existing commercial paper
programmes and other money market facilities, the enlarged group (BP as
enlarged by the merger with Amoco) has sufficient working capital for its
present requirements.
14. FINANCIAL AND TRADING POSITION
Since 30 June 1998, being the date to which its most recent interim
financial statements have been published, there has been no significant
change in the financial or trading position of the BP Group.
D-10
<PAGE>
Save as disclosed in Amoco's press release on 21 October 1998 announcing its
unaudited trading results for the third quarter and nine months ended 30
September 1998, since 30 June 1998, being the date to which its most recent
interim financial statements have been published, there has been no
significant change in the financial or trading position of the Amoco Group.
15. MATERIAL CONTRACTS
Except for the Merger Agreement and the Stock Option Agreement, no
contracts, other than contracts entered into in the ordinary course of
business, have been entered into by members of the BP Group within the two
years immediately preceding the date of this document which are, or may be
material.
Except for the Merger Agreement and the Stock Option Agreement, no
contracts, other than contracts entered into in the ordinary course of
business, have been entered into by members of the Amoco Group within the
two years immediately preceding the date of this document which are, or may
be material.
16. LITIGATION
16.1 BP
16.1.1 Other than as set out below, no member of the BP Group is or has
been engaged in any legal or arbitration proceedings nor, so far
as the Directors of BP are aware, are any such proceedings pending
or threatened which may have, or have had during the 12 months
preceding the date of this document, a significant effect on the
BP Group's financial position.
16.1.2 BP was involved in a number of lawsuits which arose out of the
Exxon Valdez oil spill in Prince William Sound in March 1989. BP's
interest in all those lawsuits has been settled. Exxon has
indicated that it may file a claim for contribution against the
Alyeska Pipeline Service Company ("Alyeska") in which BP has a 50
per cent. interest for a portion of the costs and damages which
Exxon has incurred. If any such claims are asserted by Exxon which
affect Alyeska and its owners BP would defend the claim vigorously
and does not believe Alyeska or BP has any liability to Exxon.
16.2 AMOCO
16.2.1 Other than as set out below, no member of the Amoco Group is or
has been engaged in any legal or arbitration proceedings, nor, so
far as Amoco is aware, are any such proceedings pending or
threatened which may have, or have had during the twelve months
preceding the date of this document, a significant effect on the
Amoco Group's consolidated financial position.
16.2.2 The IRS has challenged the application of certain foreign income
taxes as credits against Amoco's US taxes that otherwise would
have been payable for the years 1980 to 1992. On 18 June 1992, the
IRS issued a statutory Notice of Deficiency for additional taxes
in the amount of US$466 million, plus interest, relating to the
period from 1980 to 1982. Amoco filed a petition in the US Tax
Court contesting the IRS statutory Notice of Deficiency. Trial on
the matter was held in April 1995, and a decision was rendered by
the US Tax Court in March 1996 in Amoco's favour. The IRS appealed
the Tax Court's decision in the US Court of Appeals for the
Seventh Circuit and on 11 March 1998 the Seventh Circuit affirmed
the Tax Court's prior decision. A comparable adjustment of foreign
tax credits for each year has been proposed for the years 1983
through 1992 based upon subsequent IRS audits. Amoco believes that
the foreign income taxes have been reflected properly in its US
federal tax returns. Consequently, this dispute is not expected to
have a material
D-11
<PAGE>
adverse effect on liquidity, results of operations or the
consolidated financial position of Amoco.
17. AVAILABILITY OF LISTING PARTICULARS
Copies of the Listing Particulars are available for collection during
business hours from the Company Secretary, The British Petroleum Company
p.l.c, Britannic House, 1 Finsbury Circus, London EC2M 7BA, England during
normal business hours on any weekday (Saturdays and public holidays
excepted) from 30 October 1998 to the Effective Date free of charge. The
Listing Particulars may be inspected at the offices of Linklaters & Paines
at One Silk Street, London EC2Y 8HQ.
