EXHIBIT 1
AGREEMENT AND PLAN
OF MERGER
Among
BP AMOCO p.l.c.,
ATLANTIC RICHFIELD COMPANY
and
PRAIRIE HOLDINGS, INC.
Dated as of March 31 , 1999
TABLE OF CONTENTS
Page
ARTICLE I
THE CLOSING AND THE MERGER
1.1. Closing........................................................2
1.2. The Merger.....................................................2
1.3. Conversion and Exchange of Shares..............................3
1.4. Surrender and Payment..........................................5
1.5. ARCO Stock Options; Other Stock-Based Plans....................7
1.6. Fractional BP Amoco Shares....................................10
1.7. The Surviving Corporation.....................................11
1.8. Lost, Stolen or Destroyed Certificates........................11
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of BP Amoco and ARCO...........11
2.1.1. Organization, Good Standing and Qualification........12
2.1.2. Capital Structure....................................13
2.1.3. Corporate Authority; Approval and Fairness...........15
2.1.4. Governmental Filings; No Violations..................17
2.1.5. Reports; Financial Statements........................18
2.1.6. Absence of Certain Changes...........................20
2.1.7. Litigation and Liabilities...........................21
2.1.8. Takeover Statutes....................................22
2.1.9. Brokers and Finders..................................22
2.1.10. Ownership of Other Party's Common Stock..............22
2.1.11. Merger Sub...........................................23
2.1.12. ARCO Employee Benefit Plans..........................23
2.1.13. Environmental Matters................................24
2.1.14. ARCO Rights Plan.....................................24
2.1.15. ARCO Joint Ventures; Exclusivity Arrangements........25
2.1.16. Tax Matters..........................................25
2.2. Vastar........................................................25
ARTICLE III
COVENANTS
3.1. Interim Operations............................................26
3.1.1. Interim Operations of BP Amoco.......................26
3.1.2. Interim Operations of ARCO...........................27
3.1.3. Consultation as to Material Contracts................32
3.2. ARCO Acquisition Proposals....................................33
3.3. Information Supplied..........................................34
3.3.1. Registration Statement...............................34
3.3.2. BP Amoco Documents...................................36
3.4. Shareholders Meetings.........................................37
3.5. Filings; Other Actions; Notification..........................38
3.6. Access........................................................40
3.7. Publicity.....................................................40
3.8. Benefits and Other Matters....................................41
3.8.1. Employee Benefits....................................41
3.8.2. Director and Officer Liability.......................43
3.9. Expenses......................................................44
3.10. Takeover Statutes.............................................44
3.11. Dividends.....................................................44
3.12. Listing Applications..........................................45
3.13. Letters of Accountants........................................45
3.14. Agreements of ARCO Affiliates.................................45
3.15. Accounting Matters............................................46
3.16. Tax Matters...................................................46
3.17. Vastar........................................................46
3.18. Section 103...................................................46
ARTICLE IV
CONDITIONS
4.1. Conditions to Each Party's Obligation to Effect the Merger....46
4.1.1. Shareholder Approvals................................47
4.1.2. Regulatory Consents..................................47
4.1.3. Laws and Orders......................................47
4.1.4. Effectiveness of Form F-4............................47
4.1.5. Exchange Listings....................................48
4.2. Conditions to Obligations of BP Amoco and Merger Sub..........48
4.2.1. Representations and Warranties of ARCO...............48
4.2.2. Performance of Obligations of ARCO...................48
4.3. Conditions to Obligation of ARCO..............................48
4.3.1. Representations and Warranties.......................48
4.3.2. Performance of Obligations of BP Amoco...............49
4.3.3. Tax Opinion..........................................49
ARTICLE V
TERMINATION
5.1. Termination by Mutual Consent.................................49
5.2. Termination by Either BP Amoco or ARCO........................49
5.3. Termination by BP Amoco.......................................50
5.4. Termination by ARCO...........................................50
5.5. Effect of Termination and Abandonment.........................51
ARTICLE VI
MISCELLANEOUS AND GENERAL
6.1. Survival......................................................53
6.2. Modification or Amendment.....................................53
6.3. Waiver........................................................53
6.4. Failure or Indulgence Not Waiver; Remedies Cumulative.........53
6.5. Counterparts..................................................53
6.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.................54
6.7. Notices.......................................................55
6.8. Entire Agreement..............................................56
6.9. Obligations of BP Amoco and of ARCO...........................57
6.10. Severability..................................................57
6.11. Interpretation................................................57
6.12. Assignment....................................................58
Index of Defined Terms
Affiliate...........................................................13
Agreement............................................................1
ARCO.................................................................1
ARCO $2.80 Preference Stock.........................................14
ARCO $3.00 Preference Stock.........................................14
ARCO Acquisition Proposal...........................................33
ARCO Affiliates.....................................................46
ARCO Alternative Agreement..........................................52
ARCO Audit Date.....................................................20
ARCO Common Shares...................................................1
ARCO Compensation and Benefit Plans.................................23
ARCO Disclosure Letter..............................................12
ARCO Executive Officers.............................................21
ARCO Preference Stock...............................................14
ARCO Preferred Stock................................................14
ARCO Proxy Statement................................................35
ARCO Reports........................................................20
ARCO Representatives................................................33
ARCO Required Consents..............................................17
ARCO Requisite Vote.................................................16
ARCO Stock Option....................................................7
ARCO Stock Plans....................................................14
ARCO Stockholders Meeting...........................................37
ARCO Termination Amount.............................................52
Audit Date..........................................................20
Bankruptcy and Equity Exception.....................................16
BP Amoco.............................................................1
BP Amoco 20-F.......................................................19
BP Amoco ADRs........................................................3
BP Amoco Audit Date.................................................19
BP Amoco Circular...................................................36
BP Amoco Depositary Shares...........................................3
BP Amoco Disclosure Letter..........................................12
BP Amoco Documents..................................................36
BP Amoco Executive Directors........................................21
BP Amoco First Preference Shares....................................13
BP Amoco Listing Document...........................................36
BP Amoco Ordinary Share..............................................3
BP Amoco Reports....................................................19
BP Amoco Required Consents..........................................17
BP Amoco Requisite Vote.............................................15
BP Amoco Second Preference Shares...................................13
BP Amoco Shareholder Meeting........................................37
BP Amoco Shares......................................................5
BP Amoco Termination Amount.........................................53
BP Amoco Voting Shares..............................................15
Canceled ARCO Share..................................................3
Certificate..........................................................3
Certificate of Merger................................................2
CH-Twenty............................................................3
CH-Twenty ARCO Shares................................................3
Closing..............................................................2
Closing Date.........................................................2
Code.................................................................1
Companies Act.......................................................12
Confidentiality Agreement...........................................40
Constituent Corporations.............................................1
Contracts...........................................................18
Deposit Agreement....................................................3
Depositary...........................................................3
DGCL.................................................................1
Directors' Plan.....................................................10
Disclosure Letter...................................................12
Effective Time.......................................................3
Eligible ARCO Shareholders...........................................1
ELTIP................................................................8
Encumbrance.........................................................13
Environmental Law...................................................24
ERISA...............................................................23
Exchange Act........................................................13
Exchange Agent.......................................................5
Exchange Ratio.......................................................3
Excluded ARCO Shares.................................................3
Exclusivity Agreements..............................................25
Exon-▇▇▇▇▇▇.........................................................17
Form F-4............................................................35
FSA.................................................................36
Governmental Consents...............................................47
Governmental Entity.................................................17
Hazardous Substance.................................................24
HSR Act.............................................................17
Indemnitees.........................................................43
IPA.................................................................43
Joint Venture Agreements............................................25
Law.................................................................18
LSE.................................................................10
Material Adverse Effect.............................................12
Merger...............................................................1
Merger Consideration.................................................3
Merger Sub...........................................................1
Merger Sub Common Stock..............................................4
MMC.................................................................17
NYSE................................................................10
Option Schemes......................................................13
Order...............................................................47
Parties..............................................................1
Party................................................................1
Person..............................................................13
Regulation..........................................................17
Reports.............................................................20
Rights..............................................................24
Rights Agreement....................................................24
SEC.................................................................10
Securities Act......................................................10
Share Election.......................................................5
Stock Option Agreement...............................................1
Subsidiary..........................................................12
Superior Proposal...................................................33
Surviving Corporation................................................2
Takeover Panel......................................................17
Takeover Statute....................................................22
Termination Date....................................................50
U.K. GAAP...........................................................19
U.S. GAAP...........................................................20
Vastar..............................................................15
This AGREEMENT AND PLAN OF MERGER, dated as of March 31, 1999 (this
"Agreement"), among BP AMOCO p.l.c. ("BP Amoco"), an English public limited
company, ATLANTIC RICHFIELD COMPANY, a Delaware corporation ("ARCO"), and
PRAIRIE HOLDINGS, INC., a Delaware corporation and a direct wholly owned
subsidiary of BP Amoco ("Merger Sub" and, together with ARCO, the "Constituent
Corporations");
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of each of ARCO, BP Amoco
and Merger Sub (each, a "Party" and, together, the "Parties") have each
determined that it is in the best interests of their respective companies and
stockholders or shareholders, as the case may be, to combine their respective
businesses;
WHEREAS, in furtherance of such combination, the respective Boards of
Directors of ARCO and Merger Sub have each adopted resolutions approving this
Agreement and declaring its advisability and approving the merger (the "Merger")
of Merger Sub with and into ARCO in accordance with the Delaware General
Corporation Law, as amended (the "DGCL"), upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such combination, the Board of Directors of
BP Amoco adopted a resolution approving this Agreement and the Merger, 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") and that the holders of ARCO Common Shares
who will not be "five percent transferee shareholders" as defined in Treasury
Regulation Section 1.367(a)- 3(c)(5)(ii) or who enter into five-year gain
recognition agreements in the form provided in Treasury Regulation Section
1.367(a)-8(b) ("Eligible ARCO Shareholders") not recognize taxable gain with
respect to the Merger pursuant to Section 367(a) of the Code (except with
respect to cash received in lieu of fractional share interests);
WHEREAS, as an inducement to the willingness of BP Amoco to enter into
this Agreement, the Board of Directors of ARCO has approved the grant to BP
Amoco of an option to purchase shares of common stock, par value $2.50 per
share, of ARCO ("ARCO Common Shares") pursuant to a stock option agreement,
dated as of March 31, 1999, between ARCO and BP Amoco (the "Stock Option
Agreement"), and each of ARCO and BP Amoco has duly authorized, executed and
delivered the Stock Option Agreement; and
WHEREAS, ARCO and BP Amoco desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
The Closing and the Merger
1.1. Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Linklaters & Paines, One Silk Street, London,
England, with a meeting to be held simultaneously at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, for the delivery of certain
documents in connection therewith, at a time to be agreed by the Parties 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 ARCO and BP Amoco may agree in writing (the "Closing Date").
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 ARCO in accordance with the DGCL, whereupon
the separate existence of Merger Sub shall cease, and ARCO shall be the
surviving corporation in the Merger (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Delaware, and the
separate corporate existence of ARCO, with all its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger
except as set forth in this Article I. The Merger shall have the effects
specified in the DGCL.
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, ARCO and Merger
Sub will cause a certificate of merger (the "Certificate of Merger") to be
executed and filed with the Secretary of State of the State of Delaware 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 Certificate of Merger is duly filed with the Secretary
-2-
of State of the State of Delaware or at such later time as is specified in
the Certificate of Merger in accordance with the DGCL (the "Effective
Time").
1.3. Conversion and Exchange of Shares. At the Effective Time:
1.3.1. Each ARCO Common Share owned by BP Amoco, ARCO or any Subsidiary
(as defined in Section 2.1.1) of BP Amoco or ARCO (other than CH-Twenty,
Inc. , a Delaware corporation and a Subsidiary of ARCO ("CH-Twenty"))
immediately prior to the Effective Time (each, a "Canceled ARCO Share")
shall, by virtue of the Merger, and without any action on the part of the
holder thereof, no longer be outstanding, shall be canceled and retired
without payment of any consideration therefor and shall cease to exist. The
ARCO Common Shares owned by CH-Twenty immediately prior to the Merger (if
any) (the "CH-Twenty ARCO Shares" and, together with the Canceled ARCO
Shares, the "Excluded ARCO Shares") shall remain outstanding, without
change, after the Effective Time, and no consideration shall be delivered
in exchange therefor.
