<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-170-2
AMOCO CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 36-1812780
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 EAST RANDOLPH DRIVE, CHICAGO, ILLINOIS 60601
(Address of principal executive offices) (Zip Code)
312-856-6111
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Number of shares outstanding as of June 30, 1998--954,195,558
<PAGE>
<PAGE>
PART I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
(millions of dollars, except as noted)
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Sales and other operating
revenues..................... $ 6,874 $ 7,664 $13,507 $15,740
Consumer excise taxes.......... 912 868 1,758 1,683
Equity in income of affiliates
and other income............. 135 92 299 194
Total revenues............... 7,921 8,624 15,564 17,617
Cost and Expenses:
Purchased crude oil, natural
gas, petroleum products and
merchandise.................. 3,682 4,215 7,366 8,673
Operating expenses............. 1,187 1,210 2,293 2,430
Petroleum exploration expenses,
including exploratory dry
holes........................ 159 129 301 285
Selling and administrative
expenses..................... 552 475 1,111 1,007
Taxes other than income taxes.. 1,057 1,060 2,053 2,105
Depreciation, depletion,
amortization, and retire-
ments and abandonments....... 756 530 1,304 1,092
Interest expense............... 109 94 203 172
Total costs and expenses..... 7,502 7,713 14,631 15,764
Income before income taxes....... 419 911 933 1,853
Income taxes..................... 132 289 260 557
Net income....................... $ 287 $ 622 $ 673 $ 1,296
Weighted average number of shares
of common stock outstanding
(in thousands):
Basic.......................... 956,001 984,358 959,021 987,466
Assuming dilution.............. 960,572 989,743 963,540 992,813
Per Share Data (Based on weighted
average shares outstanding):
Net income (basic)............... $ .30 $ .63 $ .70 $ 1.31
Net income (assuming dilution)... $ .30 $ .63 $ .70 $ 1.30
Cash dividends................... $ .375 $ .35 $ .75 $ .70
All share data reflect the March 31, 1998 two-for-one common stock
split.
<PAGE>
<PAGE>
Consolidated Statement of Financial Position
(millions of dollars)
June 30, Dec. 31,
ASSETS 1998 1997
Current assets:
Cash......................................... $ 143 $ 166
Marketable securities -- at cost (corporate
securities, except $5 at June 30, 1998, and
$104 at December 31, 1997 which represents
state and municipal securities)............ 769 979
Accounts and notes receivable (less
allowances of $11 at June 30, 1998, and
$10 on December 31, 1997).................. 3,304 3,585
Inventories
Crude oil and products..................... 967 914
Materials and supplies..................... 253 260
Prepaid expenses, income taxes and other..... 918 1,140
Total current assets....................... 6,354 7,044
Investments and Other Assets:
Investments and related advances............. 2,289 2,099
Long-term receivables and other assets....... 962 803
3,251 2,902
Properties--at cost, less accumulated depre-
ciation, depletion and amortization of
$27,994 at June 30, 1998, and $26,814 at
December 31, 1997............................ 22,669 22,543
Total assets............................... $ 32,274 $ 32,489
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations..... $ 140 $ 218
Short-term obligations....................... 1,380 751
Accounts payable............................. 2,376 3,026
Accrued liabilities.......................... 889 785
Taxes payable (including income taxes)....... 1,046 1,264
Total current liabilities.................. 5,831 6,044
Long-term obligations:
Debt......................................... 5,327 4,639
Capitalized leases........................... 81 80
5,408 4,719
Deferred Credits and Other Non-Current Liabilities:
Income taxes................................. 2,848 2,868
Other........................................ 2,280 2,408
5,128 5,276
Minority Interest.............................. 163 131
Shareholders' Equity:
Common stock (authorized 1,600,000,000 shares;
issued and outstanding at June 30, 1998
--954,195,558; December 31, 1997
--966,047,616 shares)...................... 2,542 2,568
Earnings retained and invested in the
business................................... 13,352 13,900
Accumulated other comprehensive income:
Pension liability adjustment............... (31) (31)
Foreign currency translation adjustment.... (119) (118)
15,744 16,319
Total liabilities and shareholders' equity. $ 32,274 $ 32,489
<PAGE>
<PAGE>
Consolidated Statement of Cash Flows
(millions of dollars)
Six Months Ended
June 30,
1998 1997
Cash Flows from Operating Activities:
Net income................................... $ 673 $ 1,296
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, amortization,
and retirements and abandonments......... 1,304 1,092
Decrease in receivables.................... 267 399
Increase in inventories.................... (46) (154)
Decrease in payables and accrued
liabilities.............................. (873) (475)
Deferred taxes and other items............. (305) (55)
Net cash provided by operating activities.. 1,020 2,103
Cash Flows from Investing Activities:
Capital expenditures......................... (1,452) (1,527)
Proceeds from dispositions of property
and other assets........................... 381 182
Net investments, advances and business
acquisitions............................... (151) (470)
Other........................................ (17) 11
Net cash used in investing activities...... (1,239) (1,804)
Cash Flows from Financing Activities:
New long-term obligations.................... 744 337
Repayment of long-term obligations........... (131) (83)
Cash dividends paid.......................... (722) (694)
Issuances of common stock.................... 27 69
Acquisitions of common stock................. (561) (658)
Increase in short-term obligations........... 629 289
Net cash used in financing activities...... (14) (740)
Decrease in Cash and Marketable
Securities................................... (233) (441)
Cash and Marketable Securities-
Beginning of Period.......................... 1,145 1,321
Cash and Marketable Securities-End of Period... $ 912 $ 880
<PAGE>
<PAGE>
Basis of Financial Statement Preparation
The consolidated financial statements contained herein are
unaudited and have been prepared from the books and records of
Amoco Corporation ("Amoco" or the "Corporation"). In the opinion
of management, the consolidated financial statements reflect all
adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of the results for the interim
periods. The consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore,
do not include all information and notes necessary for a complete
presentation of results of operations, financial position and
cash flows in conformity with generally accepted accounting
principles. Certain information in the Consolidated Statement of
Cash Flows has been reclassified to conform to the new
presentation.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
This statement establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires
that all derivatives be recognized at fair value as either assets
or liabilities in the statement of financial position. The effect
of adoption of SFAS No. 133 is not known at this time, but is not
expected to be material to Amoco's financial position or results
of operations. Implementation of SFAS No. 133 is required no
later than the quarter ending March 31, 2000.
Amoco adopted Statement of Position ("SOP") 98-1, "Accounting For
the Costs of Computer Software Developed or Obtained for Internal
Use" in the first quarter of 1998. 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 after tax in the first six months of 1998 with $22
million capitalized during the second quarter.
Shown below is Amoco's comprehensive income.
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
Net income............................ $ 287 $ 622 $ 673 $1,296
Other comprehensive income, after tax. 3 13 (1) (75)
Comprehensive income.................. $ 290 $ 635 $ 672 $1,221
Item 2. Management's Discussion and Analysis
Results of Operations
Net income for the second quarter of 1998 was $287 million, or
$.30 per share, compared to second-quarter 1997 earnings of $622
million, or $.63 per share. Basic and fully diluted per-share
data were the same.
Second-quarter 1998 results included favorable tax adjustments of
$106 million related to Canadian operations. Earnings were
reduced by $214 million for impairment of the value of operations
in Colombia. The impairment of the Opon field in Colombia
reflected lower than anticipated natural gas production and
related reserve estimates. The charge also reflected impairment
of the adjacent Termo Santander power plant because of the
unavailability of an economic fuel supply.
Excluding these items, second-quarter 1998 earnings would have
been $395 million compared with second-quarter 1997 earnings of
$622 million. The earnings decline primarily resulted from lower
worldwide crude oil prices, which for Amoco dropped over $5.00
per barrel in the United States compared with the year-earlier
levels, reflecting an oversupply of crude oil on world markets,
and lower worldwide demand resulting in part from the economic
crisis in Asia.
For the first six months of 1998, Amoco reported earnings of $738
million, excluding the Colombian impairment charge of $214
million, favorable tax adjustments of $106 million and the first-
quarter gain of $43 million on asset divestitures. This compared
with $1,296 million for the first half of 1997. The decrease in
earnings in 1998 primarily reflected lower crude oil prices and
chemical margins. Partly offsetting were higher petroleum
products earnings due to improved refining margins and sales
volumes.
Sales and other operating revenues totaled $6.9 billion for the
second quarter of 1998, 10 percent lower than the $7.7 billion
reported in the corresponding 1997 period. For the first six
months of 1998, sales and other operating revenues declined 14
percent to $13.5 billion from 1997 revenues of $15.7 billion. The
decline in revenues in both periods reflected lower prices for
crude oil and refined products.
The increase in other income for the second quarter and year-to-
date 1998 reflected gains associated with the divestitures of
North American exploration and production ("E&P") properties. The
divestitures, which began in the third quarter of 1997, were part
of the Corporation's strategy to upgrade and refocus the
portfolio of E&P assets.
Purchases of crude oil, natural gas, petroleum products and
merchandise totaled $3.7 billion for the second quarter of 1998,
down 13 percent from the second quarter of 1997. For the first
six months of 1998, purchases totaled $7.4 billion, 15 percent
below the comparable 1997 period. The decrease in both periods
was primarily attributable to lower crude oil purchase prices.
Petroleum exploration expenses of $159 million for the second
quarter of 1998 increased 23 percent from the second quarter of
1997, mainly due to higher dry hole costs in the United States
and overseas. For the first six months of 1998, exploration
expenses increased six percent over the six-month period in 1997,
reflecting higher exploration costs in the United States offset
by lower costs overseas.
