1
EXHIBIT 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JUNE 19, 1996
AMONG
EL PASO NATURAL GAS COMPANY,
EL PASO MERGER COMPANY
AND
TENNECO INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7
2.1 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7
2.2 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-7
2.3 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . B-8
2.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
2.5 Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
2.6 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-9
2.7 New Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
ARTICLE III CLOSING AND FILING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
3.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TENNECO . . . . . . . . . . . . . . . . . . . . . . B-12
4.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
4.3 Authority and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-13
4.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . B-13
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
4.7 Tenneco SEC Documents; Accuracy of Information . . . . . . . . . . . . . . . . . . . . B-14
4.8 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
4.9 Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
4.10 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
4.11 Amendments to Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUBSIDIARY . . . . . . . . . . . . . . B-15
5.1 Organization and Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
5.3 Authority and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
5.5 Consent and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . B-16
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.7 Acquiror SEC Documents; Accuracy of Information . . . . . . . . . . . . . . . . . . . B-17
5.8 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.9 Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.10 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.11 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.12 No Active Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
5.13 Ownership of Tenneco Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
ARTICLE VI COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
6.1 Conduct of Tenneco and its Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . B-18
6.2 Conduct of the Business of Acquiror and its Subsidiaries . . . . . . . . . . . . . . . B-21
6.3 Access to Information; Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . B-22
6.4 Directors' and Officers' Indemnification and Insurance. . . . . . . . . . . . . . . . B-22
6.5 Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-24
6.6 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
6.7 Registration Statement; Joint Proxy Statement; NPS Materials; Tender and Exchange
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
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6.8 Stockholders' Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-28
6.9 Further Action; Reasonable Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . B-28
6.10 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-29
6.11 Listing of Acquiror Common Stock and Depositary Shares. . . . . . . . . . . . . . . . B-30
6.12 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-30
6.13 The Spinoffs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-30
6.14 Antitrust Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-30
6.15 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
6.16 Debt Realignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
6.17 No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-31
6.18 Performance of Agreement and Distribution Agreement . . . . . . . . . . . . . . . . . B-31
6.19 Affiliates of Tenneco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
6.20 Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
6.21 Equity Issuance by Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
6.22 Ruhrgas AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
6.23 Additional Covenants of Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
ARTICLE VII CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-34
7.1 Conditions to Obligations of Each Party to Effect the Merger . . . . . . . . . . . . . B-34
7.2 Additional Conditions to Obligations of Acquiror and Subsidiary. . . . . . . . . . . . B-35
7.3 Additional Conditions to Obligations of Tenneco . . . . . . . . . . . . . . . . . . . B-36
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-36
8.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-36
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
8.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
ARTICLE IX EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
9.1 Scope of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
9.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-38
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-39
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-39
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.4 Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.5 Successors and Assignors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.8 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
10.9 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-41
10.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-41
10.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-41
10.12 Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-41
10.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-00
X-xx
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XXXXXXXX
XXXXXXX A Distribution Agreement--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT B Certificate of Designation Respecting Acquiror Preferred Stock--[Intentionally Omitted from Joint
Proxy Statement-Prospectus]
EXHIBIT C Debt Realignment Plan
EXHIBIT D [Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT E Certificate of Designation Respecting New Preferred Stock--[Intentionally Omitted from Joint Proxy
Statement-Prospectus]
EXHIBIT F Pro Forma Financial Information Concerning the Energy Business--[Intentionally Omitted from Joint Proxy
Statement-Prospectus]
EXHIBIT G Certain Permitted Actions, Transactions and Other Matters--[Intentionally Omitted from Joint Proxy
Statement-Prospectus]
EXHIBIT H Text of Section 14 of Article IV of the By-Laws of the Surviving Corporation--[Intentionally Omitted from
Joint Proxy Statement-Prospectus]
EXHIBIT I Certain Deferred Intercompany Gains--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT J Representations in Connection with IRS Ruling Letter--[Intentionally Omitted from Joint Proxy
Statement-Prospectus]
EXHIBIT K Benefits for Employees of the Energy Business--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT L Guarantees--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT M Form of Rule 145 Letter--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT N Form of Jenner & Block Tax Opinion--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
EXHIBIT O Form of Depositary Agreement--[Intentionally Omitted from Joint Proxy Statement-Prospectus]
ANNEX 1 Form of Amendment to Tenneco Certificate of Incorporation--[Intentionally Omitted from Joint Proxy
Statement-Prospectus]
Omitted exhibits and annex available upon request.
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER is entered into as
of June 19, 1996 (the ''AGREEMENT EFFECTIVE DATE''), by and among Tenneco Inc.,
a Delaware corporation (''TENNECO''), El Paso Natural Gas Company, a Delaware
corporation (''ACQUIROR''), and El Paso Merger Company, a Delaware corporation
and an indirect wholly-owned subsidiary of Acquiror (''SUBSIDIARY'').
W I T N E S S E T H:
WHEREAS, the board of directors of Tenneco has approved a plan of
distribution set forth in the form of agreement attached hereto as EXHIBIT A
(which, together with any exhibits, schedules or attachments thereto, is
hereinafter referred to as the ''DISTRIBUTION AGREEMENT'') which will be
entered into prior to the Effective Time (as defined below) and pursuant to
which, prior to the Effective Time,
(i) Tenneco and its subsidiaries will, through various intercompany
transfers and distributions, restructure, divide and separate their
existing automotive, packaging and shipbuilding businesses so that all of
the assets, liabilities and operations of
(a) the automotive and packaging businesses will be owned,
directly and indirectly, by a wholly-owned subsidiary of Tenneco (the
''INDUSTRIAL SUBSIDIARY''), and
(b) the shipbuilding business will be owned, directly and
indirectly, by a wholly-owned subsidiary of Tenneco (the
''SHIPBUILDING SUBSIDIARY''), and
(ii) all of the shares of capital stock of each of the Industrial
Subsidiary and the Shipbuilding Subsidiary will be distributed on a pro
rata basis as a dividend to the holders of Tenneco's issued and
outstanding common stock (the ''SPINOFFS'');
WHEREAS, Acquiror (which is the ultimate parent company of its
consolidated group) desires to acquire Tenneco and its direct and indirect
subsidiaries remaining immediately following the Spinoffs pursuant to the
merger of Subsidiary with and into Tenneco (the ''MERGER''), with Tenneco
surviving as an indirect subsidiary of Acquiror (the ''SURVIVING
CORPORATION'');
WHEREAS, the respective boards of directors of Acquiror, Subsidiary and
Tenneco, deeming the Merger to be advisable and in the best interests of their
respective stockholders, have authorized and approved the execution and
delivery of this Agreement and the performance of their respective obligations
hereunder;
WHEREAS, for federal income tax purposes, the parties hereto intend that
(i) the Spinoffs will qualify as tax-free distributions within the
meaning of Section 355 of the Internal Revenue Code of 1986, as amended
(the ''CODE''), and
(ii) the Merger will be treated as a reorganization pursuant to the
provisions of Section 368(a)(1)(B) of the Code;
WHEREAS, this Agreement is intended to be, and is adopted as, a plan of
reorganization.
WHEREAS, the parties entered into an Agreement and Plan of Merger (the
''PRIOR AGREEMENT'') as of June 19, 1996, and now desire to amend and restate
the Prior Agreement in its entirety effective as of the Agreement Effective
Date.
NOW, THEREFORE, in consideration of the premises and of the mutual and
dependent promises, representations, warranties and covenants herein contained,
the parties agree as follows:
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ARTICLE I
DEFINITIONS
Unless otherwise defined herein or unless the context otherwise requires,
the following terms shall have the meanings set forth below:
''ACQUIROR COMMON STOCK'' means the Common Stock, par value $3.00 per
share, of Acquiror.
''ACQUIROR PREFERRED STOCK'' means the series of voting preferred
stock of Acquiror to be designated as Adjustable Rate Cumulative Preferred
Stock and described in the form of Certificate of Designation therefor
attached hereto as EXHIBIT B; provided, however, that if either Tenneco or
Acquiror determines, in good faith after consultation with the other party
and its advisors, that there exists a reasonable likelihood that the
issuance of Acquiror Preferred Stock (or Depositary Shares (as defined
below) in respect thereof) in connection with the Merger would cause the
Merger to be taxable to the stockholders of Tenneco, Acquiror shall have
the absolute obligation (at Acquiror's sole cost) to amend, if legally
possible, the terms of the Acquiror Preferred Stock in a manner reasonably
acceptable to Tenneco so that the issuance would not cause the Merger to
be so taxable. In the event that the terms of the Acquiror Preferred Stock
are amended pursuant to the proviso in the immediately preceding sentence,
the parties hereto hereby agree, if required by applicable Law, they shall
(i) prepare and execute an appropriate amendment to this Agreement
reflecting said amendment to the terms of the Acquiror Preferred Stock,
(ii) subject to SECTIONS 6.7(A) and 6.8 hereof, prepare, file and mail an
appropriate supplement to the Joint Proxy Statement reflecting the terms
of this Agreement and of the Merger as so amended, and (iii) if such
amendment is made after the approval of the Merger by the stockholders of
Tenneco, resubmit for the approval of the stockholders of Tenneco this
Agreement and the Merger as so amended.
''ACQUIROR COMMON STOCKHOLDERS' MEETING'' has the meaning set forth in
SECTION 6.8 hereof.
''ACQUIROR SEC DOCUMENTS'' means all filings made by Acquiror or its
subsidiaries, including Subsidiary, with the SEC from January 1, 1995
through the Agreement Effective Date, including notes, schedules,
amendments and exhibits thereto.
''ACQUIROR STOCK'' means the Acquiror Common Stock and the Acquiror
Preferred Stock.
''ACQUIROR STOCK FUND'' has the meaning set forth in SECTION 2.6(A)
hereof.
''ACQUISITION TRANSACTION'' has the meaning set forth in SECTION 6.17
hereof.
''ADJUSTED COMMON EQUITY CONSIDERATION'' means the product of (i) the
Average Acquiror Price, and (ii) the quotient determined by dividing the
Common Equity Consideration by the Average Acquiror Common Equity Price.
''AFFILIATE'' means, when used with respect to a specified Person,
another Person that directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified.
''AGREEMENT'' means this Amended and Restated Agreement and Plan of
Merger, as the same may be amended from time to time in accordance with
the terms hereof.
''AGREEMENT EFFECTIVE DATE'' means June 19, 1996, the date on which
the Prior Agreement was entered into.
''ALLOCATION AGREEMENT'' means the Debt and Cash Allocation Agreement
included in the Distribution Agreement as an exhibit.
''APPRAISAL CONSIDERATION'' has the meaning set forth in SECTION
2.6(H) hereof.
''ACQUIROR PRICE'' means the closing price of the Acquiror Common
Stock on the NYSE Composite Transactions Reporting System, as reported in
The Wall Street Journal, for the trading day immediately
B-2
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preceding the day on which the holders of Tenneco Stock entitled to vote
at the Tenneco Stockholders' Meeting vote with respect to Merger;
provided, however, if there is no closing price for Acquiror Common Stock
on such trading day, the Acquiror Price shall be the closing price for
Acquiror Common Stock on the next preceding trading day on which a trade
of Acquiror Common Stock occurred.
''AVERAGE ACQUIROR PRICE'' means the average of the closing prices of
the Acquiror Common Stock on the NYSE Composite Transactions Reporting
System, as reported in The Wall Street Journal, for the Average Period
(but subject to correction for typographical or other manifest errors in
such reporting), rounded to four decimal places.
''AVERAGE ACQUIROR COMMON EQUITY PRICE'' means the Average Acquiror
Price; provided that if the Average Acquiror Price is greater than
$38.3625, the Average Acquiror Common Equity Price shall be $38.3625 and
if the Average Acquiror Price is less than $31.3875, the Average Acquiror
Common Equity Price shall be $31.3875; provided further, however, that the
aforesaid dollar amounts shall be subject to appropriate adjustments,
reasonably satisfactory to Tenneco and Acquiror in all respects, to
reflect any recapitalization, reclassification, stock split, combination
of shares, issuance of equity (other than issuances of shares pursuant to
the exercise of employee stock options) or options for less than full
market value or the like of or involving Acquiror.
''AVERAGE PERIOD'' means the 20 trading days on the NYSE immediately
preceding the second trading day prior to the Effective Time.
''BENEFITS AGREEMENT'' means the Benefits Agreement attached to the
Distribution Agreement as Exhibit A.
''BLACK-OUT PERIOD'' means the Average Period and the 20 trading days
preceding the Average Period.
''CERTIFICATES'' has the meaning set forth in SECTION 2.6(B) hereof.
''CLAIM'' has the meaning set forth in SECTION 6.4(B) hereof.
''CLAIMS ADMINISTRATION'' means the handling of claims made under the
D&O Policies, including the management, defense and settlement of claims.
''CLOSING'' has the meaning set forth in SECTION 3.1 hereof.
''CLOSING DATE'' has the meaning set forth in SECTION 3.1 hereof.
''COMMISSION'' means the United States Securities and Exchange
Commission.
''COMMON CONVERSION NUMBER CASE A'' means the number of shares
(rounded to the nearest one-thousandth of a share) of Acquiror Common
Stock to be issued upon conversion of a single share of Tenneco Common
Stock at the Effective Time pursuant to SECTION 2.5 hereof and the other
terms and conditions of this Agreement, determined by dividing the Common
Equity Consideration by the Average Acquiror Common Equity Price and
dividing the result by the number of shares of Tenneco Common Stock
outstanding immediately prior to the Effective Time as certified to
Acquiror by Tenneco's principal registrar and transfer agent, which are to
be converted into the right to receive Acquiror Stock pursuant to the
provisions of SECTION 2.5 hereof.
''COMMON CONVERSION NUMBER CASE B'' means the number of shares
(rounded to the nearest one-thousandth of a share) of Acquiror Common
Stock to be issued upon conversion of a single share of Tenneco Common
Stock at the Effective Time pursuant to SECTION 2.5 hereof and the other
terms and conditions of this Agreement, determined by dividing (x) the
excess of (i) 7,000,000 over (ii) the number of shares of Acquiror Common
Stock issued in exchange for shares of $4.50 Preferred Stock and $7.40
Preferred Stock in the Merger by (y) the number of shares of Tenneco
Common Stock outstanding immediately prior to the Effective Time as
certified to Acquiror by Tenneco's principal registrar and transfer agent,
which are to be converted into the right to receive Acquiror Stock
pursuant to the provisions of SECTION 2.5 hereof.
''COMMON EQUITY CONSIDERATION'' means the Equity Consideration less
the Preferred Stock Amount.
''CORPORATE RESTRUCTURING TRANSACTIONS'' has the meaning ascribed to
that term in the Distribution Agreement.
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''DEBT'' means any indebtedness representing an obligation for the
repayment of money borrowed by a subject Person (including short-term debt
and current maturities of long-term obligations), and any accrued but
unpaid or accreted interest related to such indebtedness.
''DEBT REALIGNMENT'' means the plan for repayment, exchange and/or
modification of the indebtedness of Tenneco, as described in EXHIBIT C
attached hereto.
''DEPOSITARY'' means The First National Bank of Boston, N.A.
''DEPOSITARY AGREEMENT'' means the Depositary Agreement attached
hereto as EXHIBIT O.
''DEPOSITARY RECEIPT'' means a depositary receipt issued by the
Depositary to evidence a Depositary Share.
''DEPOSITARY SHARE'' means a unit representing a one twenty-fifth
fractional interest in a whole share of Acquiror Preferred Stock which
shall be evidenced by a Depositary Receipt issued to the Person entitled
to such fractional interest and which shall entitle the holder thereof,
pursuant to the Depositary Agreement, to rights equivalent to those of a
holder of a whole share of Acquiror Preferred Stock (to the extent of such
one twenty-fifth fractional interest therein).
''DISSENTING SHARES'' has the meaning set forth in SECTION 2.6(H)
hereof.
''DGCL'' means the Delaware General Corporation Law, as amended.
''D&O POLICIES'' has the meaning set forth in SECTION 6.4(D) hereof.
''EFFECTIVE TIME'' has the meaning set forth in SECTION 3.2 hereof.
''ENERGY ASSETS'' has the meaning ascribed to that term in the
Distribution Agreement.
''ENERGY BUSINESS'' has the meaning ascribed to that term in the
Distribution Agreement.
''ENERGY GROUP'' has the meaning ascribed to that term in the
Distribution Agreement.
''ENERGY SUBSIDIARIES'' means the direct and indirect consolidated
subsidiaries of Tenneco immediately following the Spinoffs, including the
Major Subsidiaries.
''EQUITY CONSIDERATION'' means $750,000,000.
''EXCHANGE ACT'' means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
''EXCHANGE AGENT'' means First Chicago Trust Company of New York, or
such other trust company or bank designated by Acquiror and acceptable to
Tenneco, who shall act as agent for the holders of Tenneco Stock in
connection with the Merger to receive the Exchange Fund (as defined in
SECTION 2.6(A) hereof).
''$4.50 PREFERRED STOCK'' means the $4.50 Cumulative Preferred Stock of
Tenneco.
''$4.50 PREFERRED CONVERSION NUMBER'' means the number of shares
(rounded to the nearest one-thousandth of a share) of Acquiror Common
Stock to be issued upon conversion of a single share of $4.50 Preferred
Stock at the Effective Time pursuant to SECTION 2.5 and the other terms
and conditions of this Agreement, determined by dividing (i) $115, by (ii)
the Acquiror Price.
''GAAP'' means United States generally accepted accounting principles
and practices, as in effect on the date of this Agreement, as promulgated
by the Financial Accounting Standards Board and its predecessors.
''GAINS TAX'' has the meaning set forth in SECTION 10.1(C) hereof.
''GOVERNMENTAL AUTHORITY'' means any government or any agency, bureau,
board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal,
state or local, domestic or foreign.
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''HIGHER PROPOSAL'' has the meaning set forth in SECTION 6.17 hereof.
''HSR ACT'' means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
''INDEMNIFIED PARTIES'' has the meaning set forth in SECTION 6.4(B)
hereof.
''INDUSTRIAL BUSINESS'' has the meaning ascribed to that term in the
Distribution Agreement.