1.3.2. Each ARCO Common Share outstanding immediately prior to the
Effective Time, other than Excluded ARCO Shares, shall be converted into
and shall be canceled in exchange for the right to receive 4.92 (the
"Exchange Ratio") ordinary shares, of nominal value $0.50 each, of BP Amoco
(each, a "BP Amoco Ordinary Share"), which shall be delivered to the
holders of ARCO Common Shares (other than Excluded ARCO Shares) (i) in the
form of American depositary shares (the "BP Amoco Depositary Shares"), each
representing the right to receive six BP Amoco Ordinary Shares, or (ii) if
and to the extent elected by any such holder in the manner provided in
Section 1.4.1, in the form of BP Amoco Ordinary Shares, in registered form,
rather than BP Amoco Depositary Shares (the "Merger Consideration"). The BP
Amoco Depositary Shares may be evidenced by one or more receipts ("BP Amoco
ADRs") issued in accordance with the Amended and Restated Deposit
Agreement, dated as of December 31, 1998, among BP Amoco, ▇▇▇▇▇▇ Guaranty
Trust Company of New York, as Depositary (the "Depositary"), and the
holders from time to time of BP Amoco ADRs (the "Deposit Agreement"). At
the Effective Time, all ARCO Common Shares (other than any CH-Twenty ARCO
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 ARCO Common Shares (other than Excluded ARCO
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 Amoco Depositary Shares (or, if applicable,
fractional BP Amoco Ordinary Shares) and any dividend or distribution
pursuant to Section 1.4.6, in each case without interest. BP Amoco shall,
following the Closing, pay all stamp duties, stamp duty reserve tax and
other taxes and similar levies imposed in connection with the
-3-
issuance or creation of the BP Amoco Ordinary Shares, BP Amoco Depositary
Shares and any BP Amoco ADRs in connection therewith.
1.3.3. Each share of common stock of Merger Sub, par value $.001 per
share ("Merger Sub Common Stock"), outstanding immediately prior to the
Effective Time shall be canceled and, in consideration for the issuance of
the BP Amoco Ordinary Shares referred to in Section 1.3.4, the Surviving
Corporation shall issue to BP Amoco at the Effective Time such number of
shares of common stock as is equal to the number of ARCO Common Shares
outstanding immediately prior to the Effective Time (excluding any
CH-Twenty ARCO Shares) with the same rights, powers and privileges as the
ARCO Common Shares, which shares of common stock, together with the
CH-Twenty ARCO Shares, shall constitute the only outstanding shares of
common stock of the Surviving Corporation.
1.3.4. In consideration of the issue to BP Amoco by the Surviving
Corporation of shares of common stock of the Surviving Corporation pursuant
to Section 1.3.3, BP Amoco shall issue, in accordance with Section 1.4,
such number of BP Amoco Ordinary Shares as is equal to the number of ARCO
Common Shares outstanding immediately prior to the Effective Time (other
than the Excluded ARCO Shares) multiplied by the Exchange Ratio to permit
(i) the issuance of BP Amoco Depositary Shares and (ii) if elected by any
holder of ARCO Common Shares in the manner provided in Section 1.4.1, the
delivery of BP Amoco Ordinary Shares, in registered form, to the holders of
such ARCO Common Shares for the purpose of giving effect to the delivery of
the Merger Consideration referred to in Section 1.3.2.
1.3.5. In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, ARCO changes the number of ARCO Common Shares,
or BP Amoco changes the number of BP Amoco Ordinary Shares, issued and
outstanding as a result of a stock split, stock combination, stock
dividend, recapitalization, redenomination of share capital or other
similar transaction, the Exchange Ratio and other items dependent thereon
shall be appropriately adjusted.
1.3.6. Each share of ARCO $3.00 Preference Stock and each share of ARCO
$2.80 Preference Stock (each as defined in Section 2.1.2.2) outstanding
immediately prior to the Effective Time shall remain outstanding, without
change, after the Effective Time, and no consideration shall be delivered
in exchange therefor; provided, however, BP Amoco agrees that from and
after the Effective Time, the number of BP Amoco Ordinary Shares into which
each share of ARCO $3.00 Preference Stock and each share of ARCO $2.80
Preference Stock shall be convertible shall be equal in each case to the
number of ARCO Common Shares
-4-
into which such share was convertible immediately prior to the Effective
Time, multiplied by the Exchange Ratio (without any adjustment pursuant to
Section 1.3.5 in the conversion rates between such ARCO Preference Stock
and ARCO Common Shares for changes in ARCO Common Shares prior to the
Effective Time, for which changes the terms of the ARCO $3.00 Preference
Stock and the ARCO $2.80 Preference Stock contained in the restated
certificate of incorporation of ARCO shall provide the relevant adjustment,
if any).
1.4. Surrender and Payment.
1.4.1. Prior to the Effective Time, BP Amoco shall appoint an agent
reasonably acceptable to ARCO as exchange agent (the "Exchange Agent") for
the purpose of exchanging Certificates for BP Amoco Depositary Shares or,
if and to the extent elected by a holder of a Certificate in the manner
provided in this Section 1.4.1, for BP Amoco Ordinary Shares in registered
form. 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 ARCO Common Shares (other than holders of Excluded
ARCO Shares) (i) a letter of transmittal, in such form as ARCO and BP Amoco
may reasonably agree, for use in effecting delivery of ARCO Common Shares
to the Exchange Agent, which letter of transmittal shall include a form of
election by which each such holder may elect to receive (the "Share
Election") all or any part of the Merger Consideration to which such holder
is entitled in the form of BP Amoco Ordinary Shares in registered form,
rather than in the form of BP Amoco Depositary Shares (such BP Amoco
Ordinary Shares or BP Amoco Depositary Shares to be received by a holder
being referred to in this Agreement as "BP Amoco Shares") and (ii)
instructions for surrendering Certificates in exchange for the BP Amoco
Shares, and any cash in lieu of fractional shares and any cash dividends or
other distributions, that such holder has the right to receive pursuant to
this Article I.
1.4.2. Each holder of any ARCO Common Shares that have been converted
into a right to receive the consideration set forth in Section 1.3.2 shall,
upon surrender to the Exchange Agent of a Certificate or Certificates,
together with a properly completed letter of transmittal covering the ARCO
Common Shares represented by such Certificate or Certificates, be entitled
to receive (i) the number of whole BP Amoco Shares to which such holder is
entitled in respect of such ARCO Common Shares pursuant to Section 1.3.2
(after giving effect to any Share Election made by such holder) 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
-5-
all purposes only the right to receive the number of whole BP Amoco Shares
to which such holder is entitled and the applicable amounts provided in the
foregoing clause (ii).
1.4.3. If any BP Amoco Shares are to be issued to a person other than
the registered holder of the ARCO Common Shares represented by a
Certificate or Certificates surrendered with respect thereto, it shall be a
condition to such issue that the Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such issue shall pay to the Exchange Agent any
transfer or other taxes required as a result of such issue to a person
other than the registered holder of such ARCO 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 ARCO on the day
prior to the Effective Time, there shall be no further registration of
transfers of ARCO Common Shares that were outstanding prior to the
Effective Time. After the Effective Time, Certificates presented to the
Surviving Corporation for transfer shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set
forth, in this Article I.
1.4.5. Any BP Amoco Shares issued and delivered in respect of ARCO
Common Shares pursuant to this Article I and any cash in lieu of fractional
interests in BP Amoco Shares to be paid pursuant to Section 1.6, plus any
cash dividend or other distribution that such holder has the right to
receive pursuant to Section 1.4.6, that remains unclaimed by any holder of
ARCO Common Shares six months after the Effective Time shall be held by the
Exchange Agent (or a successor agent appointed by BP Amoco) or shall be
delivered to the Depositary upon the instruction of BP Amoco and held by
the Depositary, in either case subject to the instruction of BP Amoco in an
account or accounts designated for such purpose. BP Amoco shall not be
liable to any holder of ARCO Common Shares for any securities delivered or
any amount paid by the Depositary or the Exchange Agent, as the case may
be, to a public official pursuant to applicable abandoned property laws.
Any cash remaining unclaimed by holders of ARCO Common Shares three years
after the Effective Time (or such earlier date immediately prior to such
time as such cash would otherwise escheat to or become property of any
governmental entity or as is otherwise provided by applicable Law (as
defined in Section 2.1.4.2)) shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation or BP Amoco, as BP
Amoco may determine.
-6-
1.4.6. No dividends, interest or other distributions with respect to
securities of BP Amoco or the Surviving Corporation issuable with respect
to ARCO 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 Amoco 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 Amoco 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 Amoco 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 Amoco Shares, all BP Amoco Shares to be issued pursuant to the Merger
shall be deemed issued and outstanding as of the Effective Time.
1.4.7. The Parties may, by mutual agreement and without amending this
Agreement in accordance with Section 6.2, make any modifications to the
terms of or procedures for the Share Election, provided that any such
modification will not adversely affect the entitlement of holders of ARCO
Common Shares to the Merger Consideration and that such modification shall
be filed with the Secretary of ARCO and made available to the stockholders
of ARCO, without cost, upon request.
1.5. ARCO Stock Options; Other Stock-Based Plans.
1.5.1. At the Effective Time, each stock option to purchase ARCO Common
Shares under any ARCO Stock Plan (as defined in Section 2.1.2.2) (each, an
"ARCO Stock Option") which is then outstanding and unexercised shall cease
to represent a right to acquire ARCO Common Shares and shall be converted
automatically into an option to purchase BP Amoco Ordinary Shares, to be
issued in the form of BP Amoco Depositary Shares, and BP Amoco shall assume
each such ARCO Stock Option subject to the terms of the relevant ARCO Stock
Plan, and the agreement evidencing the grant thereunder; provided, however,
that from and after the Effective Time, (i) the number of BP Amoco Ordinary
Shares purchasable, in the form of BP Amoco Depositary Shares, upon
exercise of each such ARCO Stock Option shall be equal to the number of
ARCO Common Shares that were purchasable under such ARCO Stock Option
immediately prior to the Effective Time (without taking into account any
Dividend Share Credits under any ARCO Stock Plan), multiplied by the
Exchange Ratio, subject to adjustment as provided in Section 1.3.5, and
rounding down to the nearest whole BP Amoco Ordinary Share and (ii) the per
BP Amoco Ordinary
-7-
Share exercise price under each such ARCO Stock Option shall be obtained by
dividing the per share exercise price of each such ARCO 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 Amoco Ordinary Shares and the per BP Amoco Ordinary Share
exercise price of each ARCO 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
Amoco Ordinary Shares shall be rounded down to the nearest whole number of
BP Amoco Ordinary Shares and where necessary the per BP Amoco Ordinary
Share exercise price shall be rounded up to the nearest cent. BP Amoco
Ordinary Shares to be issued upon the exercise of ARCO Stock Options,
shall, at the election of the holders of such ARCO Stock Options, be
delivered in the form of BP Amoco Depositary Shares.
1.5.2. Shares of Restricted Stock and Performance-Based Restricted
Stock outstanding and held by participants in any ARCO Stock Plan
immediately prior to the Effective Time shall be converted into and shall
be canceled in exchange for the right to receive BP Amoco Shares in
accordance with Sections 1.3.2 and 1.4.1.
1.5.3. The obligation of ARCO to deliver ARCO Common Shares pursuant
to Article III, Subsection 3(b)(v)(1) of the ARCO 1985 Executive Long-Term
Incentive Plan (the "ELTIP"), as amended through the date hereof, in
respect of Contingent Restricted Stock upon the Change of Control
represented by the Merger shall be satisfied through the delivery by BP
Amoco of (i) a number of BP Amoco Ordinary Shares (to be issued in the form
of BP Amoco Depositary Shares) equal to the number of ARCO Common Shares
that were otherwise so deliverable multiplied by the Exchange Ratio, and
(ii) such other amounts payable in respect of such ARCO Common Shares
pursuant to this Article I.
1.5.4. With respect to Dividend Share Credits under any ARCO Stock
Plan, including Prospective Dividend Share Credits to be credited pursuant
to Article IV, Subsection 4(b) of the ELTIP and under Article II, Section
2.6 of the Director's Plan (as defined in Section 1.5.6(b)) in connection
with the Merger, BP Amoco and ARCO agree that: (a) as of the Effective
Time, ARCO Common Shares represented by Dividend Share Credits, including
such Prospective Dividend Share Credits, shall be deemed converted into BP
Amoco Ordinary Shares at the Exchange Ratio; (b) after the Effective Time
the obligation of ARCO to deliver ARCO Common Shares under Article IV,
Section 3 of the ELTIP shall be satisfied through the delivery by BP Amoco
of a number of BP Amoco Ordinary Shares (to be issued in the form of BP
Amoco Depositary Shares) equal
-8-
to the number of ARCO Common Shares that were otherwise so deliverable
multiplied by the Exchange Ratio; and (c) after the Effective Time,
references in Article IV of the ELTIP and Article V of the Directors' Plan
to "Common Stock" shall be deemed references to "BP Amoco Ordinary Shares",
and references in Article I, Subsection 2(m) of the ELTIP and Article II,
Subsection 2.7 of the Directors' Plan to "New York Stock Exchange" shall be
to "London Stock Exchange".
