APPENDIX B
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.
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS................................................. 2
ARTICLE II THE MERGER.................................................. 7
2.1 Merger...................................................... 7
2.2 Effects of the Merger....................................... 7
2.3 Certificate of Incorporation and Bylaws..................... 8
2.4 Directors................................................... 8
2.5 Conversion of Shares........................................ 8
2.6 Exchange of Certificates.................................... 9
2.7 New Preferred Stock......................................... 11
ARTICLE III CLOSING AND FILING.......................................... 11
3.1 Closing..................................................... 11
3.2 Effective Time.............................................. 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TENNECO................... 12
4.1 Organization and Existence.................................. 12
4.2 Capitalization.............................................. 12
4.3 Authority and Approval...................................... 12
4.4 Financial Statements........................................ 13
4.5 Consents and Approvals; No Violations....................... 13
4.6 Litigation.................................................. 14
4.7 Tenneco SEC Documents; Accuracy of Information.............. 14
4.8 No Material Adverse Effect.................................. 14
4.9 Advisors.................................................... 14
4.10 Opinion of Financial Advisor................................ 14
4.11 Amendments to Rights Agreement.............................. 15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND SUBSIDIARY... 15
5.1 Organization and Existence.................................. 15
5.2 Capitalization.............................................. 15
5.3 Authority and Approval...................................... 16
5.4 Financial Statements........................................ 16
5.5 Consent and Approvals; No Violation......................... 16
5.6 Litigation.................................................. 17
5.7 Acquiror SEC Documents; Accuracy of Information............. 17
5.8 No Material Adverse Effect.................................. 17
5.9 Advisors.................................................... 17
5.10 Opinion of Financial Advisor................................ 17
5.11 Due Authorization........................................... 17
5.12 No Active Business.......................................... 17
5.13 Ownership of Tenneco Stock.................................. 17
ARTICLE VI COVENANTS OF THE PARTIES.................................... 17
6.1 Conduct of Tenneco and its Subsidiaries..................... 17
6.2 Conduct of the Business of Acquiror and its Subsidiaries.... 21
6.3 Access to Information; Confidentiality...................... 22
6.4 Directors' and Officers' Indemnification and Insurance...... 22
6.5 Notification of Certain Matters............................. 24
6.6 Tax Treatment............................................... 25
Registration Statement; Joint Proxy Statement; NPS
6.7 Materials................................................... 25
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PAGE
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6.8 Stockholders' Meetings..................................... 28
6.9 Further Action; Reasonable Best Efforts.................... 28
6.10 Public Announcements....................................... 29
6.11 Listing of Acquiror Stock.................................. 30
6.12 Rights Agreement........................................... 30
6.13 The Spinoffs............................................... 30
6.14 Antitrust Matters.......................................... 30
6.15 Employee Matters........................................... 31
6.16 Debt Realignment........................................... 31
6.17 No Solicitations........................................... 31
6.18 Performance of Agreement and Distribution Agreement........ 31
6.19 Affiliates of Tenneco...................................... 32
6.20 Antitakeover Statutes...................................... 32
6.21 Equity Issuance by Acquiror................................ 32
6.22 Ruhrgas AG................................................. 32
6.23 Additional Covenants of Acquiror........................... 32
ARTICLE VII CONDITIONS PRECEDENT....................................... 33
Conditions to Obligations of Each Party to Effect the
7.1 Merger..................................................... 33
Additional Conditions to Obligations of Acquiror and
7.2 Subsidiary................................................. 35
7.3 Additional Conditions to Obligations of Tenneco............ 35
ARTICLE VIII TERMINATION................................................ 36
8.1 Grounds for Termination.................................... 36
8.2 Effect of Termination...................................... 38
8.3 Waiver..................................................... 38
ARTICLE IX EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS.................................. 38
9.1 Scope of Representations................................... 38
9.2 Survival................................................... 38
ARTICLE X MISCELLANEOUS.............................................. 38
10.1 Expenses................................................... 38
10.2 Notices.................................................... 39
10.3 Remedies................................................... 40
10.4 Consent to Amendments...................................... 40
10.5 Successors and Assignors................................... 40
10.6 Severability............................................... 40
10.7 Counterparts............................................... 40
10.8 Descriptive Headings....................................... 40
10.9 No Third-Party Beneficiaries............................... 40
10.10 Entire Agreement........................................... 40
10.11 Construction............................................... 41
10.12 Incorporation of Exhibits.................................. 41
10.13 Governing Law.............................................. 41
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EXHIBITS
EXHIBIT ADistribution Agreement
EXHIBIT BCertificate of Designation Respecting Acquiror Preferred Stock
EXHIBIT CDebt Realignment Plan
EXHIBIT D[Intentionally Omitted]
EXHIBIT EForm of Certificate of Designation Respecting New Preferred Stock
EXHIBIT F Pro Forma Financial Information Concerning the Energy Business
EXHIBIT G Certain Permitted Actions, Transactions and Other Matters
EXHIBIT H Text of Section 14 of Article IV of the By-Laws of the
Surviving Corporation
EXHIBIT I Certain Deferred Intercompany Gains
EXHIBIT J Representations in Connection with IRS Ruling Letter
EXHIBIT KBenefits for Employees of the Energy Business
EXHIBIT LGuarantees
EXHIBIT MForm of Rule 145 Letter
EXHIBIT NForm of Jenner & Block Tax Opinion
EXHIBIT OForm of Depositary Agreement
ANNEX 1 Form of Amendment to Tenneco Certificate of Incorporation
iii
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:
1
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
2
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.
3
"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.
4
"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.
5
"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
6
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.
"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.
7
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.
8
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.
9
(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)
10
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").
11
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 50,000,000 none
Stock
(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
12
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
13
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
14
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
20
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
22
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
23
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
24
(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.
25
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
26
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
27
Registration Statement. 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
28
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.
29
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
30
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.
32
(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.
33
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
34
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.
35
(d) 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;
36
(ii) 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
37
(D) 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
38
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.
39
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.
40
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.
41
IN WITNESS WHEREOF, the undersigned have executed this Agreement, as of the
date first written above.
TENNECO INC.
/s/ XXXXXX X. XXXXXXX
By __________________________________
Title: Vice President
EL PASO NATURAL GAS COMPANY
/s/ XXXXXXX XXXXX, XX.
By___________________________________
Title: Senior Vice President and
General Counsel
EL PASO MERGER COMPANY
/s/ XXXXXXX XXXXX, XX.
By___________________________________
Title: Vice President
42
EXHIBIT A TO
AGREEMENT AND PLAN OF MERGER
DISTRIBUTION AGREEMENT
THE DISTRIBUTION AGREEMENT TOGETHER WITH EXHIBITS
IS ATTACHED TO THE JOINT PROXY STATEMENT-
PROSPECTUS AS APPENDIX A.
EXHIBIT 3(III)
FORM OF CERTIFICATE OF DESIGNATION OF POWERS, PREFERENCES AND RIGHTS OF THE
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK OF EL PASO NATURAL GAS COMPANY
El Paso Natural Gas Company, a Delaware corporation (the "Company"),
pursuant to Section 151 of the General Corporation Law of the State of
Delaware does hereby make this Certificate of Designation of Powers,
Preferences and Rights (this "Certificate of Designation") and does hereby
state and certify that pursuant to the authority conferred upon the Board of
Directors of the Company (the "Board") by the Restated Certificate of
Incorporation of the Company (the "Restated Certificate of Incorporation"),
the Board on , 199 duly adopted the following resolution:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Company in accordance with the provisions of the Restated
Certificate of Incorporation, which authorizes 25,000,000 shares of preferred
stock, $.01 par value per share (the "Preferred Stock"), the Board hereby
creates a series of preferred stock of the Company and hereby states the
designation and number of shares, and fixes the relative rights, preferences
and limitations thereof (in addition to the provisions set forth in the
Restated Certificate of Incorporation which are applicable to the preferred
stock of all classes and series) as follows:
SECTION 1. Designation, Rank. This series of preferred stock shall be
designated the "Adjustable Rate Cumulative Preferred Stock", with a par value
of $.01 per share (the "AR Preferred Stock"). The AR Preferred Stock will
rank, with respect to dividend rights and rights on liquidation, winding-up
and dissolution, (i) senior to all classes of common stock of the Company, as
they exist on the date hereof or as such stock may be constituted from time to
time (the "Common Stock"), and each other class of capital stock or series of
preferred stock established by the Board to the extent the terms of such stock
do not expressly provide that it ranks senior to or on a parity with the AR
Preferred Stock as to dividend rights and rights on liquidation, winding-up
and dissolution, including the Company's Series A Junior Preferred Stock, par
value $.01 per share (collectively, together with the Common Stock, the
"Junior Securities"); (ii) on a parity with each other class of capital stock
or series of preferred stock issued by the Company established by the Board to
the extent the terms of such stock expressly provide that it will rank on a
parity with the AR Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution (collectively, the "Parity
Securities"); and (iii) junior to each other class of capital stock or series
of preferred stock established by the Board to the extent the terms of such
stock expressly provide that it will rank senior to the AR Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Senior Securities"). Shares of additional series of AR
Preferred Stock may be issued from time to time by the Board of Directors,
subject to limitations set forth in the Restated Certificate of Incorporation
and the resolutions of the Board of Directors providing for any such series,
which shall be mutually fixed by Tenneco Inc. and the Company.
SECTION 2. Authorized Number. The authorized number of shares constituting
the AR Preferred Stock shall be [505,875] shares. Such number of shares may be
increased or decreased by resolution of the Board of Directors, provided that
no decrease shall reduce the number of shares of the AR Preferred Stock to a
number less than that of the shares then outstanding.
SECTION 3. Dividends.
(a) Dividend Periods and Rates. Dividends on each share of AR Preferred
Stock shall be payable with respect to each quarter beginning on the last day
of March, June, September and December of each year and ending on the day
immediately prior to the first day of the next succeeding period (each, a
"Quarterly Dividend Period"). Dividends shall be payable in cash when, as and
if declared by the Board out of funds of the Company legally available
therefor, quarterly in arrears on the last day of March, June, September and
December of each year (each a "Quarterly Dividend Payment Date"), commencing
on the next Quarterly Dividend Payment
1
Date following the issuance of the AR Preferred Stock. Dividends will be
payable at a per annum rate equal to the Applicable Rate in effect for the
Quarterly Dividend Period to which such dividend relates, multiplied by the
Liquidation Preference (as defined in Section 4) of each such share. Dividends
for each full Quarterly Dividend Period will be computed by dividing the
Applicable Rate by four. Dividends payable for any period less than a full
Quarterly Dividend Period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Each dividend will be payable to holders
of record as they appear on the books of the Company at the close of business
on a record date, not more than 60 nor less than 15 days before the related
Quarterly Dividend Payment Date fixed by the Board. Dividends will be
cumulative from the date of original issuance of the AR Preferred Stock. The
AR Preferred Stock will not entitle the holder thereof to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends. No interest, or sum of money in lieu of interest, will be payable
in respect of any accrued and unpaid dividends. Dividends in arrears for any
past Quarterly Dividend Periods may be declared and paid at any time without
reference to any regular Quarterly Dividend Payment Date, to holders of record
on such date, not exceeding 45 days preceding the payment date thereof, as may
be fixed by the Board of Directors of the Company.
(b) Priority. So long as shares of AR Preferred Stock are outstanding, no
dividends may be declared or paid and no funds may be set apart for the
payment of dividends or other distributions on any Parity Securities (except
dividends on Parity Securities paid in shares of Junior Securities) for any
period unless the full cumulative dividends on all outstanding shares of AR
Preferred Stock shall have been declared and paid in full for all past
Quarterly Dividend Periods. No dividends or other distributions may be paid or
declared and set apart for such payment on Junior Securities or Parity
Securities (except dividends paid in additional shares of Junior Securities)
and no Parity Securities or Junior Securities may be repurchased, redeemed or
otherwise retired nor may funds be declared and set apart for payment with
respect thereto, nor shall the Company permit any corporation or entity
directly or indirectly controlled by the Company to purchase any Parity
Securities or Junior Securities, unless, in each case, the full cumulative
dividends on all outstanding shares of AR Preferred Stock shall have been
declared and paid in full for all past Quarterly Dividend Periods.
Notwithstanding the foregoing, the Company may (i) make redemptions, purchases
or other acquisitions of Parity Securities or Junior Securities payable in
Junior Securities and (ii) make, pursuant to the Company's Shareholder Rights
Plan (the "Plan"), redemptions of Rights (as defined in the Plan) distributed
pursuant to the Plan.
(c) Applicable Rate. Except as provided below in this subsection (c), the
"Applicable Rate" for each Quarterly Dividend Period shall be a per annum
rate, rounded to the nearest one-hundredth of a percentage point, equal to the
arithmetic average of the [ ] Rates quoted by the Reference Banks. In
the event that the [ ] Rates quoted by the Reference Banks with respect to
the Quarterly Dividend Period preceding the first Quarterly Dividend Payment
Date are not identical to within one-one hundredth of a percentage point, then
the Applicable Rate with respect to such period will be determined by Xxxxxx
Xxxxxxx & Co. Incorporated. ["Reference Banks" shall mean two major banks in
the New York interbank market, one of which shall be selected by the Company
and the other by Tenneco Inc. with respect to the calculation of the
Applicable Rate for any Quarterly Dividend Period.] Notwithstanding the
foregoing, in no event shall the Applicable Rate for any dividend period be
less than 6% per annum or greater than 10% per annum.
SECTION 4. Liquidation Rights. The liquidation preference of each share of
AR Preferred Stock shall be $1,000.00 (the "Liquidation Preference"). In the
event of any voluntary or involuntary liquidation, dissolution or winding-up
of the Company, after satisfaction of the claims of creditors and before any
payment or distribution of assets is made on any Junior Securities, including,
without limitation, the Common Stock, the holders of AR Preferred Stock shall
receive an amount equal to the Liquidation Preference of their shares,
and shall be entitled to receive an amount equal to all accrued and unpaid
dividends through the date of distribution (whether or not declared). If, upon
such a voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the assets of the Company are insufficient to pay in full the amounts
described above as payable with respect to the AR Preferred Stock, the holders
of the AR Preferred Stock and any Parity Securities will share ratably in any
distribution of assets of the Company, first in proportion to their respective
liquidation preferences until such preferences are paid in full, and then in
proportion to their respective amounts
2
of accrued but unpaid dividends. After payment in full of any such liquidation
preference and accrued but unpaid dividends, the AR Preferred Stock will not
be entitled to any further participation in any distribution of assets by the
Company. Neither the sale or transfer of all or any part of the assets of the
Company, nor the merger or consolidation of the Company into or with any other
corporation or a merger of any other corporation with or into the Company,
will be deemed to be a liquidation, dissolution or winding-up of the Company.
SECTION 5. Voting Rights.
(a) Except as provided below and as may be required by Delaware law, the
holders of AR Preferred Stock will be entitled to vote together as one class
with the holders of Common Stock on all matters submitted for a vote of the
Company's stockholders. Each share of AR Preferred Stock shall entitle the
holder thereof to 15 votes.
(b) (i) If at any time dividends on the AR Preferred Stock shall be in
arrears in an amount equal to six (6) or more quarterly dividends thereon, the
occurrence of such contingency shall xxxx the beginning of a period (herein
called a "Default Period") which shall extend until such time when all accrued
and unpaid dividends for all previous Quarterly Dividend Periods and for the
current Quarterly Dividend Period on all shares of AR Preferred Stock then
outstanding shall have been paid or set apart for payment. During each Default
Period, all holders of AR Preferred Stock, voting as a class, shall have the
right to elect two (2) directors.
(ii) So long as any shares of AR Preferred Stock shall be outstanding,
during any Default Period, the voting right described in subsection (i) above
may be exercised initially at a special meeting called pursuant to subsection
(iii) below or at any annual meeting of stockholders and thereafter at annual
meetings of stockholders. The absence of a quorum of holders of Common Stock
(or any class thereof) shall not affect the exercise of such voting rights by
the holders of AR Preferred Stock. At any meeting at which the holders of AR
Preferred Stock shall exercise such voting right initially during an existing
Default Period, they shall have the right, voting as a class, to elect
directors to fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) directors or, if such right is exercised at an annual
meeting, to elect two (2) directors. If the number of directors which may be
so elected at any special meeting does not amount to the required number of
directors, the holders of the AR Preferred Stock shall have the right to make
such increase in the number of directors as shall be necessary to permit the
election by them of the required number of directors. After the holders of the
AR Preferred Stock shall have exercised their right to elect directors in any
Default Period and during the continuance of such period, the number of
directors on the Board of Directors shall not be increased or decreased except
by vote of the holders of AR Preferred Stock as herein provided or pursuant to
the rights of any Senior Securities or Parity Securities.
(iii) Unless the holders of AR Preferred Stock, if any such shares are then
outstanding, have, during an existing Default Period, previously exercised
their right to elect directors, the Board may, and upon the request of the
holders of record of not less than 10% of the aggregate liquidation preference
of AR Preferred Stock then outstanding, the Board shall, order the calling of
a special meeting of holders of AR Preferred Stock, which meeting shall
thereupon be called by the Chairman of the Board or the President and Chief
Executive Officer of the Company. Notice of such meeting and of any annual
meeting at which holders of AR Preferred Stock are entitled to vote pursuant
to this subsection (iii) shall be given to each holder of record of AR
Preferred Stock by mailing a copy of such notice to such holder at such
holder's last address as it appears on the books of the Company. Such meeting
shall be called for a date not earlier than 10 days and not later than 60 days
after such order or request, or, in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not
less than 10% of the aggregate liquidation preference of the AR Preferred
Stock then outstanding. Any holder of the AR Preferred Stock shall have access
to the stock books of the Company for the purpose of causing a meeting of
stockholders to be called pursuant to these provisions. [Notwithstanding the
provisions of this subsection (iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed for the
next annual meeting of stockholders of the Company.]
3
(iv) During any Default Period, the holders of Common Stock, and other
classes of stock of the Company, if applicable, shall continue to be entitled
to elect all of the directors unless and until the holders of AR Preferred
Stock shall have exercised their right pursuant to this Section 5(b) to elect
two directors voting as a class. After the exercise of such right (x) the
directors so elected by the holders of AR Preferred Stock shall continue in
office until the earlier of (A) such time as their successors shall have been
elected by such holders and (B) the expiration of the Default Period, and (y)
any vacancy in the Board with respect to a directorship to be elected pursuant
to this Section 5(b) by the holders of AR Preferred Stock may be filled by
vote of the remaining director previously elected by such holders. References
in this subsection (b)(iv) to directors elected by the holders of a particular
class of stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period (and subject to
revesting of the rights provided for in this Section 5(b) upon the subsequent
occurrence of a Default Period), (x) the right of the holders of AR Preferred
Stock to elect directors pursuant to this Section 5(b) shall cease, (y) the
term of any directors elected by the holders of AR Preferred Stock pursuant to
this Section 5(b) shall terminate, and (z) the number of directors shall be
such number as may be provided for in the Restated Certificate of
Incorporation or bylaws of the Company irrespective of any increase made
pursuant to subsection (ii) of this subsection (b) (such number being subject,
however, to subsequent change in any manner provided by law or in the Restated
Certificate of Incorporation or bylaws of the Company). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(c) Except as set forth herein, holders of AR Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
SECTION 6. Redemption.
(a) On or after [ ], 200 [the fifth anniversary of the Merger],
the Company may, at its option, redeem all or any part of the shares of AR
Preferred Stock, in cash out of funds legally available therefor, at any time
upon giving a notice of redemption as set forth in section (c) below, at the
Liquidation Preference thereof plus an amount equal to accrued and unpaid
dividends, if any (whether or not declared), up to but excluding the date
fixed for redemption. If fewer than all of the outstanding shares of the AR
Preferred Stock are to be redeemed, the number of shares to be redeemed shall
be determined by the Board in good faith and the shares to be redeemed will be
determined pro rata as nearly as practicable, or by such other method as the
Board in its discretion may determine is fair and appropriate. AR Preferred
Stock may not be redeemed unless full cumulative dividends have been paid on
the AR Preferred Stock for all past dividend periods.
(b) On [ ], 201 [the twentieth anniversary of the Merger], the
Company shall redeem, in cash out of funds legally available therefor, all
outstanding shares of AR Preferred Stock, at the Liquidation Preference
thereof plus an amount equal to accrued and unpaid dividends, if any (whether
or not declared), up to but excluding such date.
(c) Notice of redemption of AR Preferred Stock will be given by (i) first-
class mail, not less than 30 nor more than 60 days prior to the date fixed for
redemption thereof, to each record holder of shares of AR Preferred Stock to
be redeemed at the address of such holder in the books of the Company and (ii)
publication in the Wall Street Journal. On the date such notices are mailed,
the Company shall issue a press release announcing the redemption. The mailed
and published notice shall state, as appropriate: (1) the redemption date and
record date for purposes of such redemption; (2) the number of shares of AR
Preferred Stock to be redeemed and, if fewer than all shares of AR Preferred
Stock held by any holder are to be redeemed, the number of shares to be
redeemed from such holder; (3) the place or places at which certificates for
such shares are to be surrendered; (4) the redemption price; and (5) that
dividends on the AR Preferred Stock to be redeemed shall cease to accrue on
such redemption date, except as otherwise provided herein. If a notice of
redemption has been given, from
4
and after the specified redemption date (unless the Company defaults in making
payment of the redemption price), dividends on the AR Preferred Stock so
called for redemption will cease to accrue, such shares will no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Company (except the right to receive the redemption price
and any dividend due on a Quarterly Dividend Payment Date after the redemption
date relating to a dividend record date prior to such redemption date) will
cease.
SECTION 7. Exchange.
(a) At any time, the Company shall have the right to exchange the
outstanding shares of the AR Preferred Stock for shares of Common Stock,
subject to the notice provisions set forth below. On the date fixed for such
exchange by the Board (the "Exchange Date"), the Company shall deliver to the
holders of the AR Preferred Stock, in exchange for each share of AR Preferred
Stock (i) the number of shares of Common Stock equal to the Common Equivalent
Rate in effect on the Exchange Date, plus (ii) an amount in cash equal to all
accrued and unpaid dividends on such shares of AR Preferred Stock up to but
excluding the Exchange Date. The Common Equivalent Rate shall be subject to
adjustment from time to time as provided herein, but all adjustments to the
Common Equivalent Rate shall be calculated to the nearest one one-hundredth of
a share of Common Stock.
(b) The "Common Equivalent Rate" shall be determined by dividing 1,000 by
the Current Market Price. "Current Market Price" means the average of the
daily Closing Prices for the five consecutive Trading Dates ending on and
including the date immediately preceding the Exchange Date. The term "Closing
Price" on any day shall mean the closing sale price regular way (with any
relevant due bills attached) of a share of Common Stock on such day, or in
case no such sale takes place on such day, the average of the reported closing
bid and asked prices regular way (with any relevant due bills attached) of a
share of Common Stock on such day, in each case on the New York Stock Exchange
Consolidated Tape (or any successor composite tape reporting transactions on
national securities exchanges), or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading (which
shall be the national securities exchange on which the greatest number of
shares of Common Stock has been traded during the five consecutive Trading
Dates ending on and including the date immediately preceding the Exchange
Date) or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices
regular way (with any relevant due bills attached) of a share of the Common
Stock on the over-the-counter market on the day in question as reported by the
National Association of Securities Dealers Automated Quotations System, or a
similarly generally accepted reporting service, or if not so available, the
market price of a share of Common Stock as determined in good faith by the
Board of Directors on the basis of such relevant factors as the Board of
Directors in good faith considers appropriate. The term "Trading Date" shall
mean a date on which the New York Stock Exchange (or any successor to such
Exchange) is open for the transaction of business.
(c) Before taking any action which would cause an adjustment to the Common
Equivalent Rate that would cause the Company to issue shares of Common Stock
for consideration below the then par value (if any) of the Common Stock upon
redemption of the AR Preferred Stock, the Company will take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at the Common Equivalent Rate, including registration of
such Common Stock under applicable federal and state securities laws.
(d) Notice of exchange of AR Preferred Stock will be given by (i) first-
class mail, not less than 30 nor more than 60 days prior to the date fixed for
exchange thereof, to each record holder of shares of AR Preferred Stock at the
address of such holder in the books of the Company and (ii) publication in the
Wall Street Journal. On the date such notices are mailed, the Company shall
issue a press release announcing the exchange. The mailed and published notice
shall state, as appropriate: (1) the Exchange Date and record date for
purposes of such exchange;
5
(2) the place or places at which certificates for shares of AR Preferred Stock
are to be surrendered, and (3) that dividends on the AR Preferred Stock shall
cease to accrue on the Exchange Date, except as otherwise provided herein. If
a notice of exchange has been given, from and after the Exchange Date (unless
the Company defaults in delivery of the shares of Common Stock to be exchanged
for AR Preferred Stock, or any cash with respect to accrued and unpaid
dividends up to the Exchange Date, in which event the exchange shall be null
and void as to all shares of AR Preferred Stock), dividends on the AR
Preferred Stock will cease to accrue, such shares will no longer be deemed to
be outstanding, and all rights of the holders thereof with respect to such
shares (except the right to receive shares of Common Stock in exchange
therefor and any dividends due on a Quarterly Dividend Payment Date after the
Exchange Date relating to a dividend record date prior to the Exchange Date)
will cease.
(e) Each holder of shares of the AR Preferred Stock shall surrender the
certificates evidencing such shares (properly endorsed or assigned for
transfer, if the Board of Directors of the Company shall so require and the
notice shall so state) to the Company at the place designated in the notice of
such exchange and shall thereupon be entitled to receive certificates
evidencing shares of Common Stock and to receive any other funds payable
pursuant to this Section 7 upon such surrender and following the Exchange
Date.
(f) No fractional shares or script representing fractional shares of Common
Stock shall be issued upon the exchange of any shares of AR Preferred Stock.
In lieu of any fractional interest in a share of Common Stock which would
otherwise be deliverable upon the exchange of a share of AR Preferred Stock,
the Company shall, at its election, either (i) sell such fractional share, as
agent for the person entitled thereto, and distribute the proceeds of such
sale, net of any discounts, commissions, fees or expenses associated with such
sale, to such person, all in accordance with applicable rules under the
Securities Act of 1933, as amended, or (ii) pay to the holder entitled thereto
an amount in cash (computed to the nearest cent) equal to the current value
such fraction represents of the Current Market Price, or (iii) round such
fractional share otherwise issuable to any holder up to the nearest whole
number of shares of Common Stock. If more than one share shall be surrendered
for exchange by the same holder, the number of full shares of Common Stock
issuable upon exchange thereof shall be computed on the basis of the aggregate
number of shares of AR Preferred Stock so surrendered.
SECTION 8. Status of Reacquired Shares. If shares of AR Preferred Stock are
redeemed pursuant to Section 6 or exchanged pursuant to Section 7, the shares
so reacquired shall, upon compliance with any statutory requirements, assume
the status of authorized but unissued shares of preferred stock of the
Company, but may not be reissued as AR Preferred Stock.
SECTION 9. Preemptive Rights. The AR Preferred Stock is not entitled to any
preemptive or subscription rights in respect of any securities of the Company.
SECTION 10. Notices. Except as otherwise provided herein, all notices,
requests, demands, and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by and when sent by telex
or telecopier (with receipt confirmed), provided a copy is also sent by
express (overnight, if possible) courier, addressed (i) in the case of a
holder of AR Preferred Stock, to such holder's address as it appears on the
books of the Company, and (ii) in the case of the Company, to the Company's
principal executive offices to the attention of the Company's Chief Executive
Officer or President.
SECTION 11. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof. If a court of competent
jurisdiction should determine that a provision hereof would be valid or
enforceable if a period of time were extended or shortened or a particular
percentage were increased or decreased, then such court may make such change
as shall be necessary to render the provision in question effective and valid
under applicable law.