The increase in depreciation, depletion, amortization, and
retirements and abandonments for both the quarter and year-to-
date periods primarily reflected the previously mentioned
impairment charge for Colombian assets.
The increase in interest expense for the second quarter and first
six months of 1998, compared with the prior-year's periods,
reflected higher debt balances.
For the 12 months ended June 30, 1998, return on average
shareholders' equity was 13.1 percent compared with 17.5 percent
for the 12 months ended June 30, 1997. Return on average capital
employed was 10.1 percent for the 12-month period ended June 30,
1998, compared with 13.4 percent for the corresponding prior-year
period.
Results by Industry Segment
Three Months Six Months
Ended Ended
June 30, June 30,
(millions of dollars) 1998 1997 1998 1997
Exploration and Production
United States................. $ 154 $ 209 $ 367 $ 574
Canada........................ 74 22 107 103
Overseas...................... (249) 67 (224) 194
Subtotal...................... (21) 298 250 871
Petroleum Products.............. 230 185 329 213
Chemicals....................... 115 185 218 332
Corporate and Other Operations*. (37) (46) (124) (120)
Net Income.................... $ 287 $ 622 $ 673 $1,296
* Corporate and other operations include net interest and general
corporate expenses, as well as the results of investments in
technology companies, real estate interests and other
activities.
<PAGE>
<PAGE>
Exploration and Production
Operating Statistics
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
Net Production of Natural
Gas(million cubic feet per
day)
United States............ 2,271 2,415 2,266 2,399
Canada................... 760 727 769 749
Overseas................. 1,417 962 1,372 1,006
Total................... 4,448 4,104 4,407 4,154
Amoco's share of affiliates'
production (included in
overseas).............. 169 - 151 -
Net Production of Crude Oil and
NGL(thousand barrels per day)
United States--crude oil. 155 164 153 167
--NGL....... 114 110 109 115
Canada--crude oil........ 63 52 62 51
--NGL.............. 10 10 10 10
Overseas................. 304 295 302 301
Total................... 646 631 636 644
Amoco's share of affiliates'
production (included in
overseas).............. 46 - 47 -
Exploration and Production - U. S.
U.S. E&P operations earned $154 million in the second quarter of
1998. The decrease, compared with second-quarter 1997 earnings of
$209 million, resulted from lower crude oil and natural gas
liquids ("NGL") prices, and lower production volumes. Partly
offsetting were higher natural gas prices.
For the first six months of 1998, U.S. E&P results were $367
million compared with $574 million earned during the comparable
period in 1997. Included in 1998 earnings was a first-quarter $43
million gain on asset divestitures. Excluding that gain, the
earnings decline reflected lower energy prices and production
volumes and higher exploration expenses.
Amoco's U.S. natural gas prices averaged approximately $1.85 per
thousand cubic feet ("mcf") during the second quarter and the
first six months of 1998, about $.15 per mcf higher than the
second quarter of 1997, but $.20 per mcf below average natural
gas prices for the first half of 1997.
For the second quarter, Amoco's average crude oil prices
decreased about $5.00 per barrel and averaged approximately
$12.70 per barrel. Amoco's crude oil prices for the first six
months of 1998 averaged $13.25 per barrel, a 31 percent drop from
the comparable period in 1997.
Natural gas production decreased six percent compared with the
second quarter and first six months of 1997. Second-quarter 1998
crude oil and NGL production declined two percent from a year
ago. Year-to-date crude oil and NGL production declined seven
percent from the comparable period in 1997.
The production decline reflected dispositions and normal field
declines. Partially offsetting was increased production from the
deepwater Gulf of Mexico, Tuscaloosa, Cotton Valley and
Overthrust areas.
Exploration and Production - Canada
Canadian E&P operations earned $24 million in the second quarter
of 1998, excluding tax benefits of $50 million, compared with
1997 second-quarter earnings of $22 million. Favorably affecting
results were higher production volumes and natural gas prices,
offset by lower crude oil prices.
For the first half of 1998, earnings were $57 million, excluding
tax benefits of $50 million, compared with 1997 year-to-date
earnings of $103 million. The decline in earnings primarily
resulted from lower crude oil and natural gas prices.
Amoco's Canadian natural gas prices for the second quarter
averaged approximately $1.35 per mcf, $.20 per mcf higher than
the same period in 1997. For the first six months, Canadian
natural gas prices averaged $1.30 per mcf, $.20 per mcf below the
1997 level.
Amoco's crude oil prices in Canada averaged $7.50 per barrel for
the second quarter and first half of 1998. Crude oil prices
declined about $6.50 per barrel below the second quarter of 1997
and almost $8.00 per barrel below the first six months of 1997,
reflecting lower industry prices and increased heavy oil
production.
Natural gas production increased five percent during the second
quarter of 1998 compared with the same period in 1997. For the
first six months, natural gas production increased three percent.
Incremental development production more than offset the effect of
asset dispositions and normal field declines.
Exploration and Production - Overseas
Overseas E&P operations reported a loss of $35 million in the
second quarter of 1998, excluding $214 million related to
impairment of the value of the Opon field and power plant
facility in Colombia. The loss in the second quarter of 1998
compared with second-quarter 1997 earnings of $67 million. The
decrease primarily resulted from lower crude oil prices, partly
offset by increased natural gas production.
For the first half of 1998, overseas E&P operations reported a
loss of $10 million, excluding the Colombian impairment charge.
This compared with earnings of $194 million for the 1997 six-
month period. The decrease mainly resulted from lower crude oil
prices and less favorable currency effects compared with 1997.
Weighted average overseas crude oil prices dropped approximately
$5.00 per barrel during the second quarter of 1998 compared with
the similar period in 1997. Comparing the first half of 1998 with
the same period in 1997, crude oil prices dropped over $6.00 per
barrel.
Natural gas production increased in the second quarter and first
half of 1998 mainly as a result of higher production in the
United Kingdom, Argentina and Trinidad. Crude oil production was
up three percent compared with the second quarter of 1997. For
the six-month period, crude oil production was about the same as
the 1997 period.
Petroleum Products
Operating Statistics
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
U.S. Refined Product Sales
(thousand barrels per day)
Gasoline................. 699 684 664 635
Distillates.............. 350 332 356 331
Other products........... 232 202 213 179
Total................... 1,281 1,218 1,233 1,145
Input to U.S. Crude Units
(thousand barrels per day) 997 961 933 919
Refinery Utilization Rate 98% 95% 92% 91%
Petroleum Products operations earned $230 million during the
second quarter of 1998 compared with second-quarter 1997 earnings
of $185 million. The increase reflected improved refining
efficiencies and strong gasoline sales volumes.
The stronger earnings performance in the first half of 1998 over
the same period in 1997 reflected higher gasoline and distillate
sales volumes and margins, and higher asphalt margins.
In the second quarter, U.S. refined product sales volumes grew by
five percent in comparison with 1997's second quarter. Year-to-
date sales volumes grew by eight percent.
Chemicals
Chemicals earned $115 million in the second quarter of 1998 and
$218 million for the first six months of 1998, down 38 and 34
percent, respectively, from the comparable 1997 periods. The
decrease reflected the continued impact of industry capacity
additions resulting in oversupply, which put downward pressure on
margins across most commodity product lines. Partly offsetting
were higher purified terephthalic acid ("PTA") and polypropylene
volumes, which increased 13 and three percent, respectively, for
the quarter and eight percent and five percent, respectively, for
the first half of 1998.
Corporate and Other Operations
Corporate and other operations include net interest and general
corporate expenses as well as investments in technology
companies, real estate interests and other activities. Corporate
and other operations reported net expenses of $85 million in the
second quarter of 1998, excluding $48 million of favorable
adjustments related to Canadian taxes. This compared with net
expenses of $46 million in the corresponding 1997 period. The
increase in corporate and other operations net expenses reflected
higher net interest and tax expense.
For the first half of 1998, corporate and other operations
reported net expenses of $172 million, excluding $48 million of
favorable adjustments related to Canadian taxes. The $52 million
increase in net expenses over the corresponding 1997 period
resulted from higher interest and tax expense partially offset by
favorable currency effects.
Subsequent Event
On August 11, 1998, Amoco and The British Petroleum Company
p.l.c. ("BP") announced that the companies signed a merger
agreement. Subject to standard approvals and contingencies, Amoco
will merge with a subsidiary of BP. Under the agreement, Amoco
shareholders will be entitled to receive for each Amoco common
share held at closing, 3.97 BP ordinary shares. Such shares will
be delivered in the form of American Depository Receipts, which
represent six BP ordinary shares. Following the merger, BP
shareholders will hold approximately 60 percent and Amoco
shareholders approximately 40 percent of the capital of the
combined company on a diluted basis. BP will be renamed BP Amoco
p.l.c. For additional information see Exhibits 2(a), 2(b) and
2(c) included in this Form 10-Q.
Liquidity and Capital Resources
Cash flows from operating activities for the first six months of
1998 amounted to $1,020 million compared with $2,103 million in
the prior-year period. Working capital of $523 million at June
30, 1998 compared with $1.0 billion at December 31, 1997. The
Corporation's current ratio was 1.09 to 1 at June 30, 1998,
compared with 1.17 to 1 at year-end 1997. As a matter of policy,
Amoco practices asset and liability management techniques that
are designed to minimize its investment in non-cash working
capital. This does not impair operational flexibility since the
Corporation has ready access to both short- and long-term debt
markets.
