ARRANGEMENT AGREEMENT
among
ULTRAMAR DIAMOND SHAMROCK CORPORATION
3007152 NOVA SCOTIA COMPANY
and
TOTAL PETROLEUM (NORTH AMERICA) LTD.
Dated as of April 15, 1997
TABLE OF CONTENTS
I. THE ARRANGEMENT
1.01. The Arrangement
1.02. Effective Time
II. REPRESENTATIONS AND WARRANTIES
2.01. Representations and Warranties of Topna
2.02. Representations and Warranties of UDS and Canco
III. COVENANTS RELATING TO CONDUCT OF BUSINESS
3.01. Conduct of Business
3.02. No Solicitation by Topna
IV. ADDITIONAL AGREEMENTS
4.01. Preparation of the Proxy Statement; Topna
Shareholders Meeting
4.02. Access to Information; Confidentiality
4.03. Reasonable Efforts
4.04. Stock Options
4.05. Certain Employee Matters
4.06. Indemnification, Exculpation and Insurance
4.07. Fees and Expenses
4.08. Public Announcements
4.09. Affiliates
4.10. NYSE Listing
4.11. Shareholder Litigation
4.12. Issuance of Canco Shares
V. CONDITIONS PRECEDENT
5.01. Conditions to Each Party's Obligation to Effect
the Arrangement
5.02. Conditions to Obligations of UDS and Canco
5.03. Conditions to Obligation of Topna
5.04. Frustration of Closing Conditions
VI. TERMINATION, AMENDMENT AND WAIVER
6.01. Termination
6.02. Effect of Termination
6.03. Amendment
6.04. Extension; Waiver
6.05. Procedure for Termination, Amendment, Extension
or Waiver
VII. GENERAL PROVISIONS
7.01. Nonsurvival of Representations and Warranties
7.02. Notices
7.03. Definitions
7.04. Interpretation
7.05. Counterparts
7.06. Entire Agreement; No Third-Party Beneficiaries
7.07. Governing Law
7.08. Assignment
7.09. Enforcement
EXHIBITS
Exhibit Title
A Plan of Arrangement
B Form of Affiliate Letter
SCHEDULES
Schedule Title
2.01(b) Subsidiaries
2.01(c) Options and Rights
2.01(d) Authority; Noncontravention
2.01(e) SEC and CSC Documents; Undisclosed Liabilities
2.01(g) Absence of Certain Changes or Events
2.01(h) Litigation
2.01(i) Owned Real Property
2.01(j) Environmental Matters
2.01(k) Compliance with Applicable Laws
2.01(l) Absence of Changes in Benefit Plans
2.01(m) ERISA Compliance
2.01(n) Taxes
2.01(p) Contracts
2.01(s) Transactions with Affiliates
3.01(a) Conduct of Business
4.05 Employee Matters
7.03(d) Officers with Knowledge
ARRANGEMENT AGREEMENT
ARRANGEMENT AGREEMENT, dated as of April 15, 1997, among Ultramar
Diamond Shamrock Corporation, a Delaware corporation ("UDS"), 3007152 Nova
Scotia Company, a Nova Scotia unlimited liability company and a wholly
owned Subsidiary of UDS ("Canco"), and Total Petroleum (North America)
Ltd., a Canadian corporation ("Topna").
RECITALS
A. The respective Boards of Directors of UDS, Canco and Topna have
determined that the Arrangement and other transactions contemplated hereby
(collectively, the "Arrangement Transactions") are consistent with, and in
furtherance of, their respective long-term business strategies and goals
and have therefore approved the Arrangement Transactions and this
Agreement.
B. UDS, Canco and Topna desire to make certain representations and
warranties and agree to certain covenants in connection with the
Arrangement Transactions and to prescribe various conditions thereto.
NOW, THEREFORE, in consideration of the representations, warranties
and covenants herein contained, the parties agree as follows:
I. THE ARRANGEMENT
1.01. The Arrangement. On the terms and subject to the conditions
set forth in this Agreement, and in accordance with a plan of arrangement
substantially in the form attached hereto as Exhibit A (the "Plan of
Arrangement") and the Canada Business Corporations Act (the "CBCA"), Canco
will acquire all of the issued and outstanding shares of Topna Common
Stock ("Topna Shares") in exchange for shares of Common Stock of UDS ("UDS
Shares").
1.02. Effective Time. Subject to the provisions of this Agreement,
as soon as reasonably practicable after the execution of this Agreement,
Topna will apply to the Court of the Queen's Bench of Alberta (the
"Court") pursuant to Section 192 of the CBCA for an interim order in
substantially the form previously agreed to by UDS and Topna or such other
form as Canco and Topna may approve (such approvals not to be unreasonably
withheld or delayed) (the "Interim Order") providing for, among other
things, the calling and holding of the Topna Shareholders Meeting for the
purpose of obtaining the required shareholder approval of the arrangement,
including the exchange of securities as contemplated in the Plan of
Arrangement (collectively, the "Arrangement"), under Section 192 of the
CBCA. The Interim Order sought by Topna will provide that, for the
purpose of the Topna Shareholders Meeting, the requisite majority for the
approval of the Arrangement by the shareholders of Topna will be two-thirds of
the votes cast by the holders of Topna Shares who vote in
respect of the Arrangement. As promptly as practicable after satisfaction
or waiver of the conditions set forth in Article V (which will be
confirmed at the consummation of the Arrangement, such confirmation to be
so confirmed at a meeting to be held at Xxxxx, Day, Xxxxxx & Xxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx not later than the second business
day after such satisfaction or waiver (the "Closing")), Topna will apply
for a final order of the Court approving the Arrangement (the "Final
Order" and, together with the Interim Order, the "Arrangement Orders").
If the Final Order is obtained, Topna will file articles of arrangement
and such other documents as may be required to give effect to the
Arrangement (the "Arrangement Agreements"). Notwithstanding any other
provision hereof, Canco and UDS will have the right to approve the
Arrangement Orders and the Arrangement Documents (which approval will not
be unreasonably withheld or delayed, provided that the Arrangement Orders
and the Arrangement Documents (collectively, the "Arrangement Papers") are
consistent with this Agreement and do not adversely affect the rights of
the parties hereunder or the relative benefits to be obtained from the
Arrangement).
II. REPRESENTATIONS AND WARRANTIES
2.01. Representations and Warranties of Topna. Topna hereby
represents and warrants to UDS and Canco that except as disclosed in the
Topna SEC Documents filed prior to the date hereof or as set forth on the
disclosure schedule delivered by Topna to UDS and Canco prior to the
execution of this Agreement (the "Topna Disclosure Schedule"):
(a) Organization, Standing and Corporate Power. Each of Topna and
each of its Subsidiaries (collectively, the "Topna Companies") is a
corporation or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions which recognize such concept)
under the Laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to
carry on its business as now being conducted. Each Topna Company is duly
qualified or licensed to do business and is in good standing (with respect
to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate could not reasonably
be expected to have a Topna Material Adverse Effect. Topna has delivered
to UDS, prior to the execution of this Agreement, complete and correct
copies of its articles of continuance and bylaws and has made available to
UDS complete and correct copies of the articles of incorporation and
bylaws (or comparable organizational documents) of each of its Significant
Subsidiaries, in each case as amended to date.
(b) Subsidiaries. Exhibit 21 to Topna's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Topna 1996 10-K") correctly
lists all Significant Subsidiaries of Topna. Section 2.01(b) of the Topna
Disclosure Schedule correctly lists all other Subsidiaries of Topna. All
the outstanding shares of capital of, or other equity interests in, each
Subsidiary of Topna or of any of its Subsidiaries have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly
by Topna, free and clear of all pledges, claims, options, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens").
(c) Capital Structure. The authorized capital of Topna consists of
an unlimited number of Topna Shares, 10,000,000 first preferred shares
("First Preferred"), and 10,000,000 second preferred Shares ("Second
Preferred" and, together with the First Preferred, the "Topna Preferred
Shares"). At the close of business on the second business day immediately
preceding the date hereof (the "Measurement Date"), (i) 39,143,896 Topna
Shares were issued and outstanding, (ii) no Topna Preferred Shares were
issued or outstanding or held by Topna in its treasury, and (iii) based on
Topna's records, 2,440,991 Topna Shares were reserved for issuance
pursuant to options listed in Section 2.01(c) of the Topna Disclosure
Schedule granted under stock plans listed in Section 2.01(c) of the Topna
Disclosure Schedule (the "Topna Stock Plans") and 829,527 Topna Shares
(the "Reserved Shares") were reserved under the Topna Stock Plans for
issuance pursuant to options that had not yet been granted thereunder.
Except as set forth above and excluding the Reserved Shares, at the close
of business on the Measurement Date, no shares of capital stock or other
voting securities of Topna were issued, reserved for issuance or
outstanding. Except as set forth above, at the close of business on the
Measurement Date, there were, and as of the Effective Time there will be,
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which any Topna
Company is a party or by which any of them is bound obligating any Topna
Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital or other voting securities of any Topna
Company or obligating any Topna Company to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking (collectively, "Topna Rights") and
no Topna Rights have been issued since the Measurement Date. Section
2.01(c) of the Topna Disclosure Schedule sets forth a complete and correct
list of the number of Topna Shares subject to Topna Rights and the
exercise prices and other material terms thereof. All outstanding capital
shares of Topna are, and all shares which may be issued pursuant to any
Topna Right will be, when issued in accordance with the terms of such
Topna Right, duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. There are, and as of the Effective
Time there will be, no bonds, debentures, notes or other indebtedness or
securities (other than Topna Shares) of any Topna Company having the right
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of any Topna Company
may vote ("Topna Voting Debt"). There are no outstanding contractual
obligations of any Topna Company to repurchase, redeem or otherwise
acquire any capital shares of any Topna Company. As of the close of
business on the Measurement Date, there were no outstanding contractual
obligations of any Topna Company to vote or to dispose of any capital
shares of any Topna Company and no such obligations have arisen since the
Measurement Date.
(d) Authority; Noncontravention. Topna has all requisite corporate
power and authority to enter into each of the Arrangement Agreements and,
subject to the approvals contemplated in the Arrangement Orders or this
Agreement, to consummate the transactions contemplated thereby. The
execution and delivery of each of the Arrangement Agreements by Topna and
the consummation by Topna of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of
Topna, subject, in the case of the adoption of this Agreement, to the
Topna Shareholder Approval. The Arrangement Agreements have been duly
executed and delivered by Topna and constitute legal, valid and binding
obligations of Topna, enforceable against Topna in accordance with their
terms. The execution and delivery of the Arrangement Agreements do not,
and the consummation of the transactions contemplated thereby and
compliance with the provisions thereof will not, result in the creation of
any Lien upon any of the properties or assets of any Topna Company, except
such Liens as could not, individually or in the aggregate, reasonably be
expected to have a Topna Material Adverse Effect, or conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of a material benefit under, (i)
the articles of incorporation or bylaws (or the comparable organizational
documents) of any Topna Company, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license to which any Topna Company is a party or
which is applicable to any Topna Company or its properties or assets, or
(iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order or decree ("Order") or
statute, law, ordinance, rule, regulation or other law (including without
limitation the common law) ("Law") applicable to any Topna Company or its
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights or losses that,
individually or in the aggregate, could not reasonably be expected to have
a Topna Material Adverse Effect. No consent, approval, Order or
authorization of, or registration, declaration or filing with, any United
States, Canadian, federal, provincial, state, local or foreign government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency (a "Governmental Entity") is required by
or with respect to any Topna Company in connection with the execution and
delivery of any of the Arrangement Agreements by Topna or the consummation
by Topna of the transactions contemplated thereby, except (A) pursuant to
applicable premerger notification and waiting period requirements under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); (B) pursuant to applicable requirements under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Exchange Act"), as may be required in connection with the
Arrangement Agreements and the transactions contemplated thereby; (C) the
filings of the Arrangement Documents required by the CBCA and approvals
contemplated by Section 1.02; (D) required notices, filings, consents and
approvals under the Investment Canada Act and under the Competition Act
(Canada); and (E) where the failure to obtain such consents, approvals,
orders, or authorizations, registrations, declarations or filings could
not, individually or in the aggregate, reasonably be expected to have a
Topna Material Adverse Effect.