''INDUSTRIAL GROUP'' has the meaning ascribed to that term in the
Distribution Agreement.
''INSURANCE ADMINISTRATION'' means, with respect to a D&O Policy, the
accounting for premiums, defense costs, indemnity payments, deductibles
and retentions, as appropriate, under the terms and conditions of such D&O
Policy, and the distribution of Insurance Proceeds.
''INSURANCE PROCEEDS'' means, with respect to an insured party, those
monies, net of any applicable premium adjustment, deductible, retention or
similar cost paid or held by or for the benefit of such insured party,
which are either
(i) received by an insured from an insurance carrier, or
(ii) paid by an insurance carrier on behalf of an insured.
''IRS RULING LETTER'' has the meaning set forth in SECTION 7.1(G)
hereof.
''JOINT PROXY STATEMENT'' has the meaning set forth in SECTION 6.7
hereof.
''LAW'' means any constitutional provision, statute, law, ordinance,
rule, regulation, permit, decree, injunction, judgment, order, decree,
ruling, determination, finding or writ of any Governmental Authority.
''LAZARD'' means Lazard Freres & Co. LLC.
''MAJOR SUBSIDIARIES'' means the following subsidiaries of Tenneco
after giving effect to the Spinoffs:
JURISDICTION
NAME OF ORGANIZATION
---- ---------------
Tennessee Gas Pipeline Company Delaware
Tenneco Energy Resources Corporation Delaware
Tenneco Gas Australia, Inc. Delaware
Tenneco Corporation Delaware
Tenneco Ventures Corporation Delaware
Midwestern Gas Transmission Company Delaware
East Tennessee Natural Gas Company Tennessee
''MATERIAL ADVERSE EFFECT ON ACQUIROR'' means an event, change or
effect that:
(i) is or is reasonably likely to be materially adverse to the
business, operations, properties or financial condition of Acquiror
and its consolidated subsidiaries, taken as a whole; or
(ii) prevents Acquiror or Subsidiary from consummating the
transactions contemplated hereby, including the Merger, prior to the
date specified in SECTION 8.1(II) hereof.
''MATERIAL ADVERSE EFFECT ON TENNECO'' means an event, change or
effect that:
(i) is or is reasonably likely to be materially adverse to the
business, operations, properties or financial condition of the Energy
Business, taken as a whole; or
(ii) prevents Tenneco from consummating the transactions
contemplated hereby, including the Spinoffs and the Merger, prior to
the date specified in SECTION 8.1(II) hereof.
''NEW CERTIFICATES'' has the meaning set forth in SECTION 2.6(A)
hereof.
''NEW PREFERRED STOCK'' means the series of junior preferred stock of
Tenneco to be issued prior to the Closing Date as set forth in SECTION
6.1(D) hereof and described in the form of Certificate of Designation
therefor attached hereto as EXHIBIT E.
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''NPS MATERIALS'' means any registration statement, private placement
memorandum and/or other documents or filings prepared by or on behalf of
Tenneco or Acquiror (or their Affiliates or representatives) and
(i) distributed to prospective purchasers or other receivers of
New Preferred Stock, or
(ii) filed with the Commission or other Governmental Authority,
or the NYSE or other stock exchange, relating to the issuance of New
Preferred Stock.
''NPS VALUE'' means the market value of the New Preferred Stock issued
and outstanding at and as of the Effective Time, as jointly determined by
the financial advisors identified in SECTIONS 4.10 and 5.10 below on the
Closing Date (or, if they are unable to so agree, by Xxxxxx Xxxxxxx & Co.
Incorporated later on the Closing Date). If the New Preferred Stock is
issued pursuant to a public issuance or private placement (as opposed to a
stock dividend), the gross proceeds of the issuance or placement shall be
presumptive evidence of the NPS Value (subject only to adjustment for
changes in value, if any, occurring between the date of the issuance or
placement and the Closing Date).
''NYSE'' means the New York Stock Exchange.
''1981 STOCK PLAN'' means the 1981 Tenneco Inc. Key Employee Stock
Option Plan.
''1994 STOCK PLAN'' means the 1994 Tenneco Inc. Stock Ownership Plan.
''OPTION PLANS'' means the 1981 Stock Plan and the 1994 Stock Plan.
''PERSON'' means any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability
company or other entity, or any government, or any agency or political
subdivision thereof.
''PREFERRED STOCK AMOUNT'' means an amount equal to the Acquiror Price
times the number of shares of Acquiror Common Stock issued to the holders
of the $4.50 Preferred Stock and the $7.40 Preferred Stock pursuant to the
terms of SECTION 2.5 hereof.
''PREFERRED STOCK CONVERSION NUMBER'' means the result obtained by (x)
subtracting from the Adjusted Common Equity Consideration the product of
(i) the excess of (A) 7,000,000 over (B) the number of shares of Acquiror
Common Stock issued in exchange for shares of $4.50 Preferred Stock and
$7.40 Preferred Stock in the Merger and (ii) the Average Acquiror Price,
(y) dividing the result obtained pursuant to clause (x) by the ''Assigned
Value'' (as set forth in EXHIBIT B attached hereto) (being the liquidation
value) of the Acquiror Preferred Stock and (z) dividing the result
obtained pursuant to clause (y) by the number of shares of Tenneco Common
Stock outstanding immediately prior to the Effective Time as certified to
Acquiror by Tenneco's principal registrar and transfer agent.
''RIGHTS'' shall mean the preferred stock purchase rights issued
pursuant to the Rights Agreement.
''RIGHTS AGREEMENT'' shall mean the Rights Agreement dated as of May
24, 1988, as amended and restated as of October 1, 1989, between Tenneco
and First Chicago Trust Company of New York.
''REGISTRATION STATEMENT'' has the meaning set forth in SECTION 6.7
hereof.
''REPLACEMENT D&O POLICY'' has the meaning set forth in SECTION 6.4(D)
hereof.
''SECT'' means the Stock Employee Compensation Trust currently
maintained by Tenneco.
''SECURITIES ACT'' means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
''$7.40 PREFERRED STOCK'' means the $7.40 Cumulative Preferred Stock
of Tenneco.
''$7.40 PREFERRED CONVERSION NUMBER'' means the number of shares
(rounded to the nearest one-thousandth of a share) of Acquiror Common
Stock to be issued upon conversion of a single share of $7.40
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Xxxxxxxxx Xxxxx at the Effective Time pursuant to SECTION 2.5 and the
other terms and conditions of this Agreement, determined by dividing (i)
$115, by (ii) the Acquiror Price.
''S/I TRANSACTION'' has the meaning set forth in SECTION 6.13 hereof.
''SHIPBUILDING BUSINESS'' has the meaning ascribed to that term in the
Distribution Agreement.
''SHIPBUILDING GROUP'' has the meaning ascribed to that term in the
Distribution Agreement.
''STOCKHOLDERS' MEETINGS'' has the meaning set forth in SECTION 6.8
hereof.
''TAKEOVER STATUTE'' means any ''fair price,'' ''moratorium,''
''control share acquisition'' or other similar antitakeover statute or
regulation enacted under state or federal laws in the United States or any
foreign jurisdiction.
''TENDER AND EXCHANGE MATERIALS'' means any registration statement,
private placement memorandum, offer to purchase and/or other documents or
filings prepared by or on behalf of Tenneco or Acquiror (or their
Affiliates or representatives), either separately or jointly, and
(i) distributed to the record and/or beneficial holders of
Tenneco consolidated Debt in connection with the Debt Realignment,
and/or
(ii) filed with the Commission or other Governmental Authority,
or the NYSE or other stock exchange, relating to Debt Realignment.
''TENNECO COMMON STOCK'' means the Common Stock, par value $5.00 per
share, of Tenneco.
''TENNECO SEC DOCUMENTS'' means all filings made by Tenneco or its
subsidiaries with the SEC since January 1, 1995 through the Agreement
Effective Date, including notes, schedules, amendments and exhibits
thereto.
''TENNECO STOCK'' means the Tenneco Common Stock, the $7.40 Preferred
Stock and the $4.50 Preferred Stock (but not the New Preferred Stock).
''TENNECO STOCKHOLDERS' MEETING'' has the meaning set forth in
SECTION 6.8 hereof.
''TRANSFER TAXES'' has the meaning set forth in SECTION 10.1(C)
hereof.
''$'' is a reference to United States dollars. All monetary amounts
set forth in this Agreement are intended to be United States currency
amounts.
ARTICLE II
THE MERGER
2.1 MERGER. Upon the terms and subject to the conditions herein set forth,
Subsidiary shall be merged with and into Tenneco at the Effective Time.
2.2 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time the separate existence and corporate
organization of Subsidiary shall cease and Tenneco shall continue as the
Surviving Corporation, and all the identity, purposes, properties, rights,
privileges, powers, assets, franchises, debts and duties of Tenneco and
Subsidiary shall, except as expressly provided herein or in the DGCL, vest in
the Surviving Corporation and become the identity, purposes, properties,
rights, privileges, powers, assets, franchises, debts and duties of the
Surviving Corporation.
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2.3 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) At the Effective Time, the certificate of incorporation of Tenneco in
effect immediately prior to the Effective Time shall be amended as set forth in
ANNEX 1 hereto, and as so amended shall be the certificate of incorporation of
the Surviving Corporation.
(b) From and after the Effective Time, the by-laws of Subsidiary, as in
effect immediately prior to the Effective Time (but, in any event, to be in
form and substance reasonably acceptable to Tenneco), shall, until further
amended as provided by law, constitute the by-laws of the Surviving
Corporation, except that the by-laws of the Surviving Corporation shall include
the provisions specified in SECTION 6.4(A)(I) of this Agreement.
2.4 DIRECTORS. The directors of Subsidiary at the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold office from
the Effective Time in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
2.5 CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of any stockholder of either Tenneco or
Subsidiary, as applicable, but subject to SECTION 2.6 hereof, each outstanding
share of Subsidiary's capital stock and Tenneco Stock (but not New Preferred
Stock) shall be cancelled or converted in accordance with the following
provisions of this SECTION 2.5:
(a) CAPITAL STOCK OF SUBSIDIARY. Each share of Subsidiary's capital
stock issued and outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and nonassessable share of
Common Stock, par value $5.00 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY AND ACQUIROR-OWNED STOCK. Each share of
Tenneco Stock owned immediately prior to the Effective Time (after giving
effect to the Spinoffs) by Tenneco, directly as treasury stock or
indirectly through one or more of its wholly-owned subsidiaries, or by
Acquiror or any direct or indirect wholly-owned subsidiary of Acquiror,
shall be cancelled and retired and shall cease to exist and no Acquiror
Stock or other consideration shall be delivered in exchange therefor or
with respect thereto.
(c) CONVERSION OF $7.40 PREFERRED STOCK. Each share of $7.40 Preferred
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with SECTION 2.5(B)
above) shall be converted into the right to receive that number of fully
paid and nonassessable shares of Acquiror Common Stock that is equal to
the $7.40 Preferred Conversion Number.
(d) CONVERSION OF $4.50 PREFERRED STOCK. Each share of $4.50 Preferred
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with SECTION 2.5(B)
above) shall be converted into the right to receive that number of fully
paid and nonassessable shares of Acquiror Common Stock that is equal to
the $4.50 Preferred Conversion Number.
(e) CONVERSION OF TENNECO COMMON STOCK. Each share of Tenneco Common
Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with SECTION 2.5(B)
above) shall be converted into the right to receive (i) that number of
fully paid and nonassessable shares of (i) Acquiror Common Stock that is
equal to the Common Conversion Number Case A if the issuance of Acquiror
Common Stock as contemplated by this SECTION 2.5(E)(I) is approved by the
requisite vote of the holders of the Acquiror Common Stock, or if such
vote is not required by law or the rules of any national securities
exchange on which the Acquiror Common Stock is listed, or (ii) if the
issuance of shares of Acquiror Common Stock as contemplated by SECTION
2.5(E)(I) is not approved by the requisite vote of the holders of the
Acquiror Common Stock and is not permissible as aforesaid without such
vote, (A) that number of fully paid and nonassessable shares of Acquiror
Common Stock that is equal to the Common Conversion Number Case B and (B)
that number of Depositary Shares representing interests in that fraction
of a fully paid and nonassessable share of Acquiror Preferred Stock that
is equal to the Preferred Stock Conversion Number.
(f) REDEMPTION OF PREFERRED STOCK. Subject to the consent of Acquiror
(which shall not be unreasonably withheld or delayed), Tenneco may at any
time hereafter, prior to the Effective Time, redeem the $4.50 Preferred
Stock and/or the $7.40 Preferred Stock in accordance with their respective
terms.
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2.6 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Promptly after the Effective Time, Acquiror shall
deposit with the Exchange Agent, for the benefit of the holders of shares of
Tenneco Stock, for exchange in accordance with this SECTION 2.6, certificates
and Depositary Receipts, if any (together, the ''NEW CERTIFICATES'')
representing shares of Acquiror Stock and any Depositary Shares, respectively,
in amounts sufficient to allow the Exchange Agent to make all deliveries of New
Certificates that may be required in exchange for Certificates (as defined
below) pursuant to this SECTION 2.6 (the ''ACQUIROR STOCK FUND'') (such
Acquiror Stock Fund, together with any dividends or distributions with respect
thereto contemplated by SECTION 2.6(D) hereof and cash in lieu of fractional
shares or any fractional Depositary Shares contemplated by SECTION 2.6(C)
hereof, being hereinafter referred to as the ''EXCHANGE FUND'').
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Tenneco Stock which were
converted pursuant to SECTION 2.5 hereof into the right to receive shares of
Acquiror Stock and Depositary Shares, if any (the ''CERTIFICATES'')
(i) a letter of transmittal (which shall be in such form and have such
provisions as Acquiror and Tenneco may reasonably specify), and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for New Certificates.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly completed in accordance with the
instructions thereto and executed, the holder of such Certificate shall be
entitled to receive in exchange therefor a New Certificate or New Certificates
representing that number of whole shares of Acquiror Stock (and any whole
Depositary Shares) which such holder has the right to receive pursuant to the
provisions of SECTION 2.5 hereof (after giving effect to SECTIONS 2.6(C) and
2.6(H) hereof) and any cash paid in lieu of fractional shares (or any
fractional Depositary Shares) and any dividends or distributions with respect
thereto as contemplated by SECTIONS 2.6(C) and 2.6(D) hereof, after giving
effect to any required tax withholdings, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of
Tenneco Stock that is not registered in the transfer records of Tenneco, a New
Certificate representing the proper number of shares of Acquiror Stock (and any
Depositary Shares) may be issued to a transferee if the Certificate formerly
representing such Tenneco Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this SECTION 2.6(B), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender a New Certificate or New Certificates representing such whole shares
of Acquiror Stock (and any whole Depositary Shares), any dividends or
distributions in respect of such shares of Acquiror Stock (and any Depositary
Shares) and cash in lieu of any fractional shares of Acquiror Stock (or any
fractional Depositary Shares), as is contemplated by SECTIONS 2.5 and 2.6 of
this Agreement.
(c) FRACTIONAL SHARES. Notwithstanding anything to the contrary contained
herein (but except for the issuance of Depositary Receipts), no scrip or
certificates for fractional shares of Acquiror Stock or for any fractional
Depositary Shares shall be issued, and no Person otherwise entitled to any such
fractional share or fractional Depositary Share shall be entitled to vote, to
receive dividends, or to any other rights of a holder of a share or Depositary
Share with respect to such fractional interest. Instead, the Exchange Agent
shall act as agent for the holders of Tenneco Stock and shall sell on the NYSE,
as promptly as possible, but in any event not later than 30 days after the
Closing Date, for the account of the Persons otherwise entitled to such
fractional shares or fractional Depositary Shares, shares of Acquiror Stock or
Depositary Shares equivalent to the aggregate of such fractional interests. The
Exchange Agent shall, until December 31, 1998, pay to such Persons upon
surrender of their Certificate(s) their respective pro rata shares of the net
proceeds of such sale, without interest. On December 31, 1998, any remaining
proceeds of the sale shall be paid over to Acquiror, after which the Persons
otherwise entitled to such fractional interests represented by such proceeds
shall look only to Acquiror for payment, subject to the requirements of escheat
laws of the various states that may be applicable.
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(d) DIVIDENDS AND OTHER DISTRIBUTIONS. Any dividend or other distribution
declared or made after the Effective Time with a record date after the
Effective Time in respect of Acquiror Stock issuable hereunder to the holder of
a Certificate not then surrendered pursuant to SECTION 2.6(B) hereof shall be
paid to the Exchange Agent (or, if payable after December 31, 1998, shall be
set aside and retained by Acquiror), and no such dividend or other distribution
payable in respect of such Acquiror Stock shall be paid to the holder of such
outstanding Certificate until such Certificate shall have been so surrendered
to the Exchange Agent (or, if after December 31, 1998, to Acquiror). Upon
surrender of such outstanding Certificate, there shall be paid by the Exchange
Agent (or, if after December 31, 1998, by Acquiror) to or at the direction of
the holder of the New Certificate(s) issued in exchange therefor the amount
(without interest thereon) of all dividends or distributions which have
theretofore been paid to the Exchange Agent (or, if after December 31, 1998,
set aside and retained by Acquiror) with respect to the number of shares of
Acquiror Stock and any Depositary Shares represented by the New Certificate(s)
issued upon such surrender and exchange.
(e) NO FURTHER OWNERSHIP RIGHTS IN TENNECO STOCK. All shares of Acquiror
Stock and any Depositary Shares issued upon the surrender for exchange of
shares of Tenneco Stock in accordance with the terms hereof (including any cash
paid pursuant to SECTION 2.6(C) hereof) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Tenneco Stock, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Tenneco Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this SECTION 2.6.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund held by
the Exchange Agent that remains undistributed to the stockholders of Tenneco
after December 31, 1998, shall be delivered to Acquiror, and any stockholders
of Tenneco who have not theretofore complied with this SECTION 2.6 shall
thereafter look only to Acquiror for payment of their claims for Acquiror
Stock, any Depositary Shares, any cash in lieu of fractional shares of Acquiror
Stock or in lieu of any fractional Depositary Shares and any dividends or
distributions with respect to Acquiror Stock.