Amoco's debt totaled $6.8 billion at June 30, 1998 and $5.6
billion at year-end 1997. Debt as a percentage of debt-plus-
equity was 30.1 percent at June 30, 1998, and 25.4 percent at
year-end 1997. Amoco Corporation guarantees the public debt
obligations of Amoco Company and the public notes, bonds and
debentures of Amoco Canada Petroleum Company Ltd. ("Amoco
Canada"). Amoco also guarantees certain outstanding loans of
equity-basis affiliates, which at June 30, 1998, totaled $349
million.
Cash dividends paid in the first half of 1998 totaled $722
million. Amoco was into the second year of a two-year, $2 billion
stock repurchase program which was discontinued as a result of
the merger agreement between Amoco and BP. Through June 1998, 40
million shares of Amoco's common stock were repurchased, on a
post-split basis, at a cost of $1.8 billion. Stock repurchased
under the program was in addition to shares purchased for benefit
plan purposes.
The Corporation believes its strong financial position will
permit the financing of business needs and opportunities as they
arise. Short-term borrowings totaled $1.4 billion at June 30,
1998, an increase of $629 million since year-end 1997. Short-term
obligations, such as commercial paper borrowings, give the
Corporation the flexibility to meet short-term working capital
and other temporary requirements. At June 30, 1998, bank lines of
credit available to support outstanding commercial paper
borrowings amounted to $790 million, all of which were supported
by commitment fees.
The Corporation also may utilize its favorable access to long-
term debt markets to finance profitable growth opportunities and
for ongoing operations. Amoco Company issued $500 million of ten-
year, 6% guaranteed notes during the second quarter of 1998. A
$500 million shelf registration statement on file with the
Securities and Exchange Commission was withdrawn during the
second quarter of 1998.
Capital and exploration expenditures for the first six months of
1998 totaled $1,753 million, excluding $196 million for Amoco's
share of equity-basis affiliates' spending. This compared with
$1,812 million for the similar 1997 period, excluding $89 million
for Amoco's share of affiliates' spending. Approximately 70
percent of the 1998 expenditures was spent in E&P operations.
Amoco has been addressing the issue of preparing its computer
systems to properly handle date information in the year 2000 and
beyond. This has involved the implementation of new systems and
upgrading of computer information technology where needed. In
addition Amoco has reviewed its information and process control
systems, as well as other electronic control systems, to identify
all critical equipment and software that will need to be altered
or replaced to be prepared for the year 2000. The upgrading and
replacement of these systems is underway and will occur primarily
during the three years ending in December 1999, with the bulk of
this work being completed by the end of 1998. Incremental costs
related to this effort are expected to reduce income by about $55
million before tax in 1998, and by about $100 million for the
1997 through 1999 period. The Amoco year 2000 process will assess
the year 2000 readiness of critical suppliers and customers who
are addressing similar issues in their businesses and systems.
Interruptions in supplies or customer orders (or other failures
of third parties on which the Corporation relies) resulting from
year 2000 issues could adversely affect Amoco's business. The
Corporation is in the process of reviewing its business
resumption and contingency plans to mitigate the impact of
possible third party failures where cost effective.
The Corporation has provided in its accounts for the reasonably
estimable future costs of probable environmental remediation
obligations relating to various oil and gas operations,
refineries, marketing sites and chemical locations, including
multiparty sites at which Amoco and certain of its subsidiaries
have been identified as potentially responsible parties by the
U.S. Environmental Protection Agency. Such estimated costs will
be refined over time as remedial requirements and regulations
become better defined. However, any additional environmental
costs cannot be reasonably estimated at this time due to
uncertainty of timing, the magnitude of contamination, future
technology, regulatory changes and other factors. Although future
costs could have a significant effect on the results of
operations in any one period, they are not expected to be
material in relation to Amoco's liquidity or consolidated
financial position. In total, the accrued liability represents a
reasonable best estimate of Amoco's remediation liability.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995.
Statements in this report that are not historical facts,
including statements about industry and company growth, estimates
of expenditures and savings, and other trend projections are
forward looking statements. These statements are based on current
expectations and involve risk and uncertainties. Actual future
results or trends may differ materially depending on a variety of
factors. These include specific factors identified in the
discussion accompanying such forward looking statements, industry
product supply, demand and pricing, political stability and
economic growth in relevant areas of the world, the Corporation's
successful execution of its internal performance plans,
development and use of new technology, successful partnering,
actions of competitors, natural disasters, and other changes to
business conditions.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the description of the challenge by the
Internal Revenue Service of certain foreign income taxes as
credits against the Corporation's U.S. taxes that otherwise would
have been payable for the years 1980 through 1992 in Part II,
Item 1 of Amoco's Form 10-Q for the quarter ended March 31, 1998.
Seven proceedings instituted by governmental authorities are
pending or known to be contemplated against Amoco and certain of
its subsidiaries under federal, state or local environmental
laws, each of which could result in monetary sanctions in excess
of $100,000. No individual proceeding is, nor are the proceedings
as a group, expected to have a material adverse effect on Amoco's
liquidity, consolidated financial position or results of
operations. Amoco estimates that in the aggregate the monetary
sanctions reasonably likely to be imposed from these proceedings
amount to approximately $3.9 million.
Amoco has various other suits and claims pending against it among
which are several class actions for substantial monetary damages
which in Amoco's opinion are not meritorious. While it is
impossible to estimate with certainty the ultimate legal and
financial liability in respect to these other suits and claims,
Amoco believes that, while the aggregate amount could be
significant, it will not be material in relation to its liquidity
or its consolidated financial position.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Shown below is summarized financial information for Amoco's
wholly owned subsidiary, Amoco Company.
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
(millions of dollars)
Total revenues(including
excise taxes)........... $ 7,233 $ 7,826 $14,169 $15,900
Net income.............. $ 158 $ 546 $ 455 $ 1,102
June 30, Dec. 31,
1998 1997
(millions of dollars)
Current assets................. $ 6,032 $ 6,442
Total assets................... $29,927 $30,062
Current liabilities............ $ 4,865 $ 5,165
Long-term debt-affiliates...... $ 5,022 $ 4,739
-other........... $ 3,505 $ 2,791
Deferred credits............... $ 4,725 $ 4,663
Minority interest.............. $ 120 $ 119
Shareholder's equity........... $11,609 $12,505
Shown below is summarized financial information for Amoco's
wholly owned subsidiary, Amoco Canada.
Three Months Six Months
Ended Ended
June 30, June 30,
1998 1997 1998 1997
(millions of dollars)
Revenues................ $ 858 $ 1,057 $ 1,833 $ 2,407
Net income(loss)........ $ 131 $ (4) $ 159 $ 137
June 30, Dec. 31,
1998 1997
(millions of dollars)
Current assets.................. $ 828 $ 1,479
Total assets.................... $ 3,860 $ 4,217
Current liabilities............. $ 551 $ 948
Non-current liabilities......... $ 2,924 $ 3,043
Shareholder's equity............ $ 385 $ 226
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
2(a) The August 11, 1998, press release announcing
the merger agreement between Amoco and BP.
2(b) Agreement and Plan of Merger among Amoco, BP
and Eagle Holdings, Inc., dated August 11, 1998.
2(c) Stock Option Agreement between Amoco and BP.
12 Statement Setting Forth Computation of
Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1998.
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Amoco Corporation
(Registrant)
Date: August 13, 1998
A. J. NOCCHIERO
A. J. Nocchiero
Vice President and Controller
(Duly Authorized and Chief
Accounting Officer)
<PAGE>
<PAGE>
Exhibit 2 (a)
[LOGO] Amoco Corporation
Mail Code 2304
200 East Randolph Drive
Chicago, Illinois 60601-7125
Jim Fair For Immediate Release
Manager, Communications Services
Phone: 312-856-5566
Internet: www.amoco.com
BP AND AMOCO MERGE TO ENTER
GLOBAL TOP TRIO OF OIL MAJORS
Largest ever industrial merger creates Britain's
biggest company
Combined current market capitalization of some $110
billion, with size and scale to access biggest projects for
future growth
Agreed equity split of 60 per cent to BP and 40 per
cent to Amoco
Run by chief executive Sir John Browne and integrated
management team
Target of at least $2 billion extra to annual pre-tax
earnings by end-2000
Aims for strong annual growth and top competitive
returns
Prime positions in key producing areas, retail markets,
petrochemicals and emerging regions.
Chicago (August 11) - BP and Amoco today announced that they
have agreed to join forces to create one of the strongest
and most competitive international energy and petrochemicals
groups in the world.
The two companies intend to unite their global operations
through an agreed merger. The executive management of the
new group will be headed by BP chief executive Sir John
Browne and the board will be co-chaired by BP chairman Peter
Sutherland and Amoco chairman Larry Fuller.
The combined enterprise, which is the largest ever
industrial merger, will be called BP Amoco p.l.c. It will
be headquartered in London and will be Britain's biggest
company.
BP's earnings in 1997 were $4.6 billion and Amoco's totaled
$2.7 billion. Combined revenues were $108 billion and
capital employed $53 billion. Current combined market
capitalization of some $110 billion would take the united
group into the world's top trio of oil majors.
Sir John Browne described the BP-Amoco link-up as "a superb
alliance of equals with complementary strategic and
geographical strengths which effectively creates a new super-
major that can better serve our millions of customers world-
wide".
In a joint statement following approval of the transaction
by the boards of BP and Amoco, he and Larry Fuller said the
move was expected to deliver synergies from cost-savings
that would add at least $2 billion pre-tax a year by end-
2000 to the earnings already separately targeted by the two
companies - and possible upside beyond that.