(e) SEC and CSC Documents; Undisclosed Liabilities. Since January
1, 1996, Topna has filed or disclosed with the Securities and Exchange
Commission (the "SEC") all reports, schedules, forms, information,
statements and other documents required to be filed by it with the SEC
(the "Topna SEC Documents") and has filed with all Canadian, federal,
provincial and local Governmental Entities having jurisdiction with
respect to the registration or qualification of Topna Shares and Topna's
public reporting obligations as a result of such registration or
qualification all forms, reports and documents required to be filed by it
therewith (collectively, the "Topna CSC Documents"). As of their
respective dates, the Topna SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such
Topna SEC Documents, and the Topna CSC Documents complied with all
applicable Laws and policies in all material respects. Except to the
extent that information contained in any Topna SEC Document has been
revised or superseded by a later Topna SEC Document or any information in
any Topna CSC Document has been revised or superseded by a later filed
Topna CSC Document in any such case filed prior to the date hereof (the
"Topna Filed SEC/CSC Documents"), none of the Topna SEC Documents or Topna
CSC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Topna
included in the Topna SEC Documents complied, as of their respective dates
of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with United States
generally accepted accounting principles ("U.S. GAAP") (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as
specified therein) and fairly present in all material respects the
consolidated financial position of Topna and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments).
Except (i) as reflected in the consolidated balance sheet of Topna as of
December 31, 1996 included within the Topna 1996 10-K (the "12/31/96 Topna
Balance Sheet") or as specifically described in the notes thereto, (ii)
for liabilities incurred in connection with the Arrangement Agreements or
the transactions contemplated thereby, and (iii) for liabilities and
obligations incurred since December 31, 1996 in the ordinary course of
business consistent with past practice, none of the Topna Companies has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by U.S. GAAP to be reflected in a
consolidated balance sheet (including without limitation the notes
thereto), including without limitation liabilities arising under any Laws
relating to the protection of health, safety or the environment
("Environmental Laws"). Topna has previously delivered to UDS its
business plan for the period 1997-2001 (the "Five-Year Plan"), including
the material assumptions on which it was based. The Five-Year Plan has
been prepared in good faith and is based upon assumptions believed by
management to be reasonable for the purposes for which it was prepared at
the time it was made. Giving effect to changes in the refining and
petroleum products and convenience store marketing business generally in
the United States since the time the Five-Year Plan was prepared, the
executive officers of Topna have no reason to believe that any such
assumption is no longer valid for such purposes in any material respect.
(f) Information Supplied. None of the information to be supplied by
Topna specifically for inclusion or incorporation by reference in the
proxy statement relating to the Topna Shareholders Meeting (the "Proxy
Statement") will, at the date it is first mailed to Topna's shareholders
or at the time of the Topna Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The Proxy Statement will comply as to form in all material respects with
all Laws applicable thereto, except that no representation or warranty is
made by Topna herein or in the immediately preceding sentence with respect
to statements made or incorporated by reference therein based on
information supplied by UDS or Canco specifically for inclusion or
incorporation by reference in the Proxy Statement.
(g) Absence of Certain Changes or Events. Since December 31, 1996,
Topna has conducted its business only in the ordinary course and, except
as expressly contemplated in this Agreement, there has not been (i) any
event, change or condition which could reasonably be expected to result in
a Topna Material Adverse Effect, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, shares or
property) with respect to any of Topna's capital, other than regular
quarterly dividends of U.S. $0.075 per Topna Share, (iii) any split,
combination or reclassification of any of Topna's capital or any issuance
or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of Topna's capital, (iv) (A)
any granting by any Topna Company to any of its directors, officers or
other key employees of any increase in compensation, (B) any granting by
any Topna Company to any such director, officer or key employee of any
increase in severance or termination pay or incurrence of any obligation
in respect thereof, or (C) any entry by any Topna Company into any
employment, severance or termination agreement with any such executive
officer or key employee, (v) any transaction between any Topna Company and
any officer, director or shareholder of any Topna Company, or any
Affiliate, associate or relative of any of the foregoing, or any payment
to or for the benefit of, directly or indirectly, any of the foregoing,
other than transactions in the ordinary course of business with Total, a
French societe anonyme ("Total"), described by category on the Topna
Disclosure Schedule, and (vi) any transaction consummated or agreement
entered into by any Topna Company that would be required to be described
on the Topna Disclosure Schedule pursuant to Rule 402 or 404 of the SEC's
Regulation S-K if such Rules applied to disclosures by the Topna Companies
on the Topna Disclosure Schedule (any such transaction or agreement, a
"Related-Party Transaction"). For purposes of this Agreement, "key
employee" means any employee whose current salary and targeted bonus
exceeds U.S. $100,000 per annum.
(h) Litigation. Except for claims for money damages alone of less
than $250,000 in respect of any single claim or series of related claims,
there is no suit, judicial or regulatory action or proceeding pending or,
to the Knowledge of Topna, threatened, against or affecting any Topna
Company, any Order or notice of any Order of any Governmental Entity or
arbitrator outstanding against Topna or any of its Subsidiaries, or, to
the Knowledge of Topna, any such threatened or proposed Order.
(i) Owned Real Property. All real property owned by a Topna Company
(the "Owned Real Property") and all real property leased by any Topna
Company ("Leased Real Property") is so owned or leased, as the case may
be, free and clear of all Liens, mortgages, easements, rights-of-way or
other restrictions of any nature whatsoever, except for (A) Liens that are
listed or described on Section 2.01(i) of the Topna Disclosure Schedule,
(B) mechanics', carriers', workers', warehouseman's, materialman's,
repairmen's or other Liens arising or incurred in the ordinary course of
business, (C) Liens for taxes, assessments and other similar governmental
charges which are not due and payable or which may thereafter be paid
without penalty, (D) other imperfections of title or encumbrances, if any,
which do not materially affect the marketability of the property subject
thereto and do not materially impair the use of the property subject
thereto in the business as presently conducted, and (E) other Liens
arising as a matter of Law.
(j) Environmental Matters. The Topna Companies have conducted all
operations at or from the Owned Real Property and Leased Real Property in
compliance with all applicable Environmental Laws. None of the Topna
Companies has received any directive, order, notice, request for
information or demand from any federal, state or local Governmental
Authority, with jurisdiction to enforce the Environmental Laws asserting
any non-compliance or violation of the Environmental Laws, or identifying
any of the Topna Companies as a potential responsible party liable or
potentially liable under any applicable Environmental Laws for the
investigation or remediation of any real property, including any Owned
Real Property and Leased Real Property, formerly owned or operated real
property, or any off-site facilities at which any of the Topna Companies
has disposed of waste. To the Knowledge of Topna, there are no conditions
existing at any Owned Real Property, Leased Real Property and formerly
owned or operated real properties that require remedial, corrective action
or monitoring under any applicable Environmental Laws. To the Knowledge
of Topna, no Topna Company has contractually or by operation of any
Environmental Law assumed any liabilities arising under the Environmental
Laws of any predecessors or any other Person.
(k) Compliance with Applicable Laws. The Topna Companies hold all
permits, licenses, variances, exemptions, Orders and approvals of all
Governmental Entities which are material to the operation of the
businesses of the Topna Companies, taken as a whole, as conducted on the
date hereof (the "Topna Permits"). The Topna Companies are in compliance
with the terms of the Topna Permits and all applicable Laws. No action,
demand, requirement or investigation by any Governmental Entity with
respect to any of the Topna Companies is pending or, to the Knowledge of
Topna, threatened.
(l) Absence of Changes in Benefit Plans. Since December 1, 1996,
except as set forth in Section 2.01(l) of the Topna Disclosure Schedule or
as contemplated in Section 4.05, (i) there has not been any adoption or
amendment by any of the Topna Companies of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of any Topna Company and (ii) no
Topna Company has entered into any employment, consulting, severance,
termination or indemnification agreement, arrangement or understanding
with any current or former employee, officer or director thereof.
(m) ERISA Compliance. (i) The Topna Disclosure Schedule sets forth
all "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other material employee benefit arrangements or policies, including
without limitation severance pay, sick leave, vacation pay, salary,
continuation, retirement, savings, deferred compensation, bonus, stock
purchase, stock option, hospitalization, medical insurance, life insurance
and scholarship programs, (1) maintained by any of the Topna Companies and
(2) to which any of the Topna Companies contributes or is obligated to
contribute, in either case on behalf of current or former employees of any
of the Topna Companies or any current or former employees of Total or any
Affiliate thereof who as of the date hereof perform or performed services
primarily for any of the Topna Companies (any such current employees being
referred to herein collectively as "Business Employees"), other than any
Multiemployer Plan (as defined below) (the "Employee Benefit Plans")
maintained or contributed to by any Person (whether or not incorporated)
which is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended (the "Code") (an
"ERISA Affiliate"). Topna has previously delivered or made available to
UDS a complete and correct copy of each of the Employee Benefit Plans.
(ii) None of the Topna Companies or any of their ERISA Affiliates has
incurred any liability or obligation that would result in a material
adverse effect due to a complete or partial withdrawal from any plan
described in Section 3(37) of ERISA (a "Multiemployer Plan") prior to the
date hereof, nor has any of them incurred any liability or obligation
that, individually or in the aggregate, could reasonably be expected to
have a material adverse effect due to the termination or reorganization of
a Multiemployer Plan, in either case which remains unsatisfied as of the
date hereof.
(iii) Each Employee Benefit Plan intended to qualify under Section 401
of the Code and the trusts maintained pursuant thereto has received a
determination letter from the Internal Revenue Service (the "IRS") that
they are so qualified and exempt from federal income taxation under
Section 401 of the Code, and, to the Knowledge of Topna, nothing has
occurred with respect to the operation of any such Employee Benefit Plan
which could reasonably be expected to cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under
ERISA or the Code.
(iv) No accumulated funding deficiencies exist in any of the Employee
Benefit Plans subject to Section 412 of the Code. No waivers of the
minimum funding requirements of Section 412 of the Code have been
requested or obtained by any of the Topna Companies or any of their ERISA
Affiliates.
(v) Complete and correct copies of the following documents with
respect to each of the Employee Benefit Plans, as applicable, have been
delivered or made available to UDS by Topna: (A) all material Employee
Benefit Plans and related trust documents, and amendments thereto, (B) the
most recent Forms 5500, (C) the most recent IRS determination letter, (D)
summary plan descriptions, and (E) the most recent actuarial report.
(vi) There are no pending actions, claims or lawsuits which have been
asserted or instituted against any Topna Company, the Employee Benefit
Plans, the assets of any of the trusts under such plans or the plan
sponsor or the plan administrator or, to the Knowledge of Topna, against
any fiduciary of the Employee Benefit Plans, concerning the operation of
any such plan (other than routine benefit claims made in the ordinary
course of plan administration for which plan administrative review
procedures have not been exhausted), nor does Topna have Knowledge of
facts which could reasonably be expected to form the basis for any such
claim or lawsuit, except with respect to any such claim or lawsuit which
could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect.
(vii) Except for (A) any failures to maintain any Employee Benefit
Plan or (B) any prohibited transactions that could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect,
the Employee Benefit Plans have been maintained in accordance with their
terms and with all applicable provisions of ERISA (including rules and
regulations thereunder) and other applicable federal and state Laws, and
none of the Topna Companies, or to the Knowledge of Topna, any other
"party in interest" or "disqualified person" with respect to the Employee
Benefit Plans, has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA with respect
to which an excise tax or penalty could reasonably be expected to be
imposed against any of the Topna Companies. To the Knowledge of Topna, no
fiduciary of any of the Employee Benefit Plans has, or could reasonably be
expected to become subject to, on account of actions taken prior to the
date hereof, any liability for breach of fiduciary duty or any other
failure to act or comply in connection with the administration or
investment of the assets of any Employee Benefit Plan, insofar as such
liability could reasonably be expected to have any adverse effect on the
benefits or participation of any Business Employee.