IN WITNESS WHEREOF, El Paso Natural Gas Company has caused this Certificate
of Designation to be duly executed by its duly authorized officer and attested
by its Secretary this day of , 199 .
6
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.
1
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).
2
TENNECO INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF JUNIOR PREFERRED STOCK
BY RESOLUTIONS OF THE BOARD OF DIRECTORS
PROVIDING FOR AN ISSUE OF 2,000,000
SHARES OF JUNIOR PREFERRED STOCK DESIGNATED
" % CUMULATIVE JUNIOR PREFERRED STOCK, SERIES A"
----------------
I, , , of Tenneco Inc. (hereinafter referred to as the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of said Corporation, as amended (the "Certificate
of Incorporation"), the Board of Directors is authorized to issue Junior
Preferred Stock, without par value, of the Corporation ("Junior Preferred
Stock") in one or more series, and the Board of Directors (i) has authorized
the issuance of the series of Junior Preferred Stock hereinafter provided for,
and (ii) has authorized a special committee of the Board of Directors (the
"Junior Preferred Stock Issuance Committee") to adopt the resolutions set
forth below creating a series of 2,000,000 shares of Junior Preferred Stock,
without par value, designated as % Cumulative Junior Preferred Stock,
Series A.
That the Junior Preferred Stock Issuance Committee has adopted the following
resolution:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation and the authority
vested by such Board in a Junior Preferred Stock Issuance Committee, all of
the members of which are members of such Board, a series of Junior
Preferred Stock, without par value, of the Corporation (the "Junior
Preferred Stock") be, and hereby is created, to be designated " %
Cumulative Junior Preferred Stock, Series A" (hereinafter referred to as
the "Series A Preferred Stock"), consisting of 2,000,000 shares, and the
designations, powers, preferences and relative and other special rights and
the qualifications, limitations and restrictions of the Series A Preferred
Stock, are hereby fixed and stated to be as follows (all terms used herein
which are defined in the Certificate of Incorporation shall be deemed to
have the meanings provided therein):
Section 1. Dividends. (a) The dividend rate on the Series A Preferred
Stock shall be $ per annum ($ per quarter-year). Dividends
(including Additional Dividends (as defined in Section 2)) on shares of the
Series A Preferred Stock shall accrue, whether or not declared, on a daily
basis from the date of issuance of such shares. Accrued but unpaid
dividends shall not bear interest.
(b) Dividends on the Series A Preferred Stock shall be payable, when, as
and if declared by the Board of Directors of the Corporation out of assets
legally available therefor, quarter-yearly on the last days of March, June,
September and December in each year (each, a "Dividend Payment Date"), with
the first dividend payment date being the next Dividend Payment Date
following the date of issuance. Dividends will be payable to holders of
record of the Series A Preferred Stock as they appear on the stock books of
the Corporation on such record dates, not more than 60 days preceding the
Dividend Payment Dates. Dividends payable on the Series A Preferred Stock
for any period shorter than a quarter-yearly dividend period shall be
computed on the basis of a 360-day year of twelve 30-day months. The Series
A Preferred Stock shall rank on a parity with each other series of Junior
Preferred Stock as to the payment of dividends, except to the extent
otherwise provided in Section 7 hereof or in the resolution or resolutions
providing for the issuance of such other series.
(c) If (x) the Stock Issuance (as defined in the Amended and Restated
Agreement and Plan of Merger, dated as of , 1996, as such may be
amended or supplemented from time to time (the "Merger Agreement") among
the Corporation, El Paso Natural Gas Company, a Delaware corporation ("El
Paso") and El Paso Merger Company, a Delaware corporation) is not approved
by the stockholders of El Paso (as hereinafter defined) at a special
meeting of El Paso stockholders (including any adjournments or
postponements thereof, the "El Paso Special Meeting") called to approve
such issuance, (y) the Merger (as
defined in the Merger Agreement) is effected, and (z) on or before the 30th
day after the date of the El Paso Special Meeting, either Standard & Poor's
Corp. or Xxxxx'x Investors Service, Inc., downgrades the rating previously
given by it to the Series A Preferred Stock (the "Revised Ratings"), the
annual dividend rate set forth in (a) above will be automatically subjected
to a one-time upward adjustment by the amount set forth in the table below
opposite the applicable Revised Rating, effective as of the date of
original issuance of the Series A Preferred Stock.
ANNUAL
DIVIDEND
RATE
REVISED RATINGS (XXXXX'X/S&P) INCREASE
----------------------------- --------
Ba1/BBB- or Baa3/BB+............................................. %
Ba1/BB+.......................................................... %
Ba2/BB+ or Ba1/BB................................................ %
Ba2/BB........................................................... %
Ba3/BB or BA2/BB-................................................ %
Ba3/BB-.......................................................... %
If any such adjustment to the annual dividend rate occurs after a
Dividend Payment Date as to which the Corporation previously paid dividends
on the Series A Preferred Stock, additional dividends will be payable on
each share of Series A Preferred Stock on the next succeeding Dividend
Payment Date (or if such adjustment occurs after the dividend payable on
the next succeeding Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of such adjustment) to
the holder of record of such share of Series A Preferred Stock as of the
record date established for such succeeding Dividend Payment Date (or
second succeeding Dividend Payment Date, as the case may be) in an amount
equal to the excess of (x) the aggregate amount of dividends that would
have been payable on such share on all Dividend Payment Dates as to which
the Corporation previously paid dividends on the Series A Preferred Stock
if dividends accrued from the date of issuance of the Series A Preferred
Stock at the adjusted annual dividend rate over (y) the aggregate amount of
dividends actually paid with respect to such share of Series A Preferred
Stock. If the annual dividend rate is adjusted as provided above, the
Corporation will cause notice of such adjustment to be sent to the holders
of record of the Series A Preferred Stock as they appear in the stock
register of the Corporation.
Section 2. Changes in the Dividends Received Percentage. (a)
Notwithstanding Section 1 hereof, if one or more amendments to the Internal
Revenue Code of 1986, as amended (the "Code"), are enacted that reduce the
percentage of the dividends received deduction as specified in Section
243(a)(1) of the Code or any successor provision (the "Dividends Received
Percentage") to below 70%, the amount of each dividend payable per share of
the Series A Preferred Stock for dividend payments made on or after the
effective date of such change (or the second succeeding dividend payment
after such effective date, as hereinafter described) will be adjusted by
multiplying the amount of the dividend payable pursuant to Section 1
(before adjustment) by a factor, which will be the number determined in
accordance with the following formula (the "DRD Formula"), and rounding the
result to the nearest cent:
1 - (.35 (1 - .70))
-------------------------
1 - (.35 (1 - DRP))
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question. No amendment to the
Code, other than a change in the percentage of the dividends received
deduction set forth in Section 243(a)(1) of the Code or any successor
provision, will give rise to an adjustment. Notwithstanding the foregoing
provisions of this Section 2, in the event that, with respect to any such
amendment, the Corporation receives either an unqualified opinion of
nationally recognized independent tax counsel selected by the Corporation
or a private letter ruling or similar form of authorization from the
Internal Revenue Service to the effect that such an amendment would not
apply to dividends payable on the Series A Preferred Stock, then any such
amendment will not result in the adjustment provided for pursuant to the
DRD Formula. The opinion referenced in the previous sentence must be based
upon a specific exception in the legislation amending the DRP or upon a
published
2
pronouncement of the Internal Revenue Service addressing such legislation.
The Corporation's calculation of the dividends payable, as so adjusted and
as certified accurate as to calculation and reasonable as to method by the
independent public accountants then regularly engaged by the Corporation,
will be final and not subject to review absent manifest error.
(b) If any amendment to the Code which reduces the Dividends Received
Percentage to below 70% is enacted after a dividend payable on a Dividend
Payment Date has been declared but prior to the applicable dividend payment
date, the amount of dividend payable on such Dividend Payment Date will not
be increased. Instead, an amount, equal to the excess of (x) the product of
the dividends paid by the Corporation on such Dividend Payment Date and the
factor derived from the DRD Formula (where the DRP used in the DRD Formula
would be equal to the reduced Dividends Received Percentage for such
dividends) over (y) the dividends paid by the Corporation on such Dividend
Payment Date, will be payable to holders of record as of the record date
established for the next succeeding Dividend Payment Date in addition to
any other amounts payable on such date. Notwithstanding the foregoing, no
such additional dividend will be payable pursuant to this Section 2 if such
amendment to the Code would not result in an adjustment to the DRD Formula
due to the Corporation having received either an opinion of counsel or tax
ruling referred to in paragraph (a) of this Section 2.
(c) If, prior to January 2, 1997, an amendment to the Code is enacted
that reduces the Dividends Received Percentage to below 70% and such
reduction retroactively applies to a Dividend Payment Date as to which the
Corporation previously paid dividends on the Series A Junior Preferred
Stock (each an "Affected Dividend Payment Date"), additional dividends (the
"Additional DRD Dividends") will be payable out of funds legally available
therefor on the next succeeding Dividend Payment Date (or if such amendment
is enacted after the dividend payable on such Dividend Payment Date has
been declared, on the second succeeding Dividend Payment Date following the
date of enactment) to holders of record as of the record date established
for such succeeding Dividend Payment Date in an amount equal to the excess
of (x) the product of the dividends paid by the Corporation on each
Affected Dividend Payment Date and the factor derived from the DRD Formula
(where the DRP used in the DRD Formula would be equal to the reduced
Dividends Received Percentage applied to each Affected Dividend Payment
Date), over (y) the dividends paid by the Corporation on all Affected
Dividend Payment Dates.
(d) Additional DRD Dividends will not be payable in respect of the
enactment of any amendment to the Code on or after January 2, 1997 which
retroactively reduces the Dividends Received Percentage to below 70%, or if
enacted prior to January 2, 1997, which would not result in an adjustment
due to the Corporation having received either an opinion of counsel or tax
ruling referred to in clause (a) of this Section 2. The Corporation shall
only be required to make one payment of Additional DRD Dividends.
(e) In the event that the amount of dividends payable per share of the
Series A Preferred Stock are adjusted pursuant to the DRD Formula and/or
Additional DRD Dividends are to be paid, the Corporation shall cause notice
of each such adjustment and, if applicable, any Additional DRD Dividends,
to be sent to the holders of record of the Series A Preferred Stock as they
appear in the stock register of the Corporation.
Section 3. Optional Redemption. (a) At any time or from time to time, on
or after , 2001, the Series A Preferred Stock may be redeemed at the
option of the Corporation, in whole or in part, at a redemption price equal
to $50.00 per share, plus accrued and unpaid dividends (whether or not
declared) to but excluding the date fixed for redemption including any
changes in dividends payable due to changes in the annual dividend rate or
Dividends Received Percentage, and Additional DRD Dividends if any. If full
cumulative dividends on the Series A Preferred Stock for all past dividend
periods have not been paid or declared and set apart for payment, the
Series A Preferred Stock shall not be redeemed in part by the Corporation
pursuant to this clause (a) and the Corporation shall not purchase or
acquire any shares of Series A Preferred Stock other than pursuant to
Section 4 hereof or pursuant to a purchase or exchange offer made on the
same terms to all holders of the Series A Preferred Stock. If fewer than
all the outstanding shares of
3
Series A Preferred Stock are to be redeemed, the Corporation will select
those to be redeemed pro rata, by lot or by a substantially equivalent
method.
(b) If the Dividends Received Percentage is equal to or less than %
and, as a result, the amount of dividends on the Series A Preferred Stock
payable on any Dividend Payment Date will be or is adjusted upwards as
provided in Section 2, the Corporation, at its option, may redeem all, but
not less than all, of the outstanding shares of the Series A Preferred
Stock, provided that within 60 days of the date on which an amendment to
the Code is enacted which reduces the Dividends Received Percentage to %
or less, the Corporation gives notice of redemption as provided in
paragraph (d) of this Section 3 to all holders of record of the Series A
Preferred Stock. A redemption of the Series A Preferred Stock in accordance
with this paragraph (b) shall be at the applicable redemption price set
forth in the following table, in each case plus an amount equal to accrued
and unpaid dividends (whether or not declared) thereon to but excluding the
date fixed for redemption, including any changes in dividends payable due
to changes in the annual dividend rate or Dividends Received Percentage,
and Additional Dividends, if any:
REDEMPTION
PRICE PER
REDEMPTION PERIOD SHARE
----------------- ----------
, 1996 to , 1997....................................... $
, 1997 to , 1998.......................................
, 1998 to , 1999.......................................
, 1999 to , 2000.......................................
, 2000 to , 2001.......................................
, 2001 and thereafter......................................
(c) If at any time fewer than 200,000 shares of Series A Preferred Stock
remain outstanding, the Corporation, at its option, may redeem all, but not
less than all, of the outstanding Series A Preferred Stock. A redemption of
the Series A Preferred Stock in accordance with this clause (c) shall be at
the applicable redemption price set forth in the following table, in each
case plus an amount equal to accrued but unpaid dividends (whether or not
declared thereon) to but excluding the date fixed for redemption, including
any changes in dividends payable due to changes in the annual dividend rate
or the Dividends Received Percentage, and Additional DRD Dividends, if any:
REDEMPTION
PRICE PER
REDEMPTION PERIOD SHARE
----------------- ----------
Date of Issuance to , 1997........................... $
, 1997 to , 1998........................... $
, 1998 to , 1999........................... $
, 1999 to , 2000........................... $
, 2000 to , 2001........................... $
, 2001 and thereafter................................ $
(d) Notice of redemption pursuant to paragraph (a), (b) or (c) of this
Section 3 will be given by mail, (i) not less than 30 days prior to the
date fixed for redemption thereof in the case of paragraph (a) and (ii) not
less than 30 nor more than 60 days prior to the date fixed for redemption
thereof, in the case of paragraphs (b) and (c), in each case to each record
holder of the shares of Series A Preferred Stock to be redeemed at the
address of such holder in the stock register of the Corporation. If a
notice of redemption has been given, from and after the specified
redemption date (unless the Corporation defaults in making payment of the
redemption price), dividends on the Series A Preferred Stock so called for
redemption will cease to accrue, such shares will no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive the redemption price) will cease.
Subject to applicable escheat and similar abandoned property laws, any
moneys set aside by the Corporation for such redemption and unclaimed at
the end of six months from the redemption date shall revert to the general
funds of the Corporation, after which reversion the holders of such shares
so called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such redemption.
Any interest accrued on funds so deposited shall be paid to the Corporation
from time to time.
4
Section 4. Mandatory Redemption. Upon the occurrence of a Mandatory
Redemption Event, the Corporation shall redeem out of funds legally
available therefor all of the outstanding shares of Series A Preferred
Stock on a date (the "Mandatory Redemption Date") not more than 60 days
after the date of such Mandatory Redemption Event at $ per share plus an
amount equal to accrued and unpaid dividends (whether or not declared)
thereon to but excluding the Mandatory Redemption Date including any
changes in dividends payable due to changes in the annual dividend rate or
Dividends Received Percentage, and Additional Dividends, if any.
A "Mandatory Redemption Event" shall mean the earliest to occur of the
following events:
(i) the Transaction (as defined below) shall have been subjected to a
vote by the stockholders of the Corporation at the Tenneco Special
Meeting and shall not have been approved; (ii) the Transaction shall
not have been approved by the requisite vote of the stockholders of the
Corporation entitled to vote thereon on or prior to March 31, 1997; and
(iii) the Corporation shall not have accepted on or prior to March 31,
1997 any indebtedness of the Corporation and its subsidiaries tendered
to it pursuant to the cash tender offers made by it pursuant to the
Transaction.
"Transaction" means the reorganization of the Corporation pursuant to
which (i) the Corporation and its subsidiaries will, pursuant to a
Distribution Agreement dated as of , 1996 (as such may be
amended, supplemented or modified from time to time among the Corporation,
New Tenneco Inc., a newly formed wholly-owned subsidiary of the Corporation
("New Tenneco"), and Newport News Shipbuilding Inc., a wholly-owned
subsidiary of the Corporation ("Newport News"), undertake various
intercompany transfers and distributions designed to restructure, divide
and separate their various businesses and assets so that all of the assets,
liabilities and operations of (A) their automotive parts, packaging and
administrative services businesses ("Industrial Business") are owned and
operated by New Tenneco, and (B) their shipbuilding business ("Shipbuilding
Business") are owned and operated by Newport News; (ii) the Corporation
will then distribute pro rata to holders of Common Stock all of the
outstanding common stock of New Tenneco and Newport News; and (iii)
thereafter a subsidiary of El Paso will merge with and into the
Corporation, which will then consist of the remaining existing and
discontinued operations of the Corporation and its subsidiaries other than
those relating to the Industrial Business or the Shipbuilding Business,
including the transmission and marketing of natural gas, pursuant to the
Merger Agreement.
Notice of redemption pursuant to this Section 4 will be given by mail,
not less than 30 nor more than 60 days prior to the Mandatory Redemption
Date to each record holder of shares of Series A Preferred Stock at the
address of such holder in the stock register of the Corporation. If a
notice of redemption has been given, from and after the Mandatory
Redemption Date (unless the Corporation defaults in making payment of the
redemption price), dividends on the Series A Preferred Stock will cease to
accrue, such shares will no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive the redemption price) will cease. Subject to
applicable escheat and similar abandoned property laws, any moneys set
aside by the Corporation for such redemption and unclaimed at the end of
six months from the Mandatory Redemption Date shall revert to the general
funds of the Corporation, after which reversion the holders of such shares
so called for redemption shall look only to the general funds of the
Corporation for the payment of the amounts payable upon such redemption.
Any interest accrued on funds so deposited shall be paid to the Corporation
from time to time.
Section 5. Voting. The Series A Preferred Stock shall have the following
voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to one vote on all matters submitted to a vote of the holders
of Series A Preferred Stock.
(b) The holders of Series A Preferred Stock, voting as a separate
series from all other series of Junior Preferred Stock and classes of
capital stock, but together as a single class with the holders of %
Cumulative Junior Preferred Stock, Series B, of the Corporation
("Series B Preferred Stock") and each other class or series ranking on
parity with respect to dividends with the Series A Preferred
5
Stock and Series B Preferred Stock and having substantially the same
voting rights (together with the Series A Preferred Stock and Series B
Preferred Stock, the "Voting Preferred Stock"), shall be entitled, at
each annual meeting of stockholders of the Corporation, to elect a
number of directors of the Corporation equivalent to the smallest
number, representing at least one-sixth of the number of members of the
Board of Directors as if there were no vacancies or unfilled newly
created directorships on such Board, which number shall not give effect
to any directors elected pursuant to paragraph (c) below. Any director
so elected shall hold office until the next annual meeting and until
his or her successor shall be elected and qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office.
A director elected pursuant to the terms of this paragraph (b) may be
removed without cause only by the holders of a majority in voting power
of the outstanding Voting Preferred Stock, entitled to vote in an
election of such director.
At such time as all shares of the Voting Preferred Stock shall cease
to be outstanding, the term of office of any director elected pursuant
to this paragraph (b), or his or her successor, shall automatically
terminate.
(c) Whenever, at any time or times, dividends payable on the Series A
Preferred Stock shall be in arrears for dividend periods, whether or
not consecutive, containing in the aggregate a number of days
equivalent to six calendar quarters, the holders of outstanding Series
A Preferred Stock shall have the exclusive right, in addition to their
rights under (b) above, voting together with the Voting Junior
Preferred Stock but as a separate series from all other series of
Junior Preferred Stock and classes of capital stock of the Corporation,
at each meeting of the stockholders held for the purpose of electing
directors, to elect two directors of the Corporation, until such time
as all dividends accumulated on the Series A Preferred Stock and in
arrears shall have been paid in full or declared and set apart for
payment, at which time the right of the holders of the Series A
Preferred Stock to vote pursuant to the provisions of this clause (c)
shall terminate, subject to revesting in the event of each and every
subsequent default of the character and for the time above mentioned.
At any time when voting rights shall, pursuant to the provisions of
this clause (c), be vested in the Series A Preferred Stock, the number
of directors of the Corporation shall be automatically increased, to
the extent necessary, so that two directors may be elected by the
holders of the Series A Preferred Stock, voting together with all other
Voting Preferred Stock, and a proper officer of the Corporation shall,
upon the written request of the holders of record of at least ten
percent in aggregate liquidation value of the Series A Preferred Stock
then outstanding and other outstanding Voting Preferred Stock then
entitled to vote in such election, addressed to the Secretary of the
Corporation, call a special meeting of holders of the Series A
Preferred Stock and of any other class or series of Voting Preferred
Stock then entitled to vote in such election. Such meeting shall be
held at the earliest practicable date but in no event shall a special
meeting be held if the annual meeting of stockholders of the
Corporation is to be held within 90 days of the receipt by the
Secretary of the Corporation of such request. If such meeting shall not
be called by the proper officer of the Corporation as required within
20 days after personal service of the said written request upon the
Secretary of the Corporation, or within 20 days after mailing the same
within the United States of America by certified or registered mail,
return receipt requested, addressed to the Secretary of the Corporation
at its principal office (such mailing to be evidenced by the registry
receipt issued by the postal authorities), then the holders of record
of at least ten percent of the aggregate liquidation value of the
Series A Preferred Stock then outstanding and other outstanding Voting
Preferred Stock then entitled to vote in such election may designate in
writing one of their number to call such meeting, and such meeting may
be called by such person designated upon the notice required for annual
meetings of stockholders but in no event shall a special meeting be
held if the annual meeting of stockholders of the Corporation is to be
held within 90 days of the receipt by the Secretary of the Corporation
of such request. Any holder of the Voting Junior Preferred Stock so
designated shall have access to the stock books of the Corporation for
the purpose of causing a meeting of stockholders to be called pursuant
to these provisions.
6
Upon any termination of the right of the holders of the Series A
Junior Preferred Stock to vote for directors as a class as provided in
this clause (c), the term of office of the directors so elected in
accordance with this paragraph (c) shall automatically terminate and
the number of directors shall be reduced accordingly.
(d) At any meeting so called pursuant to paragraph (c) above, and at
any other meeting of stockholders held for the purpose of electing
directors at which the holders of the Voting Junior Preferred Stock
shall have the right to elect directors as provided in paragraph (b) or
paragraph (c) above, the presence in person or by proxy of a majority
in voting power of the outstanding shares of the Voting Junior
Preferred Stock shall be required to constitute a quorum thereof for
the election of any director by the holders of the Voting Junior
Preferred Stock.
At any such meeting or adjournment thereof, (x) the absence of a
quorum of the Voting Junior Preferred Stock, shall not prevent the
election of directors other than those to be elected by the Voting
Junior Preferred Stock and the absence of a quorum for the election of
such other directors shall not prevent the election of the directors to
be elected by the Voting Junior Preferred Stock, and (y) in the absence
of either or both such quorums, a majority in voting power of the
holders present in person or by proxy of the stock or stocks which lack
a quorum shall have power to adjourn the meeting, subject to applicable
law, for the election of directors which they are entitled to elect
from time to time without notice other than announcement at the meeting
until a quorum shall be present.
(e) If by reason of any resignation, retirement, disqualification,
death or removal there are not in office all such directors that the
holders of the Voting Junior Preferred Stock are entitled to elect
pursuant to paragraph (c), then any such vacancy shall be filled only
by the remaining director elected by such holders or, only in the event
there is no such remaining director, by the holders of the Voting
Preferred Stock entitled to vote thereon. If by reason of any
resignation, retirement, disqualification, death or removal there are
not in office all such directors that the holders of the Voting
Preferred Stock are entitled to elect pursuant to paragraph (b), then
any such vacancy shall be filled by a majority of the remaining
directors elected by such holders or, in the event there are no such
remaining directors, by the majority vote of the remaining directors
then constituting the Board of Directors.
Promptly after the right of the holders of the Voting Preferred Stock
to fill any vacancy as set forth in the immediately preceding paragraph
arises, the Board of Directors may cause a special meeting of the
holders of Voting Preferred Stock entitled to vote thereon, to be held
for the purpose of filling such vacancy and such vacancy shall be
filled at any such special meeting. Such meeting shall be held at the
earliest practicable date but in no event shall a special meeting be
held if the annual meeting of stockholders of the Corporation is to be
held within 90 days of the occurrence of such vacancy.
Notwithstanding the immediately preceding paragraph, at any time
after the right of the holders of the Voting Preferred Stock to fill
any vacancy as set forth above in the first paragraph of this paragraph
(e) arises, a proper officer of the Corporation shall, upon the written
request of the holders of record of at least ten percent in aggregate
liquidation value of the Voting Preferred Stocks then outstanding,
addressed to the Secretary of the Corporation, call a special meeting
of holders of the Voting Preferred Stock entitled to vote thereon. Such
meeting shall be held at the earliest practicable date but in no event
shall a special meeting be held if the annual meeting of stockholders
of the Corporation is to be held within 90 days of the occurrence of
such vacancy. If such meeting shall not be called by the proper officer
of the Corporation as required within 20 days after personal service of
the said written request upon the Secretary of the Corporation, or
within 20 days after mailing the same within the United States of
America by registered mail addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced by
the registry receipt issued by the postal authorities), then the
holders of record of at least ten percent of the aggregate liquidation
value of the Voting Junior Preferred Stocks then outstanding and
entitled to vote thereon may designate in writing one of their number
to call such meeting, and such meeting may be called by such person
designated upon the notice required for annual meetings of stockholders
and shall be held at the place at which
7
the last preceding annual meeting of the stockholders of the
Corporation was held. Any holder of the Voting Junior Preferred Stock
so designated shall have access to the stock books of the Corporation
for the purpose of causing a meeting of stockholders to be called
pursuant to these provisions.
(f) So long as any shares of Series A Junior Preferred Stock or
Series B Junior Preferred Stock are outstanding, the Corporation shall
not, without the consent of the holders of at least a majority in
voting power of the outstanding shares of Series A Junior Preferred
Stock and Series B Junior Preferred Stock, voting together as a single
class, given in person or by proxy, either in writing or by vote at an
annual meeting or a special meeting called for that purpose:
(A) issue any additional class of stock or any additional
series of Junior Preferred Stock ranking, in each case, prior to
or on parity with the Series A Preferred Stock and Series B
Junior Preferred Stock as to the payment of dividends or as to
the distribution of assets on liquidation, dissolution or
winding up;
(B) issue any obligation or security convertible into shares
of stock ranking prior to or on parity with the Series A
Preferred Stock and Series B Preferred Stock as to the payment
of dividends or as to the distribution of assets on liquidation,
dissolution or winding up.
Section 6. Restrictions on Dividends and Stock Repurchases. So long as
any shares of Series A Preferred Stock or Series B Preferred Stock shall
remain outstanding, (a) in no event shall any dividends whatsoever, whether
in cash, stock or otherwise, be paid or declared, or any distribution be
made on any stock ranking junior to the Series A Preferred Stock and Series
B Preferred Stock, unless all dividends of the Series A Preferred Stock and
Series B Preferred Stock for all past dividend periods shall have been
paid, or declared and a sum sufficient for the payment of such dividends
set apart, and (b) during the continuance of any default in the payment of
dividends on, or any mandatory redemption obligations of the Corporation in
respect of, the Series A Preferred Stock or Series B Preferred Stock, the
Corporation shall not purchase, redeem or otherwise acquire for value any
shares of Series A Preferred Stock or Series B Preferred Stock or any
shares of any other stock ranking on a parity with the Series A Preferred
Stock and Series B Preferred Stock as to the payment of dividends or as to
the distribution of assets on liquidation, dissolution or wind up without
the consent, given in person or by proxy, either in writing or by vote at
an annual meeting or at a special meeting called for that purpose, of the
holders of at least a majority in voting power of the outstanding shares of
Series A Preferred Stock and Series B Preferred Stock, voting together as a
single class, present in person or by proxy at such meeting, provided that
a quorum, consisting of at least a majority in voting power of the then
outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, voting together as a single class, is present.