"We are uniting two excellent portfolios of assets and
people to create a group that will have the financial
resources, scale and global reach to compete effectively in
the 21st century," they said.
DISTINCTIVE RETURN: "International competition in the
industry is already fierce and will grow more acute as new
players emerge. In such a climate the best investment
opportunities will go increasingly to companies that have
the size and financial strength to take on those large-scale
projects that offer a truly distinctive return."
The merger will be effected by the issue of new BP shares,
in the form of American Depository Receipts, in exchange for
Amoco common stock, with BP shareholders owning 60 per cent
and Amoco shareholders owning 40 per cent of the combined
group. The board of BP Amoco will comprise 13 directors from
BP, of whom six will be executive directors, and nine
directors from Amoco, of whom two will be executive
directors.
Sir John Browne will be CEO of BP Amoco. He will also be
chairman of the management committee and Larry Fuller deputy
chairman. The two will co-chair the transition team
responsible for integrating the operations of the new group.
BP deputy CEO Rodney Chase and Amoco president Bill Lowrie
will be deputy CEOs and presidents of BP Amoco. Mr. Chase
will have responsibility for exploration & production and
Mr. Lowrie for refining & marketing, and chemicals. BP chief
financial officer John Buchanan will be CFO. As co-chairman
of the new group, Mr. Fuller will remain an executive
director until his retirement in the first half of 2000.
The world-wide headquarters of the BP Amoco group will be in
London. Amoco's head office in Chicago will be headquarters
for the group's North American refining, marketing and
transportation business and, in due course, the world-wide
chemicals business.
AMOCO BRAND: Exploration and production operations for the
Western Hemisphere will be managed from Houston, Texas,
where both BP and Amoco currently have offices. The Amoco
brand will be extended over time to all BP's retail gasoline
and convenience store outlets in the US. Retail sites
elsewhere in the world will continue to carry the BP brand.
The initial synergies of $2 billion from the transaction are
expected to come from a mix of reductions in staff in areas
of overlap, more focused exploration, streamlining of
business processes, improved procurement and rationalization
where operations are duplicated.
The BP Amoco group will have combined reserves of around
14.8 billion barrels of oil and gas equivalent and daily
production of some three million barrels. It will have prime
positions in established major oil and gas provinces of the
world, including the North Sea and North America. It will be
the largest producer of oil and gas in the US, with output
from Alaska, the Gulf of Mexico and the Lower 48 states.
Amoco is already the biggest gas producer in the US and
Canada.
It will have key positions and enhanced opportunities for
access to new acreage in regions expected to supply a
growing share of global energy demand in the 21st century.
These include Algeria, Angola, Argentina, Australia,
Azerbaijan, Bolivia, Canada, Colombia, Egypt, Kazakhstan,
Kuwait, Norway, Oman, Russia and Siberia, Trinidad, the UAE
and Venezuela.
TOP MARKETER: Amoco is one of the leading gasoline marketers
in the US and a market-leader in premium gasoline. Based on
1997 sales, the new group will share top place for retail
sales east of the Rocky Mountains, with first or second
position in some 20 states. World-wide, it will be a top-
tier marketer of fuels, served by a global refining network
with key refineries among the top performers in their
regions.
Combining the chemicals operations of BP and Amoco will
create a business with revenues of some $13 billion that
marries the strengths of BP in Europe and Amoco in the US,
and provides a powerful platform for expansion in Asia where
both companies already have significant investments.
The new chemicals business will be one of the world's
largest petrochemicals companies, with leading positions in
seven core products - acetic acid, acrylonitrile, aromatics,
purified terephthalic acid (PTA), alpha-olefins, purified
isophthalic acid (PIA) and polypropylene - and a portfolio
of key proprietary technologies.
Both BP and Amoco have significant investments in solar
energy and share strong records and reputations for sound
operating practices, and environmental and social
responsibility.
FIRST-CLASS PEOPLE: Concluding their joint statement on the
new group, Sir John Browne and Larry Fuller said: "Through
this transaction, we are creating an energy business for the
new millennium, a business that has the first-class people,
the financial resources and the leading-edge technology to
supply our millions of customers world-wide with cleaner,
premium-quality products at competitive prices.
"The managements of BP and Amoco already have a shared
financial philosophy. The targets our two companies have
previously set are very similar - powerful annual earnings
growth, a strongly-competitive return on capital, and
dividends growing in line with underlying earnings. This
transaction gives us the financial strength, flexibility and
global reach to pursue growth opportunities that will
underpin those targets and to extend them over the longer
term."
A summary of the proposed merger agreement is set out in
Part lll of this release. The companies said they intend to
publish detailed information for dispatch to shareholders
within the next three months. Subject to shareholder
approval and regulatory consents, the conclusion of the
merger is targeted for the end of the year.
Investment bank advisers are J P Morgan for BP and Morgan
Stanley for Amoco.
August 11, 1998
Safe Harbor Language Regarding Forward Looking Statements:
The statements contained in this press release,
particularly those regarding synergies, performance, costs,
dividends, returns, divestments, reserves and growth are or
may be forward looking statements and actual results may
differ materially from the statements made depending on a
variety of factors, including successful integration of BP
and Amoco operations.
Additional information concerning factors that could
cause the actual results to differ materially from those in
the forward looking statements are contained in BP's Annual
Report on Form 20-F and Amoco's Annual Report on Form 10-K
filed with the US Securities and Exchange Commission.
CONTACTS FOR FURTHER INFORMATION
BP LONDON AMOCO CHICAGO
Roddy Kennedy - Press Office Jim Fair - Media Relations
Tel: 44 (0)171 496 4624 Tel: (1) 312-856 5566
David Peattie - Investor Relations Chuck Koepke - Investor Relations
Tel: 44 (0)171 496 4717 Tel: (1) 312- 856 6431
BP AMERICA AMOCO LONDON
Tom Koch - Press Office Harry MacMillan - Public Affairs
Tel: (1) 212 451 8019 44 (0)181 849 7271
Terry Lamore - Investor Relations
Tel: (1) 212 451 8034
BROKER CONTACTS
FOR BP FOR AMOCO
Rod Peacock - J P Morgan London Gordon Dyal - Morgan Stanley
Tel: 44 (0)171 325 5664 Tel: (1) 212 761 4457
Harry Hampson - J P Morgan London
Tel: 44 (0)171 325 5536
Jes Staley - J P Morgan New York
Tel: (1) 212 648 0069
Stephen Robinson - Merrill Lynch, London
Tel: 44 (0)171 772 2608
Mike Ryan - Merrill Lynch, New York
Tel: (1) 212 449 3697
David Mayhew - Cazenove & Co
Tel: 44 (0)171 825 9453
Satellite feed today, August 11th, of executive comments and
Amoco B-roll:
Times of feed: 2:45 p.m. to 3:00 p.m. EDT
3:45 p.m. to 4:00 p.m. EDT
Satellite coordinates: C-Band, Galaxy 6/Transponder 5
Part ll
FACTS AND STATISTICS
The BP Group
1997 replacement cost pre-exceptional earnings of $4.6
billion
1997 revenues exceeding $71 billion
Capital employed in 1997 was $30.7 billion
Capital budget for 1998 of $6 billion
Some 56,450 employees world-wide at end-1997
In business since 1909
Over 375,000 shareholders.
Exploration & Production
1997 world-wide net production of over 1.25 million
barrels a day of crude oil and natural gas liquids and
around 1.66 billion cubic feet of natural gas a day
Estimated net proven liquid reserves of 6.85 billion
barrels; estimated net proven natural gas reserves of 10.5
trillion cubic feet
Exploration activities in 16 countries and production
activities in 11 countries
Largest oil producer in the US with over 8 per cent of
the oil produced in the country coming from BP fields
Largest oil producer in the UK North Sea.
Refining and Marketing
Total oil product sales of 3.3 million barrels a day
17,900 service stations world-wide
Refinery throughput of around 1.8 million barrels a day
Owned or part-owned refineries in 12 countries,
including the UK, France, Spain, the US, Australia, South
Africa and Singapore
One of the largest marketers of aviation fuels, serving
customers at more than 600 airports
Leading supplier of fuels and lubricants to the
shipping industry with facilities at more than 800 ports.
Chemicals
Produces around 9.4 million metric tons of product a
year
World's largest supplier of acetic acid and its
derivatives to the market
A leading European manufacturer of polyethylene which
is used in a range of modern products from food packaging to
gas pipes
More than 90 per cent of the world's manufacturing
capacity for acrylonitrile uses BP's proprietary process
BP has the world's largest acrylonitrile plant at Green
Lake, Texas
One of Europe's biggest styrenics producers and the top
supplier of oxygenated solvents
Europe's leading producer of polybutene, used in cable
insulation, fuel additives and adhesives.
Solar
World's second largest photovoltaic company
In 1997 sales reached $80 million, up 33 per cent on
1996
Manufactures the highest-efficiency solar cells in
volume production.
Amoco Corporation
1997 earnings of $2.7 billion
1997 revenues exceeding $36 billion
Capital employed in 1997 was $22 billion
Capital budget for 1998 of $3.9 billion
Some 43,000 employees world-wide at end-1997
In business since 1889
Over 340,000 shareholders.
Exploration & Production
1997 world-wide net production averaged 637,000 barrels
of crude oil and natural gas liquids per day and more than 4
billion cubic feet of natural gas per day
Proven liquid reserves of 2.4 billion barrels; proven
natural gas reserves of more than 21 trillion cubic feet
Exploration activities in some 20 countries, production
activities in 14 countries
Largest North American private natural gas producer;
second largest reserves holder.