18. DOCUMENTS FOR INSPECTION
In addition to the Listing Particulars the following documents may be
inspected at the offices of Linklaters & Paines at One Silk Street, London
EC2Y 8HQ, England, during usual business hours on any weekday (Saturdays and
public holidays excepted) until the Effective Date and at the EGM and the
Separate Class Meeting:
18.1 the Memorandum and Articles of Association of BP in their current
form;
18.2 the Memorandum and Articles of Association of BP Amoco in their
proposed form assuming the Redenomination and the Merger take effect
and all the Resolutions proposed at the EGM which amend the Articles
of Association are passed;
18.3 the audited consolidated accounts of the BP Group for the two
financial years ended 31 December 1997 and the interim statement of
results for the six month period ended 30 June 1998;
18.4 the audited consolidated accounts of the Amoco Group for the two
financial years ended 31 December 1997 and the interim statement of
results for the six month period ended 30 June 1998;
18.5 the letter from Ernst & Young regarding the summary of differences
between U.S. GAAP and U.K. GAAP for Amoco, set out in Part III of the
Listing Particulars;
18.6 the letter from Ernst & Young regarding the pro forma financial
information set out in Part IV of the Listing Particulars;
18.7 the Prospectus;
18.8 the letter from J.P. Morgan to BP dated 11 August 1998 giving its
opinion as of that date that the Exchange Ratio was fair from a
financial point of view to BP;
18.9 the service contracts referred to in paragraphs 7.3 and 7.4 of Part
VIII of the Listing Particulars;
18.10 the material contracts referred to in paragraph 9 of Part VIII of the
Listing Particulars;
18.11 the written consents referred to in paragraph 11 of Part VIII of the
Listing Particulars;
18.12 BP's Annual Report and Accounts for 1992-1997;
18.13 the rules of the LTTP; and
18.14 the rules of the Option Plan.
30 October 1998
D-12
<PAGE>
STATE STREET BANK AND TRUST COMPANY, TRUSTEE
AMOCO EMPLOYEE SAVINGS PLAN (AESP)
AND/OR AMOCO PERFORMANCE SHARE PLAN (APSP)
THIS VOTING FORM IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO PARTICIPANTS IN THE AESP AND/OR APSP:
With this voting form you will receive a copy of Amoco Corporation s Proxy
Statement/Prospectus and Notice of Special Meeting of Shareholders to be held in
Chicago, Illinois on December 10, 1998.
Under the AESP and APSP, a participant may instruct the Trustee how to vote the
Amoco shares allocable to or owned by his or her account at the December 10,
1998 Special Meeting.
IF YOU WISH TO INSTRUCT THE TRUSTEE HOW TO VOTE SUCH SHARES, PLEASE COMPLETE AND
SIGN THE REVERSE SIDE OF THIS VOTING FORM AND MAIL IT TO REACH THE TRUSTEE BY
DECEMBER 3, 1998. A postage paid return envelope is enclosed for your
convenience. The Trustee will also then be authorized to vote in its discretion
on any additional matters that may properly come before the Special Meeting.
IF YOU ONLY SIGN AND RETURN THIS VOTING FORM AND PROVIDE NO SPECIFIC VOTING
DIRECTION, THE TRUSTEE WILL VOTE SUCH SHARES "FOR" PROPOSAL 1.
IF BY DECEMBER 3, 1998, THE TRUSTEE HAS NOT RECEIVED THIS COMPLETED FORM, the
Trustee will be authorized to vote such shares in its discretion on all matters
that are determined by vote at the Special Meeting.
PROPOSAL 1: Approval of the Agreement and Plan of Merger, dated as of August 11,
1998, as amended as of October 22, 1998, by and among The British Petroleum
Company p.l.c., an English public limited company ("BP"); Amoco Corporation, an
Indiana corporation; and Eagle Holdings, Inc., an Indiana corporation and
wholly-owned subsidiary of BP ("Merger Sub"), and the transactions contemplated
thereby, including the merger of Merger Sub with and into Amoco Corporation,
after which Amoco Corporation shall be a wholly-owned subsidiary of BP.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[LOGO]
SPECIAL MEETING OF SHAREHOLDERS OF
AMOCO CORPORATION
DECEMBER 10, 1998
3:00 P.M.
CHICAGO HILTON & TOWERS
INTERNATIONAL BALLROOM
720 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60605
<PAGE>
PLEASE MARK YOUR 9533
/X/ VOTE AS IN THIS ----
EXAMPLE.
I DIRECT THE AMOCO SHARES ALLOCABLE TO AND/OR OWNED BY MY ACCOUNT(S)
WITHIN THE AESP AND/OR APSP WHICH THE TRUSTEE IS ENTITLED TO VOTE
AT SAID MEETING SHALL BE VOTED AS FOLLOWS:
- --------------------------------------------------------------------------------
AMOCO'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
- --------------------------------------------------------------------------------
For Against Abstain
1. Approval of the Agreement and Plan of Merger, dated / / / / / /
as of August 11, 1998, as amended as of October 22,
1998, by and among The British Petroleum Company
p.l.c., an English public limited company ("BP");
Amoco Corporation, an Indiana corporation; and Eagle
Holdings, Inc., an Indiana corporation and
wholly-owned subsidiary of BP ("Merger Sub"), and the
transactions contemplated thereby, including the merger
of Merger Sub with and into Amoco Corporation, after
which Amoco Corporation shall be a wholly-owned
subsidiary of BP.
- --------------------------------------------------------------------------------
PLEASE CHECK THIS BOX TO REQUEST A
TICKET TO THE SPECIAL MEETING. / /
Please complete, sign, and return this form so that
it is received by the Trustee no later than
December 3, 1998.