(viii) None of the Topna Companies or any of their ERISA Affiliates
has terminated any pension plan, as defined in Section 3(2) of ERISA and
which is subject to Title IV of ERISA or Section 412 of the Code ("Pension
Plan"), or incurred any liability to the Pension Benefit Guaranty
Corporation (the "PBGC") (other than for the payment of premiums) or to a
trustee appointed under Section 4042 of ERISA, for which any of the Topna
Companies would be liable following the date hereof. All premiums due the
PBGC with respect to the Pension Plans have been paid when due.
(ix) No liability under any Employee Benefit Plan which is intended
to be qualified under Section 401(a) of the Code respect to any current or
former Business Employee has been funded nor has any such obligation been
satisfied with the purchase of a contract from an insurance company that
is not rated AA or higher by Standard & Poor's Corporation or the
equivalent by any other nationally recognized rating agency.
(x) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (A) except as
provided in Section 4.04 and 4.05, result in any payment which would be
considered a "parachute payment" under Section 280G of the Code, without
reference to whether such payment is made to a "disqualified individual"
for purposes of Section 280G of the Code, becoming due to any current or
former Business Employee, (B) except as disclosed in Sections 4.05 and
4.06 and Schedule 4.05, increase any benefits otherwise payable to any
current or former Business Employee under any Employee Benefit Plan or
other material agreement to which any of the Topna Companies is subject,
or (C) except as provided in Section 4.04, result in the acceleration of
the time of payment or vesting of any such benefits, including to any such
payment, increase or acceleration that individually or collectively could
give rise to any amount that would not be deductible pursuant to Section
280G of the Code.
(xi) Except as described in Section 4.05, none of the Topna Companies
has any Contract, plan or commitment to create any additional Employee
Benefit Plan covering any current or former Business Employee or to modify
any existing Employee Benefit Plan with respect to any current or former
Business Employee.
(xii) There has been no "mass layoff" or "plant closing," as defined
in the Worker Adjustment and Retraining Notification Act ("WARN") or any
similar state or local "plant closing" law, with respect to the employees
of any of the Topna Companies with respect to which any of the Topna
Companies could be subject to liability in the future, except with respect
to any such liability which could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect.
(n) Taxes. (i) Each Topna Company has filed all tax returns and
reports required to be filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired,
and each Topna Company has paid (or Topna has paid on behalf of the other
Topna Companies) all taxes shown as due on such returns. The most recent
financial statements contained in the Topna SEC Documents reflect reserves
that are adequate under U.S. GAAP for all taxes payable or which may
become payable by the Topna Companies for all taxable periods and portions
thereof through the date of such financial statements.
(ii) No material deficiencies for taxes have been proposed, asserted
or assessed against any Topna Company that are not adequately reserved for
in the 12/31/96 Topna Balance Sheet. The income tax returns of the Topna
Companies consolidated in such returns have been examined and closed, or
the applicable statutes of limitations with respect to such returns after
giving effect to any and all extensions and waivers have expired, or
remain open only for the periods described in the Topna Disclosure
Schedule, and except as reflected therein are not currently under audit or
examination by any taxing authority.
(iii) None of the Topna Companies is a party to, or is bound by, any
tax allocation or tax sharing agreement with any third party, or has any
current or potential contractual obligation to indemnify any other Person,
with respect to any material amount of taxes.
(iv) Each Topna Company has withheld and paid all taxes required by
it to be withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third
party, except where the failure to withhold and pay such taxes,
individually or in the aggregate, could not reasonably be expected to have
a Topna Material Adverse Effect.
(v) The information set forth in Section 2.01(n)(v) of the Topna
Disclosure Schedule represents Topna management's best estimate of the
minimum amount of adjusted cost base to Topna of the shares of Total
Petroleum, Inc., Topna's direct wholly owned Subsidiary ("TPI"), and the
exempt surplus of TPI in respect of Topna, in each case in accordance with
applicable Canadian tax Law (the sum of such adjusted cost base and exempt
surplus, the "TPI Tax Basis").
(vi) As used in this Agreement, "taxes" includes all United States,
Canadian, federal, state, provincial, foreign and local income, property,
sales, excise and other taxes or similar governmental charges.
(o) Insurance. The Topna Companies are insured, and will be so
insured through the Effective Time, against risks and in aggregate amounts
deemed to be reasonable and sufficient in the judgment of management and
consistent in all material respects with then-prevailing industry
practice.
(p) Contracts. The Topna Disclosure Schedule lists each written or
oral contract, lease or other legally binding obligation of a contractual
nature (a "Contract") which is of a type identified below:
(i) Contract for the employment of any Person or any consulting
Contract with any current or former director or officer of Topna,
Total or any Affiliate thereof;
(ii) Contract with any labor union or association;
(iii) Contract pertaining to a Related-Party Transaction with any
director, officer or Affiliate of Topna, other than those entered
into with Total in the ordinary course of business of a type
described on the Topna Disclosure Schedule;
(iv) indenture, note, loan or credit agreement or other Contract
relating to the borrowing of money or the payment of interest
thereon, or issuance of any material letters of credit, by any of the
Topna Companies or to the direct or indirect guarantee or assumption
by any of the Topna Companies of any material obligation of any other
Person other than lease financing transactions, borrowings under
existing revolving credit agreements and similar transactions in any
such case in the ordinary course of business; or
(v) other Contract to which it is a party that is material to
the Topna Companies, taken as a whole, or which, individually or in
the aggregate, could reasonably be expected to have a Topna Material
Adverse Effect.
Each Contract listed or required to be listed in the Topna Disclosure
Schedule is a valid and binding obligation of the parties thereto
enforceable in accordance with its terms and in full force and effect, and
no Topna Company is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect under any
such Contract, and, to the Knowledge of Topna, none of the other parties
to any such Contract is (with or without the lapse of time or the giving
of notice, or both) in such breach or default thereunder, except for such
of the foregoing as could not, individually or in the aggregate,
reasonably be expected to have a Topna Material Adverse Effect.
(q) Material Misstatements or Omissions. No statements,
representations or warranties by Topna contained herein (including the
Topna Disclosure Schedule), contains or will contain any untrue statement
of a material fact.
(r) Voting Requirements. Subject to obtaining the Arrangement
Orders, the affirmative vote of the holders of two-thirds of the Topna
Shares represented in person or by proxy at the Topna Shareholders Meeting
and actually voted thereat ("Topna Shareholder Approval") is the only vote
of the holders of any class or series of Topna's capital necessary to
approve and adopt this Agreement and the transactions contemplated hereby
or by any other Arrangement Agreement.
(s) Transaction With Affiliates. No Affiliate of any Topna Company
is involved in any business arrangement or relationship, other than solely
as an employee, with any Topna Company (whether written or oral), and none
of such Affiliates owns any property or right, tangible or intangible,
which is used in the business of any Topna Company. All transactions set
forth on the Topna Disclosure Schedule in which any Affiliate has an
interest were or are on terms no less favorable than could be obtained
from an unrelated third party.
(t) Brokers. No broker, investment banker, financial advisor or
other Person, other than Credit Suisse First Boston Corporation ("CSFB"),
the fees and expenses of which will be paid by Topna, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by any of the Arrangement
Agreements based upon arrangements made by or on behalf of Topna. Topna
has furnished to UDS complete and correct copies of all agreements under
which any such fees or expenses are payable and all indemnification and
other agreements related to the engagement of the Persons to whom such
fees are payable.
(u) Opinion of Financial Advisor. Topna has received the opinion of
CSFB dated the date of this Agreement, to the effect that, as of such
date, the consideration to be received by the Shareholders of Topna in the
Arrangement is fair to such shareholders from a financial point of view,
and a copy of such opinion has been delivered to UDS.
(v) Ownership of UDS Shares. Except for holdings of less than 1% of
the outstanding securities of any class or ownership of any employee plan
or related trust (such exception, the "1% Exception"), neither Topna nor,
to its Knowledge, any of its Affiliates (other than any employee benefit
trust or plan) (i) beneficially owns (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital stock of
UDS.
2.02. Representations and Warranties of UDS and Canco. UDS and
Canco, jointly and severally, hereby represent and warrant to Topna that,
except as disclosed in the UDS SEC Documents filed prior to the date
hereof or as set forth on the disclosure schedule delivered by UDS to
Topna prior to the execution of this Agreement (the "UDS Disclosure
Schedule"):
(a) Organization, Standing and Corporate Power. Each of UDS, Canco
and UDS's Significant Subsidiaries (collectively, the "UDS Companies") is
a corporation or other legal entity duly organized, validly existing and
in good standing (with respect to jurisdictions which recognize such
concept) under the Laws of the jurisdiction in which it is organized and
has the requisite corporate or other power, as the case may be, and
authority to carry on its business as now being conducted. Each UDS
Company is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such concept) in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed or to be in good standing, individually or in the aggregate,
could not be reasonably expected to have a UDS Material Adverse Effect.
UDS will deliver to Topna, within 10 days after the execution of this
Agreement, complete and correct copies of its and Canco's certificates of
incorporation and bylaws (or comparable organizational documents), in each
case as amended to date.
(b) Subsidiaries. UDS's Annual Report on Form 10-K for the year
ended December 31, 1996 correctly lists all Subsidiaries of UDS which as
of the date of this Agreement are Significant Subsidiaries.
(c) Capital Structure of UDS. The authorized capital stock of UDS
consists of 250,000,000 UDS Shares and 25,000,000 shares of preferred
stock of UDS ("UDS Preferred Shares"). Except as set forth above, at the
close of business on the Measurement Date, no shares of capital stock or
other voting securities of UDS were issued, reserved for issuance or
outstanding. Except (i) as set forth on the UDS Disclosure Schedule, (ii)
for the UDS Rights and (iii) for options granted pursuant to stock option
plans filed as exhibits to UDS's SEC Documents, at the close of business
on the Measurement Date, there were no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which any UDS Company is a party or by which
any of them is bound obligating any UDS Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of any UDS Company or obligating any UDS
Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking
(collectively, "UDS Rights") and no UDS Rights have been issued since the
Measurement Date. All outstanding shares of capital stock of UDS are, and
all shares which may be issued pursuant to any UDS Right will be, when
issued in accordance with the terms of such UDS Right, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are, and as of the Effective Time there will be, no bonds,
debentures, notes or other indebtedness of any UDS Company having the
right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of any UDS Company
may vote ("UDS Voting Debt"). The UDS Shares to be issued in the
Arrangement have been duly authorized and, when issued and delivered in
accordance herewith, will be validly issued, fully paid and nonassessable
with no liability attaching to the ownership thereof. Canco is a newly
formed, wholly owned Subsidiary of UDS that has not engaged in any
substantial business prior to the date hereof.
