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Exhibit 99.1
AMENDED AND RESTATED
ARRANGEMENT AGREEMENT
TARRAGON OIL AND GAS LIMITED
AND
MARATHON OIL COMPANY
AND
761581 ALBERTA LTD.
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LTD.
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................................................. 4
1.1 Definitions.................................................................................. 4
ARTICLE 2 INTERPRETATION............................................................................... 10
2.1 Interpretation Not Affected by Headings...................................................... 10
2.2 Article References........................................................................... 10
2.3 Number and Gender............................................................................ 10
2.4 Date for Any Action.......................................................................... 10
2.5 Statutory References......................................................................... 10
2.6 Currency..................................................................................... 10
2.7 Enforceability Qualifications................................................................ 10
2.8 Disclosure................................................................................... 10
2.9 Schedules.................................................................................... 10
ARTICLE 3 TARRAGON'S CLOSING CONDITIONS................................................................ 10
3.1 Conditions for the Benefit of Tarragon....................................................... 10
ARTICLE 4 MARATHON'S CLOSING CONDITIONS................................................................ 12
4.1 Conditions for the Benefit of Marathon, Holdco and Albertaco................................. 12
ARTICLE 5 MUTUAL CLOSING CONDITIONS.................................................................... 14
5.1 Mutual Closing Conditions.................................................................... 14
ARTICLE 6 TARRAGON'S REPRESENTATIONS AND WARRANTIES.................................................... 14
6.1 Representations and Warranties of Tarragon................................................... 14
6.2 Negation of other Representations by Tarragon................................................ 20
ARTICLE 7 MARATHON'S REPRESENTATIONS AND WARRANTIES.................................................... 21
7.1 Representations and Warranties of Marathon................................................... 21
7.2 Negation of Other Representations by Marathon................................................ 22
ARTICLE 8 TARRAGON'S COVENANTS......................................................................... 22
8.1 Covenants of Tarragon........................................................................ 22
8.2 Superior Transaction......................................................................... 25
ARTICLE 9 MARATHON'S COVENANTS......................................................................... 26
9.1 Covenants of Marathon........................................................................ 26
9.2 Directors' and Officers' Insurance........................................................... 26
9.3 Directors' and Officers' Indemnification..................................................... 27
ARTICLE 10 MANAGEMENT INFORMATION CIRCULAR; REGISTRATION STATEMENT...................................... 27
10.1 Information Circular......................................................................... 27
10.2 Providing Information........................................................................ 28
10.3 Blue Sky Laws................................................................................ 28
ARTICLE 11 TERMINATION AND REMEDIES..................................................................... 28
11.1 Termination.................................................................................. 28
11.2 Effect of Termination........................................................................ 28
11.3 Limitation................................................................................... 28
11.4 Marathon Damages Event....................................................................... 28
11.5 Tarragon Damages Event....................................................................... 29
11.6 Liquidated Damages........................................................................... 29
11.7 Equitable Remedies........................................................................... 29
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ARTICLE 12 AMENDMENT.................................................................. 29
12.1 Amendment.................................................................. 29
ARTICLE 13 COSTS...................................................................... 30
13.1 Costs...................................................................... 30
ARTICLE 14 DISCLOSURE................................................................. 30
14.1 Joint Disclosure........................................................... 30
ARTICLE 15 NOTICES.................................................................... 30
15.1 Notices in Writing......................................................... 30
15.2 Addresses.................................................................. 30
ARTICLE 16 TIME....................................................................... 31
16.1 Time of the Essence........................................................ 31
ARTICLE 17 ENTIRE AGREEMENT AND RESTATEMENT........................................... 31
17.1 Entire Agreement........................................................... 31
17.2 Restatement................................................................ 31
ARTICLE 18 SEVERABILITY............................................................... 31
18.1 Severability............................................................... 31
ARTICLE 19 FURTHER ASSURANCES......................................................... 31
19.1 Further Assurances......................................................... 31
ARTICLE 20 GOVERNING LAW.............................................................. 31
20.1 Alberta Law................................................................ 31
20.2 Alberta Courts............................................................. 31
ARTICLE 21 EXECUTION IN COUNTERPARTS.................................................. 32
21.1 Counterparts............................................................... 32
ARTICLE 22 WAIVER..................................................................... 32
22.1 Limitation on Waiver....................................................... 32
ARTICLE 23 ENUREMENT AND ASSIGNMENT................................................... 32
23.1 Enurement.................................................................. 32
ARTICLE 24 SUBSIDIARY COVENANTS....................................................... 32
24.1 Tarragon................................................................... 32
24.2 Marathon................................................................... 32
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AMENDED AND RESTATED ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT made the 20th day of June, 1998, as amended and
restated the 7th day of July, 1998.
BETWEEN:
TARRAGON OIL AND GAS LIMITED, a body corporate incorporated under the
laws of Ontario with its head office in the City of Calgary, in the
Province of Alberta (hereinafter called "Tarragon")
OF THE FIRST PART
AND
MARATHON OIL COMPANY, a body corporate incorporated under the laws of
Ohio with its head office in the City of Houston, in the State of Texas
(hereinafter called "Marathon")
OF THE SECOND PART
AND
761581 ALBERTA LTD., a body corporate incorporated under the laws of
Alberta (hereinafter called "Albertaco")
OF THE THIRD PART
AND
787722 ALBERTA LTD., a body corporate incorporated under the laws of
Alberta (hereinafter called "Holdco")
OF THE FOURTH PART
WHEREAS Albertaco wishes to acquire all the issued and outstanding shares of
Tarragon;
AND WHEREAS Albertaco is a wholly-owned subsidiary of Holdco, and Holdco is
a wholly-owned subsidiary of Marathon;
AND WHEREAS the parties hereto intend to carry out the transactions
contemplated herein pursuant to an arrangement under the OBCA;
NOW THEREFORE IN CONSIDERATION of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties hereto covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. In this Agreement, unless the context otherwise requires:
(a) "ACQUISITION AGREEMENT" means the letter agreement dated May 29, 1998
between Tarragon, Marathon and Albertaco setting forth certain of the
terms and conditions upon which the parties propose to proceed with the
Arrangement;
(b) "AGREEMENT" means this agreement, including the recitals and all
Schedules to this agreement, as amended or supplemented from time to
time, and "hereby", "hereof", "herein", "hereunder", "herewith" and
similar terms refer to this Agreement and not to any particular
provision of this Agreement;
(c) "ALBERTACO" means 761581 Alberta Ltd., a wholly-owned Subsidiary of
Holdco;
(d) "APPLICABLE LAWS" means applicable corporate and securities laws,
regulations and rules, all policies thereunder and rules of applicable
stock exchanges;
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(e) "ARRANGEMENT" means the arrangement under the provisions of Section 182
of the OBCA as set out in the Plan of Arrangement;
(f) "ARTICLES OF ARRANGEMENT" means the articles of arrangement in respect
of the Arrangement required under Section 183(1) of the OBCA to be filed
with the Director after the Final Order has been made;
(g) "BUSINESS DAY" means a day, other than a Saturday, Sunday or statutory
holiday, when banks are generally open in Calgary and New York for the
transaction of banking business;
(h) "CERTIFICATE OF ARRANGEMENT" means the certificate to be issued by the
Director pursuant to Section 183(2) of the OBCA giving effect to the
Arrangement;
(i) "CLOSING" means the completion of the transactions contemplated herein;
(j) "CONTROL" or "CONTROLLED" means, with respect to control of a body
corporate by a Person, the holding (other than by way of security) by or
for the benefit of that Person of securities of that body corporate to
which are attached more than 50% of the votes that may be cast to elect
directors of the body corporate (whether or not securities of any other
class or classes shall or might be entitled to vote upon the happening
of any event or contingency) provided that such votes, if exercised, are
sufficient to elect a majority of the board of directors of the body
corporate;
(k) "COURT" means the Ontario Court (General Division);
(l) "DEPOSITARY" means a trust company licensed to carry on business in
Alberta and Ontario selected by Marathon and satisfactory to Tarragon
acting reasonably;
(m) "DEPOSITARY AGREEMENT" means the Escrow and Depositary Agreement to be
entered into on or before the Effective Date by the Depositary,
Tarragon, Albertaco and Holdco, which includes the matters referred to
in Section 3.1(d);
(n) "DIRECTOR" means the Director duly appointed under the OBCA;
(o) "EFFECTIVE DATE" means the date shown on the Certificate of Arrangement;
(p) "ENCUMBRANCE" includes, without limitation, any mortgage, pledge,
assignment, charge, lien, security interest, claim, trust, royalty or
carried, participation, net profits or other third party interest and
any agreement, option, right or privilege (whether by law, contract or
otherwise) capable of becoming any of the foregoing;
(q) "ENVIRONMENTAL CLAIM" means, with respect to any Person, any written or
oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's
liability for investigatory costs, cleanup costs, governmental response
costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Hazardous
Material at any location, whether or not owned by such Person, or (ii)
circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law. The term "Environmental Claim" shall include
any claim by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment;
(r) "ENVIRONMENTAL LAW" includes any principles of equity or common law and
any federal, provincial, municipal or local laws, statutes, ordinances,
regulations, rules, permits, approvals, certificates, registrations,
by-laws, guidelines, orders, directives, judgments, decisions or other
instruments having the force of law which are rendered or issued by any
Governmental Authority having jurisdiction, including but not limited to
any judicial or administrative order, consent, decree, judgment or
directive, that relates in any way to the protection of the environment
or to the health and safety of persons or property or product liability,
handling or transportation, and whether applying to or governing any
actual or threatened presence, release, discharge, escape, manufacture,
processing, distribution, use,
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treatment, storage, disposal, transport, recycling or handling of any
Hazardous Material or any material or substance capable of becoming a
Hazardous Material when in combination with any other substance;
(s) "EXCHANGE TRUST AGREEMENT" means the agreement to be entered into
between USX, Marathon, Albertaco and the Depositary as trustee,
substantially in the form set out in Schedule 4 annexed hereto;
(t) "EXCHANGEABLE SHARES" means shares of Albertaco that are exchangeable on
a one-for-one basis (subject to adjustment in certain circumstances)
into USX-Marathon Shares and having attached thereto the attributes set
out in Schedule 2 annexed hereto;
(u) "FINANCIAL INSTRUMENT TRANSACTION" means any agreement involving the
purchase, sale or ownership of interest rate or currency swaps, foreign
exchange swaps or forward delivery agreements or commodity or financial
derivatives (other than a contract for purchase or sale of oil or gas at
a fixed price on which delivery is intended to be made not later than 30
days after the agreement);
(v) "FINAL ORDER" means the final order of the Court approving the
Arrangement pursuant to Section 182(5)(f) of the OBCA, as such order may
be affirmed, amended or modified by any court of competent jurisdiction;
(w) "GAAP" means generally accepted accounting principles as in effect in
Canada from time to time, applied on a basis consistent with that of
prior periods;
(x) "GOVERNMENTAL AUTHORITY" includes any federal, provincial, municipal or
other political subdivision, government department, commission, board,
bureau, agency or instrumentality, domestic or foreign;
(y) "HAZARDOUS MATERIAL" means pollutants, contaminants, dangerous goods or
substances, toxic or hazardous chemicals, substances, materials or
waste, petroleum products or any derivatives or by-products thereof,
other hydrocarbons or other substances, and any other substance or
material released into or present in the environment, where such release
or presence is prohibited, controlled, managed or regulated in any
manner under Environmental Law or by any Governmental Authority
thereunder or pursuant thereto, and whether or not any release of such
substance or material was permitted by Environmental Laws applicable at
the relevant time;
(z) "HOLDCO" means 787722 Alberta Ltd., a wholly-owned Subsidiary of
Marathon;
(aa) "HSR ACT" means the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS ACT of
1976 of the United States, as amended;
(ab) "INCOME TAX ACT" means the INCOME TAX ACT (Canada), R.S.C. 1985, c.1
(5th Supp), as amended, including the regulations promulgated
thereunder;
(ac) "INFORMATION CIRCULAR" means the information circular to be used in
connection with the holding of the Tarragon Meeting;
(ad) "INTERIM ORDER" means an interim order of the Court concerning the
Arrangement under Section 182(5) of the OBCA, containing declarations
and directions with respect to the Arrangement and the holding of the
Tarragon Meeting, as such order may be affirmed, amended or modified by
any court of competent jurisdiction;
(ae) "INVESTEE AGREEMENTS" means agreements dated December 9, 1997 between
Tarragon and each of Triax Resource Limited Partnership and Triax
Resource Limited Partnership II providing for the issuance of an
aggregate of 1,000,000 Special Warrants;
(af) "MARATHON" means Marathon Oil Company, a corporation incorporated under
the laws of Ohio;
(ag) "MARATHON COUNSEL" means ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other legal counsel as
may be designated by Marathon and satisfactory to Tarragon, acting
reasonably;
(ah) "MARATHON DAMAGES EVENT" has the meaning ascribed thereto in Section
11.4;
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(ai) "MARATHON PUBLIC DOCUMENTS" means all documents or information filed by
or on behalf of Marathon in compliance with or intended compliance with
Applicable Laws;
(aj) "MARATHON SUBSIDIARIES" means all of the Subsidiaries of Marathon;
(ak) "MATERIAL ADVERSE EFFECT" and "MATERIAL ADVERSE CHANGE" used with
respect to any party means an effect or change, respectively, in each
case which is materially adverse to the business, assets, properties,
condition (financial or otherwise), results of operations or prospects
of such party and its Subsidiaries, taken as a whole, provided that a
Material Adverse Effect or Material Adverse Change shall not include any
adverse effect or change resulting from changes in general economic
conditions or conditions generally affecting the industries in which
Marathon or Tarragon operate including, without limitation, fluctuations
in the prices of Petroleum Substances;
(al) "MATERIAL CONTRACTS" means all contracts to which Tarragon or a
Tarragon Subsidiary is a party of a nature described in Section 6.1(v);
(am) "ME" means The Montreal Exchange;
(an) "MISREPRESENTATION" includes any untrue statement of a material fact,
any omission to state a material fact that is required to be stated and
any omission to state a material fact that is necessary to be stated in
order for a statement not to be misleading in the circumstances in
which it is made;
(ao) "NYSE" means the New York Stock Exchange;
(ap) "OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), R.S.O. 1990, c.
B.16 as amended, including the regulations promulgated thereunder;
(aq) "OPTION" means any option, warrant, or right to subscribe for, convert
to, exchange for or otherwise acquire any unissued Tarragon Shares;
(ar) "PERMITTED ENCUMBRANCES" means:
(i) the terms and conditions of title documents, including, without
limitation, the requirement to pay any rentals or royalties to the
grantor of leases for Petroleum Substances to maintain such leases
in good standing;
(ii) the right reserved to or vested in any grantor, municipality,
government or other public authority by the term of any lease for
Petroleum Substances or by any statute, law, rule, order or
regulation to terminate any such lease or to require annual or
other periodic payments as a condition of the continuance thereof;
(iii) easements, rights of way, servitudes or other similar rights in
land, including without limitation, rights of way and servitudes
for highways, railways, sewers, drains, gas and oil pipelines, gas
and water mains, electric light, power, telephone or cable
television conduits, poles, wires or cables which do not materially
detract from the value of the land concerned or materially impair
its use;
(iv) the right to levy taxes on Petroleum Substances or the income or
revenue therefrom and government requirements pertaining to
production rates from ▇▇▇▇▇ or operations being conducted on oil
and gas interests or otherwise affecting the value of any oil and
gas interests;
(v) agreements for the sale of Petroleum Substances;
(vi) statutes, laws, rules, orders and regulations of any public
authority relating to any of the foregoing in any manner;
(vii) undetermined or inchoate liens incurred or created as security in
favour of any Person with respect to the development or operation
of any oil and gas interests, as regards Tarragon's share of the
costs and expenses thereof, which costs and expenses are not due or
delinquent;
(viii) mechanics', builders' or materialmens' liens in respect of services
rendered or goods supplied for which payment is not at the time
due;
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(ix) the reservations, limitations, provisos and conditions in any
grants or transfers from the Crown of any of the subject lands or
interests therein and statutory exceptions as to title;
(x) agreements and plans relating to pooling or unitization;
(xi) governmental requirements as to production rates on the operations
of any property;
(xii) Crown or other lessor royalties;
(xiii) agreements respecting the processing, treating or transmission of
Petroleum Substances or the operating of ▇▇▇▇▇ by contract field
operators;
(xiv) provisions for penalties and forfeitures under agreements as a
consequence of non-participation in operations provided such
penalties or forfeitures are not in effect or currently capable of
being invoked; and
(xv) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority with respect to
operations pertaining to any oil and gas interests;
(as) "PERSON" includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of Persons or association;
(at) "PETROLEUM SUBSTANCES" means petroleum, natural gas and related
hydrocarbons and any substances associated therewith;
(au) "PLAN OF ARRANGEMENT" means the plan of arrangement set out in Schedule
1 hereto as amended or supplemented from time to time in accordance
with Article 12 hereof;
(av) "PURCHASE FUNDS" means the aggregate cash amount required to purchase
Exchangeable Shares in respect of which the holders elect or are to
receive cash pursuant to the terms of the Arrangement;
(aw) "SHARE CONSIDERATION DETERMINATION PERIOD" means the period of ten
consecutive trading days ending on the fifth calendar day next
preceding the date on which the Tarragon Meeting is held, provided that
if such calendar day is not a trading day, then such ten-day period
will end on the trading day immediately preceding such calendar day;
(ax) "SHAREHOLDER RIGHTS PLAN" means the shareholder rights plan of Tarragon
established pursuant to the Second Amended and Restated Shareholder
Protection Rights Plan Agreement made as of November 19, 1997 between
Tarragon and Montreal Trust Company of Canada;
(ay) "SHAREHOLDER AGREEMENT" means the shareholders' agreement made as of
April 15, 1998 among Tarragon Oil and Gas Limited and Unocal
Corporation, Unocal Canada Resources, Unocal Canada Limited and Unocal
Canada Exploration Limited;
(az) "SPECIAL WARRANTS" means the Special Warrants entitling the holders
thereof to acquire one Tarragon Share per Special Warrant without
payment of additional consideration, issued or to be issued by Tarragon
pursuant to the Investee Agreements;
(ba) "SUBSIDIARY" means, when used to indicate a relationship with another
body corporate,
(i) a body corporate which is Controlled by (A) that other, or (B) that
other and one or more bodies corporate, each of which is Controlled
by that other, or (C) two or more bodies corporate each of which is
Controlled by that other, or
(ii) a subsidiary of a body corporate that is the other's subsidiary;
(bb) "SUPPORT AGREEMENT" means an agreement to be entered into between USX,
Marathon and Albertaco substantially in the form set out in Schedule 3
annexed hereto;
(bc) "TAKE-OVER PROPOSAL" means any take-over bid for 50% or more of the
issued and outstanding Tarragon Shares or any proposal or offer for a
merger, consolidation, amalgamation or other business combination
involving Tarragon or any proposal or offer to acquire in any manner a
50% or greater
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equity or beneficial interest in, or a material amount of the assets
of, Tarragon, other than pursuant to the Arrangement;
(bd) "TARRAGON" means Tarragon Oil and Gas Limited, a corporation
incorporated under the OBCA;
(be) "TARRAGON COUNSEL" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or such other legal counsel
as may be designated by Tarragon and satisfactory to Marathon, acting
reasonably;
(bf) "TARRAGON DAMAGES EVENT" has the meaning ascribed thereto in Section
11.5;
(bg) "TARRAGON FAIRNESS OPINIONS" means, collectively, the opinions of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. and Credit Suisse First Boston Corporation that the
consideration offered to the Tarragon Shareholders pursuant to the
terms of the Arrangement is fair, from a financial point of view, to
the Tarragon Shareholders;
(bh) "TARRAGON FINANCIAL STATEMENTS" means the audited consolidated
financial statements of Tarragon for the years ended December 31, 1997
and 1996 and the unaudited consolidated financial statements of
Tarragon for the three month periods ended March 31, 1998 and 1997;
(bi) "TARRAGON MATERIAL SUBSIDIARIES" means Tarragon Resources (U.S.A.) Inc.
and 1214579 Ontario Limited;
(bj) "TARRAGON MEETING" means the special meeting of the Tarragon
Securityholders to be called to, INTER ALIA, consider and, if thought
fit, authorize, approve and adopt the Arrangement in accordance with
the Interim Order, and any adjournments thereof;
(bk) "TARRAGON OPTIONS" means, collectively, all outstanding options to
purchase Tarragon Shares pursuant to Tarragon's existing share option
plan;
(bl) "TARRAGON OPTIONHOLDERS" means the holders of Tarragon Options;
(bm) "TARRAGON PUBLIC DOCUMENTS" means all documents or information filed by
or on behalf of Tarragon in compliance with or intended compliance with
Applicable Laws prior to May 29, 1998;
(bn) "TARRAGON RESERVE REPORT" means collectively the reports evaluating
certain of Tarragon's oil, natural gas liquids and natural gas reserves
and the estimated future cash flow from such reserves:
(i) prepared by ▇▇▇▇▇▇▇ Associates Limited and dated January 30, 1998,
and
(ii) prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jung Associates Ltd. and dated
February 18, 1998;
(bo) "TARRAGON SARS" means, collectively, all outstanding stock appreciation
rights issued by Tarragon;
(bp) "TARRAGON SECURITYHOLDERS" means the Tarragon Shareholders, Tarragon
Optionholders, the holders of Special Warrants and the Persons entitled
to acquire Special Warrants pursuant to the Investee Agreements;
(bq) "TARRAGON SHAREHOLDERS" means the holders of Tarragon Shares;
(br) "TARRAGON SHARES" means the common shares of Tarragon as constituted on
the date hereof;
(bs) "TARRAGON SUBSIDIARIES" means all of the Subsidiaries of Tarragon;
(bt) "TSE" means The Toronto Stock Exchange;
(bu) "UNOCAL" means Unocal Canada Limited and its affiliates;
(bv) "U.S. GAAP" means generally accepted accounting principles as in effect
in the United States from time to time, applied on a basis consistent
with that of prior periods;
(bw) "USX" means USX Corporation, a Delaware Corporation;
(bx) "USX-MARATHON SHARES" means the shares of USX-Marathon Group Common
Stock of USX as constituted on the date hereof; and
(by) "WATEROUS PROPERTY OFFERING" means the offering of properties of
Tarragon through Waterous Securities Limited pursuant to an offering
memorandum dated May 25, 1998.
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ARTICLE 2
INTERPRETATION
2.1 INTERPRETATION NOT AFFECTED BY HEADINGS. The division of this Agreement into
Articles, Sections, subsections and paragraphs and the insertion of headings are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
2.2 ARTICLE REFERENCES. Unless the contrary intention appears, references in
this Agreement to an Article, Section, subsection, paragraph, clause, subclause
or schedule by number or letter or both refer to the article, section,
subsection, paragraph, clause, subclause or schedule, respectively, bearing that
designation in this Agreement.
2.3 NUMBER AND GENDER. In this Agreement, unless the contrary intention appears,
words importing the singular include the plural and vice versa; words importing
gender shall include all genders.
2.4 DATE FOR ANY ACTION. In the event that the date on which any action is
required to be taken hereunder by any of the parties is not a Business Day in
the place where the action is required to be taken, such action shall be
required to be taken on the next succeeding day which is a Business Day in such
place.
2.5 STATUTORY REFERENCES. References in this Agreement to any statute or
sections thereof shall include such statute as amended or substituted and any
regulations promulgated thereunder from time to time in effect.
2.6 CURRENCY. Unless otherwise stated, all references in this Agreement to sums
of money are expressed in lawful money of Canada.
2.7 ENFORCEABILITY QUALIFICATIONS. All representations, warranties, covenants
and opinions in or contemplated by this Agreement as to the enforceability of
any covenant, agreement or document are subject to enforceability being limited
by applicable bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally; and the discretionary nature of certain remedies
(including specific performance and injunctive relief).
2.8 DISCLOSURE. Where reference is made herein to disclosure of any fact to
Marathon or Tarragon, such disclosure shall be made in a written document
labelled as disclosure making reference to this agreement, delivered to an
officer of Marathon or Tarragon, as the case may be, prior to the execution
hereof.
2.9 SCHEDULES. The following Schedules form part of this Agreement:
Schedule 1 -- Plan of Arrangement
Schedule 2 -- Exchangeable Share Provisions
Schedule 3 -- Support Agreement
Schedule 4 -- Exchange Trust Agreement.
ARTICLE 3
TARRAGON'S CLOSING CONDITIONS
3.1 CONDITIONS FOR THE BENEFIT OF TARRAGON. The obligations of Tarragon to
complete the transactions contemplated herein, and in particular the
Arrangement, are subject to the fulfilment of the following conditions precedent
on or before the Effective Date or such other time as is specified below:
(a) except as affected by the transactions contemplated by this Agreement
the representations and warranties made by Marathon in Section 7.1 shall
be true as of the Effective Date in all material respects as if made on
and as of such date;
(b) Marathon shall have provided Tarragon with opinions of Marathon Counsel
reasonably satisfactory to Tarragon dated the Effective Date and
addressed to Tarragon Counsel to the effect that:
(i) each of USX Corporation, Marathon, Holdco and Albertaco is duly
incorporated and validly existing under the laws of the jurisdiction
of its incorporation, and each of Marathon, Holdco and
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Albertaco has corporate power and authority to enter into this
Agreement and perform its obligations hereunder;
(ii) all necessary proceedings, corporate, regulatory and otherwise, of
each of Marathon, Holdco and Albertaco have been taken to fully,
validly and effectively authorize this Agreement and the
transactions contemplated herein including the Arrangement, the
performance by each of Marathon, Holdco and Albertaco of its
obligations hereunder, and the execution and delivery by each of
Marathon, Holdco and Albertaco of this Agreement and all documents
delivered pursuant hereto;
(iii) the execution and delivery by each of Marathon, Holdco and
Albertaco of this Agreement and all documents delivered pursuant
hereto, the performance by each of Marathon, Holdco and Albertaco
of its obligations hereunder and thereunder and the consummation of
the transactions contemplated herein and therein will not:
(A) result in the breach of or violate any term or provision of the
articles, by-laws or governing documents of Marathon, Holdco or
Albertaco; or
(B) violate any provision of law or administrative regulation or, in
each case as known to such counsel, without special inquiry, any
judicial or administrative order, award, judgment or decree
applicable to Marathon, Holdco or Albertaco or the business or
properties of Marathon, Holdco or Albertaco contravention of
which could reasonably be expected to prevent or hinder the
completion of the Arrangement;
(iv) this Agreement has been duly executed and delivered by each of
Marathon, Holdco and Albertaco and this Agreement is valid and
binding on each of Marathon, Holdco and Albertaco and is enforceable
in accordance with its terms; and
(v) the authorized and outstanding capital of each of Marathon and
Albertaco immediately prior to the Effective Date is as stated in
Section 7.1(f) hereof.
In giving such opinion, Marathon Counsel may rely, in respect of matters
governed by the laws of any jurisdiction other than the laws of Alberta,
upon the opinion of General Counsel of Marathon or local counsel in such
jurisdiction provided that Marathon Counsel is of the opinion that the
opinion of such local counsel is one upon which Marathon Counsel may
properly rely; and, in respect of matters of fact, upon certificates of
senior officers of Marathon or any other appropriate Persons acceptable
to Tarragon Counsel;
(c) Marathon shall have complied in all material respects with its covenants
in Section 9.1 of this Agreement and Marathon shall have provided to
Tarragon a certificate of an officer of Marathon certifying as to such
compliance and Tarragon shall not have established that it has knowledge
to the contrary;
(d) the Purchase Funds shall have been deposited with the Depositary by
Holdco pursuant to the Depositary Agreement, which shall irrevocably
authorize and direct the Depositary to pay the Purchase Funds to the
holders of the Exchangeable Shares who are entitled to receive such
funds in accordance with the Arrangement;
(e) the Exchangeable Shares issuable upon completion of the Arrangement
shall be listed on the TSE or another stock exchange in Canada, subject
to notice of issuance, provided that the minimum listing requirements
are met, and each shall be freely tradeable (other than as a result of
any control person restrictions which may arise by virtue of the
ownership thereof) under applicable securities laws;
(f) the USX-Marathon Shares reserved for issuance upon exchange of the
Exchangeable Shares issuable upon completion of the Arrangement shall be
listed on the NYSE, subject to notice of issuance, and each shall be
freely tradeable (other than as a result of any control person or
affiliate restrictions which may arise by virtue of the ownership
thereof) under applicable securities laws; and
(g) the Support Agreement and Exchange Trust Agreement shall have been
executed and delivered by USX, Marathon and Albertaco.
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The foregoing conditions precedent are for the benefit of Tarragon and may
be waived, in whole or in part, by Tarragon in writing at any time. If any of
the said conditions precedent shall not be complied with or waived by Tarragon
on or before the date required for the performance thereof, Tarragon may, in
addition to the other remedies it may have at law or equity, rescind and
terminate this Agreement by written notice from Tarragon to Marathon.