---------------------------------------------------
---------------------------------------------------
Signature(s) Date
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
IF YOU WISH TO INSTRUCT THE TRUSTEE HOW TO VOTE THE AMOCO SHARES ALLOCABLE TO
AND/OR OWNED BY YOUR ACCOUNT(S) WITHIN THE AESP AND/OR APSP, PLEASE COMPLETE AND
SIGN THE ATTACHED VOTING FORM AND MAIL IT TO REACH THE TRUSTEE BY DECEMBER 3,
1998. The Trustee will also then be authorized to vote in its discretion on any
additional matters that may properly come before the Special Meeting.
IF YOU ONLY SIGN AND RETURN THIS VOTING FORM and provide no specific voting
direction, the Trustee will vote such shares FOR Proposal 1.
IF BY DECEMBER 3, 1998, YOU HAVE NOT RETURNED THIS FORM TO THE TRUSTEE, the
Trustee will be authorized to vote such shares in its discretion on all matters
that are determined by vote at the Special Meeting.
<PAGE>
BANKERS TRUST COMPANY, TRUSTEE
AMOCO FABRICS AND FIBERS COMPANY HOURLY 401(K) SAVINGS PLAN
OR AMOCO FABRICS AND FIBERS COMPANY SALARIED 401(K) SAVINGS PLAN
THIS VOTING FORM IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO PARTICIPANTS IN THE AMOCO FABRICS AND FIBERS COMPANY 401(K) SAVINGS PLANS:
With this voting form you will receive a copy of Amoco Corporation s Proxy
Statement/Prospectus and Notice of Special Meeting of Shareholders to be held in
Chicago, Illinois on December 10, 1998.
Under the Amoco Fabrics and Fibers Company 401(k) Savings Plans, a participant
may instruct the Trustee how to vote the shares allocable to that participant s
interest in the Amoco Stock Fund at the December 10, 1998 Special Meeting.
IF YOU WISH TO INSTRUCT THE TRUSTEE HOW TO VOTE SUCH SHARES, PLEASE COMPLETE AND
SIGN THE REVERSE SIDE OF THIS VOTING FORM AND MAIL IT TO REACH THE TRUSTEE BY
DECEMBER 3, 1998. A postage paid return envelope is enclosed for your
convenience. The Trustee will also then be authorized to vote in its discretion
on any additional matters that may properly come before the Special Meeting.
IF YOU ONLY SIGN AND RETURN THIS VOTING FORM AND PROVIDE NO SPECIFIC VOTING
DIRECTION, THE TRUSTEE WILL VOTE SUCH SHARES "FOR" PROPOSAL 1.
IF BY DECEMBER 3, 1998, THE TRUSTEE HAS NOT RECEIVED THIS COMPLETED FORM, the
Trustee will be authorized to vote such shares in its discretion on all matters
that are determined by vote at the Special Meeting.
PROPOSAL 1: Approval of the Agreement and Plan of Merger, dated as of August 11,
1998, as amended as of October 22, 1998, by and among The British Petroleum
Company p.l.c., an English public limited company ("BP"); Amoco Corporation, an
Indiana corporation; and Eagle Holdings, Inc., an Indiana corporation and
wholly-owned subsidiary of BP ("Merger Sub"), and the transactions contemplated
thereby, including the merger of Merger Sub with and into Amoco Corporation,
after which Amoco Corporation shall be a wholly-owned subsidiary of BP.
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SEE REVERSE
SIDE
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FOLD AND DETACH HERE
[LOGO]
SPECIAL MEETING OF SHAREHOLDERS OF
AMOCO CORPORATION
DECEMBER 10, 1998
3:00 P.M.
CHICAGO HILTON & TOWERS
INTERNATIONAL BALLROOM
720 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60605
<PAGE>
PLEASE MARK YOUR 1966
/X/ VOTE AS IN THIS ----
EXAMPLE.
I DIRECT THE AMOCO SHARES ALLOCABLE TO MY INTEREST IN THE AMOCO STOCK
FUND WHICH THE TRUSTEE IS ENTITLED TO VOTE AT SAID MEETING SHALL
BE VOTED AS FOLLOWS:
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AMOCO'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
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For Against Abstain
1. Approval of the Agreement and Plan of Merger, dated / / / / / /
as of August 11, 1998, as amended as of October 22,
1998, by and among The British Petroleum Company
p.l.c., an English public limited company ("BP");
Amoco Corporation, an Indiana corporation; and Eagle
Holdings, Inc., an Indiana corporation and
wholly-owned subsidiary of BP ("Merger Sub"), and the
transactions contemplated thereby, including the merger
of Merger Sub with and into Amoco Corporation, after
which Amoco Corporation shall be a wholly-owned
subsidiary of BP.