(d) Authority; Noncontravention. Each of UDS and Canco has the
requisite corporate or other power and authority to enter into each
Arrangement Agreement to which it is a party and to consummate the
transactions contemplated thereby. The execution and delivery of each of
the Arrangement Agreements by UDS and Canco, as applicable, and the
consummation by them of the transactions contemplated thereby have been
duly authorized by all necessary corporate or other action on the part of
UDS and Canco. The Arrangement Agreements have been duly executed and
delivered by each of UDS and Canco, as applicable, and constitute legal,
valid and binding obligations of them, enforceable against them in
accordance with the terms thereof. The execution and delivery of the
Arrangement Agreements do not, and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof will not,
result in the creation of any Lien upon any of the properties or assets of
any UDS Company, except such Liens as could not, individually or in the
aggregate, reasonably be expected to have a UDS Material Adverse Effect,
or conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or loss of
a material benefit under, (i) the certificate of incorporation or bylaws
(or the comparable organizational documents) of any UDS Company, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to or its properties or assets, or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any Order
or Law applicable to any UDS Company or its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, could not reasonably be expected to have a UDS Material Adverse
Effect. No consent, approval, Order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to any UDS Company in connection with the execution and delivery
of the Arrangement Agreements by UDS or Canco or the consummation by UDS
or Canco of the transactions contemplated thereby, except (A) pursuant to
applicable premerger notification and waiting period requirements under
the HSR Act; (B) pursuant to applicable requirements under the Exchange
Act as may be required in connection with the Arrangement Agreements and
the transactions contemplated thereby; (C) the filing of appropriate
documents with the relevant Governmental Entities of other states in which
UDS or Canco is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" Laws; (D) filings with and approvals of the New
York Stock Exchange ("NYSE") and Montreal Exchange ("ME") to permit the
UDS Shares that are to be issued in the Arrangement or under the Topna
Stock Plans to be listed on the NYSE and ME; (E) required notices,
filings, consents and approvals under the Investment Canada Act and under
the Competition Act (Canada); and (F) such consents, approvals, Orders or
authorizations the failure of which to be made or obtained could not,
individually or in the aggregate, reasonably be expected to have a UDS
Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. UDS has filed or
disclosed all required reports, schedules, forms, information statements
and other documents with the SEC since January 1, 1996 (the "UDS SEC
Documents"). As of their respective dates, the UDS SEC Documents complied
in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such UDS SEC Documents. Except
to the extent that information contained in any UDS SEC Document has been
revised or superseded by a later UDS SEC Document, none of the UDS SEC
Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of UDS
included in the UDS SEC Documents complied, as of their respective dates
of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, were prepared in accordance with U.S. GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as
specified therein) and fairly present in all material respects the
consolidated financial position of UDS and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments).
Except (i) as reflected in such financial statements or as specifically
described in the notes thereto, (ii) for liabilities incurred in
connection with the Arrangement Agreements or the transactions
contemplated thereby, and (iii) for liabilities and obligations incurred
since December 31, 1996 in the ordinary course of business consistent with
past practice, none of the UDS Companies has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise), including without limitation liabilities arising under any
Environmental Laws, required by U.S. GAAP to be reflected in a
consolidated balance sheet (including without limitation the notes
thereto) of UDS and its consolidated Subsidiaries and which, individually
or in the aggregate, could reasonably be expected to have a UDS Material
Adverse Effect.
(f) Information Supplied. None of the information to be supplied by
UDS or Canco specifically for inclusion or incorporation by reference in
the Proxy Statement will, at the date it is first mailed to Topna's
shareholders or at the time of the Topna Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(g) Absence of Certain Changes or Events. Except (i) as disclosed
in the UDS SEC Documents, (ii) for the transactions provided for in the
Arrangement Agreements, and (iii) for liabilities incurred in connection
with or as a result of the Arrangement Agreements since December 31, 1996,
UDS has conducted its business only in the ordinary course, and there has
not been (A) any UDS Material Adverse Effect, (B) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of UDS's capital stock, other than
regular quarterly dividends of U.S. $0.275 per UDS Share and U.S. $0.625
per share of UDS 5% Cumulative Convertible Preferred Stock, (C) any split,
combination or reclassification of any of UDS's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of UDS's capital
stock, or (D) except insofar as required by a change in U.S. GAAP, any
change in accounting methods, principles or practices by UDS materially
affecting its assets, liabilities or business.
(h) Brokers. No broker, investment banker, financial advisor or
other Person, other xxxx Xxxxxxx Xxxxx & Co., the fees and expenses of
which will be paid by UDS, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by the Arrangement Agreements based upon
arrangements made by or on behalf of UDS or Canco. UDS has furnished to
Topna true and complete copies of all agreements under which any such fees
or expenses are payable and all indemnification and other agreements
related to the engagement of the Persons to whom such fees are payable.
(i) Ownership of UDS Shares. Subject to the 1% Exception, neither
UDS nor, to its Knowledge, any of its Affiliates (other than any employee
benefit trust or plan) (i) beneficially owns (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, or (ii) is
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of
capital stock of Topna.
III. COVENANTS RELATING TO CONDUCT OF BUSINESS
3.01. Conduct of Business. (a) Conduct of Business by Topna.
Except as set forth in Section 3.01 of the Topna Disclosure Schedule,
during the period from the date of this Agreement to the Effective Time,
Topna will, and will cause each of its Subsidiaries to, carry on their
respective businesses in the ordinary course in substantially the same
manner as heretofore conducted and in compliance in all material respects
with all applicable Laws. Without limiting the generality or effect of
the foregoing, prior to the Effective Time, Topna will (i) consult with
UDS at such times as UDS may reasonably request with respect to all
material matters pertaining to the business, financial condition and
results of operations of the Topna Companies, including, prior to the
approval thereof, in respect of any matter which (whether under Topna's
constituent documents, resolutions of the Board of Directors of Topna (the
"Topna Board"), applicable Law or Topna's ordinary practice) requires the
approval of the Topna Board or the Chief Executive Officer of Topna or
TPI, (ii) not take, or fail to take, any action which is materially
inconsistent with the assumptions underlying the Five-Year Plan, and (iii)
cooperate with UDS and Canco in the development of a transition and
consolidation plan to be effective as of the Effective Time. Except as
set forth in Section 3.01 of the Topna Disclosure Schedule, without
limiting the generality of the foregoing, during the period from the date
of this Agreement to the Effective Time, Topna will not, and will not
permit any of its Subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
Subsidiary of Topna to its parent, or by a Subsidiary that is
partially owned by Topna or any of its Subsidiaries, provided that
Topna or any such Subsidiary receives its proportionate share
thereof, and other than the regular quarterly dividends of U.S.
$0.075 per Topna Share, (A) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its capital
stock, (B) split, combine or reclassify any of its capital stock, or
issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(C) purchase, redeem or otherwise acquire any capital shares or any
other securities of any Topna Company or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber (A)
any shares of capital stock, any other voting securities (including
without limitation any Topna Voting Debt) or any securities
convertible into any such shares or voting securities or (B) any
rights to acquire any such shares, voting securities or convertible
securities (other than the issuance of Topna Shares upon the exercise
of Topna Rights outstanding on the date of this Agreement which are
accurately listed and described on the Topna Disclosure Schedule in
accordance with the present terms thereof);
(iii) amend its articles of incorporation or bylaws (or
comparable organizational documents);
(iv) acquire, whether by merger, consolidation or purchase of a
substantial portion of the assets, or any other manner, any business
or any corporation, limited liability company, partnership, joint
venture, association or other business organization, or any division
thereof, except for (A) such acquisitions which do not, individually
or in the aggregate, involve the payment of consideration exceeding
U.S. $5,000,000, (B) purchases of inventory, feedstock and other
items in the ordinary course of business consistent with past
practice, and (C) capital expenditures as to any particular project
contemplated by the total projection therefor reflected in the Five-
Year Plan;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, other than (A) in the ordinary course of business consistent
with past practice, (B) financing transactions, including sales of
receivables, on a basis consistent with past practice, and (C) sales
of assets for an amount (whether in cash or in kind) which in the
aggregate exceeds U.S. $5,000,000;
(vi) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of any Topna Company, guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to maintain any
financial condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing, except for lease
financing transactions, borrowings under existing revolving credit
arrangements and short-term borrowings, letters of credit or similar
financial transactions in any such case in the ordinary course of
business consistent with past practice and not otherwise in breach of
any provision hereof or to finance capital expenditures made in
accordance with this Agreement or (B) make any loans, advances or
capital contributions to, or investments in, any other Person, other
than (1) to Topna or any Subsidiary of Topna, (2) to officers and
employees of any Topna Company for travel, business or relocation
expenses, or (3) loans or advances to jobbers and similar Persons, in
any such case in the ordinary course of business consistent with past
practice;
(vii) make or agree to make any capital expenditures as to any
particular project not contemplated by the total projection therefor
reflected in the Five-Year Plan;
(viii) make any material tax election, waive the tolling of any
statute of limitations relating to any material tax liability or
settle, compromise or agree on any tax liability with the IRS, any
Canadian, provincial, state or local tax authority or any third party
pertaining to income, excise or franchise taxes without, in the case
of any such settlement, compromise or agreement, the prior
consultation with and consent of UDS (such consent not to be
unreasonably withheld or delayed) or any other material tax
liability;
(ix) except as required by Law or contemplated hereby, enter
into, adopt, amend or terminate any Topna Employee Benefit Plan or
any other agreement, plan or policy involving any Topna Company and
one or more of its directors, officers or employees, or change any
actuarial or other assumption used to calculate funding obligations
with respect to any Pension Plans, or change the manner in which
contributions to any pension plans are made or the basis on which
such contributions are determined;
(x) increase the compensation of any director, officer or other
key employee of any Topna Company or pay any benefit or amount not
required by a plan or arrangement as in effect on the date of this
Agreement to any such Person, except (A) pursuant to existing
agreements or arrangements or in the ordinary course of business
consistent with past practice and described in Section 3.01(a)(x) of
the Topna Disclosure Schedule and (B) except, as to any key employee,
as a result of a change or increase relating to a promotion to a
higher position;
(xi) engage in any transaction with any officer, director or
shareholder of any Topna Company, or any Affiliate, associate or
relative of any of the foregoing, or make any payment to or for the
benefit of, directly or indirectly, any of the foregoing, except as
described by category in Section 3.01(a)(xi) of the Topna Disclosure
Schedule or pursuant to existing agreements, the existence of which
does not constitute a breach of any other provision hereof;
(xii) enter into any Contract involving the purchase or sale of
crude oil or any supply Contract having a term expiring after
December 31, 1997, except (A) in accordance with Section 3.01(a) of
the Topna Disclosure Schedule, (B) petroleum hedging contracts in the
ordinary course of business consistent with past practice, and (c)
lease purchase contracts;
(xiii) authorize, or commit or agree to take, any of the foregoing
actions; or
(xiv) except as set forth in Section 3.01(a)(xiv) of the Topna
Disclosure Schedule, decrease or increase the types or levels of
supplies and standard parts or otherwise maintain inventories
(whether crude oil products, catalyst, merchandise, materials or
other inventory) at other than normal operating levels consistent
with past practices, or voluntarily modify any insurance referred to
in Section 2.01(o) in any material respect prior to the Effective
Time.
(b) Conduct of Business by UDS. Except as set forth in Section 3.01
of the UDS Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, UDS will not, and will not permit any of
its Subsidiaries to, *** other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned Subsidiary
of UDS to its parent, or by a Subsidiary that is partially owned by UDS or
any of its Subsidiaries, provided that UDS or any such Subsidiary receives
or is to receive its proportionate share thereof, and other than the
regular quarterly dividends, (A) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of its capital
stock, (B) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire any shares of capital stock of any UDS Company
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities or *** authorize, or commit or
agree to take, any of the foregoing actions.
(c) Coordination of Dividends. Each of UDS and Topna will
coordinate with the other regarding the declaration and payment of
dividends in respect of the UDS Shares and the Topna Shares and the record
dates and payment dates relating thereto, it being the intention of UDS
and Topna that any holder of Topna Shares will not receive two dividends,
or fail to receive one dividend, for any single calendar quarter with
respect to its shares of Topna Shares and/or any shares of UDS Shares any
such holder may receive in exchange therefor pursuant to the Arrangement.
(d) Other Actions. Except as required by Law, Topna and UDS will
not, and will not permit any of their respective Subsidiaries to,
voluntarily take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of
such party set forth in any Arrangement Agreements that are qualified as
to materiality becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any material
respect, or (iii) any of the conditions to the Arrangement set forth in
Article V not being satisfied.
(e) Advice of Changes. Topna and UDS will promptly advise the other
party orally and in writing of (i) any representation or warranty made by
it contained in any Arrangement Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply in
any material respect with, or satisfy in any material respect, any
covenant or condition to be complied with or satisfied by it under any
Arrangement Agreement, or (iii) any change or event having, or which,
insofar as can reasonably be foreseen, could reasonably be expected to
have a material adverse effect on such party or on the truth of its
representations and warranties or the ability of the conditions set forth
in Article V to be satisfied; provided, however, that no such notification
shall affect the representations, warranties or covenants of the parties
or the conditions to the obligations of the parties under any Arrangement
Agreement.