1.5.5. At the Effective Time, each right of any kind, whether vested or
unvested, contingent or accrued, to acquire or receive ARCO Common Shares
that may be held, awarded, outstanding, credited, payable or reserved for
issuance under the ARCO Stock Plans and any other ARCO Compensation and
Benefit Plan (as defined in 2.1.12), except for ARCO Stock Options
converted in accordance with Section 1.5.1, shares of Restricted Stock and
Performance-Based Restricted Stock converted in accordance with Section
1.5.2, Contingent Restricted Stock converted in accordance with Section
1.5.3, and any Dividend Share Credits converted in accordance with 1.5.4,
shall be deemed to be converted into a right to acquire or receive, as the
case may be, the number of BP Amoco Ordinary Shares (to be issued in the
form of BP Amoco Depositary Shares) equal to the number of ARCO Common
Shares subject to such right immediately prior to the Effective Time
multiplied by the Exchange Ratio, and such rights with respect to BP Amoco
Ordinary Shares shall otherwise be subject to the same terms, conditions
and restrictions, if any, as were applicable to the rights with respect to
ARCO Common Shares under the relevant ARCO Stock Plan or ARCO Compensation
and Benefit Plan. Similarly, all ARCO Stock Plans and other ARCO
Compensation and Benefit Plans (and awards thereunder) providing for cash
payments measured by the value of a number of ARCO Common Shares shall be
deemed to refer to the number of BP Amoco Ordinary Shares equal to the
result of multiplying such number of ARCO Common Shares by the Exchange
Ratio, and such cash payments shall otherwise be made on the same terms,
conditions and restrictions, if any, as were applicable under the relevant
ARCO Stock Plan or ARCO Compensation and Benefit Plan. At or prior to the
Effective Time, ARCO shall adopt appropriate amendments to the ARCO Stock
Plans and the ARCO Compensation and Benefit Plans to effectuate the
provisions of this Section 1.5.5. Without limiting the applicability of the
foregoing, ARCO shall take all necessary action to ensure that the
Surviving Corporation will not be bound at the Effective Time by any
options, stock appreciation rights, warrants or other rights or
arrangements under any ARCO Compensation and Benefit Plan that would
entitle any person to own any ARCO Common Shares or to receive any payments
in respect thereof, and all ARCO Compensation and Benefit Plans conferring
any rights to ARCO Common Shares or other capital stock of ARCO shall be
deemed to be amended to be in conformity with this Section.
-9-
1.5.6. (a) All capitalized terms used in this Section 1.5 and not
otherwise defined in this Agreement shall have the respective meanings
given such terms in the ELTIP.
(b) "Directors' Plan" means the Stock Option Plan for Outside
Directors of ARCO, as amended through the date hereof.
1.5.7. Prior to the Effective Time, BP Amoco shall make available for
issuance in accordance with Section 1.4.1 the number of BP Amoco Ordinary
Shares necessary to satisfy BP Amoco's obligations under this Section 1.5.
At the Effective Time, BP Amoco 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"), (i) with
respect to the BP Amoco Ordinary Shares and the BP Amoco Depositary Shares
subject to issuance or subject to options pursuant to this Section 1.5, and
(ii) if registration of any other interests in any ARCO Stock Plan or any
other ARCO Compensation and Benefit Plan referred to in this Section 1.5,
or the BP Amoco Ordinary Shares and BP Amoco Depositary Shares to be issued
thereunder, is required under the Securities Act, with respect to such
interests or such BP Amoco Ordinary Shares or BP Amoco Depositary Shares,
BP Amoco shall use its best reasonable efforts to cause such registration
statement to become and remain effective and 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 Amoco Shares. No fraction of a BP Amoco Share will
be issued. In lieu of any such fractional shares, each holder of ARCO Common
Shares who would otherwise be entitled to such fractional shares shall be
entitled to an amount in cash, without interest, rounded to the nearest cent,
equal to the product of (i) the amount of the fractional interest in an BP Amoco
Ordinary Share or BP Amoco Depositary Share, as the case may be, to which such
holder is entitled under Section 1.3 (or would be entitled but for this Section
1.6) and (ii) (A) in respect of fractional interests in BP Amoco Depositary
Shares, the average of the closing sale prices for the BP Amoco Depositary
Shares on the New York Stock Exchange (the "NYSE"), as reported in The Wall
Street Journal, Northeastern edition, for each of the ten consecutive trading
days ending with the fifth complete trading day prior to the Closing Date (not
counting the Closing Date) and (B) in respect of fractional interests in BP
Amoco Ordinary Shares, the average of the closing mid-market prices for the BP
Amoco Ordinary Shares on the London Stock Exchange Limited (the "LSE"), as
reported in The Financial Times, for each of the ten consecutive trading days
ending with the fifth complete trading day prior to the Closing Date (not
counting the Closing Date). As soon as practicable after the
-10-
determination of the amount of cash, if any, to be paid to holders of ARCO
Common Shares in lieu of any fractional interests, the Exchange Agent shall make
available such amounts to such holders without interest.
1.7. The Surviving Corporation.
1.7.1. The certificate of incorporation of the Surviving Corporation
shall be the restated certificate of incorporation of ARCO, unless this
Agreement is adopted by the holders of 66 2/3% of the outstanding stock
entitled to vote at the ARCO Stockholders Meeting (as defined in Section
3.4), in which case the restated certificate of incorporation of the
Surviving Corporation shall be amended as of the Effective Time to delete
Articles V, VI, VII and VIII and to substitute therefor Articles V, VI and
VII as set forth in full in Exhibit A.
1.7.2. The bylaws of Merger Sub 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) such officers as are mutually agreed by
BP Amoco and ARCO prior to the Effective Time shall be the officers of the
Surviving Corporation.
1.8. Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the holder's
compliance with the replacement requirements established by the Exchange Agent,
including, if necessary, the posting by such Person of a bond in customary
amount as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate, the Merger Consideration and any cash payable
in lieu of fractional BP Amoco Shares and any unpaid dividends or other
distributions deliverable pursuant to Section 1.4.6 in respect of the ARCO
Common Shares represented by such Certificate pursuant to this Agreement.
ARTICLE II
Representations and Warranties
2.1. Representations and Warranties of BP Amoco and ARCO. Except as set
forth in the corresponding sections or subsections of the disclosure letter,
dated the
-11-
date hereof and signed by an authorized officer, delivered by BP Amoco to ARCO
or by ARCO to BP Amoco (each a "Disclosure Letter," and the "BP Amoco Disclosure
Letter" and the "ARCO Disclosure Letter," respectively), as the case may be, BP
Amoco (except for Sections 2.1.2.2, 2.1.3.2, 2.1.5.2, 2.1.8, 2.1.9(ii),
2.1.10.2, 2.1.12, 2.1.14 and 2.1.15 and references in Section 2.1.1 to documents
made available by ARCO to BP Amoco) hereby represents and warrants to ARCO, and
ARCO (except for Sections 2.1.2.1, 2.1.3.1, 2.1.5.1, 2.1.9(i), 2.1.10.1 and
2.1.11 and references in Section 2.1.1 to documents made available by BP Amoco
to ARCO), subject to Section 2.2, hereby represents and warrants to BP 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, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined below) on it. BP Amoco has made available to
ARCO complete and correct copies of its memorandum and articles of
association, and ARCO has made available to BP Amoco complete and correct
copies of its restated certificate of incorporation and by-laws, in all
cases as amended to date. Such memorandum and articles of association or
restated certificate of incorporation and by-laws, 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 BP Amoco, 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"), and, with respect
to ARCO, any entity, whether incorporated or unincorporated, in which ARCO
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 ARCO otherwise
has the power to direct, (ii) "Material Adverse Effect" means, with respect
to any Person (as defined below), a material adverse effect on the
financial condition, properties, business or operating income of such
Person and its Subsidiaries taken as a whole, other than any such effect to
the extent arising out of changes in general United States, United Kingdom
or
-12-
international economic conditions, conditions or changes in or affecting
the United States, United Kingdom or international oil and gas industry
(including changes in market prices), provided that, except as otherwise
specifically provided, all references to Material Adverse Effect on BP
Amoco or any of its Subsidiaries or to ARCO or any of its Subsidiaries in
this Article II or in Article III shall be deemed to refer solely to BP
Amoco and its Subsidiaries and ARCO and its Subsidiaries, respectively,
without giving effect to BP Amoco's ownership of ARCO and its Subsidiaries
after the Effective Time, (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
Section 2.1.4.1) 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 share capital of BP Amoco is
$6,000,000,000 and (pound)12,750,000. As of the close of business on
March 29, 1999, the allotted share capital of BP Amoco consisted of
9,720,380,579 BP Amoco Ordinary Shares, not more than 7,232,838 8%
cumulative first preference shares, of nominal value (pound)1 each ("BP
Amoco First Preference Shares"), and not more than 5,473,414 9%
cumulative second preference shares, of nominal value (pound)1 each
("BP Amoco Second Preference Shares"). All of the outstanding BP Amoco
Ordinary Shares, BP Amoco First Preference Shares and BP Amoco Second
Preference Shares have been, and the BP Amoco 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 Amoco has no BP Amoco Ordinary Shares, BP Amoco First
Preference Shares or BP Amoco Second Preference Shares reserved for or
otherwise subject to issuance, except for BP Amoco Ordinary Shares held
by trusts or otherwise subject to issuance in relation to option
schemes pursuant to which BP Amoco Ordinary Shares may be issued in the
ordinary course of business (the "Option Schemes"). Each of the
outstanding shares of capital stock or other ownership interests of
each of BP 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 BP Amoco or a direct or indirect wholly
owned Subsidiary of BP Amoco, in each case free and clear of any lien,
pledge, security interest, claim or other encumbrance ("Encumbrance").
Except as set forth above or as contemplated by this
-13-
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 Amoco or any of its
Subsidiaries to issue or to sell any shares of capital stock or other
securities of BP 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 BP Amoco or
any of its Subsidiaries, any securities of BP Amoco or any of its
Subsidiaries, and no securities or obligations evidencing such rights
are authorized, issued or outstanding. BP 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 BP Amoco on any matter.
2.1.2.2. The authorized capital stock of ARCO consists of
600,000,000 ARCO Common Shares, of which 325,937,777 ARCO Common Shares
were issued and outstanding as of the close of business on March 26,
1999, 75,000,000 shares of Preferred Stock, par value $.01 per share
("ARCO Preferred Stock"), of which no shares were outstanding as of the
date hereof; 78,089 shares of $3.00 Cumulative Convertible Preference
Stock, par value $1.00 per share ("ARCO $3.00 Preference Stock"), of
which 49,749 shares were outstanding as of March 26, 1999; and 833,776
shares of $2.80 Cumulative Convertible Preference Stock, par value
$1.00 per share ("ARCO $2.80 Preference Stock"), of which 564,439
shares were outstanding as of March 26, 1999 (the ARCO $3.00 Preference
Stock and the ARCO $2.80 Preference Stock being referred to herein as
the "ARCO Preference Stock"). All of the outstanding ARCO Common Shares
and shares of ARCO Preference Stock have been duly authorized and
validly issued and are fully paid and nonassessable. ARCO has no ARCO
Common Shares, shares of ARCO Preferred Stock or shares of ARCO
Preference Stock reserved for or otherwise subject to issuance, except
that (i) as of the close of business on March 29, 1999, there were
13,927,493.16 ARCO Common Shares subject to issuance pursuant to
options or other common stock equivalents (excluding Prospective
Dividend Share Credits (as defined in the ELTIP)) outstanding under the
plans of ARCO identified in paragraph 2.1.2.2 of the ARCO Disclosure
Letter as being the only ARCO Compensation and Benefit Plans pursuant
to which ARCO Common Shares may be issued (the "ARCO Stock Plans"); and
(ii) as of the date hereof, there are not less than 64,861,617 ARCO
Common Shares reserved for issuance pursuant to the Stock Option
Agreement. Each of the outstanding shares of capital stock or
-14-
other ownership interests of each of ARCO's Significant Subsidiaries
(or, in the case of Vastar Resources, Inc. ("Vastar"), the shares of
capital stock of Vastar owned by ARCO) is duly authorized, validly
issued, fully paid and nonassessable and owned by ARCO or a direct or
indirect wholly owned subsidiary of ARCO, in each case free and clear
of any Encumbrance. Except as set forth above or as contemplated by
this Agreement, 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 ARCO or any of its
Subsidiaries to issue or sell any shares of capital stock or other
securities of ARCO 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 ARCO or any
of its Subsidiaries, any securities of ARCO or any of its Subsidiaries,
and no securities or obligations evidencing such rights are authorized,
issued or outstanding. The ARCO Common Shares issuable pursuant to the
Stock Option Agreement have been duly reserved for issuance by ARCO,
and upon any issuance of such ARCO Common Shares in accordance with the
terms of the Stock Option Agreement, such ARCO Common Shares will be
duly authorized, validly issued, fully paid and nonassessable and free
and clear of any Encumbrance. ARCO 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 stockholders of ARCO on
any matter.
2.1.3. Corporate Authority; Approval and Fairness.
2.1.3.1. BP 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, on a show of hands, not less than the
requisite majority of the holders of outstanding BP Amoco Ordinary
Shares, BP Amoco First Preference Shares and BP Amoco Second Preference
Shares (collectively, the "BP Amoco Voting Shares") present in person
or, on a poll, not less than the requisite majority of the votes
attaching to the BP Amoco Voting Shares voted by the holders in person
or by proxy at the BP Amoco Shareholders Meeting (as defined in Section
3.4) (the "BP Amoco Requisite Vote"). The execution, delivery and
performance of this Agreement and the Stock Option Agreement have been
duly authorized by
-15-
all necessary corporate action on the part of BP Amoco, and, assuming
the due authorization, execution and delivery of this Agreement and the
Stock Option Agreement by ARCO, this Agreement and the Stock Option
Agreement constitute valid and binding agreements of BP Amoco,
enforceable against BP 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 BP Amoco 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, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, to the effect that, as of the date of this Agreement, the
Exchange Ratio is fair to BP Amoco, from a financial point of view.