ARTICLE 4
MARATHON'S CLOSING CONDITIONS
4.1 CONDITIONS FOR THE BENEFIT OF MARATHON, HOLDCO AND ALBERTACO. The
obligations of Marathon, Holdco and Albertaco to complete the transactions
contemplated herein, and in particular the Arrangement, are subject to
fulfilment of the following conditions precedent on or before the Effective Date
or such other time as is specified below:
(a) except as affected by the transactions contemplated by this Agreement,
the representations and warranties made by Tarragon in Section 6.1 shall
be true in all material respects as of the Effective Date as if made on
and as of such date;
(b) Tarragon shall have provided Marathon with opinions of Tarragon Counsel
reasonably satisfactory to Marathon and Marathon Counsel, dated the
Effective Date and addressed to Marathon and Marathon Counsel, to the
effect that:
(i) each of Tarragon and the Tarragon Material Subsidiaries is duly
incorporated and validly existing under the law of the jurisdiction
of its incorporation and Tarragon has corporate power and authority
to enter into this Agreement and perform its obligations hereunder;
(ii) all necessary proceedings, corporate, regulatory and otherwise, of
Tarragon have been taken to fully, validly and effectively
authorize this Agreement and the transactions contemplated herein
including the Arrangement, the performance by Tarragon of its
obligations hereunder, and the execution and delivery by Tarragon
of this Agreement and all documents delivered pursuant hereto;
(iii) the execution and delivery by Tarragon of this Agreement and all
documents delivered pursuant hereto, the performance by Tarragon of
its obligations hereunder and thereunder and the consummation of
the transactions contemplated herein and therein will not:
(A) result in the breach of or violate any term or provision of the
articles, by-laws or governing documents of any of Tarragon or
the Tarragon Material Subsidiaries; or
(B) violate any provision of law or administrative regulation or,
in each case as known to such counsel, without special inquiry,
any judicial or administrative order, award, judgment or decree
applicable to any of Tarragon or the Tarragon Material
Subsidiaries or the business or properties of Tarragon or the
Tarragon Material Subsidiaries;
(iv) this Agreement has been duly executed and delivered by Tarragon and
this Agreement is valid and binding on Tarragon and is enforceable
in accordance with its terms;
(v) all Tarragon SARs shall have been exercised or cancelled;
(vi) the application of the Shareholder Rights Plan shall have been
validly and effectively terminated on or prior to the Effective
Date; and
(vii) the authorized capital of Tarragon immediately prior to the
Effective Date is as stated herein.
In giving such opinion, Tarragon Counsel may rely, in respect of matters
governed by the laws of any jurisdiction other than the Province of
Alberta or the laws of Canada applicable therein, upon the opinion of
local counsel in such jurisdiction provided that Tarragon Counsel is of
the opinion that the opinion of such local counsel is one upon which
Tarragon Counsel may properly rely; and, in respect of matters of fact,
upon certificates of senior officers of Tarragon or any other
appropriate Persons acceptable to Marathon Counsel;
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(c) Tarragon shall have complied in all material respects with its covenants
in Section 8.1 of this Agreement and all other material covenants in
this Agreement and Tarragon shall have provided to Marathon a
certificate of an officer certifying as to such compliance and Marathon
shall not have established that it has knowledge to the contrary;
(d) before giving effect to the transactions contemplated by this Agreement,
since December 31, 1997 there shall have been no Material Adverse Change
in Tarragon or any occurrences or circumstances which have resulted or
might reasonably be expected to result in a Material Adverse Change in
Tarragon except as disclosed in the Tarragon Public Documents or except
as have been disclosed in writing to Marathon prior to the execution of
this Agreement;
(e) there shall be no action taken by a Governmental Authority under any
existing applicable law or regulation, nor any statute, rule, regulation
or order which is enacted, enforced, promulgated or issued by any court,
department, commission, board, regulatory body, government or
Governmental Authority or similar agency, domestic or foreign, that:
(i) results in a judgment or assessment of material damages against
Tarragon, USX, Marathon, Holdco or any Subsidiary of any of them,
directly or indirectly relating to the transactions contemplated
herein; or
(ii) imposes or confirms material limitations on the ability of Marathon
effectively to exercise full rights of ownership of the Tarragon
Shares, including, without limitation, the right to vote any such
securities;
(f) Tarragon and Marathon shall have obtained all consents, approvals and
authorizations by any Governmental Authority (including, without
limitation, all consents or approvals required under the COMPETITION ACT
(Canada) or the INVESTMENT CANADA ACT (Canada) and all stock exchange
and securities commission approvals) which are required or necessary in
connection with the transactions contemplated herein, (other than any
such consent, approval or authorization the failure of which to obtain
would not have a Material Adverse Effect on Tarragon) on terms and
conditions reasonably satisfactory to Marathon;
(g) such members of the board of directors and officers of Tarragon as
Marathon shall have designated in writing to Tarragon not less than
three days prior to the Effective Date, shall have provided their
written resignations as directors and officers of Tarragon effective as
of the Effective Date together with releases (satisfactory to Marathon
acting reasonably) in favour of Tarragon;
(h) the application of the Shareholder Rights Plan to the Arrangement shall
have been validly and effectively terminated on or prior to the
Effective Date and Marathon shall have received such opinions of
Tarragon Counsel and such other documents and assurances to such effect,
as in its sole discretion it may determine, acting reasonably;
(i) Tarragon shall have obtained any required consent of third party lenders
and other parties to Material Contracts in respect of the transactions
contemplated herein; and
(j) the holders of not more than 10% of the outstanding Tarragon Shares
(other than Unocal) shall have exercised rights of dissent in connection
with the Arrangement.
The foregoing conditions precedent are for the benefit of Marathon and may be
waived, in whole or in part, by Marathon in writing at any time. If any of the
said conditions precedent shall not be complied with or waived by Marathon on or
before the date required for the performance thereof, Marathon may, in addition
to the other remedies it may have at law or equity, rescind and terminate this
Agreement by written notice to Tarragon.
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ARTICLE 5
MUTUAL CLOSING CONDITIONS
5.1 MUTUAL CLOSING CONDITIONS. The obligations of Marathon and Tarragon to
complete the transactions contemplated herein are subject to fulfilment of the
following conditions precedent on or before the Effective Date or such other
time as is specified below:
(a) a special resolution shall have been passed by the Tarragon
Securityholders on or before October 31, 1998, in form and substance
satisfactory to each of Marathon and Tarragon, acting reasonably, duly
approving the Arrangement in accordance with the Interim Order;
(b) the Final Order shall have been granted in form and substance
satisfactory to Marathon and Tarragon, each acting reasonably;
(c) the Arrangement shall have become effective on or before November 30,
1998;
(d) there shall be no action taken by a Governmental Authority under any
existing applicable law or regulation, nor any statute, rule, regulation
or order which is enacted, enforced, promulgated or issued by any court,
department, commission, board, regulatory body, government or
Governmental Authority or similar agency, domestic or foreign, that
makes illegal or otherwise directly or indirectly restrains, enjoins or
prohibits the Arrangement or any other transactions contemplated herein;
and
(e) Tarragon and Marathon shall have obtained all consents, approvals and
authorizations by any Governmental Authority (including, without
limitation, all consents or approvals or expiry of waiting periods
required under HSR, the COMPETITION ACT (Canada) or the INVESTMENT
CANADA ACT (Canada) and all stock exchange and securities commission
approvals) which are required or necessary in connection with the
transactions contemplated herein the failure of which to obtain would
materially adversely affect the ability of Marathon to complete the
Arrangement, all on terms and conditions reasonably satisfactory to
Tarragon and Marathon.
The foregoing conditions are for the mutual benefit of Marathon and Tarragon and
may be waived, in whole or in part, by Marathon and Tarragon together, at any
time. If any of the said conditions precedent shall not be complied with or
waived as aforesaid on or before the date required for the performance thereof,
Marathon or Tarragon may, in addition to the other remedies it may have at law
or in equity, rescind and terminate this Agreement by written notice to the
other party.
ARTICLE 6
TARRAGON'S REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF TARRAGON. Tarragon represents and warrants
to Marathon that:
(a) Corporate Standing. Each of Tarragon and the Tarragon Subsidiaries:
(i) is duly organized and validly existing under the laws of the
jurisdiction of its incorporation;
(ii) has the corporate capacity, power and authority to own or lease its
property and assets and to carry on its business as now conducted
by it; and
(iii) is duly qualified to carry on business in each jurisdiction in
which the nature of its business or the property or assets owned or
leased by it makes such qualification necessary, except where the
failure to be so qualified will not have a Material Adverse Effect
on Tarragon;
(b) Compliance with Laws, Licenses. Each of Tarragon and the Tarragon
Subsidiaries:
(i) has complied with and is in compliance with all laws or regulations
applicable to its assets or the operation of its business,
including the Applicable Laws, except where failure to do so would
not have a Material Adverse Effect on Tarragon; and
(ii) has all licenses, permits, orders or approvals of, and has made all
required registrations with any government or regulatory body that
are material to its assets or the conduct of its business.
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(c) Corporate Capacity. Tarragon has all requisite corporate capacity, power
and authority to enter into this Agreement and all documents to be
delivered pursuant hereto and, subject to the terms hereof, including
the approval of the Arrangement at the Tarragon Meeting and by the
Court, to perform its obligations hereunder.
(d) Authorization and Binding Effect. This Agreement has been duly
authorized, executed and delivered by Tarragon and all documents to be
executed and delivered by Tarragon pursuant hereto to Marathon shall be
duly executed and delivered and this Agreement constitutes a legal,
valid and binding obligation of Tarragon enforceable against it in
accordance with its terms.
(e) No Contravention. The execution and delivery of this Agreement and all
documents to be delivered pursuant thereto, the performance of the terms
hereof and thereof and the consummation of the transactions contemplated
herein do not and will not:
(i) result in the breach of or violate any term or provision of the
articles, by-laws or other governing documents of Tarragon or the
Tarragon Subsidiaries; or
(ii) conflict with, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of the performance
required by, any agreement, instrument, licence, permit or
authority to which Tarragon or the Tarragon Subsidiaries is a
party, by which it is bound or to which any of its property or
assets is subject or give to any Person any interest or right,
including any right of purchase, termination, cancellation or
acceleration under any such agreement, instrument, license, permit
or authority; or
(iii) result in the creation of any Encumbrance upon any of the property
or assets of Tarragon or the Tarragon Subsidiaries; or
(iv) violate any provision of law or administrative regulation or any
judicial or administrative order, award, judgment or decree
applicable to Tarragon or the Tarragon Subsidiaries or any of their
property or assets;
except those which in the case of (ii) (iii) or (iv), would not have a
Material Adverse Effect on Tarragon.
(f) Finder's Fees. Other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. and Credit Suisse First
Boston Corporation, in accordance with the terms of their respective
engagement letters, copies of which have been provided to Marathon,
Tarragon has not incurred any obligation or liability, contingent or
otherwise, for brokerage fees, finder's fees, agent's commission,
financial advisory fees or other similar forms of compensation with
respect to the transactions contemplated herein.
(g) Legal Matters. Except as disclosed to Marathon prior to the execution of
this Agreement, there are no actions, suits or other legal,
administrative or arbitration proceedings or government investigations
commenced, or to the knowledge of Tarragon contemplated, at law or in
equity or before or by any court or other Governmental Authority which
involve or affect Tarragon or any Tarragon Subsidiary or any of their
assets, including, without limitation, the title to, or ownership of,
the properties of Tarragon and the Tarragon Subsidiaries and there are
no outstanding judgments, awards, decrees, injunctions, awards or orders
against Tarragon or a Tarragon Subsidiary which, in any of the above
cases, could have a Material Adverse Effect on Tarragon, and, to the
best of Tarragon's knowledge, there are no grounds upon which any such
actions, suits or proceedings may be commenced with reasonable
likelihood of success. As of the date hereof, there are no actions,
suits or other proceedings commenced or which have been threatened which
involve Tarragon or any Tarragon Subsidiary or any of their assets which
have not been disclosed to Marathon.
(h) Authorized and Issued Capital.
(i) The authorized capital of Tarragon consists of an unlimited number
of Tarragon Shares, an unlimited number of Preferred Shares,
issuable in one or more series and 20,000,000 7% Cumulative
Convertible Preferred Shares, Series A, of which as at the date
hereof, only
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72,236,396 Tarragon Shares are issued and outstanding, all of which
are issued as fully paid and non-assessable;
(ii) all of the issued shares of each Tarragon Subsidiary are owned by
Tarragon as the sole beneficial owner of record, free and clear of
any Encumbrances, voting trusts, proxies and other interests,
claims or demands of every kind or nature whatsoever and no Person
has any agreement, option, right or privilege (including, without
limitation, by law, pre-emptive right, contract or otherwise) to
purchase, convert into, exchange for or otherwise acquire, nor any
agreement, option, right or privilege capable of becoming any such
agreement, right, option or privilege, for any of such securities
or any interest therein, in all cases other than as reflected in
the Tarragon Financial Statements; and
(iii) no Person has any agreement, option, right or privilege (including,
without limitation, whether by law, pre-emptive right, contract or
otherwise) to purchase, subscribe for, convert into, exchange for
or otherwise require the issuance of, nor any agreement, option,
right or privilege capable of becoming any such agreement, option,
right or privilege, any of the unissued shares of Tarragon or any
Tarragon Subsidiary, other than (A) Tarragon Options to purchase in
the aggregate not more than 4,471,150 Tarragon Shares, (B) 83,333
Tarragon SARs, (C) Special Warrants for the issuance of 717,374
Tarragon Shares and agreements to issue Special Warrants for the
issuance of an additional 282,626 Tarragon Shares, and (D) in
connection with the Shareholder Rights Plan.
(i) Subsidiaries. Other than the Tarragon Material Subsidiaries Tarragon has
no Subsidiaries which carry on any business or have any material assets
or liabilities, and neither Tarragon nor any Tarragon Subsidiary has any
agreements of any nature to acquire any Subsidiary, or to acquire or
lease any other business operations out of the ordinary course.
(j) Corporate Records. The respective minute books of Tarragon and the
Tarragon Subsidiaries for the past five (5) years are true and correct
in all material respects and contain the minutes of all meetings and all
resolutions of the directors and shareholders thereof.
(k) Financial Matters.
(i) The Tarragon Financial Statements have been prepared in accordance
with GAAP (except as stated therein) and present fairly the
financial position of Tarragon to which they relate as of the date
provided therein and the results of operations and the changes in
financial position for the periods then ended;
(ii) except as disclosed to Marathon prior to the execution of this
Agreement there are no known or anticipated liabilities, whether
contingent or otherwise, of Tarragon of any kind whatsoever,
whether or not determined or determinable other than as set out in
the Tarragon Financial Statements or as described in or
contemplated by this Agreement;
(iii) except as set out in the Tarragon Financial Statements, none of
Tarragon and the Tarragon Subsidiaries is a party to or bound by
any agreement of guarantee, indemnification, assumption or
endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other
Person; and
(iv) except as disclosed to Marathon prior to the execution of this
Agreement, none of Tarragon and the Tarragon Material Subsidiaries
is in default under any mortgage, debenture, loan agreement or
other security agreement and no event has occurred which with the
giving of notice or lapse of time would constitute a default,
(except in each case any such default which may occur after the
date hereof as a result of fluctuations in the prices of Petroleum
Substances occurring after December 31, 1997).
(l) Change in Affairs. Since December 31, 1997 except as disclosed in the
Tarragon Public Documents and the Information Circular or otherwise in
writing to Marathon, Tarragon has not amended its articles, by-laws or
other governing documents and each of Tarragon and the Tarragon Material
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Subsidiaries has conducted its business in all material respects in the
usual, ordinary and regular course and consistent with past practice;
and has not:
(i) disposed of any property or assets other than in the ordinary
course of business;
(ii) made any material loans or advances;
(iii) incurred, assumed or become subject to any liability except in the
ordinary course of business;
(iv) suffered any Material Adverse Change, or any occurrences or
circumstances which have resulted or might reasonably be expected
to result in a Material Adverse Change (other than changes
attributable to fluctuations in the prices of Petroleum
Substances);
(v) made any change in its accounting principles and practices as
theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained;
(vi) made any general change in its salary and other compensation
levels;
(vii) entered into any agreements, whether in writing or verbal,
providing for payments to be made to any employees or officers of
Tarragon or its Subsidiaries in respect of loss of office or loss
of employment in connection with the transactions contemplated
hereby other than as disclosed to Marathon prior to the date
hereof;
(viii) acquired any assets which are material;
(ix) taken any action which would be prohibited by Section 8.1(c) or
failed to take any action which would be required by Section
8.1(c);
(x) made any payment to or entered into any agreement with any Person
not dealing at arms length with Tarragon;
(xi) paid any dividend, in the case of Tarragon, or redeemed or
purchased any Tarragon Shares, in the case of Tarragon and the
Tarragon Subsidiaries;
(xii) issued, sold or agreed to issue or sell any securities except
pursuant to the exercise of outstanding Tarragon Options, the
Tarragon SARs and the Investee Agreements, and except for
borrowings under existing credit facilities; or
(xiii) entered into any agreement or commitment to do any of the
foregoing.
(m) Tax Matters. Each of Tarragon and the Tarragon Subsidiaries has duly and
timely filed, in proper form, returns in respect of taxes under the
INCOME TAX ACT, the CORPORATE TAX ACT (Alberta), the Goods and Services
Tax levied under the EXCISE TAX ACT (Canada), the income tax legislation
of any other province of Canada or any foreign country in which it
carries on business or to the jurisdiction of which it is otherwise
subject, the MINES AND MINERALS TAX ACT (Alberta), the FREEHOLD MINERAL
RIGHTS TAX ACT (Alberta) and similar legislation of other provinces
having jurisdiction over the affairs of Tarragon, for all prior periods
in respect of which such filings have heretofore been required, and all
taxes shown thereon and all taxes owing with respect to periods ending
on or prior to December 31, 1997 have been paid or accrued on the books
of Tarragon and all payments by Tarragon to any non-resident of Canada
have been made in accordance with all applicable legislation in respect
of withholding tax; and Tarragon and each Tarragon Subsidiary has
withheld from each payment made to any of its officers, directors,
former directors and employees the amount of all taxes (including,
without limitation, income tax) and other deductions required to be
withheld therefrom and has paid the same to the proper tax or other
authority within the time required under any applicable tax legislation;
there are no outstanding agreements or waivers material to Tarragon
extending the statutory period of limitations applicable to any federal,
provincial or other income tax return for any period; all remittances of
taxes collected on behalf of any taxing authority owing with respect to
periods ending on or prior to December 31, 1997 have been paid or
accrued on the books of Tarragon and in the Financial Statements; all
such returns are complete and correct in all material respects; there
are no assessments or reassessments respecting Tarragon or any Tarragon
Subsidiaries pursuant to which there are
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amounts owing or discussions in respect thereof with any taxing
authority. Tarragon knows of no basis for the assessment of any material
amount of taxes for any period covered by such returns that is not
reflected on such returns. Tarragon is not a party to any material
action, suit, or other proceeding or claim in progress, pending or
threatened in respect of taxes.
(n) Government Incentives. All filings made by Tarragon or any of the
Tarragon Subsidiaries under which it has received or is entitled to
government incentives, have been made in accordance, in all material
respects, with all applicable legislation and contain no
Misrepresentations of material fact or omit to state any material fact
which could cause any amount previously paid to such corporation or
previously accrued on the accounts thereof to be recovered or
disallowed.
(o) Employment Matters. Except as disclosed to Marathon prior to the
execution of this Agreement, neither Tarragon nor any Tarragon
Subsidiary is a party to any written contracts of employment or
collective bargaining agreements and there are no currently existing
employment benefit plans, arrangements or agreements, other than the
share option plan, contributions to retirement savings plans, vacation
entitlements, health and group insurance plans and customary government
plans such as Canada Pension Plan, Employment Insurance and Workers'
Compensation, to which Tarragon or any Tarragon Material Subsidiary is a
party or by which it is bound except as disclosed to Marathon and
Tarragon is in compliance with all such plans except for defaults which
would not have a Material Adverse Effect on Tarragon.
(p) Engineering Reports. Tarragon has made available to ▇▇▇▇▇▇▇ Associates
Limited and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jung Associates Ltd. prior to the issuance
of the Tarragon Reserve Report, all information in Tarragon's possession
material to an adequate determination of oil and gas reserves, none of
such information contained a Misrepresentation and (other than as may be
affected by the disposition of Petroleum Substances in ordinary course)
Tarragon has no knowledge of any Material Adverse Change to the oil and
gas reserves of Tarragon since the effective dates of the Tarragon
Reserve Reports.
(q) Reporting Issuer Status. Tarragon is a "reporting issuer" or has
equivalent status in each of the provinces of Canada and the Tarragon
Shares are listed on the TSE and the ME, and Tarragon has not been
notified of any default or alleged default by Tarragon of any
requirement of securities and corporate laws, regulations, orders,
notices and policies.
(r) Environmental Matters. Except to the extent that any violation or other
matter referred to in this paragraph does not have a Material Adverse
Effect on Tarragon,
(i) None of Tarragon or any of the Tarragon Subsidiaries is in
violation of any applicable Environmental Law;
(ii) Each of Tarragon and the Tarragon Subsidiaries has operated its
business at all times and has received, handled, used, stored,
treated, shipped and disposed of all contaminants without violation
of Environmental Law;
(iii) Except as have been disclosed to Marathon prior to the date hereof,
there have been no spills, releases, deposits or discharges of
Hazardous Materials which have not been rectified or are in the
process of being rectified on any of the real property owned or
leased by Tarragon or any of the Tarragon Subsidiaries or under
their respective control and there are not any past or present
conditions or circumstances at or arising out of any current or
former businesses, assets or properties of Tarragon or any of its
Subsidiaries, including but not limited to on-site or off-site
disposal or release of any Hazardous Materials which may give rise
to (A) liabilities or obligations for any clean-up, remediation,
disposal or corrective action under any Environmental Law or (B)
claims arising for personal injury, property damage, or damage to
natural resources;
(iv) There have been no releases, deposits or discharges, in violation
of Environmental Law in effect at the relevant time, of any
Hazardous Materials into the earth, air or into any body of water
or any municipal or other sewer or drain water systems by Tarragon
or any of the Tarragon Subsidiaries;
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(v) No orders, directions or notices have been issued by a Governmental
Authority and remain outstanding pursuant to any Environmental Law
relating to the business or assets of Tarragon or any of the
Tarragon Subsidiaries;
(vi) Except as disclosed to Marathon, Tarragon has not received notice
of any violation of Environmental Law or investigation relating to
any Environmental Claims. Tarragon is not aware of any permits,
licenses or other authorizations which are required under federal,
provincial or local laws with respect to pollution or protection of
the environment relating to the assets, business or operations of
Tarragon which have not been obtained by Tarragon;
(vii) All of the assets of Tarragon and the Tarragon Subsidiaries
operated and maintained by Tarragon or any Tarragon Subsidiary are
in compliance with all terms and conditions of Environmental Laws,
and all related permits, licenses and authorizations, in all
material respects, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder relating to the assets operated
by Tarragon or any Tarragon Subsidiary, in all material respects;
(viii) Tarragon has provided Marathon with copies of all environmental
investigations, studies, audits, tests, reviews or other analyses
by or that are in the possession of Tarragon;
(ix) None of Tarragon or the Tarragon Subsidiaries has failed to report
to the proper Governmental Authority the occurrence of any event
which is required to be so reported by any Environmental Law where
failure to so report could have a Material Adverse Effect on
Tarragon; and
(x) Each of Tarragon and the Tarragon Subsidiaries holds all licenses,
permits and approvals required under any Environmental Law in
connection with the operation of its business and the ownership and
use of its assets, all such licenses, permits and approvals are in
full force and effect, and except for (A) notifications and
conditions of general application to assets of the type owned by
Tarragon, and (B) notifications relating to reclamation obligations
under the ENVIRONMENTAL PROTECTION AND ENHANCEMENT ACT (Alberta),
copies of which have been provided to Marathon, Tarragon has not
received any notification pursuant to any Environmental Law that
any work, repairs, construction or capital expenditures are
required to be made by it or that any licence, permit or approval
referred to above is about to be reviewed, made subject to
limitation or conditions, revoked, withdrawn or terminated, except
as would not have a Material Adverse Effect on Tarragon.
(s) Delivery Obligations. Except as reflected in the Tarragon Financial
Statements or as otherwise disclosed to Marathon prior to the execution
of this Agreement, Tarragon is not obligated by virtue of a prepayment
arrangement under any gas contract containing a "take or pay" or similar
provision, or gas imbalances, a production payment, prepaid contract or
any other arrangement to deliver a material amount of gas or oil
attributable to its properties at some future time without then or
thereafter receiving full payment therefor.
(t) Expenditure Obligations. Except for the expenditure of funds pursuant to
the Investee Agreements, of which approximately $3.7 million remains to
be expended as at May 31, 1998, Tarragon has no unsatisfied expenditure
obligations relating to flow through shares.
(u) Insurance. Tarragon is insured with reputable insurers against all risks
normally insured against in accordance with generally prevailing
practices in the oil and gas industry. There are no currently
outstanding material losses for which Tarragon has failed to give or
present notice or claim under any policy. Tarragon has no knowledge of
the cancellation or proposed cancellation of any of the insurance.
(v) Material Contracts. Tarragon has delivered to Marathon a true copy of
each of the following to which it is a party:
(i) all agreements or arrangements for the future purchase, sale or
delivery of oil or gas by Tarragon which provide for volumes of
greater than 3,000 barrels per day for liquids or 15 million cubic
feet
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per day for gas, other than those which are terminable by Tarragon
without penalty or payment on not more than 12 month's notice;
(ii) Financial Instrument Transactions;
(iii) credit agreements, indentures, guarantees or other agreements
regarding indebtedness;
(iv) agreements with Unocal, any other shareholder having beneficial
ownership of 5% or more of the Tarragon Shares then issued and
outstanding, or any director or officer of Tarragon;
(v) agreements not made in the ordinary course of business and which
are materially adverse to the business of Tarragon;
(vi) the Investee Agreements; and
(vii) premises leases including, without limitation, the lease dated
September 24, 1997 between 725844 Alberta Inc. and Tarragon
respecting the principal office space of Tarragon, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇
▇.▇., ▇▇▇▇▇▇▇, as amended.
Tarragon has made available to Marathon, and has provided Marathon with
accurate summaries of, all agreements for the future purchase, sale or
delivery of oil or gas by Tarragon.
(w) Information Circular. All information relating to Tarragon and the
Tarragon Subsidiaries in the Information Circular shall be, as of the
earlier of the date it purports to be given and the date of the
Information Circular, true and complete in all material respects and
shall not contain any Misrepresentation.
6.2 NEGATION OF OTHER REPRESENTATIONS BY TARRAGON. Tarragon makes no
representations or warranties except as expressly set forth in Section 6.1 and,
in particular, and without limitation, Tarragon hereby expressly negates any
representations or warranties (verbal or written, express or implied) made by
Tarragon or employees, consultants or representatives of Tarragon or the
Tarragon Subsidiaries, whether contained in any information memorandum or
otherwise, (including presentations made by their employees, consultants or
representatives) with respect to:
(a) any data or information supplied to Marathon or its representatives by
Tarragon or a Tarragon Subsidiary or their advisors, agents, employees,
officers or directors;
(b) the quality or quantity of Petroleum Substances within or under
Tarragon's assets or the recoverability of such Petroleum Substances;
(c) the value of Tarragon's assets or the future cash flow therefrom; or
(d) the quality, condition, fitness or merchantability of any tangible
depreciable equipment or property comprised in Tarragon's assets.
Marathon acknowledges and confirms that, except for the representations and
warranties contained in Section 6.1, Marathon is not entitled to rely on any
other representations or warranties of Tarragon, express or implied.
Except for Marathon's rights under this Agreement with respect to the
representations and warranties in Section 6.1, Marathon forever releases and
discharges Tarragon and Tarragon Subsidiaries and their respective directors,
officers, agents and employees from any claims and liabilities (whether in
contract or in tort) (except for actual fraud or wilful misconduct) to Marathon
or Marathon's representatives, assigns and successors, as a result of the use or
reliance upon advice, information, statements, opinions or materials pertaining
to Tarragon which were delivered or made available to Marathon or its
representatives by Tarragon or Tarragon Subsidiaries or their directors,
officers, agents, advisors, representatives or employees.
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ARTICLE 7
MARATHON'S REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF MARATHON. Marathon represents and warrants
to Tarragon that:
(a) Corporate Standing. Each of Marathon and the Marathon Subsidiaries:
(i) is duly organized and validly existing under the laws of the
jurisdiction of its incorporation;
(ii) has the corporate capacity, power and authority to own or lease its
property and assets and to carry on its business as now conducted
by it; and
(iii) is duly qualified to carry on business in each jurisdiction in
which the nature of its business or the property or assets owned or
leased by it makes such qualification necessary, except where the
failure to be so qualified will not materially impede completion of
the Arrangement.