Refining and Marketing
Total oil product sales of 1.2 million barrels a day
9,300 service stations, all in the US
Five US refineries process a total of about 1 million
barrels of crude oil daily.
Chemicals
Capacity of some 13 million metric tons of product a
year
World's largest producer of purified terephthalic acid
(PTA), used to make polyester fibers, cassette tapes,
photographic film and many types of plastic containers
World's largest producer of paraxylene, used in making
PTA
World's largest producer of polybutene
World's largest producer of poly alpha-olefins and
second-biggest producer of linear alpha-olefins
A leading world-wide producer of polypropylene, used in
synthetic fabrics and fibers
World's largest producer of woven polypropylene carpet-
backing
A leading supplier to the unsaturated polyester and
paint and coatings markets.
Solar
Amoco is 50 per cent owner of Solarex Corporation, the
largest producer of photovoltaic solar panels in the US.
NOTE: BP earnings are quoted UK GAAP and Amoco earnings US
GAAP.
Part lll
1. Principal Terms
Under the terms of the Merger:
Amoco shareholders will be entitled to receive for each
Amoco common share held at closing, 3.97 BP ordinary shares.
Such shares will be delivered in the form of BP Amoco
American Depository Receipts ("ADRs"), which represent six
BP ordinary shares.
Following the Merger, BP shareholders will hold
approximately 60 per cent and Amoco shareholders
approximately 40 per cent of the capital of the combined
company on a diluted basis.
BP will be renamed BP Amoco p.l.c.
BP Amoco's shares will remain listed on the London Stock
Exchange. BP Amoco will apply to list the new ADRs to be
issued to Amoco shareholders in connection with the Merger,
together with its existing ADRs, on the New York Stock
Exchange.
2. Structure of the Transaction
The Merger will be effected in accordance with the terms of
an Agreement and Plan of Merger dated as of August 11, 1998
(the "Merger Agreement"), entered into between BP, Eagle
Holdings, Inc., a wholly-owned US subsidiary of BP, and
Amoco.
Under the terms of the Merger, each share of common stock of
Amoco will effectively be canceled and re-issued to BP in
exchange for new BP ordinary shares to be delivered in the
form of ADRs.
On completion of the Merger BP will acquire the entire
issued share capital of Amoco. Following closing, Amoco
will be called BP-Amoco Corporation.
3. Merger Agreement
The Merger Agreement sets out the conditions to the closing
of the Merger. It also contains certain termination rights,
mutual representations and warranties and various convenants
relating to the operation of the businesses of BP and Amoco
in the period until closing.
The Merger Agreement requires BP and Amoco to effect the
Merger unless any one of the conditions to the
implementation of the Merger is not satisfied or waived by
August, 31 1999 or either BP or Amoco exercises one of its
limited termination rights. The Merger Agreement also
provides for termination fees to be paid by one party to the
other in certain circumstances.
a) Principal Conditions
The conditions to the implementation of the Merger include
BP and Amoco shareholder approvals, receipt of certain
regulatory and tax approvals and the absence of any
governmental order prohibiting the Merger.
b) Termination rights
The circumstances in which either party is able to terminate
the Merger Agreement include:
if either Amoco or BP shareholders do not approve the
Merger and related transactions;
if the other party enters into negotiations with any
other person in relation to an acquisition offer for that
party or that party's board recommends such a transaction;
if the board of the other party withdraws or adversely
modifies its recommendation of the Merger; or
if there is a material breach of covenant or warranty
by the other party.
c) Termination payments
The parties have agreed that Amoco will make a payment to BP
of up to US$950 million (making a total of US$1 billion
payable to BP when considered together with the US$50
million payable under the Stock Option Agreement) if the
Merger Agreement is terminated in the following
circumstances:
Amoco fails to obtain shareholder approval of the
Merger at a time when a third party has made an alternative
proposal;
the directors of Amoco withdraw or adversely amend
their approval of the Merger or recommend an alternative
transaction; or
Amoco recommends to its shareholders an alternative
proposal by a third party.
In the event of a termination based on the failure to obtain
shareholder approval, the termination payment will be
limited to US$500 million, with an additional US$450 million
payable to BP only in the event that Amoco enters into an
agreement for an alternative transaction.
Similarly, the parties have agreed that BP will make a
payment to Amoco of up to US$1 billion if the transaction is
terminated for identical reasons relating to BP and in the
same circumstances.
4. Stock Option Agreement
Amoco has granted BP an option to purchase 189,783,270
shares of Amoco Common Stock at a price per share of $41.00.
This represents approximately 19.9 per cent of the
outstanding Amoco Common Stock. The stock option is
exercisable in circumstances in which a termination fee also
is payable by Amoco to BP. The stock option includes terms
limiting the aggregate maximum amount receivable by BP under
the stock option agreement and termination fees, when
considered together, to US$1 billion.
5. Dividends
BP and Amoco will continue to pay quarterly dividends in the
ordinary course prior to the implementation of the Merger.
BP's gross scrip dividend share will continue to be
available in respect of dividends paid prior to March 31,
1999.
BP Amoco intends to continue paying four dividends a year.
Its dividend policy will be to pay out approximately 50 per
cent of through-cycle earnings. BP is considering
reconstituting its share capital in US dollars in line with
the accounts of the group, dividend declaration and the
currency of its material business operations.
6. Accounting and tax implications
It is intended that BP Amoco will have a calendar financial
year-end. The accounts of the group will be published in US
dollars and will be prepared in accordance with UK GAAP,
with a reconciliation to US GAAP.
_ END _
<PAGE>
<PAGE>
Exhibit 2 (b)
EXECUTION COPY
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
<PAGE>
<PAGE>
This AGREEMENT AND PLAN OF MERGER, dated as of
August 11, 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 futherance 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 the date of
this Agreement, 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 the date
hereof; 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:
<PAGE>
<PAGE>
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.
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 cancelled in exchange for the right
to receive 3.97 (the "Exchange Ratio") ordinary shares, of
nominal value 25p each ("BP Ordinary Shares"), which shall be in
the form of American depositary shares, each representing the
right to receive six BP Ordinary Shares, or such other form of BP
Ordinary Shares as BP and Amoco may agree in accordance with
Section 1.4.7 (the "BP Depositary Shares"), and the BP Depositary
Shares shall 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, as amended through the
date hereof (as it may be amended with the consent of Amoco from
time to time, the "Deposit Agreement"), among BP, Morgan Guaranty
Trust Company of New York, as Depositary (the "Depositary"), and
the holders of BP ADRs, or such other arrangements as BP and
Amoco may agree (the "Merger Consideration"). 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) 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, respectively, and any
distribution or dividend pursuant to Section 1.4.6, in each case
without interest. The BP Ordinary Shares and BP Depositary
Shares issued as provided in this Section 1.3.2 shall be of the
same class and shall have the same terms as the currently
outstanding BP Ordinary Shares and the currently outstanding BP
Depositary Shares, respectively. BP shall, following the
Closing, pay all stamp duties, stamp duty reserve tax and other
taxes and similar levies imposed in connection with the issuance
or creation of the BP Depositary Shares and any BP ADRs in
connection therewith.
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 cancelled and, in consideration for the
allotment of the BP Ordinary Shares referred to in Section 1.3.4
below, the Surviving Corporation shall issue to 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 by the Surviving
Corporation of shares of common stock of the Surviving
Corporation pursuant to Section 1.3.3 hereof, BP shall allot
(subject to satisfaction of the condition set forth in Section
4.1.5 hereof) 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 issue 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 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 the Depositary
or, failing the Depositary, another agent acceptable to Amoco as
exchange agent (the "Exchange Agent") for the purpose of
exchanging Certificates for BP ADRs as provided in Section 1.3.2.
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 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. To the extent required, the Exchange Agent
will requisition from the Depositary, from time to time, such
number of BP ADRs as are issuable in respect of Amoco Common
Shares properly delivered to the Exchange Agent. BP shall, prior
to the Effective Time, conditionally allot the BP Ordinary Shares
referred to in Section 1.3.4, subject to the terms and conditions
of this Agreement.
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, 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, will be entitled
to receive (i) the number of whole BP Depositary Shares included
in the Merger Consideration in respect of such Amoco Common
Shares in the form of BP ADRs, 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 ADRs are to be issued to a person other than the
registered holder of the Amoco Common Shares represented by the
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 cancelled 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 allotted in respect of BP Depositary
Shares pursuant to this Article I and any cash in lieu of
fractional interests of BP Ordinary 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 the holders of Amoco Common Shares six
months after the Effective Time shall (i) (as to BP Ordinary
Shares so allotted) be deemed to have lapsed, and (ii) (as to any
cash) be returned to BP upon demand. Any such holder who has not
delivered his Amoco Common Shares to the Exchange Agent in
accordance with this Article I prior to that time shall
thereafter look only to BP and the Surviving Corporation for
issuance of BP Ordinary Shares in respect of his Amoco Common
Shares and payment of cash dividends or other distributions in
respect thereof, issuable and/or payable pursuant to Section
1.4.6. Notwithstanding the foregoing, BP shall not be liable to
any holder of Amoco Common Shares for any securities delivered or
any amount paid to a public official pursuant to applicable
abandoned property laws. Any BP Ordinary Shares 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 securities 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 the case may be, free and clear of any
claims or interest of any Person previously entitled thereto.
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 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.