2.1.3.2. ARCO 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 adoption of this
Agreement by the vote of the holders of a majority of the outstanding
stock entitled to vote at the ARCO Stockholders Meeting (as defined in
Section 3.4) (the "ARCO Requisite Vote"). The execution, delivery and
performance of this Agreement and the Stock Option Agreement have been
duly authorized by all necessary corporate action on the part of ARCO
and, assuming the due authorization, execution and delivery of this
Agreement and the Stock Option Agreement by BP Amoco, this Agreement
and the Stock Option Agreement constitute valid and binding agreements
of ARCO enforceable against ARCO in accordance with their terms,
subject to the Bankruptcy and Equity Exception. The Board of Directors
of ARCO (A) has unanimously approved this Agreement, the Stock Option
Agreement, the Merger and the other transactions contemplated hereby
and thereby and declared the advisability of the Merger Agreement and
(B) has received the opinions of its financial advisors, ▇▇▇▇▇▇▇, Sachs
& Co. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., to the effect that, as of the date
of this Agreement, the Exchange Ratio is fair to the holders of ARCO
Common Shares (other than holders of Excluded ARCO Shares) from a
financial point of view.
-16-
2.1.4. Governmental Filings; No Violations.
2.1.4.1. Other than the necessary filings, permits,
authorizations, notices, approvals, confirmations, consents,
declarations and/or decisions (A) pursuant to Sections 1.2.2 and 3.3.1,
(B) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Exchange Act, the Securities Act and the
Exon-▇▇▇▇▇▇ provisions of the Omnibus Trade and Competitiveness Act of
1988 ("Exon-▇▇▇▇▇▇"), (C) to comply with the rules and regulations of
the NYSE or the LSE or any other stock exchanges on which securities of
BP Amoco, ARCO or any of their respective Subsidiaries are listed, (D)
to comply with 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 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), (F) with or from any other national authority within
the European Community to which the Merger (or any part of it) is
referred pursuant to Article 9 of the Regulation) and (G) 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, permits, authorizations, notices,
approvals, confirmations, consents, declarations and/or decisions to be
made, given or obtained by BP Amoco being the "BP Amoco Required
Consents" and by ARCO being the "ARCO Required Consents"), no filings,
notices, declarations and/or decisions are required to be made by it
with, nor are any permits, authorizations, 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 U.K. Panel on Takeovers and Mergers (the "Takeover Panel")) (each,
a "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 would not, individually or in the aggregate,
reasonably be expected to have a
-17-
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 Amoco,
the issue of BP Amoco Ordinary Shares, and the deposit of BP Amoco
Ordinary Shares by or on behalf of BP Amoco with the Depositary against
issuance of BP Amoco 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 memorandum or articles of association, in
the case of BP Amoco, or its restated certificate of incorporation or
by-laws, in the case of ARCO, or the comparable governing instruments
of any of the Significant Subsidiaries of BP Amoco or ARCO (in each
case as amended from time to time), (B) subject to making, giving or
obtaining all necessary filings, permits, authorizations, notices,
approvals, confirmations, consents, declarations and/or decisions
described in Section 2.1.4.1 and all other necessary third-party
consents as set forth in paragraph 2.1.4.2 of its Disclosure Letter, a
breach or violation of, or a default under, the acceleration of any
obligations or rights of third parties or the creation of an
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 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, would not reasonably be expected 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. BP Amoco has made available to ARCO copies of (A)
each registration statement, report and annual report prepared by it
or its Subsidiaries and filed with the SEC since December 31, 1997,
each in the
-18-
form (including exhibits, annexes and any amendments thereto) filed
with the SEC, a draft as of the date hereof of BP Amoco's Annual Report
on Form 20-F for the year ended December 31, ▇▇▇▇ (▇▇▇ "▇▇ ▇▇▇▇▇ ▇▇-▇,"
December 31, 1998 being the "BP Amoco Audit Date"), and each quarterly
report distributed by BP Amoco 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 Amoco shareholders subsequent to the date hereof, the "BP Amoco
Reports"); and (B) all circulars, reports and other documents
distributed by BP Amoco to its shareholders since the BP Amoco Audit
Date. As of their respective dates, the BP Amoco Reports (i) complied
in all material respects with, and any BP Amoco Report filed,
distributed or delivered subsequent to the date hereof will comply in
all material respects with, any applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations of
the SEC promulgated thereunder and (ii) did not, and any BP Amoco
Report filed, distributed or delivered subsequent to the date hereof
will not (and all circulars, reports and other documents referred to in
clause (B) of the preceding sentence did not, and such materials
circulated 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 Amoco
and its Subsidiaries included in or incorporated by reference into the
BP Amoco Reports (including the related notes and schedules) fairly
presents, or will fairly present, in all material respects, the
consolidated financial position of BP Amoco 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
Amoco 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 Amoco and its Subsidiaries as of the relevant dates 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
generally accepted accounting principles in the U.K. ("U.K. GAAP")
consistently applied during the periods involved except as may be noted
therein. The related notes reconciling to generally accepted accounting
principles in the United States ("U.S. GAAP") the consolidated net
income and shareholders' equity of BP Amoco and its Subsidiaries comply
in all material respects with the requirements of the SEC applicable to
such reconciliation.
-19-
2.1.5.2. ARCO has made available to BP Amoco copies of each
registration statement, report, proxy statement or information
statement prepared by it or any of its Subsidiaries and filed with the
SEC since December 31, 1998 (December 31, 1998 being the "ARCO Audit
Date," with the BP Amoco Audit Date and the ARCO Audit Date each being
referred to herein as the relevant Party's "Audit Date"), including
ARCO's Annual Report on Form 10-K for the year ended December 31, 1998,
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 "ARCO
Reports"). As of their respective dates, the ARCO Reports (i) complied
in all material respects with, and any ARCO Report filed subsequent to
the date hereof will comply in all material respects with, any
applicable requirements of the Securities Act and the Exchange Act and
the rules and regulations of the SEC promulgated thereunder and (ii)
did not, and any ARCO 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 balance sheets included in or incorporated by reference
into the ARCO Reports (including the related notes and schedules)
fairly presents, or will fairly present, in all material respects, the
consolidated financial position of ARCO and its Subsidiaries as of its
date and each of the related consolidated statements of income, changes
in stockholders' equity and cash flows included in or incorporated by
reference into the ARCO Reports (including any related notes and
schedules) fairly presents, or will fairly present in all material
respects, the consolidated results of operations and cash flows of ARCO
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. The BP Amoco Reports
and the ARCO Reports are collectively referred to herein as the
"Reports," and references in this Agreement to "Reports filed prior to
the date hereof" shall include, with respect to ▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇
▇▇-▇ provided to ARCO on or prior to the date hereof.
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
-20-
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 operating income of it and its
Subsidiaries except those changes that, individually or in the aggregate,
have not had and would not reasonably be expected 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 stock split, stock combination,
recapitalization, redenomination of share capital or other similar
transaction 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
ARCO, in the Stock Option Agreement; or (iv) any change by it in accounting
principles, practices or methods except as required by changes in U.K. GAAP
or U.S. 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 material 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, complaints
or proceedings pending or, to the knowledge of, in the case of BP Amoco,
its Chief Executive Officer, Deputy Chief Executive Officer, Chief
Financial Officer or General Counsel ("BP Amoco Executive Directors"), and,
in the case of ARCO, its Chief Executive Officer, President, Chief
Financial Officer or General Counsel ("ARCO Executive 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 BP Amoco, the BP Amoco Executive Directors, and, in the case
of ARCO, the ARCO Executive Officers, have knowledge that would reasonably
be expected to result in any claims against, or obligations or liabilities
of, it or any of its Subsidiaries, except, in each case, for those that,
individually or in the aggregate, have not had and would not reasonably be
expected 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.
-21-
2.1.8. Takeover Statutes. Assuming that BP Amoco's representation and
warranty set forth in Section 2.1.10.1 is true and correct, the board of
directors of ARCO has taken or will take all appropriate and necessary
action such that BP Amoco will not be prohibited from entering in a
"business combination" with ARCO as an "interested stockholder" (in each
case as such term is used in Section 203 of the DGCL) without complying
with Section 203(a)(3) of the DGCL as a result of the execution and
delivery of this Agreement and the Stock Option Agreement or the
consummation of the transactions contemplated hereby and thereby. No other
"fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation, including such business combination
provisions of the DGCL (each, a "Takeover Statute"), and no anti-takeover
provision in the restated certificate of incorporation or by-laws of ARCO
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) BP Amoco has
employed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated and Cazenove & Co. as its financial advisors, the
arrangements with all of which have been disclosed to ARCO prior to the
date hereof, and (ii) ARCO has retained ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc. as its financial advisors, the arrangements with both of
which have been disclosed to BP Amoco prior to the date hereof.
2.1.10. Ownership of Other Party's Common Stock.
2.1.10.1. Neither BP Amoco nor any of its Subsidiaries
"beneficially owns" (as such term is defined in Rule 13d-3 under
the Exchange Act) any ARCO Common Shares.
2.1.10.2. Neither ARCO nor any of its Subsidiaries
"beneficially owns" (as such term is defined in Rule 13d-3 under
the Exchange Act) any BP Amoco Ordinary Shares or BP Amoco
Depositary Shares (other than any BP Amoco Ordinary Shares or BP
Amoco Depositary Shares beneficially owned by an ARCO
Compensation and Benefit Plan or an ARCO sponsored non-U.S.
employee benefit plan).
-22-
2.1.11. Merger Sub. 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, delivery and performance of this
Agreement have 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 ARCO and BP 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 Amoco, as Merger Sub's sole
stockholder, has approved Merger Sub's execution, delivery and
performance of this Agreement and has adopted this Agreement.
2.1.12. ARCO Employee Benefit Plans.
2.1.12.1. Set forth in Section 2.1.12 of the ARCO Disclosure
Letter are all significant compensation and benefit plans,
contracts, policies or arrangements currently in effect for U.S.
based employees covering current or former employees of ARCO and
its Subsidiaries and current or former directors of ARCO,
including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and deferred
compensation, stock option, stock purchase, stock appreciation
rights, stock based, incentive and bonus plans (the "ARCO
Compensation and Benefit Plans"). True and complete copies of all
ARCO Compensation and Benefit Plans, including, but not limited
to, any trust instruments and insurance contracts forming a part
of any ARCO Compensation and Benefit Plan, and all amendments
thereto have been provided or made available to BP Amoco.
2.1.12.2. Except as set forth in Section 2.1.12 of the ARCO
Disclosure Letter, none of the execution and delivery of this
Agreement by ARCO, the performance by ARCO of its obligations
hereunder, the consummation of the transactions contemplated by
this Agreement nor any other action taken or failed to be taken
by ARCO prior to the execution of this Agreement will (a) limit
ARCO's right, in its sole discretion, to administer, amend or
terminate any ARCO Compensation and Benefit Plan or any related
trust instrument, (b) entitle any employees of ARCO or any of its
Subsidiaries to severance pay, (c) accelerate the time of payment
or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation, benefits or awards under,
increase the amount
-23-
payable or trigger any other material obligation pursuant to, any
of the ARCO Compensation and Benefit Plans or (d) result in any
breach or violation of, or a default under, any of the ARCO
Compensation and Benefit Plans.
2.1.13. Environmental Matters. Except as disclosed in its Reports
filed prior to the date hereof and except for such matters that,
individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect on it, to the knowledge
of the BP Amoco Executive Officers or the ARCO Executive Officers, as
applicable, (i) it and its Subsidiaries are in compliance with all
applicable Environmental Laws; (ii) no property currently or formerly
owned or operated by it or its Subsidiaries is contaminated with any
Hazardous Substance requiring remediation under any Environmental Law;
(iii) neither it nor any of its Subsidiaries is subject to liability
under any Environmental Law for off-site disposal or contamination;
(iv) neither it nor any of its Subsidiaries has received any claim,
notice, demand or letter indicating that it may be in violation of, or
subject to liability under, any Environmental Law; (v) neither it nor
any of its Subsidiaries is subject to any order, decree, investigation,
injunction or agreement with any Governmental Entity or any third party
relating to any Environmental Law; and (vi) there are no other
circumstances or conditions involving it or any of its Subsidiaries
that reasonably could be expected to result in any claims, liabilities
or costs in connection with any Environmental Law.
As used herein, "Environmental Law" means any federal, state,
local and foreign law, regulation, order, decree, common law or agency
requirement relating to the protection of the environment or human
health and safety, and "Hazardous Substance" means any substance, waste
or byproduct in any concentration that is listed, classified or
regulated pursuant to any Environmental Law, including petroleum and
petroleum products and wastes, mine tailings and wastes, asbestos, lead
products and polychlorinated biphenyls.
2.1.14. ARCO Rights Plan. Assuming that BP Amoco's representation
and warranty set forth in Section 2.1.10.1 is true and correct, the
board of directors of ARCO has taken all action necessary to render the
rights (the "Rights") issued under the Rights Agreement, dated as of
July 24, 1995 (the "Rights Agreement"), between ARCO and First Chicago
Trust Company of New York inapplicable to the Merger, this Agreement,
the Stock Option Agreement and the other transactions contemplated
hereby and thereby. ARCO will take all necessary action with respect to
all of the outstanding Rights so that, as of immediately prior to the
Effective Time, (A) neither ARCO nor BP Amoco will have any obligations
under the Rights or the Rights Agreement and (B) the holders of the
Rights will have no rights under the Rights or the Rights Agreement.