(b) Compliance with Laws, Licenses. Except as publicly disclosed by Marathon
prior to the commencement of the Share Consideration Determination
Period, each of Marathon and the Marathon Subsidiaries:
(i) has complied with and is in compliance with all laws or regulations
applicable to its assets or the operation of its business,
including the Applicable Laws, except where failure to do so would
not materially impede completion of the Arrangement; and
(ii) has all licenses, permits, orders or approvals of, and has made all
required registrations with any government or regulatory body the
failure of which to hold or obtain would materially impede
completion of the Arrangement.
(c) Corporate Capacity. Each of Marathon, Holdco and Albertaco has all
requisite corporate capacity, power and authority to enter into this
Agreement and all documents to be delivered pursuant hereto and, subject
to the terms hereof, to perform its obligations hereunder.
(d) Authorization and Binding Effect. This Agreement has been duly
authorized, executed and delivered by each of Marathon, Holdco and
Albertaco and all documents to be executed and delivered by Marathon,
Holdco and Albertaco or any of them pursuant hereto to Tarragon shall be
duly executed and delivered and this Agreement constitutes a legal,
valid and binding obligation of Marathon, Holdco or Albertaco, as the
case may be, enforceable against it in accordance with its terms.
(e) Authorization, Contravention. The execution and delivery of this
Agreement and all documents to be delivered pursuant thereto, the
performance of the terms hereof and thereof and the consummation of the
transactions contemplated herein do not and will not:
(i) result in the breach of or violate any term or provision of the
articles, by-laws or other governing documents of Marathon, Holdco
or Albertaco; or
(ii) conflict with, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of the performance
required by, any agreement, instrument, licence, permit or
authority to which any of Marathon, Holdco or Albertaco is a party,
by which it is bound or to which any of its property or assets is
subject or give to any Person any interest or right, including any
right of purchase, termination, cancellation or acceleration under
any such agreement, instrument, license, permit or authority; or
(iii) result in the creation of any Encumbrance upon any of the property
or assets of Marathon or Albertaco; or
(iv) violate any provision of law or administrative regulation or any
judicial or administrative order, award, judgment or decree
applicable to Marathon or Albertaco or their respective property or
assets;
except those which in the case of (ii) (iii) or (iv), would not
materially impede completion of the Arrangement.
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(f) Authorized and Issued Capital. The authorized capital stock of USX
includes 550,000,000 USX-Marathon Shares, of which 289,872,808
USX-Marathon Shares were outstanding at May 29, 1998. All issued and
outstanding shares of Holdco are owned by Marathon. All issued and
outstanding voting shares of Albertaco are owned by Holdco.
(g) Trading Status. The USX-Marathon Shares are listed on the NYSE.
(h) Information Circular. All information relating to Marathon and the
Marathon Subsidiaries provided to Tarragon for inclusion in the
Information Circular pursuant to Section 9.1(b) shall be, as of the
earlier of the date it purports to be given and the date of the
Information Circular, true and complete in all material respects and
shall not contain any Misrepresentation.
(i) Exchangeable Shares. The Exchangeable Shares to be issued pursuant to
the Arrangement shall be validly authorized and upon the Effective Date
shall be validly issued, fully paid and non-assessable.
(j) No Shareholders' Meeting. No meeting of securityholders of Marathon or
USX is required in connection with the execution, delivery or
performance by USX and Marathon of their obligations under the terms of
this Agreement, the Exchange Trust Agreement or the Support Agreement.
(k) Public Disclosure. Marathon and USX have disclosed in the Marathon
Public Documents all information concerning Marathon which is required
by Applicable Laws to be so disclosed and contains no Misrepresentation.
7.2 NEGATION OF OTHER REPRESENTATIONS BY MARATHON. Marathon makes no
representations or warranties (verbal or written, express or implied) except as
expressly set forth in Section 7.1 and, in particular, and without limitation,
Marathon hereby expressly negates any representations or warranties made by
Marathon or its employees, consultants or representatives, whether contained in
any information memorandum or otherwise, with respect to:
(a) any data or information supplied to Tarragon or its representatives by
Marathon or Marathon Subsidiaries or their advisors, agents, employees,
officers or directors;
(b) the quality or quantity of Petroleum Substances within or under
Marathon's assets or the recoverability of such Petroleum Substances;
(c) the value of Marathon's assets or the future cash flow therefrom; or
(d) the quality, condition, fitness or merchantability of any tangible
depreciable equipment or property, interests in which are comprised in
Marathon's assets.
Tarragon acknowledges and confirms that except for the representations and
warranties contained in Section 7.1 Tarragon is not entitled to rely on any
other representations of Marathon, express or implied.
Except for Tarragon's rights under this Agreement with respect to the
representations and warranties in Section 7.1, Tarragon forever releases and
discharges Marathon, USX and their respective Subsidiaries, affiliates,
directors, officers, agents and employees from any claims and all liability
(whether in contract or in tort) (except for actual fraud or wilful misconduct)
to Tarragon or Tarragon's representatives, assignees and successors, as a result
of the use or reliance upon advice, information, statements, opinions or
materials pertaining to Marathon or USX which were delivered or made available
to Tarragon or its representatives by Marathon or USX or their directors,
officers, agents, advisors, representatives or employees.
ARTICLE 8
TARRAGON'S COVENANTS
8.1 COVENANTS OF TARRAGON. Tarragon covenants and agrees that, until the issue
of the Certificate of Arrangement or the termination of this Agreement,
whichever is the earlier, Tarragon:
(a) will use its reasonable commercial efforts to fulfil or cause the
fulfilment of the conditions set forth in Sections 4.1 and 5.1 as soon
as reasonably possible to the extent the fulfilment of the same is
within the control of Tarragon;
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(b) will conduct its business only in, not take any action except in, and
maintain its properties and facilities in, the usual, ordinary and
regular course of business and consistent with past practice and will
not take any action which may reasonably be expected to result in a
Material Adverse Change to Tarragon, including, without limiting the
generality of the foregoing, the entering into of employment,
consultancy or severance agreements or other arrangements with any
director or officer of Tarragon, other than in connection with
agreements and other arrangements which have been disclosed to Marathon
prior to the execution hereof;
(c) will not:
(i) as regards the business and properties of Tarragon and the Tarragon
Subsidiaries, except as required in the course of prudent oilfield
operations in connection with the operation and maintenance
thereof, make, commit, or allow commitments to make,
(A) expenditures on any item described in the budget of Tarragon
disclosed to Marathon in excess of the amount so described, or
(B) additional expenditures exceeding $250,000 in each case or
$500,000 in the aggregate;
(ii) other than customary sales of production consistent with past
practice, and other than as contemplated pursuant to the Plan of
Arrangement and other than sales, pledges or dispositions or
Encumbrances in aggregate not exceeding $500,000, sell, transfer,
pledge or otherwise dispose of or create any Encumbrance on, or
agree to or allow the sale, transfer, pledge or other disposition
of or creation of any Encumbrance on any properties or assets of
Tarragon (including the properties described in the Waterous
Property Offering) or the Tarragon Subsidiaries other than chattel
property or other non-real property that is replaced by equivalent
property or consumed in the operation of Tarragon's business and
properties and other than Permitted Encumbrances;
(iii) subject to the provisions of Section 8.2, and other than as
contemplated pursuant to the Plan of Arrangement or the Waterous
Property Offering, directly or indirectly, through officers,
directors, employees, affiliates, representatives, advisors,
agents, investment bankers (including, without limitation, ▇▇▇▇▇▇▇
▇▇▇▇▇ Inc. and Credit Suisse First Boston Corporation), consultants
or otherwise, take any action to solicit, initiate, encourage, or
participate in any discussions or negotiations with any third party
or otherwise assist or cause or facilitate anyone else to solicit,
initiate, encourage, or participate in any discussions or
negotiations with any third party, or otherwise assist with respect
to any offer (confidential or otherwise) or expression of interest
to acquire any part of the business or properties of Tarragon and
the Tarragon Subsidiaries or any acquisition of Tarragon Shares or
any amalgamation, merger, arrangement, consolidation, business
combination or other similar transaction involving Tarragon outside
the ordinary course of business and immediately cease and cause to
be terminated any existing negotiations with any parties conducted
heretofore with respect to the foregoing;
(iv) issue, sell, pledge, lease, dispose of, encumber or agree to issue,
sell, pledge, lease, dispose of or encumber any additional shares
of, or any options, warrants, calls, conversion privileges or
rights of any kind to acquire any shares or other securities of,
any capital stock or other securities of Tarragon or any of the
Tarragon Subsidiaries (other than pursuant to the exercise of
Tarragon Options, Tarragon SARs and Special Warrants and pursuant
to the Investee Agreements) or amend or propose to amend its
articles or by-laws other than as contemplated by the Arrangement;
(v) other than as contemplated by the Arrangement, reorganize,
amalgamate, arrange or merge Tarragon or any Tarragon Subsidiary
with any other Person, or other business organization whatsoever;
(vi) acquire or agree to acquire (by merger, amalgamation, arrangement,
acquisition of securities or assets or otherwise) any Person or
other business organization or division or any assets or
properties;
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(vii) incur or commit to incur any indebtedness for borrowed money or
issue any debt securities except for borrowing in the ordinary
course of business and consistent with past practice;
(viii) amend the Shareholders' Agreement or waive any provision or consent
to any action thereunder; or
(ix) amend or terminate any Material Contract or enter into any new
agreement of the nature described in Section 6.1(v);
without the prior written consent of Marathon;
(d) will, in all material respects, conduct itself so as to keep Marathon
fully informed as to the decisions required with respect to the most
advantageous methods (in Tarragon's opinion) of exploring, operating and
producing from the Tarragon business and assets;
(e) will maintain insurance on and in respect of all its business and
properties in like kind to, and in an amount not less than the amount
of, insurance in respect thereof in effect on May 29, 1998, to the
extent that such insurance remains available on commercially reasonable
terms;
(f) will not disclose to any Person, other than officers, directors and key
employees and professional advisors of Tarragon, any confidential
information relating to Marathon except information disclosed in the
Information Circular, required to be disclosed by law or otherwise known
to the public or Tarragon;
(g) will forthwith file, proceed with and diligently prosecute an
application to the Court under the OBCA for an Interim Order of the
Court with respect to the matters pertaining to the Arrangement and
acceptable to Marathon acting reasonably;
(h) will:
(i) forthwith carry out the terms of the Interim Order;
(ii) convene the Tarragon Meeting and distribute copies of this
Agreement (or a written summary thereof prepared by Tarragon in
form and substance reasonably satisfactory to Marathon), in each
case as ordered by the Interim Order;
(iii) solicit proxies to be voted at the Tarragon Meeting in favour of
the Arrangement;
(iv) provide notice to Marathon of the Tarragon Meeting and allow
Marathon's representatives to attend the Tarragon Meeting unless
such attendance is prohibited by rules governing such Tarragon
Meeting; and
(v) conduct the Tarragon Meeting in accordance with the Interim Order,
the bylaws of Tarragon and any instrument governing such Tarragon
Meeting, as applicable, and as otherwise required by law;
(i) will prepare (in consultation with Marathon), file and distribute to the
Tarragon Securityholders in a timely and expeditious manner, the
Information Circular, and any amendments or supplements to the
Information Circular, and will include the Fairness Opinions as a
schedule thereto (unless such Fairness Opinions have been withdrawn by
▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. or Credit Suisse First Boston Corporation), all as
required by the Interim Order or by applicable law, in all jurisdictions
where the same is required complying in all material respects with all
applicable legal requirements on the date of issue thereof;
(j) subject to the provisions of Section 8.2, will include in the
Information Circular a recommendation of the Board of Directors of
Tarragon that the Tarragon Securityholders vote in favour of the
Arrangement;
(k) will not waive any material provision relating to the treatment of
confidential information set forth in any outstanding confidentiality
agreement in favour of the other party thereto;
(l) will, subject to the approval of the Arrangement in accordance with the
provisions of the Interim Order, forthwith file, proceed with and
diligently prosecute an application for the Final Order;
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(m) will forthwith carry out the terms of the Final Order to the extent
applicable to Tarragon and will forthwith file Articles of Arrangement
and the Final Order with the Director;
(n) will prior to the Effective Date cause to be prepared and delivered to
Marathon a list specifying all Persons who, at the time of the Tarragon
Meeting, may be deemed to be "affiliates" of Tarragon, as that term is
used in paragraphs (c) and (d) of Rule 145 under the SECURITIES ACT OF
1933 of the United States (the "Rule 145 Affiliates"); and will cause
each Person who is identified as a Rule 145 Affiliate in such list who
elects to take Exchangeable Shares under the Arrangement to deliver to
Marathon, on or prior to the Effective Date, a written agreement, in the
form to be approved by Marathon and Tarragon, that such Rule 145
Affiliate will not sell, pledge, transfer or otherwise dispose of any
USX-Marathon Shares issued to such Rule 145 Affiliate, except in
compliance with the SECURITIES ACT OF 1933, as amended, or an exemption
therefrom, including compliance with the position of the Division of
Corporation Finance of the Securities Exchange Commission set forth in
Legal Bulletin No. 3 (July 25, 1997);
(o) will promptly inform Marathon of possible breaches of the Shareholder
Agreement of which Tarragon becomes aware and consult with Marathon
regarding any action Tarragon contemplates taking in respect thereof,
and will in a timely manner at the request of Marathon from time to time
take all commercially reasonable steps to enforce and protect Tarragon's
rights under the Shareholder Agreement, it being acknowledged that the
existence and enforcement of such rights are a material inducement to
Marathon to enter into this Arrangement Agreement;
(p) will promptly at the request of Marathon from time to time inform
Marathon of the number of proxies for the Tarragon Meeting received to
the time of such request and the voting instructions on such proxies;
(q) will provide Marathon with all information relating to its assets,
business and affairs, including access to its assets, officers and
employees which Marathon may reasonably require provided that such
access does not unreasonably interfere with the carrying on of
Tarragon's business activities. Marathon shall be entitled to have
representatives attend at the offices and properties of Tarragon during
normal business hours on reasonable notice to observe and consult on
Tarragon business activities in a manner that does not unreasonably
interfere with Tarragon's business activities. Tarragon will conduct
itself so as to keep Marathon fully informed as to its business and
affairs and as to the material decisions required with respect to
operating and producing from its assets;
(r) except for proxies and other non-substantive communications with
security holders, will furnish promptly to Marathon a copy of each
notice, report, schedule or other document delivered, filed or received
by Tarragon in connection with (i) the Arrangement, (ii) the Tarragon
Meeting, (iii) any filings under applicable laws and (iv) any dealings
with regulatory agencies in connection with the transactions
contemplated herein;
(s) will make other necessary filings and applications under applicable
Canadian federal and provincial and U.S. laws and regulations required
on the part of Tarragon in connection with the transactions contemplated
herein and take all reasonable action necessary to be in compliance with
such laws and regulations;
(t) will promptly advise Marathon of the number of Tarragon Shares for which
Tarragon has received notices of dissent or written objections to the
Plan of Arrangement and will provide Marathon with copies of such
notices or written objections; and
(u) will use its reasonable commercial efforts to conduct its affairs so
that all of Tarragon's representations and warranties contained herein,
insofar as the accuracy of such representations and warranties
constitute a condition of closing under subsection 4.1(a), shall be true
and correct on and as of the Effective Date as if made thereon.
8.2 SUPERIOR TRANSACTION. Notwithstanding the covenants of Tarragon in Section
8.1, if prior to the completion of the Arrangement, another unsolicited BONA
FIDE Take-Over Proposal is proposed, offered or made to the holders of Tarragon
Shares or to Tarragon which, in the BONA FIDE opinion of Tarragon's Board of
Directors, after
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consultation with its financial advisors, would result in a superior
transaction, directly or indirectly, for the holders of Tarragon Shares than
that contemplated by the Arrangement:
(a) the board of directors of Tarragon may respond or take any other action
(including, without limitation, furnishing a party with information of
the type furnished to Marathon or making any disclosure to its
shareholders), other than a waiver or amendment described in Section
8.1(c)(viii) or non compliance with a request of Marathon described in
Section 8.1(o), with respect to any BONA FIDE Take-Over Proposal made in
writing which in the judgment of the board of directors of Tarragon,
based on the advice of its legal counsel, is required under applicable
law; and
(b) the board of directors of Tarragon may withdraw, modify or change the
recommendation regarding the Arrangement if, in the opinion of such
board of directors acting reasonably and after consultation with its
outside legal counsel, the failure to do so would be inconsistent with
the directors' fiduciary duties under applicable law.
Tarragon will advise Marathon of any Take-Over Proposal promptly after it is
received by Tarragon and will not withdraw or change the directors'
recommendation regarding the Arrangement prior to the earlier of (i) 48 hours
after Tarragon so advises Marathon, and (ii) 10 calendar days prior to the
Tarragon Meeting, unless Marathon has informed Tarragon prior to the expiry of
such period that Marathon does not intend to amend the terms of the Arrangement.
ARTICLE 9
MARATHON'S COVENANTS
9.1 COVENANTS OF MARATHON. Each of Marathon, Holdco and Albertaco covenants and
agrees that until the issue of the Certificate of Arrangement or the termination
of this Agreement, whichever is the earlier, Marathon, Holdco and Albertaco will
each:
(a) use its reasonable commercial efforts to fulfil or cause the fulfilment
of the conditions set forth in Sections 3.1 and 5.1 as soon as
reasonably possible to the extent the fulfilment of the same is within
the control of Marathon, Holdco and Albertaco;
(b) assist Tarragon in the preparation of the Information Circular and
provide to Tarragon, in a timely and expeditious manner, all information
as may be reasonably requested by Tarragon or is required by the Interim
Order or applicable law, with respect to Marathon and USX for inclusion
in the Information Circular and any amendments or supplements to the
Information Circular, in each case complying in all material respects
with all applicable legal requirements on the date of issue thereof;
(c) forthwith inform Tarragon in writing of the full particulars of any
change in any material fact contained or referred to in the Information
Circular relating to Marathon or USX or their property or assets;
(d) forthwith carry out the terms of the Interim Order and the Final Order
to the extent applicable to Marathon, Holdco or Albertaco provided that
nothing shall require Marathon, Holdco or Albertaco to consent to any
material modification of this Agreement, the Arrangement or the
obligations of Marathon, Holdco or Albertaco hereunder or thereunder;
(e) make all other necessary filings and applications advised by counsel
under applicable federal, provincial and state laws and regulations in
Canada and the United States required on the part of Marathon, Holdco or
Albertaco in connection with the transactions contemplated herein and
take all reasonable commercial action necessary to be in compliance with
such laws and regulations; and
(f) use its reasonable commercial efforts to conduct its affairs so that all
representations and warranties of Marathon, Holdco and Albertaco
contained herein, insofar as the accuracy of such representations and
warranties constitute a condition of closing under subsection 3.1(a),
shall be true and correct on and as of the Effective Date as if made
thereon.
9.2 DIRECTORS' AND OFFICERS' INSURANCE. For six years after the Effective Date,
Marathon shall provide directors' and officers' liability insurance covering the
directors and officers of Tarragon and Tarragon Subsidiaries who are now covered
by directors' and officers' liability insurance or will be so covered at the
Effective Date with respect
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to actions and omissions occurring prior to the Effective Date on terms no less
favourable, to the extent permitted by law and commercially available, to such
persons than such insurance maintained in effect by Tarragon on the date hereof
in terms of coverage and amounts; provided, however, that Marathon shall not be
required to pay annual premiums in excess of the last annual premium paid by
Tarragon prior to the date hereof but in such case shall purchase as much
coverage as reasonably practicable for such amount.
9.3 DIRECTORS' AND OFFICERS' INDEMNIFICATION. From and after the Effective Date,
Marathon shall indemnify, defend and hold harmless, in each case to the full
extent permitted under applicable law and currently permitted in the by-laws of
Marathon, each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Effective Date, an officer or director of
Tarragon or any Tarragon Subsidiary, their respective heirs, executors,
administrators and other legal representatives (the "Indemnified Individuals")
against all losses, claims, damages, costs, expenses, liabilities or judgments
or amounts that are paid in settlement of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of Tarragon or a Tarragon Subsidiary, pertaining to any
matter existing or occurring at or prior to the Effective Date and whether
asserted or claimed prior to, or at or after, the Effective Date; provided,
however, that:
(a) Marathon shall not be required to pay the fees and disbursements of more
than one counsel for all Indemnified Individuals in any single action
unless there is a conflict of interest between two or more of such
Indemnified Individuals;
(b) Marathon shall not be liable for any settlement effected without its
written consent (which consent will not be unreasonably withheld or
delayed); and
(c) such indemnification shall not be available to an officer or director
unless, in respect of the matter for which indemnification is sought,
(i) he acted honestly and in good faith with a view to the best
interests of Tarragon; and
(ii) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable grounds
for believing that his conduct was lawful.
ARTICLE 10
MANAGEMENT INFORMATION CIRCULAR;
REGISTRATION STATEMENT
10.1 INFORMATION CIRCULAR. As promptly as practicable after execution of this
Agreement, Tarragon, in consultation with Marathon and taking into account
Marathon's comments thereon, shall, prepare a management information circular
(the "Information Circular"), with respect to the Tarragon Meeting. If either
Marathon or Tarragon determines on the advice of its counsel that the offer and
sale of the Exchangeable Shares issuable in the Arrangement is required to be
registered under the SECURITIES ACT OF 1933, as amended (the "Securities Act"),
then Marathon shall cause Albertaco to file with the U.S. Securities and
Exchange Commission (the "SEC") a registration statement on Form S-4 (or other
applicable form) (such registration statement, the "Form S-4") and the
Information Circular shall also constitute the prospectus of Albertaco with
respect to such offer and sale and shall be included in the Form S-4. As
promptly as practicable after comments are received from the SEC thereon (if
required to be filed with the SEC as aforesaid) and after the furnishing by
Marathon and Tarragon of all information required to be contained therein,
Tarragon shall cause the Information Circular to be mailed to the Tarragon
Securityholders. Notwithstanding anything in this Agreement to the contrary,
Marathon shall be under no obligation to cause Albertaco to file the Form S-4 if
Marathon shall have determined on the advice of its counsel that the issuance of
the Exchangeable Shares pursuant to the Arrangement is exempt from the
registration requirements of section 5 of the Securities Act by virtue of
section 3(a)(10) thereof. If Marathon determines on the advice of its counsel
that it is necessary to file a registration statement on Form S-3 (the "Form
S-3") in order to register the USX-Marathon Shares to be issued from time to
time after the Effective Date upon exchange of the Exchangeable Shares, then
Marathon shall cause USX to file the Form S-3 with the SEC and use its
reasonable best efforts to maintain the effectiveness of such registration for
such period as such Exchangeable Shares remain outstanding, and Marathon and
Tarragon shall use all reasonable efforts to cause the Form S-3 to become
effective. Notwithstanding anything herein to
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the contrary, Marathon shall be under no obligation to cause USX to file the
Form S-3 if it shall have determined on the advice of its counsel that the
issuance of shares USX-Marathon Shares upon exchange of the Exchangeable Shares
after the Effective Date is exempt from the registration requirements of section
5 of the Securities Act by virtue of section 3(a)(9) thereof.
10.2 PROVIDING INFORMATION. Each party shall promptly furnish to the other party
all information concerning such party and its shareholders as may be reasonably
required in connection with any action contemplated by Section 10.1. The
Information Circular and, if required, the Form S-4 and Form S-3, shall comply
in all material respects with all Applicable Laws. Each of Marathon and Tarragon
will notify the other promptly of the receipt of any comments from Canadian
securities commissions, the SEC or its staff and of any request by Canadian
securities commissions, the SEC or its staff for amendments or supplements to
the Information Circular or the Form S-4 or Form S-3 or for additional
information, and will supply the other with copies of all correspondence with
Canadian securities commissions, the SEC or its staff with respect to the
Information Circular or the Form S-4 or Form S-3. Whenever any event occurs
which should be set forth in an amendment or supplement to the Information
Circular or the Form S-4 or Form S-3, Marathon or Tarragon, as the case may be,
shall promptly inform the other of such occurrence and cooperate in filing with
the SEC or its staff, and/or mailing to Tarragon Securityholders, such amendment
or supplement.
10.3 BLUE SKY LAWS. Marathon and Tarragon shall take all such action as may be
reasonably required to be taken under any applicable provincial or state
securities laws (including "BLUE SKY" laws) in connection with the issuance of
the Exchangeable Shares and the Arrangement; provided, however, that with
respect to the blue sky and Canadian provincial qualifications, neither Marathon
nor Tarragon shall be required to register or qualify as a foreign corporation
or reporting issuer where any such entity is not now so registered or qualified
except as to matters and transactions arising solely from the offer and sale of
the USX-Marathon Shares or the issuance of the Exchangeable Shares.
ARTICLE 11
TERMINATION AND REMEDIES
11.1 TERMINATION. This Agreement may be terminated prior to the completion of
the Arrangement, without prejudice to any rights or causes of action which may
exist at the date of termination:
(a) by mutual written consent of Tarragon and Marathon;
(b) by either Tarragon or Marathon giving notice in writing to the other if
any of the conditions contained in this Agreement for the benefit of the
terminating party are not met or waived on or before the date required
for their performance;
(c) by Marathon upon the occurrence of a Marathon Damages Event, provided
that in the event of a Marathon Damages Event provided for in Subsection
11.4(a), this Agreement may not be terminated by Marathon unless the
Tarragon Securityholders do not approve the Arrangement as required by
applicable law or the Arrangement is not submitted for their approval;
and
(d) by Tarragon upon the occurrence of a Tarragon Damages Event.
11.2 EFFECT OF TERMINATION. In the event of such termination of this Agreement,
this Agreement shall forthwith become void and neither party shall have any
liability or further obligation to the other party hereunder except with respect
to the obligations set forth in Sections 11.4 or 11.5, which shall survive such
termination.
11.3 LIMITATION. Nothing contained in this Article Eleven, including the payment
of any amount under Section 11.4 or 11.5, shall, however, relieve or have the
effect of resulting in relieving any party in any way from liability for damages
incurred or suffered by a party as a result of a breach of this Agreement by a
party acting in bad faith intended and designed to result in the conditions
precedent to this Agreement not being satisfied.
11.4 MARATHON DAMAGES EVENT. If at any time after the execution of the
Acquisition Agreement:
(a) the Board of Directors of Tarragon has failed to make or has withdrawn
or changed any recommendations referred to in Section 8.1(j) in a manner
adverse to Marathon or shall have resolved to do so prior to the
Arrangement becoming effective;
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(b) a bona fide Take-over Proposal is publicly announced, proposed, offered
or made to the Tarragon Shareholders or to Tarragon and the Tarragon
Securityholders do not approve the Arrangement or the Arrangement is not
submitted for their approval, and the transaction contemplated by the
Take-over Proposal is completed within 140 days of the Tarragon Meeting
(or, if such meeting does not occur, within 140 days of October 31,
1998); or
(c) Tarragon breaches any of its representations, warranties or covenants
made in this Agreement which breach individually or in the aggregate
would have a Material Adverse Effect on Tarragon or materially impede
the completion of the Arrangement;
(each of the above being a "Marathon Damages Event"), then Tarragon shall pay to
Marathon Cdn. $30 million as liquidated damages in immediately available funds
to an account designated by Marathon within one Business Day after the first to
occur of the events described above. Tarragon shall only be obligated to make
one payment pursuant to this Section 11.4.
11.5 TARRAGON DAMAGES EVENT. If at any time after the execution of the
Acquisition Agreement, Marathon breaches any of its representations or
warranties in this Agreement (except any such breach, the nature of which is
publicly disclosed by Marathon prior to the commencement of the Share
Consideration Determination Period) or Marathon shall breach any of its
covenants made in this Agreement which breach (in either case) individually or
in the aggregate would materially impede the completion of the Arrangement (such
breach or breaches being a "Tarragon Damages Event"), then Marathon shall pay to
Tarragon Cdn. $30 million as liquidated damages in immediately available funds
to an account designated by Tarragon within one Business Day after the first to
occur of the events described above. Marathon shall only be obligated to make
one payment pursuant to this Section 11.5.
11.6 LIQUIDATED DAMAGES. Each party acknowledges that all of the payment amounts
set out in this Article Eleven are payments of liquidated damages which are a
genuine pre-estimate of the damages which the party entitled to such damages
will suffer or incur as a result of the event giving rise to such damages and
resultant termination of this Agreement and are not penalties. Each party
irrevocably waives any right it may have to raise as a defence that any such
liquidated damages are excessive or punitive. For greater certainty, the parties
agree that, subject to Section 11.3, the payment of the amount pursuant to this
Article Eleven is the sole monetary remedy of the party receiving such payment.
11.7 EQUITABLE REMEDIES. Notwithstanding Section 11.6, Tarragon hereby
acknowledges that, in the event of a breach by Tarragon of Section 8.1(c)(viii)
or 8.1(o), Marathon may be without an adequate remedy at law. Tarragon therefore
agrees that in the event of a breach of any such provision Marathon may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision by Tarragon.