(g) NO LIABILITY. None of Acquiror, Subsidiary, Tenneco, the Industrial
Subsidiary or the Shipbuilding Subsidiary (or any of their respective direct or
indirect subsidiaries or Affiliates) shall be liable to any holder of shares of
Tenneco Stock, Acquiror Stock or any Depositary Shares, as the case may be, for
such shares (or dividends or distributions with respect thereto) or cash for
payment in lieu of fractional shares or in lieu of any fractional Depositary
Shares delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. The Industrial Subsidiary, the Shipbuilding
Subsidiary and their respective direct and indirect subsidiaries and Affiliates
shall be deemed third party beneficiaries of this SECTION 2.6(G) and all other
provisions of this Agreement necessary or appropriate for purposes of enforcing
this SECTION 2.6(G).
(h) DISSENTING HOLDERS OF $4.50 PREFERRED STOCK AND DISSENTING HOLDERS OF
NEW PREFERRED STOCK. Notwithstanding anything in this Agreement to the
contrary, shares of $4.50 Preferred Stock and New Preferred Stock that are
issued and outstanding immediately prior to the Effective Time and are held by
stockholders who are entitled to appraisal rights in respect thereof under
Section 262 of the DGCL and who have
(i) not voted such shares in favor of the adoption of this Agreement
or otherwise waived or lost their right to demand appraisal of such shares
and
(ii) properly demanded appraisal of such shares in accordance with
Section 262 of the DGCL (the ''DISSENTING SHARES'')
shall not be converted as described in SECTION 2.5(D) above or remain
outstanding as described in SECTION 2.7 hereof, as the case may be, but shall
become the right to receive such consideration as may be determined to be due
to such stockholders pursuant to Section 262 of the DGCL (''APPRAISAL
CONSIDERATION''). If, after the Effective Time, any such stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his right of
appraisal, in any case pursuant to the DGCL, his Dissenting Shares shall be
deemed to be converted as of the Effective Time into the right to receive
shares of Acquiror Common Stock (without any interest thereon)
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as provided in SECTION 2.5(D) hereof or shall be deemed to have remained
outstanding as provided in SECTION 2.7 hereof, as the case may be. Promptly
upon receiving any demands for appraisal, withdrawals of demand for appraisal
or any other instrument served pursuant to Section 262 of the DGCL, Tenneco
shall so notify Acquiror and shall give Acquiror the opportunity to participate
in and direct all negotiations and proceedings with respect to any such
appraisal demands. Tenneco shall not, without the prior written consent of
Acquiror, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such appraisal demands. From and after the Effective
Time, the Surviving Corporation shall be solely responsible for the payment of
any and all Appraisal Consideration, and shall indemnify, defend, protect and
hold harmless the Industrial Subsidiary, the Shipbuilding Subsidiary and their
respective direct and indirect subsidiaries from and against any and all
claims, losses, expenses, payments, liabilities and damages (including
attorneys' fees) relating to any Dissenting Shares or claims of stockholders
holding Dissenting Shares. In order to effect the payment of any Appraisal
Consideration, the Surviving Corporation shall establish an escrow with the
Exchange Agent (or other escrow agent reasonably acceptable to the Industrial
Subsidiary) consisting of an adequate amount of cash from the $25,000,000 of
cash required to be on hand at Tenneco as of the Effective Time pursuant to the
Allocation Agreement. The Industrial Subsidiary, the Shipbuilding Subsidiary
and their respective direct and indirect subsidiaries shall be deemed third
party beneficiaries of this SECTION 2.6(H) and all other provisions of this
Agreement necessary or appropriate for purposes of enforcing this SECTION
2.6(H).
2.7 NEW PREFERRED STOCK. Subject to SECTION 2.6(H) hereof, the shares of
New Preferred Stock outstanding immediately prior to the Effective Time shall
not be converted or otherwise exchanged pursuant to the Merger and shall remain
outstanding immediately after the Effective Time, held by the Persons who were
holders of the New Preferred Stock immediately prior to the Effective Time.
ARTICLE III
CLOSING AND FILING
3.1 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to SECTION
8.1 hereof, and subject to the satisfaction or, if permissible, waiver of the
conditions set forth in ARTICLE VII hereof, the closing of the Merger (the
''CLOSING'') shall take place as promptly as practicable (and in any event
within two business days) after satisfaction or waiver of the conditions set
forth in ARTICLE VII hereof, at the offices of Tenneco Inc., 0000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxx, unless another date, time or place is agreed to in writing by
the parties hereto; provided, however, that if, (i) during the Black-out Period
there occurs an event or series of events that, in the opinion of either
Tenneco or Acquiror, could reasonably be expected to have a temporary effect on
the price of Acquiror Stock, and (ii) but for the provisions of this proviso
the Average Acquiror Price would be greater than $38.3625 or less than $31.3875
(said dollar amounts to be adjusted on the same basis as is described in the
definition of Average Acquiror Common Equity Price), then either Tenneco (in
the case the Average Acquiror Price would be greater than $38.3625 as
aforesaid) or Acquiror (in the case the Average Acquiror Price would be less
than $31.3875 as aforesaid) may, by written notice to the other, elect to delay
or to restart the commencement of the Average Period (and thereby the Closing)
until such day as such temporary effect has ended (but in no event shall the
Closing be delayed by more than 15 days and in no event beyond the dated
specified in SECTION 8.1(II) hereof), as determined and specified by the
notifying party. The date on which the Closing occurs is referred to in this
Agreement as the ''CLOSING DATE''.
3.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in ARTICLE VII hereof, but
subject to the terms of SECTION 3.1 hereof, the parties hereto shall cause the
Merger to be consummated by filing a certificate of merger with the Secretary
of State of the State of Delaware in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL (the date and time of the
acceptance of such filing, or such later date or time as set forth therein,
being the ''EFFECTIVE TIME'').
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TENNECO
Tenneco hereby represents and warrants to Acquiror and Subsidiary as
follows:
4.1 ORGANIZATION AND EXISTENCE. Each of Tenneco and the Major Subsidiaries
is a corporation validly existing and in good standing under the laws of the
jurisdiction of its organization with the corporate power and authority to own
its properties and assets and to carry on its business as now being conducted,
except where the failure to be so existing and in good standing or to have such
power and authority would not have a Material Adverse Effect on Tenneco.
4.2 CAPITALIZATION.
(a) As of the dates indicated below, the authorized and outstanding
capital stock of Tenneco was as follows:
AUTHORIZED AS
OF THE
CLASS DATE HEREOF OUTSTANDING AS OF MARCH 31, 1996
----- ------------------- --------------------------------
Common Stock 350,000,000 191,354,932 shares (including 17,358,445
shares held in treasury or by subsidiaries of Tenneco)
Preferred Stock 15,000,000 803,723 shares of $4.50 Preferred Stock; 391,519
shares of $7.40 Preferred Stock
Junior Preferred Stock 50,000,000 none
(b) Between March 31, 1996 and the Agreement Effective Date, Tenneco has
issued no shares of its capital stock except for shares of Tenneco Common Stock
issued upon the exercise of options granted pursuant to the Option Plans or to
executives of Tenneco outside the Option Plans.
(c) As of March 31, 1996, except for
(i) Rights issued pursuant to the Rights Agreement and
(ii) options to acquire an aggregate of 5,207,655 shares of Tenneco
Common Stock,
there were no outstanding options, warrants, rights, puts, calls, commitments
or other contracts, arrangements, or understandings issued by or binding upon
Tenneco requiring or providing for, and there were no outstanding securities of
Tenneco or its subsidiaries which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance by Tenneco of any new or
additional equity interests in Tenneco or any other securities of Tenneco
which, with notice, lapse of time and/or payment of monies, are or would be
convertible into or exercisable or exchangeable for equity interests in Tenneco
(each, a ''TENNECO EQUITY RIGHT''). Between March 31, 1996 and the Agreement
Effective Date, Tenneco has not issued or granted any Tenneco Equity Right
except for
(i) Rights issued in connection with the issuance of Tenneco Common
Stock as described in SECTION 4.2(B) hereof and
(ii) options to purchase 11,000 shares of Tenneco Common Stock granted
pursuant to the 1994 Stock Plan.
(d) As of the Agreement Effective Date all outstanding shares of Tenneco
Stock are, and immediately prior to the Effective Time all outstanding shares
of Tenneco Stock and New Preferred Stock will be, validly issued, fully paid
and nonassessable and free of any preemptive (or similar) right.
4.3 AUTHORITY AND APPROVAL. Tenneco has the corporate power and authority,
and no other corporate proceedings on the part of Tenneco are necessary, to
execute and deliver this Agreement and the Distribution Agreement and to
consummate the transactions contemplated hereby and thereby (subject to
securing the
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approval of the stockholders of Tenneco as contemplated by SECTION 6.8 hereof,
and formal declaration of the dividends necessary to effectuate the Spinoffs
and the issuance of the New Preferred Stock). This Agreement has been duly
executed and delivered by Tenneco and, assuming this Agreement constitutes a
valid and binding obligation of each of Acquiror and Subsidiary, this Agreement
constitutes a valid and binding obligation of Tenneco, enforceable against
Tenneco in accordance with its terms.
4.4 FINANCIAL STATEMENTS. The audited financial statements of Tenneco and
consolidated subsidiaries as of December 31, 1995 and 1994 and for the three
years ended December 31, 1995, included in Tenneco's 1995 Annual Report on Form
10- K, as filed with the Commission, (i) were prepared in accordance with GAAP
applied on a consistent basis (except as indicated therein or in the notes
thereto) and (ii) fairly present the financial position of Tenneco and
consolidated subsidiaries as of the dates thereof and the results of their
operations and cash flows for the periods then ended. The unaudited financial
statements of Tenneco and consolidated subsidiaries as of March 31, 1996 and
1995 and for the three- month periods ended on each of such dates, included in
Tenneco's March 31, 1996 Quarterly Report on Form 10-Q as filed with the
Commission, (A) comply in all material respects with the published rules and
regulations of the Commission with respect thereto, (B) were prepared in
accordance with GAAP, except as otherwise permitted under the Exchange Act and
the rules and regulations thereunder, on a consistent basis (except as
indicated therein or in the notes thereto) and (C) fairly present the financial
position of Tenneco and consolidated subsidiaries as of the dates thereof and
the results of their operations and cash flows for the periods then ended,
subject to normal year-end adjustments and any other adjustments described
herein or in the notes or schedules thereto.
The unaudited pro forma financial information of the Energy Business
(including related notes thereto) as of December 31, 1995 included in EXHIBIT
F-1 attached to this Agreement (which were prepared without cash flow
statements and treating the Energy Business as if it were a separate entity for
the purpose of estimates and judgments of materiality) appropriately reflects
all significant pro forma adjustments necessary to and does fairly present the
financial position of the Energy Business as of December 31, 1995 and for the
year then ended, except that such financial information was prepared on the
assumption that the Energy Business had no long-term debt as of December 31,
1995. The historical financial balances included in the unaudited pro forma
financial balances included in EXHIBIT F-1 have been derived from amounts
included in the consolidated balances presented in the audited financial
statements of Tenneco and consolidated subsidiaries included in Tenneco's
December 31, 1995 Annual Report on Form 10-K as filed with the Commission.
The unaudited pro forma financial information of the Energy Business
(including related notes thereto) as of March 31, 1996 included in EXHIBIT F-2
attached to this Agreement (which were prepared without cash flow statements
and treating the Energy Business as if it were a separate entity for the
purpose of estimates and judgments of materiality) appropriately reflects all
significant pro forma adjustments necessary to and does fairly present the
financial position of the Energy Business as of March 31, 1996, except that
such financial information was prepared on the assumption that the Energy
Business had no long-term debt as of March 31, 1996. The historical financial
balances included in the unaudited pro forma financial balances included in
EXHIBIT F-2 have been derived from amounts included in the consolidated
balances presented in the audited financial statements of Tenneco and
consolidated subsidiaries included in Tenneco's March 31, 1996 Quarterly Report
on Form 10-Q as filed with the Commission.
The financial statements of Tennessee Gas Pipeline Company, Midwestern Gas
Transmission Company and East Tennessee Natural Gas Company as of and for the
years ended December 31, 1995 and 1994 included on pages 110 through 123 of
each company's respective Federal Energy Regulatory Commission Form 2 were
prepared in all material respects in accordance with the accounting
requirements of the Federal Energy Regulatory Commission as set forth in its
applicable Uniform System of Accounts and published accounting releases.
4.5 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution, delivery and,
subject to securing the approval of the stockholders of Tenneco as contemplated
by SECTION 6.8 hereof, formal declaration of the dividends necessary to
effectuate the Spinoffs and the issuance of the New Preferred Stock,
performance by Tenneco of
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this Agreement and the Distribution Agreement and the consummation by Tenneco
of the transactions contemplated hereby or thereby do not or will not:
(i) conflict with or result in any breach of any provisions of the
certificate of incorporation or bylaws of Tenneco;
(ii) except as contemplated by this Agreement or the Distribution
Agreement, require any filing by Tenneco or any Energy Subsidiary with any
Governmental Authority, or require Tenneco or any Energy Subsidiary to
obtain any permit, authorization, consent or approval from any
Governmental Authority;
(iii) after giving effect to the Debt Realignment, result in a
violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement, franchise, permit, concession or other
instrument, obligation, understanding, commitment or other arrangement to
which Tenneco or any Energy Subsidiary is a party or by which any of them
or any of their respective material properties or assets may be bound or
affected; or
(iv) violate any Law applicable to Tenneco or any Energy Subsidiary;
except, in the case of each of clauses (ii) through (iv) above, for failures to
make filings or obtain permits, authorizations, consents or approvals,
violations, breaches or defaults that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Tenneco.
4.6 LITIGATION. Except as previously disclosed in writing to Acquiror, as
of the Agreement Effective Date there are no actions, suits, proceedings or, to
the knowledge of Tenneco, governmental investigations or inquiries pending
against Tenneco or any of its subsidiaries or their respective properties,
assets, operations or businesses which could reasonably be expected to delay,
prevent or hinder the consummation of the transactions contemplated hereby or
by the Distribution Agreement, and to the knowledge of Tenneco as of the
Agreement Effective Date, no such actions, suits, proceedings or governmental
investigations or inquiries are threatened.
4.7 TENNECO SEC DOCUMENTS; ACCURACY OF INFORMATION. The information
relating to the Energy Business contained in the Tenneco SEC Documents (A)
complied, as of the date of filing thereof (or, in the case of any registration
statement, on the date it was declared effective), in all material respects
with the applicable requirements of the Exchange Act or Securities Act and (B)
did not contain, as of the date of filing thereof (or, in the case of any
registration statement, on the date it was declared effective), any untrue
statement of a material fact or omit to state any material fact necessary in
order to have the statements made therein, in light of the circumstances under
which they were made, not misleading.
4.8 NO MATERIAL ADVERSE EFFECT. Except as previously disclosed to Acquiror
in writing prior to the date of this Agreement, between December 31, 1995 and
the Agreement Effective Date, there has occurred no Material Adverse Effect on
Tenneco.
4.9 ADVISORS. Except for Xxxxxx, Xxxxxx Xxxxxxx & Co. Incorporated, and
X.X. Xxxxxx Securities Incorporated, which have been retained by Tenneco to
assist and advise Tenneco in connection with the transactions contemplated by
this Agreement and the Distribution Agreement, Tenneco has not employed any
broker, finder or intermediary in connection with such transactions who might
be entitled to a fee or commission upon the consummation of this Agreement, the
Distribution Agreement or the transactions contemplated hereby or thereby. A
copy of the engagement letter between Tenneco and each such advisor has been
provided to Acquiror.
4.10 OPINION OF FINANCIAL ADVISOR. Tenneco has received the opinion of
Lazard, dated as of the Agreement Efffective Date, to the effect that, as of
such date, the consideration to be received in the Merger by Tenneco's
stockholders is fair to Tenneco's stockholders from a financial point of view
(and Tenneco has the right to refer
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to that opinion, so long as such reference is in form and substance
satisfactory to Lazard, in the Joint Proxy Statement and other appropriate
filings with the Commission and mailings to its stockholders).
4.11 AMENDMENTS TO RIGHTS AGREEMENT. Tenneco has caused the Rights
Agreement to be amended such that
(i) neither a ''Triggering Event'' nor a ''Distribution Date'' (in
each case as defined in the Rights Agreement) will occur solely by reason
of the execution of this Agreement and the consummation of the
transactions contemplated hereby, and
(ii) the Rights will expire at the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUBSIDIARY
Acquiror and Subsidiary hereby represent and warrant, jointly and
severally, to Tenneco as follows:
5.1 ORGANIZATION AND EXISTENCE. Each of Acquiror and Subsidiary is a
corporation validly existing and in good standing under the laws of the
jurisdiction of its organization with the corporate power and authority to own
its properties and assets and to carry on its business as now being conducted,
except where the failure to be so existing and in good standing or to have such
power and authority would not have a Material Adverse Effect on Acquiror.
5.2 CAPITALIZATION.
(a) ACQUIROR.
(i) As of the Agreement Effective Date, the authorized capital stock of
Acquiror consists of:
(A) 100,000,000 shares of Acquiror Common Stock of which, at June 18,
1996, 35,582,074 shares were issued and outstanding and 1,769,151 shares
were held in treasury (including shares held in Acquiror's Benefits
Protection Trust); and
(B) 25,000,000 shares of Preferred Stock , $.01 par value, none of
which are issued and outstanding.
(ii) As of the Agreement Effective Date, except for rights issued pursuant
to the Shareholders Rights Agreement, dated as of July 7, 1992, between
Acquiror and The First National Bank of Boston and options to acquire an
aggregate of 4,066,487 shares of Acquiror Common Stock, there were no
outstanding options, warrants, rights, puts, calls, commitments or other
contracts, arrangements, or understandings issued by or binding upon Acquiror
requiring or providing for, and there were no outstanding securities of
Acquiror or its subsidiaries which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance by Acquiror of any new or
additional equity interests in Acquiror or any other securities of Acquiror
which, with notice, lapse of time and/or payment of monies, are or would be
convertible into or exercisable or exchangeable for equity interests in
Acquiror (each, an ''ACQUIROR EQUITY RIGHT'').