(f) Dissenting Shares. Topna will give UDS (i) prompt notice of any
written objections to the resolutions in respect of the Arrangement at the
Topna Shareholders Meeting, withdrawals of such objections and any other
documents received by it pursuant to Section 190 of the CBCA and the
applicable provisions of the Plan of Arrangement (together, the
"Dissenting Share Provisions") and received by Topna from holders of Topna
Shares who exercise rights of dissent (such shares, "Dissenting Shares")
and (ii) the opportunity to participate in all negotiations and
proceedings with respect to Dissenting Shares. Topna will not, except
with the prior written consent of UDS, voluntarily make any payment with
respect to any Dissenting Shares or offer to settle or settle any claim,
demand or proceeding in respect thereof. Notwithstanding any other
provision hereof, effective as of the Effective Time, all Dissenting
Shares will cease to represent Topna Shares and will thereafter represent
only the rights provided in the Dissenting Share Provisions.
3.02. No Solicitation by Topna. (a) From and after the date
hereof, Topna will not, nor will it permit any of its Subsidiaries or
Affiliates controlled by it to, nor will it authorize or permit any of its
or any other such Person's officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representatives retained by it or any of its Subsidiaries (collectively,
"Representatives") to, directly or indirectly through another Person, (i)
solicit, initiate or encourage, or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes
any Topna Takeover Proposal or (ii) furnish any confidential information
to any Person, or participate in any discussions or negotiations,
regarding any Topna Takeover Proposal; provided, however, that if the
Topna Board determines in good faith, after consulting with outside
counsel, that it is necessary to do so in order to comply with its
fiduciary duties to Topna's shareholders under applicable Law, Topna may,
in response to a Topna Takeover Proposal which was not solicited by it on
or after the date hereof or which did not otherwise result from a breach
of this Section 3.02(a), and subject to compliance with Section 3.02(c),
(A) furnish information with respect to the Topna Companies to any Person
pursuant to a customary confidentiality agreement (as determined in good
faith by Topna after consultation with its outside counsel) and (B)
participate in negotiations regarding such Topna Takeover Proposal. For
purposes of this Agreement, "Topna Takeover Proposal" means any inquiry,
proposal or offer from any Person on or after the date hereof relating to
any direct or indirect acquisition or purchase of 10% or more of the
assets of Topna and its Subsidiaries or 10% or more of any class of equity
securities of Topna or any of its Subsidiaries, any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 10% or more of any class of equity securities of Topna or any of
its Subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Topna or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Neither the Topna Board nor any committee thereof may (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to UDS or Canco, the approval or recommendation by the Topna Board
or such committee of the Arrangement or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Topna Takeover
Proposal, or (iii) cause Topna to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, a "Topna Acquisition Agreement") related to any Topna Takeover
Proposal, provided that, in the event that the Topna Board determines in
good faith, after it has received a Topna Superior Proposal and after
consulting with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to Topna's shareholders under applicable
Law, the Topna Board may (subject to this and the following sentences)
withdraw or modify its approval or recommendation of the Arrangement or
this Agreement, approve or recommend such Topna Superior Proposal or
terminate this Agreement (and concurrently with or after such termination,
if it so chooses, cause Topna to enter into any Topna Acquisition
Agreement with respect to any Topna Superior Proposal), but in each of the
cases set forth in this sentence, only (A) at a time that is after the
fifth business day following UDS's receipt of written notice advising UDS
that the Topna Board has received a Topna Superior Proposal, specifying
the material terms and conditions of such Topna Superior Proposal and
identifying the person making such Topna Superior Proposal and (B) prior
thereto or simultaneously therewith, Topna shall have paid the Termination
Fee. For purposes of this Agreement, a "Topna Superior Proposal" means
any proposal received by Topna after the date hereof by a third party to
acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the combined voting power of the Topna
Shares then outstanding or all or substantially all the assets of Topna
and otherwise on terms which the Topna Board determines in its good faith
judgment (based on the advice of a financial advisor of nationally
recognized reputation) to provide value to Topna's shareholders that is
greater than that provided by the Arrangement and for which financing, to
the extent required, is then committed or which, in the good faith
judgment of the Topna Board, is reasonably available to such third party.
(c) In addition to the obligations of Topna set forth in Sections
3.02(a) and 3.02(b), Topna will immediately advise UDS orally and in
writing of any request for information or of any Topna Takeover Proposal,
the material terms and conditions of such request or Topna Takeover
Proposal and the identity of the Person making such request or Topna
Takeover Proposal. Topna will keep UDS reasonably informed of the status
and details (including amendments or proposed amendments) of any such
request or Topna Takeover Proposal.
(d) Nothing contained in this Section 3.02 will prohibit Topna from
making any disclosure to Topna's shareholders if, in the good faith
judgment of the Topna Board, after consultation with outside counsel, the
failure so to disclose would be inconsistent with its fiduciary duties to
Topna's shareholders under applicable Law or would result in a violation
of Rule 14e-2(a) under the Exchange Act; provided, however, that neither
Topna nor the Topna Board nor any committee thereof may withdraw or
modify, or propose publicly to withdraw or modify, its position with
respect to this Agreement or the Arrangement or approve or recommend, or
propose publicly to approve or recommend, a Topna Takeover Proposal,
except as expressly provided in Section 3.02(b).
IV. ADDITIONAL AGREEMENTS
4.01. Preparation of the Proxy Statement; Topna Shareholders
Meeting. (a) Topna will use all reasonable efforts to cause the Proxy
Statement to be mailed to Topna's shareholders as promptly as practicable.
Subject to the Interim Order, UDS will on a timely basis provide Topna
with all such information as may be required to be included in the Proxy
Statement which relates to it and Canco and will take any action (other
than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required
to be taken under any applicable securities Laws of any State of the
United States or any province of Canada in connection with the issuance of
UDS Shares in the Arrangement and under the Topna Stock Plans and Topna
will furnish all information concerning Topna and the holders of Topna
Shares as may be reasonably requested in connection with any such action.
(b) Subject to the Interim Order, Topna will, as soon as practicable
following the date of this Agreement, duly call, give notice of, convene
and hold a meeting of its shareholders (the "Topna Shareholders Meeting")
for the purpose of obtaining the Topna Shareholder Approval. Without
limiting the generality of the foregoing but subject to Section 3.02(b),
Topna agrees that its obligations pursuant to the first sentence of
Section 4.01(b) will not be affected by the commencement, public proposal,
public disclosure or communication to Topna of any Topna Takeover
Proposal, and Topna will, through the Topna Board, recommend to its
shareholders the approval and adoption of this Agreement, the Arrangement
and the other transactions contemplated hereby.
4.02. Access to Information; Confidentiality. Subject to the
previously executed confidentiality agreement between UDS and Topna (the
"Confidentiality Agreement"), each of UDS and Topna will, and Topna will
cause each of its Subsidiaries to, afford to the other party and to the
Representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books and records, contracts, commitments, and
personnel and, during such period, each of UDS and Topna will, and Topna
will cause each of its Subsidiaries to, furnish promptly to the other
party (i) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements
of federal, state or provincial securities Laws and (ii) all other
information concerning its business, properties and personnel as such
other party may reasonably request, including without limitation with
respect to budgets and forecasts (in the case of Topna, on both a
consolidated and consolidating basis), environmental and engineering
reports relating to Owned Real Property, pending and threatened
litigation, and prospective acquisitions and other significant
transactions, provided, however, that (A) each of the parties will conduct
any such review in a fashion as does not unreasonably disrupt the
operations of the other or any Subsidiaries of the other, (B) in no event
will a party be obligated to grant access hereunder or otherwise to any
information that (1) would constitute a breach of any Contract (provided
that any required consents thereunder have been requested) or violation of
Law or (2) Topna determines in good faith, after consulting with counsel,
is protected by the attorney-client or attorney work product privilege,
and (C) in conducting any environmental review, UDS will not be entitled
to conduct any borings or other so-called "Phase II" environmental testing
procedures unless the conduct of such procedures has been recommended by a
third-party environmental engineering firm of recognized competence based
upon such firm's review of information then available to it, UDS gives
notice thereof to Topna which in reasonable detail describes such
recommendation and the stated reasons therefor Known to UDS and then only
if and to the extent to which Topna has consented thereto, such consent
not to be unreasonably withheld or delayed. Each of UDS and Topna will
hold, and will cause its Representatives and affiliates to hold, any
nonpublic information (including in respect of any termination of this
Agreement) in accordance with the terms of the Confidentiality Agreement,
provided, however, that if the Closing occurs, there will be no
restrictions on any UDS Company in respect of information pertaining to
the business, financial condition, results of operations or prospects of
the Topna Companies.
4.03. Reasonable Efforts. (a) On the terms and subject to the
conditions set forth in this Agreement, each of the parties will use all
reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Arrangement and
the other transactions contemplated by the Arrangement Agreements,
including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making
of all necessary registrations and filings (including filings with
Governmental Entities, such as those referred to in Sections
2.01(d)(A)-(D) and 2.02(d)(A)-(E)) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging any of the Arrangement Agreements or the
consummation of the transactions contemplated thereby, including seeking
to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the other Arrangement Agreements.
(b) In connection with and without limiting the foregoing, Topna and
UDS will each use reasonable efforts (i) to take all action necessary to
ensure that no state or provincial takeover statute or similar Law is or
becomes applicable to this Agreement, the Arrangement or the other
transactions contemplated hereby or any of the other Arrangement
Agreements or the transactions contemplated thereby and (ii) if any state
or provincial takeover statute or similar Law becomes applicable to this
Agreement, the Arrangement or the other transactions contemplated hereby
or any of the other Arrangement Agreements or any transaction contemplated
thereby, to take all action necessary to ensure that the Arrangement and
such other transactions may be consummated as promptly as practicable on
the terms contemplated by this Agreement and the other Arrangement
Agreements and otherwise to minimize the effect of such Law on the
Arrangement and the other transactions contemplated by this Agreement and
the other Arrangement Agreements.
(c) In connection with and without limiting the generality of the
foregoing, it is the intention of UDS to defend against any actual or
threatened action, suit or proceeding arising or purportedly arising under
federal or state antitrust laws and seeking to impose any restraint
against the consummation of the Arrangement or any of the other effects
specified in Section 5.02(d) hereunder, and Topna will reasonably
cooperate in connection therewith. Notwithstanding the foregoing or any
other provision hereof, Topna acknowledges that the decision as to whether
to initiate or continue any such defense will be made by UDS in its sole
discretion, nothing herein will affect UDS's or Canco's rights hereunder,
including without limitation under Section 5.02(d), and in no event will
UDS be required to agree to any divestiture, hold-separate or other
requirement applicable to any UDS Company or Topna Company in connection
with this Agreement or any of the transactions contemplated hereby.
4.04. Stock Options. (a) Within 10 calendar days after the
execution and delivery of this Agreement, the Topna Board (or, if
appropriate, any committee administering the Topna Stock Plans) will adopt
such resolutions and take such other actions (and Topna will furnish
evidence thereof to UDS) so as to adjust the terms of all outstanding
options to acquire Topna Shares granted under the Topna Stock Plans as
necessary to provide that, at the Effective Time, each such option
outstanding immediately prior to the Effective Time (a "Topna Option") (i)
will be fully vested and exercisable and (ii) options to acquire Topna
Shares will be deemed to constitute an option to acquire that number of
UDS Shares calculated by multiplying (A) the number of Topna Shares
subject thereto by (B) the Exchange Ratio, at an exercise price equal to
(1) the aggregate exercise price of such Topna Option divided by (2) the
Exchange Ratio (each, as so adjusted, an "Adjusted Option"). Other than
as set forth in the preceding sentence and the proviso to this sentence,
each Adjusted Option shall on and after the Effective Time be subject to
the same terms and conditions as the Topna Option to which it relates;
provided that no Adjusted Option shall expire sooner than the earlier of
(i) six months (or, in the case of Topna's Chief Executive Officer on the
date hereof, nine months) following the holder's termination for any
reason described in Section 8.6 of the Topna 1990 Incentive Stock Plan, or
(ii) the end of the original term of the Topna Option to which it relates.