ARTICLE 12
AMENDMENT
12.1 AMENDMENT. This Agreement may, at any time and from time to time before or
after the holding of the Tarragon Meeting, be amended by written agreement of
the parties hereto without further notice to or authorization on the part of the
Tarragon Securityholders, and any such amendment may, without limitation:
(a) change the time for performance of any of the obligations or acts of the
parties hereto;
(b) waive any inaccuracies or modify any representation, term or provision
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants or conditions
herein contained and waive or modify performance of any of the
obligations of the parties hereto;
provided that any such amendment may not reduce or materially adversely affect
the consideration to be received by a Tarragon Securityholder for each Tarragon
Share, Option or Special Warrant.
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ARTICLE 13
COSTS
13.1 COSTS. Except as contemplated in the Arrangement, each party hereto
covenants and agrees to bear its own costs and expenses in connection with the
transactions contemplated hereby.
ARTICLE 14
DISCLOSURE
14.1 JOINT DISCLOSURE. No party hereto shall disclose, by press release, any
aspect of the transactions contemplated hereby, without prior written consent of
the other party. Notwithstanding the foregoing, if either party is required by
law or administrative regulation to make any disclosure relating to the
transactions contemplated herein, such disclosure may be made, but that party
will inform, to the extent reasonably feasible, the other party as to the
wording of such disclosure prior to its being made.
ARTICLE 15
NOTICES
15.1 NOTICES IN WRITING. Any notice, consent, waiver, direction or other
communication required or permitted to be given under this Agreement by a party
to any other party shall be in writing and may be given by delivering same or
sending same by facsimile transmission or by hand delivery addressed to the
party to whom the notice is to be given at its address for service herein. Any
notice, consent, waiver, direction or other communication aforesaid shall, if
delivered, be deemed to have been given and received on the date on which it was
delivered to the address provided herein (if a Business Day and, if not, the
next succeeding Business Day) and if sent by facsimile transmission be deemed to
have been given and received at the time of receipt unless actually received
after 4:00 p.m. at the point of delivery in which case it shall be deemed to
have been given and received on the next Business Day.
15.2 ADDRESSES. The address for service of each of the parties hereto shall be
as follows:
if to Tarragon:
Tarragon Oil and Gas Limited
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Q.C.
if to Marathon, Holdco or Albertaco:
Marathon Oil Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
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ARTICLE 16
TIME
16.1 TIME OF THE ESSENCE. Time shall be of the essence in this Agreement.
ARTICLE 17
ENTIRE AGREEMENT AND RESTATEMENT
17.1 ENTIRE AGREEMENT. This Agreement together with the Confidentiality
Agreement dated May 11, 1998 between the parties:
(a) from the date hereof constitutes the entire agreement and supersedes all
other prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof, including the
Acquisition Agreement; and
(b) is not intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
To the extent of any inconsistency between this Agreement and the
Confidentiality Agreement, this Agreement shall govern.
17.2 RESTATEMENT. This Agreement has been amended and restated effective July 7,
1998. Notwithstanding such restatement, this Agreement shall be dated as of June
20, 1998 and references to time herein shall be considered to speak as of June
20, 1998 except where the context otherwise requires.
ARTICLE 18
SEVERABILITY
18.1 SEVERABILITY. If any one or more of the provisions or parts thereof
contained in this Agreement should be or become invalid, illegal or
unenforceable in any respect in any jurisdiction, the remaining provisions or
parts thereof contained herein shall be and shall be conclusively deemed to be,
as to such jurisdiction, severable therefrom and:
(a) the validity, legality or enforceability of such remaining provisions or
parts thereof shall not in any way be affected or impaired by the
severance of the provisions or parts thereof severed; and
(b) the invalidity, illegality or unenforceability of any provision or part
thereof contained in this Agreement in any jurisdiction shall not affect
or impair such provision or part thereof or any other provisions of this
Agreement in any other jurisdiction.
ARTICLE 19
FURTHER ASSURANCES
19.1 FURTHER ASSURANCES. Each party hereto shall, from time to time, and at all
times hereafter, at the request of the other party hereto, but without further
consideration, do all such further acts and execute and deliver all such further
documents and instruments as shall be reasonably required in order to fully
perform and carry out the terms and intent hereof.
ARTICLE 20
GOVERNING LAW
20.1 ALBERTA LAW. This Agreement shall be governed by, and be construed in
accordance with, the laws of the Province of Alberta and applicable laws of
Canada but the reference to such laws shall not, by conflict of laws rules or
otherwise, require the application of the law of any jurisdiction other than the
Province of Alberta.
20.2 ALBERTA COURTS. Each party hereto hereby irrevocably attorns to the
jurisdiction of the Courts of the Province of Alberta in respect of all matters
arising under or in relation to this Agreement and Marathon hereby
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appoints Albertaco at its registered office in the Province of Alberta as
Marathon's attorney for service of process in connection with any such matter.
ARTICLE 21
EXECUTION IN COUNTERPARTS
21.1 COUNTERPARTS. This Agreement may be executed in identical counterparts,
each of which is and is hereby conclusively deemed to be an original and
counterparts collectively are to be conclusively deemed one instrument.
ARTICLE 22
WAIVER
22.1 LIMITATION ON WAIVER. No waiver by any party hereto shall be effective
unless in writing and any waiver shall affect only the matter, and the
occurrence thereof, specifically identified and shall not extend to any other
matter or occurrence.
ARTICLE 23
ENUREMENT AND ASSIGNMENT
23.1 ENUREMENT. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns. This Agreement
may not be assigned by any party hereto without the prior consent of the other
party hereto except that Marathon may assign all or a portion of its rights
under this Agreement to any Subsidiary of Marathon, but no assignment shall
relieve Marathon of its obligations hereunder.
ARTICLE 24
SUBSIDIARY COVENANTS
24.1 TARRAGON. To the extent any representations, warranties, covenants or
agreements contained herein relate, directly or indirectly, to a Tarragon
Subsidiary, each such provision shall be construed as a covenant by Tarragon to
cause (to the fullest extent to which it is legally capable) such entity to
perform the required action.
24.2 MARATHON. To the extent any representations, warranties, covenants or
agreements contained herein relate, directly or indirectly, to a Marathon
Subsidiary, each such provision shall be construed as a covenant by Marathon to
cause (to the fullest extent which it is legally capable) such entity to perform
the required action.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement.
TARRAGON OIL AND GAS LIMITED
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Per: /s/ ▇. ▇▇▇▇
---------------------------------
▇. ▇▇▇▇
MARATHON OIL COMPANY
Per: /s/ ▇.▇. ▇▇▇▇▇▇▇
---------------------------------
▇.▇. ▇▇▇▇▇▇▇
Per:
---------------------------------
761581 ALBERTA LTD.
Per: /s/ ▇.▇. ▇▇▇▇▇▇▇
---------------------------------
▇.▇. ▇▇▇▇▇▇▇
Per:
---------------------------------
787722 ALBERTA LTD.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Per:
---------------------------------
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Schedule 1 to that Arrangement Agreement
made the 20th day of June, 1998 between
Tarragon Oil and Gas Limited, Marathon Oil Company,
761581 Alberta Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.
as amended and restated the 7th day of July, 1998
PLAN OF ARRANGEMENT
MADE PURSUANT TO
SECTION 182 OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
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PLAN OF ARRANGEMENT
MADE PURSUANT TO
SECTION 182 OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
INTERPRETATION
1.1 Definitions.
In this Plan of Arrangement unless there is something in the subject matter
or context inconsistent therewith, the following terms shall have the respective
meanings set out below and grammatical variations of such terms shall have
corresponding meanings:
"Albertaco" means 761581 Alberta Ltd., a wholly-owned subsidiary of Holdco,
organized and existing under the laws of Alberta and any successor
corporation;
"Arrangement" means the arrangement under section 182 of the OBCA on the
terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments thereto made in accordance with Section 6.1 hereof
or made at the direction of the Court in the Final Order;
"Arrangement Agreement" means the agreement by and among Marathon, Holdco,
Albertaco and Tarragon, dated as of June 20, 1998, as amended and restated
July 7, 1998, and as may be further amended and restated, providing for,
among other things, the Arrangement;
"Arrangement Resolution" means the special resolution to be passed by the
Securityholders at the Meeting approving the Arrangement;
"Automatic Redemption Date" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Average Closing Price" means the average of the closing sales prices, as
published in the Wall Street Journal, of the USX-Marathon Common Stock on
the NYSE in United States dollars as reported in the Wall Street Journal on
each day (converted on each such day to Canadian dollars using the Currency
Exchange Rate) over the ten (10) consecutive trading days ending on the
fifth calendar day next preceding the date on which the Meeting is held;
provided that if such calendar day is not a trading day, then such ten (10)
day period shall end on the trading day immediately preceding such calendar
day;
"Business Day" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Cash Payment" means the cash payment, if any, which a holder of
Exchangeable Shares is entitled to receive in accordance with Sections
2.1(e) and 2.1(f);
"Certificates" means the certificates representing the Exchangeable Shares
which a holder of Tarragon Common Shares is entitled to receive pursuant to
Section 4.1, other than those Exchangeable Shares represented by the Global
Certificate;
"Common Share Letter of Transmittal and Election Form" has the meaning
attributed thereto in Section 2.1(g);
"Court" means the Ontario Court (General Division);
"Currency Exchange Rate" means the noon spot rate of exchange of United
States dollars to Canadian dollars announced by the Bank of Canada on the
date of calculation;
"Depositary" means Montreal Trust Company of Canada at its principal office
in Calgary, Alberta;
"Dissent Procedures" has the meaning attributed thereto in Section 3.1;
"Effective Date" means the date shown on the certificate of arrangement
issued by the Director under the OBCA giving effect to the Arrangement;
"Election Deadline" means 5:00 p.m. (Toronto time) on that date which is the
day prior to the date of the Meeting;
"Exchange Trust Agreement" has the meaning attributed thereto in the
Exchangeable Share Provisions;
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"Exchangeable Share Consideration" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Exchangeable Share Price" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares as amended from time to
time;
"Exchangeable Shares" means the exchangeable shares in the capital of
Albertaco;
"Exercise Price" with respect to any Tarragon Option means the price per
share at which the holder is entitled to acquire a Tarragon Common Share;
"Final Order" means the final order of the Court approving the Arrangement
as such order may be affirmed, amended or modified by the Court or by an
appeal court on any appeal therefrom;
"Global Certificate" has the meaning attributed thereto in Section 4.1(b);
"Holdco" means 787722 Alberta Ltd., a wholly-owned subsidiary of Marathon,
organized and existing under the laws of Alberta and any successor
corporation;
"Interim Order" means the order of the Court dated July 2, 1998 with respect
to the Arrangement and the Meeting;
"ITA" means the INCOME TAX ACT (Canada);
"Information Circular" means the Management Information Circular of Tarragon
dated July 7, 1998 prepared in connection with the Meeting;
"Investee Agreements" means agreements dated December 9, 1997 between
Tarragon and each of Triax Resource Limited Partnership and Triax Resource
Limited Partnership II providing for the issuance of an aggregate of
1,000,000 Special Warrants;
"Issued Exchangeable Shares" has the meaning attributed thereto in Section
2.1(f);
"Letter of Transmittal and Election Form" means all or any of the Common
Share Letter of Transmittal and Election Form, the Option Letter of
Transmittal and Election Form and the Special Warrant Letter of Transmittal
and Election Form;
"Marathon" means Marathon Oil Company, a corporation organized and existing
under the laws of Ohio and any successor corporation;
"Meeting" means the special meeting of the Securityholders to be held to
consider the Arrangement;
"NYSE" means the New York Stock Exchange;
"OBCA" means the BUSINESS CORPORATIONS ACT (Ontario), as amended;
"Option Letter of Transmittal and Election Form" has the meaning attributed
thereto in Section 2.1(h);
"Option Payment" has the meaning attributed thereto in Section 2.1(a);
"Optionholder" means a holder of Tarragon Options;
"Purchased Shares" has the meaning attributed thereto in Section 2.1(f);
"Securityholders" means, collectively, the Shareholders, Optionholders and
Warrantholders;
"Shareholders" means holders of issued and outstanding Tarragon Common
Shares;
"Special Warrant Letter of Transmittal and Election Form" has the meaning
attributed thereto in Section 2.1(i);
"Special Warrants" means the Special Warrants entitling the holders thereof
to acquire one Tarragon Share per Special Warrant without payment of
additional consideration, issued or to be issued by Tarragon pursuant to the
Investee Agreements;
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"Subsidiary" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Tarragon" means Tarragon Oil and Gas Limited, a corporation organized and
existing under the OBCA and any successor corporation;
"Tarragon Common Shares" means the common shares in the capital of Tarragon;
"Tarragon Option" means an option to acquire a Tarragon Common Share granted
pursuant to Tarragon's stock option plan dated March 19, 1992, as amended
May 24, 1995;
"Tarragon Securities" means the Tarragon Common Shares, the Tarragon Options
and the Special Warrants;
"USX" means USX Corporation, a corporation organized and existing under the
laws of the State of Delaware and any successor corporation;
"USX Certificate" means the Restated Certificate of Incorporation of USX
Corporation dated September 1, 1996;
"USX-Marathon Common Stock" has the meaning attributed thereto in the
Exchangeable Share Provisions; and
"Warrantholder" means a holder of Special Warrants.
1.2 Sections and Headings.
The division of this Plan of Arrangement into sections and the insertion of
headings are for reference purposes only and shall not affect the interpretation
of this Plan of Arrangement. Unless otherwise indicated, any reference in this
Plan of Arrangement to a section or an Appendix refers to the specified section
of or Appendix to this Plan of Arrangement.
1.3 Number, Gender and Persons.
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa, words importing
any gender include all genders and words importing persons include individuals,
corporations, partnerships, associations, trusts, unincorporated organizations,
governmental bodies and other legal or business entities of any kind.
1.4 Currency.
Unless otherwise specified, all references herein to "dollars" or "$" shall
mean Canadian dollars.
ARTICLE 2
ARRANGEMENT
2.1 Arrangement.
On the Effective Date, the following transactions shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) Each issued and unexercised Tarragon Option that is not held by an
Optionholder who has validly exercised its right of dissent in
accordance with Article 3 hereof and is ultimately entitled to be paid
the fair value of its Tarragon Options will vest, if not already vested,
and will be transferred to Albertaco in consideration for a number of
Exchangeable Shares, being equal to the quotient (rounded to four
decimal places, subject to Section 4.3) of $14.25 divided by the Average
Closing Price, and the Optionholder shall make a payment to Albertaco of
an amount (the "Option Payment") equal to the Exercise Price of such
Tarragon Option; provided, however, that at the election of the
Optionholder or deemed election of the Optionholder under Section
2.1(h), such Option Payment may be omitted in which event the number of
Exchangeable Shares to be received in consideration for such Tarragon
Option shall be reduced by the number obtained by dividing the Option
Payment by the Average Closing Price.
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(b) Each outstanding Special Warrant that is not held by a Warrantholder who
has validly exercised its right of dissent in accordance with Article 3
hereof and is ultimately entitled to be paid the fair value of its
Special Warrants will be transferred to Albertaco in consideration for a
number of Exchangeable Shares, being equal to the quotient (rounded to
four decimal places, subject to Section 4.3) of $14.25 divided by the
Average Closing Price.
(c) Each outstanding Tarragon Common Share that is not held by a Shareholder
who has validly exercised its right of dissent in accordance with
Article 3 hereof and is ultimately entitled to be paid the fair value of
its Tarragon Common Shares will be transferred to Albertaco in
consideration for a number of Exchangeable Shares, being equal to the
quotient (rounded to four decimal places, subject to Section 4.3) of
$14.25 divided by the Average Closing Price.
(d) Upon the transfers of Tarragon Securities referred to in Sections
2.1(a), (b) and (c) above: (i) each holder of a Tarragon Security shall
cease to be such a holder, shall have its name removed from the relevant
register of holders of Tarragon Securities and shall become a holder of
the number of fully paid Exchangeable Shares to which it is entitled as
a result of the transfers of Tarragon Securities referred to in Sections
2.1(a), (b) and (c) and such holder's name shall be added to the
register of holders of Exchangeable Shares accordingly; and (ii)
Albertaco shall become the legal and beneficial owner of all of the
Tarragon Securities so transferred.
(e) Holdco shall purchase Exchangeable Shares from the holders of
Exchangeable Shares who have elected, or have been deemed to have
elected, pursuant to Section 2.1(g), (h) or (i) to sell all or a portion
of their Exchangeable Shares to Holdco for cash at a purchase price per
Exchangeable Share equal to the Average Closing Price and such holders
shall sell such Exchangeable Shares to Holdco pursuant to such
elections.
(f) If the number of Exchangeable Shares purchased by Holdco pursuant to
Section 2.1(e) (the "Purchased Shares") is not equal to at least ten
percent (10%) of the total number of Exchangeable Shares issued pursuant
to Sections 2.1(a), (b) and (c) (the "Issued Exchangeable Shares"), then
(unless the provision of this Section 2.1(f) is waived by Marathon by
notice to Tarragon on or prior to the Effective Date) each holder of
Exchangeable Shares who elected to sell less than all of its
Exchangeable Shares shall be deemed to have elected to sell an
additional number of their Exchangeable Shares, such number to be equal
to the product of the number of Exchangeable Shares held by each such
holder after the purchase made pursuant to Section 2.1(e) multiplied by
a fractional amount ("A") which shall be determined according to the
following formula:
(.10 X no. of Issued Exchangeable Shares) - no. of Purchased Shares
A = --------------------------------------------------------------------
no. of Issued Exchangeable Shares - no. of Purchased Shares
and each such holder shall sell and Holdco shall purchase such
additional Exchangeable Shares on the same terms as set forth in Section
2.1(e).
(g) A Shareholder must have given notice of its election whether or not to
sell all or a portion of such holder's Exchangeable Shares for cash
pursuant to Section 2.1(e) above by depositing with the Depositary,
prior to the Election Deadline, a duly completed letter of transmittal
and election form (the "Common Share Letter of Transmittal and Election
Form") in the form provided by Tarragon along with the Information
Circular indicating such holder's election either to sell or not to sell
all or a portion of such holder's Exchangeable Shares. In the event that
a Shareholder has failed to validly make such an election in a Common
Share Letter of Transmittal and Election Form pursuant to this
paragraph, such holder shall be deemed to have elected to sell to Holdco
all of the Exchangeable Shares issued to it under Section 2.1(c) as
though such holder had made a valid election to sell all of such
Exchangeable Shares to Holdco for cash.
(h) An Optionholder must have given notice of its election whether or not
to: (i) make the Option Payment and (ii) sell all or a portion of such
holder's Exchangeable Shares for cash pursuant to Section 2.1(e) above
by depositing with the Depositary, prior to the Election Deadline, a
duly completed letter of transmittal and election form (the "Option
Letter of Transmittal and Election
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Form") in the form provided by Tarragon with the Information Circular
indicating such holder's election in each respect. If the Optionholder
has elected to make the Option Payment, then the Optionholder shall
include with its Option Letter of Transmittal and Election Form a
certified cheque payable to "MONTREAL TRUST COMPANY OF CANADA" in
respect of the total Option Payment in respect of all Tarragon Options
to which the election relates. If an Optionholder who has elected to
make the Option Payment fails to deliver such payment in accordance with
the terms hereof on or before the Effective Date, such Optionholder
shall be deemed to have elected the option to receive a reduced number
of Exchangeable Shares pursuant to Section 2.1(a) above by not making
such Option Payment. In the event that an Optionholder has failed to
validly make an election in an Option Letter of Transmittal and Election
Form pursuant to this paragraph, with respect to the making of the
Option Payment, such Optionholder shall be deemed to have elected to
receive the reduced number of Exchangeable Shares by not making the
Option Payment as though such holder had made a valid election to
receive such reduced number of Exchangeable Shares. In the event that an
Optionholder has failed to validly make an election in an Option Letter
of Transmittal and Election Form pursuant to this paragraph, with
respect to whether or not to sell its Exchangeable Shares for cash, such
holder shall be deemed to have elected to sell all of the Exchangeable
Shares issued to it under Section 2.1(a) as though such holder had made
a valid election to sell all of such Exchangeable Shares to Holdco for
cash.
(i) A Warrantholder must have given notice of its election whether or not to
sell all or a portion of such holder's Exchangeable Shares for cash
pursuant to Section 2.1(e) above by depositing with the Depositary,
prior to the Election Deadline, a duly completed letter of transmittal
and election form (the "Special Warrant Letter of Transmittal and
Election Form") in the form provided by Tarragon along with the
Information Circular indicating such holder's election either to sell or
not to sell all or a portion of such holder's Exchangeable Shares. In
the event that a Warrantholder has failed to validly make such an
election in a Special Warrant Letter of Transmittal and Election Form
pursuant to this paragraph, such holder shall be deemed to have elected
to sell to Holdco all of the Exchangeable Shares issued to it under
Section 2.1(b) as though such holder had made a valid election to sell
all of such Exchangeable Shares to Holdco for cash.
(j) Shareholders and Warrantholders who are residents of Canada for the
purposes of the ITA shall be entitled to make an income tax election
pursuant to subsection 85(1) or subsection 85(2), as applicable, of the
ITA, or under the corresponding provisions of any provincial
legislation, with respect to the transfer of all, but not less than all,
their Tarragon Shares and Special Warrants to Albertaco by providing two
signed copies of the necessary election forms to Albertaco, care of
Tarragon, within 90 days following the Effective Date, duly completed
with, among all other required information, the details of the number of
shares transferred and the applicable agreed amounts for the purposes of
such elections. Thereafter, subject to the election forms complying with
the provisions of the ITA or other applicable legislation, the forms
will be signed by Albertaco and returned to such Securityholders for
filing with Revenue Canada. Albertaco will not be liable for any late
filing penalties or other loss resulting from the late filing of any
election form received by Albertaco or from the invalidation of any
election form unless such invalidation is solely attributable to any
negligent act or omission of Albertaco.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent.
Tarragon Securityholders may exercise rights of dissent with respect to
their Tarragon Securities pursuant to and in the manner set forth in section 185
of the OBCA and this Section 3.1, as modified by the Interim Order, (the
"Dissent Procedures") in connection with the Arrangement and holders who duly
exercise such rights of dissent and who:
(a) are ultimately entitled to be paid the fair value for their Tarragon
Securities shall be deemed to have transferred such Tarragon Securities
to Tarragon for cancellation on the Effective Date; or
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(b) are ultimately not entitled, for any reason, to be paid the fair value
for their Tarragon Securities shall be deemed to have participated in
the Arrangement on the same basis as any non-dissenting Securityholder
and to have elected to sell to Holdco all of the Exchangeable Shares
issued to them under Section 2.1(a), (b) or (c),
but, except for the circumstances provided in subsection 185(29) of the OBCA,
Tarragon shall not be required to recognize such holders as Tarragon
Securityholders on and after the Effective Date, and the names of such Tarragon
Securityholders shall, on the Effective Date, be deleted from the register of
holders of Tarragon Common Shares, Tarragon Options and Special Warrants, as the
case may be.
ARTICLE 4
CERTIFICATES, CASH PAYMENT AND FRACTIONAL SHARES
4.1 Delivery of Certificates and Cash Payment.
(a) On or before the Effective Date, Albertaco shall deposit with the
Depositary, for the benefit of the holders of Tarragon Securities
transferred pursuant to the Arrangement, the Certificates and the Global
Certificate (as defined in Section 4.1(b)) and Holdco shall deposit the
Cash Payments with the Depositary, for the benefit of the
Securityholders entitled thereto pursuant to the Arrangement.
(b) The Exchangeable Shares which Tarragon Securityholders have elected or
have been deemed to have elected to sell to Holdco pursuant to Sections
2.1(g), (h) or (i) and, if applicable, Section 2.1(f) shall be
represented by a global certificate registered in the name of the
Depositary, as trustee for such holders (the "Global Certificate"). An
election or deemed election to sell Exchangeable Shares to Holdco shall
constitute: (i) an irrevocable acceptance of the offer by Holdco to
purchase such Exchangeable Shares immediately upon issuance to the
Tarragon Securityholders pursuant to Section 2.1(a), (b) and (c); and
(ii) an irrevocable direction to the Depositary, as trustee, to endorse
the Global Certificate for transfer to Holdco.
(c) Upon surrender to the Depositary for transfer to Albertaco of (i) a
certificate or certificates representing outstanding Tarragon Common
Shares or Special Warrants, if applicable, (ii) the Option Payment, if
applicable, (iii) duly completed Letter of Transmittal and Election
Forms relating to the relevant type of securities, and (iv) such
additional documents and instruments as the Depositary may reasonably
require, each such holder shall be entitled to receive, and the
Depositary shall forthwith deliver to each such holder, the Certificates
and the Cash Payment which such holder has the right to receive pursuant
to the Arrangement (together with any dividends or distributions with
respect to the Exchangeable Shares which such holder is entitled to
receive pursuant to Section 4.2 and any cash in lieu of fractional
shares which such holder is entitled to receive pursuant to Section
4.3), and any certificates so surrendered shall forthwith be cancelled.
In the event of a transfer of ownership of Tarragon Common Shares which
is not registered in the transfer records of Tarragon, the Certificates
may be issued and the Cash Payment, if any, may be paid and delivered to
a transferee if the certificate representing such Tarragon Common Shares
is presented to the Depositary, accompanied by all documents required to
evidence and effect such transfer.
(d) Until surrendered as contemplated by this Section 4.1, each certificate
which immediately prior to the Effective Date represented outstanding
Tarragon Common Shares or Special Warrants that were transferred
pursuant to the Arrangement shall be deemed at any time on or after the
Effective Date to represent only the right to receive upon such
surrender (i) the Certificates and the Cash Payment, if any, which the
holder has the right to receive pursuant to the Arrangement, (ii) a cash
payment in lieu of any fractional shares as contemplated by Section 4.3
and (iii) any dividends or distributions with a record date on or after
the Effective Date theretofore paid or payable with respect to the
Exchangeable Shares (other than any such Exchangeable Shares purchased
by Holdco pursuant to Section 2.1(e) and Section 2.1(f)) as contemplated
by Section 4.2. No interest will be paid from or after the Effective
Date in respect of the Cash Payment.
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4.2 Distributions Limited.
No dividends or other distributions declared or made on or after the
Effective Date with respect to the Exchangeable Shares with a record date on or
after the Effective Date shall be paid to the holder of any unsurrendered
certificate which, immediately prior to the Effective Date, represented
outstanding Tarragon Common Shares or Special Warrants, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
4.3 (and no interest will be earned or payable on these proceeds), unless and
until (a) such certificate or any applicable Option Payments and (b) the
applicable Letter of Transmittal and Election Form or Forms shall be received by
the Depositary in accordance with Section 4.1 and such holder has not elected
nor been deemed to have elected to sell all such Exchangeable Shares to Holdco
pursuant to Section 2.1(g), (h) or (i). Subject to applicable law and to Section
4.5, at the time of such surrender of any such applicable certificates, Option
Payments and Letter of Transmittal and Election Forms, (or, in the case of
clause (c) below, at the appropriate payment date), there shall be paid to the
record holder of such certificate without interest, (a) the amount of any cash
payable in lieu of fractional shares to which such holder is entitled pursuant
to Section 4.3, (b) the amount of dividends or other distributions with a record
date on or after the Effective Date theretofore paid with respect to the
Exchangeable Shares and (c) the amount of dividends or other distributions with
a record date on or after the Effective Date but prior to surrender and a
payment date subsequent to surrender payable with respect to the Exchangeable
Shares.
4.3 Fractional Shares.
Certificates for fractional Exchangeable Shares shall not be delivered to
Securityholders. Interests in fractional Exchangeable Shares which arise
pursuant to Section 2.1 shall be disposed of pursuant to the following rules:
(a) With respect to Securityholders who elect or are deemed to elect to sell
to Holdco all Exchangeable Shares received in consideration for Tarragon
Securities of any class held by them, the quotient of $14.25 divided by
the Average Closing Price shall be calculated for the purpose of Section
2.1(a), (b) or (c) as applicable, to a number of decimal places
sufficient to result in such holder receiving pursuant to such sale, an
aggregate price for the Exchangeable Shares so sold to Holdco equal to
$14.25 multiplied by the number of Tarragon Securities of that class
held by the Securityholder (less, if applicable, any reduction in the
case of an Optionholder not making an Option Payment); and
(b) Holdco shall purchase fractional Exchangeable Shares, other than those
referred to in Section 4.3(a), from each person entitled to a fractional
Exchangeable Share for an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (i) such fraction
multiplied by (ii) the Average Closing Price, such amount to be provided
to the Depositary by Holdco upon request.