(iii) As of the Agreement Effective Date all outstanding shares of the
capital stock of Acquiror are, and immediately prior to the Effective Time all
outstanding shares of the capital stock of Acquiror will be, validly issued,
fully paid and nonassessable and free of any preemptive (or similar) right.
(b) SUBSIDIARY.
(i) The authorized capital stock of Subsidiary consists of 1,000 shares of
common stock, $1.00 par value, all of which are issued and outstanding.
(ii) There are no outstanding options, warrants, rights, puts, calls,
commitments or other contracts, arrangements, or understandings issued by or
binding upon Subsidiary requiring or providing for, and there were
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no outstanding securities of Subsidiary which upon the conversion, exchange or
exercise thereof would require or provide for, the issuance by Subsidiary of
any new or additional equity interests in Subsidiary or any other securities of
Subsidiary which, with notice, lapse of time and/or payment of monies, are or
would be convertible into or exercisable or exchangeable for equity interests
in Subsidiary.
(iii) All outstanding shares of the capital stock of Subsidiary are, and
immediately prior to the Effective Time all outstanding shares of the capital
stock of Subsidiary will be, validly issued, fully paid and nonassessable and
free of any preemptive (or similar) right.
5.3 AUTHORITY AND APPROVAL. Each of Acquiror and Subsidiary has the
corporate power and authority, and no other corporate proceedings on the part
of Acquiror or Subsidiary are necessary, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Acquiror and Subsidiary and, assuming
this Agreement constitutes a valid and binding obligation of Tenneco, this
Agreement constitutes the valid and binding obligation of Acquiror and
Subsidiary, enforceable against each of them in accordance with its terms.
5.4 FINANCIAL STATEMENTS. Acquiror has heretofore delivered to Tenneco
complete and correct copies of all filings made by Acquiror pursuant to the
Exchange Act since January 1, 1995. The audited consolidated financial
statements of Acquiror included in such filings (i) were prepared in accordance
with GAAP applied on a consistent basis (except as indicated therein or in the
notes thereto) during the periods presented and (ii) fairly present the
financial position of Acquiror and its consolidated subsidiaries as of the
dates thereof and the results of their operations and cash flows for the
periods then ended. The unaudited financial statements included in such filings
(i) comply in all material respects with the published rules and
regulations of the Commission with respect thereto,
(ii) were prepared in accordance with GAAP, except as otherwise
permitted under the Exchange Act and the rules and regulations thereunder,
on a consistent basis (except as may be indicated therein or in the notes
or schedules thereto) during the periods presented and
(iii) fairly present the financial position of Acquiror and its
consolidated subsidiaries as at the dates thereof and the results of their
operations and cash flows for the periods then ended, subject to normal
year-end adjustments and any other adjustments described therein or in the
notes or schedules thereto.
5.5 CONSENT AND APPROVALS; NO VIOLATION. The execution, delivery and
performance by Acquiror and Subsidiary of this Agreement and the consummation
by Acquiror and Subsidiary of the transactions contemplated hereby do not and
will not:
(i) conflict with or result in any breach of any provisions of the
certificate of incorporation, bylaws or other governing documents of
Acquiror or Subsidiary,
(ii) except as contemplated by this Agreement, require any filing by
Acquiror or any of its subsidiaries (including Subsidiary) with any
Governmental Authority or require Acquiror or any of its subsidiaries
(including Subsidiary) to obtain any permit, authorization, consent or
approval of any Governmental Authority;
(iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement, franchise, permit,
concession or other instrument, obligation, understanding, commitment or
other arrangement to which Acquiror or any of its subsidiaries (including
Subsidiary) is a party or by which any of them or any of their respective
material properties or assets may be bound or affected; or
(iv) violate any Law applicable to Acquiror or any of its subsidiaries
(including Subsidiary);
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except, in the case of each of clauses (ii) through (iv) above, for failures to
make filings or obtain permits, authorizations, consents or approvals,
violations, breaches or defaults which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Acquiror.
5.6 LITIGATION. Except as previously disclosed in writing to Tenneco, as
of the Agreement Effective Date, there are no actions, suits, proceedings or,
to Acquiror's knowledge, governmental investigations or inquiries pending
against Acquiror or any of its subsidiaries (including Subsidiary) or their
respective properties, assets, operations or businesses which could reasonably
be expected to delay, prevent or hinder the consummation of the transactions
contemplated hereby and, to the knowledge of Acquiror, no such actions, suits,
proceedings or governmental investigations or inquiries are threatened.
5.7 ACQUIROR SEC DOCUMENTS; ACCURACY OF INFORMATION. The information
regarding Acquiror and its consolidated subsidiaries contained in the Acquiror
SEC Documents (A) complied, as of the date of filing thereof (or, in the case
of any registration statement, on the date it was declared effective), in all
material respects with the applicable requirements of the Exchange Act or
Securities Act and (B) did not contain, as of the date of filing thereof (or,
in the case of any registration statement, on the date it was declared
effective), any untrue statement of a material fact or omit to state any
material fact necessary in order to have the statements made therein, in light
of the circumstances under which they were made, not misleading.
5.8 NO MATERIAL ADVERSE EFFECT. Except as previously disclosed to Tenneco
in writing prior to the date of this Agreement, between December 31, 1995 and
the Agreement Effective Date, there has occurred no Material Adverse Effect on
Acquiror.
5.9 ADVISORS. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx (''DLJ''), which has
been retained by Acquiror to assist and advise Acquiror in connection with the
transactions contemplated by this Agreement, Acquiror has not employed any
broker, finder or intermediary in connection with such transactions who might
be entitled to a fee or commission upon the consummation of this Agreement or
the transactions contemplated hereby.
5.10 OPINION OF FINANCIAL ADVISOR. Acquiror has received the opinion of
DLJ, dated as of the Agreement Effective Date, to the effect that, as of such
date, the consideration to be paid in the Merger by Acquiror is fair to
Acquiror's stockholders from a financial point of view (and Acquiror has the
right to refer to that opinion, so long as such reference is in form and
substance satisfactory to DLJ, in the Joint Proxy Statement and other
appropriate filings with the Commission and mailings to its stockholders).
5.11 DUE AUTHORIZATION. The shares of Acquiror Stock and any Depositary
Shares issued in connection with the Merger as contemplated by this Agreement
will be duly authorized and will be validly issued, fully paid and
nonassessable.
5.12 NO ACTIVE BUSINESS. Subsidiary has not engaged in any business and
does not have any contractual liabilities, commitments, or obligations (other
than pursuant to this Agreement) or any assets (other than cash representing
its initial capitalization). Subsidiary has been formed solely for purposes of
effectuating the transactions contemplated by this Agreement and having such
transactions treated for federal income tax purposes as an acquisition of the
outstanding Tenneco Stock by Acquiror in exchange for Acquiror Stock through
the Merger of Subsidiary with and into Tenneco pursuant to this Agreement.
5.13 OWNERSHIP OF TENNECO STOCK. Neither Acquiror nor Subsidiary is
(i) an ''Interested Stockholder'' of Tenneco as defined in Article
NINTH of the Certificate of Incorporation of Tenneco or
(ii) an ''interested stockholder'' of Tenneco as defined in Section
203 of the DGCL.
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As of the Agreement Effective Date, Acquiror and its Affiliates own
(directly or indirectly, beneficially or of record) no shares of Tenneco Stock
and neither Acquiror nor any of its Affiliates own any rights to acquire any
shares of Tenneco Stock, except pursuant to this Agreement.
ARTICLE VI
COVENANTS OF THE PARTIES
6.1 CONDUCT OF TENNECO AND ITS SUBSIDIARIES.
(a) Between the Agreement Effective Date and the Effective Time, unless
Acquiror shall have consented in writing (such consent not to be unreasonably
withheld), and except for
(i) actions taken that either affect solely the Industrial Business or
the Shipbuilding Business or only adversely affect the Energy Business to
a de minimis extent and do not materially delay or prevent consummation of
the transactions contemplated hereby,
(ii) actions taken by Tenneco and its Affiliates and subsidiaries
(including the Energy Subsidiaries) in order to consummate any of the
Merger, the Spinoffs and the other transactions contemplated by this
Agreement or the Distribution Agreement, which actions are taken in good
faith and either are contemplated by this Agreement or the Distribution
Agreement (including the Corporate Restructuring Transactions described
therein) or do not have more than a de minimis effect on Tenneco or do not
materially delay or prevent consummation of the transactions contemplated
hereby, or
(iii) actions or matters set forth in EXHIBIT G attached hereto,
Tenneco shall, and shall cause each of the Energy Subsidiaries to:
(A) use its reasonable best efforts to
(I) operate the Energy Business in good faith and in the ordinary
course, consistent with past practices, including, without limitation,
with respect to the payment and administration of accounts payable and
the collection and administration of accounts receivable, inventory
management and control policies and implementation of capital programs
for the Energy Business in a timely manner,
(II) preserve substantially intact the present business
organization of the Energy Business,
(III) keep available, consistent with the past practices of the
Energy Business, the services of the present officers, employees and
consultants of Tenneco and each of the Energy Subsidiaries (to the
extent they customarily provide services to the Energy Business), and
(IV) preserve the relationships with customers, suppliers and
others having business dealings with the Energy Business,
it being understood that
(x) certain employees of Tenneco and the Energy Subsidiaries will
also be engaged in activities for the Industrial Business and the
Shipbuilding Business, and
(y) the failure of any officer, employee or consultant of the
Energy Business to remain an officer, employee or consultant of the
Energy Business or to become an officer, employee or consultant of
Acquiror or any subsidiary of Acquiror shall not constitute a breach
of this covenant;
(B) not amend or otherwise change the certificate of incorporation or
bylaws of Tenneco (except as may be necessary or appropriate to effect the
transactions contemplated hereby or by the Distribution Agreement);
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(C) not issue or authorize the issuance of (except, as to Tenneco, in
the ordinary course of business consistent with past practices or as
contemplated in this Agreement) or the Distribution Agreement, any shares
of any class of the capital stock of Tenneco or any Energy Subsidiary
(other than New Preferred Stock) or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of Tenneco or any of the Energy
Subsidiaries (other than the issuance of Rights and shares of Tenneco
Common Stock either
(I) in connection with any dividend reinvestment plan,
(II) upon the exercise of options granted prior to the Agreement
Effective
Date,
(III) pursuant to the terms of any other Tenneco employee benefit
plan with an employee stock fund or employee stock ownership plan
feature,
(IV) in accordance with the Rights Agreement, or
(V) as is otherwise permitted pursuant to this Agreement or the
Distribution Agreement);
(D) not reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any class of the capital stock
of Tenneco or of any of the Energy Subsidiaries other than acquisitions by
a dividend reinvestment plan or by any Tenneco employee benefit plan with
an employee stock fund or employee stock ownership plan feature,
consistent with the terms thereof and applicable securities laws;
(E) not declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any class of the capital stock of Tenneco or any of the Energy
Subsidiaries, except:
(I) in the case of Tenneco, regular dividends (including the
regular dividend for the dividend period in which the Effective Time
occurs) with respect to the $4.50 Preferred Stock, the $7.40 Preferred
Stock and the New Preferred Stock and regular quarterly dividends on
the Tenneco Common Stock at such times and in such amounts as the
Board of Directors of Tenneco in its sole discretion determines;
(II) the Spinoffs;
(III) the issuance of New Preferred Stock; and
(IV) cash dividends declared and paid by any of the Energy
Subsidiaries;
(F) with respect to the individuals who will be executive officers or
employees of the Energy Business after the Effective Time, not:
(I) increase the compensation payable or to become payable to any
of such executive officers or employees except for increases in the
ordinary course of business in accordance with past practices;
(II) grant any severance or termination pay to, or enter into any
employment or severance agreement with, any executive officer of the
Energy Subsidiaries; or
(III) except as contemplated in this Agreement or in the
Distribution Agreement, establish, adopt, enter into or amend or take
action to accelerate any rights or benefits under, any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any such director,
executive officer or employee;
provided, however, that Tenneco may continue to provide benefits under
employee benefit plans and incentive compensation plans that are in effect
on the Agreement Effective Date;
(G) not take, or permit any of its subsidiaries in respect of which it
has the direct or indirect voting power to control to take, any action
that would reasonably likely result in any of the conditions to the
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Merger set forth in ARTICLE VII of this Agreement not being satisfied or
that would materially impair the ability of Tenneco to consummate the
Spinoffs in accordance with the terms of the Distribution Agreement or the
Merger in accordance with the terms hereof or would materially delay such
consummation or that would disqualify either of the Spinoffs as a tax free
distribution within the meaning of Section 355 of the Code;
(H) not implement any change in its accounting principles, practices
or methods, other than as (X) may be required by GAAP, the Financial
Accounting Standards Board, the Commission or any other Governmental
Authority or oversight agency and (Y) relating solely to the Shipbuilding
Group and/or the Industrial Group;
(I) except in the ordinary course of business, consistent with past
practices, with respect to inventory or services or except where the
effect on the Energy Business would be de minimis, not, with respect to
the Energy Business, transfer, lease, license, sell, mortgage, pledge or
dispose of any property or assets included in the Energy Assets or
otherwise encumber any property or assets included in the Energy Assets;
(J) not release any third party from, or amend, modify or waive any
provisions of, any confidentiality or standstill agreement to which
Tenneco is a party (except any that relate solely to the Industrial
Business or the Shipbuilding Business);
(K) file on or before the due date therefor all tax returns required
to be filed by Tenneco or any Energy Subsidiary, which tax returns shall,
to the extent such tax returns relate to the Energy Business, be (i)
complete and correct in all material respects and (ii) prepared in
accordance and on a basis consistent with the elections, accounting
methods, conventions and principles of tax returns used for the most
recent taxable periods for which tax returns involving similar tax items
have been filed; and
(L) not make, change or revoke any tax election relating to the Energy
Business to the extent such election may have more than a de minimis
effect on the Energy Business or Acquiror, or enter into any material
agreement or settlement regarding taxes relating to the Energy Business
with any tax authority to the extent such settlement or agreement may have
a more than de minimis effect on the Energy Business or Acquiror.
(b) Prior to the Effective Time, Tenneco shall cause all stock options
issued under the Option Plans (or to executives outside the Option Plans) to be
(i) converted to options to acquire the stock of the Industrial
Company or the Shipbuilding Company;
(ii) exercised; and/or
(iii) cancelled.
Tenneco shall also cause all such options not held by employees of the Energy
Business to be so converted if not exercised or cancelled prior to the
Effective Time in accordance with their terms. All such options held by
employees of the Energy Business shall become exercisable prior to the
Effective Time and, if not exercised by the Effective Time, shall be cancelled.
(c) Between the Agreement Effective Date and the Effective Time, Tenneco
shall cause the Industrial Subsidiary to succeed to sponsorship of the SECT. To
the extent the SECT continues to own Tenneco Stock, the SECT will participate
in the Merger, the Spinoffs and the conversion of shares pursuant to SECTION
2.5 hereof (and the other transactions contemplated by this Agreement and/or
the Distribution Agreement) as any other stockholder of Tenneco.
(d) Tenneco shall have the right, and shall use its reasonable best
efforts to, issue shares of New Preferred Stock prior to the Effective Time on
the following basis:
(i) the issuance may be effected through public sale or private
placement (either United States or foreign, but with a placement agent
mutually and reasonably acceptable to both Tenneco and Acquiror), or
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if such sale or placement is not reasonably practicable under the
circumstances, through a dividend-in-kind to the holders of Tenneco Common
Stock, but shall in any event be in accordance with all applicable
securities and other Laws (and, if publicly issued or issued as a
dividend-in-kind, shall be listed on the NYSE);
(ii) the NPS Value shall be approximately 25% (but in no event 20% or
less) of the sum of:
(x) the NPS Value, plus
(y) the market value of all outstanding Tenneco Common Stock (as
determined as of the Effective Time pursuant to the same procedure as
applies to determining the NPS Value).
(e) Prior to the Effective Time, Tenneco shall cause the elimination of
all intercompany accounts (including accounts and notes receivable and payable)
between members of the Energy Group, the Shipbuilding Group and the Industrial
Group, as the case may be (except trade accounts incurred in the ordinary
course of business), as set forth in the Distribution Agreement.
(f) From and after the Agreement Effective Date, Tenneco shall afford
Acquiror and its officers, employees, representatives and agents the
opportunity to participate with Tenneco in the process of obtaining the rulings
set forth in the IRS Ruling Request, including the right to participate in the
submission of written materials by Tenneco to the Internal Revenue Service, and
in-person and telephonic conferences between Tenneco and the Internal Revenue
Service, to the extent such communications relate to the IRS Ruling Request.
Notwithstanding the foregoing, Tenneco shall have the right, subject to prior
consultation with Acquiror, to determine, in its reasonable discretion, that
Acquiror's participation in certain communications with the Internal Revenue
Service (or any other aspects of the rulings process) may hinder or delay
Tenneco's ability to obtain the rulings requested in the IRS Ruling Request, in
which case Acquiror will be precluded from such participation; provided, that
Tenneco shall promptly inform Acquiror of the substance of any matter in which
Acquiror does not participate.
(g) In the event that, between the Agreement Effective Date and the
Closing Date, the General Counsel or an Executive Vice President of Tenneco
becomes aware that the Energy Business has the realistic opportunity to
exercise its right of first refusal with respect to the acquisition of
additional interests in the Oasis pipeline or otherwise to acquire additional
interests in the Oasis pipeline, Tenneco shall notify Acquiror thereof and
shall consult and cooperate with Acquiror prior to exercising its right of
first refusal or making any acquisition proposal. Any exercise of such right of
first refusal or other acquisition of interests in the Oasis pipeline by the
Energy Business shall be subject to the consent of Acquiror, which consent
shall not be unreasonably withheld or delayed.