1.4.7. Option to Issue BP Ordinary Shares. BP and Amoco may
jointly determine that it is more practical and desirable for BP
to cause BP Ordinary Shares to be issued to the holders of Amoco
Common Shares in complete satisfaction of BP's obligations under
this Article I or cause the BP Ordinary Shares to be
redenominated in a currency other than sterling or issued in
bearer or registered form (which may or may not be in the form of
BP Depositary Shares evidenced by BP ADRs). If BP and Amoco make
the requisite determination under this Section, then all
references in this Agreement to BP Depositary Shares or BP ADRs
issuable to such persons, shall mean BP Ordinary Shares as so
redenominated and in such form as is hereafter agreed by the
Parties and any BP Depositary Shares or other certificates, or BP
ADRs evidencing such BP Depositary Shares or other certificates,
if any, representing such redenominated BP Ordinary Shares.
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, unless otherwise requested by the holders
of such Amoco Stock Options, be delivered in the form of BP
Depositary Shares represented by depositary receipts having the
same terms as BP ADRs.
1.5.2. Prior to the Effective Time, BP shall make available for
issuance 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 ADRs
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
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
making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by
BP, 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 and any unpaid dividends
or other distributions in respect thereof pursuant to Section
1.4.2 upon due surrender of and deliverable in respect of the
Amoco Common Shares represented by such Certificate pursuant to
this Agreement.
<PAGE>
<PAGE>
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 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 2,000 million
(pound sterling). 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 1 (pound sterling) each ("BP First Preference Shares"), and not
more than 5,473,414 9% cumulative second preference shares, of
nominal value 1 (pound sterling) 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 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, 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 Merger and the other transactions contemplated
hereby 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 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 allotment of BP Ordinary Shares and the deposit of BP
Ordinary Shares 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 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 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 ( 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.
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 or (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), 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, 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 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.
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 F-4") 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 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 ADRs 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.
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 transactions contemplated
hereby (the "BP Shareholders Meeting") 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 include in the
notice of meeting referred to above, resolutions inter alia to
approve: (i) the Merger and the other transactions contemplated
hereby; (ii) a change of name of BP to BP Amoco p.l.c.; (iii) an
alteration to BP's articles of association to permit BP to
declare and pay dividends in U.S. dollars; and (iv) the
appointment of the Persons referred to in Section 3.8.3 as
directors of BP, in each case subject to and with effect at the
Effective Time. 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.
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 Circular 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 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, statement 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 3.5.2, 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. Employee Benefits. 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.
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) 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.
(b) At or prior to the Effective Time, BP shall enter into
employment agreements substantially in the form previously
provided by Amoco to BP with the Amoco officers, and on the
principal terms, identified in the Amoco Disclosure Letter.
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, 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 procure as much coverage as can
be obtained for the remainder of such period for an annual
premium not in excess 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 shall be
nominated for election by shareholders 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.
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 ADRs. 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 ADRs 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 ADRs, 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 ADRs 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 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 ADRs
issued to such Amoco Rule 145 Affiliate pursuant to the Merger,
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 ADRs received in the
Merger (within the meaning of Section 201.01 of the SEC's
Codification of Financial Policies), until such time as financial
results (including combined sales 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 No. 65 and 76 (or
any successor thereto) issued by the SEC. Any BP Ordinary 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 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 Rule 145 under
the Securities Act (the "BP Rule 145 Affiliates"). BP shall use
its best efforts to cause each person who is identified as a BP
Rule 145 Affiliates 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 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 No. 65 and 76 (or any successor thereto)
issued by the SEC. Any BP Ordinary Shares held by any BP 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 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 restatement or
recalculation prepared in accordance with 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 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, BP agrees that it will make filings
with the SEC on Form 6-K, providing for such disclosures as are
comparable to those required by Form 10-Q. BP further agrees
that it will make any requisite filings on Form 20-F with the SEC
within 90 days after the end of its fiscal year.
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:
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 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
ADRs 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.
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 ADRs
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.
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 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 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.
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 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
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.
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.
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
<PAGE>
<PAGE>
Exhibit 2(c)
STOCK OPTION AGREEMENT, dated as of the 11th day
of August, 1998 (this "Agreement"), between Amoco
Corporation, an Indiana corporation ("Issuer"), and The
British Petroleum Company p.l.c., an English public limited
company (including any assigns permitted under Section11
hereof, "Grantee").
RECITALS
A. The Merger Agreement. Prior to the entry
into this Agreement and prior to the grant of the Option (as
defined in Section1(a)), Issuer, Grantee, and Eagle
Holdings, Inc., an Indiana corporation and a wholly-owned
subsidiary of Grantee ("Merger Sub"), have entered into an
Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), pursuant to which Grantee and
Issuer intend to effect the Merger (as defined in the Merger
Agreement).
B. The Stock Option Agreement. As an inducement
and condition to Grantee's willingness to enter into the
Merger Agreement, and in consideration thereof, the board of
directors of Issuer has approved the grant to Grantee of the
Option pursuant to this Agreement and the acquisition of
Common Stock (as defined below) by Grantee pursuant to this
Agreement; provided, that such grant was expressly
conditioned upon, and made to have no effect until after,
execution and delivery by Issuer, Grantee and Merger Sub of
the Merger Agreement.
C. Capitalized Terms. Capitalized terms used
herein but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements set forth herein and
in the Merger Agreement, the parties hereto agree as
follows:
1. The Option. (a) Issuer hereby grants to
Grantee an unconditional, irrevocable option (the "Option")
to purchase, subject to the terms hereof, up to 189,783,270
fully paid and nonassessable shares ("Option Shares") of
common stock, without par value ("Common Stock"), of Issuer
at a price per share in cash equal to $41.00 (subject to
adjustment in accordance with this Agreement, the "Option
Price"); provided, however, that in no event shall the
number of Option Shares exceed 19.9% of the shares of Common
Stock issued and outstanding at the time of exercise
(without giving effect to the Option Shares issued or
issuable under the Option) (the "Maximum Applicable
Percentage"). The number of Option Shares purchasable upon
exercise of the Option and the Option Price are subject to
adjustment as set forth herein.
(b) In the event that any additional shares of
Common Stock are issued or otherwise become outstanding
after the date of this Agreement (other than pursuant to
this 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
Issuer or Grantee being necessary) so that, taking into
consideration any such issuance, such aggregate number
equals the Maximum Applicable Percentage.
(c) The Option Price with respect to the Option
Shares as to which Grantee may propose to exercise this
Option pursuant to Section 2, or to request the repurchase
of this Option by Issuer pursuant to Section 9 (in either
case, the "Proposed Exercise Shares"), shall not be greater
than, and shall be adjusted downward to the extent necessary
to be, the Maximum Option Price (as defined below). The
"Maximum Option Price" with respect to any Proposed Exercise
Shares shall be that price per share in cash at which the
Option must be exercisable in order to result in a Total
Profit (as defined in Section 19) to Grantee, determined as
of the date of such proposal, of $50,000,000, assuming that
this Option were exercised on such date for all of the
Option Shares subject to this Option and assuming that all
of such Option Shares were sold for cash at the closing
market price on the New York Stock Exchange, Inc. (the
"NYSE") for the Common Stock as of the close of business on
the preceding trading day (less customary brokerage
commissions).
2. Exercise; Closing. (a) Conditions to
Exercise; Termination. Grantee may exercise the Option, in
whole but not in part, by giving a written notice thereof as
provided in Section 2(d) within 180 days following the
occurrence of a Triggering Event (as defined in Section
2(b)) unless prior to the giving of such notice the
Effective Time (as defined in the Merger Agreement) shall
have occurred. The Option shall 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 Issuer has paid to Grantee the maximum amount of
the Amoco Termination Amount which could be payable pursuant
to Section 5.5.2 of the Merger Agreement and (y) the date
that Grantee is no longer potentially entitled to receive
any payment upon termination of the Merger Agreement
pursuant to Section5.5.2 of the Merger Agreement.
(b) Triggering Event. A "Triggering Event" shall
have occurred if the Merger Agreement is terminated and
Grantee becomes entitled to receive the maximum amount of
the Amoco Termination Amount which could be payable pursuant
to Section 5.5.2 of the Merger Agreement.
(c) Notice of Triggering Event by Issuer. Issuer
shall notify Grantee promptly in writing of the occurrence
of any Triggering Event and the number of shares of Common
Stock issued and outstanding as of the date of such notice,
it being understood that the giving of such notice by Issuer
shall not be a condition to the right of Grantee to exercise
the Option.
(d) Notice of Exercise by Grantee. If Grantee
shall be entitled to and wishes to exercise the Option, it
shall send to Issuer a written notice (an "Exercise Notice"
and the date of which is referred to herein as the "Notice
Date") specifying (i) the total amount payable to Issuer on
the exercise of the Option in respect of the Option Shares
and (ii)a place and date (the "Closing Date") not earlier
than three business days nor later than 60 business days
from the Notice Date for the closing of such purchase (the
"Closing"); provided, that if a filing is required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or prior notification to or
approval of any other regulatory authority in the U.S., U.K.
or elsewhere is required in connection with such purchase,
Grantee and Issuer, as required, promptly after the giving
of the Exercise Notice shall file any and all required
notices, applications or other documents necessary for
approval and shall expeditiously process the same and in
such event the period of time referred to in clause(ii)
shall commence on the date on which Grantee furnishes to
Issuer a supplemental written notice setting forth the
Closing Date, which notice shall be furnished as promptly as
practicable after all required notification periods shall
have expired or been terminated and all required approvals
shall have been obtained and all requisite waiting periods
shall have passed. Each of Grantee and the Issuer agrees to
use all reasonable efforts to cooperate with and provide
information to Issuer or Grantee, as the case may be, with
respect to any required notice or application for approval
to such regulatory authority.