4.4 Lost Certificates.
If any certificate which immediately prior to the Effective Date represented
outstanding Tarragon Common Shares or Special Warrants that were transferred
pursuant to Section 2.1 has been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed, the Depositary will issue and deliver in exchange for such
lost, stolen or destroyed certificate, the Certificates and Cash Payment, if
any, to which the holder of such certificate is entitled pursuant to the
Arrangement (and any dividends or distributions with respect thereto and any
cash pursuant to Section 4.3) deliverable to the holder in respect thereof as
determined in accordance with Section 2.1. The person who is entitled to receive
such Certificates and Cash Payment, if any, and other payments shall, as a
condition precedent to the receipt thereof, give a bond satisfactory to
Albertaco and Albertaco's transfer agent (the "Transfer Agent"), as the case may
be, in such form as Albertaco may direct or otherwise indemnify Albertaco and
the Transfer Agent in a manner satisfactory to Albertaco and the Transfer Agent
against any claim that may be made against Albertaco or the Transfer Agent with
respect to the certificate alleged to have been lost, stolen or destroyed.
4.5 Extinguishment of Rights.
Any certificate which immediately prior to the Effective Date represented
outstanding Tarragon Common Shares or Special Warrants that were transferred
pursuant to Section 2.1 and has not been deposited, with all
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other instruments required by Section 4.1, on or prior to the tenth anniversary
of the Effective Date shall cease to represent a claim or interest of any kind
or nature as a Securityholder of Tarragon. On such date, the consideration and
other payments to which the former registered holder of the certificate referred
to in the preceding sentence was ultimately entitled shall be deemed to have
been surrendered to Albertaco together with all entitlements to dividends,
distributions and interest thereon held for such former registered holder for no
consideration.
ARTICLE 5
CERTAIN RIGHTS OF USX AND MARATHON
TO ACQUIRE EXCHANGEABLE SHARES
5.1 Rights to Acquire Exchangeable Shares.
USX and Marathon shall have the rights to acquire Exchangeable Shares from
the holders thereof described in the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, as such terms are defined in the
Exchangeable Share Provisions and such rights shall be exercisable in accordance
with the terms and conditions set forth in the Exchangeable Share Provisions.
ARTICLE 6
AMENDMENT
6.1 Plan of Arrangement Amendment.
Tarragon reserves the right to amend, modify or supplement this Plan of
Arrangement at any time and from time to time provided that any such amendment,
modification, or supplement must be contained in a written document that is (a)
agreed to by Marathon, Holdco and Albertaco, (b) if made prior to or at the
Meeting, approved by the persons voting at the Meeting, subject to the Interim
Order; and (c) if made following the Meeting, but prior to the Final Order,
approved by the Court.
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Schedule 2 to that Arrangement Agreement
made the 20th day of June, 1998 between
Tarragon Oil and Gas Limited, Marathon Oil Company,
761581 Alberta Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.
as amended and restated the 7th day of July, 1998
EXCHANGEABLE SHARE PROVISIONS
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EXCHANGEABLE SHARE PROVISIONS*
The Exchangeable Shares in the capital of the Corporation shall have the
following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these share provisions:
"AUTOMATIC REDEMPTION DATE" means the date for the automatic redemption by
the Corporation of Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be the Business Day next following the fifth
anniversary of the date of the first issuance of Exchangeable Shares unless
(a) such date shall be extended at any time or from time to time to a
specified later date by the Board of Directors or (b) such date shall be
accelerated at any time to a specified earlier date (but no earlier than the
third anniversary of the first issuance of Exchangeable Shares) by the Board
of Directors if at such time there are issued and outstanding less than 5%
of the number of Exchangeable Shares initially issued pursuant to the Plan
of Arrangement (including Exchangeable Shares which the recipients elect to
sell for cash pursuant to the Plan of Arrangement, but excluding
Exchangeable Shares held by USX and its Subsidiaries) and as such number of
shares may be adjusted as deemed appropriate by the Board of Directors to
give effect to any subdivision or consolidation of or stock dividend on the
Exchangeable Shares, any issuance or distribution of rights to acquire
Exchangeable Shares or securities exchangeable for or convertible into
Exchangeable Shares, any issue or distribution of other securities or rights
or evidences of indebtedness or assets, or any other capital reorganization
or other transaction affecting the Exchangeable Shares, in each case upon at
least 60 days' prior written notice of any such extension or acceleration,
as the case may be, to the registered holders of the Exchangeable Shares, in
which case the Automatic Redemption Date shall be such later or earlier
date; provided, however, that the accidental failure or omission to give any
such notice of extension or acceleration, as the case may be, to less than
10% of such holders of Exchangeable Shares shall not affect the validity of
such extension or acceleration.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day when
banks are not open for business in any of Pittsburgh, Pennsylvania, Houston,
Texas or Calgary, Alberta.
"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any
date, the product obtained by multiplying (a) the Foreign Currency Amount by
(b) the noon spot rate of exchange on such date for such currency expressed
in Canadian dollars as reported by the Bank of Canada or, in the event such
spot rate of exchange is not available, such exchange rate on such date for
such foreign currency expressed in Canadian dollars as may be deemed by the
Board of Directors to be appropriate for such purpose.
"EQUIVALENT NUMBER", when used in reference to USX-Marathon Common Stock,
means that number of shares of USX-Marathon Common Stock equal to the
Exchangeable Share Price on a specified date;
"EXCHANGE TRUST AGREEMENT" means the Exchange Trust Agreement among the
Corporation, USX, Marathon and the Trustee, made as of - , 1998.
"EXCHANGEABLE SHARE CONSIDERATION" means, for any exchange of Exchangeable
Shares pursuant to these share provisions, the Plan of Arrangement, the
Support Agreement or the Exchange Trust Agreement, certificates representing
the aggregate number of shares of USX-Marathon Common Stock deliverable in
connection with satisfaction of the relevant Exchangeable Share Price,
provided that any such stock shall be duly issued as fully paid and
non-assessable and free and clear of any lien, claim and encumbrance,
security interest or adverse claim and provided further that such
consideration shall be paid less any tax required to be deducted and
withheld therefrom and without interest.
* As used in this Appendix, the term "Corporation" refers to 761581 Alberta
Ltd. and the terms "Common Shares" and "Non-Voting Common Shares" refer to
the Common Shares and Non-Voting Common Shares of the Corporation.
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"EXCHANGEABLE SHARE PRICE" means, initially, one share of USX-Marathon
Common Stock for each Exchangeable Share and is subject to adjustment from
time to time as provided in Article 10 of these share provisions.
"EXCHANGEABLE SHARES" mean the Exchangeable Shares of the Corporation having
the rights, privileges, restrictions and conditions set forth herein.
"HOLDCO" means 787722 Alberta Ltd., a wholly-owned subsidiary of Marathon.
"LIQUIDATION AMOUNT" has the meaning attributed thereto in Section 5.1 of
these share provisions.
"LIQUIDATION CALL PURCHASE PRICE" has the meaning attributed thereto in
Section 5.4 of these share provisions.
"LIQUIDATION CALL RIGHT" has the meaning attributed thereto in Section 5.4
of these share provisions.
"LIQUIDATION DATE" has the meaning attributed thereto in Section 5.1 of
these share provisions.
"MARATHON" means Marathon Oil Company, a corporation organized and existing
under the laws of the State of Ohio and any successor corporation.
"MARATHON GROUP EXCHANGE" has the meaning attributed thereto in Section 10.3
of these share provisions.
"MARATHON GROUP SUBSIDIARY" has the meaning attributed thereto in Section
10.3 of these share provisions.
"MARATHON SUBSIDIARY" means any Subsidiary of Marathon, other than the
Corporation.
"PLAN OF ARRANGEMENT" means the plan of arrangement contemplated in that
Arrangement Agreement dated June 20, 1998 between Marathon, the Corporation,
Holdco and Tarragon Oil and Gas Limited, as amended and restated July 7,
1998.
"REDEMPTION CALL PURCHASE PRICE" has the meaning attributed thereto in
Section 7.4 of these share provisions.
"REDEMPTION CALL RIGHT" has the meaning attributed thereto in Section 7.4 of
these share provisions.
"REDEMPTION PRICE" has the meaning attributed thereto in Section 7.1 of
these share provisions.
"RETRACTED SHARES" has the meaning attributed thereto in Subsection 6.1(i)
of these share provisions.
"RETRACTION CALL RIGHT" has the meaning attributed thereto in Subsection
6.1(iii) of these share provisions.
"RETRACTION DATE" has the meaning attributed thereto in Subsection 6.1(ii)
of these share provisions.
"RETRACTION REQUEST" has the meaning attributed thereto in Section 6.1 of
these share provisions.
"SUBSIDIARY" of any person means each partnership, joint venture,
corporation, association or other business entity of which more than 50% of
the total voting power of shares of stock or units of ownership or
beneficial interest entitled to vote in the election of directors (or
members of a comparable governing body) is owned or controlled, directly or
indirectly, by such person.
"SUPPORT AGREEMENT" means the Support Agreement between USX, Marathon and
the Corporation, made as of - , 1998.
"TRANSFER AGENT" means Montreal Trust Company of Canada or such other person
as may from time to time be the registrar and transfer agent for the
Exchangeable Shares.
"TRUSTEE" means Montreal Trust Company of Canada and any successor trustee
appointed under the Exchange Trust Agreement.
"UNPAID DIVIDENDS" means the full amount of all cash and non-cash dividends
declared and unpaid in respect of Exchangeable Shares on a specified date.
"USX" means USX Corporation, a corporation organized and existing under the
laws of the State of Delaware and any successor corporation.
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"USX CERTIFICATE" means the Restated Certificate of Incorporation of USX
Corporation dated September 1, 1996.
"USX DIVIDEND DECLARATION DATE" means the date on which the board of
directors of USX declares any dividend on the USX-Marathon Common Stock.
"USX/MARATHON CALL NOTICE" has the meaning attributed thereto in Section 6.3
of these share provisions.
"USX-MARATHON COMMON STOCK" means the shares of USX-Marathon Group Common
Stock of USX, with a par value of U.S. $1.00 per share, and any other
securities into which such shares may be changed.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares, the Non-Voting Common Shares and any other shares of the Corporation,
with respect to the payment of dividends and the distribution of assets in the
event of the liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each USX Dividend Declaration
Date, declare a dividend (a) in the case of a cash dividend declared on the
USX-Marathon Common Stock, in an amount in cash for each Exchangeable Share
equal to the Canadian Dollar Equivalent (calculated on the USX Dividend
Declaration Date) of the cash dividend declared on each share of USX-Marathon
Common Stock or (b) in the case of a stock dividend declared on the USX-Marathon
Common Stock to be paid in USX-Marathon Common Stock, in such number of
Exchangeable Shares for each Exchangeable Share as is equal to the number of
shares of USX-Marathon Common Stock to be issued in satisfaction of the stock
dividend on each share of USX-Marathon Common Stock or (c) in the case of a
dividend declared on the USX-Marathon Common Stock in property other than cash
or securities of USX, in such type and amount or value of property for each
Exchangeable Share as is the same as or economically equivalent to (to be
determined by the Board of Directors as contemplated by the Support Agreement)
the type and amount or value of property declared as a dividend on each share of
USX-Marathon Common Stock or (d) in the case of a dividend declared on the
USX-Marathon Common Stock to be paid in securities of USX other than
USX-Marathon Common Stock, in such number of either such securities or
economically equivalent securities of the Corporation, as the Board of Directors
determines, for each Exchangeable Share as is equal to the number of securities
of USX to be paid on each share of USX-Marathon Common Stock. Such dividends
shall be paid out of money, assets or property of the Corporation properly
applicable to the payment of dividends, or out of authorized but unissued shares
of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends contemplated by
Subsection 3.1 (a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share (less any tax required to be deducted and withheld from such
dividends paid or credited by the Corporation) shall satisfy the cash dividend
represented thereby unless the cheque is not paid on presentation. Certificates
registered in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends or dividends payable in
other securities contemplated by Subsections 3.1 (b) or (d) hereof and the
sending of such a certificate to each holder of an Exchangeable Share shall
satisfy the stock dividend or dividend payable in other securities represented
thereby. Such other type and amount of property in respect of any dividends
contemplated by Subsection 3.1 (c) hereof shall be issued, distributed or
transferred by the Corporation in such manner as it shall determine and the
issuance, distribution or transfer thereof by the Corporation to each holder of
an Exchangeable Share shall satisfy the dividend represented thereby (subject to
any adjustment for the tax required to be deducted and withheld from such
dividends paid or credited by the Corporation). No holder of an Exchangeable
Share shall be entitled to recover by action or other legal process against the
Corporation any dividend that is represented by a cheque
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that has not been duly presented to the Corporation's bankers for payment or
that otherwise remains unclaimed for a period of six years from the date on
which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as
the record date and payment date, respectively, for the corresponding dividend
declared on the USX-Marathon Common Stock.
3.4 If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Corporation shall have sufficient moneys, assets or property
properly applicable to the payment of such dividends (subject to any adjustment
for the tax required to be deducted and withheld from such dividends paid or
credited by the Corporation).
3.5 Except as provided in this Article 3, the holders of Exchangeable Shares
shall not be entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Corporation
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Section 9.2 of these
share provisions:
(a) pay any dividends on the Common Shares, the Non-Voting Common Shares or
any other shares ranking junior to the Exchangeable Shares, other than
stock dividends payable in Common Shares or Non-Voting Common Shares or
in any such other shares ranking junior to the Exchangeable Shares;
(b) redeem or purchase or make any capital distribution in respect of Common
Shares or Non-Voting Common Shares or any other shares ranking junior to
the Exchangeable Shares;
(c) redeem or purchase any other shares of the Corporation ranking equally
with the Exchangeable Shares with respect to the payment of dividends or
on any liquidation distribution; or
(d) issue any Exchangeable Shares or any other shares of the Corporation
ranking equally with, or superior to, the Exchangeable Shares other than
by way of stock dividends (including rights to acquire Exchangeable
Shares) to the holders of such Exchangeable Shares or distributions of
securities as contemplated by the Support Agreement;
unless all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared to date on the USX-Marathon Common Stock shall have been
declared on the Exchangeable Shares and the Corporation shall have sufficient
assets, funds and other property available to enable the due and punctual
payment in accordance with applicable law of such dividends in accordance with
these share provisions.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date (the "LIQUIDATION DATE") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Corporation
to the holders of the Common Shares, the Non-Voting Common Shares or any other
shares ranking junior to the Exchangeable Shares, an amount (the "LIQUIDATION
AMOUNT") equal to the amount that a holder of an Equivalent Number of shares of
USX-Marathon Common Stock on the Liquidation Date would be entitled to receive
on the liquidation, dissolution or winding-up of USX, which Liquidation Amount
shall be satisfied by the delivery to holders of the Exchangeable Shares such
number of shares of USX-Marathon Common Stock as
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have a fair market value on the last Business Day prior to the Liquidation Date
equal to the Liquidation Amount. In connection with payment of the Liquidation
Amount, the Corporation shall be entitled to liquidate some of the USX-Marathon
Common Stock to which the particular holder of Exchangeable Shares is entitled
and apply the proceeds on behalf of such holder in order to fund any statutory
withholding tax obligation.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
USX or Marathon of the Liquidation Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount for
each such Exchangeable Share upon presentation and surrender of the certificates
representing such Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
applicable law and the by-laws of the Corporation and such additional documents
and instruments as the Transfer Agent may reasonably require, at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation by notice to the holders of the Exchangeable
Shares. Payment of the total Liquidation Amount for such Exchangeable Shares
shall be made by delivery to each holder, at the address of the holder recorded
in the securities register of the Corporation for the Exchangeable Shares or by
holding for pick up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation by
notice to the holders of Exchangeable Shares, on behalf of the Corporation of
the Exchangeable Share Consideration representing the total Liquidation Amount.
On and after the Liquidation Date, the holders of the Exchangeable Shares shall
cease to be holders of such Exchangeable Shares and shall not be entitled to
exercise any of the rights of holders in respect thereof, other than the right
to receive their proportionate part of the total Liquidation Amount and any
Unpaid Dividends on the last Business Day prior to the Liquidation Date, unless
payment of the total Liquidation Amount for such Exchangeable Shares and any
Unpaid Dividends shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
and any Unpaid Dividends have been paid in the manner hereinbefore provided. The
Corporation shall have the right at any time on or after the Liquidation Date to
deposit or cause to be deposited the Exchangeable Share Consideration together
with any Unpaid Dividends in respect of the Exchangeable Shares represented by
certificates that have not at the Liquidation Date been surrendered by the
holders thereof in a custodial account or for safe keeping, in the case of
non-cash items, with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares after such
deposit shall be limited to receiving their proportionate part of the total
Liquidation Amount for such Exchangeable Shares and Unpaid Dividends so
deposited, against presentation and surrender of the said certificates held by
them, respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of such Exchangeable Share Consideration and Unpaid
Dividends, the holders of the Exchangeable Shares shall thereafter be considered
and deemed for all purposes to be the holders of the USX-Marathon Common Stock
delivered to them.
5.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares (a) the Liquidation Amount per Exchangeable Share
pursuant to Section 5.1 of these share provisions and (b) the Unpaid Dividends
on the last Business Day prior to the Liquidation Date, such holders shall not
be entitled to share in any further distribution of the assets of the
Corporation.
5.4 USX shall have the overriding right (the "LIQUIDATION CALL RIGHT"), in the
event of and notwithstanding the proposed liquidation, dissolution or winding-up
of the Corporation pursuant to this Article 5, to acquire from all but not less
than all of the holders (other than USX and any Subsidiary thereof) of
Exchangeable Shares on the Liquidation Date all but not less than all of the
Exchangeable Shares held by each such holder on payment by USX to the holder of
the Exchangeable Share Price in effect on the last Business Day prior to the
Liquidation Date (the "LIQUIDATION CALL PURCHASE PRICE"). In the event of the
exercise of the Liquidation Call Right by USX, each holder shall be obligated to
sell all the Exchangeable Shares held by the holder to USX on the Liquidation
Date on payment by USX to the holder of the Liquidation Call Purchase Price for
each such share; provided that such sale shall be without prejudice to the right
of a holder to receive from the Corporation any Unpaid Dividends.
5.5 To exercise the Liquidation Call Right, USX must notify the Transfer Agent
in writing, as agent for the holders of Exchangeable Shares, and the Corporation
of USX's intention to exercise such right at least 55 days before the
Liquidation Date in the case of a voluntary liquidation, dissolution or
winding-up of the Corporation and at least five Business Days before the
Liquidation Date in the case of an involuntary liquidation, dissolution
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or winding-up of the Corporation. The Transfer Agent will notify the holders of
Exchangeable Shares as to whether or not USX has exercised the Liquidation Call
Right forthwith after the expiry of the date by which the same may be exercised
by USX. If USX exercises the Liquidation Call Right, on the Liquidation Date USX
will purchase and the holders will sell all of the Exchangeable Shares then
outstanding for a price per share equal to the Liquidation Call Purchase Price.
5.6 For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, USX shall deposit with the Transfer
Agent, on or before the Liquidation Date, the Exchangeable Share Consideration
representing the total Liquidation Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with the Transfer Agent,
on and after the Liquidation Date the rights of each holder of Exchangeable
Shares will be limited to receiving such holder's proportionate part of the
total Liquidation Call Purchase Price payable by USX without interest upon
presentation and surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall on and after the
Liquidation Date be considered and deemed for all purposes to be the holder of
the USX-Marathon Common Stock delivered to such holder. Upon surrender to the
Transfer Agent of a certificate or certificates representing Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under applicable law and such
additional documents and instruments as the Transfer Agent may reasonably
require, the holder of such surrendered certificate or certificates shall be
entitled to receive in exchange therefor, and the Transfer Agent on behalf of
USX shall deliver to such holder, the Exchangeable Share Consideration to which
the holder is entitled. If USX does not exercise the Liquidation Call Right in
the manner described above, on the Liquidation Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor the
Exchangeable Share Price otherwise payable by the Corporation in connection with
the liquidation, dissolution or winding-up of the Corporation pursuant to this
Article 5 of the Exchangeable Share Provisions.
5.7 USX may assign its rights to exchange the Exchangeable Share Consideration
for Exchangeable Shares pursuant to the Liquidation Call Right to Marathon,
Holdco or any Marathon Subsidiary at any time with respect to all or any portion
of the Exchangeable Shares relating to such right and in such circumstance, all
provisions of this Article 5 relating to the Liquidation Call Right which refer
to USX shall, to the extent applicable, apply to Marathon, Holdco or such
Marathon Subsidiary, MUTATIS MUTANDIS, and in such case delivery of the
Exchangeable Share Consideration by or on behalf of Marathon, Holdco or such
Marathon Subsidiary shall satisfy all of USX's obligations with respect to the
Liquidation Call Right.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by USX or Marathon of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Corporation to
redeem any or all of the Exchangeable Shares registered in the name of such
holder by delivery to such holder of the Exchangeable Share Consideration
representing the Exchangeable Share Price in respect of such Exchangeable
Shares. In connection with payment of the Exchangeable Share Price, the
Corporation shall be entitled to liquidate some of the USX-Marathon Common Stock
to which the particular holder of Exchangeable Shares is entitled and apply the
proceeds on behalf of such holder in order to fund any statutory withholding tax
obligation. To effect such redemption, the holder shall present and surrender at
the registered office of the Corporation or at any office of the Transfer Agent
as may be specified by the Corporation by notice to the holders of Exchangeable
Shares the certificate or certificates representing the Exchangeable Shares
which the holder desires to have the Corporation redeem, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under applicable law and the by-laws of the Corporation and
such additional documents and instruments as the Transfer Agent may reasonably
require, and together with a duly executed statement (the "RETRACTION REQUEST")
in the form of Exhibit A hereto or in such other form as may be acceptable to
the Corporation:
(i) specifying that the holder desires to have all or any number specified
therein of the Exchangeable Shares represented by such certificate or
certificates (the "RETRACTED SHARES") redeemed by the Corporation;
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(ii) stating the Business Day on which the holder desires to have the
Corporation redeem the Retracted Shares (the "RETRACTION DATE"),
provided that the Retraction Date shall be not less than three Business
Days nor more than 10 Business Days after the date on which the
Retraction Request is received by the Corporation and further provided
that, in the event that no such Business Day is specified by the holder
in the Retraction Request, the Retraction Date shall be deemed to be
the tenth Business Day after the date on which the Retraction Request
is received by the Corporation; and
(iii) acknowledging the overriding right (the "RETRACTION CALL RIGHT") of USX
and Marathon to acquire all but not less than all the Retracted Shares
directly from the holder in exchange for one share of USX-Marathon
Common Stock for each Exchangeable Share and that the Retraction
Request shall be deemed to be a revocable offer by the holder to
exchange the Retracted Shares with USX or Marathon in accordance with
the Retraction Call Right on the terms and conditions set out in
Section 6.3 below.
6.2 Subject to the exercise by USX or Marathon of the Retraction Call Right,
upon receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the Corporation redeem,
together with a Retraction Request, and provided that the Retraction Request is
not revoked by the holder in the manner specified in Section 6.7, the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date and shall cause to be delivered to such holder the total
Exchangeable Share Price with respect to such shares by the delivery of the
Exchangeable Share Consideration. If only a part of the Exchangeable Shares
represented by any certificate are redeemed (or purchased by USX or Marathon
pursuant to the Retraction Call Right), a new certificate for the balance of
such Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify USX and Marathon thereof. In order to exercise the
Retraction Call Right, USX or Marathon must notify the Corporation in writing of
its determination to do so (the "USX/MARATHON CALL NOTICE") within two Business
Days of notification to USX and Marathon by the Corporation of the receipt by
the Corporation of the Retraction Request. If USX or Marathon does not so notify
the Corporation within such two Business Day period, the Corporation will notify
the holder as soon as possible thereafter that neither USX nor Marathon will
exercise the Retraction Call Right. If USX or Marathon delivers the USX/Marathon
Call Notice within such two Business Day time period, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the Retraction Request shall thereupon be considered only to be an
offer by the holder to exchange the Retracted Shares with USX or Marathon, as
applicable, in accordance with the Retraction Call Right. In such event, the
Corporation shall not redeem the Retracted Shares and USX or Marathon, as
applicable, shall acquire from such holder and such holder shall deliver to USX
or Marathon, as applicable, on the Retraction Date the Retracted Shares in
exchange for delivery to such holder of the Exchangeable Share Consideration
respecting the total Exchangeable Share Price in respect of the Retracted
Shares. For the purposes of completing an exchange pursuant to the Retraction
Call Right, USX or Marathon, as applicable, shall deposit with the Transfer
Agent, on or before the Retraction Date the Exchangeable Share Consideration
representing the total Exchangeable Share Price. Provided that such Exchangeable
Share Consideration has been so deposited with the Transfer Agent, the closing
of the exchange of the Retracted Shares pursuant to the Retraction Call Right
shall be deemed to have occurred as at the close of business on the Retraction
Date and, for greater certainty, no redemption by the Corporation of such
Retracted Shares shall take place on the Retraction Date. In the event that
neither USX nor Marathon delivers a USX/Marathon Call Notice within such two
Business Day period or otherwise complies with these Exchangeable Share
provisions in respect thereto, and provided that the Retraction Request is not
revoked by the holder in the manner specified in Section 6.7, the Corporation
shall redeem the Retracted Shares on the Retraction Date and in the manner
otherwise contemplated in this Article 6.
6.4 The Corporation, USX or Marathon, as the case may be, shall deliver or cause
the Transfer Agent to deliver to the relevant holder, at the address of the
holder recorded in the securities register of the Corporation for the
Exchangeable Shares or at the address specified in the holder's Retraction
Request or by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation by notice to the holders of Exchangeable Shares, the Exchangeable
Share Consideration representing the total Exchangeable Share Price and such
delivery of such Exchangeable Share Consideration to
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the Transfer Agent shall be deemed to be payment of and shall satisfy and
discharge all liability for the total Exchangeable Share Price.
6.5 On and after the close of business on the Retraction Date, the holder of the
Retracted Shares shall cease to be a holder of such Retracted Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive his proportionate part of the total Exchangeable
Share Price and any Unpaid Dividends on the last Business Day prior to the
Retraction Date, unless upon presentation and surrender of certificates in
accordance with the foregoing provisions, payment of the total Exchangeable
Share Price and any Unpaid Dividends shall not be made, in which case the rights
of such holder shall remain unaffected until the total Exchangeable Share Price
and any Unpaid Dividends have been paid in the manner hereinbefore provided. On
and after the close of business on the Retraction Date, provided that
presentation and surrender of certificates and payment of the total Exchangeable
Share Price and any Unpaid Dividends has been made in accordance with the
foregoing provisions, the holder of the Retracted Shares so redeemed by the
Corporation or purchased by USX or Marathon shall thereafter be considered and
deemed for all purposes to be a holder of the USX-Marathon Common Stock
delivered to it.
6.6 Notwithstanding any other provision of this Article 6, the Corporation shall
not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to liquidity or solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it would
not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that neither USX nor Marathon
shall have exercised the Retraction Call Right with respect to the Retracted
Shares, the Corporation shall only be obligated to redeem Retracted Shares
specified by a holder in a Retraction Request to the extent of the maximum
number that may be so redeemed (rounded down to a whole number of shares) as
would not be contrary to such provisions and shall notify the holder at least
two Business Days prior to the Retraction Date as to the number of Retracted
Shares which will not be redeemed by the Corporation. In any case in which the
redemption by the Corporation of Retracted Shares would be contrary to liquidity
or solvency requirements or other provisions of applicable law, the Corporation
shall redeem Retracted Shares in accordance with Section 6.2 of these share
provisions on a PRO RATA basis and shall issue to each holder of Retracted
Shares a new certificate, at the expense of the Corporation, representing the
Retracted Shares not redeemed by the Corporation pursuant to Section 6.2 hereof.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Corporation before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to exchange the Retracted
Shares with USX or Marathon shall be deemed to have been revoked.
6.8 USX and Marathon may assign their rights under the Retraction Call Right to
Holdco or a Marathon Subsidiary at any time with respect to all or any portion
of the Retracted Shares and in such circumstance, all provisions of this Article
6 relating to the Retraction Call Right which refer to USX and Marathon or to
USX or Marathon shall, to the extent applicable, apply to Holdco, or such
Marathon Subsidiary, MUTATIS MUTANDIS, and in such case delivery of the
Exchangeable Share Consideration by or on behalf of Holdco or such Marathon
Subsidiary, shall satisfy the corresponding obligations of USX and Marathon
under the Retraction Call Right.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law and the Redemption Call Right, the Corporation
shall on the Automatic Redemption Date redeem the whole of the then outstanding
Exchangeable Shares by delivery of the Exchangeable Share Consideration
representing the Exchangeable Share Price applicable on the last Business Day
prior to the Automatic Redemption Date (the "REDEMPTION PRICE"). In connection
with payment of the Redemption Price, the Corporation shall be entitled to
liquidate some of the USX-Marathon Common Stock to which the particular holder
of Exchangeable Shares is entitled and apply the proceeds on behalf of such
holder in order to fund any statutory withholding tax obligation.