6.2 CONDUCT OF THE BUSINESS OF ACQUIROR AND ITS SUBSIDIARIES.
(a) Between the Agreement Effective Date and the Effective Time, neither
Acquiror nor Subsidiary nor any of their Affiliates shall:
(i) take any action that would be reasonably likely to result in any
of the conditions to the Merger set forth in ARTICLE VII of this Agreement
not being satisfied or that would impair the ability of Acquiror or
Subsidiary to consummate the Merger in accordance with the terms hereof or
delay such consummation;
(ii) acquire (directly or indirectly, beneficially or of record), any
shares of Tenneco Stock (or any rights to acquire any such shares, except
pursuant to this Agreement); or
(iii) amend or otherwise change its certificate of incorporation
(except as is contemplated by this Agreement in respect of the designation
of the Acquiror Preferred Stock), bylaws or other organizational
documents; provided, however, that the provisions of this clause (iii)
shall not apply to any Affiliate of Acquiror or Subsidiary if the
amendment or other change would not adversely effect any of the rights or
benefits hereunder or under any of the Ancillary Agreements of Tenneco or
the holders of Tenneco Stock (other than to a de minimis extent) or
otherwise materially delay or prevent the consummation of the transactions
contemplated hereby.
(b) Acquiror shall not, and shall not permit any of its subsidiaries
(including Subsidiary) to, take or cause or permit to be taken any action that
would disqualify either of the Spinoffs as a tax-free distribution within the
meaning of Section 355 of the Code.
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(c) Between the Agreement Effective Date and the Effective Time,
Subsidiary shall not engage in any activities of any nature except as provided
in, or in connection with the transactions contemplated by, this Agreement.
6.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Effective Time, and except
as may otherwise be required by applicable law, each of Tenneco and Acquiror
shall (and shall cause its subsidiaries and officers, directors, employees,
auditors and agents to) afford the officers, employees and agents of the other
party (the ''RESPECTIVE REPRESENTATIVES'') reasonable access at all reasonable
times to its officers, employees, agents, properties, offices, plants and other
facilities, books and records, and shall furnish such Respective
Representatives with all financial, operating and other data and information as
may be reasonably requested, in each case to the extent that such access and
disclosure would not:
(i) violate the terms of any agreement to which the disclosing party
or any of its Affiliates is bound or any applicable law or regulation; or
(ii) impair any attorney-client privilege of the disclosing party.
Notwithstanding the foregoing, Tenneco shall not be required (and shall
not be required to cause its subsidiaries and officers, directors, employees,
auditors and agents) to provide the access, data and information described in
the preceding sentence with respect to the Industrial Business or the
Shipbuilding Business unless Acquiror has a reasonable interest in obtaining
such access, data or information in connection with the Merger.
(b) All information obtained by Tenneco, Acquiror or their Respective
Representatives pursuant to SECTION 6.3(A) hereof shall be kept confidential in
accordance with the confidentiality agreement, dated March 28, 1996, executed
by Acquiror and the confidentiality agreement, dated June 12, 1996, executed by
Tenneco.
(c) The Industrial Subsidiary and the Shipbuilding Subsidiary (and their
respective direct and indirect subsidiaries and Affiliates) shall be deemed
third party beneficiaries of this SECTION 6.3 and all other provisions of this
Agreement necessary or appropriate for purposes of enforcing this SECTION 6.3.
6.4 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) For a period of six years after the Effective Time, Acquiror shall not
cause or permit any amendment, repeal or other modification of the provisions
of
(i) Article IV, Section 14 of the by-laws of the Surviving
Corporation, as set forth in EXHIBIT H attached hereto, or
(ii) Article Eighth of the certificate of incorporation of the
Surviving Corporation,
in either case in any manner that would adversely affect the rights thereunder
of individuals who at any time prior to the Effective Time were directors,
officers or employees of Tenneco or any of its subsidiaries or Affiliates or
who are otherwise entitled to indemnification pursuant to such provisions in
respect of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this Agreement
and the Distribution Agreement), unless such modification is required by the
DGCL or applicable federal law, and then only to the extent of such applicable
requirements of the DGCL or federal law. To the extent the Surviving
Corporation is unable for any reason to fulfill its obligations under the bylaw
provisions set forth in EXHIBIT H attached hereto, Acquiror agrees to pay,
perform and discharge all such obligations.
(b) Prior to the Effective Time, Tenneco shall, and from and after the
Effective Time the Acquiror and the Surviving Corporation jointly and severally
shall, indemnify, defend and hold harmless each Person who is now, has been at
any time prior to the date of this Agreement or who becomes prior to Effective
Time an officer, director or employee of Tenneco or any of its subsidiaries
(collectively, the ''INDEMNIFIED PARTIES'') against all losses, expenses,
claims, damages, liabilities or amounts that are paid in settlement of, with
the approval of the
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indemnifying party (which approval shall not unreasonably be withheld), or
otherwise in connection with any claim, action, suit, proceeding or
investigation (a ''CLAIM''), based in whole or in part on the fact that such
Person is or was a director, officer or employee of Tenneco or any of its
subsidiaries and arising out of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Agreement and the Distribution Agreement), whether or not
such Claim was asserted prior to, at or after the Effective Time, in each case
to the fullest extent permitted under the DGCL or other applicable law (and
shall pay expenses in advance of the final disposition of any such Claim to
each Indemnified Party to the fullest extent permitted under the DGCL or other
applicable law, upon receipt from the Indemnified Party to whom expenses are
advanced of any undertaking to repay such advances required by Section 145(e)
of the DGCL or other applicable law). Notwithstanding anything contained
herein, Tenneco's obligation to indemnify any such person pursuant to this
SECTION 6.4 shall not affect the allocation of liability among the Energy
Group, the Industrial Group and Shipbuilding Group pursuant to the Distribution
Agreement and any corresponding indemnification rights thereunder.
(c) Without limiting the generality of the foregoing, in the event any
Claim is brought against any Indemnified Party (whether arising before or after
the Effective Time):
(i) the Indemnified Party may retain counsel satisfactory to him with
the consent of Tenneco (or the consent of Acquiror and the Surviving
Corporation after the Effective Time) which consent of Tenneco (or, after
the Effective Time, Acquiror and the Surviving Corporation) with respect
to such counsel retained by the Indemnified Party may not be unreasonably
withheld or delayed;
(ii) Tenneco (or, after the Effective Time, Acquiror and the Surviving
Corporation) shall pay all reasonable fees and expenses of such counsel
for the Indemnified Party promptly as statements therefor are received;
and
(iii) Tenneco (or, after the Effective Time, Acquiror and the
Surviving Corporation) will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that none of Tenneco,
Acquiror or the Surviving Corporation shall be liable for any settlement
of any Claim effected without its written consent, which consent, however,
shall not be unreasonably withheld.
Any Indemnified Party wishing to claim indemnification under this SECTION 6.4,
upon learning of any such Claim, shall notify Tenneco (or, after the Effective
Time, Acquiror and the Surviving Corporation) (but any failure so to notify
shall not relieve Tenneco, Acquiror or the Surviving Corporation from any
liability which it may have under this SECTION 6.4, except to the extent such
failure materially prejudices such party), and shall deliver to Tenneco (or,
after the Effective Time, Acquiror and the Surviving Corporation) any
undertaking required by Section 145(e) of the DGCL or other applicable law. The
Indemnified Parties as a group may retain only one law firm to represent them
with respect to each such Claim unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnified Parties.
(d) (i) MAINTENANCE OF D&O POLICIES. On or prior to the Closing Date,
Tenneco shall provide Acquiror with copies and a schedule of those Directors'
and Officers' Liability Insurance Policies which Tenneco shall enter into
effective as of the Closing Date (the ''D&O POLICIES''). For a period of seven
years after the Effective Time, Acquiror and the Surviving Corporation shall
cause to be maintained in full force and effect the D&O Policies. Acquiror and
the Surviving Corporation shall be jointly and severally responsible for
payment of all premiums due as respects the D&O Policies and shall take all
other actions necessary or appropriate to maintain the D&O Policies in full
force and effect (other than to the extent the available limit of liability of
any such D&O Policy may be reduced or exhausted solely as the result of the
payment of claims thereunder) for the agreed term of seven years after the
Effective Time. If at any time an insurance carrier under any of the D&O
Policies becomes unable or unwilling, or it becomes probable that such
insurance carrier will be unable or unwilling (which determination shall be
made in the reasonable discretion of the Industrial Subsidiary), to fulfill any
of its obligations under any D&O Policy, whether due to such insurance
carrier's dissolution, bankruptcy, insolvency or otherwise, then Acquiror and
the Surviving Corporation shall obtain a directors' and officers' liability
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insurance policy in substitution (with an insurance carrier acceptable to the
Industrial Subsidiary) of each D&O Policy under which such insurance carrier
was to provide coverage (a ''REPLACEMENT D&O POLICY''), which shall provide at
least the same coverage and amounts, and contain terms and provisions which are
no less favorable to the insured parties, as existed under the D&O Policy so
replaced. Acquiror and the Surviving Corporation shall pay any costs associated
with the obtaining and maintenance of any Replacement D&O Policy as
contemplated hereby.
(ii) OWNERSHIP AND ADMINISTRATION OF POLICIES. The parties hereto agree
that the D&O Policies and any Replacement D&O Policy shall be owned by the
Industrial Subsidiary. From and after the Effective Time, the Industrial
Subsidiary shall be solely responsible for all aspects of service and
administration of such policies (other than the payment of any premiums due),
including the notification to insurers, and the management, negotiation and
settlement, of any claims made under the D&O Policies and any Replacement D&O
Policy. From and after the Effective Time, Acquiror and the Surviving
Corporation shall have the right to participate in the negotiation and
participate in and consent to settlement (such consent not to be unreasonably
withheld or delayed) of any claim under the D&O Policies and any Replacement
D&O Policy for which, and then only to the extent, that either is obligated to
indemnify any of the present or former directors or officers of Tenneco or any
of its present or past subsidiaries (''DIRECTORS OR OFFICERS'') for liabilities
associated with such claim. The Industrial Subsidiary's responsibilities for
administering and servicing the D&O Policies and any Replacement D&O Policy
shall in no manner restrict, reduce, limit or impair any of the Directors' or
Officers' rights to indemnification from Acquiror, the Surviving Corporation or
their respective successors or assigns in accordance with any applicable Law,
statute, charter or bylaw provision.
(iii) COOPERATION. Acquiror and the Surviving Corporation shall cooperate
with the Directors and Officers in the defense and settlement of any claim made
against them based upon or arising out of any actual or alleged wrongful act
(as such term may be defined in the applicable D&O Policies or Replacement D&O
Policy) occurring at or prior to the Effective Time. Acquiror and the Surviving
Corporation shall provide any reasonable assistance or information that may be
required by a Director or Officer in connection with any such claim. Neither
Acquiror, the Surviving Corporation nor any of their respective representatives
shall cause any action or inaction that could reasonably be expected to
jeopardize or otherwise impair the rights or ability of the Directors or
Officers to recover loss amounts due under the D&O Policies or any Replacement
D&O Policy.
(e) Neither Acquiror nor the Surviving Corporation shall take any action
that could reasonably be expected to jeopardize or otherwise interfere with the
ability of any of the Indemnified Parties to collect any proceeds payable under
any of the D&O Policies.
(f) Each of Tenneco, Acquiror and Subsidiary acknowledges and agrees that
the Industrial Subsidiary's responsibilities hereunder for Claims
Administration and Insurance Administration shall not relieve any Person
submitting an insured claim under any of the D&O Policies of
(i) the primary responsibility for giving notice of such insured claim
accurately, completely and in a timely manner, or
(ii) any other right or responsibility which such Person may have
pursuant to the terms of any of the D&O Policies.
(g) This SECTION 6.4 (and all other provisions of this Agreement necessary
or appropriate for purposes of enforcing this SECTION 6.4) is intended to be
for the benefit of, and shall be enforceable by, the Industrial Subsidiary and
the Indemnified Parties, their heirs and personal representatives and shall be
binding on Tenneco, the Surviving Corporation and Acquiror and each of their
respective successors and assigns.
6.5 NOTIFICATION OF CERTAIN MATTERS. Between the Agreement Effective Date
and the Effective Time, Tenneco and Acquiror shall give prompt notice to the
other of :
(i) the occurrence or nonoccurrence of any event, the occurrence or
nonoccurrence of which would likely cause
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(A) any of its representations or warranties contained in this
Agreement to be untrue or inaccurate, or
(B) any of its covenants, conditions or agreements contained in
this Agreement not to be complied with or satisfied; and
(ii) its (or in the case of Acquiror, Acquiror's or Subsidiary's)
failure to comply with or satisfy any of its covenants, conditions or
agreements to be complied with or satisfied by it (or, in the case of
Acquiror, Acquiror or Subsidiary) at or prior to the Effective Time;
provided, however, that the delivery of any notice pursuant to this SECTION 6.5
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
6.6 TAX TREATMENT.
(a) Each of Tenneco, on the one hand, and Acquiror and Subsidiary, on the
other hand, intend the Merger to qualify as a reorganization under Code Section
368(a)(1)(B) and the Spinoffs to be treated as tax-free distributions under
Code Section 355, and each such party shall use its reasonable best efforts to
cause the Merger and Spinoffs to so qualify. Neither Tenneco, on the one hand,
nor Acquiror or Subsidiary, on the other hand, shall take any action which
might cause
(i) the Merger to fail to qualify as a reorganization under Code
Section 368(a)(1)(B),
(ii) the Spinoffs to fail to qualify as tax free distributions under
Code Section 355,
(iii) any other transfer described in the Corporate Restructuring
Transactions that is intended (as described in Tenneco's request for
rulings from the Internal Revenue Service) to qualify as a tax free
transfer under Code Sections 332, 351, 355 or 368 to fail to so qualify,
or
(iv) Tenneco or any Energy Subsidiary to recognize any gains relating
to deferred intercompany transactions or excess loss accounts between or
among any members of the affiliated group of corporations of which Tenneco
is the common parent (other than those deferred intercompany gains listed
on EXHIBIT I attached hereto).
(b) In furtherance of SECTION 6.6(A) above, Tenneco shall make the
representations set forth in EXHIBIT J attached hereto, and such other
representations as are reasonably necessary to ensure the tax-free treatment of
the Merger, Spinoffs and related transactions described in SECTION 6.6(A)
above, and shall assure the continuing accuracy of such representations.
(c) In furtherance of SECTION 6.6(A) above, Acquiror and Subsidiary shall
each make the representations set forth in EXHIBIT J attached hereto, and such
other representations as are reasonably necessary to ensure the tax-free
treatment of the Merger, Spinoffs and related transactions described in SECTION
6.6(A) above, and shall assure the continuing accuracy of such representations.
(d) The Industrial Subsidiary and the Shipbuilding Subsidiary (and their
respective direct and indirect subsidiaries and Affiliates) shall be deemed
third party beneficiaries of this SECTION 6.6 and all other provisions of this
Agreement necessary or appropriate for purposes of enforcing this SECTION 6.6.
6.7 REGISTRATION STATEMENT; JOINT PROXY STATEMENT; NPS MATERIALS; TENDER
AND EXCHANGE MATERIALS.
(a) As promptly as practicable after the Agreement Effective Date, Tenneco
and Acquiror shall prepare and file, or cause to be prepared and filed, with
the Commission a joint proxy statement (the ''JOINT PROXY STATEMENT'') and
other proxy solicitation materials relating to the Stockholders' Meeting (as
defined in SECTION 6.8 hereof), and Acquiror shall prepare and file, or cause
to be prepared and filed, with the Commission a registration statement on Form
S-4 in which the Joint Proxy Statement shall be included as a prospectus (the
''REGISTRATION STATEMENT''), in connection with the registration under the
Securities Act of the shares of Acquiror Stock (and any Depositary Shares) to
be issued to the stockholders of Tenneco pursuant to the Merger.
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Each of Acquiror and Tenneco shall furnish or cause to be furnished to the
other party all information concerning itself and its subsidiaries as the other
party may reasonably request in connection with such actions and the
preparation of the Registration Statement and the Joint Proxy Statement (and in
connection with the preparation of the NPS Materials and the Tender and
Exchange Materials). Each of Acquiror and Tenneco hereby agree to take, and to
cause their respective subsidiaries to take,
(i) such actions as may be required to have the Registration Statement
and, to the extent applicable, the NPS Materials and the Tender and
Exchange Materials declared effective under the Securities Act and to have
the Joint Proxy Statement cleared by the Commission, in each case as
promptly as practicable, including by consulting with each other as to,
and responding promptly to, any Commission comments with respect thereto,
and
(ii) such actions as may be required to be taken under applicable
state securities or ''blue sky'' laws in connection with the issuance of
shares of Acquiror Stock (and any Depositary Shares) pursuant to the
Merger.
As promptly as practicable after the Registration Statement shall have become
effective, each of Tenneco and Acquiror shall mail the Joint Proxy Statement to
its respective stockholders (and Tenneco and Acquiror shall attempt to effect
their respective mailings on the same date), and the Joint Proxy Statement
shall include the recommendation of the board of directors of Tenneco in favor
of adoption and approval of this Agreement and the Merger and the Spinoffs, and
of the board of directors of Acquiror in favor of approval of the Stock
Issuance (as defined in SECTION 6.8 hereof); provided, however, that no
obligation of Tenneco pursuant to this SECTION 6.7(A) shall be required to be
performed if there is a substantial risk that the performance thereof would
constitute a breach of the fiduciary duties of the board of directors of
Tenneco as determined by the board of directors of Tenneco in good faith after
consultation with and based upon the advice of its independent legal counsel
(who may be its regularly engaged independent legal counsel).
(b) Acquiror covenants that the information supplied by or on behalf of
Acquiror for inclusion in the Registration Statement and the Joint Proxy
Statement shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, at any of:
(i) the time the Registration Statement (or any amendment or
supplement thereto) is declared effective;
(ii) the time the Joint Proxy Statement (or any amendment or
supplement thereto) is first mailed to the stockholders of Tenneco and
Acquiror;
(iii) the time of each of the Stockholders' Meetings; and
(iv) the Effective Time.
Likewise, Acquiror covenants that the information and data supplied by or on
behalf of Acquiror for inclusion in the NPS Materials and Tender and Exchange
Materials (including, without limitation, all information and financial data
(pro forma or otherwise) relating to the business and operations of Tenneco
following consummation of the Merger supplied by or on behalf of Acquiror)
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, at all times through the completion of (A)
in the case of the NPS Materials, the offering and sale of the New Preferred
Stock, and (B) in the case of the Tender and Exchange Materials, the tender and
exchange offers pursuant to the Debt Realignment.