Section 7. Ranking. (a) Any class or series of stock of the Corporation
shall be deemed to rank:
(i) prior to the Series A Preferred Stock and Series B Preferred
Stock, as to the payment of dividends or as to distributions of assets
upon liquidation, dissolution or winding up, as the case may be, if the
holders of such class or series shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of Series A Preferred Stock and Series B Preferred Stock;
(ii) on a parity with the Series A Preferred Stock and Series B
Preferred Stock as to the payment of dividends, whether or not the
dividend rates or dividend payment dates thereof be different from
those of the Series A Preferred Stock or Series B Preferred Stock, if
the holders of such class or series of stock and the holders of the
Series A Preferred Stock and Series B Preferred Stock shall be entitled
to the receipt of dividends in proportion to their respective amounts
of accrued and unpaid dividends per share, without preference or
priority one over the other, and on a parity with the Series A
Preferred Stock and Series B Preferred Stock as to the distribution of
assets upon liquidation, dissolution or winding up, whether or not the
liquidation prices per share thereof be different from those of the
Series A Preferred Stock or Series B Preferred Stock, if the holders of
such class or series of stock and the holders of the Series A Preferred
Stock and Series B Preferred Stock shall be entitled to the receipt of
amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective liquidation preferences, without
preference or priority one over the other; and
8
(iii) junior to the Series A Preferred Stock and Series B Preferred
Stock, as to the payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up, as the case may be,
if the holders of Series A Preferred Stock and Series B Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable
upon liquidation, dissolution or winding up, as the case may be, in
preference or priority to the holders of shares of such class or
series.
(b) Except for the Common Stock, par value $5.00 per share, of the
Corporation (the "Common Stock") and the Series A Participating Junior
Preferred Stock, without par value, of the Corporation (the "Participating
Junior Preferred Stock"), each other class of stock of the Corporation
existing on the date of the adoption of this Certificate shall be deemed to
rank prior to the Series A Preferred Stock and Series B Junior Preferred
Stock both as to the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up. The Series A Preferred
Stock and Series B Preferred Stock shall be deemed to rank on a parity with
each other both as to the payment of dividends and as to the distribution
of assets upon liquidation, dissolution or winding up. The Common Stock and
the Participating Preferred Stock shall be deemed to rank junior to the
Series A Preferred Stock and Series B Preferred Stock both as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up.
Section 8. Status of Redeemed or Acquired Shares. Any shares of Series A
Preferred Stock which shall have been redeemed or otherwise acquired by the
Corporation shall be restored to the status of authorized but unissued
shares of Junior Preferred Stock undesignated as to series.
Section 9. Liquidation Rights. (a) The amount that the holders of Series
A Preferred Stock shall be entitled to receive in the event of any
dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntary or involuntary (collectively, a "Liquidation"), shall be
$50.00 per share, plus an amount equal to all accrued and unpaid dividends
to the date of Liquidation including any changes in dividends payable due
to changes in the annual dividend rate or Dividends Received Percentage,
and Additional Dividends, if any, and no more. After such amount is paid in
full, no further distributions or payments shall be made in respect of
shares of Series A Preferred Stock, such shares of Series A Preferred Stock
shall no longer be deemed to be outstanding or be entitled to any powers,
preferences, rights or privileges, including voting rights, and such shares
of Series A Preferred Stock shall be surrendered for cancellation to the
Corporation.
(b) In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall
be made to the holders of any class or series of stock of the Corporation
ranking junior to the Series A Preferred Stock and Series B Preferred
Stock, the holders of the Series A Preferred Stock and Series B Preferred
Stock (subject to the rights of the Preferred Stock) shall be entitled to
be paid in full the amounts set forth in paragraph (a) of this Section 9.
After such payment shall have been made in full to the holders of the
Series A Preferred Stock and Series B Preferred Stock, the remaining assets
and funds of the Corporation shall be distributed among the holders of the
stock of the Corporation ranking junior in respect thereof to the Series A
Preferred Stock and Series B Preferred Stock according to their respective
rights. In the event that the assets of the Corporation available for
distribution to holders of Series A Preferred Stock and Series B Preferred
Stock shall not be sufficient to make the payment herein required to be
made in full and to pay in full the liquidation preference on all other
shares of stock of the Corporation ranking on a parity with the Series A
Preferred Stock and Series B Preferred Stock as to amounts distributable
upon dissolution, liquidation or winding up of the Corporation, such assets
shall be distributed to the holders of the respective shares of Series A
Preferred Stock, Series B Preferred Stock and any such other parity stock
pro rata in proportion to the full amounts payable upon the shares of
Series A Preferred Stock, Series B Preferred Stock and any such other
parity stock if all amounts payable thereon were paid in full.
Section 10. Increase in Shares. The number of shares of Series A
Preferred Stock may, to the extent of the Corporation's authorized and
unissued Junior Preferred Stock, be increased and may be decreased (but not
below the number of shares thereof then outstanding) by further resolution
duly adopted by the Board of Directors and the filing and recording of a
certificate pursuant to the provisions of the General Corporation Law of
the State of Delaware stating that such increase or decrease has been so
authorized.
9
Section 11. Maturity. Unless otherwise redeemed as provided herein, the
term of the Series A Preferred Stock shall be perpetual.
IN WITNESS WHEREOF, said Tenneco Inc. has caused this Certificate to be
signed by , as , this th day of , 1996.
TENNECO INC.
By: _________________________________
Name:
Title:
10
EXHIBIT F-1 TO
AGREEMENT AND PLAN OF MERGER
ENERGY BUSINESS
PRO FORMA BALANCE SHEET
(UNAUDITED)
(MILLIONS)
1995 PRO FORMA PRO FORMA
ASSETS DEC 31 ADJUSTMENTS BALANCE
------ ------ ----------- ---------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS.......... $ 248 $ (212)(6)
(20)(11)
9 (14) $ 25
RECEIVABLES--
CUSTOMER NOTES AND ACCOUNTS (NET).......... 508 (202)(6)
(2)(8)
(1)(11) 303
AFFILIATED COMPANIES....................... 199 (144)(5)
(2)(6) 53
GAS TRANSPORTATION AND EXCHANGE............ 64 64
INCOME TAXES............................... 133 26 (9) 159
OTHER...................................... 436 436
INVENTORIES.................................. 24 24
PREPAYMENTS AND OTHER........................ 83 (22)(8)
4 (10) 65
------ ------- ------
1,695 (566) 1,129
------ ------- ------
INVESTMENTS AND OTHER ASSETS:
INVESTMENT IN AFFILIATED COMPANIES........... 603 (323) (1)
(1)(12) 279
LONG-TERM RECEIVABLES--
NOTES AND OTHER (NET)...................... 352 (22)(2)
(283)(6)
(5)(8) 42
INVESTMENT IN SUBSIDIARIES IN EXCESS OF FAIR
VALUE OF NET ASSETS AT DATE OF ACQUISITION,
LESS AMORTIZATION........................... 22 22
OTHER........................................ 954 31 (7)
(2)(6)
(353)(8)
(16)(14) 614
------ ------- ------
1,931 (974) 957
------ ------- ------
PLANT, PROPERTY AND EQUIPMENT, AT COST......... 6,272 (43)(12) 6,229
LESS--RESERVES FOR DEPRECIATION, DEPLETION
AND AMORTIZATION............................ 3,431 (4)(12) 3,427
------ ------- ------
2,841 (39) 2,802
------ ------- ------
$6,467 $(1,579) $4,888
====== ======= ======
1
ENERGY BUSINESS
PRO FORMA BALANCE SHEET
(UNAUDITED)
(MILLIONS)
1995 PRO FORMA PRO FORMA
LIABILITIES AND COMBINED EQUITY DEC 31 ADJUSTMENTS BALANCE
------------------------------- -------- ----------- ---------
CURRENT LIABILITIES:
SHORT-TERM DEBT (INCLUDING CURRENT
MATURITIES)............................... $ 869 $ (155)(6)
24(11)
(738)(14) --
PAYABLES--
TRADE.................................... 365 13 (2) 378
AFFILIATED COMPANIES..................... 88 (86)(5) 2
GAS TRANSPORTATION AND EXCHANGE.......... 28 28
TAXES ACCRUED.............................. 525 (12)(2)
(500)(3) 13
DEFERRED INCOME TAXES...................... 65 50 (3)
(8)(8) 107
INTEREST ACCRUED........................... 102 (16)(6) 86
NATURAL GAS PIPELINE REVENUE RESERVATION... 27 27
OTHER...................................... 426 (1)(8) 425
-------- ------- ------
2,495 (1,429) 1,066
-------- ------- ------
LONG-TERM DEBT............................... 3,690 (524)(6)
(3,166)(14) --
-------- ------- ------
DEFERRED INCOME TAXES........................ 541 (23)(2)
(5)(3)
11 (4)
(14)(6)
12 (7)
(130)(8)
(103)(13) 289
-------- ------- ------
POSTRETIREMENT BENEFITS...................... 260 (1)(8) 259
-------- ------- ------
DEFERRED CREDITS AND OTHER LIABILITIES....... 481 16 (1)
(32)(4)
(2)(8)
(23)(11)
(4)(13) 436
-------- ------- ------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST............................ 19 19
-------- ------- ------
PREFERRED STOCK WITH MANDATORY REDEMPTION
PROVISIONS.................................. 130 130
-------- ------- ------
COMBINED EQUITY
(1,149) (339)(1)
455 (3)
21 (4)
(58)(5)
8 (6)
19 (7)
(240)(8)
26 (9)
4 (10)
(22)(11)
(40)(12)
107 (13)
3,897 (14) 2,689
-------- ------- ------
(1,149) 3,838 2,689
-------- ------- ------
$6,467 $(1,579) $4,888
======== ======= ======
2
ENERGY BUSINESS
NOTES TO PRO FORMA BALANCE SHEET
Pro forma adjustments to reflect certain first quarter 1996 transactions:
(1) Disposition of Tenneco's remaining investment in Case Corp. common
stock.
(2) Tentative settlement of a note receivable and tax issues with ICH, a
company in bankruptcy.
(3) Payment made for settlement of tax issues with the Internal Revenue
Service.
(4) Reflect removal of the Cummins deferred gain which was recognized in
the first quarter of 1996.
Pro forma adjustments to reflect certain events that will occur prior to a
sale transaction:
(5) Capitalize or settle affiliated accounts receivable and accounts
payable.
(6) Reflect the reacquisition by the Automotive/Packaging businesses of
trade accounts receivable from Tenneco Credit Corp., the sale of farm and
construction equipment notes receivable and the retirement of Tenneco
Credit Corp. debt.
(7) Transfer the Energy Business' computer hardware and share of software
development costs held by Tenneco Business Services.
(8) Reflect the assumption by the Automotive/Packaging businesses of
responsibility for the Tenneco Retirement Plan.
(9) Move the Energy Business' portion of state income tax receivable to
the Energy Business.
(10) Move the Energy Business' portion of prepaid insurance to the Energy
Business.
(11) Record dividend by Eastern Insurance of $20 million and transfer of
Eastern's assets and liabilities related to the Automotive/Packaging
businesses.
(12) Transfer Corporate Aviation assets and certain furniture, fixtures
and equipment to the Automotive/Packaging businesses.
(13) Transfer of "other reserves" and recorded pre-distribution income
tax assets and liabilities in accordance with the Tax Sharing Agreement.
(14) Reflect tender for all Tenneco debt and contribution of cash to
reach $25 million.
3
EXTERNAL BASIS
TENNECO ENERGY
PRO FORMA STATEMENT OF OPERATING INCOME
YEAR ENDED DECEMBER 31, 1995
(MILLIONS)
BEFORE PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTED
----------- ----------- ---------
Revenues
Net Sales and Operating Revenues Energy.... $1,916 $1,916
Automotive............................... -- --
Packaging................................ -- --
Shipbuilding............................. -- --
Farm and Construction Equipment.......... -- -- --
Other (Land Use)......................... 5 5
------ ---- ------
1,921 -- 1,921
Other Income
Interest Income............................ 85 $(53)(1) 32
Equity in Net Income of Affiliated
Companies................................. 65 -- 65
Gain on Sale of Businesses and Assets...... 12 11 (1) 23
Gain on the Sale by a Subsidiary of its
Stock..................................... -- --
Other Income, Net.......................... 28 28
------ ---- ------
2,111 (42) 2,069
------ ---- ------
Costs and Expenses
Cost of Sales.............................. 1 1
Cost of Gas Sold........................... 954 954
Operating Expenses......................... 413 (12)(1) 401
Selling, General and Administrative........ 163 (2) (1)
38 (2)
10 (3) 209
Finance Charges,--Tenneco Finance.......... 79 (79)(1) --
Depreciation, Depletion and Amortization... 196 6 (4) 202
------ ---- ------
1,806 (39) 1,767
------ ---- ------
Operating Income............................. $ 305 $ (3) $ 302
====== ==== ======
4
TENNECO ENERGY
NOTES TO PRO FORMA STATEMENT OF OPERATING INCOME
YEAR ENDED DECEMBER 31, 1995
Pro forma adjustments to reflect income statement effects of certain events:
(1) To remove income realized from Tenneco Credit Corporation assets
which will be sold prior to any transaction.
(2) To remove impact of Tenneco Inc. Retirement Plan.
(3) To record employee benefit expense related to planned Tenneco Energy
defined contribution plan.
(4) To reflect amortization of capitalized hardware and system
development costs related to Tenneco Energy.
5
EXHIBIT F-2 TO
AGREEMENT AND PLAN OF MERGER
ENERGY BUSINESS
PRO FORMA BALANCE SHEET
(UNAUDITED)
(MILLIONS)
1996 PRO FORMA PRO FORMA
ASSETS MAR 31 ADJUSTMENTS BALANCE
------ ------ ----------- ---------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS.......... $ 150 $ (53)(9)
(72)(12) $ 25
RECEIVABLES--
CUSTOMER NOTES AND ACCOUNTS (NET).......... 927 (647)(4)
(2)(6) 278
AFFILIATED COMPANIES....................... 83 (30)(3) 53
GAS TRANSPORTATION AND EXCHANGE............ 115 115
INCOME TAXES............................... -- 40 (7) 40
OTHER...................................... 260 (3)(4) 257
INVENTORIES................................ 25 25
PREPAYMENTS AND OTHER...................... 95 (22)(6)
4 (8)
(8)(9) 69
------ ------- ------
1,655 (793) 862
------ ------- ------
INVESTMENTS AND OTHER ASSETS:
INVESTMENT IN AFFILIATED COMPANIES........... 258 (1)(10) 257
LONG-TERM RECEIVABLES-
NOTES AND OTHER (NET)...................... 294 (23)(1)
(212)(4)
(5)(6) 54
INVESTMENT IN SUBSIDIARIES IN EXCESS OF FAIR
VALUE OF NET ASSETS AT DATE OF ACQUISITION,
LESS AMORTIZATION........................... 22 22
OTHER........................................ 955 (2)(4)
36 (5)
(362)(6)
(17)(12) 610
------ ------- ------
1,529 (586) 943
------ ------- ------
PLANT, PROPERTY AND EQUIPMENT, AT COST LESS--
RESERVES FOR DEPRECIATION, DEPLETION AND
AMORTIZATION................................ 3,469 (4)(10) 3,465
------ ------- ------
2,852 (39) 2,813
------ ------- ------
$6,036 $(1,418) $4,618
====== ======= ======
6
ENERGY BUSINESS
PRO FORMA BALANCE SHEET
(UNAUDITED)
(MILLIONS)
1996 PRO FORMA PRO FORMA
LIABILITIES AND COMBINED EQUITY MAR 31 ADJUSTMENTS BALANCE
------------------------------- ------- ----------- ---------
CURRENT LIABILITIES:
SHORT-TERM DEBT (INCLUDING CURRENT
MATURITIES)................................ $ 1,179 $ (178)(4)
(1,001)(12) --
PAYABLES--
TRADE..................................... 315 13 (1) 328
AFFILIATED COMPANIES...................... 75 (73)(3) 2
GAS TRANSPORTATION AND EXCHANGE........... 77 77
TAXES ACCRUED............................... 96 (13)(1)
(77)(2) 6
DEFERRED INCOME TAXES....................... 42 42
INTEREST ACCRUED............................ 133 (14)(4)
-- (118)(12) 1
NATURAL GAS PIPELINE REVENUE RESERVATION.... 45 45
OTHER....................................... 281 (1)(6) 280
------- ------- ------
2,243 (1,462) 781
------- ------- ------
LONG-TERM DEBT................................ 3,420 (501)(4)
(2,919)(12) --
------- ------- ------
DEFERRED INCOME TAXES......................... 490 (23)(1)
72 (2)
(14)(4)
14 (5)
(131)(6)
(103)(11) 305
------- ------- ------
POSTRETIREMENT BENEFITS....................... 256 (1)(6) 255
------- ------- ------
DEFERRED CREDITS AND OTHER LIABILITIES........ 668 (8)(4)
(10)(6)
(41)(9)
(4)(11) 605
------- ------- ------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST............................. 19 19
------- ------- ------
PREFERRED STOCK WITH MANDATORY REDEMPTION
PROVISIONS................................... 111 111
------- ------- ------
COMBINED EQUITY (1,171) 5 (2)
43 (3)
(149)(4)
22 (5)
(248)(6)
40 (7)
4 (8)
(20)(9)
(40)(10)
107 (11)
3,949 (12) 2,542
------- ------- ------
(1,171) 3,713 2,542
------- ------- ------
$6,036 $(1,418) $4,618
======= ======= ======
7
ENERGY BUSINESS
NOTES TO PRO FORMA BALANCE SHEET
Pro forma adjustments to reflect certain events that will occur prior to the
Effective Time:
(1) Tentative settlement of a note receivable and tax issues with ICH, a
company in bankruptcy.
(2) Allocation of settlement of tax issues with the Internal Revenue
Service.
(3) Capitalize or settle affiliated accounts receivable and accounts
payable.
(4) Reflect the reacquisition by the Automotive/Packaging businesses of
trade accounts receivable from Tenneco Credit Corp. and the retirement of
Tenneco Credit Corp. debt.
(5) Transfer the Energy Business' computer hardware and share of software
development costs held by Tenneco Business Services.
(6) Reflect the assumption by the Automotive/Packaging businesses of
responsibility for the Tenneco Retirement Plan.
(7) Move the Energy Business' portion of state income tax receivable to
the Energy Business.
(8) Move the Energy Business' portion of prepaid insurance to the Energy
Business.
(9) Record dividend by Eastern Insurance of $20 million and transfer of
Eastern's assets and liabilities related to the Automotive/Packaging
businesses.
(10) Transfer Corporate Aviation assets and certain furniture, fixtures
and equipment to the Automotive/Packaging businesses.
(11) Transfer of "other reserves" and recorded pre-distribution income
tax assets and liabilities in accordance with the Tax Sharing Agreement.
(12) Reflect tender for all Tenneco debt and dividend of all cash in
excess of $25 million.
8
EXHIBIT G TO
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
CERTAIN PERMITTED ACTIONS, TRANSACTIONS AND OTHER MATTERS
1. Tenneco may take the actions referred to in the letters, consents,
agreements and documents (collectively, the "Letter Agreements") referred to
in Schedule G-1 attached hereto to the extent provided therein, and all the
terms of all such Letter Agreements are hereby ratified and affirmed (it being
understood, however, that (i) the allocation of any cash proceeds therefrom or
other "economic" effects thereof shall be governed by the terms of the Debt
and Cash Allocation Agreement, and (ii) the failure to include any letter
agreement or the like fully executed and delivered between the parties, does
not mean that same is not effective).
2. On November 29, 1996 (the last business day of the month), the Energy
Group will factor to ASCC sufficient receivables to generate Factored Proceeds
in an amount not to exceed $100,000,000. It is understood that under the
factoring arrangement Tenneco pledges its accounts receivable to ASCC, and
upon payment in full of amounts owed to ASCC under the factoring arrangement,
ASCC has no further claim against any pledged accounts receivable. No other
pledge or sale of accounts receivable by Tenneco or any of its subsidiaries
prior to the Effective Time shall be permitted. This paragraph will be
appropriately revised should the date of Closing not occur in December 1996.
For additional information see the Debt and Cash Allocation Agreement. All
other receivables, and all accounts payable, may only be collected, or paid,
as the case may be, in the ordinary course of business, consistent with past
practices.
3. The Energy Group may provide to employees of the Energy Group merit pay
increases, promotional pay increases and salary adjustments in the ordinary
course of business consistent with past practices.
4. The Energy Group may make payments prior to the Merger to its non-
executive employees pursuant to its 1996 Tenneco Energy Success Sharing Plan
consistent with past practices.
5. The Energy Group may make payments prior to the Merger to executive
employees of the Energy Group pursuant to the Tenneco Inc. Executive Incentive
Compensation Plan consistent with past practices.
6. Tenneco may make payments prior to the Merger to its executive employees
pursuant to the Tenneco Inc. Executive Incentive Compensation Plan as
determined by the management of Tenneco consistent with past practices.
7. Tenneco and the Energy Group may pay 1996 year-end bonuses to executives
and other employees of the Energy Business as determined by Tenneco prior to
the Effective Time with the consent of Acquiror which shall not be
unreasonably withheld.
8. Tenneco may take the actions described in Section 6.15 of the Agreement
to which this Exhibit G is attached.
9. Except for Tenneco Power Generation Co. v. City of College Station, et
al., and any other action, claim, suit or proceeding between or involving
Tenneco or any of its subsidiaries and Texas A&M University or the City of
College Station, which are not to be settled prior to Closing, all cash
proceeds received prior to Closing (i) from the settlement of any or all of
the cases identified in Exhibit G-2 shall be for the account of the Industrial
Subsidiary to a maximum amount of $10,500,000, and (ii) from collection
actions which may be initiated and settled after the date hereof and prior to
the Effective Time, shall be for the account of the Industrial Subsidiary to a
maximum amount of $5,000,000. Any such case (including collection cases) not
settled by October 18, 1996 shall be settled only with the consent of
Acquiror, which consent is not to be arbitrarily withheld.
10. Tenneco has (or may) sell its interests in the Iroquois Pipeline (the
cash proceeds from which were (or will be) added to the general cash funds of
Tenneco and will be allocated between the parties in accordance with other
cash of Tenneco as of the Closing in accordance with the Debt and Cash
Allocation Agreement.
11. Any receivables of Case Corporation (and/or its affiliates) or the
Industrial Group held by Tenneco or any of its subsidiaries may be sold for
cash and the cash will be added to the general cash funds of Tenneco and
allocated between the parties in accordance with other cash of Tenneco as of
the Closing in accordance with the Debt and Cash Allocation Agreement.
12. Tenneco and its subsidiaries may, with the consent of Acquiror, take
actions and enter into agreements and transactions to monetize Tenneco
Ventures, Tenneco's investment in Australia and Tenneco's interest in the
Orange Cogeneration Facility.
1
SCHEDULE G-1 TO EXHIBIT G
TO AGREEMENT AND PLAN OF MERGER
1. July 8, 1996 agreement to invest in 70 MW Dunaferr power project in
Hungary
2. September 19, 1996 agreement to reimburse amounts expended by Tenneco
relating to the 70 MW Dunaferr power project in Hungary and to indemnify
Tenneco against losses related to the project
3. July 17, 1996 consent to the disposition of certain private operational-
fixed microwave licenses used by Tenneco Communications Corporation on
frequencies 1,850 to 1,990 MHz
4. July 31, 1996 blanket consent to the disposition of certain private
microwave licenses
5. August 8, 1996 consent to sale of 960-acre parcel of land located along
Galveston Bay at Ingleside
6. August 28, 1996 consent to sale of Post Oak Ranch
7. August 28, 1996 consent to sale of Westchase Development property, Tract
6A
8. September 12, 1996 consent to sale of certain gas turbines
9. September 13, 1996 consent to Additional Retention Agreements
10. October 14, 1996 blanket consent to disposition of certain real estate.
11. September 24, 1996 consent to settlement of ICH tax indemnity issue
12. September 24, 1996 letter returning consents to settlement of three
lawsuits involving discontinued operations
13. August 19, 1996 letter consenting to customer rate refunds.
2
EXHIBIT G-2
CASE NAME
TGP v. Conoco (Grand Xxxxxxx)(1)
TGP v. Tidewater(1)
TGP v. South Oak Production(2)
TGP v. SIFCO Forge Group(2)
Land Ventures, Inc. v. Port Camelot(2)
Altamont Gas Transmission Co. v. Express Pipeline, Inc. (Arbitration award)(1)
TGP x. Xxxxx Companies, Inc. & the D/B Xxxxx Xxxxxx(3)
TGP v. KES Pepperell and HCE Pepperell, Inc.(3)
Western American Specialized Transportation Services, Inc. v. United States
Fire Insurance Company (Tenneco Energy, Inc. as Intervenor)(3)
Tenneco Power Generation Co. v. City of College Station, et al.(4)
--------
(1) Settled but cash not yet received.
(2) Settled and cash received.
(3) Not yet settled.
(4) Not yet settled and not to be settled prior to closing.
3
EXHIBIT H TO
AGREEMENT AND PLAN OF MERGER
Section 14.
(a) General. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any contemplated, pending or
completed action, suit, arbitration, alternate dispute resolution mechanism,
investigation, administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative ("Proceeding") (other than a
Proceeding by or in the right of the Corporation to procure a judgment in its
favor) in whole or in part attributable to (i) the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise ("Indemnitee"), or (ii) anything done or not done by such
Indemnitee in any such capacity, against expenses (including attorneys' fees)
and losses, claims, liabilities, judgments, fines and amounts paid in
settlement incurred by him or on his behalf in connection with such Proceeding
("Losses") if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful; provided, however, that except as provided in Section
14(f) of this Article IV, the Corporation shall indemnify any such Indemnitee
in connection with a Proceeding initiated by such Indemnitee only if such
Proceeding was authorized by the Board of Directors.
(b) Actions by or in the Right of the Corporation. The Corporation shall
indemnify any person who was or is made a party or is threatened to be made a
party to any pending, completed or threatened Proceeding brought by or in the
right of the Corporation to procure a judgment in its favor in whole or in
part attributable to (i) the fact that he is or was a director or officer of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (also an "Indemnitee") or (ii)
anything done or not done by such Indemnitee in any such capacity, against
expenses (including attorneys' fees) actually incurred by him or on his behalf
in connection with such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, provided that no such indemnification shall be made in
respect of any claim, issue or matter as to which Delaware law expressly
prohibits such indemnification by reason of an adjudication of liability of
such person to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit
was brought shall determine such indemnification to be equitable under the
circumstances.
(c) Indemnification in Certain Cases. Notwithstanding any other provision of
this Section 14, to the extent that an Indemnitee has been wholly successful
on the merits or otherwise in defense of any Proceeding referred to in
Sections 14(a) or 14(b) of this Article IV or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) incurred by him or on his behalf in connection therewith. If
Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Corporation shall indemnify Indemnitee, to the
maximum extent permitted by law, against expenses (including attorneys' fees)
actually incurred by Indemnitee in connection with each successfully resolved
claim, issue or matter. For purposes of this Section 14(c) and without
limitation, the termination of any such claim, issue or matter by dismissal
with or without prejudice shall be deemed to be a successful resolution as to
such claim, issue or matter.
(d) Procedure. (i) Any indemnification under Sections 14(a) and 14(b) of
this Article IV (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the Indemnitee is proper (except that the right of
Indemnitee to receive payments pursuant to Section 14(e) of this Article IV
shall not be subject to this Section 14(d)) in the circumstances because he
has met the applicable standard of conduct set forth in such Sections 14(a)
and 14(b), as applicable. When seeking indemnification, Indemnitee shall
submit a written request for indemnification to the Corporation. Such requests
shall include documentation or information which is necessary for the
Corporation to make a determination of Indemnitee's entitlement to
indemnification and what is reasonably available to Indemnitee. Such
determination
1
shall be made promptly, but in no event later than 30 days after receipt by
the Corporation of Indemnitee's written request for indemnification. The
Secretary of the Corporation shall, promptly upon receipt of Indemnitee's
request for indemnification, advise the Board of Directors that Indemnitee has
made such request for indemnification.