(b) As soon as practicable after the Effective Time, UDS will
deliver to the holders of Topna Options appropriate notices setting forth
such holders' rights pursuant to the Topna Stock Plans and the agreements
evidencing the Topna Options (and, following the Effective Time, the
Adjusted Options) and confirming that the Topna Stock Plans and the Topna
Options have been assumed by UDS in accordance with the terms and
conditions required by this Section 4.04.
(c) UDS will take necessary actions for the assumption of the Topna
Stock Plans and the Topna Options as of the Effective Time, including the
reservation and listing of UDS Shares as is necessary to effectuate the
transactions contemplated by Section 4.04(a).
(d) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by delivering a properly
executed notice of exercise to UDS, together with the consideration
therefor and the withholding tax information, if any, required in
connection with the related Topna Stock Plans. The Topna Board (or, if
appropriate, any committee administering the Topna Stock Plan) shall
approve a "cashless" exercise procedure whereby the holder of an Adjusted
Option may deliver irrevocable instruction to a broker to sell shares
underlying such Adjusted Option on the applicable national stock exchange.
(e) Except as otherwise contemplated by this Section 4.04, all
restrictions or limitations on transfer with respect to Topna Options
awarded under the Topna Stock Plans, to the extent that such restrictions
or limitations shall not have already lapsed, will remain in full force
and effect with respect to such Topna Options after giving effect to the
Arrangement and the assumption by UDS as set forth above.
4.05. Certain Employee Matters. Following the Effective Time, UDS
will cause Topna to honor and assume all obligations and liabilities
relating to the employment change-in-control and severance agreements
listed on Schedule 4.05 and the Employee Benefit Plans relating to such
arrangements in accordance with the terms thereof.
4.06. Indemnification, Exculpation and Insurance. (a) All rights
to indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the
current or former directors or officers of Topna and its Subsidiaries as
provided in their respective articles of incorporation or bylaws (or
comparable organizational documents) and any indemnification agreements of
Topna, the existence of which does not constitute a breach of this
Agreement, will survive the Arrangement and continue in full force and
effect in accordance with their respective terms.
(b) The provisions of this Section 4.06 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and
not in substitution for, any other rights to indemnification or
contribution that any such Person may have by contract or otherwise.
4.07. Fees and Expenses. (a) Except as set forth in this Section
4.07 or in Section 6.01, all fees and expenses incurred in connection with
this Agreement, the Arrangement and the other transactions contemplated
hereby and the other Arrangement Agreements and the transactions
contemplated thereby will be paid by the party incurring such fees or
expenses, whether or not the Arrangement is consummated, except that each
of UDS and Topna will bear and pay one-half of the out-of-pocket costs and
expenses incurred in connection with (i) the filing, printing and mailing
of the Proxy Statement and any filing fees relating to the issuance of UDS
shares in the Arrangement and (ii) the filings of the premerger
notification and report forms under the HSR Act (including filing fees).
(b) In the event that (i) a Topna Takeover Proposal shall have been
made known to Topna or has been made directly to its shareholders
generally or any Person shall have publicly announced or disclosed an
intention (whether or not conditional) to make a Topna Takeover Proposal
and thereafter this Agreement is terminated by either UDS or Topna
pursuant to Section 6.01(b)(i) or 6.01(b)(ii) and, in the case of a
termination by UDS pursuant to Section 6.01(b), a Topna Board
reconfirmation shall not have been given and publicly announced within
five business days after any request therefor, or (ii) this Agreement is
terminated by (A) UDS pursuant to Section 6.01(d) or (B) Topna pursuant to
Section 6.01(f), then Topna will promptly, but in no event later than two
days after the date of such termination or at such earlier time as is
contemplated hereby, pay UDS a fee equal to U.S. $15 million (the
"Termination Fee"). Topna acknowledges that the agreements contained in
this Section 4.07(b) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, UDS would not enter
into this Agreement; accordingly, if Topna fails to pay promptly the
amount due pursuant to this Section 4.07(b), and, in order to obtain such
payment, UDS commences a suit which results in a judgment against Topna
for the fee set forth in this Section 4.07(b), Topna will pay to UDS its
costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the
prime rate of Citibank N.A. in effect on the date such payment is made.
4.08. Public Announcements. UDS and Topna will consult with each
other before issuing, and provide each other the opportunity to review,
comment upon and concur with, any press release or other public statements
with respect to the transactions contemplated by this Agreement, including
the Arrangement, and the other Arrangement Agreements and will not issue
any such press release or make any such public statement without the prior
consent of the other party (which shall not be unreasonably withheld),
except as either party may determine is required by applicable Law, court
process or by obligations pursuant to any listing agreement with any
securities exchange. The parties agree that the initial press release to
be issued with respect to the execution of this Agreement will be in the
form heretofore agreed to by the parties.
4.09. Affiliates. Prior to the Closing Date, Topna will deliver to
UDS a letter identifying all Persons who are, at the time this Agreement
is submitted for adoption by the shareholders of Topna, "affiliates" of
Topna for purposes of Rule 145 under the Securities Act. Topna will use
all reasonable efforts to cause each such Person to deliver to UDS on or
prior to the Closing Date a written agreement substantially in the form
attached as Exhibit B.
4.10. NYSE Listing. UDS will use reasonable efforts to cause the
UDS Shares to be issued in the Arrangement and under the Topna Stock Plans
to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Effective Time.
4.11. Shareholder Litigation. Each of Topna and UDS will give the
other the reasonable opportunity to participate in the defense of any
shareholder litigation against Topna or UDS, as applicable, and its
directors relating to the transactions contemplated by this Agreement and
the other Arrangement Agreements.
4.12. Issuance of Canco Shares. Canco will, in consideration of the
deposit by UDS of the UDS Shares and cash in lieu of fractional UDS Shares
with the depositary pursuant to the depositary agreement contemplated by
the Plan of Arrangement, issue to UDS as of the Effective Time one
additional Canco Common Share for each UDS Share so deposited plus a
number of Canco Common Shares (rounded down to the nearest whole share)
determined by dividing the aggregate cash payment made by UDS by the
closing price for UDS Shares on the NYSE on the fifth business day prior
to the Effective Time.
V. CONDITIONS PRECEDENT
5.01. Conditions to Each Party's Obligation to Effect the
Arrangement. The respective obligation of each party to effect the
Arrangement is subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Interim Order. The Interim Order shall have been obtained;
(b) The Arrangement. The Arrangement shall have been approved at
the Topna Shareholders Meeting in accordance with the Interim Order;
(c) The Final Order. The Final Order shall have been obtained;
(d) No Termination. This Agreement shall not have been terminated
in accordance with the provisions hereof;
(e) No Injunctions or Restraints. No judgment, Order, decree,
statute, Law, ordinance, rule, regulation, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any court of competent jurisdiction or
other Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Arrangement (collectively,
"Restraints") shall be in effect; provided, however, that, subject to
Section 4.03(c), each of the parties shall have used reasonable efforts to
prevent the entry of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered.
(f) NYSE Listing. The UDS Shares issuable pursuant to this
Agreement and under the Topna Stock Plans shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(g) Regulatory Approvals. The waiting period prescribed under the
HSR Act shall have expired or been terminated. UDS, Canco and Topna shall
each have filed all notices and information (if any) required under Part
IX of the Competition Act (Canada) and the applicable waiting periods and
any extensions thereof shall have expired or the parties shall have
received an Advance Ruling Certificate pursuant to Section 102 of the
Competition Act (Canada) setting out that the Director under such Act is
satisfied that he would not have sufficient grounds on which to apply for
an order in respect of the Arrangement. The Arrangement shall have
received the allowance or approval or deemed allowance or approval by the
responsible Minister under the Investment Canada Act in respect of the
Arrangement, to the extent such allowance or approval is required, and
such allowance or approval shall be consistent with this Agreement and not
adversely affect the rights of the parties hereunder or the relative
benefit to be obtained from the Arrangement.
5.02. Conditions to Obligations of UDS and Canco. The obligations
of each of UDS and Canco to effect the Arrangement are further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. There shall be no breach of any
representation or warranty of Topna contained in this Agreement that,
individually or in the aggregate when considered with any other such
breach, could reasonably be expected to result in a Topna Material Adverse
Effect, and UDS shall have received a certificate signed on behalf of
Topna by the chief executive officer and the chief financial officer of
Topna to such effect; provided, however, that, (i) for purposes of this
Section 5.02(a), any breach or alleged breach of Sections 2.01(a)-(d),
2.01(e) (first two sentences only), 2.01(f), 2.01(g) (clauses (ii) through
(v) only), 2.01(l), 2.01(p) (first sentence only) and 2.01(r)-(v) may be
asserted by UDS regardless of Sections 6.01(g) and (h) or whether matters
pertaining to any such Sections are discovered in the Topna Due Diligence
Review and (ii) this Section 5.02(a) will not apply to any actual or
alleged breach of any provision of Section 2.01 not listed in clause (i)
hereof (collectively, the "Diligenced Reps") except to the extent that (A)
such breach arises based on events occurring or failing to occur after May
10, 1997, in the case of any matter referred to in Section 6.01(g), or May
1, 1997, in the case of any matter referred to in Section 6.01(h), or (B)
was a matter Known to Topna but not Known to UDS prior to such relevant
date.
(b) Performance of Obligations of Topna and Total. Each of Topna
and Total shall have performed in all material respects all obligations
required to be performed by it under this Agreement and the Stockholder
Agreement (as applicable) at or prior to the Effective Time, and UDS shall
have received a certificate signed on behalf of Topna and Total by their
respective chief executive officers and the chief financial officer of
Topna to such effect.
(c) No Topna Material Adverse Effect. At any time (i) after the
date of this Agreement but prior to May 10, 1997, there shall not have
occurred any event which, individually or when considered with any other
such event, was Known to Topna but not Known to UDS until after such date,
which could reasonably be expected to result in a Topna Material Adverse
Effect or (ii) on or after May 10, 1997, there shall have occurred any
event which, individually or when considered with any other event, could
reasonably be expected to result in a Topna Material Adverse Effect.
(d) No Litigation. There shall not be pending any suit, action or
proceeding brought by or on behalf of any Governmental Entity (i) seeking
to restrain or prohibit the consummation of the Arrangement or any of the
other transactions contemplated by this Agreement or any of the other
Arrangement Agreements or seeking to obtain from either Topna or UDS any
damages that are material in relation to Topna and its Subsidiaries taken
as a whole or UDS and its Subsidiaries taken as a whole, as applicable,
(ii) seeking to prohibit or limit the ownership or operation by Topna, UDS
or any of their respective Subsidiaries of any portion of the business or
assets of Topna, UDS or any of their respective Subsidiaries, or to compel
Topna, UDS or any of their respective Subsidiaries to dispose of or hold
separate any portion of the business or assets of Topna, UDS or any of
their respective Subsidiaries, as a result of the Arrangement or any of
the other transactions contemplated by this Agreement or any of the other
Arrangement Agreements, or (iii) otherwise seeking any other relief which
otherwise could have a Topna Material Adverse Effect or a UDS Material
Adverse Effect, as applicable. In addition, there shall not be any
Restraint enacted, entered, enforced or promulgated that is reasonably
likely to result, directly or indirectly, in any of the consequences
referred to in clauses (ii) or (iii) above.
(e) Tax Opinions. UDS shall not have received an opinion of either
of Xxxxx, Xxxxx or Xxxxx, Day, Xxxxxx & Xxxxx that due to a change in Law
or any interpretation thereof by any Governmental Entity since the date
hereof, such firm could not confirm as of the Effective Time that the tax
consequences of the transactions contemplated therein were not
substantially the same as set forth in the opinions of such firm delivered
to UDS on the date hereof.