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7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the
Corporation shall, at least 120 days before the Automatic Redemption Date, send
or cause to be sent to each holder of Exchangeable Shares a notice in writing of
the redemption by the Corporation or the purchase by USX or Marathon under the
Redemption Call Right, as the case may be, of the Exchangeable Shares held by
such holder. Such notice shall set out the Automatic Redemption Date and, if
applicable, particulars of the Redemption Call Right.
7.3 On or after the Automatic Redemption Date and subject to the exercise by USX
or Marathon of the Redemption Call Right, the Corporation shall cause to be
delivered to the holders of the Exchangeable Shares the Redemption Price for
each such Exchangeable Share upon presentation and surrender at the registered
office of the Corporation or at any office of the Transfer Agent as may be
specified by the Corporation in such notice of the certificates representing
such Exchangeable Shares, together with such other documents and instruments as
may be required to effect a transfer of Exchangeable Shares under applicable law
and the by-laws of the Corporation and such additional documents and instruments
as the Transfer Agent may reasonably require. Payment of the total Redemption
Price for such Exchangeable Shares shall be made by delivery to each holder, at
the address of the holder recorded in the securities register of the Corporation
or by holding for pick up by the holder at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation in such notice, on behalf of the Corporation of the Exchangeable
Share Consideration representing the total Redemption Price. On and after the
Automatic Redemption Date, the holders of the Exchangeable Shares called for
redemption shall cease to be holders of such Exchangeable Shares and shall not
be entitled to exercise any of the rights of holders in respect thereof, other
than the right to receive their proportionate part of the total Redemption Price
and any Unpaid Dividends on the last Business Day prior to the Redemption Date,
unless payment of the total Redemption Price for such Exchangeable Shares and
any Unpaid Dividends shall not be made upon presentation and surrender of
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Redemption Price
and any Unpaid Dividends have been paid in the manner hereinbefore provided. The
Corporation shall have the right at any time after the sending of notice of its
intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to
be deposited the Exchangeable Share Consideration with respect to the
Exchangeable Shares so called for redemption, or of such of the said
Exchangeable Shares represented by certificates that have not at the date of
such deposit been surrendered by the holders thereof in connection with such
redemption, together with any Unpaid Dividends, in a custodial account or for
safe keeping with any chartered bank or trust company in Canada named in such
notice. Upon the later of such deposit being made and the Automatic Redemption
Date, the Exchangeable Shares in respect whereof such deposit shall have been
made shall be redeemed and the rights of the holders thereof after such deposit
or Automatic Redemption Date, as the case may be, shall be limited to receiving
their proportionate part of (a) the total Exchangeable Share Price for such
Exchangeable Shares so deposited, against presentation and surrender of the said
certificates held by them, respectively, in accordance with the foregoing
provisions and (b) the Unpaid Dividends on the last Business Day prior to the
Redemption Date. Upon deposit of such Exchangeable Share Consideration and
Unpaid Dividends, the holders of the Exchangeable Shares shall thereafter be
considered and deemed for all purposes to be holders of the USX-Marathon Common
Stock delivered to them.
7.4 USX shall have the overriding right (the "REDEMPTION CALL RIGHT"),
notwithstanding the compulsory redemption of the Exchangeable Shares by the
Corporation pursuant to this Article 7, to acquire from all but not less than
all of the holders (other than USX or any Subsidiary thereof) of Exchangeable
Shares on the Automatic Redemption Date all but not less than all of the
Exchangeable Shares held by each such holder upon the payment to each such
holder by USX of the Exchangeable Share Price in effect on the last Business Day
prior to the Automatic Redemption Date (the "REDEMPTION CALL PURCHASE PRICE").
In the event of the exercise of the Redemption Call Right by USX, each holder
shall be obligated to exchange all the Exchangeable Shares held by the holder
with USX on the Automatic Redemption Date on delivery by USX to the holder of
the Exchangeable Share Consideration representing the Redemption Call Purchase
Price for each such share and the obligation of the Corporation to redeem any
Exchangeable Shares (including those held by USX or any Subsidiary thereof)
shall terminate.
7.5 To exercise the Redemption Call Right, USX must notify the Transfer Agent in
writing, as agent for the holders of Exchangeable Shares, and Albertaco of USX's
intention to exercise such right at least 125 days before the Automatic
Redemption Date. The Transfer Agent will notify the holders of the Exchangeable
Shares as to
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whether or not USX has exercised the Redemption Call Right forthwith after the
date by which the same may be exercised by USX. If USX exercises the Redemption
Call Right, on the Automatic Redemption Date USX and the holders will exchange
all of the Exchangeable Shares then outstanding for the Exchangeable Share
Consideration in satisfaction of the Redemption Call Purchase Price.
7.6 For the purposes of completing the exchange of the Exchangeable Shares
pursuant to the Redemption Call Right, USX shall deposit with the Transfer
Agent, on or before the Automatic Redemption Date, the Exchangeable Share
Consideration representing the total Redemption Call Purchase Price. Provided
that such Exchangeable Share Consideration has been so deposited with the
Transfer Agent, on and after the Automatic Redemption Date the rights of each
holder of Exchangeable Shares will be limited to receiving such holder's
proportionate part of (i) the Exchangeable Share Consideration issued by USX in
respect of the total Redemption Call Purchase Price upon presentation and
surrender by the holder of certificates representing the Exchangeable Shares
held by such holder and (ii) any Unpaid Dividends on the last Business Day prior
to the Automatic Redemption Date. Upon deposit of such Exchangeable Share
Consideration, the holder shall on and after the Automatic Redemption Date be
considered and deemed for all purposes to be the holder of the USX-Marathon
Common Stock delivered to such holder. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under applicable law and such additional documents and
instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in exchange
therefor, and the Transfer Agent on behalf of USX shall deliver to such holder,
the Exchangeable Share Consideration to which the holder is entitled. If USX
does not exercise the Redemption Call Right in the manner described above, on
the Automatic Redemption Date the holders of the Exchangeable Shares will be
entitled to receive in exchange therefor the redemption price otherwise payable
by the Corporation in connection with the redemption of the Exchangeable Shares
pursuant to this Article 7.
7.7 USX may assign its rights to exchange the Exchangeable Share Consideration
for Exchangeable Shares pursuant to the Redemption Call Right to Marathon,
Holdco or a Marathon Subsidiary at any time with respect to all or any portion
of the Exchangeable Shares relating to such right and in such circumstance, all
provisions of this Article 7 relating to the Redemption Call Right which refer
to USX shall, to the extent applicable, apply to Marathon, Holdco or such
Marathon Subsidiary, MUTATIS MUTANDIS, and in such case delivery of the
Exchangeable Share Consideration by or on behalf of Marathon, Holdco or such
Marathon Subsidiary shall satisfy all of USX's obligations under the Redemption
Call Right.
ARTICLE 8
VOTING RIGHTS
8.1 Except as required by applicable law and the provisions hereof, the holders
of the Exchangeable Shares shall not be entitled as such to receive notice of or
to attend any meeting of the shareholders of the Corporation or to vote at any
such meeting.
ARTICLE 9
AMENDMENT AND APPROVAL
9.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
9.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution by persons represented
in person or by proxy at a meeting of holders of Exchangeable Shares duly called
and held at which the holders of at least 50% of the outstanding Exchangeable
Shares at that time are present or represented by
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proxy. If at any such meeting the holders of at least 50% of the outstanding
Exchangeable Shares at that time are not present or represented by proxy within
one-half hour after the time appointed for such meeting then the meeting shall
be adjourned to such date not less than 10 days thereafter and to such time and
place as may be designated by the Chairman of such meeting. At such adjourned
meeting the holders of Exchangeable Shares present or represented by proxy
thereat may transact the business for which the meeting was originally called
and a resolution passed thereat by the affirmative vote of not less than
two-thirds of the votes cast on such resolution by holders of Exchangeable
Shares represented in person or by proxy at such meeting shall constitute the
approval or consent of the holders of the Exchangeable Shares.
ARTICLE 10
RECIPROCAL CHANGES, ETC. IN RESPECT OF USX-MARATHON COMMON STOCK
10.1 If USX causes any of the following events to occur:
(a) issue or distribute USX-Marathon Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
USX-Marathon Common Stock) to the holders of all or substantially all of
the then outstanding USX-Marathon Common Stock by way of stock dividend
or other distribution other than an issue of USX-Marathon Common Stock
(or securities exchangeable for or convertible into or carrying rights
to acquire USX-Marathon Common Stock) to holders of USX-Marathon Common
Stock who exercise an option to receive dividends in USX-Marathon Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire USX-Marathon Common Stock) in lieu of receiving cash
dividends; or
(b) issue or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding USX-Marathon Common Stock
entitling them to subscribe for or to purchase shares of USX-Marathon
Common Stock (or securities exchangeable for or convertible into or
carrying rights to acquire shares of USX-Marathon Common Stock); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding shares of USX-Marathon Common Stock (i) shares or
securities of USX of any class other than USX-Marathon Common Stock
(other than shares convertible into or exchangeable for or carrying
rights to acquire USX-Marathon Common Stock), (ii) rights, options or
warrants other than those referred to in Section 10.l(b) above, (iii)
evidences of indebtedness of USX or (iv) assets of USX (except as
provided in Section 10.3 of these share provisions);
then, if the Corporation is permitted under applicable law, the Corporation
shall issue or distribute the economic equivalent on a per share basis of such
rights, options, securities, shares, evidences of indebtedness or other assets
simultaneously to holders of the Exchangeable Shares. In the event that the
Corporation is not so permitted under applicable law, then the dividend
entitlement described in Section 3.1 of these share provisions and the
Exchangeable Share Price shall be subject to adjustment from time to time upon
the occurrence of any such event in the manner determined by the Board of
Directors in their sole discretion to not be prejudicial to the interests of the
holders of Exchangeable Shares. Such adjustment shall increase or decrease the
dividend entitlement and the Exchangeable Share Price, as the case may be, so as
to maintain the equivalent entitlement as was available to holders of
Exchangeable Shares prior to occurrence of such event.
10.2 If USX shall cause any of the following events to occur:
(a) subdivide, redivide or change the then outstanding shares of
USX-Marathon Common Stock into a greater number of shares of
USX-Marathon Common Stock; or
(b) reduce, combine or consolidate or change the then outstanding shares of
USX-Marathon Common Stock into a lesser number of shares of USX-Marathon
Common Stock; or
(c) reclassify or otherwise change the shares of USX-Marathon Common Stock
or effect an amalgamation, merger, reorganization or other transaction
affecting the shares of USX-Marathon Common Stock;
then the dividend entitlement described in Section 3.1 of these share provisions
and the Exchangeable Share Price shall be subject to adjustment from time to
time upon the occurrence of any such event in the manner as
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determined by the Board of Directors in their sole discretion to not be
prejudicial to the interests of the holders of Exchangeable Shares. Such
adjustment shall increase or decrease the dividend entitlement and the
Exchangeable Share Price so as to maintain the equivalent entitlement as was
available to holders of Exchangeable Shares prior to occurrence of such event.
10.3 In the event that the board of directors of USX declares that all of the
outstanding shares of USX-Marathon Common Stock shall be exchanged for all of
the outstanding shares of common stock of a wholly-owned subsidiary of USX (the
"Marathon Group Subsidiary"), as provided in Section 2(a) of Division I of the
USX Certificate (the "Marathon Group Exchange"), then upon the completion of the
Marathon Group Exchange all references to USX and Marathon in these share
provisions shall be deemed to be references to the Marathon Group Subsidiary and
all references to USX-Marathon Common Stock in these share provisions shall be
deemed to be references to common stock of the Marathon Group Subsidiary. Each
holder of an Exchangeable Share acknowledges that the Plan of Arrangement, the
Support Agreement and the Exchange Trust Agreement each contain provisions
acknowledging the effect of the Marathon Group Exchange and that the Support
Agreement and the Exchange Trust Agreement each contain covenants of USX that in
the event of the Marathon Group Exchange being consummated, the Marathon Group
Subsidiary shall agree to become a party to the Support Agreement and the
Exchange Trust Agreement on substantially the same terms as such agreements
shall contain at the time of the Marathon Group Exchange. For greater certainty,
the Marathon Group Exchange shall not require any adjustments as described in
Sections 10.1 or 10.2 of these share provisions.
10.4 Each holder of an Exchangeable Share acknowledges that the Support
Agreement and the Exchange Trust Agreement each provide, in part, that the
provisions of the Support Agreement and the Exchange Trust Agreement shall not
be changed without the approval of the holders of the Exchangeable Shares given
in accordance with Section 9.2 of these share provisions.
ARTICLE 11
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
11.1 The Corporation will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by USX and Marathon with all provisions of the Support Agreement
and the Exchange Trust Agreement in accordance with the terms thereof including,
without limitation, taking all such actions and doing all such things as shall
be necessary or advisable to enforce to the fullest extent possible all rights
and benefits in favour of the Corporation under or pursuant thereto.
11.2 The Corporation shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement or the Exchange Trust Agreement without the approval of the
holders of the Exchangeable Shares given in accordance with Section 9.2 of these
share provisions other than such amendments, waivers and/or forgiveness as may
be necessary or advisable for the purposes of:
(a) adding to the covenants of the other party or parties to such agreement
for the protection of the Corporation or the holders of Exchangeable
Shares; or
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder, including, without limitation, any changes
required for the purposes of Sections 10.1 or 10.2 of these share
provisions or Sections 2.6 or 2.7 of the Support Agreement, which, in
the opinion of the Board of Directors, it may be expedient to make,
provided that the Board of Directors shall be of the opinion, after
consultation with counsel, that such provisions and modifications will
not be prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes in or corrections to such agreement which, on the
advice of counsel to the Corporation, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the opinion, after
consultation with counsel, that such changes or corrections will not be
prejudicial to the interests of the holders of the Exchangeable Shares.
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ARTICLE 12
EXCHANGE RIGHT
12.1 Each holder of Exchangeable Shares shall have the right at any time or from
time to time to require USX to purchase from such holder at any time all or any
part of the Exchangeable Shares held by such holder in consideration for
Exchangeable Share Consideration representing the Exchangeable Share Price
applicable on the last Business Day prior to the exercise of this right of
exchange. This right of exchange shall be exercisable by the holder delivering
the certificates for any Exchangeable Shares to be exchanged to the Corporation
together with a request to effect such purchase by USX. In such event, the
Corporation will immediately give notice of such request to USX.
12.2 USX may assign its obligation to purchase Exchangeable Shares from holders
pursuant to the exercise of the rights of such holders set out in Section 12.1
to Marathon, Holdco or any Marathon Subsidiary.
ARTICLE 13
LEGEND
13.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the Plan of
Arrangement relating to the Liquidation Call Right, the Retraction Call Right
and the Redemption Call Right, and the Exchange Trust Agreement (including the
provisions with respect to the exchange right and automatic exchange rights
thereunder).
ARTICLE 14
MISCELLANEOUS
14.1 Any notice, request or other communication to be given to the Corporation
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery to
the registered office of the Corporation and addressed to the attention of the
President. Any such notice, request or other communication, if given by mail,
telecopy or delivery, shall only be deemed to have been given and received upon
actual receipt thereof by the Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be made
by mail (postage prepaid) or by delivery to the registered office of the
Corporation or to such office of the Transfer Agent as may be specified by the
Corporation, in each case addressed to the attention of the President of the
Corporation. Any such presentation and surrender of certificates shall only be
deemed to have been made and to be effective upon actual receipt thereof by the
Corporation or the Transfer Agent, as the case may be. Any such presentation and
surrender of certificates made by mail shall be at the sole risk of the holder
mailing the same.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the fifth Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.
14.4 All Exchangeable Shares acquired by the Corporation upon the redemption or
retraction thereof shall be cancelled.
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EXHIBIT A
RETRACTION REQUEST
To 761581 Alberta Ltd. (the "Corporation") and USX Corporation ("USX") and
Marathon Oil Company ("Marathon")
This request is given pursuant to Article 6 of the provisions (the "SHARE
PROVISIONS") attaching to the share(s) represented by this certificate and all
capitalized words and expressions used in this request which are defined in the
Share Provisions have the meanings attributed to such words and expressions in
such Share Provisions.
The undersigned hereby requests that the Corporation, subject to the
Retraction Call Right referred to below, redeem in accordance with Article 6 of
the Share Provisions:
/ / all share(s) represented by this certificate; or
/ / ______ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date
shall be ____________.
NOTE: The Retraction Date must be a Business Day and must not be less than
three Business Days nor more than 10 Business Days after the date upon
which this request is received by the Corporation. In the event that no
such Business Day is specified above, the Retraction Date shall be deemed
to be the tenth Business Day after the date on which this request is
received by the Corporation.
The undersigned acknowledges the Retraction Call Right of USX and Marathon
to purchase all but not less than all the Retracted Shares from the undersigned
and that this request shall be deemed to be a revocable offer by the undersigned
to exchange the Retracted Shares with USX or Marathon in accordance with the
Retraction Call Right on the Retraction Date for the Exchangeable Share
Consideration and on the other terms and conditions set out in Section 6.3 of
the Share Provisions. If neither USX nor Marathon exercise the Retraction Call
Right, the Corporation will notify the undersigned of such fact as soon as
possible. This retraction request, and offer to exchange the Retracted Shares
with USX or Marathon may be revoked and withdrawn by the undersigned by notice
in writing given to the Corporation at any time before the close of business on
the Business Day immediately preceding the Retraction Date. The undersigned
acknowledges that USX and Marathon are entitled to assign to certain other
parties in whole or in part their rights under the Retraction Call Right in
accordance with and subject to the terms thereof.
The undersigned acknowledges that if, as a result of liquidity or solvency
provisions of applicable law, the Corporation is unable to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Right (as
defined in the Exchange Trust Agreement) so as to require USX or Marathon or
their permitted assignee to exchange the Exchangeable Share Consideration for
the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation, USX and
Marathon that the undersigned has good title to, and owns, the share(s)
represented by this certificate to be acquired under this request or the
Retraction Call Right as the case may be, free and clear of all liens, claims
and encumbrances.
------------------- ---------------------------- ----------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
/ / Please check box if the legal or beneficial owner of the Retracted Shares
is a non-resident of Canada.
/ / Please check box if the securities and any cheque(s) to be delivered in
connection with the retraction or exchange of the Retracted Shares are to
be held for pick-up by the shareholder at the principal transfer office of
Montreal Trust Company of Canada (the "Transfer Agent") in Calgary,
Alberta, failing which the securities will be delivered to the last address
of the shareholder as it appears on the register by such means as the
Corporation deems appropriate.
NOTE: This panel must be completed and this certificate, together with such
additional documents as the Transfer Agent may require, must be deposited
with the Transfer Agent at its principal transfer office
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in Calgary, Alberta. The securities to be delivered in connection with
the retraction or exchange of the Retracted Shares will be issued and
registered in, or transferred into, respectively, the name of the
shareholder as it appears on the register of the Corporation and the
securities to be delivered in connection with such retraction or exchange
will be delivered to such shareholder as indicated above, unless the form
appearing immediately below is duly completed.
Date
------------------------------------------------- ------------------------------------------
Name of Person in Whose Name Securities Are To Be
Registered, Issued or Delivered (please print)
------------------------------------------------- ----------------------------------------------
Street Address or P.O. Box Signature of Shareholder
------------------------------------------------- ----------------------------------------------
City, -- Province Signature Guaranteed by
NOTE: If the retraction request is for less than all of the share(s)
represented by this certificate, a certificate representing the remaining
shares of the Corporation will be issued and registered in the name of
the shareholder as it appears on the register of the Corporation, unless
the Share Transfer Power on the share certificate is duly completed in
respect of such shares.
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Schedule 3 to that Arrangement Agreement
made the 20th day of June, 1998 between
Tarragon Oil and Gas Limited, Marathon Oil Company,
761581 Alberta Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.
as amended and restated the 7th day of July, 1998
SUPPORT AGREEMENT
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SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT made as of the _______ day of ______________, 1998,
BETWEEN:
USX CORPORATION, a corporation incorporated under the laws of the
State of Delaware and having its head and principal office at
Pittsburgh, Pennsylvania (hereinafter referred to as "USX")
-and -
MARATHON OIL COMPANY, a corporation incorporated under the laws of
the State of Ohio and having its head and principal office at
Houston, Texas (hereinafter referred to as "Marathon")
-and -
761581 ALBERTA LTD., a corporation incorporated under the laws of the
Province of Alberta and having its head and principal office at
Calgary, Alberta (hereinafter referred to as "Albertaco")
WHEREAS pursuant to an arrangement agreement dated as of June - , 1998, by
and among ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd. ("Holdco") and Tarragon Oil
and Gas Limited ("Tarragon") (such agreement as it may be amended or restated is
hereinafter referred to as the "Arrangement Agreement"), Marathon, Albertaco,
Holdco and Tarragon agreed that on the Effective Date (as defined in the
Arrangement Agreement), USX, Marathon and Albertaco would execute and deliver a
Support Agreement containing the terms and conditions set forth in Schedule 3 to
the Arrangement Agreement together with such other terms and conditions as may
be agreed to by the parties to the Arrangement Agreement acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated - , 1998 filed pursuant to the BUSINESS
CORPORATIONS ACT (Ontario) all of the issued and outstanding common shares of
Tarragon ("Tarragon Common Shares") were exchanged for Exchangeable Shares of
Albertaco (the "Exchangeable Shares");
AND WHEREAS the Articles of Albertaco set forth the rights, privileges,
restrictions and conditions (collectively, the "Exchangeable Share Provisions")
attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provision and to
establish a procedure whereby USX or Marathon will take certain actions and make
certain deliveries necessary to ensure that Albertaco will be able to deliver or
cause to be delivered shares of USX-Marathon Common Stock in satisfaction of the
obligations of Albertaco under the Exchangeable Share Provisions with respect to
the payment and satisfaction of Liquidation Amounts and Exchangeable Share
Prices payable upon Retraction and Redemption, all in accordance with the
Exchangeable Share Provisions;
NOW THEREFORE in consideration of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties hereto covenant and agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters and not
otherwise defined herein shall have the meaning attributed thereto in the
Exchangeable Share Provisions, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
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1.4 DATE FOR ANY ACTION. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
COVENANTS OF USX, MARATHON AND ALBERTACO
2.1 COVENANTS OF USX AND MARATHON REGARDING EXCHANGEABLE SHARES. So long as any
Exchangeable Shares are outstanding, USX and Marathon, as applicable, will:
(a) not declare or pay any dividend on USX-Marathon Common Stock unless
Albertaco shall simultaneously declare or pay, as the case may be, an
equivalent dividend on the Exchangeable Shares, in each case in
accordance with the Exchangeable Share Provisions;
(b) advise Albertaco of any dividend on USX-Marathon Common Stock and take
all such other actions as are necessary, in cooperation with Albertaco,
to ensure that the respective declaration date, record date and payment
date for a dividend on the Exchangeable Shares shall be the same as the
record date, declaration date and payment date for the corresponding
dividend on USX-Marathon Common Stock and such dividend on the
Exchangeable Shares shall correspond with any requirement of the
principal stock exchange on which the Exchangeable Shares are listed;
(c) ensure that the record date for any dividend declared on USX-Marathon
Common Stock is not less than 10 calendar days after the declaration
date for such dividend;
(d) take all such actions and do all such things as are necessary or
desirable, in accordance with applicable law, to perform its obligations
with respect to the satisfaction of the Liquidation Amount in respect of
each issued and outstanding Exchangeable Share upon the liquidation,
dissolution or winding-up of Albertaco, by causing to be delivered
shares of USX-Marathon Common Stock to the holders of Exchangeable
Shares in accordance with the provisions of Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable, in accordance with applicable law, to perform its obligations
with respect to the satisfaction of the Exchangeable Share Price payable
on any Retraction Date and on the Automatic Redemption Date, by causing
to be delivered to holders of Exchangeable Shares, shares of
USX-Marathon Common Stock, upon the retraction or redemption of the
Exchangeable Shares in accordance with the provisions of Article 6 or
Article 7 of the Exchangeable Share Provisions, as the case may be;
(f) not exercise its vote as a direct or indirect shareholder to initiate
the voluntary liquidation, dissolution or winding-up of Albertaco nor
take any action or omit to take any action that is designed to result in
the liquidation, dissolution or winding-up of Albertaco; and
(g) provide public notification in a newspaper of general circulation in
Canada (if such notification does not otherwise occur) of the occurrence
of an event which would, with the lapse of time, result in the
separation of the rights under the USX Restated Rights Agreement from
the Marathon Shares.
2.2 RESERVATION OF SHARES OF USX-MARATHON COMMON STOCK. USX hereby represents,
warrants and covenants that it has irrevocably reserved for issuance and will at
all times keep available, free from preemptive and other rights, out of its
authorized and unissued capital stock such number of shares of USX-Marathon
Common Stock (including, upon their creation, other shares or securities into
which USX-Marathon Common Stock may be reclassified or changed as contemplated
by Section 2.6 hereof) as are now and may hereafter be required to meet the
obligations of USX and Marathon, and to enable and permit Albertaco to meet its
obligations, under this Agreement, under the Exchange Trust Agreement, under the
Exchangeable Share Provisions and under any other security or commitment
pursuant to the Arrangement with respect to which USX may now or hereafter be
required to issue, or Albertaco may be required to deliver or cause to be
delivered, shares of USX-Marathon Common Stock.
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2.3 NOTIFICATION OF CERTAIN EVENTS. In order to assist USX and Marathon to
comply with their obligations hereunder, Albertaco will give USX and Marathon
notice of each of the following events at the time set forth below:
(a) immediately, upon receipt by Albertaco of a Retraction Request (as
defined in the Exchangeable Share Provisions);
(b) at least 130 days prior to any accelerated Automatic Redemption Date
determined by the Board of Directors of Albertaco in accordance with the
Exchangeable Share Provisions; and
(c) as soon as practicable upon the issuance by Albertaco of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
2.4 DELIVERY OF SHARES OF USX-MARATHON COMMON STOCK. In furtherance of their
obligations hereunder, upon notice of (i) any event which requires Albertaco to
cause to be delivered shares of USX-Marathon Common Stock to any holder of
Exchangeable Shares, or (ii) the exercise by a holder of its rights pursuant to
the Exchangeable Share Provisions to require USX to purchase directly from such
holder all or any part of the Exchangeable Shares held by such holder, USX shall
forthwith issue and deliver the requisite shares of USX-Marathon Common Stock to
or to the order of the former holder of the surrendered Exchangeable Shares, and
Albertaco shall supply to USX all information in Albertaco's possession
necessary to facilitate such issuance and delivery. All such shares of
USX-Marathon Common Stock shall be duly issued as fully paid and non-assessable
and shall be free and clear of any lien, claim, encumbrance, security interest
or adverse claim.
2.5 QUALIFICATION OF SHARES OF USX-MARATHON COMMON STOCK. USX and Marathon
covenant that if any shares of USX-Marathon Common Stock (or other shares or
securities into which USX-Marathon Common Stock may be reclassified or changed
as contemplated by Section 2.6 hereof) to be issued and delivered hereunder,
including for greater certainty, pursuant to the Exchangeable Share Provisions,
or pursuant to the Exchange Right (as defined in the Exchange Trust Agreement)
require registration or qualification with or approval of or the filing of any
document including any prospectus or similar document or the taking of any
proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority or the fulfilment of any other legal
requirement (collectively, the "Applicable Laws") before such shares (or other
shares or securities into which USX-Marathon Common Stock may be reclassified or
changed as contemplated by Section 2.6 hereof) may be issued and delivered by
USX to the initial holder thereof (other than Albertaco) or in order that such
shares may be freely traded thereafter (other than any restrictions on transfer
by reason of a holder being a "control person" of USX for purposes of Canadian
federal or provincial securities law or an "affiliate" of USX or, prior to the
Effective Date, of Tarragon for purposes of United States federal or state
securities law), USX or Marathon will in good faith expeditiously take all such
reasonable actions and do all such reasonable things as are necessary to cause
such shares of USX-Marathon Common Stock (or other shares or securities into
which USX-Marathon Common Stock may be reclassified or changed as contemplated
by Section 2.6 hereof) to be and remain duly registered, qualified or approved.
USX and Marathon each represent and warrant that it has in good faith taken all
actions and done all things as are necessary under Applicable Laws as they exist
on the date hereof to cause the shares of USX-Marathon Common Stock (or other
shares or securities into which USX-Marathon Common Stock may be reclassified or
changed as contemplated by Section 2.6 hereof) to be issued and delivered
hereunder, including for greater certainty, pursuant to the Exchangeable Share
Provisions, or pursuant to the Exchange Right to be freely tradeable thereafter
(other than restrictions on transfer by reason of a holder being a "control
person" of USX for the purposes of Canadian federal and provincial securities
law or an "affiliate" of USX or, prior to the Effective Date, of Tarragon for
the purposes of United States federal or state securities law). USX and Marathon
will in good faith expeditiously take all such reasonable actions and do all
such reasonable things as are necessary to cause all shares of USX-Marathon
Common Stock (or other shares or other securities into which USX-Marathon Common
Stock may be reclassified or changed as contemplated by Section 2.6 hereof) to
be delivered hereunder, including for greater certainty, pursuant to the
Exchangeable Share Provisions, or pursuant to the Exchange Right to be listed,
quoted or posted for trading on all stock exchanges and quotation systems on
which such shares are listed, quoted or posted for trading at such time. USX and
Marathon will in good faith expeditiously take all such reasonable action and do
all such reasonable things as are necessary to
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cause all Exchangeable Shares to be and to continue to be listed and posted for
trading on The Toronto Stock Exchange or another stock exchange in Canada.