(e) Payment of Purchase Price. At the Closing,
Grantee shall pay to Issuer the aggregate Option Price for
the Option Shares in immediately available funds by a wire
transfer to a bank account designated by Issuer; provided,
that failure or refusal of Issuer to designate such a bank
account shall not preclude Grantee from exercising the
Option.
(f) Delivery of Common Stock. At the Closing,
simultaneously with the payment of the purchase price by
Grantee, Issuer shall deliver to Grantee or such other
person as Grantee may nominate in writing, a certificate or
certificates representing the number of Option Shares
purchased by Grantee.
(g) Restrictive Legend. Certificates for Common
Stock delivered at the Closing may be endorsed with a
restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to resale restrictions arising under
the Securities Act of 1933, as amended."
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without
such reference if Grantee shall have delivered to Issuer a
copy of a letter from the staff of the Securities and
Exchange Commission, or a written opinion of counsel, in
form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the
Securities Act of 1933, as amended. In addition, such
certificates shall bear any other legend as may be required
by applicable law.
(h) Ownership of Record; Tender of Purchase
Price; Expenses. Upon the tender of the applicable purchase
price in immediately available funds (following the giving
of the Exercise Notice), Grantee shall be deemed to be the
holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books
of Issuer may then be closed or that certificates
representing such shares of Common Stock may not have been
delivered to Grantee. Issuer shall pay all expenses, and
any and all federal, national, state, provincial and local
taxes and other charges worldwide that may be payable in
connection with the preparation, issuance and delivery of
stock certificates under this Section2 in the name of
Grantee or its nominee, assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other
agreements and covenants herein, Issuer agrees:
(a) Shares Reserved for Issuance. To maintain, free
from preemptive rights, sufficient authorized but unissued
or treasury shares of Common Stock so that the Option may be
fully exercised without additional authorization of Common
Stock after giving effect to all other options, warrants,
convertible securities and other rights of third parties to
purchase shares of Common Stock from Issuer, and to issue
the appropriate number of shares of Common Stock pursuant to
the terms of this Agreement;
(b) No Avoidance. Not to avoid or seek to avoid
(whether by charter amendment or through reorganization,
consolidation, merger, issuance of rights, dissolution or
sale of assets, or by any other voluntary act) the
observance or performance of any of the covenants,
agreements or conditions to be observed or performed
hereunder by Issuer; and
(c) Further Assurances. Promptly after the date
hereof to take all actions as may from time to time be
required (including (i) complying with all applicable
premerger notification, reporting and waiting period
requirements under the HSR Act and (ii) in the event that
prior notification to or approval of any other regulatory
authority in the U.S., U.K. or elsewhere is necessary before
the Option may be exercised, cooperating fully with Grantee
in preparing and processing the required notices or
applications) in order to permit Grantee to exercise the
Option and purchase Option Shares pursuant to such exercise
and to take all action necessary to protect the rights of
Grantee against dilution.
4. Representations and Warranties of Issuer.
Issuer hereby represents and warrants to Grantee as follows:
(a) Merger Agreement. Issuer hereby makes each of the
representations and warranties contained in Sections
2.1.2.1, 2.1.3.1, and 2.1.4 of the Merger Agreement as they
relate to Issuer and this Agreement, as if such
representations were set forth herein.
(b) Shares Reserved for Issuance; Capital Stock. The
Option Shares issuable in accordance with the terms of this
Agreement have been duly reserved for issuance by Issuer and
upon any issuance of such shares in accordance with the
terms hereof, such Option Shares will be duly authorized,
validly issued, fully paid and nonassessable, and will be
delivered free and clear of any lien, pledge, security
interest, claim or other encumbrance (other than those
created by this Agreement) and not subject to any preemptive
rights.
5. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that
Grantee 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 to consummate the transactions contemplated
hereby; the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action on
the part of Grantee, and, assuming the due authorization,
execution and delivery of this Agreement by Issuer,
constitutes a valid and binding agreement of Grantee
enforceable against Grantee in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles.
6. Replacement. Upon (i)receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Agreement, (ii)receipt by
Issuer of reasonably satisfactory indemnification in the
case of loss, theft or destruction and (iii)surrender and
cancellation of this Agreement in the case of mutilation,
Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at
any time be enforceable by any person other than the holder
of the new Agreement.
7. Adjustments. In addition to the adjustment to
the total number of Option Shares pursuant to Section1(b)
and the adjustment to the Option Price pursuant to Section
1(c), the total number of Option Shares purchasable upon the
exercise of the Option hereof and the Option Price shall be
subject to adjustment from time to time as follows:
(a) In the event of any change in the outstanding
shares of Common Stock by reason of stock dividends, split-
ups, mergers, recapitalizations, combinations, subdivisions,
conversions, extraordinary dividends or distributions,
exchanges of shares or the like, the type and number of
Option Shares purchasable upon exercise of the Option shall
be appropriately adjusted, and proper provision shall be
made in the agreements governing any such transaction, so
that (i) Grantee shall receive upon exercise of the Option
the number and class of shares, other securities, property
or cash that Grantee would have received in respect of the
Option Shares purchasable upon exercise of the Option if the
Option had been exercised and such Option Shares had been
issued to Grantee immediately prior to such event or the
record date therefor, as applicable; and (ii) in the event
any additional shares of Common Stock are to be issued or
otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the
number of Option Shares purchasable upon exercise of the
Option shall be increased so that, after such issuance the
number of Option Shares so purchasable equals the Maximum
Applicable Percentage of the number of shares of Common
Stock issued and outstanding immediately after the
consummation of such change; and
(b) Whenever the number of Option Shares purchasable
upon exercise hereof is adjusted as provided in this
Section7, the Option Price shall be adjusted by multiplying
the Option Price by a fraction, the numerator of which is
equal to the number of Option Shares purchasable prior to
the adjustment and the denominator of which is equal to the
number of Option Shares purchasable after the adjustment.
8. Registration. (a) Upon the occurrence of a
Triggering Event, Issuer shall, at the request of Grantee
included in the Exercise Notice, as promptly as practicable
prepare, file and keep current a shelf registration
statement under the Securities Act covering all Option
Shares issued and issuable pursuant to the Option and shall
use its best efforts to cause such registration statement to
become effective and remain current in order to permit the
sale or other disposition of any Option Shares issued upon
exercise of the Option in accordance with any plan of
disposition requested by Grantee; provided, however, that
Issuer may postpone filing a registration statement relating
to a registration request by Grantee under this Section8 for
a period of time (not in excess of 30 days) if in its
judgment such filing would require the disclosure of
material information that Issuer has a bona fide business
purpose for preserving as confidential. Issuer will use its
best efforts to cause such registration statement first to
become effective and then to remain effective for 270 days
from the day such registration statement first becomes
effective or until such earlier date as all shares
registered shall have been sold by Grantee. In connection
with any such registration, Issuer and Grantee shall provide
each other with representations, warranties, indemnities,
contribution and other agreements customarily given in
connection with such registrations. If requested by Grantee
in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating Issuer in
respect of representations, warranties, indemnities,
contribution and other agreements customarily made by
issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the
closing of the sale or other disposition of the Option
Shares or other securities pursuant to a registration
statement filed pursuant to Section8(a) shall occur
substantially simultaneously with the exercise of the
Option.
9. Repurchase of Option and/or Shares.
(a)Repurchase; Repurchase Price. Following the occurrence
of a Triggering Event, (i)at the request of Grantee, given
in writing within 180 days of such occurrence (or such later
period as provided in Section2(d) with respect to any
required notification, application or approval or in
Section10), Issuer shall repurchase the Option from Grantee,
in whole but not in part, at a price (the "Option Repurchase
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 applicable Option Price (giving effect to the
Maximum Option Price) and (ii)at the request of Grantee,
given in writing within 180days of such occurrence (or such
later period as provided in Section2(d) with respect to any
required notification, application or approval or in
Section10), Issuer shall repurchase all Option Shares then
owned by Grantee at a price (the "Option Share Repurchase
Price") equal to the number of such Option Shares multiplied
by the market/offer price. The term "market/offer price"
shall mean the highest of (x)the price per share of Common
Stock at which a tender or exchange offer for Common Stock
has been made, (y)the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer
and (z)the highest trading price for shares of Common Stock
on the NYSE (or, if the Common Stock is not then listed on
the NYSE, any other national securities exchange or
automated quotation system on which the Common Stock is then
listed or quoted) within the six-month period immediately
preceding the delivery of the Repurchase Notice. In the
event that a tender or exchange offer is made for the Common
Stock or an agreement is entered into for a merger, share
exchange, consolidation, recapitalization, reorganization or
similar transaction involving consideration other than cash,
the value of the securities or other property issuable or
deliverable in exchange for the Common Stock shall (I) if
such consideration is in securities and such securities are
listed on a national securities exchange, be determined to
be the highest trading price for such securities on such
national securities exchange within the six-month period
immediately preceding the delivery of the Repurchase Notice
or (II) if such consideration is not securities, or if in
securities and such securities are not traded on a national
securities exchange, be determined in good faith by a
nationally recognized investment banking firm selected by
Issuer.
(b) Method of Repurchase. Grantee may exercise
its right to require Issuer to repurchase the Option, in
whole but not in part, or all Option Shares then owned by
Grantee pursuant to this Section9 by surrendering for such
purpose to Issuer, at its principal office, this Agreement
or certificates for such Option Shares, as applicable,
accompanied by a written notice or notices stating that
Grantee elects to require Issuer to repurchase the Option or
such Option Shares in accordance with the provisions of this
Section9 (such notice, a "Repurchase Notice"). As promptly
as practicable, and in any event within 2 business days
after the surrender of this Agreement or certificates
representing Option Shares and the receipt of the Repurchase
Notice relating thereto, Issuer shall deliver or cause to be
delivered to Grantee the applicable Option Repurchase Price
or the Option Share Repurchase Price.