(ii) The entitlement of Indemnitee to indemnification shall be determined in
the specific case by a majority vote of the directors who are Disinterested
Directors, even though less than a quorum, except that such determination
shall be made by Independent Legal Counsel, if either there are no
Disinterested Directors or a majority of such Disinterested Directors so
directs.
(iii) In the event the determination of entitlement is to be made by
Independent Legal Counsel, such Independent Legal Counsel shall be selected by
the Board of Directors and approved by Indemnitee. Upon failure of the Board
of Directors to so select such Independent Legal Counsel or upon failure of
Indemnitee to so approve, such Independent Legal Counsel shall be selected by
the Chancellor of the State of Delaware or such other person as such
Chancellor shall designate to make such selection.
(iv) If the Board of Directors or Independent Legal Counsel shall have
determined that Indemnitee is not entitled to indemnification to the full
extent of Indemnitee's request, Indemnitee shall have the right to seek
entitlement to indemnification in accordance with the procedures set forth in
Section 14(f) of this Article IV.
(v) If the person or persons empowered pursuant to Section 14(d)(ii) of this
Article IV to make a determination with respect to entitlement to
indemnification shall have failed to make the requested determination within
90 days after receipt by the Corporation of such request, the requisite
determination of entitlement to indemnification shall be deemed to have been
made and Indemnitee shall be absolutely entitled to such indemnification,
absent (A) misrepresentation by Indemnitee of a material fact in the request
for indemnification or (B) a final judicial determination that all or any part
of such indemnification is expressly prohibited by law.
(vi) The termination of any Proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, adversely affect the rights of Indemnitee to indemnification hereunder
except as may be specifically provided herein, or create a presumption that
Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Corporation or create a presumption that (with respect to any criminal action
or proceeding) Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(vii) For purposes of any determination of good faith hereunder, Indemnitee
shall be deemed to have acted in good faith if Indemnitee's action is based on
the records or books of account of the Corporation or an Affiliate, including
financial statements, or on information supplied to Indemnitee by the officers
of the Corporation or an Affiliate in the course of their duties, or on the
advice of legal counsel for the Corporation or an Affiliate or by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or an Affiliate. The
provisions of this Section 14(d)(vii) of this Article IV shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set
forth in these By-Laws.
(viii) The knowledge and/or actions, or failure to act, of any director,
officer, agent or employee of the Corporation or an Affiliate shall not be
imputed to Indemnitee for purposes of determining the right to indemnification
under these By-Laws.
(ix) Without limiting the generality of the foregoing, in the event any
Indemnitee is made a party or is threatened to be made a party to any
Proceeding:
(A) the Indemnitee may retain counsel satisfactory to him with the
consent of the Corporation, which may not be unreasonably withheld or
delayed;
2
(B) the Corporation shall pay all fees and expenses of such counsel for
the Indemnitee promptly as statements therefor are received; and
(C) the Corporation will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that the Corporation shall
not be liable for any settlement effected without its written consent,
which consent, however, shall not be unreasonably withheld.
Any Indemnitee wishing to claim indemnification under this Section 14, upon
notice that such person has been made or is threatened to be made a party to
any such Proceeding, shall notify the Corporation (but any failure so to
notify shall not relieve the Corporation from any liability which it may have
under this Section 14, except to the extent such failure materially prejudices
the Corporation) and shall deliver to the Corporation any undertaking required
by Section 145(e) of the DGCL. The Indemnitees as a group may retain only one
law firm to represent them with respect to each such Proceeding unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnitees.
(e) Advances for Expenses and Costs. All expenses (including attorneys'
fees) incurred by or on behalf of Indemnitee (or reasonably expected by
Indemnitee to be incurred by Indemnitee within three months) in connection
with any Proceeding shall be paid by the Corporation in advance of the final
disposition of such Proceeding within 20 days after the receipt by the
Corporation of a statement or statements from Indemnitee requesting from time
to time such advance or advances whether or not a determination to indemnify
has been made under Section 14(d) of this Article IV (and even if the
Disinterested Directors or Independent Legal Counsel has determined, pursuant
to Section 14(d), that Indemnitee is not entitled to indemnification by reason
of their conclusions that Indemnitee (i) did not act in good faith or in a
manner Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation or (ii) had reasonable cause to believe his
conduct was unlawful, but not after the conclusion of judicial proceedings
under Section 14(f)). Indemnitee's entitlement to such advancement of expenses
shall include those incurred in connection with any Proceeding by Indemnitee
seeking an adjudication or award in arbitration pursuant to these By-Laws.
Such statement or statements shall evidence such expenses incurred (or
reasonably expected to be incurred) by Indemnitee in connection therewith and
shall include or be accompanied by a written undertaking by or on behalf of
Indemnitee to repay such amount if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified therefor pursuant to the terms of
this Section 14(e) of Article IV. The financial ability of an Indemnitee to
repay an advance shall not be a prerequisite to the making of such an advance.
(f) Remedies in Cases of Determination not to Indemnify or to Advance
Expenses. (i) In the event that (A) a determination is made that Indemnitee is
not entitled to indemnification hereunder, (B) advances are not made pursuant
to Section 14(e) of this Article IV or (C) payment has not been timely made
following a determination of entitlement to indemnification pursuant to
Section 14(d) of this Article IV, Indemnitee shall be entitled to seek a final
adjudication in an appropriate court of the State of Delaware or any other
court of competent jurisdiction of Indemnitee's entitlement to such
indemnification or advance.
(ii) In the event a determination has been made in accordance with the
procedures set forth in Section 14(d) of this Article IV, in whole or in part,
that Indemnitee is not entitled to indemnification, any judicial proceeding
referred to in paragraph (i) of this Section 14(f) shall be de novo and
Indemnitee shall not be prejudiced by reason of any such prior determination
that Indemnitee is not entitled to indemnification.
(iii) If a determination is made or deemed to have been made pursuant to the
terms of Sections 14(d) or (f) of this Article IV that Indemnitee is entitled
to indemnification, the Corporation shall be bound by such determination in
any judicial proceeding in the absence of (A) a misrepresentation of a
material fact by Indemnitee or (B) a final judicial determination that all or
any part of such indemnification is expressly prohibited by law.
(iv) To the extent deemed appropriate by the court, interest shall be paid
by the Corporation to Indemnitee at a reasonable interest rate for amounts
which the Corporation indemnifies or is obliged to indemnify Indemnitee
3
for the period commencing with the date on which Indemnitee requested
indemnification (or reimbursement or advance of expenses) and ending with the
date on which such payment is made to Indemnitee by the Corporation.
(g) Rights Non-Exclusive. The rights of indemnification and advancement of
expenses provided by, or granted pursuant to, this Section 14 of Article IV
shall not be deemed exclusive of any rights to which any person seeking
indemnification or advancement of expenses may be entitled under any law,
certificate of incorporation, by-law, agreement, vote of stockholders or
resolution of directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. No
amendment, alteration, rescission or replacement of these By-Laws or any
provision hereof shall be effective as to Indemnitee with respect to any
action taken or omitted by such Indemnitee in Indemnitee's position with the
Corporation or an Affiliate or any other entity which Indemnitee is or was
serving at the request of the Corporation prior to such amendment, alteration,
rescission or replacement.
(h) Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Section 14
of Article IV.
(i) Surviving of Rights. The indemnification and advancement of expenses
provided by, or granted pursuant to this Section 14 of Article IV shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(j) Indemnification of Employees and Agents of the Corporation. The
Corporation may, by action of the Board of Directors from time to time, grant
rights to indemnification and advancement of expenses to employees and agents
of the Corporation, with the same scope and effect as the provisions of this
Section 14 of Article IV with respect to the indemnification of directors and
officers of the Corporation.
(k) Definitions. For purposes of this Section 14:
(a) "Affiliate" includes any corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise directly or indirectly
owned by the Corporation.
(b) "Corporation" includes all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation
so that any person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this Article IV
with respect to the resulting or surviving corporation as he would if he
had served the resulting or surviving corporation in the same capacity.
(c) "Disinterested Director" shall mean a director of the Corporation who
is not or was not a party to the Proceeding in respect of which
indemnification is being sought by Indemnitee.
(d) "Independent Legal Counsel" shall mean a law firm or lawyer that
neither is presently nor in the past five years has been retained to
represent: (i) the Corporation or Indemnitee in any matter material to
either such party or (ii) any other party to the Proceeding giving rise to
a claim for indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any firm or person who, under
the applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Corporation or
Indemnitee in an action to determine Indemnitee's right to indemnification
under these By-Laws. All fees and expenses of the Independent Counsel
incurred in connection with acting pursuant to these By-Laws shall be borne
by the Corporation.
4
EXHIBIT I TO
AGREEMENT AND PLAN OF MERGER
CERTAIN DEFERRED INTERCOMPANY GAINS
. The deferred gain created as a result of the transfer of the assets and
business of Newport News Industrial Corporation and Newport News Industrial
Corporation of America to Tenneco InterAmerica Inc.
. Any deferred gain created as a result of the transfer of any assets to
Industrial Subsidiary as contemplated by the Corporate Transaction Steps as
defined in the Distribution Agreement.
1
EXHIBIT J TO
AGREEMENT AND PLAN OF MERGER
REPRESENTATIONS IN CONNECTION WITH IRS RULING LETTER
A. TENNECO REPRESENTATIONS
Pursuant to Section 6.6(a) of the Agreement, Tenneco will use its reasonable
best efforts to deliver, in connection with the IRS Ruling Letter, letters of
representation reasonable under the circumstances as to its present intentions
and present knowledge including the following representations:
(a) Tenneco will pay its own expenses, if any, in connection with the
Merger.
(b) There is no plan or intention by the Tenneco Stockholders who own
five percent or more of the Tenneco Stock, and to the best of the knowledge
of the management of Tenneco, there is no plan or intention on the part of
the remaining Tenneco Stockholders to sell, exchange, or otherwise dispose
of a number of shares of Acquiror Stock received in the transaction that
would reduce the Tenneco Stockholders' ownership of Acquiror Stock to a
number of shares having a value, as of the Closing Date, of less than 50%
of the value of all of the formerly outstanding Tenneco Stock as of the
Closing Date. For purposes of this representation, shares of Tenneco Stock
surrendered by dissenters or exchanged for cash in lieu of fractional
shares of Acquiror Stock will be treated as outstanding Tenneco Stock on
the Closing Date. Moreover, shares of Tenneco Stock and shares of Acquiror
Stock held by Tenneco Stockholders and otherwise sold, redeemed or disposed
of prior or subsequent to the Closing Date will be considered in making
this representation.
(c) The fair market value of the Acquiror Stock received by each of the
Tenneco Stockholders will be approximately equal to the fair market value
of the Tenneco Stock surrendered in the Merger.
(d) Tenneco has no plan or intention to issue additional shares of
capital stock that would result in Acquiror losing control of Tenneco
within the meaning of Section 368(c)(1) of the Code.
(e) At the time of the Merger, Tenneco will not have outstanding any
warrants, options, convertible securities, or any other type of right
pursuant to which any Person could acquire stock in Tenneco that, if
exercised or converted, would affect Acquiror's acquisition or retention of
control of Tenneco, as defined in Section 368(c)(1) of the Code.
(f) Tenneco is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(g) Tenneco will pay to its stockholders who are entitled to demand, and
who properly demand and perfect, appraisal rights under the DGCL the fair
value of their Tenneco Stock as determined by the Delaware courts out of
its own funds. No funds will be supplied for that purpose, directly or
indirectly, by Acquiror, nor will Acquiror directly or indirectly reimburse
Tenneco for any payments to dissenters.
(h) On the date of the Merger, the fair market value of the assets of
Tenneco will exceed the sum of its liabilities plus the liabilities, if
any, to which Tenneco's assets are subject.
(i) The payment of cash in lieu of fractional shares of Acquiror Stocks
is solely for the purpose of avoiding the expense and inconvenience to
Acquiror of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid
in the transaction to the Tenneco stockholders instead of issuing
fractional shares of Acquiror Stock will not exceed one percent of the
total consideration that will be issued in the transaction to the Tenneco
stockholders in exchange for their shares of Tenneco Stock. The total share
interests of each stockholder will be aggregated, and no stockholder will
receive cash in an amount greater to or greater than the value of one full
share of Acquiror Stock.
1
B. ACQUIROR AND SUBSIDIARY REPRESENTATIONS
Pursuant to Section 6.6(b) of the Agreement, each of Acquiror and Subsidiary
will use its reasonable best efforts to deliver, in connection with the IRS
Ruling Letter, letters of representation reasonable under the circumstances as
to its present intentions and present knowledge including the following
representations:
(a) Acquiror has no present plan or intention to liquidate Tenneco, to
merge Tenneco into another corporation, to cause Tenneco to sell or
otherwise dispose of its assets (other than certain assets unrelated to
Tenneco's interstate gas pipeline and natural gas marketing businesses), or
to sell or otherwise dispose of any Tenneco Stock acquired in the Merger,
except for transfers described in Section 368(a)(2)(C) of the Code.
(b) Acquiror has no plan or intention to reacquire any shares of Acquiror
Stock issued to Tenneco stockholders in the Merger.
(c) Acquiror will pay its expenses, if any, incurred in connection with
the Merger.
(d) Acquiror will acquire the Tenneco Stock in exchange for voting
capital stock of Acquiror pursuant to Section 2.5 of the Merger Agreement.
For purposes of this representation, Tenneco Stock redeemed for cash or
other property furnished by Acquiror will be considered as acquired by
Acquiror. Further, no liabilities of Tenneco or the Tenneco stockholders
will be assumed by Acquiror, nor will any of the Tenneco Stock be subject
to any liabilities.
(e) Acquiror does not presently own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any capital stock
of Tenneco.
(f) Immediately following the Merger, Acquiror will continue Tenneco's
Energy Business or use a significant portion of the assets of Tenneco's
Energy Business in a business.
(g) Acquiror is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(h) Immediately after the Merger, Acquiror will be in control of Tenneco
within the meaning of Section 368(c) of the Code.
2
EXHIBIT K TO
AGREEMENT AND PLAN OF MERGER
BENEFITS FOR EMPLOYEES OF THE ENERGY BUSINESS
After the Effective Time,
(i) Acquiror shall cause Tenneco to perform its obligations under the
Benefits Agreement.
(ii) Acquiror shall provide, or shall cause its subsidiaries (including
Tenneco) to provide, the severance benefits described on Annex I hereto to
employees of the Energy Business whose employment with Tenneco and its
Affiliates (including Acquiror and its Affiliates) is terminated within one
year after the Effective Time for any reason other than (A) death, (B)
disability, (C) voluntary termination by the employee, other than with
respect to EICP Employees upon a substantial reduction in compensation or
substantial diminishment of job responsibilities or (D) for cause. A
termination of employment for cause with respect to EICP Employees shall
not include a termination of employment due to a refusal to accept a
relocation of such employment to a location that is more than 50 miles from
the location of such employment immediately prior to the Effective Time;
(iii) Acquiror shall cause to be provided to (A) former employees of
Tenneco currently eligible for retiree medical and life benefits, (B)
current employees of Tenneco who (i) would be eligible to receive such
benefits if they retired as of the Effective Time and (ii) retire within
six months following the Effective Time (or such longer period designated
by Acquiror) and (C) the dependents of the current and former employees
described in clause (A) and (B) the retiree medical and life benefits as in
effect immediately prior to the Effective Time for a period of at least ten
years from the Effective Time; provided, however, that nothing herein shall
be construed to prohibit changes to the retiree medical plan (to the extent
otherwise permitted under the documents governing the benefits), to
implement appropriate cost containment features and other methods of
providing comparable benefits;
(iv) Acquiror shall cause to be provided the benefits under the Tenneco
Energy Retention Programs as described on Annex II hereto;
(v) Acquiror shall timely pay or cause to be timely paid to each employee
of the Energy Business whose employment is terminated within one year after
the Effective Time an amount equal to his or her earned but unused 1996 and
1997 vacation pay (in accordance with Tenneco Energy's current vacation
policy).
(vi) Acquiror shall provide to each employee of the Energy Business whose
employment is involuntarily terminated within one year after the Effective
Time outplacement services as follows:
(A) for officer and director-level employees of the Energy Business,
up to 12 months of counseling services by either Right and Associates
or King Xxxxxxx Xxxxxxxxx; and
(B) for other employees of the Energy Business, up to three months of
counseling services by Xxx Xxxxx Xxxxxxxx.
(vii) Employees of the Energy Business will receive credit for Past
Service (as hereinafter defined) in determining vacation entitlement under
the applicable vacation policy of Acquiror and its subsidiaries. "Past
Service" means (A) service as an employee of Tenneco or any of its
Affiliates and (ii) service as an employee of any other entity, but only to
the extent that such service is recognized under the applicable plan of
Acquiror and is continuous through the Closing Date.
(viii) For a period extending to December 31, 1997, employees of the
Energy Business shall receive benefits which in the aggregate are
substantially equivalent to the benefits received by similarly situated
employees of Acquiror (other than pursuant to the Acquiror's employee and
executive severance plans).
(ix) Acquiror shall give credit for Past Service for purposes of (i)
determining eligibility for initial participation in the plans or
arrangements maintained by Acquiror and its Affiliates, (ii) determining
the
1
duration and amount, if any, of short-term disability benefits due and
(iii) vesting (including, without limitation, eligibility for early
retirement) under such plans.
(x) No preexisting condition, exclusion or limitation shall be applicable
with respect to the participation of an employee of the Energy Business in
any medical benefit plan of Acquiror or any of its Affiliates. Welfare
plans will credit amounts already expended in the year in which the Merger
occurs towards deductibles, out-of-pocket limits and similar provisions for
such year.
(xi) Acquiror shall satisfy, or shall cause the Surviving Corporation or
one of its subsidiaries to satisfy, the obligations owed by Tenneco or its
subsidiaries to (i) Xxxxxx Xxxxx, former Chairman of the Board of Directors
of Tenneco, in accordance with past practices, and (ii) X. X. Xxxxxxxx,
former Chairman of the Board of Directors of Tenneco, set forth in the
Letter Agreement dated December 13, 1991 from Xxxxxx X. Xxxxx to X. X.
Xxxxxxxx.
(xii) Acquiror shall satisfy, or shall cause the Surviving Corporation or
one of its subsidiaries to satisfy, the obligations owed by Tenneco or its
subsidiaries to Xxxxxx Xxxxx, Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx, set forth
in the following documents:
1. Letter dated November 1, 1995, from Xxxxx X. Xxxxxxx to Xxxxxx X.
Xxxxx, Xx.
2. Letter dated May 12, 1994, from Xxxx X. Xxxx to Xxxxx Xxxxxxxx;
Memorandum dated December 13, 1994, from Xxxxx Xxxxxxx to Xxxxx
Xxxxxxxx.
3. Letter dated April 15, 1996, from Xxxxxx X. Xxxxx, Xx. to Xxxxxx
X. Xxxxxxxx.
2
ANNEX I
TO EXHIBIT K TO
AGREEMENT AND PLAN OF MERGER
SEVERANCE BENEFITS
EICP Employees
In the event of a sale, approximately 50 high-level employees are covered by
Tenneco Energy's current Executive Incentive Compensation Program (EICP). The
non-ERISA severance program for EICP employees is based on position. Under
this current program, in the event of an acquisition of Tenneco Energy,
Tenneco shall pay to eligible employees severance benefits generally ranging
from 12 months of base pay to 24 months of base pay on the following formula:
MONTHS
LEVEL OF PAY
----- ------
1 12
2 18
3 and above 24
Employees otherwise eligible for severance benefits pursuant to this program
and pursuant to any employment agreement shall receive the greater of the
above severance benefits or the benefits provided under the employment
agreement.
In addition, if an eligible employee is enrolled in medical or dental plans
when separated, Tenneco shall provide health care coverage on an optional
basis with the costs shared by the employee being the same as for similarly
situated active employees for a period equal to the months of pay received as
severance, up to 12 months. At the end of such period, the employee shall be
entitled to COBRA coverage and the applicable COBRA coverage period shall not
be reduced by the period of the optional continued coverage.
Acquiror shall maintain the current severance benefits for at least one year
from the Effective Time.
3
ANNEX I, PAGE 2
TO EXHIBIT K TO
AGREEMENT AND PLAN OF MERGER
SEVERANCE BENEFITS
Non-EICP Employees
In the event of a sale, approximately 3200 employees are covered by Tenneco
Energy's current non-ERISA severance program, based on three factors: 1) years
of service; 2) age; and 3) position. Under this program, in the event of an
acquisition of Tenneco Energy, Tenneco shall pay to eligible employees
severance benefits ranging from 6 weeks to 52 weeks of base pay based on the
following formula:
(A) 2 weeks base pay per year or partial year of service, plus
(B) a number of weeks of base pay according to employee age at
termination
40 to 44(4)
45 to 49(6)
50 to 54(8)
55 to 59(10)
60+(12), plus
(C) a number of weeks base pay according to position level
Grade 09(1)15(7)
10(2)16(8)
11(3)17(9)
12(4)18(10)
13(5)
14(6)
Employees otherwise eligible for severance benefits pursuant to this program
and pursuant to any employment agreement shall receive the greater of the
above severance benefits or the benefits provided under the employment
agreement.
In addition, if an eligible employee is enrolled in medical or dental plans
when separated, Tenneco shall provide health care coverage on an optional
basis with the costs shared by the employee being the same as for similarly
situated active employees for a period equal to the months of pay received as
severance, up to 12 months. At the end of such period, the employee shall be
entitled to COBRA coverage and the applicable COBRA coverage period shall not
be reduced by the period of the optional continued coverage.
Acquiror shall maintain the current severance benefits for at least one year
from the Effective Time.
4
ANNEX II
TO EXHIBIT K TO
AGREEMENT AND PLAN OF MERGER
TENNECO ENERGY RETENTION PROGRAMS
To insure that certain Tenneco Energy employees continue to devote
appropriate time and effort toward managing the enterprise, Tenneco has
implemented an Executive Retention Program. Under the Program, cash awards are
provided to "Key Employees" who are instrumental in the operation and who
continue with Tenneco during this critical transition.
The retention payments are to be paid to designated Key Employees only if
all of the following conditions are met:
. The acquisition by a third party of Tenneco Energy by a merger or
otherwise (collectively a "Sale") occur no later than March 31, 1997.
. The Key Employee remains a full-time, active employee of Tenneco Energy
on the date of the Sale (unless earlier terminated at the request of
Acquiror).
. The Key Employee cooperates fully with Tenneco in the efforts to sell
Tenneco and complies with all terms and conditions of employment required
of all full-time employees.
The retention payments will be payable with 30 days following the completion
of the sale and upon execution of releases.
The cost of the Executive Retention Program is approximately $9 million and
will be the obligation of Tenneco (to be paid after it has been acquired by
Acquiror).
Additionally, a separate retention program will be implemented for
approximately 200 lower management and staff level employees. Conditions for
the program are similar to those set forth above, and the resulting costs are
approximately $4 million (or such higher amount if instructed by Acquiror).
Consistent with the Executive Retention Program, all costs would be the
obligation of Tenneco (to the paid after it has been acquired by Acquiror).
5
EXHIBIT L TO
AGREEMENT AND PLAN OF MERGER
GUARANTY
This Guaranty (the "GUARANTY") dated as of , , by the
undersigned, El Paso Natural Gas Company, a Delaware corporation
("GUARANTOR"), in favor of , a Delaware corporation
("INDUSTRIAL COMPANY"), has reference to the following facts and
circumstances:
A. Guarantor owns 100% of the issued and outstanding capital stock of
, a Delaware corporation ("ACQUIROR SUBSIDIARY");
B. Guarantor, Acquiror Subsidiary and Tenneco Inc., a Delaware
corporation ("TENNECO") have entered into that certain Agreement and Plan
of Merger, dated as of , 1996 ("the MERGER AGREEMENT"),
pursuant to which, subject to the terms and conditions contained therein,
Acquiror Subsidiary will be merged with and into Tenneco, with Tenneco
continuing as the surviving corporation of the merger (the "SURVIVING
CORPORATION") and a wholly-owned subsidiary of Guarantor;
C. In connection with the transactions contemplated by the Merger
Agreement, Tenneco, Industrial Company and , a Delaware
corporation (SHIPBUILDING COMPANY"), have entered into that certain
Distribution Agreement, dated as of , 1996 (together with all
exhibits, schedules and attachments thereto, the "DISTRIBUTION AGREEMENT"),
pursuant to which, subject to the terms and conditions contained therein,
(i) Tenneco and its subsidiaries will restructure, divide and separate
their existing businesses and assets so that (a) the Industrial Assets and
Industrial Business (as such terms are defined in the Distribution
Agreement) shall be owned, directly and indirectly, by the Industrial
Company, and (b) the Shipbuilding Assets and Shipbuilding Business (as such
terms are defined in the Distribution Agreement) shall be owned, directly
and indirectly by the Shipbuilding Company, and (ii) Tenneco shall
distribute all of the outstanding capital stock of Industrial Company and
Shipbuilding Company as a dividend to the holders of shares of the common
stock, par value $5.00 per share, of Tenneco;
D. Guarantor deems it to be in its best interests to enter into this
Guaranty in order to guarantee the payment and performance of the
obligations of Tenneco, Surviving Corporation and the Energy Subsidiaries
arising under the Transaction Documents (as hereinafter defined); and
E. Tenneco, as a condition precedent to consummation of the transactions
contemplated by the Merger Agreement, requires that Guarantor execute and
deliver this Guaranty.
NOW, THEREFORE, in consideration of the foregoing, Guarantor agrees as
follows:
1. DEFINITIONS.
(a) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement.
(b) "ENERGY SUBSIDIARIES" has the meaning set forth in the Merger Agreement.
(c) "GUARANTOR'S LIABILITIES" means all of Guarantor's obligations and
liabilities to Industrial Company under this Guaranty
(d) "PERSON" has the meaning set forth in the Merger Agreement.
(e) "TENNECO LIABILITIES" has the meaning set forth in Section 2 hereof.
(f) "TRANSACTION DOCUMENTS" means the Merger Agreement and the Distribution
Agreement (including, without limitation, the Tax Sharing Agreement included
as an exhibit to the Distribution Agreement).
1
2. GUARANTY.
In consideration of the foregoing, from and after the Effective Time
Guarantor unconditionally, absolutely, continuingly and irrevocably
guarantees, as a primary obligor and not a surety, to Industrial Company the
timely payment and performance by Tenneco, Surviving Corporation and/or the
Energy Subsidiaries of all of their respective covenants, agreements,
obligations and liabilities arising under or pursuant to the Transaction
Documents (or any of them) (collectively, the "TENNECO LIABILITIES").
As a condition to payment or performance of Guarantor's Liabilities,
Industrial Company is not required to prosecute collection or seek to enforce
or resort to any remedies against Tenneco, Surviving Corporation or any of the
Energy Subsidiaries or any other Person liable to Industrial Company on
account of Tenneco Liabilities or any guaranty thereof. Guarantor's
Liabilities shall in no way be impaired, affected, reduced or released by
reason of (i) Industrial Company's failure or delay to do or take any of the
actions or things described in this Guaranty, or (ii) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets of Tenneco, Surviving Corporation or any of the
Energy Subsidiaries or the marshaling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or
other similar proceedings, or any other inability to pay or perform, affecting
Tenneco, Surviving Corporation or any of the Energy Subsidiaries, or any of
their respective assets, or any allegation concerning, or contest of the
legality or validity of, the indemnification obligations under any of the
Transaction Documents or this Guaranty in any such proceeding.
3. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants to Industrial Company that:
(a) Guarantor has the legal power, right and authority to execute, deliver
and perform this Guaranty, and to consummate the transactions contemplated
hereby. All requisite corporate action has been taken by the Guarantor in
connection with the execution and delivery of this Guaranty, and the
consummation of the transactions contemplated hereby.
(b) This Guaranty has been duly executed and delivered by or on behalf of
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms.
(c) None of the execution, delivery and performance by Guarantor of this
Guaranty shall, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any provision of applicable law, or contained in any
agreement, instrument or document to which Guarantor is now or may hereafter
become a party or by which Guarantor is or may become bound.
(d) Guarantor is now solvent and generally able to pay its debts as such
debts become due.
4. WAIVERS.
(a) Guarantor waives any and all right to assert against Industrial Company
any claims or defenses with respect to the legality, validity and/or
enforceability of this Guaranty based upon any failure of Industrial Company
to furnish to Guarantor any information or facts relating to the ability of
any of Tenneco, Surviving Corporation or the Energy Subsidiaries to pay and
perform the applicable Tenneco Liabilities.
(b) Guarantor waives all defenses, counterclaims and offsets of any kind or
nature, in connection with the legality, validity and/or enforceability of
this Guaranty, including, without limitation, any such defenses, counterclaims
or offsets arising directly or indirectly from any agreement, instrument or
document executed and delivered, by Tenneco, Surviving Corporation or any of
the Energy Subsidiaries, or acquired by Industrial Company from Tenneco,
Surviving Corporation or any of the Energy Subsidiaries.
2
(c) Guarantor waives any and all right to assert against Industrial Company
any claim or defense based upon any election of remedies by Industrial Company
which in any manner impairs, affects, reduces, releases or extinguishes
Guarantor's right to proceed against Tenneco, Surviving Corporation or any of
the Energy Subsidiaries for reimbursement, or any other rights of Guarantor
against Tenneco, Surviving Corporation or any of the Energy Subsidiaries, or
against any other Person.
(d) Guarantor hereby waives notice of the following events or occurrences
and agrees that Industrial Company may do any or all of the following in such
manner, upon such terms and at such times as Industrial Company in its sole
discretion deems advisable without in any way impairing, affecting, reducing
or releasing Guarantor from Guarantor's Liabilities: (i) Industrial Company's
acceptance of this Guaranty; (ii) Industrial Company's heretofore, now or at
any time or times hereafter obtaining, releasing, waiving or modifying of any
other Person's guaranty of Tenneco Liabilities given to Industrial Company;
(iii) the amendment or modification of any of the Transaction Documents, or
the waiver or release of any provisions of the Transaction Documents by
Industrial Company; (iv) presentment, demand, notices of default, nonpayment,
partial payment and protest, and all other notices or formalities to which
Guarantor may be entitled; (v) Industrial Company's heretofore, now or at any
time or times hereafter granting to Tenneco, Surviving Corporation or any of
the Energy Subsidiaries (or any other Person liable to Industrial Company on
account of Tenneco Liabilities) of any indulgences or extensions of time of
payment of Tenneco Liabilities; and (vi) Industrial Company's heretofore, now
or at any time or times hereafter accepting from Tenneco, Surviving
Corporation or any of the Energy Subsidiaries or any other Person any partial
payment or payments on account of Tenneco Liabilities or Industrial Company's
settling, subordinating, compromising, discharging or releasing the same.
5. REMEDIES.
If Guarantor's Liabilities are not paid or performed forthwith by Guarantor
to Industrial Company at Industrial Company's principal place of business,
Industrial Company may proceed to suit against Guarantor (at Industrial
Company's election, one or more successive or concurrent suits may be brought
hereunder by Industrial Company against Guarantor, whether suit has been
commenced against Tenneco, Surviving Corporation or any of the Energy
Subsidiaries and in any such suit Tenneco, Surviving Corporation or any of the
Energy Subsidiaries may be joined (but need not be joined) as a party with
Guarantor). In addition, Industrial Company may exercise any other right or
remedy provided by law.
6. JURISDICTION.
All questions and/or disputes concerning the legality, construction,
validity and interpretation of this Guaranty shall be governed by the internal
laws, and not the law of conflicts, of the State of Delaware. Guarantor 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.
7. MISCELLANEOUS.
If any provision of this Guaranty or the application thereof to any party or
circumstance is held invalid or unenforceable, the remainder of this Guaranty
and the application of such provision to other Persons or circumstances will
not be affected thereby, the provisions of this Guaranty being severable in
any such instance.
This Guaranty shall continue in full force and effect until all of the
Tenneco Liabilities are fully and indefeasibly paid, performed and discharged.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time payment of any of Guarantor's Liabilities is rescinded or
must otherwise be returned by Industrial Company upon the insolvency,
bankruptcy or reorganization of Guarantor, Tenneco, Surviving Corporation or
any of the Energy Subsidiaries or otherwise, all as though such payment had
not been made. This Guaranty shall be binding upon Guarantor and its
successors and assigns and shall inure to the benefit of Industrial Company,
its successors and assigns.
3
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
(until notice of a change thereof is delivered as provided in this paragraph):
Industrial Company:1275 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Corporate Secretary
Guarantor:One Xxxx Xxxxxx Center
000 Xxxxx Xxxxxxx Xxxxxx
Xx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Chairman and Chief Executive Officer
Industrial Company's failure at any time hereafter to require strict
performance by Guarantor of any provision of this Guaranty shall not waive,
effect or diminish any right of Industrial Company thereafter to demand strict
compliance and performance therewith.
This Guaranty is in addition to, and not limitation of or substitution for,
Guarantor's covenants and obligations under the Transaction Documents
(including, without limitation, Guarantor's covenants and obligations under
Section 6.18 of the Merger Agreement).
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.
EL PASO NATURAL GAS COMPANY
By:__________________________________
Title:
4
GUARANTY
This Guaranty (the "GUARANTY") dated as of , , by the
undersigned, El Paso Natural Gas Company, a Delaware corporation
("GUARANTOR"), in favor of , a Delaware corporation
("SHIPBUILDING COMPANY"), has reference to the following facts and
circumstances:
A. Guarantor owns 100% of the issued and outstanding capital stock of
, a Delaware corporation ("ACQUIROR SUBSIDIARY");
B. Guarantor, Acquiror Subsidiary and Tenneco Inc., a Delaware
corporation ("TENNECO") have entered into that certain Agreement and Plan
of Merger, dated as of , 1996 ("the MERGER AGREEMENT"),
pursuant to which, subject to the terms and conditions contained therein,
Acquiror Subsidiary will be merged with and into Tenneco, with Tenneco
continuing as the surviving corporation of the merger ("SURVIVING
CORPORATION") and a wholly-owned subsidiary of Guarantor;
C. In connection with the transactions contemplated by the Merger
Agreement, Tenneco, Shipbuilding Company and , a Delaware
corporation ("INDUSTRIAL COMPANY"), have entered into that certain
Distribution Agreement, dated as of , 1996 (together with all
exhibits, schedules and attachments thereto, the "DISTRIBUTION AGREEMENT"),
pursuant to which, subject to the terms and conditions contained therein,
(i) Tenneco and its subsidiaries will restructure, divide and separate
their existing businesses and assets so that (a) the Industrial Assets and
Industrial Business (as such terms are defined in the Distribution
Agreement) shall be owned, directly and indirectly, by the Industrial
Company, and (b) the Shipbuilding Assets and Shipbuilding Business (as such
terms are defined in the Distribution Agreement) shall be owned, directly
and indirectly by the Shipbuilding Company, and (ii) Tenneco shall
distribute all of the outstanding capital stock of Industrial Company and
Shipbuilding Company as a dividend to the holders of shares of the common
stock, par value $5.00 per share, of Tenneco;
D. Guarantor deems it to be in its best interests to enter into this
Guaranty in order to guarantee the payment and performance of the
obligations of Tenneco, Surviving Corporation and the Energy Subsidiaries
arising under the Transaction Documents (as hereinafter defined); and
E. Tenneco, as a condition precedent to consummation of the transactions
contemplated by the Merger Agreement, requires that Guarantor execute and
deliver this Guaranty.
NOW, THEREFORE, in consideration of the foregoing, Guarantor agrees as
follows:
1. DEFINITIONS.
(a) "EFFECTIVE TIME" has the meaning set forth in the Merger Agreement.
(b) "ENERGY SUBSIDIARIES" has the meaning set forth in the Merger Agreement.
(c) "GUARANTOR'S LIABILITIES" means all of Guarantor's obligations and
liabilities to Shipbuilding Company under this Guaranty
(d) "PERSON" has the meaning set forth in the Merger Agreement.
(e) "TENNECO LIABILITIES" has the meaning set forth in Section 2 hereof.
(f) "TRANSACTION DOCUMENTS" means the Merger Agreement and the Distribution
Agreement (including, without limitation, the Tax Sharing Agreement included
as an exhibit to the Distribution Agreement).
2. GUARANTY.
In consideration of the foregoing, from and after the Effective Time
Guarantor unconditionally, absolutely, continuingly and irrevocably
guarantees, as a primary obligor and not a surety, to Shipbuilding Company the
timely payment and performance by Tenneco, Surviving Corporation and/or the
Energy Subsidiaries of all of
1
their respective covenants, agreements, obligations and liabilities arising
under or pursuant to the Transaction Documents (or any of them) (collectively,
the "TENNECO LIABILITIES").
As a condition to payment or performance of Guarantor's Liabilities,
Shipbuilding Company is not required to prosecute collection or seek to
enforce or resort to any remedies against Tenneco, Surviving Corporation or
any of the Energy Subsidiaries or any other Person liable to Shipbuilding
Company on account of Tenneco Liabilities or any guaranty thereof. Guarantor's
Liabilities shall in no way be impaired, affected, reduced or released by
reason of (i) Shipbuilding Company's failure or delay to do or take any of the
actions or things described in this Guaranty, or (ii) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets of Tenneco, Surviving Corporation or any of the
Energy Subsidiaries or the marshaling of assets and liabilities, receivership,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or
other similar proceedings, or any other inability to pay or perform, affecting
Tenneco, Surviving Corporation or any of the Energy Subsidiaries, or any of
their respective assets, or any allegation concerning, or contest of the
legality or validity of, the indemnification obligations under any of the
Transaction Documents or this Guaranty in any such proceeding.
3. REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants to Shipbuilding Company that:
(a) Guarantor has the legal power, right and authority to execute, deliver
and perform this Guaranty, and to consummate the transactions contemplated
hereby. All requisite corporate action has been taken by the Guarantor in
connection with the execution and delivery of this Guaranty, and the
consummation of the transactions contemplated hereby.
(b) This Guaranty has been duly executed and delivered by or on behalf of
Guarantor and constitutes the legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms.
(c) None of the execution, delivery and performance by Guarantor of this
Guaranty shall, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any provision of applicable law, or contained in any
agreement, instrument or document to which Guarantor is now or may hereafter
become a party or by which Guarantor is or may become bound.
(d) Guarantor is now solvent and generally able to pay its debts as such
debts become due.
4. WAIVERS.
(a) Guarantor waives any and all right to assert against Shipbuilding
Company any claims or defenses with respect to the legality, validity and/or
enforceability of this Guaranty based upon any failure of Shipbuilding Company
to furnish to Guarantor any information or facts relating to the ability of
any of Tenneco, Surviving Corporation or the Energy Subsidiaries to pay and
perform the applicable Tenneco Liabilities.
(b) Guarantor waives all defenses, counterclaims and offsets of any kind or
nature, in connection with the legality, validity and/or enforceability of
this Guaranty, including, without limitation, any such defenses, counterclaims
or offsets arising directly or indirectly from any agreement, instrument or
document executed and delivered, by Tenneco, Surviving Corporation or any of
the Energy Subsidiaries, or acquired by Shipbuilding Company from Tenneco,
Surviving Corporation or any of the Energy Subsidiaries.
(c) Guarantor waives any and all right to assert against Shipbuilding
Company any claim or defense based upon any election of remedies by
Shipbuilding Company which in any manner impairs, affects, reduces, releases
or extinguishes Guarantor's right to proceed against Tenneco, Surviving
Corporation or any of the Energy Subsidiaries for reimbursement, or any other
rights of Guarantor against Tenneco, Surviving Corporation or any of the
Energy Subsidiaries, or against any other Person.
2
(d) Guarantor hereby waives notice of the following events or occurrences
and agrees that Shipbuilding Company may do any or all of the following in
such manner, upon such terms and at such times as Shipbuilding Company in its
sole discretion deems advisable without in any way impairing, affecting,
reducing or releasing Guarantor from Guarantor's Liabilities: (i) Shipbuilding
Company's acceptance of this Guaranty; (ii) Shipbuilding Company's heretofore,
now or at any time or times hereafter obtaining, releasing, waiving or
modifying of any other Person's guaranty of Tenneco Liabilities given to
Shipbuilding Company; (iii) the amendment or modification of any of the
Transaction Documents, or the waiver or release of any provisions of the
Transaction Documents by Shipbuilding Company; (iv) presentment, demand,
notices of default, nonpayment, partial payment and protest, and all other
notices or formalities to which Guarantor may be entitled; (v) Shipbuilding
Company's heretofore, now or at any time or times hereafter granting to
Tenneco, Surviving Corporation or any of the Energy Subsidiaries (or any other
Person liable to Shipbuilding Company on account of Tenneco Liabilities) of
any indulgences or extensions of time of payment of Tenneco Liabilities; and
(vi) Shipbuilding Company's heretofore, now or at any time or times hereafter
accepting from Tenneco, Surviving Corporation or any of the Energy
Subsidiaries or any other Person any partial payment or payments on account of
Tenneco Liabilities or Shipbuilding Company's settling, subordinating,
compromising, discharging or releasing the same.
5. REMEDIES.
If Guarantor's Liabilities are not paid or performed forthwith by Guarantor
to Shipbuilding Company at Shipbuilding Company's principal place of business,
Shipbuilding Company may proceed to suit against Guarantor (at Shipbuilding
Company's election, one or more successive or concurrent suits may be brought
hereunder by Shipbuilding Company against Guarantor, whether suit has been
commenced against Tenneco, Surviving Corporation or any of the Energy
Subsidiaries and in any such suit Tenneco, Surviving Corporation or any of the
Energy Subsidiaries may be joined (but need not be joined) as a party with
Guarantor). In addition, Shipbuilding Company may exercise any other right or
remedy provided by law.
6. JURISDICTION.
All questions and/or disputes concerning the legality, construction,
validity and interpretation of this Guaranty shall be governed by the internal
laws, and not the law of conflicts, of the State of Delaware. Guarantor 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.
7. MISCELLANEOUS.
If any provision of this Guaranty or the application thereof to any party or
circumstance is held invalid or unenforceable, the remainder of this Guaranty
and the application of such provision to other Persons or circumstances will
not be affected thereby, the provisions of this Guaranty being severable in
any such instance.
This Guaranty shall continue in full force and effect until all of the
Tenneco Liabilities are fully and indefeasibly paid, performed and discharged.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time payment of any of Guarantor's Liabilities is rescinded or
must otherwise be returned by Shipbuilding Company upon the insolvency,
bankruptcy or reorganization of Guarantor, Tenneco, Surviving Corporation or
any of the Energy Subsidiaries or otherwise, all as though such payment had
not been made. This Guaranty shall be binding upon Guarantor and its
successors and assigns and shall inure to the benefit of Shipbuilding Company,
its successors and assigns.
3
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
(until notice of a change thereof is delivered as provided in this paragraph):
Shipbuilding Company:4101 Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Attn: Corporate Secretary
Guarantor:One Xxxx Xxxxxx Center
000 Xxxxx Xxxxxxx Xxxxxx
Xx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Chairman and Chief Executive Officer
Shipbuilding Company's failure at any time hereafter to require strict
performance by Guarantor of any provision of this Guaranty shall not waive,
effect or diminish any right of Shipbuilding Company thereafter to demand
strict compliance and performance therewith.
This Guaranty is in addition to, and not limitation of or substitution for,
Guarantor's covenants and obligations under the Transaction Documents
(including, without limitation, Guarantor's covenants and obligations under
Section 6.18 of the Merger Agreement).
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.
EL PASO NATURAL GAS COMPANY
By:__________________________________
Title:
4
EXHIBIT M TO
AGREEMENT AND PLAN OF MERGER
FORM OF AFFILIATE LETTER
Acquiror
Gentlemen:
I have been advised that as of the date of this letter I may be deemed to be
an "affiliate" of Tenneco Inc., a Delaware corporation (the "Company"), as the
term "affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145
of the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"). Pursuant to the terms of the Agreement and Plan of
Merger dated , 1996 (the "Agreement"), among Acquiror, a Delaware
corporation ("Acquiror"), , a Delaware corporation (the
"Subsidiary"), and the Company, Subsidiary will be merged with and into the
Company (the "Merger").
As a result of the Merger, shares of Tenneco capital stock owned by me will
be converted into shares of capital stock of Acquiror ("Acquiror Stock").
I represent, warrant and covenant to Acquiror that in the event I receive
any Acquiror Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the
Acquiror Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed the
requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Acquiror Stock to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Acquiror Stock to me pursuant
to the Merger has been or will be registered with the Commission under the
Act on a Form S-4 Registration Statement. However, I have also been advised
that, because at the time the Merger is submitted for a vote of the
stockholders of the Company, (a) I may be deemed to be an affiliate of the
Company and (b) the distribution by me of the Acquiror Stock has not been
registered under the Act, I may not sell, transfer or otherwise dispose of
Acquiror Stock issued to me in the Merger unless (i) such sale, transfer or
other disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, (ii)
such sale, transfer or other disposition has been registered under the Act
or (iii) in the opinion of counsel reasonably acceptable to Acquiror, such
sale, transfer or other disposition is otherwise exempt from registration
under the Act.
D. I understand that Acquiror is not under an obligation to register the
sale, transfer or other disposition of the Acquiror Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available solely as a
result of the Merger.
E. I also understand that there will be placed on the certificates for
the Acquiror Stock issued to me, or any substitutions therefor, a legend
stating in substance
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
, 1996, BETWEEN THE REGISTERED HOLDER HEREOF AND ACQUIROR, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
ACQUIROR."
1
F. I also understand that unless a sale or transfer is made in conformity
with the provisions of Rule 145 or pursuant to a registration statement,
Acquiror reserves the right to put the following legend on the certificates
issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED
BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E and F
above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to Acquiror a copy of a letter
from the staff of the Commission, or an opinion of counsel reasonably
satisfactory to Acquiror in form and substance reasonably satisfactory to
Acquiror, to the effect that such legend is not required for purposes of the
Act.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of the Company as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
-------------------------------------
Name:
Accepted this day of
, 1996, by
ACQUIROR
By_____________________________
Name:
Title:
2
EXHIBIT N TO
AGREEMENT AND PLAN OF MERGER
[Jenner & Block Letterhead]
FORM OF OPINION
, 1996
Tenneco Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Re:Opinion With Respect to the Acquisition of Tenneco Inc. by
El Paso Natural Gas Company
Gentlemen:
We have acted as counsel to Tenneco Inc., a Delaware corporation
("TENNECO"), in connection with the proposed merger of El Paso Merger Company
("SUBSIDIARY"), a newly created, wholly-owned subsidiary of El Paso Natural
Gas Company ("ACQUIROR"), with and into Tenneco (the "MERGER"), pursuant to
the Agreement and Plan of Merger dated as of , 1996, by and among
Acquiror, Subsidiary and Tenneco (the "MERGER AGREEMENT"). Subsidiary,
Acquiror and Tenneco are sometimes referred to herein collectively as the
"PARTIES." Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Merger Agreement.
You have requested our opinion as to certain of the federal income tax
consequences of the Merger.
I. STATEMENT OF FACTS
For purposes of the opinions set forth herein we have relied on the
following facts set forth in the Merger Agreement or otherwise represented to
us by one or more of the Parties, the truth and accuracy of which have not
been independently verified by us:
1. Tenneco is the common parent corporation of an affiliated group of
corporations filing a consolidated federal income tax return on a calendar-
year basis. Its address is 0000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000, and
its employer identification number is 00-0000000.
2. As of March 31, 1996, Tenneco had approximately 191,354,932 shares of
Common Stock, par value $5.00 per share, outstanding (the "Tenneco Common
Stock"). The shares are listed on the New York, Midwest, Pacific, Toronto,
London, Paris, Frankfurt, Dusseldorf, Basel, Geneva, and Zurich stock
exchanges. In addition, Tenneco had 391,519 shares of $7.40 Cumulative
Preferred Stock (the "$7.40 PREFERRED STOCK") and 803,723 shares of $4.50
Cumulative Preferred Stock (the "$4.50 PREFERRED STOCK") outstanding. The
Tenneco Common Stock, $7.40 Preferred Stock and $4.50 Preferred Stock are
sometimes referred to collectively herein as the "TENNECO STOCK." As of March
31, 1996, there were Tenneco options outstanding to acquire an aggregate of
5,207,655 shares of Tenneco Common Stock. [Update as of the Closing.]
3. Tenneco is a diversified industrial company conducting all of its
operations through its subsidiaries. Tenneco's major business interests are in
natural gas transportation and marketing ("ENERGY BUSINESS"); manufacture and
sale of automotive exhaust system parts, ride control products and brake
products ("AUTOMOTIVE BUSINESS"); design, construction and repair of ships and
submarines ("SHIPBUILDING BUSINESS"); and manufacture and sale of packaging
materials, cartons, containers and speciality packaging products ("PACKAGING
BUSINESS").
1
4. Acquiror is a Delaware corporation and the common parent of an affiliated
group of corporations filing a federal consolidated income tax return. As of
the date of the Closing, the authorized capital stock of Acquiror consisted of
[100,000,000] shares of voting common stock ("ACQUIROR COMMON STOCK") and
[ ] shares of par value Adjustable Rate Cumulative
Preferred Stock ("ACQUIROR PREFERRED STOCK"). [Update as of Closing.] The
adjustable Rate Cumulative Preferred Stock is a series of voting preferred
stock of the Acquiror with the terms set forth in Exhibit B to the Merger
Agreement. Acquiror Common Stock and Acquiror Preferred Stock are sometimes
collectively referred to herein as "ACQUIROR STOCK."
5. Subsidiary, a corporation, was formed on ,
1996, solely as an acquisition vehicle for purposes of accomplishing the
Merger. Subsidiary is a newly created, wholly-owned first tier subsidiary of
Acquiror and it has not material assets or liabilities.
6. The Parties have entered into the Merger Agreement, which provides for
the merger of Subsidiary with and into Tenneco, with Tenneco surviving as a
subsidiary of Acquiror. The Merger is related to other transactions preceding
the Merger that will be carried out according to the Distribution Agreement
dated as of , 1996 ("DISTRIBUTION AGREEMENT") among Tenneco,
[Newco], a Delaware corporation ("NEWCO"), and Tenneco InterAmerica Inc., a
Delaware corporation ("TIA"). The Distribution Agreement and the transactions
contemplated therein are integral parts of a plan for reorganizing Tenneco and
its subsidiaries.
7. Pursuant to the Distribution Agreement, Tenneco and its subsidiaries
will, through various intercompany transfers and distributions, divide and
separate their existing businesses such that Newco will own, directly or
indirectly, all of the assets, liabilities and operations of the Automotive
and Packaging Businesses of Tenneco, and TIA will own, directly or indirectly,
all of the assets, liabilities and operations of the Shipbuilding Business of
Tenneco (the "RESTRUCTURING"). Thereafter, Tenneco will distribute all of the
capital stock of Newco and TIA on a pro rata basis as a dividend to the
holders of Tenneco Common Stock (the "SPIN-OFFS"). The Parties intend (i) for
the Spin-offs to qualify for tax-free treatment pursuant to Section 355 of the
Internal Revenue Code of 1986, as amended (the "CODE"), and (ii) for the
Merger to qualify as a tax-free reorganization pursuant to Code Section
368(a)(1)(B). The Restructuring and the Spin-offs collectively are described
in greater detail in section C of the ruling request filed by Tenneco, dated
as of , 1996 (the "RULING REQUEST"), and the foregoing summary is
qualified in its entirety by the description contained in the Ruling Request,
as amended prior to the date hereof, and the terms of the Distribution
Agreement.
8. Following the Spin-offs, but prior to the Merger, Tenneco shall either
issue shares of $ Cumulative Preferred Stock of Tenneco ("NEW
PREFERRED STOCK") in a public or private offering for cash proceeds or
distribute the New Preferred Stock on a pro rata basis to holders of Tenneco
Common Stock. The New Preferred Stock will have an aggregate value
approximately equal to 25% of the Aggregate value of all of the classes of
capital stock of Tenneco immediately following the Merger. The holders of the
New Preferred Stock will have the right to vote as a separate class to elect a
number of directors of the Board of Directors of Tenneco, rounded up to the
nearest whole number, representing one-sixth of the members of the Board of
Directors of Tenneco. The directors elected by the holders of the New
Preferred Stock will have the same rights to vote on matters as all other
directors of Tenneco. The terms of the New Preferred Stock are set forth in
Exhibit D to the Merger Agreement.
9. As promptly as practicable after the Spin-offs and the satisfaction of
the conditions contained in the Merger Agreement, the Parties shall consummate
the Merger. Pursuant to the Merger Agreement, each share of Tenneco Common
Stock owned, directly or indirectly, by Tenneco shall be canceled and retired.
In addition, each share of Tenneco Common Stock issued and outstanding shall
be converted into the right to receive shares of Acquiror Common
Stock (or, in the event a shareholder vote is required for the issuance of
such Acquiror Common Stock, and a majority of the Acquiror Common Stock does
not approve the issuance of such Acquiror Common Stock (a "NO VOTE"), a number
of shares of Acquiror Preferred Stock or Acquiror Common Stock as determined
pursuant to Section 2.5 of the Merger Agreement). Each share of $7.40
Preferred Stock issued and outstanding shall be converted into the right to
receive shares of Acquiror Common Stock in accordance with the terms of
the Merger Agreement (or, in the event of a No Vote, a number of shares of
2
Acquiror Preferred Stock or Acquiror Common Stock as determined pursuant to
Section 2.5 of the Merger Agreement), and each share of $4.50 Preferred Stock
issued and outstanding shall be converted into the right to receive
shares of Acquiror Common Stock in accordance with the terms of the Merger
Agreement (or, in the event of a No Vote, number of shares of Acquiror
Preferred Stock or Acquiror Common Stock as determined pursuant to Section 2.5
of the Merger Agreement). Each share of Subsidiary stock owned and outstanding
shall be converted into and become one fully paid and nonassessable share of
Tenneco Common Stock. As a result of these exchanges, Acquiror will acquire
all of Tenneco's issued and outstanding stock, except for the New Preferred
Stock which will not be affected by the Merger and shall remain outstanding
immediately after the Merger.
10. Section 1.6(c) of the Merger Agreement provides that, notwithstanding
anything to the contrary in paragraph I.9 above, no scrip or fractional shares
of Acquiror Stock shall be issued in the Merger. Instead, the Exchange Agent
shall sell on the NYSE, for the account of the persons otherwise entitled to
such fractional share interests, shares of Acquiror Common Stock, as the case
may be, equivalent to the aggregate of such fractional share interests. The
Exchange Agent will pay the net proceeds of such sale, without interest, to
the persons otherwise entitled to fractional share interests who surrender
their shares of Tenneco Common Stock, $7.40 Preferred Stock and $4.50
Preferred Stock.
11. Section 2.6(h) of the Merger Agreement provides that, notwithstanding
anything to the contrary in paragraph I.0 above, holders of Tenneco's $4.50
Preferred Stock who have properly demanded appraisal of such shares (the
"DISSENTERS") in accordance with Section 262 of the Delaware General
Corporation Law ("DGCL") shall not receive shares of Acquiror Preferred Stock
in exchange for such stock. Instead, the Dissenters will receive such
consideration as may be determined to be due the Dissenters pursuant to
Section 262 of the DGCL. All such consideration paid to the Dissenters shall
be paid by Tenneco from the $25,000,000 of cash required to be on hand prior
to the Effective Time pursuant to the Allocation Agreement, which cash shall
have been deposited by Tenneco into a separate escrow account. Acquiror shall
not have directly contributed any cash to such escrow account nor shall
Acquiror have guaranteed or otherwise supported any new borrowing the proceeds
of which are contributed to such escrow account.