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PLEASE CHECK THIS BOX TO REQUEST A
TICKET TO THE SPECIAL MEETING. / /
Please complete, sign, and return this form so that
it is received by the Trustee no later than
December 3, 1998.
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Signature(s) Date
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FOLD AND DETACH HERE
IF YOU WISH TO INSTRUCT THE TRUSTEE HOW TO VOTE THE AMOCO SHARES ALLOCABLE TO
YOUR INTEREST IN THE AMOCO STOCK FUND, PLEASE COMPLETE AND SIGN THE ATTACHED
VOTING FORM AND MAIL IT TO REACH THE TRUSTEE BY DECEMBER 3, 1998. The Trustee
will also then be authorized to vote in its discretion on any additional matters
that may properly come before the Special Meeting.
IF YOU ONLY SIGN AND RETURN THIS VOTING FORM and provide no specific voting
direction, the Trustee will vote such shares "FOR" Proposal 1.
IF BY DECEMBER 3, 1998, YOU HAVE NOT RETURNED THIS FORM TO THE TRUSTEE, the
Trustee will be authorized to vote such shares in its discretion on all matters
that are determined by vote at the Special Meeting.
<PAGE>
AMOCO CORPORATION
THIS VOTING FORM IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints as proxies, with full power of substitution, H. L.
Fuller and W. G. Lowrie, and each of them, to vote all shares of the undersigned
at the Special Meeting of Shareholders of Amoco Corporation to be held at
Chicago Hilton & Towers, 720 South Michigan Avenue, Chicago, Illinois, on
December 10, 1998, at 3:00 p.m., or at any adjournment thereof, on the matter
shown in the manner directed hereon and in their discretion on all other matters
properly coming before the Special Meeting.
PROPOSAL 1: Approval of the Agreement and Plan of Merger, dated as of August
11, 1998, as amended as of October 22, 1998, by and among The British
Petroleum Company p.l.c., an English public limited company ("BP"); Amoco
Corporation, an Indiana corporation; and Eagle Holdings, Inc., an Indiana
corporation and wholly-owned subsidiary of BP ("Merger Sub"), and the
transactions contemplated thereby, including the merger of Merger Sub with
and into Amoco Corporation, after which Amoco Corporation shall be a
wholly-owned subsidiary of BP.
The proxies cannot vote your shares unless you sign and return a voting form.
You are encouraged to specify your vote by marking the appropriate box on the
reverse side of this form.
IF YOU ONLY SIGN AND RETURN THIS VOTING FORM AND PROVIDE NO SPECIFIC VOTING
DIRECTION TO THE PROXIES, YOUR SHARES WILL BE VOTED "FOR" PROPOSAL 1.
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ADDRESS CHANGE/COMMENTS
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(If you have written in this space, please mark the SEE REVERSE
corresponding box on the reverse side of this card.) SIDE
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FOLD AND DETACH HERE
[LOGO]
SPECIAL MEETING OF SHAREHOLDERS OF
AMOCO CORPORATION
DECEMBER 10, 1998
3:00 P.M.
CHICAGO HILTON & TOWERS
INTERNATIONAL BALLROOM
720 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60605
<PAGE>
PLEASE MARK YOUR 2254
/X/ VOTE AS IN THIS ----
EXAMPLE.
THIS VOTING FORM WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREON.
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AMOCO'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
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For Against Abstain
1. Approval of the Agreement and Plan of Merger, dated / / / / / /
as of August 11, 1998, as amended as of October 22,
1998, by and among The British Petroleum Company
p.l.c., an English public limited company ("BP");
Amoco Corporation, an Indiana corporation; and Eagle
Holdings, Inc., an Indiana corporation and
wholly-owned subsidiary of BP ("Merger Sub"), and the
transactions contemplated thereby, including the merger
of Merger Sub with and into Amoco Corporation, after
which Amoco Corporation shall be a wholly-owned
subsidiary of BP.
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PLEASE CHECK THIS BOX TO REQUEST A
TICKET TO THE SPECIAL MEETING. / /
MARK THE BOX AT RIGHT IF A COMMENT OR
ADDRESS CHANGE HAS BEEN NOTED ON
THE REVERSE SIDE OF THIS FORM. / /
Please sign exactly as your name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. Each
signer hereby revokes all proxies heretofore
given by same to vote at said meeting or any
adjournments thereof.
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Signature(s) Date
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FOLD AND DETACH HERE
PLEASE COMPLETE, SIGN, AND RETURN THE ATTACHED VOTING FORM. Thank you for
responding promptly and saving your Corporation the expense of a second mailing.
The proxies cannot vote your shares unless you sign and return a voting form.
You are encouraged to specify your vote by marking the appropriate box above.
If you only sign and return the attached voting form and provide no specific
voting direction, the proxies will vote your shares "FOR" Proposal 1.