(c) Effect of Statutory or Regulatory Restraints
on Repurchase. To the extent that, upon or following the
giving of a Repurchase Notice, Issuer is prohibited under
applicable law or regulation from repurchasing the Option or
any Option Shares subject to such Repurchase Notice (and
Issuer hereby undertakes to use its reasonable best efforts
to obtain all required regulatory and legal approvals and to
file any required notices as promptly as practicable in
order to accomplish such repurchase), Issuer shall
immediately so notify Grantee in writing and thereafter
deliver or cause to be delivered, from time to time, to
Grantee the portion of the Option Repurchase Price or the
Option Share Repurchase Price that Issuer is no longer
prohibited from delivering, within 2 business days after the
date on which it is no longer so prohibited; provided,
however, that upon notification by Issuer in writing of such
prohibition, Grantee may, within 5 days of receipt of such
notification from Issuer, revoke in writing its Repurchase
Notice, whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to Grantee that portion of the Option
Repurchase Price or the Option Share Repurchase Price that
Issuer is not prohibited from delivering; and (ii) deliver
to Grantee, as appropriate, (A) with respect to the Option,
a new stock option agreement evidencing the right of Grantee
to purchase that number of Option Shares for which the
surrendered stock option agreement was exercisable at the
time of delivery of the Repurchase Notice less the number of
shares as to which the Option Repurchase Price has
theretofore been delivered to Grantee, or (B) with respect
to Option Shares, a certificate for the Option Shares as to
which the Option Share Repurchase Price has not theretofore
been delivered to Grantee. Notwithstanding anything to the
contrary in this Agreement, including, without limitation,
the time limitations on the exercise of the Option, Grantee
may give notice of exercise of the Option for 180days after
a notice of revocation has been issued pursuant to this
Section 9(c) and thereafter exercise the Option in
accordance with the applicable provisions of this Agreement.
(d) Acquisition Transactions. In addition to any
other restrictions or covenants, Issuer hereby agrees that,
in the event that Grantee delivers a Repurchase Notice, it
shall not enter or agree to enter into an agreement or
series of agreements relating to a merger with or into or
the consolidation with any other person or entity, the sale
of all or substantially all of the assets of Issuer or any
similar transaction or disposition unless the other party or
parties to such agreement or agreements agree to assume in
writing Issuer's obligations under Section 9(a) and,
notwithstanding any notice of revocation delivered pursuant
to the proviso to Section9(c), Grantee may require such
other party or parties to perform Issuer's obligations under
Section 9(a) unless such party or parties are prohibited by
law or regulation from such performance, in which case such
party or parties shall be subject to the obligations of the
Issuer under Section9(c).
10. Extension of Exercise Periods. The 180-day
periods for exercise of certain rights under Sections 2 and
9 shall be extended in each such case at the request of
Grantee to the extent necessary to avoid liability by
Grantee under Section 16(b) of the Exchange Act by reason of
such exercise.
11. Assignment. Neither party hereto may assign
or delegate any of its rights or obligations under this
Agreement or the Option to any other person without the
express written consent of the other party, except that this
Agreement or the Option may be assigned to any direct or
indirect wholly owned Subsidiary of Grantee. Any attempted
assignment or delegation in contravention of the preceding
sentence shall be null and void.
12. Filings; Other Actions. Each of Grantee and
Issuer will use its best efforts to make all filings with,
and to obtain consents of, all third parties and
governmental authorities necessary for the consummation of
the transactions contemplated by this Agreement.
13. Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for a
breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be specifically
enforceable through injunctive or other equitable relief.
14. Severability; Etc. If any term, provision,
covenant, or restriction contained in this Agreement is held
by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms, provisions,
covenants, and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way
be affected, impaired, or invalidated. If for any reason
such court or regulatory agency determines that Grantee is
not permitted to acquire pursuant to Section 2, or Issuer is
not permitted to repurchase pursuant to Section9, the full
number of Option Shares provided in Section 1(a) hereof (as
adjusted pursuant to Sections 1(b) and 7 hereof), it is the
express intention of Issuer to allow Grantee to acquire such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
15. 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 respective addresses of the parties set forth
in the Merger Agreement.
16. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.
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. 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 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 mailing of process or other
papers in connection with any such action or proceeding in
the manner provided in Section15, or in such other manner as
may be permitted by Law, shall be valid and sufficient
service thereof. 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 OR
THE TRANSACTIONS CONTEMPLATED BY THIS 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 SECTION16.
17. Expenses. Except as otherwise expressly
provided herein or in the Merger Agreement, all costs and
expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by
the party incurring such expense, except that Issuer shall
be responsible for all fees and expenses (other than
underwriting discounts or commissions) relating to the
registration of securities pursuant to Section 8.
18. Entire Agreement, Etc. This Agreement, the
Confidentiality Agreement (as such term is defined in the
Merger Agreement) and the Merger Agreement (including any
exhibits thereto, the Amoco Disclosure Letter and the BP
Disclosure Letter) 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. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement is not
intended to confer upon any person or entity, other than the
parties hereto, and their respective successors and
permitted assigns, any rights or remedies hereunder.
19. Limitation on Profit. (a) Notwithstanding
any other provision of this Agreement, in no event shall
Grantee's Total Profit (as hereinafter defined) plus any
Amoco Termination Amount (or part thereof) paid to Grantee
pursuant to Section5.5.2 of the Merger Agreement exceed in
the aggregate $1billion (the "Maximum Amount") and, if it
otherwise would exceed such amount, Grantee, at its sole
election, shall either (i) reduce the number of Option
Shares subject to this Option, (ii) deliver to the Issuer
for cancellation Option Shares previously purchased by
Grantee, (iii) pay cash to the Issuer, or (iv)any
combination thereof, so that Grantee's actually realized
Total Profit, when aggregated with such Amoco Termination
Amount (or part thereof) so paid to Grantee shall not exceed
the Maximum Amount taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this
Agreement, this Option may not be exercised for a number of
Option Shares as would, as of the date of exercise, result
in a Notional Total Profit (as defined below) which,
together with any Amoco Termination Amount (or part thereof)
theretofore paid to Grantee, would exceed the Maximum
Amount; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any
subsequent date.
(c) As used herein, the term "Total Profit" shall
mean the aggregate amount (before taxes) of the following:
(i) (x) the amount received by Grantee pursuant to Issuer's
repurchase of the Option or any Option Shares pursuant to
Section 9, less, in the case of any repurchase of Option
Shares, (y) Grantee'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 Grantee
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) Grantee's purchase price for
such Option Shares.
(d) As used herein, the term "Notional Total
Profit" with respect to the Option Shares as to which
Grantee may propose to exercise this Option shall be the
Total Profit determined as of the date of such proposal
assuming that this Option were 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 the Common Stock as of the close of business on the
preceding trading day (less customary brokerage
commissions).
20. Captions. The Section and paragraph captions
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.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by duly authorized officers of the
parties hereto as of the day and year first hereinabove
written.
AMOCO CORPORATION
By: /s/ H. Laurance Fuller
Name: H. Laurance Fuller
Title: Chairman and Chief
Executive Officer
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
<PAGE>
<PAGE>
EXHIBIT 12
AMOCO CORPORATION
______________________
STATEMENT SETTING FORTH COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(millions of dollars, except ratios)
Six
Months
Ended Year Ended December 31,
June 30,
1998 1997 1996 1995 1994 1993
Determination of Income:
Consolidated earnings
before income taxes
and minority interest... $ 932 $3,771 $3,965 $2,404 $2,491 $2,506
Fixed charges expensed by
consolidated companies.. 242 452 412 406 316 350
Adjustments for certain
companies accounted for
by the equity method... 59 66 69 25 7 11
Adjusted earnings plus
fixed charges........... $1,233 $4,289 $4,446 $2,835 $2,814 $2,867
Determination of Fixed Charges:
Consolidated interest on
indebtedness (including
interest capitalized)... $ 193 $ 363 $ 317 $ 317 $ 288 $ 299
Consolidated rental
expense representative
of an interest factor... 49 102 107 89 23 50
Adjustments for certain
companies accounted for
by the equity method.... 34 7 8 6 5 8
Total fixed charges...... $ 276 $ 472 $ 432 $ 412 $ 316 $ 357
Ratio of earnings to
fixed charges........... 4.5 9.1 10.3 6.9 8.9 8.0
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income and the Consolidated Statement of Financial
Position and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000093397
<NAME> AMOCO CORPORATION
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 143
<SECURITIES> 769
<RECEIVABLES> 3315
<ALLOWANCES> 11
<INVENTORY> 1220
<CURRENT-ASSETS> 6354
<PP&E> 50663
<DEPRECIATION> 27994
<TOTAL-ASSETS> 32274
<CURRENT-LIABILITIES> 5831
<BONDS> 5327
0
0
<COMMON> 2542
<OTHER-SE> 13202
<TOTAL-LIABILITY-AND-EQUITY> 32274
<SALES> 13507
<TOTAL-REVENUES> 15564
<CGS> 9960
<TOTAL-COSTS> 9960
<OTHER-EXPENSES> 3357
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 203
<INCOME-PRETAX> 933
<INCOME-TAX> 260
<INCOME-CONTINUING> 673
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 673
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