(c) Tenneco covenants that the financial information (including pro forma
financial data and information) supplied or to be supplied by Tenneco or its
representatives for inclusion or incorporation by reference in the Registration
Statement or the Joint Proxy Statement (or the NPS Materials and/or Tender and
Exchange Materials) shall comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, shall be prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto
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or, in the case of unaudited financial information, as permitted by the rules
of the Commission) and shall fairly present (subject, in the case of unaudited
financial information, to normal, recurring audit adjustments) the financial
information reflected therein as of the dates thereof or for the periods then
ended. The Joint Proxy Statement shall, as it relates to the Tenneco
Stockholders' Meeting, comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder, except
that no representation is herein made by Tenneco with respect to statements
made in the Joint Proxy Statement based on information supplied by Acquiror or
any of its representatives for inclusion in the Joint Proxy Statement or with
respect to information concerning Acquiror or any of its subsidiaries
(including Subsidiary) incorporated by reference in the Joint Proxy Statement.
If at any time prior to the Effective Time any event or circumstance relating
to Acquiror or any of its subsidiaries (including Subsidiary), their respective
officers or directors, or Acquiror's plans and intentions regarding its
operation of the Surviving Corporation after the Merger should be discovered by
Acquiror or any of its subsidiaries (including Subsidiary) that should be set
forth in an amendment or a supplement to the Registration Statement or Joint
Proxy Statement (or in any of the NPS Materials or Tender and Exchange
Materials), Acquiror shall promptly inform Tenneco in writing.
(d) Tenneco covenants that the information supplied by or on behalf of
Tenneco for inclusion in the Registration Statement and the Joint Proxy
Statement shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, at
(i) the time the Registration Statement (or any amendment or
supplement thereto) is declared effective,
(ii) the time the Joint Proxy Statement (or any amendment or
supplement thereto) is first mailed to the stockholders of Tenneco and
Acquiror,
(iii) the time of each of the Stockholders' Meetings, and
(iv) the Effective Time.
Likewise, Tenneco covenants that the NPS Materials and Tender and Exchange
Materials shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, at all times through the completion
of (A) in the case of the NPS Materials, the offering and sale of the New
Preferred Stock, and (B) in the case of the Tender and Exchange Materials, the
tender and exchange offers pursuant to the Debt Realignment; provided, that the
foregoing provisions of this sentence shall not apply to any information or
financial data (including pro forma financial information and data) supplied by
or on behalf of Acquiror, including information and data relating to the
business and operations of Tenneco following consummation of the Merger.
(e) Acquiror covenants that the financial information (including pro forma
financial data and information regarding Acquiror or Tenneco) supplied or to be
supplied by Acquiror or its representatives for inclusion or incorporation by
reference in the Registration Statement or the Joint Proxy Statement (or the
NPS Materials or Tender and Exchange Materials) shall comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, shall
be prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited financial information, as permitted by the rules of the
Commission) and shall fairly present (subject, in the case of unaudited
financial information, to normal, recurring audit adjustments) the financial
information reflected therein as of the dates thereof or for the periods then
ended. Each of the Joint Proxy Statement, as it relates to the Acquiror Common
Stockholders' Meeting, and the Registration Statement will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder or the Securities Act and the rules and regulations
thereunder, as applicable, except that no representation is herein made by
Acquiror with respect to statements made in the Joint Proxy Statement or
Registration Statement based on information supplied by Tenneco or any of its
representatives for inclusion in the Joint Proxy Statement or Registration
Statement or with respect to information concerning Tenneco or any of its
subsidiaries incorporated by reference in the Joint Proxy Statement or
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Xxxxxxxxxxxx Xxxxxxxxx. If at any time prior to the Effective Time any event or
circumstance relating to Tenneco or any of its subsidiaries, or their
respective officers or directors, should be discovered by Tenneco or any of its
subsidiaries which should be set forth in an amendment or a supplement to the
Registration Statement or Joint Proxy Statement (or in any of the NPS Materials
or Tender and Exchange Materials), Tenneco shall promptly inform Acquiror in
writing.
(f) None of the Joint Proxy Statement, the Registration Statement, the NPS
Materials or the Tender and Exchange Materials shall be filed or distributed,
and, prior to the termination of this Agreement, no amendment or supplement to
the Joint Proxy Statement or the Registration Statement shall be filed or
distributed, by or on behalf of Tenneco or Acquiror, without consultation with
the other party and its counsel.
6.8 STOCKHOLDERS' MEETINGS. Tenneco shall call and hold a meeting of its
stockholders (the ''Tenneco Stockholders' Meeting'') for the purpose of voting
upon the adoption and approval of this Agreement, the Merger and the Spinoffs.
Acquiror shall call and hold a meeting of its stockholders (the ''Acquiror
Common Stockholders' Meeting'') for the purpose of voting upon the approval of
the issuance of Acquiror Common Stock in connection with the Merger as
contemplated by this Agreement (the ''Stock Issuance'') (the Acquiror Common
Stockholders' Meeting and the Tenneco Stockholders' Meeting being collectively
referred to herein as the ''Stockholders' Meetings''). Each of Tenneco and
Acquiror shall use its reasonable best efforts to schedule and hold their
respective Stockholders' Meetings so that the Acquiror Common Stockholders'
Meeting occurs at least one business day prior to the Tenneco Stockholders'
Meeting, and otherwise so as not to delay the transactions contemplated hereby
(it being intended that the Joint Proxy Statement shall be mailed and the
Stockholders' Meetings shall be scheduled to occur as soon as practicable after
the receipt of the IRS Ruling Letter). Each of Tenneco and Acquiror shall use
its reasonable best efforts to solicit from its stockholders proxies in favor
of the approval and adoption of this Agreement, the Merger and the Spinoffs or
the Stock Issuance, as applicable, and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required therefor by
applicable Law and/or its certificate of incorporation or other governing
instrument or document. The stockholders of Tenneco will vote on the Spinoffs
and the Merger as a single transaction. Notwithstanding the foregoing, Tenneco
shall not be required to take any action if there is a substantial risk that
the subject action would constitute a breach of the fiduciary duties of the
board of directors of Tenneco as determined by the board of directors of
Tenneco in good faith after consultation with and based upon the advice of
independent legal counsel (who may be its regularly engaged independent legal
counsel).
6.9 FURTHER ACTION; REASONABLE BEST EFFORTS.
(a) Upon the terms and subject to the provisions of this Agreement, each
of the parties hereto shall use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations promptly
to consummate and make effective the transactions contemplated hereby and by
the Distribution Agreement (subject, however, to the vote of the stockholders
of Tenneco and, to the extent required, Acquiror as provided herein),
including, without limitation, using its reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities and parties to contracts with Tenneco and,
to the extent required, Acquiror and their respective subsidiaries as are
necessary for the consummation of the transactions contemplated by this
Agreement. Each party hereto shall promptly consult with each other party with
respect to, and provide to each other party all such information or
documentation which shall be reasonably requested with respect to, all filings
made by such party with any Governmental Authority in connection with this
Agreement and the transactions contemplated hereby. In case at any time after
the Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take all such
action.
(b) Between the Agreement Effective Date and the Closing Date,
(i) Tenneco and Acquiror shall, and shall cause their respective
Affiliates and representatives to, consult, cooperate and work together in
good faith and with reasonable best efforts and all deliberate speed to
attempt jointly to obtain a favorable resolution prior to the Effective
Time with respect to pending
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regulatory proceedings affecting the Energy Business, including sharing
ideas and information concerning alternative approaches to resolving such
regulatory proceedings and coordinating the timing and content of
communications with customers of the Energy Business, affecting the Energy
Business, and regulatory authorities having jurisdiction over the
operations of the Energy Business; provided, that any settlement (or
proposed settlement) of any such regulatory proceedings shall require the
consent of both Tenneco and Acquiror, such consent not to be arbitrarily
withheld; and
(ii) Tenneco shall, and shall cause its Affiliates and representatives
to, consult and work with Acquiror and its Affiliates and representatives
to attempt to obtain favorable resolutions of material litigation
affecting the Energy Business; provided that, except as otherwise set
forth on EXHIBIT G attached hereto, any settlement (or proposed
settlement) of any such litigation shall require the consent of Acquiror,
such consent not to be arbitrarily withheld.
(c) Except as set forth on EXHIBIT G attached hereto, between the
Agreement Effective Date and the Closing Date, the Energy Business shall not
incur any additional off balance sheet indebtedness for the purpose of
monetization of any Energy Assets. Subject to the terms of the previous
sentence, Acquiror and Tenneco shall consult and cooperate with each other with
respect to off-balance sheet financing opportunities for the Australian assets
of the Energy Business, the Orange Cogeneration Project and the South Sulawesi
Project and any such off-balance sheet financing may be incurred by mutual
agreement between Acquiror and Tenneco.
Between the Agreement Effective Date and the Closing Date, Tenneco shall
attempt to cooperate with Acquiror to the extent reasonably requested by
Acquiror in connection with sales by the Energy Business after the Closing Date
of material Energy Assets; provided that any such transactions shall be subject
to the covenants, restrictions and limitations set forth in SECTION 6.6 hereof.
(d) Between the Agreement Effective Date and the Closing Date, Tenneco
shall, to the extent permitted by law, consult and work in good faith with
Acquiror with respect to the payment and administration of accounts payable,
inventory levels and policies and the collection and administration of accounts
receivable of the Energy Business and the making of capital expenditures by the
Energy Business to preserve the value of the Energy Business and not to
artificially delay payment of accounts payable, accelerate collections of
accounts receivable, alter inventory levels or unreasonably delay capital
expenditures; provided, however, that Tenneco shall have the right to effect
the actions and transactions identified on EXHIBIT G attached hereto. To the
extent permitted by Law, Tenneco shall consult with Acquiror with respect to
other matters pertaining to the operation of the Energy Business. Each of
Tenneco and Acquiror shall designate one or more members of management to act
as coordinators with respect to the matters covered by this SECTION 6.9.
(e) Each party shall use its reasonable best efforts to not take any
action, or enter into any transaction, that would cause any of its
representations or warranties contained in this Agreement to be untrue or
result in a breach of any covenant made by it in this Agreement.
(f) The Industrial Subsidiary shall be a deemed third party beneficiary of
this SECTION 6.9 and all other provisions of this Agreement necessary or
appropriate for purposes of enforcing this SECTION 6.9.
6.10 PUBLIC ANNOUNCEMENTS. Each party hereto shall consult with each other
before issuing any press release or otherwise issuing any other similar written
public statement with respect to this Agreement or the Merger and shall not
issue any such press release or make any such public statement without the
prior consent of each other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of any other
party, issue such press release or other similar written public statement as
may be required by law or any listing agreement with a national securities
exchange to which Tenneco or Acquiror is a party if it has used all reasonable
efforts to consult with such other party and to obtain such party's consent but
has been unable to do so in a timely manner. Further, the parties shall use
their respective reasonable best efforts to coordinate and jointly schedule and
interface with the various Governmental Authorities and ratings agencies and
other applicable bodies and groups involved or otherwise interested in the
transactions contemplated by this Agreement.
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6.11 LISTING OF ACQUIROR COMMON STOCK AND DEPOSITARY SHARES. Acquiror
shall use its reasonable best efforts to cause the shares of Acquiror Common
Stock and any Depositary Shares to be issued in or in connection with the
Merger to be approved for listing on the NYSE and any other national securities
exchange on which shares of Acquiror Common Stock may at such time be listed,
subject to official notice of issuance prior to the Effective Time.
6.12 RIGHTS AGREEMENT. Except as contemplated by this Agreement, prior to
the Effective Time the Board of Directors of Tenneco shall not, without the
prior written approval of Acquiror,
(i) amend or supplement the Rights Agreement in any manner that would
cause either a ''Triggering Event'' or a ''Distribution Date'' (in each
case as defined in the Rights Agreement) to occur or to be deemed to have
occurred solely by reason of the execution of this Agreement and the
consummation of the transactions contemplated hereby, or
(ii) redeem the Rights.
6.13 THE SPINOFFS. Prior to the Closing, Tenneco shall enter into the
Distribution Agreement (with only such amendments or modifications as are not
prejudicial, other than to a de minimis extent, to the Energy Business or do
not materially delay or prevent consummation of the Merger) and shall cause the
Industrial Subsidiary and the Shipbuilding Subsidiary to enter into the
Distribution Agreement (with only such amendments), and Tenneco shall take, or
cause to be taken, all actions and do, or cause to be done, all things
necessary to effect the Spinoffs pursuant to the terms of the Distribution
Agreement (with only such amendments). Notwithstanding the foregoing, after
prior notice to Acquiror, Tenneco may furnish information or enter into
negotiations regarding, or enter into an agreement for, any sale, merger or
other disposition transaction(s) involving either or both of the Shipbuilding
Business and/or the Industrial Business, or any portion of either (an ''S/I
TRANSACTION''), which may render either or both of the Spinoffs (or any portion
thereof) impossible or impracticable; provided, that Tenneco shall not solicit
any S/I Transaction involving the Industrial Subsidiary, the Shipbuilding
Subsidiary, the Industrial Business as a whole, the Shipbuilding Business as a
whole or any other S/I Transaction which could be reasonably predicted to
render the Merger impossible or impracticable or materially delay or prevent
consummation thereof. Tenneco may enter into any such S/I Transaction in its
sole discretion if the subject S/I Transaction would not be adverse, other than
to a de minimis extent, to Acquiror or the Energy Business (including with
respect to any covenants or obligations of a party under this Agreement or the
Distribution Agreement) and would not render the Merger impossible or
impracticable or materially delay or prevent consummation thereof. If the S/I
Transaction would be so adverse to Acquiror or the Energy Business, or would
render the Merger impossible or impracticable or materially delay or prevent
consummation thereof, then S/I Transaction may be pursued and/or entered into
only (a) prior to the approval of this Agreement, the Merger and the Spinoffs
by the Tenneco stockholders and (b) if Tenneco's board of directors determines
in good faith, after consultation with and based upon the advice of independent
legal counsel (which may be Tenneco's regularly engaged independent legal
counsel), that there is a substantial risk that the failure to do so would
constitute a breach of its fiduciary duties under applicable Law.
6.14 ANTITRUST MATTERS.
(a) Tenneco and Acquiror shall file with the Federal Trade Commission and
the Department of Justice, as promptly as practicable but in any event within
20 business days of the Agreement Effective Date, the notification and report
form required for the transactions contemplated hereby and shall promptly
provide any supplemental information which may be reasonably requested in
connection therewith pursuant to the HSR Act, which notification, report and
supplemental information shall comply in all material respects with the
requirements of the HSR Act.
(b) Although the parties do not believe that the Merger has any antitrust
implications, Acquiror shall use all reasonable efforts to resolve antitrust
objections, if any, that may be asserted with respect to the transactions
contemplated hereby by the Federal Trade Commission, the Antitrust Division of
the Department of Justice or any other federal or state agency. Acquiror shall
make such divestitures, or enter into such hold-separate
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agreements, as may be necessary to prevent the entry of, or effect the
dissolution of, any injunction, temporary restraining order or other order that
has the effect of preventing for any period of time the consummation of the
Merger in any respect. Acquiror shall reimburse Tenneco for reasonable
attorneys' fees and costs incurred by Tenneco in connection with defending any
antitrust investigation or other proceeding brought by any of the above
identified entities.
6.15 EMPLOYEE MATTERS.
(a) Prior to the Effective Time, Tenneco shall enter into the Benefits
Agreement and shall take the actions with respect to compensation and benefits
described elsewhere in this Agreement or in the Distribution Agreement.
(b) Acquiror shall provide, or shall cause the Surviving Corporation (or
any of its subsidiaries, as appropriate) to provide, to the employees and
former employees of the Energy Business and the dependents of either, as
applicable, the benefits described in EXHIBIT K attached hereto.
6.16 DEBT REALIGNMENT. Each of Tenneco and Acquiror shall use its
reasonable best efforts so that, immediately prior to the Spinoffs, the Debt
Realignment has been effected (with only such modifications as are not adverse,
except to a de minimis extent, to Acquiror, the Energy Business, the Industrial
Subsidiary or the Shipbuilding Subsidiary).
6.17 NO SOLICITATIONS. Tenneco shall immediately cease any existing
discussions or negotiations with any third parties conducted prior to the date
hereof with respect to any merger, consolidation, business combination, sale of
the Energy Business, sale of a Major Subsidiary, tender or exchange offer or
similar transaction involving the Energy Business as a whole or any Major
Subsidiary as a whole, other than the transactions contemplated by this
Agreement or the Distribution Agreement (an ''ACQUISITION TRANSACTION'').
Neither Tenneco nor any of its subsidiaries nor any of their respective
directors and officers shall, and Tenneco shall use its best efforts to ensure
that none of its or its subsidiaries' Affiliates, representatives or agents
shall, directly or indirectly, solicit any person, entity or group concerning
any Acquisition Transaction; provided, however, that, after prior notice to
Acquiror and prior to the approval of this Agreement, the Merger and the
Spinoffs by the Tenneco stockholders, Tenneco may furnish information or enter
into negotiations regarding, or enter into an agreement for, an Acquisition
Transaction if Tenneco's board of directors determines in good faith, after
consultation with and based upon the advice of independent legal counsel (which
may be Tenneco's regularly engaged independent legal counsel), that there is a
substantial risk that the failure to do so would be found to constitute a
breach of its fiduciary duties under applicable Law, but only in response to a
proposal (which may be subject to due diligence) for an Acquisition Transaction
received by Tenneco which the board of directors of Tenneco determines in good
faith after consultation with its financial advisors is reasonably likely to
result in consummation of an Acquisition Transaction more favorable, from a
financial point of view, to the stockholders of Tenneco than the transactions
contemplated hereby, taking into account the financial responsibility of the
party making such proposal, as then reasonably determinable by Tenneco, and
such party's ability, as then reasonably determinable by Tenneco, to obtain
regulatory approvals for such Acquisition Transaction (a ''HIGHER PROPOSAL'').