2.6 NOTICE OF CERTAIN EVENTS. If USX shall:
(a) issue or distribute shares of USX-Marathon Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire
shares of USX-Marathon Common Stock) to the holders of all or
substantially all of the then outstanding USX-Marathon Common Stock by
way of stock dividend or other distribution; or
(b) issue or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding shares of USX-Marathon Common
Stock entitling them to subscribe for or to purchase shares of
USX-Marathon Common Stock (or securities exchangeable for or convertible
into or carrying rights to acquire shares of USX-Marathon Common Stock);
or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding shares of USX-Marathon Common Stock (i) shares or
securities of USX of any class other than USX-Marathon Common Stock
(other than shares convertible into or exchangeable for or carrying
rights to acquire shares of USX-Marathon Common Stock), (ii) rights,
options or warrants other than those referred to in subsection
2.7(a)(ii) above, (iii) evidences of indebtedness of USX or (iv) assets
of USX; or
(d) subdivide, divide or change the then outstanding shares of USX-Marathon
Common Stock into a greater number of shares of USX-Marathon Common
Stock; or
(e) reduce, combine or consolidate or change the then outstanding shares of
USX-Marathon Common Stock into a lesser number of shares of USX-Marathon
Common Stock; or
(f) reclassify or otherwise change the shares of USX-Marathon Common Stock
or effect an amalgamation, merger, reorganization or other transaction
affecting the shares of USX-Marathon Common Stock;
then USX will ensure that the record date for any such event or (if no record
date is applicable for such event) the effective date for any such event, is not
less than 10 calendar days after the date on which such event is declared or
announced by USX (with simultaneous notice thereof to be given by USX to
Albertaco).
2.7 TENDER OFFERS, ETC. In the event that a tender offer, share exchange offer,
issuer bid, take-over bid or similar transaction with respect to USX-Marathon
Common Stock (an "Offer"), is proposed by USX or is proposed to USX or its
shareholders and is recommended by the Board of Directors of USX, or is
otherwise effected or to be effected with the consent or approval of the Board
of Directors of USX, USX shall take all such actions and do all such things as
are necessary and reasonably within its power to enable and permit holders of
Exchangeable Shares to participate in such Offer to the same extent and on an
equivalent basis as the holders of shares of USX-Marathon Common Stock, without
discrimination. USX may discharge this obligation by ensuring that holders of
Exchangeable Shares may participate in all such Offers by means of retraction of
Exchangeable Shares as against Albertaco which shall be effective only upon, and
shall be conditional upon, the closing of the Offer and only to the extent
necessary to tender or deposit to the Offer.
2.8 OWNERSHIP OF OUTSTANDING SHARES. USX covenants and agrees in favour of
Albertaco that, as long as any outstanding Exchangeable Shares are owned by any
person or entity other than USX or any of its Subsidiaries, USX, or any
successor entity to USX contemplated by Section 2.6(f) hereof, will be and
remain the direct or indirect beneficial owner of all outstanding voting
securities of Albertaco.
2.9 USX NOT TO VOTE EXCHANGEABLE SHARES. USX covenants and agrees that it will
appoint and cause to be appointed proxyholders with respect to all Exchangeable
Shares held by USX and its Subsidiaries for the sole purpose of attending each
meeting of holders of Exchangeable Shares in order to be counted as part of the
quorum for each such meeting. USX further covenants and agrees that it will not,
and will cause its Subsidiaries not to, exercise any voting rights which may be
exercisable by holders of Exchangeable Shares from time to time pursuant to the
Exchangeable Share Provisions or pursuant to the provisions of any corporate
statute by which Albertaco may be governed with respect to any Exchangeable
Shares held by it or by its Subsidiaries in respect of any matter considered at
any meeting of holders of Exchangeable Shares.
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2.10 DUE PERFORMANCE. On and after the Effective Date, USX and Marathon shall
duly and timely perform all of their obligations provided for in connection with
the Plan of Arrangement including any obligations that may arise upon the
exercise of USX's or Marathon's rights under the Exchangeable Share Provisions.
ARTICLE 3
GENERAL
3.1 TERM. This Agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
the rights as shareholders of all holders of Exchangeable Shares (other than USX
and any of its subsidiaries) have been terminated in accordance with the terms
of the Exchangeable Share Provisions and no Exchangeable Shares (or securities
or rights convertible into or exchangeable for or carrying rights to acquire
Exchangeable Shares) are held by any party other than USX and any of its
Subsidiaries.
3.2 CHANGES IN CAPITAL OF USX.
(a) GENERAL. Notwithstanding the provisions of Section 3.4 hereof, at all
times after the occurrence of any event effected pursuant to Section 2.6
or 2.7 hereof, as a result of which either USX-Marathon Common Stock or
the Exchangeable Shares or both are in any way changed, or after the
occurrence of any event requiring an adjustment to the dividend
entitlement or the Exchangeable Share Price pursuant to Section 10.1 or
10.2 of the Exchangeable Share provisions, this Agreement shall
forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, MUTATIS MUTANDIS, to all new
securities into which USX-Marathon Common Stock or the Exchangeable
Shares or both are so changed and the parties hereto shall execute and
deliver an agreement in writing giving effect to and evidencing such
necessary amendments and modifications.
(b) MARATHON GROUP EXCHANGE. The Parties hereto acknowledge that the USX
Certificate provides for the ability of the board of directors of USX to
declare that all of the outstanding shares of USX-Marathon Common Stock
shall be exchanged for all of the outstanding shares of common stock of
a wholly-owned subsidiary of USX (the "Marathon Group Subsidiary") in
circumstances where USX has transferred all of the assets and
liabilities of the Marathon Group to the Marathon Group Subsidiary (the
"Marathon Group Exchange"). If USX shall complete the Marathon Group
Exchange, then the Marathon Group Subsidiary shall execute,
contemporaneously with the consummation of the Marathon Group Exchange,
an amending agreement supplemental to this Agreement and such other
instruments and agreements as are necessary or advisable to evidence (i)
the assumption by the Marathon Group Subsidiary of liability for all the
obligations of USX and Marathon in this Agreement and the Exchange Trust
Agreement and (ii) the Marathon Group Subsidiary's agreement to observe
and perform all the covenants and obligations of USX and Marathon under
this Agreement and the Exchange Trust Agreement.
(c) MARATHON GROUP ASSUMPTION AGREEMENT. Whenever the conditions of Section
3.2(b) hereof have been duly observed and performed, Albertaco and the
Marathon Group Subsidiary shall execute and deliver the supplemental
agreement provided for in Section 3.2(b) and thereupon (i) the Marathon
Group Subsidiary shall possess and from time to time may exercise each
and every right and power of USX and Marathon under this Agreement, the
Exchangeable Share Provisions, the Plan of Arrangement and the Exchange
Trust Agreement in the place of USX and Marathon and (ii) in this
Agreement, the Exchangeable Share Provisions and the Plan of
Arrangement, all references to USX and Marathon shall be deemed to be
references to the Marathon Group Subsidiary and all references to shares
of USX-Marathon Common Stock shall be deemed to be references to common
stock of the Marathon Group Subsidiary.
(d) NO SHAREHOLDER APPROVAL. Provided that the provisions of Section 3.2(b)
and 3.2(c) are complied with, the approval of the holders of
Exchangeable Shares shall not be required in order for USX to consummate
the Marathon Group Exchange.
3.3 SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this Agreement shall not in any way be affected or impaired
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thereby and this Agreement shall be carried out as nearly as possible in
accordance with its original terms and conditions.
3.4 AMENDMENTS, MODIFICATIONS, ETC. Except as provided in Section 3.2, this
Agreement may not be amended or modified except by an agreement in writing
executed by Albertaco, Marathon and USX and approved by the holders of the
Exchangeable Shares in accordance with Section 9.2 of the Exchangeable Share
Provisions.
3.5 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section 3.4, the
parties to this Agreement may in writing, at any time and from time to time,
without the approval of the holders of the Exchangeable Shares, amend or modify
this Agreement for the purposes of:
(a) adding to the covenants of any party for the protection of the holders
of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which it may be expedient to make, provided that such
amendments or modifications will not be prejudicial to the interests of
the holders of the Exchangeable Shares; or
(c) making such changes or corrections which, on the advice of counsel to
Albertaco, Marathon and USX, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the parties shall
be of the opinion that such changes or corrections will not be
prejudicial to the interests of the holders of the Exchangeable Shares.
3.6 MEETING TO CONSIDER AMENDMENTS. Albertaco, at the request of USX or
Marathon, shall call a meeting or meetings of the holders of the Exchangeable
Shares for the purpose of considering any proposed amendment or modification
requiring approval of such shareholders. Any such meeting or meetings shall be
called and held in accordance with the by-laws of Albertaco, the Exchangeable
Share Provisions and all applicable laws.
3.7 INUREMENT. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and the holders, from time to time, of Exchangeable Shares
and each of their respective heirs, successors and assigns.
3.8 NOTICES TO PARTIES. All notices and other communications between the parties
shall be in writing and shall be deemed to have been given if delivered
personally or by confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be specified in like
notice):
(a) if to USX or Marathon at:
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Marathon Oil Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to Albertaco at:
c/o Tarragon Oil and Gas Limited
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or other communication given personally shall be deemed to have been
given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of confirmed receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
3.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
3.10 JURISDICTION AND ATTORNMENT. This Agreement shall be construed and enforced
in accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein. USX and Marathon agree that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of Alberta,
waive any objection which they may have now or hereafter to the venue of any
such action or proceeding, irrevocably submit to the jurisdiction of the said
courts in any such action or proceeding and agree to be bound by any judgment of
the said courts and hereby appoint Albertaco at its registered office in the
Province of Alberta as USX's and Marathon's attorney for service of process in
connection with any such action or proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
USX CORPORATION
Per: _________________________________
Per: _________________________________
MARATHON OIL COMPANY
Per: _________________________________
Per: _________________________________
761581 ALBERTA LTD.
Per: _________________________________
Per: _________________________________
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Schedule 4 to that Arrangement Agreement
made the 20th day of June, 1998 between
Tarragon Oil and Gas Limited, Marathon Oil Company,
761581 Alberta Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.
as amended and restated the 7th day of July, 1998
EXCHANGE TRUST AGREEMENT
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EXCHANGE TRUST AGREEMENT
THIS EXCHANGE TRUST AGREEMENT made as of the - day of - , 1998,
AMONG:
USX CORPORATION, a corporation incorporated under the laws of the
State of Delaware and having its head and principal office at
Pittsburgh, Pennsylvania (hereinafter referred to as "USX")
-- and --
MARATHON OIL COMPANY, a corporation incorporated under the laws of
the State of Ohio and having its head and principal office at
Houston, Texas (hereinafter referred to as "Marathon")
-- and --
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LTD., a corporation incorporated under the laws of the
Province of Alberta and having its head and principal office at
Calgary, Alberta (hereinafter referred to as "Albertaco")
-- and --
MONTREAL TRUST COMPANY OF CANADA, a trust company existing under the
laws of Canada (hereinafter referred to as the "Trustee")
WHEREAS pursuant to an arrangement agreement dated as of June 20, 1998, by
and among ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd. ("Holdco") and Tarragon Oil
and Gas Limited ("Tarragon") (such agreement as it may be amended or restated is
hereinafter referred to as the "Arrangement Agreement"), Marathon, Albertaco,
Holdco and Tarragon agreed that on the Effective Date (as defined in the
Arrangement Agreement), USX, Marathon and Albertaco would execute and deliver an
Exchange Trust Agreement containing the terms and conditions set forth in
Schedule 4 to the Arrangement Agreement together with such other terms and
conditions as may be agreed to by the parties to the Arrangement Agreement
acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated - , 1998 filed pursuant to the BUSINESS
CORPORATIONS ACT (Ontario) all of the issued and outstanding common shares of
Tarragon ("Tarragon Common Shares") were exchanged for Exchangeable Shares of
Albertaco (the "Exchangeable Shares");
AND WHEREAS the Articles of Albertaco set forth the rights, privileges,
restrictions and conditions (collectively, the "Exchangeable Share Provisions")
attaching to the Exchangeable Shares;
AND WHEREAS USX is to grant to and in favour of the holders (other than USX
and its Subsidiaries) from time to time of Exchangeable Shares the right, in the
circumstances set forth herein, to require USX to purchase from each such holder
all or any part of the Exchangeable Shares held by the holder;
AND WHEREAS these recitals and any statements of fact in this Agreement are
made by USX, Marathon and Albertaco and not by the Trustee;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this Agreement, the following terms shall have the following
meanings:
(a) "ARRANGEMENT" has the meaning attributed thereto in the recitals hereto.
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(b) "AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of USX
to effect the automatic exchange of shares of USX-Marathon Common Stock
for Exchangeable Shares pursuant to Section 3.11 hereof.
(c) "BOARD OF DIRECTORS" means the Board of Directors of Albertaco.
(d) "BUSINESS DAY" has the meaning attributed thereto in the Exchangeable
Share Provisions.
(e) "EXCHANGE RIGHT" has the meaning attributed thereto in Article 3 hereof.
(f) "EXCHANGEABLE SHARE CONSIDERATION" has the meaning attributed thereto in
the Exchangeable Share Provisions.
(g) "EXCHANGEABLE SHARE PRICE" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(h) "EXCHANGEABLE SHARE PROVISIONS" has the meaning attributed thereto in
the recitals hereto.
(i) "EXCHANGEABLE SHARES" has the meaning attributed thereto in the recitals
hereto.
(j) "HOLDCO" means 787722 Alberta Ltd., a wholly-owned subsidiary of
Marathon.
(k) "HOLDERS" means the registered holders from time to time of Exchangeable
Shares, other than USX and its Subsidiaries.
(l) "LIQUIDATION CALL RIGHT" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(m) "LIQUIDATION EVENT" has the meaning attributed thereto in subsection
3.11(b) hereto.
(n) "LIQUIDATION EVENT EFFECTIVE DATE" has the meaning attributed thereto in
subsection 3.11(c) hereof.
(o) "MARATHON GROUP SUBSIDIARY" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(p) "MARATHON SUBSIDIARY" means a subsidiary of Marathon, other than
Albertaco.
(q) "OFFICER'S CERTIFICATE" means, with respect to USX, Marathon or
Albertaco, as the case may be, a certificate signed by any one of the
Chairman of the Board, the Vice-Chairman of the Board, the President,
any Vice-President or any other senior officer of USX, Marathon or
Albertaco, as the case may be.
(r) "PERSON" includes an individual, partnership, corporation, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
(s) "PLAN OF ARRANGEMENT" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(t) "REDEMPTION CALL RIGHT" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(u) "RETRACTED SHARES" has the meaning attributed thereto in Section 3.7
hereof.
(v) "RETRACTION CALL RIGHT" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(w) "SUBSIDIARY" has the meaning attributed thereto in the Exchangeable
Share Provisions.
(x) "SUPPORT AGREEMENT" means that certain support agreement made as of even
date hereof between Albertaco, Marathon and USX.
(y) "TRUST" means the trust created by this Agreement.
(z) "TRUST ESTATE" means the Exchange Right, the Automatic Exchange Rights
and any money or other property which may be held by the Trustee from
time to time pursuant to this Agreement.
(aa) "TRUSTEE" means Montreal Trust Company of Canada and, subject to the
provisions of Article 7 hereof, includes any successor trustee or
permitted assigns.
(bb) "USX CERTIFICATE" has the meaning attributed thereto in the
Exchangeable Share Provisions.
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(cc) "USX-MARATHON COMMON STOCK" has the meaning attributed thereto in the
Exchangeable Share Provisions.
(dd) "USX SUCCESSOR" has the meaning attributed thereto in subsection 8.1(a)
hereof.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this Agreement
into articles, sections and paragraphs and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall include
all genders.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to be taken
under this Agreement is not a Business Day, such action shall be required to be
taken on the next succeeding Business Day.
ARTICLE 2
PURPOSE OF AGREEMENT
The purpose of this Agreement is to create the Trust for the benefit of the
Holders, as herein provided. The Trustee will hold the Exchange Right and the
Automatic Exchange Rights in order to enable the Trustee to exercise such
rights, in each case as Trustee for and on behalf of the Holders as provided in
this Agreement.
ARTICLE 3
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
3.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHTS. USX and Marathon hereby grant to
the Trustee as trustee for and on behalf of, and for the use and benefit of, the
Holders (i) the right (the "EXCHANGE RIGHT") to require USX to purchase from
each or any Holder at any time and from time to time all or any part of the
Exchangeable Shares held by such Holders, and (ii) the Automatic Exchange
Rights, all in accordance with the provisions of this Agreement.
USX hereby acknowledges receipt from the Trustee as trustee for and on
behalf of the Holders of good and valuable consideration (and the adequacy
thereof) for the grant of the Exchange Right and the Automatic Exchange Rights
by USX to the Trustee. During the term of the Trust and subject to the terms and
conditions of this Agreement, the Trustee shall possess and be vested with full
legal ownership of the Exchange Right and the Automatic Exchange Rights and
shall be entitled to exercise all of the rights and powers of an owner with
respect to the Exchange Right and the Automatic Exchange Rights, provided that
the Trustee shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the legal
title thereto as trustee solely for the use and benefit of the Holders
in accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to exercise or otherwise deal in or with the Exchange Right or
the Automatic Exchange Rights, and the Trustee shall not exercise any
such rights for any purpose other than the purposes for which this Trust
is created pursuant to this Agreement.
3.2 LEGENDED SHARE CERTIFICATES. Albertaco will cause each certificate
representing Exchangeable Shares to bear an appropriate legend notifying the
Holders of:
(a) their right to instruct the Trustee with respect to the exercise of the
Exchange Right in respect of the Exchangeable Shares held by a Holder,
and
(b) the Automatic Exchange Rights.
3.3 GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right shall be and remain
vested in and exercisable by the Trustee. Subject to Section 4.15 hereof, the
Trustee shall exercise the Exchange Right only on the basis of instructions
received pursuant to this Article 3 from Holders entitled to instruct the
Trustee as to the exercise thereof to the extent that no instructions are
received from a Holder with respect to the Exchange Right, the Trustee shall not
exercise or permit the exercise of the Exchange Right.
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3.4 PURCHASE PRICE. The purchase price payable by USX for each Exchangeable
Share to be purchased by USX under the Exchange Right shall be an amount equal
to the Exchangeable Share Price on the last Business Day prior to the day of
closing of the exchange of such Exchangeable Share under the Exchange Right. In
connection with each exercise of the Exchange Right, USX will provide to the
Trustee an Officer's Certificate setting forth the calculation of the
Exchangeable Share Price for each Exchangeable Share. The Exchangeable Share
Price for each such Exchangeable Share so purchased may be satisfied only by USX
issuing and delivering or causing to be delivered to the Trustee, on behalf of
the relevant Holder, the Exchangeable Share Consideration representing the total
Exchangeable Share Price.
3.5 EXERCISE INSTRUCTIONS. Subject to the terms and conditions herein set forth,
a Holder shall be entitled to instruct the Trustee to exercise the Exchange
Right with respect to all or any part of the Exchangeable Shares registered in
the name of such Holder on the books of Albertaco. To cause the exercise of the
Exchange Right by the Trustee, the Holder shall deliver to the Trustee, in
person or by certified or registered mail, at its principal offices in Calgary,
Alberta or Toronto, Ontario or at such other places in Canada as the Trustee may
from time to time designate by written notice to the Holders, the certificates
representing the Exchangeable Shares which such Holder desires USX to purchase,
duly endorsed in blank, and accompanied by such other documents and instruments
as may be required to effect a transfer of Exchangeable Shares under applicable
law and the by-laws of Albertaco and such additional documents and instruments
as the Trustee may reasonably require together with (a) a duly completed form of
notice of exercise of the Exchange Right, contained on the reverse of or
attached to the Exchangeable Share certificates, stating (i) that the Holder
thereby instructs the Trustee to exercise the Exchange Right so as to require
USX to purchase from the Holder the number of Exchangeable Shares specified
therein, (ii) that such Holder has good title to and owns all such Exchangeable
Shares to be acquired by USX free and clear of all liens, claims and
encumbrances, (iii) the names in which the certificates representing
USX-Marathon Common Stock issuable in connection with the exercise of the
Exchange Right are to be issued and (iv) the names and addresses of the persons
to whom the Exchangeable Share Consideration should be delivered and (b) payment
(or evidence satisfactory to the Trustee, Albertaco and USX of payment) of the
taxes (if any) payable as contemplated by Section 3.8 of this Agreement. If only
a part of the Exchangeable Shares represented by any certificate or certificates
delivered to the Trustee are to be purchased by USX under the Exchange Right, a
new certificate for the balance of such Exchangeable Shares shall be issued to
the Holder at the expense of Albertaco.
3.6 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE.
Immediately after receipt of the certificates representing the Exchangeable
Shares which the Holder desires USX to purchase under the Exchange Right
(together with such documents and instruments of transfer and a duly completed
form of notice of exercise of the Exchange Right), duly endorsed for transfer to
USX the Trustee shall notify USX and Albertaco of its receipt of the same, which
notice to USX and Albertaco shall constitute exercise of the Exchange Right by
the Trustee on behalf of the Holder of such Exchangeable Shares, and USX shall
immediately thereafter deliver or cause to be delivered to the Trustee, for
delivery to the Holder of such Exchangeable Shares (or to such other persons, if
any, properly designated by such Holder), the Exchangeable Share Consideration
deliverable in connection with the exercise of the Exchange Right; provided,
however, that no such delivery shall be made unless and until the Holder
requesting the same shall have paid (or provided evidence satisfactory to the
Trustee, Albertaco and USX of the payment of) the taxes (if any) payable as
contemplated by Section 3.8 of this Agreement. Immediately upon the giving of
notice by the Trustee to USX and Albertaco of the exercise of the Exchange
Right, as provided in this Section 3.6, the closing of the transaction
contemplated by the Exchange Right shall be deemed to have occurred, and the
Holder of such Exchangeable Shares shall be deemed to have transferred to USX
all of its right, title and interest in and to such Exchangeable Shares and in
the related interest in the Trust Estate and shall cease to be a holder of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of a
holder in respect thereof, other than the right to receive his proportionate
part of the total purchase price therefor, unless such Exchangeable Share
Consideration is not delivered by USX to the Trustee, for delivery to such
Holder (or to such other persons, if any, properly designated by such Holder),
within three Business Days of the date of the giving of such notice by the
Trustee, in which case the rights of the Holder shall remain unaffected until
such Exchangeable Share Consideration is delivered by USX. Concurrently with
such Holder ceasing to be a holder of Exchangeable Shares, the Holder shall be
considered and deemed for all purposes to be the holder of the shares of
USX-Marathon Common Stock delivered to it pursuant to the Exchange Right.
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3.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event that a
Holder has exercised its right under Article 6 of the Exchangeable Share
Provisions to require Albertaco to redeem any or all of the Exchangeable Shares
held by the Holder (the "RETRACTED SHARES") and is notified by Albertaco
pursuant to Section 6.6 of the Exchangeable Share Provisions that Albertaco will
not be permitted as a result of liquidity or solvency requirements of applicable
law to redeem all such Retracted Shares, subject to receipt by the Trustee of
written notice to that effect from Albertaco and provided that USX shall not
have exercised the Retraction Call Right with respect to the Retracted Shares
and that the Holder has not revoked the retraction request delivered by the
Holder to Albertaco pursuant to Section 6.1 of the Exchangeable Share
Provisions, the retraction request will constitute and will be deemed to
constitute notice from the Holder to the Trustee instructing the Trustee to
exercise the Exchange Right with respect to those Retracted Shares which
Albertaco is unable to redeem. In any such event, Albertaco hereby agrees with
the Trustee and in favour of the Holder immediately to notify the Trustee of
such prohibition against Albertaco redeeming all of the Retracted Shares and
immediately to forward or cause to be forwarded to the Trustee all relevant
materials delivered by the Holder to Albertaco or to the transfer agent of the
Exchangeable Shares (including without limitation a copy of the retraction
request delivered pursuant to Section 6.1 of the Exchangeable Share Provisions)
in connection with such proposed redemption of the Retracted Shares and the
Trustee will thereupon exercise the Exchange Right with respect to the Retracted
Shares that Albertaco is not permitted to redeem and will require USX to
purchase such shares in accordance with the provisions of this Article 3.
3.8 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares to USX
pursuant to the Exchange Right or the Automatic Exchange Rights, the share
certificate or certificates representing USX-Marathon Common Stock to be
delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Holder of the Exchangeable Shares so sold or
in such names as such Holder may otherwise direct in writing without charge to
the holder of the Exchangeable Shares so sold, provided, however, that such
Holder (a) shall pay (and none of USX, Marathon, Albertaco nor the Trustee shall
be required to pay) any documentary, stamp, transfer or other similar taxes that
may be payable, or income taxes that may be required to be withheld, in respect
of any transfer involved in the issuance or delivery of such shares to a person
other than such Holder or (b) shall have established to the satisfaction of the
Trustee, USX, Marathon and Albertaco that such taxes, if any, have been paid.
3.9 QUALIFICATION OF USX-MARATHON COMMON STOCK. USX covenants that if any shares
of USX-Marathon Common Stock to be issued and delivered pursuant to the Exchange
Right or the Automatic Exchange Rights require registration or qualification
with or approval of or the filing of any document including any prospectus or
similar document or the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or regulatory authority under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority or the
fulfilment of any other legal requirement (collectively, the "APPLICABLE LAWS")
before such shares may be issued and delivered by USX to the initial holder
thereof (other than Albertaco) or in order that such shares may be freely traded
thereafter (other than any restrictions on transfer by reason of a holder being
a "control person" of USX for purposes of Canadian federal or provincial
securities law or an "affiliate" of USX or, prior to the date hereof, of
Tarragon for purposes of United States federal or state securities law), USX
will in good faith expeditiously take all such reasonable actions and do all
such reasonable things as are necessary to cause such shares of USX-Marathon
Common Stock to be and remain duly registered, qualified or approved. USX
represents and warrants that it has in good faith taken all actions and done all
things as are necessary under Applicable Laws as they exist on the date hereof
to cause the shares of USX-Marathon Common Stock to be issued and delivered
pursuant to the Exchange Right and the Automatic Exchange Rights and to be
freely tradeable thereafter (other than restrictions on transfer by reason of a
holder being a "control person" of USX for the purposes of Canadian federal and
provincial securities law or an "affiliate" of USX or, prior to the date hereof,
of Tarragon for the purposes of United States federal or state securities law).
USX will in good faith expeditiously take all such reasonable actions and do all
such reasonable things as are necessary to cause all shares of USX-Marathon
Common Stock to be delivered pursuant to the Exchange Right or the Automatic
Exchange Rights to be listed, quoted or posted for trading on all stock
exchanges and quotation systems on which such shares are listed, quoted or
posted for trading at such time.
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3.10 RESERVATION OF SHARES OF USX-MARATHON COMMON STOCK. USX hereby represents,
warrants and covenants that it has irrevocably reserved for issuance and will at
all times keep available, free from pre-emptive and other rights, out of its
authorized and unissued capital stock such number of shares of USX-Marathon
Common Stock as are now and may hereafter be required to enable and permit
Albertaco, Marathon and USX to meet their respective obligations hereunder,
under the Support Agreement, under the Exchangeable Share Provisions and under
any other security or commitment pursuant to the Arrangement with respect to
which USX may now or hereafter be required to issue shares of USX-Marathon
Common Stock.
3.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF USX.
(a) USX will give the Trustee written notice of each of the following events
at the time set forth below:
(i) in the event of any determination by the board of directors of USX
to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to USX or to effect any other distribution
of assets of USX among its stockholders for the purpose of
winding-up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution, winding-up or
other distribution; and
(ii) immediately, upon the earlier of (A) receipt by USX of notice of
and (B) USX otherwise becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect
to the involuntary liquidation, dissolution or winding-up of USX or
to effect any other distribution of assets of USX among its
stockholders for the purpose of winding-up its affairs.
(b) Immediately following receipt by the Trustee from USX of notice of any
event (a "LIQUIDATION EVENT") contemplated by Section 3.11(a) above, the
Trustee will give notice thereof to the Holders. Such notice will be
provided by USX to the Trustee and shall include a brief description of
the automatic exchange of Exchangeable Shares for shares of USX-Marathon
Common Stock provided for in Section 3.11(c) below.