12. Under the Merger Agreement, Tenneco will use its commercially reasonable
efforts to have in place a credit facility for itself to fund such tenders,
redemptions, prepayments, deficiencies and maturities as will be effected
pursuant to the Debt Realignment, as described in Exhibit C to the Merger
Agreement. Acquiror is required to cooperate with Tenneco in arranging such
credit facility and is required to provide such credit support and
undertakings as shall be reasonably requested of it by the providers of the
credit facility. As a result, the Acquiror may acquire directly, or become
indirectly liable for the payment of, debts of Tenneco and its consolidated
Energy Subsidiaries ("CONSOLIDATED DEBT") other than any new debt incurred to
fund payments into the escrow account to pay Dissenters as described in I.11
above. A substantial portion of the Consolidated Debt is held by persons other
than Tenneco's shareholders.
13. Section 10.1 of the Merger Agreement provides that subsequent to the
Merger, Acquiror will cause the Surviving Corporation promptly to pay any and
all legal and other 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 that are incurred by
Tenneco in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement; provided such expenses are incurred
prior to the Effective Time, and have not been paid as of such time. In
addition, Section 10.1(c) of the Merger Agreement provides that Tenneco will
establish a separate escrow account, consisting of an adequate amount of cash
from the $25,000,000 of cash required to be on hand pursuant to the Allocation
Agreement, to fund any New York State Tax on Gains Derived from Certain Real
Property Transfers, the New York State Real Estate Transfer Tax and New York
City Real Property Transfer Tax (these taxes are referred to herein
collectively as the "TRANSFER TAXES") and any similar taxes in any other
jurisdiction that become payable in connection with the Merger.
14. Tenneco and Acquiror believe that the Merger will enhance prospects for
the future growth of the Energy Business due to the affiliation with another
corporation possessing similar and complementary lines of business.
3
II. ADDITIONAL ASSUMPTIONS AND REPRESENTATIONS
The following representations have been made by each of the Parties (to the
extent such representation relates to such Party) in connection with the
Merger, and have been relied on by us in rendering the opinions set forth
herein:
1. Except as otherwise provided in the Merger Agreement, Tenneco, Acquiror,
Subsidiary and the Tenneco stockholders will each pay their own expenses, if
any, in connection with the Merger.
2. To the best of the knowledge of the management of Tenneco, there is no
plan or intention on the part of the Tenneco stockholders to sell, exchange,
or otherwise dispose of a number of shares of Acquiror Stock received in the
Merger that would reduce the Tenneco stockholders' ownership of Acquiror Stock
to a number of shares having a value, as of the Closing Date, of less than 50%
of the value of all of the formerly outstanding Tenneco Stock as of the
Closing Date. For purposes of this representation, shares of Tenneco Stock
surrendered by Dissenters or exchanged for cash in lieu of fractional shares
of Acquiror Stock will be treated as outstanding Tenneco Stock on the Closing
Date. Moreover, shares of Tenneco Stock and shares of Acquiror Stock held by
Tenneco stockholders and otherwise sold, redeemed or disposed of prior or
subsequent to the Closing Date will be considered in making this
representation. There are no Tenneco stockholders who own beneficially five
percent or more of the Tenneco Stock.
3. The fair market value of the Acquiror Stock received by each of the
Tenneco stockholders will be approximately equal to the fair market value of
the Tenneco Stock surrendered in the Merger.
4. Immediately after the Merger, the outstanding capital stock of Tenneco
shall consist solely of the Tenneco Common Stock and the New Preferred Stock,
and Acquiror shall own 100% of the Tenneco Common Stock. Acquiror has no plan
or intention to cause Tenneco to issue additional shares that would result in
Acquiror losing control of Tenneco within the meaning of Section 368(c)(1) of
the Code.
5. On the Closing Date, Tenneco will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to which
any Person could acquire stock in Tenneco that, if exercised or converted,
would affect Acquiror's acquisition or retention of control of Tenneco, as
defined in Section 368(c )(1) of the Code.
6. None of the Parties is an investment company as defined in Section
368(a)(2) (F)(iii) and (iv) of the Code.
7. On the Closing Date, the fair market value of the assets of Tenneco will
exceed the sum of its liabilities plus the liabilities, if any, to which
Tenneco's assets are subject.
8. A substantial portion of the Consolidated Debt is owned by persons who
are not owners of Tenneco stock.
9. The payment of cash in lieu of fractional shares of Acquiror Stock is
solely for the purpose of avoiding the expense and inconvenience to Acquiror
of issuing fractional shares and does not represent separately bargained-for
consideration. The total cash consideration that will be paid in the
transaction to the Tenneco stockholders instead of issuing fractional shares
of Acquiror Stock will not exceed one percent of the total consideration that
will be issued in the transaction to the Tenneco stockholders in exchange for
their shares of Tenneco Stock. The fractional share interests of each
stockholder with respect to each class of Acquiror Stock will be aggregated,
and no stockholder will receive cash in an amount greater to or greater than
the value of one full share of Acquiror Stock of any such class.
10. Acquiror has no present plan or intention to liquidate Tenneco, to merge
Tenneco into another corporation, to cause Tenneco to sell or otherwise
dispose of its assets (other than the sale of certain assets unrelated (or
immaterial in relation) to Tenneco's interstate pipeline or natural gas
marketing businesses), or to sell or otherwise dispose of any Tenneco Stock
acquired in the Merger, except for transfers described in Section 368(a)(2)(C)
of the Code.
4
11. Acquiror has no plan or intention to reacquire any Acquiror Stock issued
to Tenneco stockholders in the Merger.
12. Acquiror will acquire the Tenneco Stock in exchange for Acquiror Stock
as provided in Section 2.5 of the Merger Agreement. For purposes of this
representation, Tenneco Stock redeemed for cash or other property furnished by
Acquiror will be considered as acquired by Acquiror. Further, no liabilities
of Tenneco or the Tenneco shareholders will be assumed by Acquiror, nor will
any of the Tenneco Stock be subject to any liabilities.
13. Acquiror does not presently own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any capital stock of
Tenneco.
14. Immediately following the Merger, Acquiror will continue the Energy
Business or use a significant portion of the assets of the Energy Business in
a business.
In addition to the facts, assumptions and representations set forth above,
we have examined and relied on such statutes, regulations, records,
certificates and other documents as we have considered necessary or
appropriate as a basis for the opinions rendered below, including, but not
limited to, the following:
(a) The Merger Agreement and its exhibits;
(b) The Distribution Agreement and its exhibits;
(c) The Tax Sharing Agreement dated as of , 1996, by and between
Tenneco, Newco and TIA;
(d) The representation letter of Tenneco dated , 1996,
delivered to us pursuant to section 6.6 of the Merger Agreement and in the
form set forth in Exhibit I to the Merger Agreement;
(e) The representation letter of Acquiror and Subsidiary dated ,
1996, delivered to us pursuant to section 6.6 of the Merger Agreement and
in the form set forth in Exhibit I to the Merger Agreement; and
(f) [list of other appropriate documents including:
a. Any registration statement on form S-1, including the S-1's for
Newco, TIA and the New Preferred;
b. Any underwriting agreement, including the underwriting agreement
for Newco, TIA and the New Preferred; and
c. Any appropriate debt or loan documents.]
The documents referred to in items (a) through (f) above are referred to
herein as the "Transaction Documents."
In our examination of the Transaction Documents, we have assumed, without
independent investigation, that each of the Transaction Documents has been
duly executed and delivered by the respective parties thereto in the form
reviewed by us and are enforceable against such parties in accordance with
their terms and that all obligations imposed by any such documents on the
parties thereto have been or will be performed or satisfied in accordance with
the terms of such documents. We have further assumed that the Merger of
Tenneco and Subsidiary and related transactions will be carried out strictly
in accordance with the terms of the Merger Agreement and the other Transaction
Documents.
In rendering the opinions set forth herein, we have also assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the
conformity to the original documents of all documents submitted to us as
copies, (iv) the authority and capacity of the individual or individuals who
executed any such document on behalf of any person, (v) the accuracy and
completeness of all records made available to us, and (vi) the factual
accuracy of all representations, warranties and other statements made by all
parties.
5
We have further assumed, without investigation, that all documents,
representations, warranties and covenants on which we have relied as set forth
herein in rendering the opinions set forth below and that were given or dated
earlier than the date of this letter continue to remain accurate, in so far as
relevant to the opinions set forth below, from such earlier date through and
including the date of this letter.
III. OPINIONS
Based on our review of relevant provisions and limitations of the Code,
Treasury Regulations promulgated thereunder (including Proposed, Temporary and
Final Regulations), legislative history of the Code, as of the date hereof,
and interpretations of the code by the Service and the courts having
jurisdiction over such matters, we are of the following opinion:
1. The Merger will qualify as a tax-free reorganization within the meaning
of Section 368(a)(1)(B) of the Code. The Parties will each be a "party to a
reorganization" within the meaning of Code Section 368(b).
2. Acquiror will not recognize any gain or loss upon the receipt of Tenneco
Stock, solely in exchange for Acquiror Stock, as set forth in the Merger
Agreement.
3. Acquiror's basis in Tenneco Common Stock, $7.40 Preferred Stock and $4.50
Preferred Stock will, in each case, be equal to the basis of such stock in the
hands of the Tenneco shareholders immediately prior to the Merger.
4. Acquiror's holding period for Tenneco Common Stock, $7.40 Preferred Stock
and $4.50 Preferred Stock will, in each case, include the period during which
such stock was held by the shareholders of Tenneco.
5. The holders of Tenneco Common Stock, $7.40 Preferred Stock and $4.50
Preferred Stock will not recognize any gain or loss upon the exchange of such
stock for Acquiror Stock.
6. The basis of the Acquiror Stock to be received by the holders of Tenneco
Common Stock, $7.40 Preferred Stock and $4.50 Preferred Stock will be the same
as the basis of the Tenneco Stock surrendered in exchange therefor.
7. The holding period for the Acquiror Stock to be received by the holders
of Tenneco Common Stock, $7.40 Preferred Stock and $4.50 Preferred Stock will
include the holding period for the Tenneco Stock surrendered in exchange
therefor, provided that the Tenneco Stock surrendered is held as a capital
asset on the Closing Date.
8. The payment of cash to holders of Tenneco Common Stock, $7.40 Preferred
Stock and $4.50 Preferred Stock in lieu of the issuance of fractional shares
by Acquiror will be treated for federal income tax purposes as if the
fractional shares were issued in the transaction and then redeemed by
Acquiror. These cash payments will be treated as having been received as
distributions in full payment in exchange for the stock redeemed as provided
in Section 302(a) of the Code. A holder of Tenneco Common Stock, $7.40
Preferred Stock and $4.50 Preferred Stock receiving cash for fractional shares
will recognize capital gain or loss thereon, provided the shares of Tenneco
Stock surrendered for such fractional interests are held as capital assets by
the Tenneco stockholders on the Closing Date, in an amount equal to the
difference between the amount of cash received and the portion of such
shareholder's basis in the shares of Tenneco Stock allocable to such
fractional share interests. Such capital gain or loss will be long term
capital gain or loss if the holding period for such shares is more than one
year.
9. Holders of Tenneco's $4.50 Preferred Stock who properly demand appraisal
of such shares in accordance with Section 262 of the DGCL, and as a result
receive only cash in the merger, will be treated as having received that cash
as a distribution in redemption of such stock subject to the provisions and
limitations of Section 302 of the Code. These Dissenters who hold no Acquiror
Stock, directly or through the application of Code Section
6
318, shall be treated as having a complete termination of interest within the
meaning of Code Section 302(b)(3), and the cash received will be treated as a
distribution in full payment in exchange for such Tenneco $4.50 Preferred
Stock as provided in Code Section 302(a). Holders of such $4.50 Preferred
Stock receiving solely cash will recognize capital gain or loss thereon,
provided such shares are held as capital assets on the Closing Date, in an
amount equal to the difference between the amount of cash received and the
shareholder's basis in the shares surrendered. Such capital gain or loss will
be long term capital gain or loss if the holding period for such shares is
more than one year.
As noted above, our opinions set forth above are based on relevant
provisions and limitations of the Code, Treasury Regulations promulgated
thereunder (including Proposed, Temporary and Final Regulations), legislative
history of the Code, as of the date hereof, and interpretations of the Code by
the Service and the courts having jurisdiction over such matters. These
provisions and interpretations are subject to change, either prospectively or
retroactively, which might result in modification of our opinion. Also, any
variation or difference in the facts from those set forth above or otherwise
provided to us may affect the conclusions stated herein.
No opinion is expressed regarding the tax treatment of the Merger under any
other provision of the Code, the Treasury Regulations, or under any state,
local or foreign tax laws. In addition, no opinion is expressed regarding the
tax treatment of any conditions existing at the time of, or effects resulting
from, the Merger that are not specifically covered by the above opinions.
This opinion is based on the facts, circumstances and law in existence as of
the date of this letter, and we disclaim any responsibility to advise the
Parties of any matters arising after the date hereof that may affect the
conclusions set forth herein.
Our opinion is provided as a legal opinion only, and while it represents our
best legal judgment, it does not constitute, and shall not be deemed to
constitute a guaranty, warranty, or surety of the matters discussed herein.
Accordingly, we can provide no assurances that the Service (and other
applicable state, local and foreign tax authorities) may not take positions
which conflict with the opinions expressed herein, which positions might
ultimately be sustained by the courts. Our opinions have no binding, legal
effect on the Service, the courts or any other applicable state, local or
foreign tax authority.
The opinions set forth above are solely for the benefit of Tenneco Inc. and
the shareholders of Tenneco, and it may not be relied upon or used by any
other person or for any other purpose without our express written consent.
JENNER & BLOCK
By:__________________________________
a partner
7
EXHIBIT 3(IV)
FORM OF
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of [ , 1996,] between El Paso Natural Gas
Company, a Delaware corporation, and [ ], as Depositary.
WITNESSETH:
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of shares of Stock with the Depositary, as agent
for the beneficial owners of the Stock, for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of the Receipts evidencing
Adjustable Rate Depositary Shares representing an interest in the Stock so
deposited; and
WHEREAS, the Receipts are to be substantially in the form of the Depositary
Receipt annexed as Exhibit A to this Deposit Agreement, with appropriate
insertions, modifications and omissions, as hereinafter provided in this
Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, it is
agreed by and among the parties hereto as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and
the Depositary Receipts:
"Adjustable Rate Depositary Share" shall mean an interest in one twenty-
fifth of a share of Stock deposited with the Depositary hereunder, as
evidenced by the Receipts issued hereunder. Subject to the terms of this
Deposit Agreement, each owner of an Adjustable Rate Depositary Share is
entitled, proportionately, to all the rights and preferences of the Stock
represented by such Adjustable Rate Depositary Share, including the dividend,
voting, redemption and liquidation rights contained in the Certificate of
Designation.
"Certificate of Designation" shall mean the Certificate of Designation
annexed as Exhibit B to this Deposit Agreement, as amended from time to time,
establishing and setting forth the rights, preferences, privileges and
limitations of the Stock.
"Certificate of Incorporation" shall mean the Restated Certificate
Incorporation, as amended from time to time, of the Company.
"Common Stock" shall mean the Company's Common Stock, par value $3 per
share.
"Company" shall mean El Paso Natural Gas Company, a Delaware corporation,
and its successors.
"Corporate Office" shall mean the office of the Depositary at which at any
particular time its depositary receipt business shall be administered, which
at the date of this Deposit Agreement is located at [ ].
"Deposit Agreement" shall mean this agreement, as the same may be amended,
modified or supplemented from time to time.
"Depositary" shall mean [ ], and any successor as depositary hereunder.
"Depositary's Agent" shall mean an agent appointed by the Depositary as
provided, and for the purposes specified, in Section 7.05.
"Depositary Successor" means a successor to the Depositary taking title to
the Stock in accordance with Section 5.04.
"Operating Guidelines" means the operating and administrative procedures
relating to the functions of the Depositary pursuant to this Deposit
Agreement, as agreed between the Company and the Depositary from time to time.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, a government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Receipt" shall mean a Depositary Receipt issued hereunder to evidence one
or more Adjustable Rate Depositary Shares, whether in temporary or definitive
form.
"Record holder" as applied to a Receipt shall mean the person in whose name
a Receipt is registered on the books maintained by the Depositary for such
purpose.
"Redemption Date" shall have the meaning assigned to it in Section 2.03.
"Registrar" shall mean any qualified Person appointed by the Company to
register ownership of Receipts as herein provided.
"Securities" shall have the meaning assigned to it in Section 3.02.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's Adjustable Rate Cumulative
Preferred Stock, par value $.01 per share, heretofore validly issued, fully
paid and nonassessable.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.01. Form and Transferability of Receipts. Receipts shall be
engraved or printed or lithographed with steel-engraved borders and underlying
tint and shall be substantially in the form set forth in Exhibit A annexed to
this Deposit Agreement, with appropriate insertions, modifications and
omissions, as hereinafter provided. Pending the preparation of definitive
Receipts, the Depositary, upon the written order of the Company or any holder
of Stock, as the case may be, delivered for deposit in compliance with Section
2.02, shall execute and deliver temporary Receipts that are printed,
lithographed, typewritten, mimeographed or otherwise substantially of the
tenor of the definitive Receipts in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the persons executing such Receipts may determine, as evidenced by their
execution of such Receipts. If temporary Receipts are issued, the Company and
the Depositary will cause definitive Receipts to be prepared without
unreasonable delay. After the preparation of definitive Receipts, the
temporary Receipts shall be exchangeable for definitive Receipts upon
surrender of the temporary Receipts at an office described in the second to
last paragraph of Section 2.02, without charge to the holder. Upon surrender
for cancellation of any one or more temporary Receipts, the Depositary shall
execute and deliver in exchange therefor definitive Receipts representing the
same number of Adjustable Rate Depositary Shares as represented by the
surrendered temporary Receipt or Receipts. Such exchange shall be made at the
Company's expense and without any charge to the holder thereof. Until so
exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Agreement, and with respect to the Stock deposited
hereunder, as definitive Receipts.
2
Receipts shall be executed by the Depositary by the manual signature of a
duly authorized signatory of the Depositary, provided, however, that such
signature may be a facsimile if a Registrar (other than the Depositary) shall
have countersigned the Receipts by manual signature of a duly authorized
signatory of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it
shall have been executed as provided in the preceding sentence. The Depositary
shall record on its books each Receipt executed as provided above and
delivered as hereinafter provided.
Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Adjustable Rate Depositary Shares. All
Receipts shall be dated the date of their execution.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or regulation or with the rules and regulations of any
securities exchange upon which the Stock, the Adjustable Rate Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject by reason of the date of issuance of the Stock
or otherwise.
Title to any Receipt (and to the Adjustable Rate Depositary Shares evidenced
by such Receipt) that is properly endorsed or accompanied by a properly
executed instrument of transfer or endorsement shall be transferable by
delivery with the same effect as in the case of a negotiable instrument;
provided, however, that until a Receipt shall be transferred on the books of
the Depositary as provided in Section 2.04, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder thereof at
such time as the absolute owner thereof for the purpose of determining the
person entitled to distribution of dividends or other distributions or to any
notice provided for in this Deposit Agreement and for all other purposes.
SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. On the date any Stock is initially issued by the Company, the
Depositary, upon receipt of a written order from the Company and a certificate
or certificates for the Stock to be deposited under this Deposit Agreement in
accordance with the provisions of this Section, shall execute and deliver a
Receipt or Receipts for the number of Adjustable Rate Depositary Shares
representing such deposited Stock to the person or persons stated in such
order.
Subject to the terms and conditions of this Deposit Agreement, any holder of
Stock may deposit such Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the Stock to be deposited,
properly endorsed or accompanied, if required by the Depositary, by a properly
executed instrument of transfer or endorsement in form satisfactory to the
Depositary, together with (i) all such certifications as may be required by
the Depositary in accordance with the provisions of this Deposit Agreement and
(ii) a written order directing the Depositary to execute and deliver to or
upon the written order of the person or persons stated in such order a Receipt
or Receipts for the number of Adjustable Rate Depositary Shares representing
such deposited Stock.
If required by the Depositary, Stock presented for deposit at any time,
whether or not the register of stockholders of the Company is closed, shall
also be accompanied by an agreement or assignment, or other instrument
satisfactory to the Depositary, that will provide for the prompt transfer to
the Depositary or its nominee of any dividend or right to subscribe for
additional Stock or to receive other property that any person in whose name
the Stock is or has been registered may thereafter receive upon or in respect
of such deposited Stock, or in lieu thereof such agreement of indemnity or
other agreement as shall be satisfactory to the Depositary.
Upon receipt by the Depositary of a certificate or certificates for Stock to
be deposited hereunder, together with the other documents specified above, the
Depositary shall, as soon as transfer and registration can be accomplished,
present such certificate or certificates to the registrar and transfer agent
of the Stock for transfer and registration in the name of the Depositary or
its nominee of the Stock being deposited. Deposited Stock shall be held by the
Depositary in an account to be established by the Depositary at the Corporate
Office.
3
Upon receipt by the Depositary of a certificate or certificates for Stock to
be deposited hereunder, together with the other documents specified above, the
Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver to or upon the order of the person or persons named
in the written order delivered to the Depositary referred to in the first or
second paragraph of this Section 2.02 a Receipt or Receipts for the number of
whole Adjustable Rate Depositary Shares representing the Stock so deposited
and registered in such name or names as may be requested by such person or
persons. The Depositary shall execute and deliver such Receipt or Receipts at
the Corporate office, except that, at the request, risk and expense of any
person requesting such delivery, such delivery may be made at such other place
as may be designated by such person. In each case, delivery will be made only
upon payment by such person to the Depositary of all taxes and other
governmental charges and any fees payable in connection with such deposit and
the transfer of the Deposited Stock.
The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may reasonably request to enable the
Depositary to perform its obligations under this Deposit Agreement.
SECTION 2.03. Redemptions of Stock. Whenever the Company shall elect to
redeem shares of Stock in accordance with the Certificate of Designation, it
shall (unless otherwise agreed in writing with the Depositary) give the
Depositary in its capacity as Depositary not less than two business days prior
notice of the proposed date of the mailing of the notice of redemption of
Stock required pursuant to paragraphs 6(b) or 7(d) of the Certificate of
Designation to be effected in connection with a redemption of Stock and of the
number of such shares of Stock hold by the Depositary to be redeemed as
hereinafter provided.
On the date of any redemption of Stock in accordance with the Certificate of
Designation, provided that the Company shall then have deposited with the
Depositary the shares of Common Stock and any funds required pursuant to the
Certificate of Designation for the Stock deposited with the Depositary to be
redeemed, the Depositary shall redeem (using the shares of Common Stock and
funds, if any, deposited with it) the number of Adjustable Rate Depositary
Shares representing such redeemed Stock. The distribution of the shares of
Common Stock and funds, if any, used to effect such redemption shall be
governed by Sections 4.01 and 4.02 hereof. The Depositary shall, as directed
by the Company, mail, first class postage prepaid, the notice of the
redemption of Stock and the proposed simultaneous redemption of the Adjustable
Rate Depositary Shares representing the Stock to be redeemed, not less than 30
and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date") of such Stock and Adjustable Rate Depositary Shares. Such
notice shall be mailed to each holder of record on the record date fixed for
such redemption pursuant to Section 4.04 hereof of the Receipts evidencing the
Adjustable Rate Depositary Shares, at the address of such holder as the same
appears on the records of the Depositary; but neither failure to mail any such
notice to one or more such holders nor any defect in any notice shall affect
the sufficiency of the proceedings for redemption.
With respect to the notices provided in accordance with the first paragraph
of this Section 2.03, the Company shall provide the Depositary with such
notice, and each such notice shall, as appropriate and to the extent
determinable at the time of such notice, state: the record date for such
redemption; the redemption date; that all outstanding Adjustable Rate
Depositary Shares are to be redeemed or, in the case of a redemption of fewer
than all outstanding Adjustable Rate Depositary Shares in connection with a
partial redemption of Stock pursuant to paragraph 6(a) or 7(a) of the
Certificate of Designation, the number of such Adjustable Rate Depositary
Shares held by such holder to be so redeemed; in connection with a redemption
of Stock pursuant to paragraph 6(a) of the Certificate of Designation, the
redemption price for the Adjustable Rate Depositary Shares, in connection with
a redemption pursuant paragraph 7(a) of the Certificate of Designation, the
number of shares of Common Stock deliverable upon redemption of each
Adjustable Rate Depositary Share to be redeemed and the then effective Common
Equivalent Rate (as defined in the Certificate of Designation) used to
calculate the number of shares of Common Stock; the place or places where
Receipts evidencing Adjustable Rate Depositary Shares to be redeemed are to be
surrendered for redemption and that dividends in respect of the Stock
represented by the Adjustable Rate Depositary Shares to be redeemed will cease
to accrue on such redemption date, unless the Company shall default in
delivering the shares of Common Stock or cash, if any, payable by the Company
at the time and place specified in such notice. In case fewer than all the
outstanding Adjustable Rate Depositary
4
Shares are to be redeemed, the Adjustable Rate Depositary Shares to be
redeemed shall be selected by lot or such other method as the Company in its
discretion may determine is fair and appropriate.
Notice having been mailed by the Depositary as aforesaid, from and after the
redemption date (unless the Company shall have failed to redeem the shares of
Stock to be redeemed by it as set forth in the Company's notice provided for
in the preceding paragraphs), the Adjustable Rate Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Receipts evidencing such Adjustable Rate Depositary Shares (except
the right to receive the shares of Common Stock and any cash upon redemption)
shall, to the extent of such Adjustable Rate Depositary Shares, cease and
terminate. Upon surrender in accordance with said notices of the Receipts
evidencing such Adjustable Rate Depositary Shares (properly endorsed or
assigned for transfer, if the Depositary shall so require), such Adjustable
Rate Depositary Shares shall be redeemed (as nearly as may be practicable
without creating fractional shares) in exchange for cash or, if applicable,
shares of Common Stock at a rate equal to one twenty-fifth the number of
shares of Common Stock delivered in respect of the shares of Stock represented
by such Adjustable Rate Depositary Shares as is provided for in the
Certificate of Designation. The foregoing shall be subject further to the
terms and conditions of the Certificate of Designation.
If fewer than all of the Adjustable Rate Depositary Shares evidenced by a
Receipt are called for redemption, the Depositary will deliver to the holder
of such Receipt upon its surrender to the Depositary, a new Receipt evidencing
the Adjustable Rate Depositary Shares evidenced by such prior Receipt and not
called for redemption, together with the shares of Common Stock for the
Adjustable Rate Depositary Shares called for redemption.
SECTION 2.04. Transfer of Receipts. Subject to the terms and conditions of
this Deposit Agreement, the Depositary shall make transfers on its books from
time to time of Receipts upon any surrender thereof by the holder in person or
by a duly authorized attorney, properly endorsed or accompanied by a properly
executed instrument of transfer or endorsement, together with evidence of the
payment of any transfer taxes as may be required by law. Upon such surrender,
the Depositary shall execute a new Receipt or Receipts and deliver the same to
or upon the order of the person entitled thereto evidencing the same aggregate
number of Adjustable Rate Depositary Shares evidenced by the Receipt or
Receipts surrendered.
SECTION 2.05. Combination and Split-ups of Receipts. Upon surrender of a
Receipt or Receipts at the Corporate Office or such other office as the
Depositary may designate for the purpose of effecting a split-up or
combination of Receipts, subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denominations requested evidencing the same aggregate number
of Adjustable Rate Depositary Shares evidenced by the Receipt or Receipts
surrendered; provided, however, that the Depositary shall not issue any
Receipt evidencing a fractional Adjustable Rate Depositary Share.