Tenneco shall advise Acquiror immediately if any proposal of or other
indication of interest in a Higher Proposal is received by Tenneco and the
terms and conditions thereof and keep Acquiror promptly informed of the status
thereof.
6.18 PERFORMANCE OF AGREEMENT AND DISTRIBUTION AGREEMENT. After the
Effective Time, Acquiror shall, and shall cause the Surviving Corporation and
the Energy Subsidiaries to, perform their respective obligations under this
Agreement and the Distribution Agreement and their respective obligations under
each and every other agreement to be entered into pursuant to the Distribution
Agreement and/or the Spinoffs, and Acquiror hereby guarantees the full and
timely payment and performance of all of the respective obligations and
covenants of Tenneco, the Surviving Corporation and the Energy Subsidiaries
under this Agreement and the Distribution Agreement and their respective
obligations under each and every other agreement to be entered into pursuant to
the Distribution Agreement and/or the Spinoffs, which are to be performed from
and after the Effective Time. Without limiting the generality of the foregoing
sentence, the foregoing covenant and guarantee of Acquiror shall
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specifically be deemed to apply to the obligations of the Surviving Corporation
to make any payments due to the Industrial Subsidiary pursuant to Section 6 of
the Tax Sharing Agreement attached to the Distribution Agreement in respect of
any Tax Benefit attributable to any Debt Discharge Item (as those terms are
defined in the Tax Sharing Agreement). The Industrial Subsidiary and the
Shipbuilding Subsidiary are hereby designated as, and deemed to be, third party
beneficiaries of this SECTION 6.18 (and all other provisions of this Agreement
necessary or appropriate for purposes of enforcing the terms of this SECTION
6.18). The covenants and guarantees of Acquiror set forth in this SECTION 6.18
are not in limitation of or substitution for, but are in addition to, the
Guarantees attached hereto as EXHIBIT L, which shall be executed by Acquiror
and delivered to the Industrial Subsidiary and the Shipbuilding Subsidiary on
the Closing Date.
6.19 AFFILIATES OF TENNECO. Tenneco shall promptly deliver to Acquiror a
letter
(i) identifying all Persons who may be deemed affiliates of Tenneco
under Rule 145 of the Securities Act, including, without limitation, all
directors and executive officers of Tenneco, and
(ii) representing to Acquiror that Tenneco has advised the Persons
identified in such letter of the resale restrictions with respect to
shares of Acquiror Common Stock and any Depositary Shares received in
connection with the Merger imposed by applicable securities laws. Tenneco
shall use its reasonable best efforts to obtain from each Person
identified in such letter a written agreement, substantially in the form
of EXHIBIT M.
Tenneco shall use its reasonable best efforts to obtain as soon as practicable
from any Person who may be deemed to have become an Affiliate of Tenneco after
Tenneco's delivery of the letter referred to above and prior to the Effective
Time, a written agreement substantially in the form of EXHIBIT M.
6.20 ANTITAKEOVER STATUTES. If any Takeover Statute is or may become
applicable to the transactions contemplated hereby, each of the parties hereto
and the members of its board of directors shall grant such approvals and take
such actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any Takeover Statute on any of the transactions contemplated by this Agreement;
provided however, that no party hereto shall be required to take any action if
there is a substantial risk that the subject action would be held to constitute
a breach of the fiduciary duties of the board of directors of the subject
party, as determined by the subject board of directors in good faith after
consultation with and based upon the advice of independent legal counsel (who
may be the subject party's regularly engaged independent counsel).
6.21 EQUITY ISSUANCE BY ACQUIROR. Acquiror intends, subject to market
conditions, to issue, after the Closing Date, $150,000,000 to $250,000,000 of
equity securities. The initial press release with respect to the transactions
contemplated hereby will include disclosure of Acquiror's intention to effect
such issuances of additional equity securities.
6.22 RUHRGAS AG. Between the Agreement Effective Date and the Closing
Date, Tenneco shall use its reasonable best efforts to repurchase for cash the
equity interest of Ruhrgas AG in Tenneco Energy Resources Corporation, provided
that the terms of any such repurchase shall be acceptable to Acquiror. Acquiror
shall have the right to participate in any discussions or negotiations with
Ruhrgas AG with respect to the foregoing.
6.23 ADDITIONAL COVENANTS OF ACQUIROR.
(a) From the Agreement Effective Date through the Effective Time, Acquiror
shall not take, enter into or propose, or allow any of its subsidiaries to
take, enter into or propose, any action or transaction (other than actions or
transactions expressly permitted under this Agreement) which is primarily for
the purpose of reducing the value of the transactions contemplated by this
Agreement and the Distribution Agreement to the stockholders of Tenneco.
(b) From the Agreement Effective Date through the Effective Time, Acquiror
shall not enter into any internal corporate restructuring involving Acquiror
and one or more of its direct or indirect subsidiaries.
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(c) During the Black-out Period, except as expressly contemplated by this
Agreement or the Distribution Agreement in order to effect the transactions
described herein or therein:
(i) Acquiror and its subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and use all reasonable efforts to
preserve intact their present business organizations, and preserve their
relationships with customers, suppliers and others having business
dealings with them to the end that their goodwill and ongoing businesses
shall not be impaired in any material respect at the Effective Time.
(ii) Acquiror shall not, nor shall Acquiror permit any of its
subsidiaries to, nor shall Acquiror or any of its subsidiaries propose to,
(A) declare or pay any dividends on or make other distributions in respect
of any of its capital stock (other than intercompany dividends and regular
quarterly dividends on Acquiror Common Stock), (B) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) repurchase or
otherwise acquire any shares of capital stock.
(iii) Except for the issuance of shares of Acquiror Common Stock upon
the exercise of outstanding stock options disclosed in Section 5.2 hereof,
Acquiror shall not issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any
class, any debt or securities convertible into, or any rights, warrants or
options to acquire, any such shares or convertible securities or debt.
(iv) Acquiror shall not amend or propose to amend its Certificate of
Incorporation or By-laws or other organizational documents.
(v) Acquiror shall not, nor shall it permit any of its subsidiaries
to, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets, in each case
which are material, individually or in the aggregate, to Acquiror and its
subsidiaries taken as a whole.
(vi) Except for sales of inventory and services in the ordinary course
of business, Acquiror shall not, nor shall it permit any of its
subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree
to sell, lease, encumber or otherwise dispose of, any of its assets, which
are material, individually or in the aggregate, to Acquiror and its
subsidiaries taken as a whole.
(d) If the Stock Issuance is not approved by the requisite vote of the
holders of Acquiror Common Stock at the Acquiror Common Stockholders' Meeting,
Acquiror, prior to or as of the Effective Time, shall: (i) enter into the
Depositary Agreement with the Depositary so that the holders of Tenneco Common
Stock are issued Depositary Shares in connection with the Merger and such
holders of Depositary Shares will have rights equivalent to those of holders of
whole shares of Acquiror Preferred Stock (to the extent of their fractional
interest therein); and (ii) issue to the Depositary, and deliver to the
Depositary certificates for, the number of shares of Acquiror Preferred Stock
provided for in the SECTION 2.5 (E) (II) (B) hereof.
(e) From and after the Agreement Effective Date, Acquiror shall use its
reasonable best efforts, and shall cause its subsidiaries and Affiliates to use
their respective reasonable best efforts, to cause each of the ''EPNGC
Facilities'' (as defined in that certain $3 Billion Revolving Credit and
Competitive Advance Facility Agreement (the ''$3 Billion Credit Agreement'')
among Tenneco Inc., the several banks and other financial institutions (the
''Bank Group'') from time to time parties to the $3 Billion Credit Agreement
and The Chase Manhattan Bank, as agent (''Chase''), to become in full force and
effect no later than the ''Effective Date'' under Section 3.1 of the $3 Billion
Credit Agreement, and to remain in full force and effect from said Effective
Date through the ''Closing Date'' under Section 3.2 of the $3 Billion Credit
Agreement. From and after the Agreement Effective Date, Tenneco shall use its
reasonable best efforts, and shall cause its subsidiaries and Affiliates to use
their respective reasonable best efforts, to cause the $3 Billion Credit
Agreement to become in full force and effect in order to effect the
transactions contemplated by the Debt Realignment.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party hereto to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction, at or
prior to the Closing, of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by applicable law:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Registration
Statement shall have been declared effective by the Commission under the
Securities Act, no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceedings for that purpose shall have been initiated or, to the
knowledge of Tenneco or Acquiror, threatened by the Commission.
(b) STOCKHOLDER APPROVAL. This Agreement, the Merger and the Spinoffs
(and/or any S/I Transaction, if requiring such approval) shall have been
approved and adopted by the requisite vote of the stockholders of Tenneco
in accordance with the certificate of incorporation of Tenneco and the
DGCL.
(c) HSR ACT. The waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated.
(d) OTHER APPROVALS. All authorizations, consents, orders and
approvals of, and declarations or filings with, and expirations of waiting
periods imposed by, any Governmental Authority or other Person which if
not obtained or filed would have a Material Adverse Effect on Acquiror or
a Material Adverse Effect on Tenneco shall have been obtained or filed, as
applicable, and shall be in full force and effect.
(e) NO ORDER. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation of the Merger or
any transaction contemplated by this Agreement; it being understood that
the parties hereto hereby agree to use their reasonable best efforts to
cause any such decree, judgment, injunction or other order to be vacated
or lifted as promptly as possible.
(f) NYSE LISTING. The Acquiror Common Stock and any Depositary Shares
issuable to stockholders of Tenneco in accordance with SECTION 2.5 hereof
shall have been authorized for listing on the NYSE upon official notice of
issuance.
(g) TAX RULING. Tenneco shall have received rulings from the Internal
Revenue Service (the ''IRS RULING LETTER''), reasonably acceptable to
Tenneco and Acquiror, to the effect that:
(i) the distribution of the capital stock of the Industrial
Subsidiary on a pro rata basis to the stockholders of Tenneco as
contemplated under the Distribution Agreement will be tax-free for
federal income tax purposes to Tenneco under Section 355(c)(1) of the
Code and to the stockholders of Tenneco under Section 355(a) of the
Code;
(ii) the distribution of the capital stock of the Shipbuilding
Subsidiary on a pro rata basis to the stockholders of Tenneco as
contemplated under the Distribution Agreement will be tax-free for
federal income tax purposes to Tenneco under Section 355(c)(1) of the
Code and to the stockholders of Tenneco under Section 355(a) of the
Code;
(iii) The following distributions will be tax free to the
respective transferor corporations under Section 355(c)(1) or 361a) of
the Code and to the respective stockholders of the transferor
corporation under Section 355(a) of the Code: (A) the distribution by
the Shipbuilding Subsidiary of the capital stock of Tenneco Packaging
Inc. to Tenneco Corporation as contemplated under the Distribution
Agreement, (B) the distribution by Tenneco Corporation of the capital
stock of the Shipbuilding Subsidiary and the Industrial Subsidiary to
Tennessee Gas Pipeline Company as contemplated under
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the Distribution Agreement and (C) the distribution by Tennessee Gas
Pipeline Company of the capital stock of the Shipbuilding Subsidiary
and the Industrial Subsidiary to Tenneco Inc. as contemplated under
the Distribution Agreement.
(h) SPINOFFS CONSUMMATED. The Distribution Agreement, in substantially the
form attached hereto with such changes as do not adversely affect, other than
to a de minimis extent, the Energy Business, shall have been duly executed and
delivered by each of Tenneco, the Industrial Subsidiary and the Shipbuilding
Subsidiary, and the transactions contemplated thereby, including the Spinoffs
(and/or any S/I Transaction) and the Debt Realignment, shall have been
consummated (with only such changes).
(i) TAX OPINION. Tenneco shall have received an opinion of Jenner & Block,
in form and substance substantially as set forth in EXHIBIT N attached hereto,
dated the Closing Date, which opinion may be based on appropriate
representations of Tenneco and Acquiror that are in form and substance
reasonably satisfactory to Jenner & Block. The condition set forth in this
SECTION 7.1(I) shall be deemed satisfied to the extent the matters referred to
as to be covered by the tax opinion are instead covered by the IRS Ruling
Letter.
(j) NEW PREFERRED STOCK. The New Preferred Stock shall have been issued by
Tenneco and shall be outstanding as set forth in SECTION 6.1(D) hereof and, if
publicly issued or issued as a dividend-in-kind to the stockholders of Tenneco,
shall have been authorized for listing on the NYSE upon official notice of
issuance.
(k) DEBT REALIGNMENT. The Debt Realignment shall have been effected in
accordance with EXHIBIT C attached hereto.
(l) CHARTER AMENDMENT. The Charter Amendment shall have become effective.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACQUIROR AND SUBSIDIARY. The
obligations of Acquiror and Subsidiary to consummate the Merger and the other
transactions contemplated herein are also subject to the satisfaction, at the
Closing, of all of the following conditions, any one or more of which may be
waived, in whole or in part, by Acquiror and Subsidiary:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Tenneco contained in this Agreement, without giving effect
to any notification to Acquiror delivered pursuant to SECTION 6.5 hereof,
shall be true and correct as of the Closing Date as though made on and as
of the Closing Date, except
(i) for changes specifically permitted by this Agreement, and
(ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as
of such date,
except in any case for such failures to be true and correct which would
not, individually or in the aggregate, have a Material Adverse Effect on
Tenneco.
(b) AGREEMENTS AND COVENANTS. Tenneco shall have performed or complied
in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Closing.
(c) OFFICERS' CERTIFICATES. Acquiror shall have received certificates,
dated the Closing Date, of
(i) the President or any Vice President of Tenneco certifying as
to the matters specified in SECTIONS 7.2(A) and (B) hereof and
(ii) the Secretary of Tenneco certifying as to (A) the content
and continuing effectiveness as of the Closing Date of the resolutions
of the board of directors of Tenneco approving this Agreement and the
transactions contemplated hereby, and (B) the fact that this Agreement
and the transactions contemplated hereby have been duly approved by
the requisite vote of the stockholders of Tenneco in accordance with
the certificate of incorporation of Tenneco and the DGCL and that such
approval is in full force and effect.
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(x) CERTAIN LEGISLATION. There shall not have occurred any
announcement or introduction of legislation by an Appropriate Person as a
result of which Acquiror reasonably determines, in good faith after
consultation with Tenneco and its advisors, that there exists a reasonable
likelihood that the Spinoffs or the Merger would not be tax free for
federal income tax purposes to Tenneco and Acquiror. For purposes of this
SECTION 7.2(D), an ''Appropriate Person'' is a member of the House Ways
and Means Committee or the Senate Finance Committee, the President or a
President-elect, a cabinet-level member of the Executive Branch, an
Assistant Secretary of the Treasury, the Reporting Assistant Secretary of
the Treasury for Tax Policy, the Tax Legislation Counsel, the Chief of
Staff of the Joint Committee of Taxation or a current or presumptive
Majority or Minority Leader of the House or Senate.
7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF TENNECO. The obligations of
Tenneco to consummate the transactions contemplated hereby are also subject to
the satisfaction, at the Closing, of all of the following conditions, any one
or more of which may be waived, in whole or in part, by Tenneco:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Acquiror and Subsidiary contained in this Agreement, without
giving effect to any notification made by Acquiror to Tenneco pursuant to
SECTION 6.5 hereof, shall be true and correct as of the Closing Date, as
though made on and as of the Closing Date, except
(i) for changes specifically permitted by this Agreement, and
(ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as
of such date,
except in any case for such failures to be true and correct which would not,
individually or in the aggregate, have a Material Adverse Effect on Acquiror.
(b) AGREEMENTS AND COVENANTS. Each of Acquiror and Subsidiary shall
have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied with
by it at or prior to the Closing.
(c) OFFICERS' CERTIFICATES. Tenneco shall have received certificates,
dated the Closing Date, of
(i) the President or any Vice President of each of Acquiror and
Subsidiary certifying as to the matters specified in SECTIONS 7.3(A)
and (B) hereof and
(ii) the Secretaries or Assistant Secretaries of Acquiror and
Subsidiary certifying as to (A) the content and continuing
effectiveness as of the Closing Date of the resolutions of the sole
stockholder of Subsidiary and of the boards of directors of Acquiror
and Subsidiary approving this Agreement and the transactions
contemplated hereby, and (B) the fact that the Stock Issuance has been
duly approved, if required, by the requisite vote of the stockholders
of Acquiror in accordance with the rules and regulations of the NYSE,
any other applicable Law and the certificate of incorporation and/or
other governing document or instrument of Acquiror, and that such
approval is in full force and effect, or, alternatively, that no such
vote of the stockholders is so required.