(c) In order that the Holders will be able to participate on a PRO RATA
basis with the holders of USX-Marathon Common Stock in the distribution
of assets of USX in connection with a Liquidation Event, immediately
prior to the effective time (the "LIQUIDATION EVENT EFFECTIVE TIME") of
a Liquidation Event all of the then outstanding Exchangeable Shares
shall be automatically exchanged for shares of USX-Marathon Common
Stock. To effect such automatic exchange, USX shall be deemed to have
purchased each Exchangeable Share outstanding and held by Holders
immediately prior to the Liquidation Event Effective Time, and each
Holder shall be deemed to have sold the Exchangeable Shares held by it
at such time, for a purchase price per share equal to the Exchangeable
Share Price applicable at such time. In connection with such automatic
exchange, USX will provide to the Trustee an Officers' Certificate
setting forth the calculation of the purchase price for each
Exchangeable Share.
(d) The closing of the transaction of purchase and sale contemplated by
Section 3.11(c) above shall be deemed to have occurred immediately prior
to the Liquidation Event Effective Time, and each Holder of Exchangeable
Shares shall be deemed to have transferred to USX all of the Holder's
right, title and interest in and to such Exchangeable Shares and the
related interest in the Trust Estate and shall cease to be a holder of
such Exchangeable Shares and USX shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon the automatic exchange
of Exchangeable Shares. Concurrently with such Holder ceasing to be a
holder of Exchangeable Shares, the Holder shall be considered and deemed
for all purposes to be the holder of the shares of USX-Marathon Common
Stock issued to it pursuant to the automatic exchange of Exchangeable
Shares for USX-Marathon Common Stock and the certificates held by the
Holder previously representing the Exchangeable Shares exchanged by the
Holder with USX pursuant to such automatic exchange shall thereafter be
deemed to represent the shares of USX-Marathon Common Stock issued to
the Holder by USX pursuant to such automatic exchange. Upon the request
of a Holder and the surrender by the Holder of Exchangeable Share
certificates deemed to represent shares of USX-Marathon Common Stock,
duly endorsed in blank and accompanied by such instruments of transfer
as USX may reasonably require, USX shall deliver or
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cause to be delivered to the Holder certificates representing the shares
of USX-Marathon Common Stock of which the Holder is the holder.
3.12 PERFORMANCE BY MARATHON. Any provision in Article 3 of this Agreement
providing for the delivery by USX of USX-Marathon Common Stock, any Officer's
Certificate or any other documents or instruments may, at the option of USX, be
satisfied by delivery of such stock certificates or other documents or
instruments by or on behalf of Marathon or Holdco or a Marathon Subsidiary
(provided that all other provisions of Article 3 with respect to qualification
of such stock and other matters shall have been complied with), and in such case
such delivery by or on behalf of Marathon or Holdco or a Marathon Subsidiary
shall satisfy USX's obligations hereunder and the rights of USX to acquire the
corresponding Exchangeable Shares shall be deemed to have been transferred to
Marathon, Holdco or the Marathon Subsidiary, as the case may be.
ARTICLE 4
CONCERNING THE TRUSTEE
4.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities of the
Trustee under this Agreement, in its capacity as trustee of the Trust, shall
include:
(a) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from USX as trustee for and on behalf of the Holders in
accordance with the provisions of this Agreement;
(b) exercising the Exchange Right and enforcing the benefit of the Automatic
Exchange Rights, in each case in accordance with the provisions of this
Agreement, and in connection therewith receiving from Holders
Exchangeable Shares and other requisite documents and distributing to
such Holders the shares of USX-Marathon Common Stock and cheques, if
any, to which such Holders are entitled upon the exercise of the
Exchange Right or pursuant to the Automatic Exchange Rights, as the case
may be;
(c) holding title to the Trust Estate;
(d) investing any monies forming, from time to time, a part of the Trust
Estate as provided in this Agreement;
(e) taking action at the direction of a Holder or Holders to enforce the
obligations of USX under this Agreement; and
(f) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers and authorities the Trustee shall
have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this Agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
Agreement.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.
The Trustee shall not be bound to give any notice or do or take any act,
action or proceeding by virtue of the powers conferred on it hereby unless and
until it shall be specifically required to do so under the terms hereof; nor
shall the Trustee be required to take any notice of, or to do or to take any
act, action or proceeding as a result of any default or breach of any provision
hereunder, unless and until notified in writing of such default or breach, which
notices shall distinctly specify the default or breach desired to be brought to
the attention of the Trustee and in the absence of such notice the Trustee may
for all purposes of this Agreement conclusively assume that no default or breach
has been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
4.2 NO CONFLICT OF INTEREST. The Trustee represents to Albertaco, Marathon and
USX that at the date of execution and delivery of this Agreement there exists no
material conflict of interest in the role of the Trustee as
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a fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall, within 90 days after it becomes aware that such a material
conflict of interest exists, either eliminate such material conflict of interest
or resign in the manner and with the effect specified in Article 7 hereof. If,
notwithstanding the foregoing provisions of this Section 4.2, the Trustee has
such a material conflict of interest, the validity and enforceability of this
Agreement shall not be affected in any manner whatsoever by reason only of the
existence of such material conflict of interest. If the Trustee contravenes the
foregoing provisions of this Section 4.2, any interested party may apply to the
Alberta Court of Queen's Bench for an order that the Trustee be replaced as
trustee hereunder.
4.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. Albertaco, Marathon and USX
irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective registrars
and transfer agents, and with any such subsequent registrar or transfer
agent, of the Exchangeable Shares and USX-Marathon Common Stock; and
(b) requisition, from time to time, (i) from any such registrar or transfer
agent any information readily available from the records maintained by
it which the Trustee may reasonably require for the discharge of its
duties and responsibilities under this Agreement and (ii) from the
transfer agent of USX-Marathon Common Stock, and any subsequent transfer
agent of such shares, the share certificates issuable upon the exercise
from time to time of the Exchange Right and pursuant to the Automatic
Exchange Rights in the manner specified in Article 3 hereof.
Albertaco and USX irrevocably authorize their respective registrars and
transfer agents to comply with all such requests. USX covenants that it will
supply its transfer agent with duly executed share certificates for the purpose
of completing the exercise from time to time of the Exchange Right and the
Automatic Exchange Rights, in each case pursuant to Article 3 hereof.
4.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection by USX,
Marathon and Albertaco, at the Trustee's principal office in Calgary, Alberta,
correct and complete books and records of account relating to the Trustee's
actions under this Agreement, including without limitation all information
relating to mailings and instructions to and from Holders and all transactions
pursuant to the Exchange Right and the Automatic Exchange Rights for the term of
this Agreement. On or before March 31, 1999, and on or before March 31 in every
year thereafter, the Trustee shall transmit to USX, Marathon and Albertaco a
brief report, dated as of the preceding December 31, with respect to:
(a) the property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Exchange Right, if any, and the aggregate
number of Exchangeable Shares received by the Trustee on behalf of
Holders in consideration of the issue and delivery by USX of shares of
USX-Marathon Common Stock in connection with the Exchange Right, during
the calendar year ended on such date; and
(c) all other actions taken by the Trustee in the performance of its duties
under this Agreement which it had not previously reported.
4.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the extent necessary,
prepare and file on behalf of the Trust appropriate United States and Canadian
income tax returns and any other returns or reports as may be required by
applicable law or pursuant to the rules and regulations of any securities
exchange or other trading system through which the Exchangeable Shares are
traded and, in connection therewith, may obtain the advice and assistance of
such experts as the Trustee may consider necessary or advisable. If requested by
the Trustee, USX and Marathon shall retain such experts for purposes of
providing such advice and assistance.
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4.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested in it by
this Agreement at the request, order or direction of any Holder upon such Holder
furnishing to the Trustee reasonable funding, security and indemnity against the
costs, expenses and liabilities which may be incurred by the Trustee therein or
thereby, provided that no Holder shall be obligated to furnish to the Trustee
any such funding, security or indemnity in connection with the exercise by the
Trustee of any of its rights, duties, powers and authorities with respect to the
Exchange Right pursuant to Article 3 hereof, subject to Section 4.15 hereof, and
with respect to the Automatic Exchange Rights pursuant to Article 3 hereof.
None of the provisions contained in this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
exercise of any of its rights, powers, duties or authorities unless funded,
given funds, security and indemnified as aforesaid.
4.7 ACTIONS BY HOLDERS. No Holder shall have the right to institute any action,
suit or proceeding or to exercise any other remedy authorized by this Agreement
for the purpose of enforcing any of its rights or for the execution of any trust
or power hereunder unless the Holder has requested the Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with the
funding, security and indemnity referred to in Section 4.6 hereof and the
Trustee shall have failed to act within a reasonable time thereafter. In such
case, but not otherwise, the Holder shall be entitled to take proceedings in any
court of competent jurisdiction such as the Trustee might have taken; it being
understood and intended that no one or more Holders shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or under the Exchange Right
or the Automatic Exchange Rights, except subject to the conditions and in the
manner herein provided, and that all powers and trusts hereunder shall be
exercised and all proceedings at law shall be instituted, had and maintained by
the Trustee, except only as herein provided, and in any event for the equal
benefit of all Holders.
4.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be in
contravention of any of its rights, powers, duties and authorities hereunder if,
when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other papers
or documents furnished pursuant to the provisions hereof or required by the
Trustee to be furnished to it in the exercise of its rights, powers, duties and
authorities hereunder and such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of Section 4.9 hereof, if applicable, and with any
other applicable provisions of this Agreement.
4.9 EVIDENCE AND AUTHORITY TO TRUSTEE. Albertaco, Marathon or USX shall furnish
to the Trustee evidence reasonably requested by the Trustee of compliance with
the conditions provided for in this Agreement relating to any action or step
required or permitted to be taken by Albertaco, Marathon or USX or the Trustee
under this Agreement or as a result of any obligation imposed under this
Agreement, including, without limitation, in respect of the Exchange Right or
the Automatic Exchange Rights and the taking of any other action to be taken by
the Trustee at the request of or on the application of Albertaco, Marathon or
USX forthwith if and when:
(a) such evidence is required by any other section of this Agreement to be
furnished to the Trustee in accordance with the terms of this Section
4.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Albertaco, Marathon or USX
written notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of Albertaco,
Marathon or USX or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this Agreement.
Whenever such evidence relates to a matter other than the Exchange Right or
the Automatic Exchange Rights, and except as otherwise specifically provided
herein, such evidence may consist of a report or opinion of any solicitor,
auditor, accountant, appraiser, valuer, engineer or other expert or any other
person whose qualifications give authority to a statement made by him provided
that if such report or opinion is furnished by a director, officer or employee
of Albertaco, Marathon or USX it shall be in the form of an Officer's
Certificate or a statutory declaration.
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Each statutory declaration, certificate, opinion or report furnished to the
Trustee as evidence of compliance with a condition provided for in this
Agreement shall include a statement by the person giving the evidence:
(c) declaring that he has read and understands the provisions of this
Agreement relating to the condition in question;
(d) describing the nature and scope of the examination or investigation upon
which he based the statutory declaration, certificate, statement or
opinion; and
(e) declaring that he has made such examination or investigation as he
believes is necessary to enable him to make the statements or give the
opinions contained or expressed therein.
4.10 EXPERTS, ADVISORS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice of
or information obtained from or prepared by any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by Albertaco, Marathon or USX or otherwise,
and may employ such assistants as may be necessary to the proper
determination and discharge of its powers and duties and determination
of its rights hereunder and may pay proper and reasonable compensation
for all such legal and other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require for
the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services
performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge of the
trusts hereof and compensation for all disbursements, costs and expenses
made or incurred by it in the determination and discharge of its duties
hereunder and in the management of the Trust.
4.11 INVESTMENT OF MONIES HELD BY TRUSTEE. Unless otherwise provided in this
Agreement, any monies held by or on behalf of the Trustee which under the terms
of this Agreement may or ought to be invested or which may be on deposit with
the Trustee or which may be in the hands of the Trustee may be invested and
reinvested in the name or under the control of the Trustee in securities in
which, under the laws of the Province of Alberta trustees are authorized to
invest trust unit monies, provided that such securities are stated to mature
within two years after their purchase by the Trustee, and the Trustee shall so
invest such monies on the written direction of Albertaco. Pending the investment
of any monies as hereinbefore provided, such monies may be deposited in the name
of the Trustee in any chartered bank in Canada or, with the consent of
Albertaco, in the deposit department of the Trustee or any other loan or company
authorized to accept deposits under the laws of Canada or any province thereof
at the rate of interest then current on similar deposits.
4.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be required to
give any bond or security in respect of the execution of the trusts, rights,
duties, powers and authorities of this Agreement or otherwise in respect of the
premises.
4.13 TRUSTEE NOT BOUND TO ACT ON REQUEST. Except as in this Agreement otherwise
specifically provided, the Trustee shall not be bound to act in accordance with
any direction or request of Albertaco, Marathon or USX or of the directors
thereof until a duly authenticated copy of the instrument or resolution
containing such direction or request shall have been delivered to the Trustee,
and the Trustee shall be empowered to act and rely upon any such copy purporting
to be authenticated and believed by the Trustee to be genuine.
4.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to Albertaco,
Marathon and USX that at the date of execution and delivery by it of this
Agreement it is authorized to carry on the business of a trust company in the
Province of Alberta but if, notwithstanding the provisions of this Section 4.14,
it ceases to be so authorized to carry on business, the validity and
enforceability of this Agreement and the Exchange Right and the Automatic
Exchange Rights shall not be affected in any manner whatsoever by reason only of
such event but the Trustee shall, within 90 days after ceasing to be authorized
to carry on the business of a trust company in the Province of Alberta, either
become so authorized or resign in the manner and with the effect specified in
Article 7 hereof.
4.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or asserted
with respect to any interest of any Holder in any Exchangeable Shares, including
any disagreement between the heirs, representatives,
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successors or assigns succeeding to all or any part of the interest of any
Holder in any Exchangeable Shares resulting in conflicting claims or demands
being made in connection with such interest, then the Trustee shall be entitled,
at its sole discretion, to refuse to recognize or to comply with any such claim
or demand. In so refusing, the Trustee may elect not to exercise any Exchange
Right or Automatic Exchange Rights subject to such conflicting claims or demands
and, in so doing, the Trustee shall not be or become liable to any person on
account of such election or its failure or refusal to comply with any such
conflicting claims or demands. The Trustee shall be entitled to continue to
refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Exchange Right
or Automatic Exchange Rights subject to such conflicting claims or
demands have been adjudicated by a final judgment of a court of
competent jurisdiction; or
(b) all differences with respect to the Exchange Right or Automatic Exchange
Right subject to such conflicting claims or demands have been
conclusively settled by a valid written agreement binding on all such
adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement.
If the Trustee elects to recognize any claim or comply with any demand made by
any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate fully to indemnify it as between all conflicting claims
or demands.
4.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created and
provided for by and in this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and to hold all rights, privileges and
benefits conferred hereby and by law in trust for the various persons who shall
from time to time be Holders, subject to all the terms and conditions herein set
forth.
ARTICLE 5
COMPENSATION
USX, Marathon and Albertaco jointly and severally agree to pay to the
Trustee reasonable compensation for all of the services rendered by it under
this Agreement and will reimburse the Trustee for all reasonable expenses
(including but not limited to taxes, compensation paid to experts, agents and
advisors and travel expenses) and disbursements, including the cost and expense
of any suit or litigation of any character and any proceedings before any
governmental agency reasonably incurred by the Trustee in connection with its
rights and duties under this Agreement; provided that USX, Marathon and
Albertaco shall have no obligation to reimburse the Trustee for any expenses or
disbursements paid, incurred or suffered by the Trustee in any suit or
litigation in which the Trustee is determined to have acted in bad faith or with
negligence or willful misconduct.
ARTICLE 6
INDEMNIFICATION AND LIMITATION OF LIABILITY
6.1 INDEMNIFICATION OF THE TRUSTEE. USX, Marathon and Albertaco jointly and
severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, employees and agents appointed and acting in accordance
with this Agreement (collectively, the "Indemnified Parties") against all
claims, losses, damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal counsel on a solicitor and
his own client basis) which, without fraud, negligence, willful misconduct or
bad faith on the part of such Indemnified Party, may be paid, incurred or
suffered by the Indemnified Party by reason of or as a result of the Trustee's
acceptance or administration of the Trust, its compliance with its duties set
forth in this Agreement, or any written or oral instructions delivered to the
Trustee by USX, Marathon or Albertaco pursuant hereto. In no case shall USX,
Marathon or Albertaco be liable under this indemnity for any claim against any
of the Indemnified Parties unless USX, Marathon and Albertaco shall be notified
by the Trustee of the written assertion of a claim or of any action commenced
against the Indemnified Parties, promptly after any of the Indemnified Parties
shall have received any such written assertion of a claim or shall have been
served with a summons or other first legal process giving information as to the
nature and basis of the claim. Subject to (b), below, USX, Marathon and
Albertaco shall be entitled to participate at their own expense in the defense
and, if USX, Marathon or Albertaco so elect at any time after receipt of such
notice, any of them may assume the
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defense of any suit brought to enforce any such claim. The Trustee shall have
the right to employ separate counsel in any such suit and participate in the
defense thereof but the fees and expenses of such counsel shall be at the
expense of the Trustee unless: (a) the employment of such counsel has been
authorized by USX, Marathon or Albertaco, such authorization not to be
unreasonably withheld; or (b) the named parties to any such suit include both
the Trustee and USX, Marathon or Albertaco and the Trustee shall have been
advised by counsel acceptable to USX, Marathon or Albertaco that there may be
one or more legal defenses available to the Trustee that are different from or
in addition to those available to USX, Marathon or Albertaco and that an actual
or potential conflict exists (in which case USX, Marathon and Albertaco shall
not have the right to assume the defense of such suit on behalf of the Trustee
but shall be liable to pay the reasonable fees and expenses of counsel for the
Trustee).
6.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for any loss
which may occur by reason of depreciation of the value of any part of the Trust
Estate or any loss incurred on any investment of funds pursuant to this
Agreement except to the extent that such loss is attributable to the fraud,
negligence, willful misconduct or bad faith on the part of the Trustee.
ARTICLE 7
CHANGE OF TRUSTEE
7.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at any
time resign by giving written notice of such resignation to USX, Marathon and
Albertaco specifying the date on which it desires to resign, provided that such
notice shall never be given less than 60 days before such desired resignation
date unless USX, Marathon and Albertaco otherwise agree and provided further
that such resignation shall not take effect until the date of the appointment of
a successor trustee and the acceptance of such appointment by the successor
trustee. Upon receiving such notice of resignation, USX, Marathon and Albertaco
shall promptly appoint a successor trustee by written instrument in duplicate,
one copy of which shall be delivered to the resigning trustee and one copy to
the successor trustee. Failing acceptance by a successor trustee, a successor
trustee may be appointed by an order of the Alberta Court of Queen's Bench upon
application of one or more of the parties hereto.
7.2 REMOVAL. The Trustee, or any Trustee hereafter appointed, may be removed
with or without cause at any time on 60 days' prior notice by written instrument
executed by USX, Marathon and Albertaco, in duplicate, one copy of which shall
be delivered to the trustee so removed and one copy to the successor trustee,
provided that, in connection with such removal, provision is made for a
replacement trustee similar to that contemplated in Section 7.1.
7.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under this
Agreement shall execute, acknowledge and deliver to USX, Marathon and Albertaco
and to its predecessor trustee an instrument accepting such appointment.
Thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as trustee in this Agreement. However, on the written request
of USX, Marathon and Albertaco or of the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of this Agreement, execute and deliver an instrument transferring to such
successor Trustee all the rights and powers of the trustee so ceasing to act.
Upon the request of any such successor trustee, USX, Marathon, Albertaco and
such predecessor trustee shall execute any and all instruments in writing for
more fully and certainly vesting in and confirming to such successor trustee all
such rights and powers.
7.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a successor
trustee as provided herein, USX, Marathon and Albertaco shall cause to be mailed
notice of the succession of such trustee hereunder to each Holder. If USX,
Marathon or Albertaco shall fail to cause such notice to be mailed within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of USX, Marathon and
Albertaco.
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ARTICLE 8
USX SUCCESSORS
8.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. If USX or Marathon
shall enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other Person or, in the case of a merger, of the
continuing corporation resulting therefrom then:
(a) such other Person or continuing corporation (a successor to USX or
Marathon, herein the "USX SUCCESSOR"), by operation of law, shall
become, without further action, bound by the terms and provisions of
this Agreement or, if not so bound, shall execute, prior to or
contemporaneously with the consummation of such transaction an agreement
supplemental hereto and such other instruments (if any) as are necessary
or advisable to evidence the assumption by the USX Successor of
liability for all monies payable and property deliverable hereunder and
the covenant of such USX Successor to pay and deliver or cause to be
delivered the same and its agreement to observe and perform all the
covenants and obligations of USX or Marathon, as applicable, under this
Agreement; and
(b) such transaction shall be upon such terms as substantially to preserve
and not to impair in any material respect any of the rights, duties,
powers and authorities of the Trustee or of the Holders hereunder; and
for the purposes hereof, the Trustee acknowledges that in substance, an
exchange of USX-Marathon Common Stock for common stock of the Marathon
Group Subsidiary on the terms described in the USX Certificate would
comply with this section 8.1(b), subject to compliance with section
8.1(a) by the Marathon Group Subsidiary.
8.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of Section 8.1
hereof have been duly observed and performed, the Trustee, if required, by
Section 8.1 hereof, the USX Successor and Albertaco shall execute and deliver
the supplemental agreement provided for in Article 9 hereof and thereupon the
USX Successor shall possess and from time to time may exercise each and every
right and power of USX or Marathon under this Agreement in the name of USX or
Marathon or otherwise and any act or proceeding by any provision of this
Agreement required to be done or performed by the board of directors of USX or
Marathon or any officers of USX or Marathon may be done and performed with like
force and effect by the directors or officers of such USX Successor.
8.3 WHOLLY-OWNED SUBSIDIARIES. Nothing herein shall be construed as preventing
the amalgamation or merger of any wholly-owned subsidiary of USX with or into
USX or the winding-up, liquidation or dissolution of any wholly-owned subsidiary
of USX provided that all of the assets of such subsidiary are transferred to USX
or another wholly-owned subsidiary of USX, and any such transactions are
expressly permitted by this Article 8.
ARTICLE 9
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
9.1 AMENDMENTS, MODIFICATIONS, ETC. This Agreement may not be amended or
modified except by an agreement in writing executed by Albertaco, Marathon, USX
and the Trustee and approved by the Holders in accordance with Section 9.2 of
the Exchangeable Share Provisions.
9.2 MINISTERIAL AMENDMENTS. Notwithstanding the provisions of Section 9.1
hereof, the parties to this Agreement may in writing, at any time and from time
to time, without the approval of the Holders, amend or modify this Agreement for
the purposes of;
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Holders hereunder,
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the opinion of each of USX, Marathon and Albertaco
and in the opinion of the Trustee having in mind the best interests of
the Holders as a whole, it may be expedient to make, provided that the
parties and the Trustee shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the Holders as
a whole; or
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(c) making such changes or corrections which, on the advice of counsel to
Albertaco, Marathon, USX and the Trustee, are required for the purpose
of curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error, provided
that the Trustee and each of Albertaco, Marathon and USX shall be of the
opinion that such changes or corrections will not be prejudicial to the
interests of the Holders as a whole in light of the purpose of this
Agreement.
9.3 MEETING TO CONSIDER AMENDMENTS. Albertaco, at the request of USX or
Marathon, shall call a meeting or meetings of the Holders for the purpose of
considering any proposed amendment or modification of this Agreement requiring
approval pursuant hereto. Any such meeting or meetings shall be called and held
in accordance with the bylaws of Albertaco, the Exchangeable Share Provisions
and all applicable laws.
9.4 CHANGES IN CAPITAL OF USX AND ALBERTACO. At all times after the occurrence
of any event effected pursuant to Section 2.6 or Section 2.7 of the Support
Agreement, as a result of which either USX-Marathon Common Stock or the
Exchangeable Shares or both are in any way changed, this Agreement shall
forthwith be automatically amended and modified, notwithstanding the provisions
of Section 9.1 hereof, as necessary in order that it shall apply with full force
and effect, MUTATIS MUTANDIS, to all new securities into which USX-Marathon
Common Stock or the Exchangeable Shares or both are so changed and the parties
hereto shall execute and deliver a supplemental agreement giving effect to and
evidencing such necessary amendments and modifications.
9.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS. No amendment to or modification or
waiver of any of the provisions of this Agreement otherwise permitted hereunder
shall be effective unless made in writing and signed by all of the parties
hereto. From time to time Albertaco, Marathon, USX and the Trustee may, subject
to the provisions of these presents, and they shall, when so directed by these
presents, execute and deliver by their proper officers, agreements or other
instruments supplemental hereto, which thereafter shall form part hereof, for
any one or more of the following purposes:
(a) evidencing the succession of any USX Successors to USX or Marathon and
the covenants of and obligations assumed by each such USX Successors in
accordance with the provisions of Article 8, and the successor of any
successor trustee in accordance with the provisions of Article 7;
(b) making any additions to, deletions from or alterations of the provisions
of this Agreement or the Exchange Right or the Automatic Exchange Rights
which will not be prejudicial to the interests of the Holders as a whole
or are necessary or advisable in order to incorporate, reflect or comply
with any legislation the provisions of which apply to USX, Marathon,
Albertaco, the Trustee or this Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including without limitation to make or evidence any
amendment or modification to this Agreement as contemplated hereby,
provided that the rights of the Trustee and the Holders as a whole will
not be prejudiced thereby.
ARTICLE 10
TERMINATION
10.1 TERM. The Trust created by this Agreement shall continue until the earliest
to occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder,
(b) each of Albertaco, Marathon and USX elects in writing to terminate the
Trust and such termination is approved by the Holders of the
Exchangeable Shares in accordance with Section 9.2 of the Exchangeable
Share Provisions; and
(c) twenty-one (21) years after the death of the last survivor of the
descendants of His Majesty King ▇▇▇▇▇▇ VI of the United Kingdom of Great
Britain and Northern Ireland living on the date of the creation of the
Trust.
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10.2 SURVIVAL OF AGREEMENT. This Agreement shall survive any termination of the
Trust and shall continue until there are no Exchangeable Shares outstanding held
by a Holder, provided, however, that the provisions of Articles 5 and 6 hereof
shall survive any such termination of this Agreement.
ARTICLE 11
GENERAL
11.1 SEVERABILITY. If any provision of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality or enforceability of the
remainder of this Agreement shall not in any way be affected or impaired thereby
and the agreement shall be carried out as nearly as possible in accordance with
its original terms and conditions.
11.2 INUREMENT. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns and to
the benefit of the Holders.
11.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in like
notice):
(a) if to USX at:
USX Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Marathon at:
Marathon Oil Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Albertaco at:
c/o Tarragon Oil and Gas Limited
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(d) if to the Trustee at:
Montreal Trust Company of Canada
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: -
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
11.4 NOTICE OF HOLDERS. Any and all notices to be given and any documents to be
sent to any Holders may be given or sent to the address of such Holder shown on
the register of Holders of Exchangeable Shares in any manner permitted by the
Exchangeable Share Provisions and shall be deemed to be received (if given or
sent in
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such manner) at the time specified in such Exchangeable Share Provisions, the
provisions of which the Exchangeable Share Provisions shall apply MUTATIS
MUTANDIS to notices or documents as aforesaid sent to such Holders.
11.5 RISK OF PAYMENTS BY POST. Whenever payments are to be made or documents are
to be sent to any Holder by the Trustee, by Albertaco, by Marathon or by USX or
by such Holder to the Trustee or to USX or to Marathon or Albertaco, the making
of such payment or sending of such document sent through the post shall be at
the risk of Albertaco, Marathon or USX, in the case of payments made or
documents sent by the Trustee or Albertaco or Marathon or USX, and the Holder,
in the case of payments made or documents sent by the Holder.
11.6 COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
11.7 JURISDICTION AND ATTORNMENT. This Agreement shall be construed and enforced
in accordance with the laws of the Province of Alberta and the laws of Canada
applicable therein. USX and Marathon agree that any action or proceeding arising
out of or relating to this Agreement may be instituted in the courts of Alberta,
waive any objection which they may have now or hereafter to the venue of any
such action or proceeding, irrevocably submit to the jurisdiction of the said
courts in any such action or proceeding and agree to be bound by any judgment of
the said courts and hereby appoint Albertaco at its registered office in the
Province of Alberta as USX's and Marathon's attorney for service of process.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be duly
executed as of the date first above written.
USX CORPORATION
Per: _________________________________
Per: _________________________________
MARATHON OIL COMPANY
Per: _________________________________
Per: _________________________________
7761581 ALBERTA LTD.
Per: _________________________________
Per: _________________________________
MONTREAL TRUST COMPANY OF CANADA
Per: _________________________________
Per: _________________________________
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