-24-
2.1.15. ARCO Joint Ventures; Exclusivity Arrangements. For
purposes of this Agreement, the material organizational documents,
shareholder, membership or voting agreements and material agreements
relating to the transfer of investments and management or operatorships
to which it or any of its Subsidiaries is a party in connection with
its joint ventures are referred to herein as the "Joint Venture
Agreements", and the non-compete, exclusivity or similar agreements
pursuant to which the ability of ARCO or any of its Subsidiaries or
Affiliates of any of them to engage in any line of business, to
contract with third parties or to do business in any geographic area is
restricted in any material manner, and any area-of-mutual-interest
agreements, are referred to herein as the "Exclusivity Agreements". All
of ARCO's Joint Venture Agreements and Exclusivity Agreements are, with
respect to it and its Subsidiaries, valid and in full force and effect
on the date hereof except for any failures to be in full force and
effect that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on it. Neither ARCO nor any
of its Subsidiaries has violated any provision of, or committed or
failed to perform any act which with or without notice, lapse of time
or both would constitute a default under the provisions of, any of its
Joint Venture Agreements or Exclusivity Agreements, except in each case
for such violations, acts or omissions as, individually or in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect on it; it being understood that no effect arising out of
the execution, performance or consummation of this Agreement shall be
deemed to have a Material Adverse Effect for purposes of this Section
2.1.15.
2.1.16. Tax Matters. Neither it nor any of its Affiliates has
taken or agreed to take any action that would, or failed to take any
action the omission of which would, or has reason to believe that any
conditions exist that could reasonably be expected to (i) prevent or
impede the Merger from qualifying as a reorganization under Section
368(a) of the Code or (ii) cause the Eligible ARCO Shareholders to
recognize taxable gain with respect to the Merger pursuant to Section
367(a) of the Code (except with respect to cash received in lieu of
fractional BP Amoco Shares).
2.2. Vastar. Notwithstanding anything to the contrary in this Article
II, ARCO does not make any representation or warranty with respect to Vastar and
its Subsidiaries (i) as of any date after the date hereof or (ii) for matters
covered by the fifth sentence of Section 2.1.2.2, clauses (B) and (C) of Section
2.1.4.2, the last sentence of Section 2.1.6, and Section 2.1.12; provided,
however, that (x) ARCO represents and warrants as of the date hereof that, to
the knowledge of the ARCO Executive Officers, without any investigation or
inquiry, the representations and warranties referred to in the foregoing clause
(ii) are true and accurate with respect to Vastar and its Subsidiaries and (y)
ARCO will make the representations and warranties contained in Sections 2.1.5.2
and
-25-
2.1.6(i) with respect to Vastar and its Subsidiaries as of the Closing Date as
though made on the Closing Date (except that any such representation or warranty
that by its terms expressly speaks as of an earlier date shall be true and
correct as of its date) for purposes of Section 4.2.1.
ARTICLE III
Covenants
3.1. Interim Operations.
3.1.1. Interim Operations of BP Amoco. BP Amoco covenants and agrees as
to itself and its Subsidiaries that, after the date hereof and until the
Effective Time (unless ARCO shall otherwise approve in writing and except
as otherwise expressly contemplated by or provided in this Agreement
(including the BP Amoco Disclosure Letter), or as required by applicable
Law):
3.1.1.1. BP Amoco shall not:
(i) amend its memorandum and articles of association in any
manner that would adversely affect the rights of any Party under this
Agreement, the transactions contemplated hereby or the rights of
holders of BP Amoco Ordinary Shares or BP Amoco Depositary Shares;
(ii) split, combine, subdivide or reclassify its outstanding
shares of capital stock;
(iii) declare, set aside or pay any dividend or distribution
payable in cash, stock or property in respect of any capital stock
other than (A) regular quarterly cash dividends on BP Amoco Ordinary
Shares consistent with past practice, including periodic dividend
increases consistent with past practice, and (B) regular cash
dividends on the issued and outstanding BP Amoco First Preference
Shares and BP Amoco Second Preference Shares; or
(iv) repurchase, redeem or otherwise acquire, or permit any of
its Subsidiaries to purchase, redeem 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 Option Schemes or any dividend reinvestment plan as in
effect on the date
-26-
hereof in the ordinary course of the operation of such plans) any
shares of the capital stock of BP Amoco or any securities convertible
into or exchangeable or exercisable for any shares of the capital
stock of BP Amoco;
3.1.1.2. neither BP Amoco nor any of its Subsidiaries shall
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 Amoco of any class (other than (x) BP Amoco
Ordinary Shares issuable or transferable pursuant to (A) options
outstanding on the date hereof under the Option Schemes and (B)
additional options or rights to acquire BP Amoco Ordinary Shares
granted under the terms of any Option Scheme as in effect on the date
hereof or as amended, or any similar option scheme adopted in
replacement of or as an enhancement to any such option scheme, in each
case in the ordinary course of the operation of such option scheme,
(y) BP Amoco Ordinary Shares issuable or transferable pursuant to such
options or rights so granted and (z) issuances of securities in
connection with grants, awards or issuances of stock-based
compensation);
3.1.1.3. subject to the provisions of Section 3.5.1, neither BP
Amoco 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 fail to qualify as a
reorganization under Section 368(a) of the Code or (ii) the exchange
of BP Amoco Shares for ARCO Common Shares in the Merger to fail to
qualify for nonrecognition of gain (except with respect to (a) cash
received in lieu of fractional BP Amoco Shares or (b) stockholders of
ARCO that are not Eligible ARCO Shareholders); and
3.1.1.4. neither BP Amoco nor any of its Subsidiaries shall
authorize or enter into an agreement to do any of the foregoing.
3.1.2. Interim Operations of ARCO. ARCO covenants and agrees as
to itself and its Subsidiaries that, after the date hereof and until
the Effective Time (unless BP Amoco shall otherwise approve in writing
and except as otherwise expressly contemplated by or provided in this
Agreement (including the ARCO
-27-
Disclosure Letter) or the Stock Option Agreement, or as required by
applicable Law, and subject to Section 3.17):
3.1.2.1. the business of ARCO and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent
consistent therewith, ARCO and each of its Subsidiaries shall use
their respective best reasonable efforts to preserve its business
organization intact and maintain its existing relations, status and
goodwill with customers, suppliers, creditors, state, federal and
foreign governmental authorities, lessors, employees and business
associates;
3.1.2.2. ARCO shall not:
(i) amend its restated certificate of incorporation; amend
its by-laws in any manner that would adversely affect the rights of
any Party under this Agreement or the transactions contemplated hereby
or affect the rights of holders of ARCO Common Shares; or, subject to
the fiduciary duties of ARCO's board of directors, amend, modify or
terminate the Rights Agreement;
(ii) split, combine, subdivide or reclassify its outstanding
shares of capital stock;
(iii) declare, set aside or pay any dividend or distribution
payable in cash, stock or property in respect of any capital stock
other than (A) regular quarterly cash dividends on ARCO Common Shares
not in excess of the quarterly cash dividends declared by ARCO in the
quarter ended December 31, 1998 and (B) regular cash dividends on the
issued and outstanding shares of ARCO Preference Stock; or
(iv) repurchase, redeem or otherwise acquire, or permit any
of its Subsidiaries to purchase, redeem 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 ARCO Stock Plans or any dividend reinvestment plan
as in effect on the date hereof in the ordinary course of the
operation of such plans) any shares of the capital stock of ARCO or
any securities convertible into or exchangeable or exercisable for any
shares of the capital stock of ARCO;
-28-
3.1.2.3. neither ARCO 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 ARCO of any class (other than (A) ARCO Common Shares
issuable or deliverable (x) pursuant to options outstanding on the
date hereof under the ARCO Stock Plans, (y) in connection with the
conversion of shares of ARCO Preference Stock in accordance with their
terms or (z) pursuant to the Stock Option Agreement; (B) issuances of
ARCO Common Shares, including Restricted Stock, Performance-Based
Restricted Stock, Contingent Restricted Stock and Dividend Share
Credits, in connection with grants and awards made prior to the date
hereof; (C) issuances of securities in connection with grants, awards
or issuances of stock-based compensation made in accordance with
Section 3.1.2.4; (D) Rights issuable pursuant to the Rights Agreement
in respect of ARCO Common Shares issued or to be issued in accordance
with this clause (i) or Section 3.1.2.4; or (E) ARCO Common Shares
issuable upon the exercise of Rights);
(ii) transfer, lease, license, sell or otherwise dispose of
any of its property or assets (including capital stock of any of its
Subsidiaries), including any contribution of property or assets to a
joint venture (including any joint venture that may be entered into
pursuant to Section 3.1.2.3 (vii)) and any transfer or disposition in
connection with financing transactions, other than property or assets
having an aggregate fair market value of not more than $500 million;
provided, however, that ARCO shall not transfer, lease, license, sell
or otherwise dispose of any individual property or asset with a fair
market value in excess of $50 million without first consulting with BP
Amoco;
(iii) incur any indebtedness except for (x) long-term
indebtedness not in excess of $1.5 billion incurred in connection with
the refinancing of existing indebtedness and (y) commercial paper and
short-term indebtedness repayable upon less than 30 days' notice
without penalty (other than LIBOR "breakage" costs); provided,
however, that ARCO shall provide reasonable advance notice to and
consult with BP Amoco on the development of, and any proposed changes
in, ARCO's plans for such refinancings contemplated by clause (x)
(including expected maturities and other material terms);
-29-
(iv) make capital expenditures in an aggregate amount in
excess of $2.7 billion during 1999 and $2.7 billion during 2000, plus,
in each year no more than an additional 15% of such limit, after
reasonable advance notice to and consultation with BP Amoco with
respect to ARCO's plans for such additional capital expenditures; or,
without first consulting with BP Amoco, authorize or commit to any
individual future capital expenditure in an amount in excess of $50
million unless such consultation would be inconsistent with applicable
Laws;
(v) by any means make or authorize or commit to any
acquisition of, or investment in, assets or stock of any other Person
or entity except to the extent that such acquisition or investment is
a capital expenditure permitted pursuant to Section 3.1.2.3(iv) or a
contribution to a joint venture permitted pursuant to Section
3.1.2.3(ii);
(vi) terminate any existing line of business; or
(vii) without reasonable advance notice to and consultation
with BP Amoco, enter into any new shareholder, membership or voting
agreements or other agreements relating to the transfer of investments
or management or operatorships in connection with joint ventures other
than any such agreements with respect to which the total book value or
fair market value (whichever is greater) of all of the assets of ARCO
and its Subsidiaries to be employed in or subject to the relevant
joint venture is less than $200 million;
3.1.2.4. neither ARCO nor any of its Subsidiaries shall
(i) terminate, establish, adopt, enter into, make any new
(or accelerate or otherwise modify any existing) grants or awards of
stock-based compensation or other benefits under, amend or otherwise
modify any ARCO Compensation and Benefit Plan except for (A) grants or
awards to directors, officers and employees of it or any of its
Subsidiaries under existing ARCO Compensation and Benefit Plans in the
ordinary and usual course of business consistent with past practice
(which shall include normal periodic performance reviews and the
making of related grants and awards with provisions consistent with
past practice; but shall not include any grants or awards that would
accelerate, vest or become payable solely as a result of the
consummation of the transactions contemplated by this Agreement) and,
with respect to stock-based compensation, in any event not in excess
of a number of grants or awards (x) granted after the date of this
Agreement and before December 31, 1999 that would (currently or
-30-
with the passage of time or the fulfillment of conditions), in the
aggregate, entitle the holders thereof to receive or to purchase
200,000 ARCO Common Shares pursuant to at-market stock options; and
(y) granted after February 1, 2000 that would (currently or with the
passage of time or the fulfillment of conditions), in the aggregate,
entitle the holders thereof to receive or to purchase 1.5 million ARCO
Common Shares pursuant to at-market stock options and 250,000 ARCO
Common Shares pursuant to other equity-based awards, except that
additional stock options may be substituted for other equity-based
awards on an equivalent value basis, with calculation of the value of
each equity instrument based on reasonable and customary valuation
methods; (B) actions necessary to satisfy existing contractual
obligations under ARCO Compensation and Benefit Plans in force as of
the date hereof, as required by law or under the terms of any
collective bargaining agreement or any other action in the ordinary
and usual course of business which would not significantly increase
the cost of such plan to ARCO; and (C) actions necessary in order to
extend the effectiveness of the Enhanced Retirement Program as set
forth in Section 41 of the ARCO Retirement Plan, Section 19 of the
CH-Twenty, Inc. Retirement Plan and Section 4A and 5A of the ARCO
Special Termination Allowance Plan (the "Enhanced Retirement
Program"), including but not limited to the final average salary
feature, as currently in effect, for qualifying terminations of
employment occurring within two years following the Effective Time;
(ii) increase the salary, wage, bonus or other compensation
of any directors, officers or employees except for (A) increases
occurring in the ordinary and usual course of business (which shall
include normal periodic performance reviews and related compensation
and benefit increases and increases reasonably required to maintain
competitive compensation (based on market data) for specialized
employees) and (B) the provision of individual compensation and
benefit plans or agreements for newly hired or appointed officers or
employees in the ordinary and usual course of business consistent with
past practice; or
(iii) make any determination with respect to the
satisfaction of performance objectives under the ARCO Compensation and
Benefit Plans other than reasonable determinations that are consistent
with past practice;
3.1.2.5. subject to the provisions of Section 3.5.1, neither
ARCO 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
-31-
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 fail to qualify as a reorganization
under Section 368(a) of the Code or (ii) the exchange of BP Amoco
Shares for ARCO Common Shares in the Merger to fail to qualify for
nonrecognition of gain (except with respect to (a) cash received in
lieu of fractional BP Amoco Shares or (b) stockholders of ARCO who are
not Eligible ARCO Shareholders);
3.1.2.6. ARCO shall timely satisfy, or cause to be timely
satisfied, all applicable tax reporting and filing requirements
contained in the Code with respect to the transactions contemplated
hereby, including, without limitation, the reporting requirements
contained in United States Treasury Regulation Section
1.367(a)-3(c)(6);
3.1.2.7. neither ARCO nor any of its Subsidiaries shall:
(i) without reasonable advance notice to and consultation
with BP Amoco (unless BP Amoco is an adverse party with respect to
such claim or litigation or to the extent such consultation would
result in ARCO waiving its attorney-client privilege with respect to
such claim or litigation), settle or compromise any claims or
litigation where the amount of any such settlement or compromise
exceeds $50,000,000; or
(ii) make any election with respect to taxes that could
reasonably be expected to have a Material Adverse Effect on it;
3.1.2.8. ARCO shall not modify any accounting policy except as
may be required by changes in Law or in U.S. GAAP;
3.1.2.9. ARCO shall not create, write down or change any material
reserve, except in the ordinary and usual course of business, without
reasonable advance notice to and consultation with BP Amoco; and
3.1.2.10. neither ARCO nor any of its Subsidiaries shall
authorize or enter into an agreement to do any of the foregoing.