ARTICLE VIII
TERMINATION
8.1 GROUNDS FOR TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after adoption and approval of
this Agreement, the Merger and the Spinoffs by the stockholders of Tenneco and
approval of the Stock Issuance by the stockholders of Acquiror:
(i) by the mutual written agreement of Tenneco and Acquiror authorized
by their respective boards of directors;
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(xx) by Tenneco or by Acquiror if the Merger shall not have been
consummated prior to June 30, 1997 unless such eventuality shall be due to
the failure of the party seeking to terminate this Agreement to perform or
observe any of the covenants, agreements and conditions hereof to be
performed or observed by such party on or prior to the Closing Date;
(iii) by Tenneco or by Acquiror if Tenneco enters into an S/I
Transaction pursuant to the last sentence of SECTION 6.13 above;
(iv) by Acquiror if
(A) there has been a material breach on the part of Tenneco in
the representations, warranties or covenants of Tenneco set forth
herein, or any failure on the part of Tenneco to comply with its
obligations hereunder or any other events or circumstances shall have
occurred such that, in any such case, any of the conditions to the
consummation of the Merger set forth in SECTIONS 7.1 or 7.2 hereof
could not be satisfied on or prior to the termination date
contemplated by paragraph (ii) of this SECTION 8.1,
(B) Tenneco's stockholders entitled to vote thereat do not adopt
and approve this Agreement, and the Merger and the Spinoffs as
contemplated by Section 7.1(B) hereof at the Tenneco Stockholders'
Meeting,
(C) the board of directors of Tenneco withdraws, amends, or
modifies in a manner materially adverse to Acquiror its favorable
recommendation of this Agreement or the Merger, or approves an
agreement for or recommends to the stockholders of Tenneco an
Acquisition Transaction, provided that any action taken by Tenneco
pursuant to PARAGRAPH (V)(A) of this SECTION 8.1 or any public
announcement by Tenneco relating thereto shall not give rise to any
right of termination by Acquiror, or
(D) there has occurred since the Agreement Effective Date of any
event, change or effect which, in the aggregate with all other events,
changes or effects (giving effect to both positive and negative
events, changes and events), reduces the value of the Energy Business
as of the Agreement Effective Date by more than $75,000,000, but
excluding any negative events, changes or effects which result from
(A) any action by Acquiror or any of its subsidiaries, Affiliates,
officers, employees, agents or representatives, (B) changes in general
economic, financial (including, without limitation, equity and debt)
markets or industrial conditions, and (C) any ruling by the Federal
Energy Regulatory Commission Administrative Law Judge in the
proceedings regarding the Energy Business pending as of the Agreement
Effective Date before the Federal Energy Regulatory Commission
Administrative Law Judge, or
(v) by Tenneco if
(A) there has been a material breach on the part of Acquiror or
Subsidiary in the representations, warranties or covenants of Acquiror
or Subsidiary set forth herein, or any failure on the part of Acquiror
or Subsidiary to comply in any material respect with its obligations
hereunder or any other events or circumstances shall have occurred
such that, in any such case, any of the conditions to the consummation
of the Merger set forth in SECTIONS 7.1 or 7.3 hereof could not be
satisfied on or prior to the termination date contemplated by
paragraph (ii) of this SECTION 8.1,
(B) Tenneco's stockholders entitled to vote thereat do not adopt
and approve this Agreement,the Merger and the Spinoffs as contemplated
by SECTION 7.1(B) hereof at the Tenneco Stockholders' Meeting,
(C) the board of directors of Acquiror withdraws, amends, or
modifies in a manner materially adverse to Tenneco its favorable
recommendation of this Agreement, the Merger or the Stock Issuance, or
approves an agreement for or recommends to the stockholders of
Acquiror an Acquisition Transaction, provided that any action taken by
Acquiror pursuant to PARAGRAPH (IV)(A) of this SECTION 8.1 or any
public announcement by Acquiror relating thereto shall not give rise
to any right of termination by Tenneco, or
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(X) there has occurred since the Agreement Effective Date any
event, change or effect which, in the aggregate with all other events,
changes or effects (giving effect to both positive and negative
events, changes and events), reduces the value of Acquiror as of the
Agreement Effective Date by more than $75,000,000, but excluding any
negative events, changes or effects which result from (i) any action
by Tenneco or any of its subsidiaries, Affiliates, officers,
employees, agents or representatives, and (ii) changes in general
economic, financial (including, without limitation, equity and debt)
market or industrial conditions; or
(vi) by Tenneco or by Acquiror (but only prior to the approval of this
Agreement by Tenneco's stockholders) if
(1) Tenneco receives a Higher Proposal that it advises Acquiror
in writing Tenneco wishes to accept and
(2) Acquiror does not make, within five business days of receipt
of written notice of Tenneco's desire to accept such Higher Proposal,
an offer that the board of directors of Tenneco believes, in good
faith after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to the stockholders of
Tenneco as the Higher Proposal.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated by Tenneco or
by Acquiror as permitted under SECTION 8.1 hereof, except as provided in
SECTION 10.1(B) such termination shall be without liability to the terminating
party, or any stockholder, director, officer, employee, agent, consultant or
representative of such party, but such termination shall not relieve any other
party of any damages or other amounts for which it would otherwise be liable.
8.3 WAIVER. Any time prior to the Effective Time any party hereto, by
action taken or authorized by its board of directors, may, to the extent
legally allowed:
(i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of
the other parties contained herein or in any document delivered pursuant
hereto, and
(iii) waive compliance by any of the other parties hereto with any of
the agreements or conditions contained herein. Any waiver of rights by any
party hereto shall be valid only if set forth in a written instrument
signed on behalf of such party.
ARTICLE IX
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
9.1 SCOPE OF REPRESENTATIONS. Except as set forth in ARTICLES IV and V
hereof, the parties make no representations or warranties whatsoever, and each
party disclaims all liability and responsibility for any other representation,
warranty, statement or information made or communicated (orally or in writing)
to another party (including, but not limited to, any opinion, information or
advice which may have been provided to Acquiror or Subsidiary by any officer,
stockholder, director, employee, agent or consultant of Tenneco, Lazard or any
other agent or representative of Tenneco). Acquiror acknowledges and affirms
that it has made its own independent investigation, analysis and evaluation of
Tenneco and its subsidiaries, their properties and assets, operations, business
and prospects, and that it is relying exclusively upon such investigation,
analysis and evaluation in entering into this Agreement.
9.2 SURVIVAL. The representations, warranties, covenants and agreements
set forth in this Agreement and in any certificate delivered in connection
herewith shall survive until the Effective Time and, except for SECTIONS 2.3,
2.6, 6.2(B), 6.3(B), 6.4, 6.6, 6.9(A) AND (F), 6.10, 6.14(B), 6.15, 6.18, 9.1
AND 9.2 and ARTICLE X hereof and
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EXHIBIT J attached hereto, shall terminate and expire at the Effective Time and
shall be of no force or effect thereafter. If the Merger is consummated, no
party to this Agreement (or any of its present or former Affiliates) shall have
any liability to any other party (or any of its present or former Affiliates)
for any breaches of this Agreement that occurred prior to the Effective Time,
whether or not known at the Effective Time.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES.
(a) All legal and other costs and expenses shall be paid by Acquiror,
Subsidiary or Tenneco, as the case may be, depending upon which party incurred
such expenses. Subsequent to the Merger, Acquiror shall cause the Surviving
Corporation promptly to pay any and all such costs and expenses (including,
without limitation, the fees and expenses of the Exchange Agent and Tenneco's
financial advisors, and all legal, accounting and actuarial fees and expenses
incurred by Tenneco in connection with this Agreement and the transactions
contemplated hereby) incurred by Tenneco prior to the Effective Time which have
not been paid as of such time.
(b) In the event that this Agreement shall be terminated pursuant to
SECTION 8.1(III), 8.1(IV)(B), 8.1(V)(B) or 8.1(VI), Tenneco shall pay to
Acquiror, as liquidated damages, in exchange for a complete release of any
liabilities of Tenneco hereunder, the amount of $25,000,000 plus actual out of
pocket expenses (up to $10,000,000) incurred by Acquiror to third parties in
connection with the transactions contemplated hereby, payable to an account
specified by Acquiror in writing by wire transfer of immediately available
funds within 5 business days after the effective date of the subject
termination (except that (i) no such amounts shall be payable unless
concurrently therewith, Tenneco receives the aforesaid complete release (other
than with respect to the items referred to in clause (ii), as to which Acquiror
shall deliver a complete release concurrently with the receipt of payment
therefor) and (ii) the aforesaid payment for Acquiror's out of pocket expenses
shall not be payable unless and until 5 business days after receipt of
reasonably satisfactory documentation of the subject expenses). Notwithstanding
the foregoing, Tenneco shall have no obligations under this SECTION 10.1(B) due
to any termination of this Agreement pursuant to either SECTION 8.1(IV)(B) or
8.1(V)(B) unless Tenneco's Board of Directors has withdrawn, amended or
modified in a manner materially adverse to Acquiror (other than by reason of a
matter referred to in SECTION 8.1(V)(A) hereof) its recommendation concerning
the Merger or the Spinoffs prior to the vote of Tenneco's stockholders which is
the subject of SECTION 8.1(IV)(B) or 8.1(V)(B), as the case may be.
(c) Acquiror shall cause the Surviving Corporation to pay any New York
State Tax on Gains Derived from Certain Real Property Transfers (the ''Gains
Tax''), New York State Real Estate Transfer Tax and New York City Real Property
Transfer Tax (the ''Transfer Taxes'') and any similar taxes in any other
jurisdiction (and any penalties and interest with respect to such taxes) that
become payable in connection with the Merger, on behalf of the stockholders of
Tenneco. Tenneco and Acquiror shall cooperate in the preparation, execution
and filing of any required returns with respect to such taxes (including
returns on behalf of the stockholders of Tenneco) and in the determination of
the portion of the consideration allocable to the real property of Tenneco and
the Tenneco subsidiaries in New York State and City (or in any other
jurisdiction, if applicable). In order to effect the payment of any transfer
taxes subject to this SECTION 10.1(C), Tenneco shall establish a separately
maintained escrow account consisting of an adequate amount of cash from the
$25,000,000 of cash required to be on hand at Tenneco as of the Effective Time
pursuant to the Allocation Agreement. The terms of the Joint Proxy Statement
shall provide that the stockholders of Tenneco shall be deemed to have agreed
to be bound by the allocation established pursuant to this SECTION 10.1(C) in
the preparation of any return with respect to the Gains Tax and the Transfer
Taxes and any similar taxes, if applicable.
(d) This SECTION 10.1 (and all other provisions of this Agreement
necessary or appropriate for purposes of enforcing this SECTION 10.1) shall be
enforceable by the Industrial Subsidiary, which is hereby deemed a third party
beneficiary hereof.
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10.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail, return receipt requested, to the parties at the
following addresses:
(A) If to Tenneco, to:
Tenneco Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Secretary
(B) If to the Acquiror or Subsidiary, to:
El Paso Natural Gas Company
One Xxxx Xxxxxx Center
000 Xxxxx Xxxxxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Chairman and Chief Executive Officer
10.3 REMEDIES. Any party having any rights under any provision of this
Agreement will have all rights and remedies set forth in this Agreement and all
rights and remedies which such party may have been granted at any time under
any other agreement or contract and all of the rights which such party may have
under any law. Any party having any rights or remedies under this Agreement
will be entitled to enforce such rights specifically, without posting a bond or
other security, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
10.4 CONSENT TO AMENDMENTS. Prior to the Effective Time, whether before or
after approval and adoption of this Agreement by the stockholders of Tenneco,
the provisions of this Agreement may be amended by a written agreement executed
and delivered by the parties hereto, subject to applicable law (and shall be so
amended if expressly required by the terms of this Agreement). After the
Effective Time, the provisions of this Agreement may be amended only by a
written agreement executed and delivered by Acquiror, the Surviving Corporation
and the Industrial Subsidiary. Any purported amendment to this Agreement that
does not strictly comply with the foregoing provisions of this SECTION 10.4
shall be null and void ab initio. This SECTION 10.4 (and all other provisions
of this Agreement necessary or appropriate for purposes of enforcing this
SECTION 10.4) shall be enforceable by the Industrial Subsidiary, which is
hereby deemed a third party beneficiary hereof.
10.5 SUCCESSORS AND ASSIGNORS. No party hereto may assign or delegate any
of such party's rights or obligations under or in connection with this
Agreement without the written consent of the other parties hereto, and any
attempted assignment without such consent shall be null and void ab initio. All
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto will be binding upon and enforceable against the respective
successors and assigns of such party and will be enforceable by and will inure
to the benefit of the respective successors and permitted assigns of such
party.
10.6 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
10.8 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
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10.9 NO THIRD-PARTY BENEFICIARIES. Except as expressly provided in
SECTIONS 2.6(G), 2.6(H), 6.3, 6.4, 6.6, 6.9, 6.18, 10.1 and 10.4 hereof, this
Agreement will not confer any rights or remedies upon any person other than the
parties hereto and their respective successors and permitted assigns.
10.10 ENTIRE AGREEMENT. Except for the Confidentiality Agreements
identified in SECTION 6.3(B) hereof, this Agreement constitutes the entire
agreement among the parties and supersedes any prior understandings, agreements
or representations by or among the parties, written or oral, that may have
related in any way to the subject matter hereof.
10.11 CONSTRUCTION. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent and no
rule of strict construction will be applied against any party. The use of the
word ''including'' in this Agreement means ''including without limitation'' and
is intended by the parties to be by way of example rather than limitation.
10.12 INCORPORATION OF EXHIBITS. The Exhibits identified in this Agreement
are incorporated herein by reference and made a part hereof.
10.13 GOVERNING LAW. ALL QUESTIONS AND/OR DISPUTES CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS
HERETO SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF DELAWARE. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES TO BE SUBJECT TO, AND HEREBY CONSENTS AND SUBMITS
TO, THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND OF THE FEDERAL
COURTS SITTING IN THE STATE OF DELAWARE.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement, as
of the date first written above.
TENNECO INC.
By /s/ XXXXXX X. XXXXXXX
-------------------------------------
Title: Vice President
EL PASO NATURAL GAS COMPANY
By /s/ XXXXXXX XXXXX, XX.
-------------------------------------
Title: Senior Vice President and
General Counsel
EL PASO MERGER COMPANY
By /s/ XXXXXXX XXXXX, XX.
-------------------------------------
Title: Vice President
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EXHIBIT C TO
AGREEMENT AND PLAN OF MERGER
DEBT REALIGNMENT PLAN
(Capitalized terms used but not otherwise defined herein have the meanings
ascribed to them in the Agreement and Plan of Merger to which this is
attached.)
1. On or prior to the effectiveness of the Spinoffs (which will occur prior
to the Merger), Tenneco shall, or shall cause Tennessee Gas Pipeline
Company (''TGP'') and/or Tenneco Credit Corporation (''TCC'') to, tender
for, redeem, prepay, defease or let mature, or cause Industrial Subsidiary
to offer to exchange its debt for, one or more of the issues of
Consolidated Debt (as defined below) (collectively, the ''Debt
Realignment''). Concurrently with the Debt Realignment, Tenneco, TGP and
TCC will solicit the consent of the holders of such Consolidated Debt to
provide that the relevant debt instruments are amended and that the
tendered-for debt is accepted in each case immediately before the
Spinoffs. Tenneco reserves the right to determine whether or not it, TGP
and/or TCC tenders for, redeems, prepays, defeases, lets mature or leaves
outstanding, or causes Industrial Subsidiary to offer to exchange its debt
for, any particular issue of Consolidated Debt. The term ''Consolidated
Debt'' means indebtedness for money borrowed of Tenneco and its
consolidated Energy Subsidiaries (including accrued and accreted interest
and fees and expenses).
2. There will not be any restriction on the right of Tenneco and/or its
consolidated subsidiaries to incur after the date of the Agreement and
Plan of Merger and on or prior to the closing of the Merger additional
Consolidated Debt.
3. Tenneco shall, at its expense, have the sole right and authority to, and
will use its commercially reasonable efforts to, have in place a credit
facility for itself (with such guarantees of its obligations thereunder by
the Energy Subsidiaries as it deems necessary) in an aggregate principal
amount sufficient (together with other funds available to Tenneco) to fund
such tenders, redemptions, prepayments, defeasances and maturities; to pay
all the fees, costs and expenses incurred by Tenneco and its subsidiaries
in preparing for, negotiating and effecting the Spinoffs, the Merger and
the Debt Realignment and any financings in connection therewith; and for
other general corporate purposes (including, without limitation, working
capital, the repayment or refinancing of Consolidated Debt and the
payments of dividends). This facility shall be in effect at, and have a
maturity date at least 180 days following, the Effective Time. The
aggregate amount of debt including accrued and accreted interest and fees
and expenses outstanding as of the Effective Time under this facility is
hereinafter called the ''Tenneco Revolving Debt''. Acquiror shall
cooperate with Tenneco in arranging such facility and will provide,
effective as of the Effective Time, such credit support and undertakings
as shall be reasonably requested of it by the providers thereof.
4. All aspects of (x) the Debt Realignment and any financing thereof, and (y)
the terms of any consents solicited in respect of or amendments with
respect to Consolidated Debt, shall be controlled solely and exclusively
by Tenneco. As appropriate, Tenneco shall consult with and update
Acquiror from time to time in respect thereof, and Acquiror shall
cooperate with Tenneco in connection therewith. Tenneco shall select in
its sole discretion the dealer manager for any and all consent
solicitations, debt tenders and debt exchanges in respect of Consolidated
Debt.
Tenneco and Industrial Subsidiary shall have the right, in their sole
discretion, to fix the timing, tender and/or exchange prices, conditions
and other terms of and the strategy and amounts of the fees, costs and
expenses payable with respect to any and all such consent solicitations,
tenders and exchanges.
5. Tenneco, Industrial Subsidiary and Acquiror shall comply with all
applicable securities, blue sky and other laws in connection with the Debt
Realignment Plan and the other transactions contemplated hereunder.
6. Industrial Subsidiary shall transfer to Tenneco on or prior to the
Effective Time all Consolidated Debt acquired by it in any exchange offer
undertaken by it.
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7. Adjustments shall be made in respect of Consolidated Debt outstanding as
of the Effective Time as set forth in the Debt and Cash Allocation
Agreement attached as Exhibit C to the Distribution Agreement.
8. Notwithstanding anything contained herein, (a) contemporaneously with the
Spinoffs, Tenneco and the Energy Subsidiaries shall be removed as obligor
under (and released from liability with respect to) any indebtedness for
borrowed money for which Tenneco or its subsidiaries are liable and which
are assumed by the Industrial Subsidiary or the Shipbuilding Subsidiary,
(b) any Tenneco Revolving Debt shall be prepayable without penalty,
subject to customary notice provisions, (c) in respect of publicly-traded
Consolidated Debt, between the date of the Merger Agreement and the
Effective Time there shall be no (i) extension of maturity or average
life, (ii) increase in interest rates or (iii) adverse change in
defeasance or redemption provisions with respect to any indebtedness for
borrowed money for which Tenneco or the Energy Subsidiaries will be liable
on or after the Effective Time and (d) except for the Tenneco Revolving
Debt, no indebtedness for borrowed money of Tenneco or the Energy
Subsidiaries at the Effective Time shall contain any affirmative or
negative financial or operational covenants other than ones that are (x)
mutually acceptable to Tenneco and Acquiror or (y) no more restrictive in
the aggregate and substantially equivalent to those set forth in the
Indenture dated as of January 1, 1992 of El Paso Natural Gas Company as in
effect as of the date of the Merger Agreement (other than Section 10.05 of
the Indenture).
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