(f) Dissenting Shares. There shall be no more than 2,000,000
Dissenting Shares in the aggregate.
5.03. Conditions to Obligation of Topna. The obligations of Topna
to effect the Arrangement are further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. There shall be no breach of any
representation or warranty of UDS or Canco contained in this Agreement
that, individually or in the aggregate when considered with any other such
breach, could reasonably be expected to result in a UDS Material Adverse
Effect, and UDS shall have received a certificate signed on behalf of UDS
by the chief executive officer and the chief financial officer of UDS to
such effect.
(b) Performance of Obligations of UDS and Canco. Each of UDS and
Canco shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Effective Time, and Topna shall have received a certificate signed on
behalf of UDS by the chief executive officer and the chief financial
officer of UDS to such effect.
(c) No UDS Material Adverse Change. At any time after the date of
this Agreement there shall not have occurred any event which, individually
or when considered together with any other event, could reasonably be
expected to result in a UDS Material Adverse Effect.
5.04. Frustration of Closing Conditions. None of UDS, Canco or
Topna may rely on the failure of any condition set forth in Section 5.01,
5.02 or 5.03, as the case may be, to be satisfied if such failure was
caused by such party's failure to use reasonable efforts to consummate the
Arrangement and the other transactions contemplated by this Agreement and
the other Arrangement Agreements, as required by and subject to Section
4.03.
VI. TERMINATION, AMENDMENT AND WAIVER
6.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Topna Shareholder
Approval:
(a) by mutual written consent of UDS and Topna;
(b) by either UDS or Topna:
(i) if the Arrangement shall not have been consummated by
September 30, 1997; provided, however, that the right to terminate this
Agreement pursuant to this Section 6.01(b)(i) will not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of the Arrangement to be consummated by such time;
(ii) if the Topna Shareholder Approval shall not have been
obtained at a Topna Shareholders Meeting duly convened therefor or at any
adjournment or postponement thereof;
(iii) if any Governmental Entity shall have issued a permanent
Restraint or taken any other action permanently enjoining, restraining or
otherwise prohibiting the consummation of the Arrangement or any of the
other transactions contemplated by this Agreement or the other Arrangement
Agreements and such Restraint or other action shall have become final and
nonappealable;
provided, however, that Topna may so terminate this Agreement pursuant to
this Section 6.01(b) only if it is not in material breach of any provision
hereof;
(c) by UDS, if Topna shall have breached or failed to perform in any
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section
5.02(a) or (b) and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to Topna of such breach (a "Topna
Material Breach") (provided that UDS is not then in UDS Material Breach of
any representation, warranty or covenant contained in this Agreement);
(d) by UDS, if (i) the Topna Board or any committee thereof shall
have withdrawn or modified in a manner adverse to UDS its approval or
recommendation of the Arrangement or this Agreement or failed to reconfirm
its recommendation within five business days after a written request to do
so, or approved or recommended any Topna Takeover Proposal, (ii) the Topna
Board or any committee thereof shall have resolved to take any of the
foregoing actions, or (iii) Total shall have breached any provision of the
Stockholder Agreement between UDS and Total entered into substantially
simultaneously herewith;
(e) by Topna, if UDS shall have breached or failed to perform in any
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section
5.03(a) or (b) and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to UDS of such breach (a "UDS Material
Breach") (provided that Topna is not then in Topna Material Breach of any
representation, warranty or covenant contained in this Agreement);
(f) by Topna in accordance with Section 3.02(b), provided that it
has complied with all provisions thereof, including the notice provisions
therein, and that prior to such termination it has paid the Termination
Fee provided in Section 4.07;
(g) by UDS, if the Total Due Diligence Amount equals or exceeds U.S.
$50.0 million, calculated on a pre-tax basis and without giving effect to
any time value of money factor. For purposes of this Section 6.01(g), UDS
will be entitled to conduct a due diligence examination ("Topna Due
Diligence Review") of the business, assets, rights, liabilities,
obligations, financial condition, results of operations and prospects of
the Topna Companies and Topna will cooperate therewith and furnish
information and access to UDS as otherwise provided herein in connection
therewith. During the course of such review, UDS will use reasonable
efforts to inform Topna and the Arbiter of material developments therein,
including by reviewing the results thereof with Topna and the Arbiter at a
meeting to be held at the headquarters of Topna between the 10th and 15th
calendar day of the Topna Due Diligence Review, but the failure by UDS so
to inform Topna or the Arbiter of any such matter will not prejudice or
otherwise affect the rights and obligations of the parties hereunder. On
or prior to May 10, 1997, UDS may, at its option, deliver to Topna UDS's
calculation of the Total Due Diligence Amount, together with a schedule
describing the material components of such calculation in reasonable
detail. If requested by Topna, representatives of UDS will meet with
representatives of Topna and the Arbiter at Topna's headquarters during
the period from May 11, 1997 to May 12, 1997 in an effort to resolve any
disagreement relating to such determination. If, on or prior to May 14,
1997, Topna disagrees with UDS's calculation of the Total Due Diligence
Amount, Topna will give notice to UDS and the Arbiter on or prior to such
date, which notice will (i) set forth Topna's calculation of the Total Due
Diligence Amount (if any) and (ii) specify in reasonable detail the basis
for Topna's disagreement with UDS's calculation in relation to the
components of UDS's calculation contemplated above. The failure by UDS to
give the notice contemplated above by May 10, 1997 will constitute UDS's
waiver of its rights under this Section 6.01(g) and the failure by Topna
to express disagreement with any component of UDS's calculation of the
Total Due Diligence Amount by May 14, 1997 will be deemed to constitute
Topna's acceptance thereof for all purposes hereof. During the period
from May 15, 1997 to May 22, 1997, the parties may make such submissions
to the Arbiter as they may elect, will appear, together, before the
Arbiter on such terms as the Arbiter may elect and during such period and
any subsequent period the parties will use their respective reasonable
efforts to cause the Arbiter to render its decision as contemplated herein
as promptly as practicable with the objective that the Arbiter renders a
final decision not later than May 27, 1997. For purposes of this
Agreement, (i) "Arbiter" means a "Big 6" accounting firm mutually accepted
by UDS and Topna by April 18, 1997; (ii) the Arbiter's determination of
the Total Due Diligence Amount will represent its determination of the
most likely outcome of any matter, and be determined by it in its sole
discretion based solely on the submissions of the parties and such
consultation and such other investigations as the Arbiter may deem
relevant in its sole discretion (the parties hereby acknowledging that the
Arbiter may, but will not be required to, consult with such other
professionals or other Persons as it may elect in its sole discretion),
any such determination to be final and binding on the parties; (iii) in no
event will the Arbiter have any liability or obligation to any of the
parties or any other Person by reason of any such determination; (iv) each
of UDS and Topna will pay one-half of the fees and all other amounts due
the Arbiter (including without limitation amounts due any other
professional firms selected by the Arbiter); (v) the term "Total Due
Diligence Amount" means the sum of (A) the Unreserved Liabilities and (B)
the Plan Variances, in each case determined by the Arbiter as aforesaid;
(vi) "Unreserved Liabilities" means the sum of (A) the total amount of any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by U.S. GAAP to be reflected in a
consolidated balance sheet of Topna or to be referenced in the notes
thereto, in the opinion of the Arbiter as aforesaid, but excluding
therefrom the portion thereof (1) reflected in the 12/31/96 Topna Balance
Sheet, (2) incurred or accrued on or after January 1, 1997 in accordance
with or contemplated by the representations, warranties and covenants of
Topna herein contained (without giving effect to any limitation or
qualification therein as to materiality, any Topna Material Adverse Effect
or Topna's Knowledge (collectively, the "Materiality/Knowledge
Limitations")), and (3) specifically described in Sections 2.01(e),
2.01(j) or 2.01(h) (Items 1-4, 6-13, and 24 only) of the Topna Disclosure
Schedule (such Sections of the Topna Disclosure Schedule, as so limited,
the "Particularly Scheduled Items"); and (vii) the term "Plan Variances"
means any cost, damage, expense, liability or other loss (including
without limitation lost profit or cash flow), arising out of any
liabilities, obligations or states of facts of any nature (whether
accrued, absolute, contingent or otherwise), other than the Particularly
Scheduled Items, to the extent that the same (A) constitutes a breach of
any representation or warranty contained in Article II (without giving
effect to any Materiality/Knowledge Limitation or matter in the Topna
Disclosure Schedule other than the Particularly Scheduled Items) and (B)
is inconsistent with any assumptions underlying the Five-Year Plan, the
existence and extent thereof to be determined in either such case in the
opinion of the Arbiter as aforesaid; or
(h) by UDS, if the amount by which, in the written opinion of the
Arbiter delivered to Topna on or before May 1, 1997, the TPI Tax Basis, as
determined under Canadian tax law in the opinion of the Arbiter arrived at
as contemplated in Section 6.01(g), is less than Canadian $397.0 million.
For purposes of this Section 6.01(h), UDS will be entitled to conduct a
due diligence examination of the books and records of Topna, Topna will
cooperate therewith and furnish information and access to Topna as
otherwise provided herein, and the Arbiter's opinion contemplated herein
will be made by the Arbiter in accordance with the procedures set forth in
Section 6.01(g) (except as specifically modified hereby).
6.02. Effect of Termination. In the event of termination of this
Agreement by either Topna or UDS as provided in Section 6.01, this
Agreement will forthwith become void and have no effect, without any
liability or obligation on the part of UDS, Canco or Topna, other than the
provisions of Section 2.01(t), Section 2.02(h), Section 4.08, Section 4.02
(last sentence only), this Section 6.02 and Article VII and except to the
extent that such termination results from the prior breach by a party of
any of its representations, warranties or covenants set forth in this
Agreement.
6.03. Amendment. This Agreement may be amended by the parties at
any time before or after the Topna Shareholder Approval; provided,
however, that after any such approval, there may not be made any amendment
that by Law requires further approval by the shareholders of Topna or the
approval by the shareholders of UDS without the approval of such
shareholders as may be required by the Court. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
6.04. Extension; Waiver. At any time prior to the Effective Time, a
party may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement, or (iii) subject to the proviso of Section 6.03, waive
compliance by the other party with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any
such extension or waiver will be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or
otherwise will not constitute a waiver of such rights.
6.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 6.01, an amendment of
this Agreement pursuant to Section 6.03 or an extension or waiver pursuant
to Section 6.04 will, in order to be effective, require, in the case of
UDS or Topna, action by its Board of Directors or, with respect to any
amendment to this Agreement, the duly authorized committee of its Board of
Directors.
VII. GENERAL PROVISIONS
7.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement will survive the Effective Time.
This Section 7.01 will not limit any covenant of the parties which by its
terms contemplates performance after the Effective Time or any provision
of the Stockholder Agreement.
7.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as will be
specified to the other parties by like notice):
(a) If to Topna, to:
Total Petroleum (North America) Ltd.
Total Tower
000 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: C. Xxxx Xxxxx
with copies to:
Total
Total Refining and Marketing
51, Esplanade du General deGaulle
CEDEX 00
Xx Xxxxxxx 00
00000 Xxxxx, Xxxxxx
Telecopy: 1 41 35 42 91
Attention: Xxxx-Xxxx Xxxxxxx
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
(b) If to UDS or Canco, to:
Ultramar Diamond Shamrock Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
7.03. Definitions. For purposes of this Agreement:
(a) An "Affiliate" of any Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first Person;
(b) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(c) A "Subsidiary" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board
of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first Person; and
(d) "Knowledge" of any party means the actual knowledge of the
officers of such party, or any of them, specified in Section 7.03 of the
Topna Disclosure Schedule or the UDS Disclosure Schedule, as the case may
be, after reasonable inquiry, or the possession of facts by such party's
officers, or any of them, after reasonable inquiry, from which he or she
could reasonably conclude that a particular event or circumstance existed.