3.1.3. Consultation as to Material Contracts. ARCO shall cooperate
with BP Amoco promptly after the date hereof in identifying and creating a
list of Contracts that may be considered material to ARCO and its
Subsidiaries. ARCO agrees that it will provide reasonable advance notice to
and consult with BP Amoco with respect to any material amendment,
modification or termination of, or
-32-
any waiver, release or assignment of any material rights or claims under,
the Contracts so identified and listed other than in the ordinary and usual
course of business of ARCO and its Subsidiaries.
3.2. ARCO Acquisition Proposals.
3.2.1. ARCO agrees that, subject to Section 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 any of its
Subsidiaries shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' employees, investment bankers, attorneys,
accountants, financial advisors, agents or other representatives
(collectively, the "ARCO 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 ARCO, or any purchase of, or offer to purchase, all
or substantially all of the equity securities of ARCO or of its and its
Subsidiaries' assets taken as a whole (any such proposal or offer being
hereinafter referred to as an "ARCO Acquisition Proposal"). ARCO 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 the ARCO Representatives not to, directly or
indirectly, have any discussions with or provide any confidential
information or data to any Person relating to an ARCO Acquisition Proposal
or engage in any negotiations concerning an ARCO Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an ARCO
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent ARCO or its board of directors from (i) making any
disclosure to its stockholders 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 ARCO Acquisition
Proposal which did not result from a breach of this Section 3.2.1; or (iii)
recommending such an ARCO Acquisition Proposal to its stockholders (and in
connection therewith withdraw its approval or favorable recommendation to
stockholders of this Agreement), if and only to the extent that, in the
case of actions referred to in clause (ii) or clause (iii), such ARCO
Acquisition Proposal is a Superior Proposal (as defined below). For
purposes of this Agreement, a "Superior Proposal" means any ARCO
Acquisition Proposal by a third party (x) on terms which the board of
directors of ARCO determines in its good faith judgment after consultation
with its financial advisors, to be more favorable from a financial point of
view to its stockholders than the Merger and the other transactions
contemplated hereby, and (y) which the ARCO board of directors determines
in its good faith judgment to constitute a transaction that is reasonably
likely to be consummated on the terms
-33-
set forth, taking into account all legal, financial, regulatory and other
aspects of such proposal. ARCO agrees that it will, on the date hereof,
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any Person conducted heretofore with
respect to any ARCO Acquisition Proposal. ARCO 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 ARCO
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. ARCO agrees that it will take the necessary steps promptly to
inform its Subsidiaries and its Subsidiaries' officers, directors and the
ARCO Representatives of the obligations undertaken in this Section 3.2.
ARCO agrees that it will notify BP Amoco promptly if any such inquiries,
proposals or offers relating to or constituting an ARCO 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' officers, directors and the ARCO
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 BP Amoco informed, on a current basis, of
the status and material terms and conditions of any such proposals or
offers. ARCO shall give BP Amoco at least five business days' notice of all
material terms and conditions of each ARCO Acquisition Proposal and the
opportunity to respond to such ARCO Acquisition Proposal prior to any
action by the ARCO board of directors approving the execution and delivery
of a definitive agreement to implement a transaction in respect of such
ARCO Acquisition Proposal.
3.2.3. Nothing contained herein shall prohibit ARCO from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act with respect to an ARCO Acquisition Proposal by
means of a tender or exchange offer.
3.3. Information Supplied.
3.3.1. Registration Statement.
3.3.1.1. Each of BP Amoco and ARCO shall cooperate with respect
to and as promptly as practicable prepare, and BP Amoco 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
pursuant to this Agreement of the BP Amoco Shares, which Registration
-34-
Statement shall include the proxy statement/prospectus to be sent to
holders of ARCO Common Shares (the "ARCO Proxy Statement") and, so far
as appropriate, the BP Amoco Documents (as defined in Section 3.3.2.1).
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 Amoco and ARCO
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 Amoco 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 Amoco will advise ARCO,
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 Amoco Shares issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of
the ARCO 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. BP Amoco and ARCO 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 ARCO 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 stockholders and at the time or times of the ARCO
Stockholders Meeting (as defined in Section 3.4), 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 ARCO
Stockholders Meeting any information relating to ARCO or BP Amoco, or
any of their respective Affiliates, officers or directors, should be
discovered by ARCO or BP Amoco which should be set forth in an
amendment to the Form F-4 or a supplement to the ARCO 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
-35-
describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the ARCO stockholders.
3.3.1.3. ARCO will use its best reasonable efforts to cause the
definitive ARCO Proxy Statement to be mailed to its stockholders as
promptly as practicable after the date hereof.
3.3.2.BP Amoco Documents.
3.3.2.1. BP Amoco shall, with the reasonable assistance of ARCO,
as promptly as practicable prepare and file with the LSE (a) a circular
to be sent to BP Amoco shareholders in connection with the BP Amoco
Shareholders Meeting (as defined in Section 3.4) (the "BP Amoco
Circular"), containing (i) a notice convening the BP Amoco Shareholders
Meeting, (ii) such other information (if any) as may be required by the
LSE and (iii) such other information as BP Amoco and ARCO shall agree
to include therein; and (b) listing particulars or an exempt listing
document relating to BP Amoco and its Subsidiaries and the BP Amoco
Ordinary Shares (together with any summary thereof, the "BP Amoco
Listing Document," and the BP Amoco Circular and the BP Amoco Listing
Document, together, the "BP Amoco Documents"). BP Amoco and ARCO each
agrees, as to itself and its Subsidiaries, that the BP Amoco Documents
and any supplements thereto and any circulars or documents issued to
shareholders, employees or debentureholders of BP Amoco, will contain
all particulars relating to BP Amoco and ARCO 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 ▇▇▇ ▇▇▇▇ (the "FSA") and the rules and regulations
made thereunder, and the rules and requirements of the LSE) and all
such information contained in the BP Amoco Documents will be
substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.
3.3.2.2. BP Amoco will use its best reasonable efforts to cause
the BP Amoco Documents to receive any clearance thereof required from
the LSE and to cause the definitive BP Amoco Documents to be mailed to
its shareholders, in each case as promptly as practicable after the
date hereof.
3.3.2.3. Notwithstanding any of the other provisions of this
Section 3.3 and for the avoidance of doubt, BP Amoco hereby agrees that
(i) for the purposes of the preparation of the BP Amoco Circular and
the BP Amoco Listing Document and any amendments or supplements
thereto,
-36-
ARCO shall only be obliged (pursuant to such other provisions) to
supply BP Amoco with information to the extent that it relates solely
to ARCO and/or its Subsidiaries, and (ii) neither ARCO, nor any of its
Subsidiaries, nor any of its or their directors or other officers shall
accept any responsibility for either the BP Amoco Circular or the BP
Amoco Listing Document or the information included therein or omitted
therefrom.
3.4. Shareholders Meetings. ARCO will take all action necessary to
convene a special meeting of the holders of ARCO Common Shares at which the
holders of ARCO Common Shares shall consider the adoption of this Agreement
(including any adjournments or postponements thereof, the "ARCO Stockholders
Meeting") as promptly as practicable after the Form F-4 has been declared
effective by the SEC. BP Amoco will take all action necessary to convene an
extraordinary general meeting of BP Amoco shareholders at which an ordinary
resolution will be proposed to consider the approval of the Merger (the "BP
Amoco Shareholder Meeting") after the BP Amoco Documents are cleared by the LSE
and the Form F-4 has been declared effective by the SEC. BP Amoco and ARCO each
agrees to use best reasonable efforts such that, to the extent practical, the
ARCO Stockholders Meeting and the BP Amoco Shareholders Meeting each shall be
held as promptly as practicable after the conditions precedent to holding such
meeting have been fulfilled and as nearly contemporaneously as practicable.
Subject to the terms of this Agreement, including the provisions of Section 3.2,
the board of directors of each of BP Amoco and ARCO shall recommend to its
respective shareholders, in the case of BP Amoco, the approval of the Merger
and, in the case of ARCO, the adoption of the Merger Agreement and shall use
best reasonable efforts to solicit such adoption unless it concludes, in the
exercise of its fiduciary duties, after consultation with outside counsel, that
the Merger is no longer advisable for its shareholders; provided, however, that
neither BP Amoco nor ARCO shall be entitled to withdraw its recommendation to
its respective shareholders if to do so would be inconsistent with the
obligations it has expressly assumed elsewhere in this Agreement. In the event
that subsequent to the date hereof, the board of directors of BP Amoco and/or
ARCO determines that the Merger or the Merger Agreement, as the case may be, is
no longer advisable and recommends that its respective shareholders reject it,
BP Amoco shall nevertheless submit the Merger to the holders of BP Amoco Voting
Shares for approval at the BP Amoco Shareholders meeting and ARCO shall
nevertheless submit this Agreement to the holders of ARCO Common Shares, for
adoption at the ARCO Stockholders Meeting, in each case unless this Agreement
shall have been terminated in accordance with its terms prior to the date of the
applicable meeting.
-37-
3.5. Filings; Other Actions; Notification.
3.5.1. BP Amoco and ARCO 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 BP
Amoco Required Consents and ARCO 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 reasonable 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 BP Amoco Required Consents or ARCO Required
Consents, as the case may be; it being understood that, for purposes of
this Section 3.5, the Parties agree that "best reasonable efforts" shall
require (without limitation of any other meaning of such words) each Party
to accept or agree to, at such time as may be required to cause the
condition set forth in Section 4.1.2 to be fulfilled prior to the
Termination Date, as it may be extended pursuant to Section 5.2, any
conditions, terms or restrictions in connection with any such BP Amoco
Required Consent or ARCO Required Consent, as the case may be, unless all
such conditions, terms and restrictions, in the aggregate, would be
reasonably likely to have a Material Adverse Effect on BP Amoco or ARCO
after the Effective Time (it being understood that, for this purpose
materiality shall be considered solely with respect to the total value of
the U.S. operations of BP Amoco, ARCO and their Subsidiaries, taken
together). Subject to applicable Laws relating to the exchange of
information, BP Amoco and ARCO shall have the right to review in advance,
and to the extent practicable each will consult the other on, all the
information relating to ARCO and its Subsidiaries or BP Amoco 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
-38-
Agreement. In exercising the foregoing right, each of BP Amoco and ARCO
shall act reasonably and as promptly as practicable.
3.5.2. BP Amoco and ARCO each shall, upon request by and reasonable
notice from the other, furnish the other with all information concerning
itself, its Subsidiaries, directors, officers and shareholders or
stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Form F-4, the BP Amoco Documents, the ARCO
Proxy Statement or any other necessary or appropriate filing, notice,
petition, statement, registration, submission of information or application
made by or on behalf of BP Amoco or ARCO 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. BP Amoco and ARCO 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 BP Amoco or ARCO, 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. BP Amoco and ARCO each shall give
prompt notice to the other of any change that would, individually or in the
aggregate, reasonably be expected 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, submission of information or application. Neither BP Amoco
nor ARCO shall 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 or
the Stock Option Agreement unless it consults with the other Party in
advance and, to the extent practicable and permitted by
-39-
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 reasonable efforts, subject to the limitations
set forth in Section 3.5.1, to defend against, respond to and resolve such
claim, action, suit, investigation or other proceeding in a manner that
permits the consummation of the Merger prior to the Termination Date.