SECTION 2.06. Surrender of Receipts and Withdrawal of Stock. Any holder of a
Receipt or Receipts may withdraw any or all of the Stock (but only in whole
shares of Stock) represented by the Adjustable Rate Depositary Shares
evidenced by such Receipts by surrendering such Receipt or Receipts at the
Corporate Office or at such other office as the Depositary may designate for
such withdrawals. After such surrender, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons
designated by such holder as hereinafter provided, the whole number of shares
of Stock represented by the Adjustable Rate Depositary Shares evidenced by the
Receipt or Receipts so surrendered for withdrawal, but holders of such shares
of Stock will not thereafter be entitled to deposit such shares of Stock
hereunder or to receive Adjustable Rate Depositary Shares therefor. If the
Receipt or Receipts delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Adjustable Rate Depositary
Shares in excess of the number of Adjustable Rate Depositary Shares
representing the whole number of shares of Stock to be withdrawn, the
Depositary shall at the same time, in addition to such whole number of shares
of Stock, deliver to such holder a new Receipt or Receipts evidencing such
excess number of Adjustable Rate Depositary Shares. Delivery of the Stock
being withdrawn may be made by the delivery of such certificates, documents of
title and other instruments
5
as the Depositary may deem appropriate, which, if required by the Depositary,
shall be properly endorsed or accompanied by proper instruments of transfer.
If the Stock being withdrawn is to be delivered to a person or persons other
than the record holder of the Receipt or Receipts being surrendered for
withdrawal of Stock, such holder shall execute and deliver to the Depositary a
written order so directing the Depositary and the Depositary may require that
the Receipt or Receipts surrendered by such holder for withdrawal of such
shares of Stock be properly endorsed in blank or accompanied by a properly
executed instrument of transfer or endorsement in blank.
The Depositary shall deliver the Stock represented by the Adjustable Rate
Depositary Shares evidenced by Receipts surrendered for withdrawal at the
Corporate office, except that, at the request, risk and expense of the holder
surrendering such Receipt or Receipts and for the account of the holder
thereof, such delivery may be made at such other place as may be designated by
such holder.
SECTION 2.07. Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts. As a condition precedent to
the execution and delivery, transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require any or all of the following: (i) payment to it of a sum
sufficient for the payment (or, in the event that the Depositary or the
Company shall have made such payment, the reimbursement to it) of any tax or
other governmental charge with respect thereto (including any such tax or
charge with respect to the Stock being deposited or withdrawn or with respect
to the Common Stock of the Company being issued upon redemption); (ii) the
production of proof satisfactory to it as to the identity and genuineness of
any signature; and (iii) compliance with such regulations, if any, as the
Depositary or the Company may establish not inconsistent with the provisions
of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against Stock
may be suspended, the transfer of Receipts may be refused, and the transfer,
split-up, combination, surrender or exchange of outstanding Receipts may be
suspended (i) during a period when the register of stockholders of the Company
is closed, (ii) if any such action is deemed necessary or advisable by the
Depositary, any of the Depositary's Agents or the Company at any time or from
time to time because of any requirement of law or of any government or
governmental body or commission, or under any provision of this Deposit
Agreement, or (iii) with the approval of the Company, for any other reason.
Without limitation of the foregoing, the Depositary shall not knowingly accept
for deposit under this Deposit Agreement any shares of Stock that are required
to be registered under the Securities Act unless a registration statement
under the Securities Act is in effect as to such shares of Stock.
SECTION 2.08. Lost Receipts, etc. In case any Receipt shall be mutilated or
destroyed or lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt or in lieu of and in substitution for such destroyed, lost
or stolen Receipt; provided, however, that the holder thereof provides the
Depositary with (i) evidence satisfactory to the Depositary of such
destruction, loss or theft of such Receipt, of the authenticity thereof and of
his ownership thereof, (ii) reasonable indemnification satisfactory to the
Depositary and (iii) payment of any expense (including fees, charges and
expenses of the Depositary) in connection with such indemnification, execution
and delivery.
SECTION 2.09. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so
cancelled.
6
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. Filing Proofs, Certificates and Other Information. Any person
presenting stock for deposit or any holder of a Receipt may be required from
time to time to file such proof of residence or other information, to execute
such certificates and to make such representations and warranties as the
Depositary or the Company may reasonably deem necessary or proper. The
Depositary or the Company may withhold or delay the delivery of any Receipt,
the transfer, redemption or exchange of any Receipt, the withdrawal of the
Stock represented by the Adjustable Rate Depositary Shares evidenced by any
Receipt or the distribution of any dividend or other distribution until such
proof or other information is filed, such certificates are executed or such
representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges. If any tax or
other governmental charge shall become payable by or on behalf of the
Depositary with respect to any Receipt, the Adjustable Rate Depositary Shares
evidenced by such Receipt, the Stock (or fractional interest therein)
represented by such Adjustable Rate Depositary Shares or any transaction
referred to in Section 4.06, such tax (including transfer, issuance or
acquisition taxes, if any) or governmental charge shall be payable by the
holder of such Receipt. Until such payment is made, transfer of any Receipt or
any withdrawal of the Stock represented by the Adjustable Rate Depositary
Shares evidenced by such Receipt may be refused, any dividend or other
distribution may be withheld and any part or all of the Stock represented by
the Adjustable Rate Depositary Shares evidenced by such Receipt may be sold
for the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale). Any dividend or other distribution so
withheld and the proceeds of any such sale may be applied to any payment of
such tax or other governmental charge, the holder of such Receipt remaining
liable for any deficiency. Unless the Company determines otherwise, the
Depositary shall act as the withholding agent for any payments, distributions
and exchanges made with respect to the Adjustable Rate Depositary Shares and
Receipts, and the Stock represented thereby (collectively, the "Securities").
The Depositary shall be responsible with respect to the Securities for the
timely (i) collection and deposit of any required withholding or backup
withholding tax, and (ii) filing of any information returns or other documents
with federal (and other applicable) taxing authorities. In the event the
Depositary is required to pay any such amounts, the Company shall reimburse
the Depositary for payment thereof upon the request of the Depositary and the
Depositary shall, upon the Company's request and as instructed by the Company,
pursue its rights against such holder at the Company's expense.
SECTION 3.03. Representations and Warranties as to Stock. In the case of the
initial deposit of the Stock, the Company and, in the case of subsequent
deposits thereof, each person so depositing Stock under this Deposit Agreement
shall be deemed thereby to represent and warrant that such Stock and each
certificate therefor are valid, fully paid and nonassessable and that the
person making such deposit is duly authorized to do so. Such representations
and warranties shall survive the deposit of the Stock and the issuance of
Receipts.
ARTICLE IV
THE STOCK, NOTICES
SECTION 4.01. Cash Distributions. Whenever any cash dividend or other cash
distribution shall be paid on the Stock, the Company, on behalf of the
Depositary (or, if the Company determines otherwise, the Depositary), shall,
subject to Sections 3.01 and 3.02, distribute to record holders of Receipts on
the record date fixed pursuant to Section 4.04 such amounts of such sum as
are, as nearly as practicable, in proportion to the respective numbers of
Adjustable Rate Depositary Shares evidenced by the Receipts held by such
holders; provided, however, that in case the Company or the Depositary shall
be required to withhold and does withhold from any cash dividend or other cash
distribution in respect of the Stock an amount on account of taxes or as
otherwise required pursuant to law, regulation or court process, the amount
made available for distribution or
7
distributed in respect of Adjustable Rate Depositary Shares shall be reduced
accordingly. The Company, on behalf of the Depositary (or, if the Company
determines otherwise, the Depositary), shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any owner of Adjustable Rate Depositary
Shares a fraction of one cent. In the event that the calculation of any such
cash dividend or other cash distribution to be paid to any record holder on
the aggregate number of Adjustable Rate Depositary Shares held by such holder
results in an amount which is a fraction of a cent, the amount the Depositary
shall distribute to such record holder shall be rounded to the next highest
whole cent; and upon request of the Depositary, the Company shall pay the
additional amount to the Depositary for distribution.
SECTION 4.02. Distributions Other Than Cash. Whenever any distribution other
than cash shall be made on the Stock, the Company, on behalf of the Depositary
(or, if the Company determines otherwise, the Depositary), shall, subject to
Sections 3.01 and 3.02, distribute to record holders of Receipts on the record
date fixed pursuant to Section 4.04 such amounts of the securities or property
received by it as are, as nearly as practicable, in proportion to the
respective numbers of Adjustable Rate Depositary Shares evidenced by the
Receipts held by such holders, in any manner that the Company may deem
equitable and practicable for accomplishing such distribution. If, in the
opinion of the Company, such distribution cannot be made proportionately among
such record holders, or if for any other reason (including any requirement
that the Company or the Depositary withhold an amount on account of taxes or
as otherwise required pursuant to law, regulation or court process), the
Company deems such distribution not to be feasible, the Company on behalf of
the Depositary (or, if the Company determines otherwise, the Depositary) may
adopt such method as it deems equitable and practicable for the purpose of
effecting such distribution, including the sale (at public or private sale) of
the securities or property thus received, or any part thereof, at such place
or places and upon such terms as it may deem proper. The net proceeds of any
such sale shall, subject to Sections 3.01 and 3.02, be distributed or made
available for distribution, as the case may be, by the Company on behalf of
the Depositary (or, if the Company determines otherwise, the Depositary) to
record holders of Receipts as provided by Section 4.01 in the case of a
distribution received in cash.
SECTION 4.03. Subscription Rights, Preferences or Privileges. If the Company
shall at any time offer or cause to be offered to the persons in whose names
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary or
the Company to the record holders of Receipts if the Company so directs in
such manner as the Company shall instruct (including by the issue to such
record holders of warrants representing such rights, preferences or
privileges); provided, however, that (a) if at the time of issue or offer of
any such rights, preferences or privileges the Company determines that it is
not lawful or feasible to make such rights, preferences or privileges
available to some or all holders of Receipts (by the issue of warrants or
otherwise) or (b) if and to the extent instructed by holders of Receipts who
do not desire to exercise such rights, preferences or privileges, the
Depositary shall then, if so instructed by the Company, and if applicable laws
or the terms of such rights, preferences or privileges so permit, sell such
rights, preferences or privileges of such holders at public or private sale,
at such place or places and upon such terms as it may deem proper. The net
proceeds of any such sale shall, subject to Sections 3.01 and 3.02, be
distributed by the Depositary or the Company, as the case may be, to the
record holders of Receipts entitled thereto as provided by Section 4.01 in the
case of a distribution received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold such securities, the Company shall promptly
file a registration statement pursuant to the Securities Act with respect to
such rights, preferences or privileges and securities and use its best efforts
and take all steps available to it to cause such registration statement to
become effective sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges. In no event shall the Depositary make available to
the holders of Receipts any right, preference or privilege to subscribe for or
to purchase any securities unless and until the
8
Depositary has been notified by the Company that such registration statement
has become effective or that the offering and sale of such securities to such
holders are exempt from registration under the provisions of the Securities
Act.
If any other action under the law of any jurisdiction or any governmental or
administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company will use its best efforts to take such action or obtain such
authorization, consent or permit sufficiently in advance of the expiration of
such rights, preferences or privileges to enable such holders to exercise such
rights, preferences or privileges.
SECTION 4.04. Notice of Dividends, Fixing of Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered with respect to the
Stock, or whenever the Depositary shall receive notice of (i) any meeting at
which holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice or any solicitation of consents in respect of the Stock,
(ii) any call for redemption of any shares of Stock or (iii) any event of
which holders of Stock are entitled to notice in accordance with the
Certificate of Designation, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date fixed by the
Company with respect to the Stock) for the determination of the holders of
Receipts who shall be entitled (i) to receive such dividend, distribution,
rights, preferences or privileges or the net proceeds of the sale thereof,
(ii) to receive notice of, and to give instructions for the exercise of voting
rights at, or the delivery of consents with respect to, any such meeting or
consent solicitation, as the case may be, or (iii) to receive notice of any
such redemption or other event.
SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting at which
the holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter (unless another arrangement for allowing holders of
Adjustable Rate Depositary Shares to exercise the voting rights associated
with the Adjustable Rate Depositary Shares is agreed by the Company and the
Depositary), mail to the record holders of Receipts a notice, which shall be
provided by the Company and which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement that the holders of
Receipts at the close of business on a specified record date fixed pursuant to
Section 4.04 will be entitled, subject to any applicable provision of law, the
Certificate of Incorporation or the Certificate of Designation, to instruct
the Depositary as to the exercise of the voting rights with respect to the
amount of Stock represented by their respective Adjustable Rate Depositary
Shares and (iii) a brief statement as to the manner in which such instructions
may be given. Upon the written request of a holder of a Receipt on such record
date, the Depositary shall endeavor insofar as practicable to vote or cause to
be voted with respect to the amount of Stock represented by the Adjustable
Rate Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. In the absence of specific
instructions from the holder of a Receipt, the Depositary will abstain from
voting to the extent of the Stock represented by the Adjustable Rate
Depositary Shares evidenced by such Receipt.
SECTION 4.06. Changes Affecting Stock and Reclassifications,
Recapitalizations, etc. Upon any split-up, consolidation or any other
reclassification of Stock, or upon any recapitalization, reorganization,
merger, amalgamation or consolidation affecting the Company or to which it is
a party or sale of all or substantially all of the Company's assets, the
Depositary shall, upon the instructions of the Company, treat any shares of
stock or other securities (including depositary shares) or property (including
cash) that shall be received by the Depositary in exchange for or upon
conversion of or in respect of the Stock as now deposited property under this
Deposit Agreement, and Receipts then outstanding shall thenceforth represent
the proportionate interests of holders thereof in the new deposited property
so received in exchange for or upon conversion or in respect of such Stock. In
any such case the Depositary may, in its discretion, with the approval of the
Company, execute and deliver additional Receipts, or may call for the
surrender of all outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited property. If upon any split-up,
consolidation or any other reclassification of Stock, or upon any
recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party or sale of all or
substantially all of the Company's assets the Company delivers to the
Depositary shares of stock or other securities (including depositary shares)
or property
9
(including cash) a portion of which shall be distributed to record holders of
Receipts in accordance with Sections 4.01, 4.02 and 4.03 and a portion of
which shall be received by the Depositary in exchange for or upon conversion
of or in respect of the Stock as new deposited property under this Section
4.06, the Company shall clearly indicate such division in the instructions to
the Depositary provided pursuant to this Section 4.06.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.01. Maintenance of Offices, Agencies, Transfer Books by the
Depositary; the Registrar. Upon execution of this Deposit Agreement in
accordance with its terms, the Depositary shall maintain at the Corporate
Office facilities for the execution and delivery, transfer, surrender and
exchange, split-up and combination of Receipts and the deposit and withdrawal
of Stock and at the offices of the Depositary's Agents, if any, facilities for
the delivery, transfer, surrender and exchange, split-up, combination and
redemption of Receipts and the deposit and withdrawal of Stock, all in
accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Corporate Office for the registration
and transfer of Receipts, which books at all reasonable times shall be open
for inspection by the record holders of Receipts as and to the extent provided
by applicable law. The Depositary shall consult with the Company upon receipt
of any request for inspection. The Depositary may close such books, at any
time or from time to time, when deemed expedient by it in connection with the
performance of its duties hereunder.
The Depositary shall make available for inspection by holders of Receipts at
the Corporate Office and at such other places as it may from time to time deem
advisable during normal business hours any reports and communications received
from the Company that are both received by the Depositary as the holder of
Stock and made generally available to the holders of Stock.
Promptly upon request from time to time by the Company and at the Company's
sole expense, the Depositary shall furnish to it a list, as of a recent date,
of the names, addresses and holdings of Adjustable Rate Depositary Shares of
all persons in whose names Receipts are registered on the books of the
Depositary.
If the Receipts or the Adjustable Rate Depositary Shares evidenced thereby
or the Stock represented by such Adjustable Rate Depositary Shares shall be
listed on the New York Stock Exchange, Inc., the Depositary shall, if directed
by the Company, appoint a Registrar for registry of such Receipts or
Adjustable Rate Depositary Shares in accordance with the requirements of such
Exchange. Such Registrar (which may be the Depositary if so permitted by the
requirements of such Exchange) may be removed and a substitute registrar
appointed by the Depositary upon the request or with the approval of the
Company. If the Receipts, such Adjustable Rate Depositary Shares or such Stock
are listed on one or more other stock exchanges, the Depositary will, at the
request of the Company, arrange such facilities for the delivery, transfer,
surrender and exchange of such Receipts, such Adjustable Rate Depositary
Shares or such Stock as may be required by law or applicable stock exchange
regulations.
SECTION 5.02. Liability of the Depositary, the Depositary's Agents or the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
shall incur any liability to any holder of any Receipt, if by reason of any
provision of any present or future law or regulation thereunder of the United
States of America or of any other governmental authority or, in the case of
the Depositary or the Depositary's Agent, by reason of any provision, present
or future, of the Certificate of Incorporation or the Certificate of
Designation or, in the case of the Company, the Depositary or the Depositary's
Agent, by reason of any act of God or war or other circumstances beyond the
control of the relevant party, the Depositary, any Depositary's Agent or the
Company shall be prevented or forbidden from doing or performing any act or
thing that the terms of this Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary's Agent or the Company
incur any liability to any holder of a Receipt by reason of any nonperformance
or delay, caused as aforesaid, in the performance of any act or thing that the
terms of this Deposit Agreement provide shall or may be done or
10
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement except, in case of any such
exercise or failure to exercise discretion not caused as aforesaid, if caused
by the negligence, bad faith or willful misconduct of the party charged with
such exercise or failure to exercise.
SECTION 5.03. Obligations of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary Agent nor the Company nor
the Registrar assumes any obligation or shall be subject to any liability
under this Deposit Agreement or any Receipt to holders of Receipts other than
that each of them agrees to use good faith in the performance of such duties
as are specifically set forth in this Deposit Agreement and other than for its
negligence, bad faith or willful misconduct.
Neither the Depositary nor any Depositary's Agent nor the Company nor the
Registrar shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to Stock, Adjustable Rate
Depositary Shares or Receipts or Common Stock or other securities or property
that in its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often as
may be required.
Neither the Depositary nor any Depositary's Agent nor the Company nor the
Registrar shall be liable for any action or any failure to act by it in
reliance upon the advice of or information from legal counsel, accountants,
any person presenting Stock for deposit, any holder of a Receipt or any other
person believed by it in good faith to be competent to give such advice or
information. The Depositary, any Depositary's Agent, the Registrar and the
Company may each rely and shall each be protected in acting upon any written
notice, request, direction or other document believed by it to be genuine and
to have been signed or presented by the proper party or parties.
Notwithstanding the first paragraph of this Section 5.03, the Depositary
shall not be responsible for any failure to carry out any instruction to vote
any of the deposited shares of Stock or for the manner or effect of any such
vote made, as long as any such action or non-action is in good faith or in
accordance with this Deposit Agreement. The Depositary undertakes, and any
Registrar shall be required to undertake, to perform such duties and only such
duties as are specifically set forth in this Deposit Agreement against the
Depositary or any Registrar. The Depositary will indemnify the Company against
any liability that may arise out of acts performed or omitted by the
Depositary or its agents due to its or their negligence, bad faith or willful
misconduct. The Depositary, its parent, affiliates or subsidiaries and any
Depositary's Agent may own, buy, sell or deal in any class of securities of
the Company and its affiliates and in Receipts or Adjustable Rate Depositary
Shares or become pecuniarily interested in any transaction in which the
Company or its affiliates may be interested or contract with or lend money to
or otherwise act as fully or as freely as if it were not the Depositary or the
Depositary's Agent hereunder. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates or act in
any other capacity for the Company or its affiliates.
It is intended that neither the Depositary nor any Depositary's Agent shall
be deemed to be an "issuer" of the securities under the federal securities
laws or applicable state securities laws, it being expressly understood and
agreed that the Depositary and any Depositary's Agent are acting only in a
ministerial capacity as Depositary for the Stock.
The Depositary agrees to comply with all information reporting and
withholding requirements applicable to it under law or this Deposit Agreement
in its capacity as Depositary.
Each of the Company and the Depositary agrees to be bound by, and act in
accordance with, the Operating Guidelines current from time to time.
The Depositary shall not lend the Adjustable Rate Depositary Shares.
Neither the Depositary (or its officers, directors, employees or agents) nor
any Depositary's Agent nor the Registrar makes any representation or has any
responsibility as to the validity of the Prospectus pursuant to which
11
the Adjustable Rate Depositary Shares are offered, the Stock, the Adjustable
Rate Depositary Shares or the Receipts (except its countersignature thereon),
or any instruments referred to therein or herein, or as to the correctness of
any statement made therein or herein; provided, however, that the Depositary
is responsible for its representations in this Deposit Agreement.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Stock at any time deposited with the Depositary hereunder
or of the Adjustable Rate Depositary Shares, as to the validity or sufficiency
of this Deposit Agreement, as to the value of the Adjustable Rate Depositary
Shares or as to any right, title or interest of the record holders of Receipts
in and to the Adjustable Rate Depositary Shares, except that the Depositary
hereby represents and warrants as follows: (i) the Depositary has been duly
organized and is validly existing and in good standing under the laws of
[ ], with full power, authority and legal right under such law to
execute, deliver and carry out the terms of this Deposit Agreement; (ii) this
Deposit Agreement has been duly authorized, executed and delivered by the
Depositary; and (iii) this Deposit Agreement constitutes a valid and binding
obligation of the Depositary, enforceable against the Depositary in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law). The Depositary shall not be accountable
for the use or application by the Company of the Adjustable Rate Depositary
Shares or the Receipts or the proceeds thereof.
SECTION 5.04. Resignation and Removal of the Depositary, Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take affect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
The Company may, by notice in writing to the Depositary, terminate the
engagement of the Depositary with respect to any or all of the duties or
obligations of the Depositary set out in this Deposit Agreement (including
such duties as are customarily associated with the role of a transfer agent or
paying agent), such termination to take effect upon the appointment of a
successor to fulfill those duties or obligations and its acceptance of such
appointment as hereinafter provided. In the event that the Company terminates
the engagement of the Depositary with respect to some, but not all, of the
duties or obligations of the Depositary, the Depositary shall thereafter be
deemed only to have such rights and obligations under this Deposit Agreement
as are necessary for it to fulfill its remaining duties or obligations. The
Depositary agrees to cooperate with the Company or any person appointed by the
Company or that person with respect to the performance of any of the duties
previously performed by the Depositary.
In case at any time the Depositary acting hereunder shall resign or the
Company shall terminate the engagement of the Depositary with respect to any
or all of the duties or obligations of the Depositary set out in this Deposit
Agreement, the Company shall, within 45 days after the delivery of the notice
of resignation or termination, as the case may be, appoint a successor with
respect to such duties and obligations so terminated. If such successor is to
take title to the Stock (a "Depositary Successor"), the Depositary Successor
shall be a bank or trust company, or an affiliate of a bank or trust company,
having its principal office in the United States of America and having a
combined capital and surplus of at least [$ ]. If a successor shall not have
been appointed in 45 days, the resigning Depositary may petition a court of
competent jurisdiction to appoint a successor.
Every Depositary Successor shall execute and deliver to its predecessor and
to the Company an instrument in writing accepting its appointment hereunder,
and thereupon such Depositary Successor, without any further act or deed,
shall become fully vested with all the duties and obligations of its
predecessor so terminated and all rights and powers with respect thereto and
for all purposes shall be the Depositary under this Deposit Agreement
12
with respect to the duties and obligations of the predecessor so terminated,
and such predecessor, upon payment of all sums due it and on the written
request of the Company, shall promptly execute and deliver an instrument
transferring to such Depositary Successor all such rights and powers of such
predecessor hereunder, shall, if applicable, duly assign, transfer and deliver
all rights, title and interest in the Stock and any moneys or property held
hereunder to such Depositary Successor and shall, if applicable, deliver to
such Depositary Successor a list of the record holders of all outstanding
Receipts. Any Depositary Successor shall promptly mail notice of its
appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without
the execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.
SECTION 5.05. Corporate Notices and Reports. The Company agrees that it will
deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, transmit to the record holders of Receipts, in each case at the
address recorded in the Depositary's books, copies of all notices and reports
(including financial statements) required by law, by the rules of any national
securities exchange upon which the Stock, the Adjustable Rate Depositary
Shares or the Receipts are listed or by the Certificate of Incorporation and
the Certificate of Designation to be furnished by the Company to holders of
Stock. Such transmission will be at the Company's expense and the Company will
provide the Depositary with such number of copies of such documents as the
Depositary may reasonably request. In addition, the Depositary will transmit
to the record holders of Receipts at the Company's expense such other
documents as may be requested by the Company. The Depositary will make
available for inspection by holders of Receipts at the Corporate office and at
such other places as it may from time to time deem advisable during normal
business hours any such notices and reports received from the Company.
SECTION 5.06. Deposit of Stock by the Company. Neither the Company nor any
company controlled by the Company will at any time deposit any Stock if such
Stock is required to be registered under the provisions of the Securities Act
and no registration statement is at such time in effect as to such Stock.
SECTION 5.07. Indemnification by the Company. The Company agrees to
indemnify the Depositary, any Depositary's Agent and any Registrar against,
and hold each of them harmless from, any liability, costs and expenses
(including reasonable attorneys' fees) that may arise out of or in connection
with its acting as Depositary, Depositary's Agent or Registrar, respectively,
under this Deposit Agreement and the Receipts, except for any liability
arising out of negligence, bad faith or willful misconduct on the part of any
such person or persons.
SECTION 5.08. Fees, Charges and Expenses. No fees, charges and expenses of
the Depositary or any Depositary's Agent hereunder or of any Registrar shall
be payable by any person other than the Company, except for any taxes and
other governmental charges and except as provided in this Deposit Agreement.
If the Depositary incurs fees, charges or expenses for which it is not
otherwise liable hereunder at the election of a holder of a Receipt or other
person, such holder or other person will be liable for such fees, charges and
expenses. All other fees, charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
fees and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid from time to time upon consultation and
agreement between the Depositary and the Company as to the amount and nature
of such fees, charges and expenses.
13
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts and any provision of this
Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable. Any amendment that shall impose any fees, taxes
or charges (other than fees and charges provided for herein or in the
Receipts), or that shall otherwise prejudice any substantial existing right of
holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 15 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. Every holder of an
outstanding Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by this Deposit Agreement an amended thereby. In no
event shall any amendment impair the right, subject to the provisions of
Sections 2.03, 2.06, 2.07 and Article III, of any owner of any Adjustable Rate
Depositary Shares to surrender the Receipt evidencing such Adjustable Rate
Depositary Shares with instructions to the Depositary to deliver to the holder
the Stock represented thereby, except in order to comply with mandatory
provisions of applicable law.
SECTION 6.02. Termination. This Deposit Agreement may be terminated by the
Company or the Depositary only after (a) (i) all outstanding Adjustable Rate
Depositary Shares shall have been redeemed pursuant to Section 2.03 or (ii)
there shall have been made a final distribution in respect of the Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Adjustable
Rate Depositary Shares pursuant to Section 4.01 or 4.02, as applicable, and
(b) reasonable notice has been given to any remaining holders of Receipts.