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 Amoco or ARCO, as the
case may be, designated for the purpose, and except as may otherwise be required
by applicable Law, BP Amoco and ARCO each shall (and shall cause its
Subsidiaries to) afford the other's officers, employees, investment bankers,
attorneys, accountants, financial advisors, agents or other representatives
reasonable 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 BP Amoco or ARCO hereunder, and provided, further, that the
foregoing shall not require BP Amoco or ARCO to permit any inquiry, or to
disclose any information, that in the reasonable judgment of BP Amoco or ARCO,
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 unless the
consent of such third party is obtained (and BP Amoco or ARCO, as the case may
be, shall use its 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 January 28, 1999, between BP Amoco
and ARCO (the "Confidentiality Agreement"), including without limitation 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 BP Amoco
and ARCO shall consult with each other prior to issuing any press releases or
otherwise making public
-40-
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and the Stock Option Agreement.
3.8. Benefits and Other Matters.
3.8.1. Employee Benefits.
3.8.1.1. It is the specific intention of the Parties that the
compensation and benefit programs (including annual and long-term
incentive programs) to be provided by BP Amoco and its Subsidiaries for
current and former employees of ARCO will be no less favorable in the
aggregate than is provided to similarly situated employees of BP Amoco
and its Subsidiaries.
3.8.1.2. For at least one year following the Effective Time, BP
Amoco shall provide or cause to be provided to current and former
employees and directors of ARCO and its Subsidiaries compensation and
benefits that are at least as favorable in the aggregate (taking into
account the benefits provided pursuant to this Section 3.8) 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 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.
3.8.1.3. BP Amoco shall cause (i) ARCO's and its Subsidiaries'
(other than Vastar's) existing severance programs (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; (ii) beginning with the first full plan year after the Effective
Time, interest to be credited to the accounts of participants under the
Acorn Executive Deferral Plan (as in effect at the Effective Time) at
the greater of (x) the interest rate credited under a comparable Oak
plan maintained in the United States for senior executives or (y) the
"Citibank Base Rate," as defined in the Acorn Executive Deferral Plan;
provided, however, that for the period ending upon completion of ten
full plan years after the Effective Time, such rate shall be no less
than 125% of the 120-month rolling average of the 10-year
-41-
U.S. Treasury Note rate for each applicable 120-month period ending
June 30 (determined in a manner consistent with past practice), such
rate to be effective for the immediately following plan year, except
that the minimum rate shall be the Citibank Base Rate in those limited
circumstances in which it is determined by Acorn management, in its
sole discretion pursuant to a formal action taken prior to the
Effective Time, that any participant has failed to satisfactorily
perform his/her duties consistent with pre-established goals previously
communicated to the participant and such failure to so perform has not
otherwise been excused by Acorn management; and (iii) the ARCO
outplacement policies and, for executives, financial counseling
policies, as in effect as of the date hereof, to be maintained for two
years following the Effective Time.
3.8.1.4. Following the Effective Time, BP Amoco shall, and shall
cause its Subsidiaries to, recognize service with ARCO and its
Subsidiaries and any predecessor entities (and any other service
credited by ARCO under similar benefit plans), prior to the Effective
Time for all purposes (including, without limitation, eligibility to
participate, vesting, benefit accrual, eligibility to commence benefits
and severance) under any benefit plans of BP Amoco or its Subsidiaries
in which the particular employee or former employee of ARCO (or its
respective Subsidiaries) participates to the same extent as if such
service had been rendered to BP Amoco or any of its Subsidiaries;
provided however, that the foregoing shall not result in any
duplication of benefits for the same period of service. From and after
the Effective Time, BP Amoco shall, and shall cause its Subsidiaries
to, recognize any and all appropriate out-of-pocket expenses of each
employee or former employee of ARCO and its Subsidiaries for purposes
of determining such employee's and former employee's (including their
beneficiaries and dependents) deductible and co-payment expenses under
BP Amoco's medical benefit plans. BP Amoco shall waive, or cause to be
waived, any pre-existing condition limitation under any welfare benefit
plan maintained by BP Amoco or any of its Subsidiaries in which
employees of ARCO and its Subsidiaries (and their respective eligible
dependents) will be eligible to participate on or following the
Effective Time to the extent such pre-existing condition limitation was
waived or satisfied under the comparable ARCO plan.
3.8.1.5. From and after the Effective Time, BP Amoco shall honor,
fulfill and discharge, and shall cause its Subsidiaries to honor,
fulfill and discharge, in accordance with its terms, each existing
employment, change of control, severance and termination agreement
between ARCO or any of its Subsidiaries, and any officer, director or
employee of such company,
-42-
including without limitation (i) all legal and contractual obligations
pursuant to outstanding retirement plans, including the extension of
the Enhanced Retirement Program, pursuant to Section 3.1.2.4(i), salary
and bonus deferral plans, vested and accrued benefits and similar
employment and benefit arrangements and agreements in effect as of the
Effective Time, including all the "change of control" provisions under
the plans, programs, policies and agreements listed in Section 3.8.1.5
of the ARCO Disclosure Letter, and (ii) all vacation, personal and sick
days accrued by employees of ARCO and its Subsidiaries as of the
Effective Time. BP Amoco acknowledges that the consummation of the
Merger will constitute a "change of control" as respectively defined
under the plans, programs, policies and agreements listed in Section
3.8.1.5 of the ARCO Disclosure Letter.
3.8.1.6. From and after the Effective Time, BP Amoco shall
recognize, and cooperate in good faith with, the Independent Plan
Administrator (the "IPA") of the ARCO Supplemental Executive Benefit
Plans Trust Agreement; provided, however, that BP Amoco agrees to
cooperate with ARCO and the IPA in an effort to effect the transfer
and/or assumptions of any plan, or portion thereof, under the
administration of ARCO or the IPA to any successor plan or trust, as
may be requested by ARCO or the IPA.
3.8.2.Director and Officer Liability.
3.8.2.1. BP Amoco 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 restated certificate
of incorporation and by-laws of ARCO or an agreement between an
Indemnitee and ARCO or its Subsidiaries in effect as of the date hereof
shall continue in full force and effect in accordance with the terms
thereof.
3.8.2.2. For six years after the Effective Time, BP Amoco shall
indemnify and hold harmless the individuals who on or prior to the
Effective Time were officers or directors of ARCO or any of its
Subsidiaries (the "Indemnitees") (i) with respect to all acts or
omissions by them in their capacities as officers or directors of ARCO
in connection with the approval of this Agreement and the transactions
contemplated hereby and (ii) to the same extent indemnified as set
forth in Section 3.8.2.1, with respect to all other actions or
omissions by them in their capacities as officers or directors of ARCO,
or taken by them at the request of, ARCO
-43-
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.
3.8.2.3. For six years after the Effective Time, BP Amoco shall
procure the provision of directors' and officers' liability insurance
in respect of acts or omissions occurring prior to the Effective Time
covering each such Person currently covered by ARCO's directors' and
officers' liability insurance policy on terms set forth in the BP Amoco
Disclosure Letter. Such liability insurance procured by BP Amoco may
provide "first dollar" coverage, without any requirement to first seek
indemnification from the Surviving Corporation or BP Amoco.
3.8.2.4. The obligations of BP Amoco 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).
3.9. Expenses. Except as otherwise provided in Section 5.5, 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 ARCO Proxy Statement, the BP Amoco Documents and related documents.
3.10. 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 BP Amoco and ARCO 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.
3.11. Dividends. At least until December 31, 2003, dividends on the BP
Amoco Ordinary Shares will be announced in U.S. dollars and paid to holders of
BP Amoco Depositary Shares in U.S. dollars and to holders of BP Amoco Ordinary
Shares in
-44-
pounds sterling. ARCO agrees that it will coordinate its record dates for
dividends on ARCO Common Shares with BP Amoco's record dates for dividends on BP
Amoco Ordinary Shares so that record dates with respect to dividends to which
holders of ARCO Common Shares will be entitled, whether declared with respect to
ARCO Common Shares or, after the Effective Time, with respect to BP Amoco
Ordinary Shares, do not occur more or less frequently than once each calendar
quarter.
3.12. Listing Applications. BP Amoco shall promptly prepare and submit
to the LSE a listing application with respect to the BP Amoco Ordinary Shares
issuable in the Merger, and to each of the NYSE and Pacific Exchange a listing
application in respect of the BP Amoco Depositary Shares issuable in the Merger,
and shall use its best efforts to obtain, prior to the Effective Time, approval
for the listing of such BP Amoco Ordinary Shares, in the case of the LSE,
subject to allotment, and such BP Amoco Depositary Shares, in the case of the
NYSE, subject to official notice of issuance.
3.13. Letters of Accountants.
3.13.1. BP Amoco shall use its best reasonable efforts to cause to be
delivered to ARCO "comfort" letters of Ernst & Young, BP Amoco's
independent public accountants, dated the effective date of the Form F-4
and the Closing Date, respectively, and addressed to ARCO and its
directors, in form reasonably satisfactory to ARCO 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.
3.13.2. ARCO shall use its best reasonable efforts to cause to be
delivered to BP Amoco "comfort" letters of PricewaterhouseCoopers, ARCO's
independent public accountants, dated the effective date of the Form F-4
and the Closing Date, respectively, and addressed to BP Amoco and its
directors, in form reasonably satisfactory to BP 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.
3.14. Agreements of ARCO Affiliates. Prior to the date of the ARCO
Stockholders Meeting, ARCO shall cause to be prepared and delivered to BP Amoco
a list identifying all persons who, at the time of the ARCO Stockholders
Meeting, ARCO believes may be deemed to be "affiliates" of ARCO for purposes of
Rule 145 under the Securities Act (the "ARCO Affiliates"). BP Amoco shall be
entitled to place restrictive legends on any BP Amoco ADRs (or any underlying BP
Amoco Ordinary Shares that may be withdrawn upon surrender of such BP Amoco
ADRs) received by such ARCO Affiliates. ARCO shall use its best efforts to cause
each person who is identified as an ARCO Affiliate in such list to deliver to BP
Amoco, at or prior to the Effective Time, a
-45-
written agreement, in the form to be approved by the Parties, that such ARCO
Affiliate will not sell, pledge, transfer or otherwise dispose of any BP Amoco
Depositary Shares or BP Amoco Ordinary Shares issued to such ARCO Affiliate
pursuant to the Merger (or any underlying BP Amoco Ordinary Shares that may be
withdrawn upon surrender of such BP Amoco Depositary Shares), except pursuant to
an effective registration statement or in compliance with Rule 145 or an
exemption from the registration requirements of the Securities Act. BP Amoco
shall not register the transfer of any BP Amoco Ordinary Shares and shall cause
the Depositary not to register the transfer of any BP Amoco Depositary Shares
unless such transfer is made in compliance with the foregoing.
3.15. Accounting Matters. At least until December 31, 2003, BP Amoco
shall include as supplemental disclosure in its consolidated financial
statements a reconciliation of its consolidated net income and shareholders'
equity to U.S. GAAP.
3.16. Tax Matters. BP Amoco shall timely satisfy, or cause to be timely
satisfied, all applicable tax reporting and filing requirements contained in the
Code with respect to the transactions contemplated hereby, including, without
limitation, the reporting requirements contained in the United States Treasury
Regulation Section 1.367(a)-3(c)(6).
3.17. Vastar. Notwithstanding anything to the contrary in this Article
III, if any action is taken by Vastar or any of its Subsidiaries, or Vastar or
any of its Subsidiaries fails to take any action, that would (but for this
Section 3.17) constitute a violation by ARCO of a provision of this Article III,
ARCO shall be deemed to be in compliance with, and deemed not in violation of,
such provision if ARCO has used reasonable efforts, consistent with the
fiduciary duties of the Vastar directors designated by ARCO, to prevent such
action or such failure to take action, as the case may be, on the part of Vastar
and its Subsidiaries. For the purposes of Section 3.1.2.3, transactions by
Vastar and its Subsidiaries shall not count toward the monetary amounts set
forth therein.
3.18. Section 103. BP Amoco shall, if and to the extent required,
comply with its obligations under Section 103 of the U.K. Companies ▇▇▇ ▇▇▇▇ in
respect of the Merger Consideration.
ARTICLE IV
Conditions
4.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of BP Amoco, Merger Sub and ARCO to effect the Merger are
subject to the satisfaction or waiver of each of the following conditions:
-46-
4.1.1. Shareholder Approvals. This Agreement shall have been duly
adopted by holders of ARCO Common Shares constituting the ARCO Requisite
Vote, and the Merger shall have been duly approved by the shareholders of
BP Amoco constituting the BP Amoco Requisite Vote.
4.1.2. Regulatory Consents. All BP Amoco Required Consents and ARCO
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, except where the failure to obtain such Governmental Consent
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on BP Amoco or ARCO after the Effective Time, and
such Governmental Consents shall not contain any terms or impose any
conditions, terms or restrictions in connection with any such Governmental
Consent which, individually or in the aggregate, would be reasonably likely
to have a Material Adverse Effect on BP Amoco or ARCO after the Effective
Time (it being understood that, for this purpose, materiality shall be
considered solely with respect to the total value of the U.S. operations of
BP Amoco, ARCO and their Subsidiaries, taken together.