If any Receipts shall remain outstanding after the date of termination of
this Deposit Agreement, the Depositary thereafter shall discontinue the
transfer of Receipts, the Company or the Depositary, as the case may be, shall
suspend the distribution of dividends to the holders thereof, and the
Depositary shall not give any further notices (other than notice of such
termination) or perform any further acts under this Deposit Agreement, except
that the Depositary shall, if applicable, continue to collect dividends and
other distributions pertaining to Stock, sell rights, preferences or
privileges as provided in this Deposit Agreement and shall continue to deliver
the Stock and any money and other property represented by Receipts upon
surrender thereof by the holders thereof. At any time after the expiration of
two years from the date of termination, the Depositary may sell Stock then
held hereunder at public or private sale, at such places and upon such terms
as it deems proper and may thereafter hold the net proceeds of any such sale,
together with any money and other property held by it hereunder, without
liability for interest, for the benefit, pro rata in accordance with their
holdings, of the holders of Receipts that have not theretofore been
surrendered. After making such sale, the Depositary shall be discharged from
all obligations under this Deposit Agreement except to account for such net
proceeds and money and other property.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.07 and 5.08. In the event this Deposit Agreement is terminated, the
Company hereby agrees to use its best efforts to list any outstanding
underlying Stock on the New York Stock Exchange, Inc. or any other national
securities exchange on which the Common Stock is listed.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Counterparts. This Deposit Agreement may be executed by the
Company and the Depositary in separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Deposit Agreement by telecopier shall be effective
14
as delivery of a manually executed counterpart of this Deposit Agreement.
Copies of this Deposit Agreement shall be filed with the Depositary and the
Depositary's Agents and shall be open to inspection at all reasonable times
during normal business hours at the Corporate Office and the respective
offices of the Depositary's Agents, if any, by any holder of a Receipt.
SECTION 7.02. Exclusive Benefits of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right,
remedy or claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Notices. Any notices to be given to the Company hereunder or
under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail, or by telegram or telex or
telecopier confirmed by letter, addressed to the Company at El Paso Natural
Gas Company, One Xxxx Xxxxxx Center, 000 Xxxxx Xxxxxxx Xxxxxx, Xx Xxxx, Xxxxx
00000, Attention: Corporate Secretary, or at any other place to which the
Company may have transferred its principal executive office.
Any notices given to the Depositary hereunder or under the Receipts shall be
in writing and shall be deemed to have been duly given if personally delivered
or sent by mail, return receipt requested, addressed to the Depositary at the
Corporate Office.
Any notices given to any record holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have timely filed with the Depositary a written request that notices
intended for such holder be mailed to some other address, at the address
designated in such request.
Delivery of a notice sent by mail, or by telegram or telex or telecopier
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a duly addressed letter confirming an earlier notice
in the case of a telegram or telex or telecopier message) is deposited,
postage prepaid, in a post office letter box. The Depositary or the Company
may, in its sole discretion, act upon any telegram or telex or telecopier
message received by it from the other or from any holder of a Receipt,
notwithstanding that such telegram or telex or telecopier message shall not
have complied with the notice provisions set forth herein.
SECTION 7.05. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents (with the Company's prior written consent and on
terms and conditions acceptable to the Company) to act in any respect for the
Depositary for the purposes of this Deposit Agreement and may at any time
appoint additional Depositary's Agents and vary or terminate the appointment
of such Depositary's Agents. The Depositary will notify the Company prior to
any such action.
SECTION 7.06. Holders of Receipts Are Parties. Notwithstanding that holders
of Receipts have not executed and delivered this Deposit Agreement or any
counterpart thereof, the holders of Receipts from time to time shall be deemed
to be parties to this Deposit Agreement and shall be bound by all of the terms
and conditions hereof and of the Receipts by acceptance of delivery of
Receipts.
SECTION 7.07. Governing Law. This Deposit Agreement and the Receipts and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, and construed in accordance with, the law of the State of New
York without giving effect to principles of conflict of laws.
15
SECTION 7.08. Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part
of this Deposit Agreement or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, El Paso Natural Gas Company, and [ ] have duly
executed this agreement as of the day and year first above set forth and all
holders of Receipts shall become parties hereto by and upon acceptance by them
of delivery of Receipts issued in accordance with the terms hereof.
EL PASO NATURAL GAS COMPANY
By: _________________________________
Name:
Title:
[ ]
By: _________________________________
Name:
Title:
16
EXHIBIT A
DEPOSITARY RECEIPT
FOR
ADJUSTABLE RATE DEPOSITARY SHARES,
EACH REPRESENTING ONE TWENTY-FIFTH SHARE OF
ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
EL PASO NATURAL GAS COMPANY
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
No. Adjustable Rate Depositary Shares (each Adjustable Rate
Depositary Share represents [one-fifteenth] share of Adjustable
Rate Cumulative Preferred Stock (par value $.01 per share)
l. [ ] trust company, as Depositary (the "Depositary"), hereby
certifies that is the registered owner of Depositary Shares (the
"Adjustable Rate Depositary Shares"), each Adjustable Rate Depositary Share
representing one twenty-fifth share of Adjustable Rate Cumulative Preferred
Stock, par value $.01 per share (the "Stock"), of El Paso Natural Gas Company,
a corporation duly organized and existing under the laws of the State of
Delaware (the "Company"), deposited with the Depositary, and the same
proportionate interest in any and all other property received by the
Depositary in respect of such share of Stock and held by the Depositary under
the Deposit Agreement (as defined below). Subject to the terms of the Deposit
Agreement, each owner of an Adjustable Rate Depositary Share is entitled,
proportionately, to all the rights, preferences and privileges of the Stock
represented thereby, including the dividend, voting, liquidation and other
rights contained in the Certificate of Designation of Adjustable Rate
Cumulative Preferred Stock, as amended from time to time, establishing the
rights, preferences, privileges and limitations of the Stock (the "Certificate
of Designation"), copies of which are on file at the Depositary's office
located at the time of the execution of the Deposit Agreement at
[ ] (such office or the corporate trust office of the Depositary at
which its business in respect of matters governed by the Deposit Agreement is
administered at any later time, being at the relevant time, the "Corporate
Officer").
2. The Deposit Agreement. Depositary Receipts (the "Receipts"), of which
this Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of [ ], 1996 (the "Deposit
Agreement"), between the Company and the Depositary. The Deposit Agreement
(copies of which are on file at the Corporate Office and at the office of any
Depositary's Agent) sets forth the rights of holders of Receipts and the
rights and duties of the Depositary. The statements made on the face and the
reverse of this Receipt are summaries of certain provisions of the Deposit
Agreement and are subject to the detailed provisions thereof, to which
reference is hereby made. In the event of any conflict between the provisions
of this Receipt and the provisions of the Deposit Agreement, the provisions of
the Deposit Agreement will govern. Unless otherwise expressly herein provided,
all defined terms used herein shall have the meanings ascribed thereto in the
Deposit Agreement.
3. Redemptions of Stock. Whenever the Company shall elect to redeem shares
of Stock in accordance with the Certificate of Designation, it shall (unless
otherwise agreed in writing with the Depositary) give the Depositary in its
capacity as Depositary not less than two business days prior notice of the
proposed date of the mailing of the notice of redemption of the Stock required
pursuant to paragraph 4(h) of the Certificate of Designation in connection
with a redemption of Stock and of the number of such shares of Stock held by
the Depositary to be redeemed as provided herein.
On the date of any redemption of Stock in accordance with the Certificate of
Designation, provided that the Company shall then have deposited with the
Depositary the shares of Common Stock, par value $3 per share ("Common
Stock"), and any funds required pursuant to the Certificate of Designation for
the Stock deposited
A-17
with the Depositary to be redeemed, the Depositary shall redeem (using the
shares of Common Stock and funds, if any, deposited with it) the number of
Adjustable Rate Depositary Shares representing such redeemed Stock. The
distribution of the shares of Common Stock and funds, if any, used to effect
such redemption shall be governed by Sections 4.01 and 4.02 of the Deposit
Agreement. The Depositary shall, as directed by the Company, mail, first class
postage prepaid, notice of the redemption of Stock and the proposed
simultaneous redemption of Adjustable Rate Depositary Shares representing the
Stock to be redeemed, not less than 30 and not more than 60 days prior to the
date fixed for redemption (the "Redemption Date") of such Stock and Adjustable
Rate Depositary Shares. Such notice shall be mailed to each holder of record on
the record date fixed for such redemption as provided in paragraph 14 below of
the Receipts evidencing Adjustable Rate Depositary Shares. In case fewer than
all the outstanding Adjustable Rate Depositary Shares are to be redeemed, the
Adjustable Rate Depositary Shares to be redeemed shall be selected by lot or
such other methods the Company in its discretion may determine is fair and
appropriate.
Notice having been mailed as aforesaid, from and after the redemption date
(unless the Company shall have failed to redeem the shares of Stock to be
redeemed by it, as set forth in the Company's notice provided for above), the
Adjustable Rate Depositary Shares called for redemption shall be deemed no
longer to be outstanding and all rights of the holders of Receipts evidencing
such Adjustable Rate Depositary Shares (except the right to receive the shares
of Common Stock and any cash upon redemption) shall, to the extent of such
Adjustable Rate Depositary Shares, cease and terminate. Upon surrender in
accordance with said notices of the Receipts evidencing such Adjustable Rate
Depositary Shares (properly endorsed or assigned for transfer, if the
Depositary shall so require), such Adjustable Rate Depositary Shares shall be
redeemed (as nearly as may be practicable without creating fractional shares)
in exchange for cash or, if applicable, shares of Common Stock at a rate equal
to one twenty-fifth of the number of shares of Common Stock delivered in
respect of the shares of Stock represented by such Depositary Shares as is
provided for in the Certificate of Designation. The foregoing shall be subject
further to the terms and conditions of the Certificate of Designation. If fewer
than all of the Adjustable Rate Depositary Shares evidenced by this Receipt are
called for redemption, the Depositary will deliver to the holder of this
Receipt upon its surrender to the Depositary, a new Receipt evidencing the
Adjustable Rate Depositary Shares evidenced by such prior Receipt and not
called for redemption, together with the shares of Common Stock or other
property for the Adjustable Rate Depositary Shares called for redemption.
4. Surrender of Receipts and Withdrawal of Stock. Upon surrender of this
Receipt to the Depositary at the Corporate Office, or at such other offices as
the Depositary may designate, and subject to the provisions of the Deposit
Agreement, the holder hereof is entitled to withdraw, and to obtain delivery,
to or upon the order of such holder, of any or all of the Stock (but only in
whole shares of Stock) and all money and other property, if any, at the time
represented by the Adjustable Rate Depositary Shares evidenced by this Receipt,
but holders of such shares of Stock will not thereafter be entitled to deposit
such shares of Stock hereunder or to receive Adjustable Rate Depositary Shares
therefor. If the Receipt or Receipts delivered by the holder to the Depositary
in connection with such withdrawal shall evidence a number of Adjustable Rate
Depositary Shares in excess of the number of Adjustable Rate Depositary Shares
representing the whole number of shares of Stock to be withdrawn, the
Depositary shall, in addition to such whole number of shares of Stock and such
money and other property, if any, to be withdrawn, deliver, to or upon the
order of such holder, a new Receipt or Receipts evidencing such excess number
of Adjustable Rate Depositary Shares.
5. Transfers, Split-ups, Combinations. Subject to paragraphs 6, 7 and 8
below, this Receipt is transferable on the books of the Depositary upon
surrender of this Receipt to the Depositary, properly endorsed or accompanied
by a properly executed instrument of transfer or endorsement, and upon such
transfer the Depositary shall sign and deliver a Receipt to or upon the order
of the person entitled thereto, all as provided in and subject to the Deposit
Agreement. This Receipt may be split into other Receipts or combined with other
Receipts into one Receipt evidencing the same aggregate number of Adjustable
Rate Depositary Shares evidenced by the Receipt or Receipts surrendered;
provided, however, that the Depositary shall not issue any Receipt evidencing a
fractional Adjustable Rate Depositary Share.
A-18
6. Conditions to Signing and Delivery, Transfer, etc., of Receipts. Prior to
the execution and delivery, transfer, split-up, combination, surrender or
exchange of this Receipt, the Depositary, any of the Depositary's Agents or
the Company may require any or all of the following: (i) payment to it of a
sum sufficient for the payment (or, in the event that the Depositary or the
Company shall have made such payment, the reimbursement to it) of any tax or
other governmental charge with respect thereto (including any such tax or
charge with respect to Stock being deposited or withdrawn or with respect to
Common Stock of the Company being issued upon redemption); (ii) the production
of proof satisfactory to it as to the identity and genuineness of any
signature; and (iii) compliance with such regulations, if any, as the
Depositary or the Company may establish not inconsistent with the Deposit
Agreement. Any person presenting Stock for deposit, or any holder of this
Receipt, may be required to file such proof of information, to execute such
certificates and to make such representations and warranties as the Depositary
or the Company may reasonably deem necessary or proper. The Depositary or the
Company may withhold or delay the delivery of this Receipt, the transfer,
redemption or exchange of this Receipt, the withdrawal of the Stock
represented by the Adjustable Rate Depositary Shares evidenced by this Receipt
or the distribution of any dividend or other distribution until such proof or
other information is filed, such certificates are executed or such
representations and warranties are made.
7. Suspension of Delivery, Transfer, etc. The deposit of Stock may be
refused, the delivery of this Receipt against Stock may be suspended, or the
transfer, split-up, combination, surrender or exchange of this Receipt may be
suspended (i) during any period when the register of stockholders of the
Company is closed, (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission, or under any provision of the Deposit
Agreement, or (iii) with the approval of the Company, for any other reason.
8. Payment of Taxes or Other Governmental Charges. If any tax or other
governmental charge shall become payable by or on behalf of the Depositary
with respect to this Receipt, the Adjustable Rate Depositary Shares evidenced
by this Receipt, the Stock (or any fractional interest therein) represented by
such Adjustable Rate Depositary Shares or any transaction referred to in
Section 4.06 of the Deposit Agreement, such tax (including transfer, issuance
or acquisition taxes, if any) or governmental charge shall be payable by the
holder hereof. Until such payment is made, transfer of this Receipt or any
withdrawal of the Stock, represented by the Adjustable Rate Depositary Shares
evidenced by this Receipt may be refused, any dividend or other distribution
may be withheld and any part or all of the Stock represented by the Adjustable
Rate Depositary Shares evidenced by this Receipt may be sold for the account
of the holder hereof (after attempting by reasonable means to notify such
holder prior to such sale). Any dividend or other distribution so withheld and
the proceeds of any such sale may be applied to any payment of such tax or
other governmental charge, the holder of this Receipt remaining liable for any
deficiency.
9. Amendment. The form of the Receipts and any provision of the Deposit
Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect that they may deem
necessary or desirable. Any amendment that shall impose any fees, taxes or
charges (other than fees and charges provided for herein or in the Deposit
Agreement), or that shall otherwise prejudice any substantial existing right
of holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 15 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. The holder of this
Receipt at the time any such amendment becomes effective shall be deemed, by
continuing to hold this Receipt, to consent and agree to such amendment and to
be bound by the Deposit Agreement an amended thereby. In no event shall any
amendment impair the right, subject to the provisions of paragraphs 3, 4, 7
and 8 hereof and of Sections 2.03, 2.06, 2.07 and Article III of the Deposit
Agreement, of the owner of the Adjustable Rate Depositary Shares evidenced by
this Receipt to surrender this Receipt with instructions to the Depositary to
deliver to the holder the Stock and all money and other property, if any,
represented thereby, except in order to comply with mandatory provisions of
applicable law.
10. Fees, Charges and Expenses. The Company will pay all fees, charges and
expenses of the Depositary, except for taxes (including transfer taxes, if
any) and other governmental charges and such charges as are
A-19
expressly provided in the Deposit Agreement to be at the expense of persons
depositing Stock, holders of Receipts or other persons.
11. Title to Receipts. It is a condition of this Receipt, and every
successive holder hereof by accepting or holding the same consents and agrees,
that title to this Receipt (and to the Adjustable Rate Depositary Shares
evidenced hereby), when properly endorsed or accompanied by a properly
executed instrument of transfer or endorsement, is transferable by delivery
with the same effect as in the case of a negotiable instrument; provided,
however, that until this Receipt shall be transferred on the books of the
Depositary as provided in Section 2.04 of the Deposit Agreement, the
Depositary and the Company may, notwithstanding any notice to the contrary,
treat the record holder hereof at such time as the absolute owner hereof for
the purpose of determining the person entitled to distribution of dividends or
other distributions or to any notice provided for in the Deposit Agreement and
for all other purposes.
12. Cash Dividends and Distributions. Whenever any cash dividend or other
cash distribution shall be paid on the Stock, the Company, on behalf of the
Depositary, (or, if the Company determines otherwise, the Depositary) will,
subject to the provisions of the Deposit Agreement, make such distribution to
record holders of Receipts as nearly as practicable in proportion to the
respective numbers of Adjustable Rate Depositary Shares evidenced by the
Receipts held by such holders; provided, however, that in the event the
Company or the Depositary shall be required to withhold and does withhold from
any cash dividend or other cash distribution in respect of the Stock an amount
on account of taxes or as otherwise required by law, regulation or court
process, the amount made available for distribution or distributed in respect
of Adjustable Rate Depositary Shares shall be reduced accordingly. The
Company, on behalf of the Depositary, (or, if the Company determines
otherwise, the Depositary) shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any owner of Adjustable Rate Depositary
Shares a fraction of one cent. In the event that the calculation of any such
cash dividend or other cash distribution to be paid to any record holder on
the aggregate number of Adjustable Rate Depositary Shares held by such holder
results in an amount which is a fraction of a cent, the amount the Depositary
shall distribute to such record holder shall be rounded to the next highest
whole cent; and upon request of the Depositary, the Company shall pay the
additional amount to the Depositary for distribution.
13. Subscription Rights, Preferences or Privileges. If the Company shall at
any time offer or cause to be offered to the persons in whose name Stock is
registered on the books of the Company any rights, preferences or privileges
to subscribe for or to purchase any securities or any rights, preferences or
privileges of any other nature, such rights, preferences or privileges shall
in each such instance, subject to the provisions of the Deposit Agreement, be
made available by the Depositary or the Company to the record holders of
Receipts if the Company so directs in such manner as the Company shall
instruct.
14. Notice of Dividends, Fixing of Record Date. Whenever any cash dividend
or other cash distribution shall become payable, any distribution other than
cash shall be made, or any rights, preferences or privileges shall at any time
be offered with respect to the Stock, or whenever the Depositary shall receive
notice of (i) any meeting at which holders of Stock are entitled to vote or of
which holders of Stock are entitled to notice or any solicitation of consents
in respect of the Stock, (ii) any call for redemption or exchange of any
shares of Stock or (iii) any event of which holders of Stock are entitled to
notice in accordance with the Certificate of Designation, the Depositary shall
in each such instance fix a record date (which shall be the same date as the
record date fixed by the Company with respect to the Stock) for the
determination of the holders of Receipts who shall be entitled (i) to receive
such dividend, distribution, rights, preferences or privileges or the net
proceeds of the sale thereof, (ii) to receive notice of, and to give
instructions for the exercise of voting rights at, or the delivery of consents
with respect to, any such meeting or consent solicitation, as the case may be,
or (iii) to receive notice of any such redemption or other event.
15. Voting Rights. Upon receipt of notice of any meeting at which the
holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter (unless another arrangement for allowing holders of
Adjustable Rate Depositary Shares to exercise the voting rights associated
with the Adjustable Rate Depositary
A-20
Shares is agreed by the Company and the Depositary), mail to the record
holders of Receipts a notice, which shall contain (i) such information as is
contained in such notice of meeting, (ii) a statement that the holders of
Receipts at the close of business on a specified record date determined as
provided in paragraph 14 will be entitled, subject to any applicable provision
of law, the Certificate of Incorporation or the Certificate of Designation, to
instruct the Depositary as to the exercise of the voting rights with respect
to the amount of Stock represented by their respective Adjustable Rate
Depositary Shares, and (iii) a brief statement as to the manner in which such
instructions may be given. Upon the written request of a holder of a Receipt
on such record date, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted with respect to the amount of Stock represented by
the Adjustable Rate Depositary Shares evidenced by such Receipt in accordance
with the instructions set forth in such request. In the absence of specific
instructions from the holder of a Receipt, the Depositary will abstain from
voting to the extent of the Stock represented by the Adjustable Rate
Depositary Shares evidenced by such Receipt.
16. Reports, Inspection of Transfer Books. The Depositary shall make
available for inspection by holders of Receipts at the Corporate office and at
such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of Stock and made generally
available to the holders of Stock by the Company. The Depositary shall keep
books at the Corporate Office for the registration and transfer of Receipts,
which books at all reasonable times during normal business hours will be open
for inspection by the record holders of Receipts as and to the extent provided
by applicable law.
17. Liability of the Depositary, the Depositary's Agent and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
shall incur any liability to any holder of any Receipt, if by reason of any
provision of any present or future law or regulation thereunder of any
governmental authority or, in the case of the Depositary or the Depositary's
Agent, by reason of any provision, present or future, of the Certificate of
Incorporation or the Certificate of Designation or, in the case of the
Company, the Depositary or the Depositary's Agent, by reason of any act of God
or war or other circumstances beyond the control of the relevant party, the
Depositary, any Depositary's Agent or the Company shall be prevented or
forbidden from doing or performing any act or thing that the terms of the
Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's Agent or the Company incur any liability to any
holder of a Receipt by reason of any nonperformance or delay, caused as
aforesaid, in the performance of any act or thing that the terms of the
Deposit Agreement provide shall or may be done or performed, or by reason of
any exercise of, or failure to exercise, any discretion provided for in the
Deposit Agreement.
18. Obligations of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation or shall be subject to any liability hereunder or under
the Deposit Agreement to holders of Receipts other than that each of them
agrees to use good faith in the performance of such duties as are specifically
set forth in the Deposit Agreement and other than for its negligence, bad
faith or willful misconduct.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or
other proceeding with respect to Stock, Adjustable Rate Depositary Shares or
Receipts or Common Stock that in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Company shall be
liable for any action or any failure to act by it in reliance upon the advice
of or information from legal counsel, accountants, any person presenting Stock
for deposit, any holder of a Receipt or any other person believed by it in
good faith to be competent to give such advice or information.
19. Termination of Deposit Agreement. The Deposit Agreement may be
terminated by the Company or the Depositary only after (a) (i) all outstanding
Adjustable Rate Depositary Shares shall have been redeemed pursuant to Section
2.03 of the Deposit Agreement or there shall have been made a final
distribution in respect
A-21
of the Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution shall have been distributed to the holders
of Adjustable Rate Depositary Shares pursuant to Section 4.01 or 4.02 of the
Deposit Agreement, as applicable and (b) reasonable notice has been given to
any remaining holders of Receipts. Upon the termination of the Deposit
Agreement, the Company shall be discharged from all obligations thereunder
except for its obligations to the Depositary, any Depositary's Agent and any
Registrar under Sections 5.07 and 5.08 of the Deposit Agreement.
If any Receipts remain outstanding after the date of termination, the
Depositary thereafter shall discontinue all functions and be discharged from
all obligations as provided in the Deposit Agreement, except as specifically
provided therein.
20. Governing Law. The Deposit Agreement and this Receipt and all rights
thereunder and hereunder and provisions thereof and hereof shall be governed
by, and construed in accordance with, the law of the State of New York without
giving effect to principles of conflict of laws.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose unless this Receipt shall
have been executed manually or, if a Registrar for the Receipts (other than
the Depositary) shall have been appointed, by facsimile by the Depositary by
the signature of a duly authorized signatory and, if executed by facsimile
signature of the Depositary, shall have been countersigned manually by Such
Registrar by the signature of a duly authorized signatory.
THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK.
THE DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE FOREGOING
DESCRIPTION WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY SUMMARIZING
CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT. UNLESS EXPRESSLY SET FORTH IN THE
DEPOSIT AGREEMENT, THE DEPOSITARY MAKES NO WARRANTIES OR REPRESENTATIONS AS TO
THE VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT ANY TIME DEPOSITED
WITH THE DEPOSITARY UNDER THE DEPOSIT AGREEMENT OR OF THE ADJUSTABLE RATE
DEPOSITARY SHARES OR THE RECEIPTS (EXCEPT FOR ITS COUNTERSIGNATURE THEREON),
AS TO THE VALIDITY OR SUFFICIENCY OF THE DEPOSIT AGREEMENT, AS TO THE VALUE OF
THE ADJUSTABLE RATE DEPOSITARY SHARES OR AS TO ANY RIGHT, TITLE OR INTEREST OF
THE RECORD HOLDERS OF THE DEPOSITARY RECEIPTS IN AND TO THE ADJUSTABLE RATE
DEPOSITARY SHARES.
The Company will furnish to any holder of a Receipt without charge, upon
request addressed to its executive office or the office of its transfer agent,
a full statement of the designation, relative rights, preferences and
limitations of the shares of each authorized class, and of each series of
preferred stock authorized to be issued, so far as the same may have been
fixed, and a statement of the authority of the Board of Directors of the
Company to designate and fix the relative rights, preferences and limitations
of each series.
Dated:
[ ]
By __________________________________
Authorized Signatory
A-22
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
the within Receipt and all rights and interests represented by the
Adjustable Rate Depositary Shares evidenced thereby, and hereby irrevocably
constitutes and appoints his attorney, to transfer the same on the
books of the within-named Depositary, with full power of substitution in the
premises.
Dated:
Signature: __________________________
NOTE: The signature to this
assignment must correspond
with the name as written
upon the face of the
Receipt in every
particular, without
alteration or enlargement,
or any change whatever.
Signature Guarantee:
_____________________________________
X-00
XXXXX 0 XX
XXXXXXXXX AND PLAN OF MERGER
FORM OF
AMENDMENT TO
CERTIFICATE OF INCORPORATION
OF
TENNECO INC.
The first two paragraphs of Article FOURTH are hereby deleted in their
entirety and replaced with the following paragraph:
"The total number of shares of all classes of stock which the corporation
shall be authorized to issue is 20,000,000 shares of Preferred Stock, par
value $.01 per share (herein called "Preferred Stock"), and 100,000 shares
of Common Stock, of the par value of $.01 per share (herein called "Common
Stock")."
Part I of Article FOURTH is hereby deleted in its entirety.
Part II of Article FOURTH is hereby amended to read in its entirety as set
forth in the following paragraph:
"I.
1. The Board of Directors of the Company is hereby expressly authorized,
by resolution or resolutions thereof, to provide, out of the unissued
shares of Preferred Stock, for series of Preferred Stock and, with respect
to each such series, to fix the number of shares constituting such series
and the designation of such series, the voting powers (if any) of the
shares of such series, and the preferences and relative, participating,
optional or other special rights, if any, and any qualifications,
limitations or restrictions thereof, of the shares of such series. The
powers, preferences and relative, participating, optional and other special
rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding.
2. Except as otherwise provided in any resolution of the Board of
Directors providing for the issuance of any particular series of Preferred
Stock, shares of Preferred Stock redeemed or otherwise acquired by the
corporation shall, upon the filing of any required certificates with the
Secretary of State of Delaware, assume the status of authorized but
unissued Preferred Stock and may thereafter, subject to the provisions of
this Part I of Article FOURTH and of any restrictions contained in any
resolution of the Board of Directors providing for the issue of any
particular series of Preferred Stock, be reissued in the same manner as
other authorized but unissued Preferred Stock."
Part III and IV of Article FOURTH are hereby deleted in their entirety.
Subsection (A) of Article FIFTH is hereby deleted in its entirety and
replaced with the following paragraph:
"The number of directors which shall constitute the whole Board of
Directors shall be as determined from time to time by resolution adopted by
the affirmative vote of a majority of the Board of Directors; provided that
until otherwise determined by the Board of Directors in accordance
herewith, the number of directors shall be six (6)."
Subsection (B)(g) of Article FIFTH is hereby amended by deleting the words
"each committee to consist of two or more directors of the corporation" and
the comma immediately following such text.
Articles SEVENTH and NINTH are hereby deleted in their entirety and the
remaining provisions renumbered accordingly.
The Certificates of Designation for the $7.40, $4.50 and Series A filed on
, and are hereby deleted in their entirety.