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 BP Amoco or ARCO or that would
materially impair the ability of BP Amoco to consummate the Merger
(collectively, an "Order"). The enactment, issuance, promulgation,
enforcement or execution by any Governmental Entity of any Order with
respect to a Governmental Consent shall not result in a failure of the
conditions set forth in this Section 4.1.3 if such Order imposes on BP
Amoco or ARCO or their respective Subsidiaries conditions, terms or
restrictions with respect to or upon the consummation of the Merger and
such conditions, terms or restrictions, if contained solely in a
Governmental Consent, would not result in the failure of the condition set
forth in Section 4.1.2.
4.1.4. Effectiveness of Form F-4. The Form F-4 shall have become
effective prior to the mailing of the ARCO Proxy Statement to its
stockholders, no stop order suspending the effectiveness of the Form F-4
shall then be in effect, and no proceedings for that purpose shall then be
threatened by the SEC or shall have been initiated by the SEC and not
concluded or withdrawn.
-47-
4.1.5. Exchange Listings. The LSE shall have granted permission for
admission to the Official List of the LSE, subject to allotment, of the BP
Amoco Ordinary Shares to be issued pursuant to the Merger, and such
permission shall not have been withdrawn prior to the Effective Time, and
the BP Amoco Depositary Shares shall have been authorized for listing on
the NYSE, subject to official notice of issuance.
4.2. Conditions to Obligations of BP Amoco and Merger Sub. The
obligations of BP Amoco and Merger Sub to effect the Merger is also subject to
the satisfaction or waiver by BP Amoco and Merger Sub prior to the Effective
Time of the following conditions:
4.2.1. Representations and Warranties of ARCO. The representations and
warranties of ARCO 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, in
each case when made and as of the Closing Date as though made on and as of
the Closing Date (except as provided in Section 2.2 and except that any
representation or warranty that by its terms expressly speaks as of an
earlier date shall be true and correct as of such date) (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,
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on ARCO), and BP Amoco shall have received a
certificate signed on behalf of ARCO by an executive officer of ARCO to
such effect.
4.2.2. Performance of Obligations of ARCO. ARCO shall have performed
all material obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and BP Amoco shall have received
a certificate signed on behalf of ARCO by an executive officer of ARCO to
such effect.
4.3. Conditions to Obligation of ARCO. The obligation of ARCO to effect
the Merger is also subject to the satisfaction or waiver by ARCO prior to the
Effective Time of the following conditions:
4.3.1. Representations and Warranties. The representations and
warranties of BP Amoco and Merger Sub 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, in each case when
-48-
made and as of the Closing Date as though made on and as of the Closing
Date (except that any representation or warranty that by its terms
expressly speaks as of an earlier date shall be true and correct as of such
date) (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, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on BP Amoco), and ARCO shall
have received a certificate signed on behalf of BP Amoco by an executive
officer of BP Amoco to such effect.
4.3.2. Performance of Obligations of BP Amoco. BP Amoco shall have
performed all material obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and ARCO shall have
received a certificate signed on behalf of BP Amoco by an executive officer
of BP Amoco to such effect.
4.3.3. Tax Opinion. ARCO shall have received an opinion from Cravath,
Swaine & ▇▇▇▇▇, 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
ARCO who exchange ARCO Common Shares solely for BP Amoco Shares pursuant to
the Merger (except with respect to (i) cash received in lieu of fractional
BP Amoco Shares or (ii) stockholders of ARCO who are not Eligible ARCO
Shareholders). In rendering such opinion, counsel may require and rely upon
representation letters of BP Amoco and ARCO substantially in the form set
forth as Exhibits B and C hereto, respectively.
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 approval by shareholders of BP Amoco and the stockholders of
ARCO referred to in Section 4.1.1, by mutual written consent of BP Amoco and
ARCO, by action of their respective boards of directors.
5.2. Termination by Either BP Amoco or ARCO. 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 Amoco or ARCO if (i) the
Merger shall not have been consummated by March 31, 2000, whether such date is
before or after the
-49-
approvals by the shareholders of BP Amoco and the stockholders of ARCO (subject
to extension as provided below, 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 BP Amoco or the stockholders of ARCO, (iii)
this Agreement shall not have been adopted by holders of ARCO Common Shares
constituting the ARCO Requisite Vote at the duly held ARCO Stockholders Meeting,
including any adjournment or postponement thereof or (iv) the Merger shall not
have been approved by shareholders of BP Amoco constituting the BP Amoco
Requisite Vote at the duly held BP Amoco Shareholders Meeting, including any
adjournment or postponement thereof; provided that the right to terminate this
Agreement pursuant to this Section 5.2 shall not be available to a Party that
has breached in any material respect its obligations under Section 3.5 or any of
its other obligations under this Agreement in any manner that shall have
proximately contributed to the failure of the Merger to be consummated;
provided, further, that, if a condition set forth in Section 4.1.2 or 4.1.3
remains unsatisfied and shall not have been waived by each of the parties hereto
on or prior to the Termination Date, either ARCO or BP Amoco may extend the
Termination Date to June 30, 2000. The party electing pursuant to the foregoing
proviso to extend the Termination Date shall deliver written notice to such
effect to the other party on or before March 31, 2000, whereupon such extension
shall be effective from and after April 1, 2000, and this Agreement may not be
terminated and the Merger abandoned pursuant to Section 5.2(i) until after such
extended Termination Date.
5.3. Termination by BP 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 the shareholders of BP Amoco referred to in Section
4.1.1, by action of the board of directors of BP Amoco, if (i) the board of
directors of ARCO shall have withdrawn its approval or favorable recommendation
to stockholders of this Agreement; or (ii) ARCO 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; or (iii) there shall be a breach by ARCO of any
representation, warranty, covenant or agreement contained in this Agreement
which would result in a failure of a condition set forth in Section 4.2.1 or
4.2.2 and cannot be or is not cured prior to the Termination Date.
5.4. Termination by ARCO. 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 stockholders of ARCO referred to in Section 4.1.1, by
action of the board of directors of ARCO, if (i) the board of directors of BP
Amoco shall have withdrawn its approval or favorable recommendation to
shareholders of the Merger or (ii) the board of directors of ARCO becomes
entitled pursuant to Section 3.2.1 to recommend an ARCO Acquisition Proposal to
its stockholders and, (A) at the time of such termination pursuant to this
clause (ii), ARCO is in compliance with Section 3.2.1, (B) ARCO first pays to BP
Amoco the ARCO Termination Amount and any amounts due to BP Amoco under the
-50-
Stock Option Agreement and (C) ARCO concurrently enters into a definitive
agreement to implement such ARCO Acquisition Proposal, or (iii) there shall be a
breach by BP Amoco of any representation, warranty, covenant or agreement
contained in this Agreement which would result in a failure of a condition set
forth in Section 4.3.1 or 4.3.2 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) 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 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 BP
Amoco or ARCO pursuant to Section 5.2(iii) and at the time of the ARCO
Stockholders Meeting (or at any adjournment thereof) an ARCO Acquisition
Proposal exists or (ii) (A) this Agreement is terminated by either BP Amoco
or ARCO pursuant to Section 5.2(iii) and prior to such termination ARCO's
board of directors shall have withdrawn its approval or favorable
recommendation to its stockholders of this Agreement, (B) this Agreement is
terminated by BP Amoco pursuant to Section 5.3(i), Section 5.3(ii) (solely
with respect to the recommendation by ARCO or the board of directors of
ARCO of an ARCO Acquisition Proposal) or Section 5.3(iii) (solely with
respect to a willful breach of Section 3.2), or (C) this Agreement is
terminated by ARCO in accordance with Section 5.4(ii), then ARCO shall
promptly, but in no event later than two business days after the date of
such termination or, in the case of termination pursuant to Section
5.4(ii), at the time provided therein, pay to BP Amoco as compensation for
the Merger not becoming effective a termination payment equal to the ARCO
Termination Amount (as defined below), which amount shall be exclusive of
any expenses to be paid pursuant to Section 3.9, payable by wire transfer
of same day funds. The term "ARCO Termination Amount" shall mean, in the
case of termination by BP Amoco pursuant to clause (ii) of the preceding
sentence, $450,000,000 (inclusive of value added tax, if any) or, in the
case of termination by BP Amoco or ARCO pursuant to clause (i) of the
preceding sentence, "ARCO Termination Amount" shall mean $250,000,000
(inclusive of value added tax, if any), plus, if (x) ARCO executes and
delivers an agreement with respect to any ARCO Acquisition Proposal (an
"ARCO Alternative Agreement") or (y) an ARCO Acquisition Proposal with
respect to ARCO is consummated, in any such case, within 12 months from the
date of termination, an additional $200,000,000
-51-
(inclusive of value added tax, if any) (which additional amount shall be
paid promptly by wire transfer in same day funds, and in no event later
than two business days after the earliest date on which the event requiring
ARCO to pay such additional sum occurs). In the event that the board of
directors of ARCO recommends the acceptance by ARCO stockholders of a
third-party tender or exchange offer for the ARCO Common Shares, such
recommendation shall be treated for purposes of this Section as though an
ARCO Alternative Agreement had been executed. ARCO 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 Amoco would not enter into this Agreement; accordingly, if
ARCO fails promptly to pay any amount due pursuant to this Section 5.5.2,
and, in order to obtain such payment, BP Amoco commences a suit which
results in a judgment against ARCO for the payment set forth in this
Section 5.5.2, ARCO shall pay to BP Amoco its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on
the ARCO 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 this Agreement is terminated (i) by ARCO
pursuant to Section 5.4(i) or (ii) by either BP Amoco or ARCO pursuant to
Section 5.2(iv) and prior to such termination BP Amoco's board of directors
shall have withdrawn its approval or favorable recommendation to
shareholders of the Merger, then BP Amoco shall promptly, but in no event
later than two business days after the date of such termination, pay to
ARCO a termination payment equal to the BP Amoco Termination Amount (as
defined below), which amount shall be exclusive of any expenses to be paid
pursuant to Section 3.9 payable by wire transfer of same day funds. The
term "BP Amoco Termination Amount" shall mean $500,000,000 (inclusive of
value added tax, if any). BP Amoco 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, ARCO
would not enter into this Agreement; accordingly, if BP Amoco fails
promptly to pay any amount due pursuant to this Section 5.5.3, and, in
order to obtain such payment, ARCO commences a suit which results in a
judgment against BP Amoco for the payment set forth in this Section 5.5.3,
BP Amoco shall pay to ARCO its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the BP 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.
-52-
ARTICLE VI
Miscellaneous and General
6.1. Survival. This Article VI and the agreements of BP Amoco and ARCO
contained in Article I, Sections 3.8 (Benefits and Other Matters), 3.15
(Accounting Matters) and Section 3.16 (Tax Matters) shall survive the Effective
Time. This Article VI, the representations and warranties contained in Section
2.1.3 (Corporate Authority; Approval and Fairness), the agreements of BP Amoco
and ARCO contained in Section 3.7 (Publicity), 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 ARCO stockholders of the matters
presented at the ARCO Stockholders Meeting, no modification or amendment shall
be made which under applicable Law requires further approval by such
stockholders 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. 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.
-53-
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
RESPECT SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS TO BE
PERFORMED WHOLLY IN SUCH STATE, EXCEPT TO THE EXTENT THAT IN THE CASE OF BP
AMOCO, 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 State of Delaware and the state courts of
the State of Delaware, solely in respect of the interpretation and
enforcement of the provisions of this Agreement and in respect of the
transactions contemplated hereby 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 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, 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 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 WITH THE ADVICE OF
COUNSEL HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH
-54-
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 ARCO:
ARCO
Atlantic Richfield Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with copies to
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ Chance
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇ Signy, Esq.
Telecopier: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
-55-
if to BP Amoco or Merger Sub:
BP Amoco p.l.c.
Brittanic House
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, Esq.
General Counsel
Telecopier: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
with copies to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
Linklaters & Paines
One ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier: 011-44-171-456-2222
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 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 BP Amoco Disclosure
Letter and the ARCO Disclosure Letter. Except as set forth in Sections 1.3, 1.5
and 3.8 (except for the provisions of Section 3.8.1.1 and 3.8.1.2), this
Agreement is not intended to confer upon any Person other than the Parties any
rights or remedies hereunder. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE STOCK OPTION
AGREEMENT OR ANY OTHER
-56-
AGREEMENT CONTEMPLATED HEREBY OR THEREBY, NONE OF BP AMOCO, ARCO 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 Amoco and of ARCO. Whenever this Agreement
requires a Subsidiary of BP Amoco to take any action, such requirement shall be
deemed to include an undertaking on the part of BP Amoco to use best reasonable
efforts to cause such Subsidiary to take such action. Subject to Section 3.17,
whenever this Agreement requires a Subsidiary of ARCO to take any action, such
requirement shall be deemed to include an undertaking on the part of ARCO 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."
-57-
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.
-58-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of BP Amoco, ARCO and Merger Sub as of the date
hereof.
BP AMOCO p.l.c.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: (E.J.P. ▇▇▇▇▇▇) - Sir ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ B.E. ▇▇▇▇▇
----------------------------------------
Name: B.E. ▇▇▇▇▇
Title: Executive Vice President
ATLANTIC RICHFIELD COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
PRAIRIE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
----------------------------------------
Name: P.B.P. ▇▇▇▇▇
Title: President
-59-