(e) "Material Adverse Effect" means any material adverse effect on
the business, financial condition or results of operations of the relevant
party and its Subsidiaries, taken as a whole, in any such case calculated
on a pre-tax basis and without giving effect to any time value of money
factor, or on the ability of such party to perform its obligations under
any of the Arrangement Agreements; a "Topna Material Adverse Effect" means
a Material Adverse Effect pertaining to Topna or the Topna Companies, as
the case may be; and a "UDS Material Adverse Effect" means a Material
Adverse Effect pertaining to UDS or the UDS Companies, as the case may be.
(f) A "Significant Subsidiary" of a Person means any Subsidiary that
would constitute a "significant subsidiary" of such Person within the
meaning of Rule 1-02 of Regulation S-X of the SEC.
7.04. Interpretation. When a reference is made in this Agreement to
an Article, Section or Exhibit, such reference will be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they will be deemed
to be followed by the words "without limitation." The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this
Agreement will have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto
and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns.
7.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement
and will become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
7.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other Arrangement Agreements (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Sections 4.04 and
4.06, are not intended to confer upon any Person other than the parties
any rights or remedies.
7.07. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of Delaware, except to the extent
mandatorily governed by the laws of Canada, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws
thereof.
7.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned, in whole
or in part, by operation of Law or otherwise by either of the parties
hereto without the prior written consent of the other party. Any
assignment in violation of the preceding sentence will be void. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
7.09. Enforcement. The parties agree that irreparable damage would
occur and that the parties would not have any adequate remedy at Law in
the event that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal
court located in Delaware, this being in addition to any other remedy to
which they are entitled at Law or in equity. In addition, each of the
parties hereto (a) consents to submit itself to the personal jurisdiction
of any federal court located in Delaware in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any
court other than Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of
the date first written above.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxxxxxxxxx
Chairman and Chief Executive Officer
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx
President and Chief Operating Officer
3007152 NOVA SCOTIA COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Vice President
TOTAL PETROLEUM (NORTH AMERICA) LTD.
By: /s/ Xxxx-Xxxx Xxxxxxx
Xxxx-Xxxx Xxxxxxx
Chairman of the Board
By: /s/ C. Xxxx Xxxxx
C. Xxxx Xxxxx
President and Chief Executive Officer
EXHIBIT A
to the
Arrangement Agreement dated as of April 15, 1997,
among
Ultramar Diamond Shamrock Corporation,
a Delaware corporation ("UDS"),
3007152 Nova Scotia Company,
a Nova Scotia unlimited liability company
and a wholly owned Subsidiary of UDS ("Canco"),
and Total Petroleum (North America) Ltd.,
a Canadian corporation ("Topna")
PLAN OF ARRANGEMENT UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT,
I. INTERPRETATION
1.1. Definitions. All terms used in this Plan of Arrangement with
initial capital letters have the following meanings, unless the subject
matter or context is inconsistent therewith:
"Arrangement" means the arrangement under Section 192 of the CBCA
involving the exchange of securities as contemplated in this Plan of
Arrangement;
"Arrangement Agreement" means the arrangement agreement dated as of
April 15, 1997 among UDS, Canco and Topna to which this Plan of
Arrangement is attached as Exhibit A;
"Arrangement Consideration" means the number of UDS Shares which a
holder of Topna Shares is entitled to receive in accordance with the
provisions of Section 2.3 upon the Arrangement becoming effective;
"Canco Shares" means common shares in the capital of Canco;
"Certificate" means a certificate previously representing Topna
Shares;
"Depositary" means in the United States, Registrar and Transfer
Company, and in Canada, R-M Trust Company;
"Depositary Agreement" means the depositary agreement among the
Depositary, UDS, Topna and Canco;
"Director" means the Director appointed under Section 260 of the
CBCA;
"Effective Date" means the date on which the Arrangement becomes
effective as shown on the certificate of arrangement issued by the
Director pursuant to the CBCA;
"Effective Time" means 12:01 a.m. (Eastern time) on the Effective
Date;
"Exchange Fund" has the meaning set forth in Section 4.1(a);
"Topna Shares" means common shares in the capital of Topna;
"UDS Shares" means common shares, par value $0.01 per share, of UDS.
1.2. Interpretation. When a reference is made in this Plan of
Arrangement to an Article or Section, such reference will be to an Article
or Section of this Plan of Arrangement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Plan of Arrangement, they will be deemed to be followed by the words
"without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Plan of Arrangement will refer
to this Plan of Arrangement as a whole and not to any particular provision
of this Plan of Arrangement. All terms defined in this Plan of
Arrangement will have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. All sums of money referred to in this Plan of Arrangement are
expressed in lawful currency of the United States.
II. ARRANGEMENT
2.1. Arrangement Agreement. This Plan of Arrangement is made
pursuant to, is subject to the provisions of, and forms a part of the
Arrangement Agreement.
2.2. Effect on Capital of Canco. Each Canco Share which is issued
and outstanding immediately prior to the Effective Time will remain
outstanding and the Arrangement will not effect any change in any of such
Canco Shares.
2.3. Exchange of Topna Shares. As of the Effective Time, each
issued and outstanding Topna Share will be acquired by Canco in exchange
for 0.322 of a UDS Share. Notwithstanding any other provision hereof,
effective as of the Effective Time, without further action, the rights of
holders of Topna Shares immediately prior to the Effective Time will cease
and, subject to Article III, thereafter such holders will have only the
right to receive the Arrangement Consideration and any dividends or other
distributions with respect thereto with a record date after the Effective
Time and cash payments in lieu of any fractional UDS Shares which such
holders are entitled to receive pursuant to the provisions of Article IV.
III. RIGHTS OF DISSENT
3.1. Dissenting Shares. Holders of Topna Shares may exercise rights
of dissent in connection with the Arrangement pursuant to and in the
manner set forth in Section 190 of the CBCA, subject to the following
additional provisions:
(a) Holders who duly exercise their rights of dissent and who are
ultimately entitled to be paid fair value for their Topna Shares as
herein provided will (i) be deemed to have transferred their Topna
Shares to Topna for cancellation and such Topna Shares will be
canceled at the Effective Time and (ii) not be entitled to any other
payment or consideration, including any payment that would be payable
under the Arrangement had such holders not exercised their right of
dissent; and
(b) Holders who duly exercise their right of dissent and who are
ultimately not entitled, for any reason, to be paid fair value for
their Topna Shares will be deemed to have participated in the
Arrangement on the same basis as any non-dissenting holder of Topna
Shares.
In no case will Topna or any other Person be required to recognize such
holders as holders of Topna Shares after the Effective Time, and the names
of such holders of Topna Shares will be deleted from the register of
holders of Topna Shares as of the Effective Time.
IV. DEPOSITARY ARRANGEMENTS
4.1. (a) Depositary. Prior to the Effective Time, the Depositary
will have received from UDS pursuant to the Depositary Agreement, for the
benefit of the holders of Topna Shares exchanged pursuant to Section 2.3,
certificates representing the number of UDS Shares to be issued in
exchange for Topna Shares in accordance with the provisions of Section 2.3
and a cash payment (and/or an irrevocable undertaking by UDS to make cash
payments when determinable) in lieu of fractional UDS Shares in amounts
determined pursuant to Section 4.1(d) (such UDS Shares, together with any
dividends or other distributions with respect thereto with a record date
after the Effective Time and cash payments in lieu of any fractional UDS
Share, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. Upon surrender of a Certificate to
the Depositary, together with a letter of transmittal from the holder
thereof, specifying, among other things, that delivery will be effected
and risk of loss and title to the Certificate will pass only upon delivery
of the Certificate to the Depositary, duly executed, and such other
documents as may reasonably be required by Topna and the Depositary, the
holder of such Certificate will be entitled to receive in exchange
therefor a certificate representing the Arrangement Consideration and
cash, if any, which such holder has the right to receive pursuant to the
provisions of Section 4.1(d). In the event of a transfer of ownership of
Topna Shares which is not registered in the transfer records of Topna,
certificates representing the Arrangement Consideration may be issued to a
Person other than the Person in whose name the Certificate so surrendered
is registered if such Certificate is properly endorsed or otherwise in
proper form for transfer and the Person requesting such issuance either
pays any transfer or other taxes required by reason of the issuance of UDS
Shares to a Person other than the registered holder of such Certificate or
establishes to the satisfaction of UDS that such tax has been paid or is
not payable. Until surrendered as contemplated by this Section 4.1(b),
each Certificate will be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Arrangement
Consideration and dividends or other distributions with respect thereto
with a record date after the Effective Time and a cash payment in lieu of
any fractional UDS Shares which the holder thereof has the right to
receive in respect of such Certificate pursuant to the provisions of
Article IV. No interest will be paid or will accrue on any Arrangement
Consideration or any dividends, other distributions or cash payable to
holders of Certificates pursuant to the provisions of this Article IV.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to UDS Shares with a record date after
the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the UDS Shares receivable in exchange therefor
and all such dividends and other distributions will be paid to the
Depositary and will be included in the Exchange Fund, in each case until
the surrender of such Certificate in accordance with this Article IV.
Subject to the effect of applicable escheat or similar laws, following
surrender of any such Certificate, there will be paid to the holder of the
certificate representing whole UDS Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole UDS Shares and (ii) at
the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender
payable with respect to such whole UDS Share.
(d) No Fractional Shares. (i) No certificates or scrip
representing fractional UDS Shares will be issued upon the surrender of
Certificates for exchange for Arrangement Consideration, and no dividend,
stock split, other change in the capital structure of UDS or distribution
of UDS will be payable with respect to such fractional share interests and
such fractional share interests will not entitle the holder thereof to
vote or to any other rights of a stockholder of UDS.
(ii) In lieu of the issuance of any such fractional share
interests in UDS, each holder of Topna Shares will be entitled to receive
out of the Exchange Fund an amount in cash equal to the product obtained
by multiplying (A) the fractional share interest to which such holder
(after taking into account all Topna Shares held at the Effective Time by
such holder) would otherwise be entitled by (B) the closing price for a
UDS Share as reported in the New York Stock Exchange Composite
Transactions Report (as reported in The Wall Street Journal, or, if not
reported therein, any other authoritative source) on the date which is
five business days prior to the Effective Date.
(e) No Liability. None of UDS, Canco, Topna or the Depositary will
be liable to any Person in respect of any UDS Shares (or dividends or
distributions with respect thereto) or cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificate shall not have been
surrendered prior to the sixth anniversary of the Effective Time (or
immediately prior to such earlier date on which any Arrangement
Consideration would otherwise escheat to or become the property of any
governmental authority), any such Arrangement Consideration will become
the property of Canco, free and clear of all claims or interest of any
Person previously entitled thereto.
EXHIBIT B
[Form of Affiliate Agreement]
Ultramar Diamond Shamrock Corporation
0000 Xxxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned is a holder of shares of Common Stock, no par value
("Topna Common Stock"), of Total Petroleum (North America) Ltd., a
Canadian corporation ("Topna"). The undersigned may receive shares of
Common Stock, par value $0.01 per share ("UDS Common Stock"), of Ultramar
Diamond Shamrock Corporation, a Delaware corporation ("UDS"), in
connection with the business combination between Topna and UDS pursuant to
a plan of arrangement (the "Arrangement").
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of Topna as the term "affiliate" is defined for purposes of
paragraphs (c) and (d) of Rule 145 ("Rule 145") of the rules and
regulations under the Securities Act of 1933, as amended (the "Act").
Execution of this Agreement by the undersigned should not be construed as
an admission of "affiliate" status or as a waiver of any rights the
undersigned may have to object to any claim that the undersigned is such
an affiliate on or after the date of this Agreement.
If in fact the undersigned were an affiliate of Topna under the
Securities Act, the undersigned's ability to sell, transfer or otherwise
dispose of any UDS Common Stock received by the undersigned in exchange
for any shares of Topna Common Stock pursuant to the Arrangement may be
restricted unless such transaction is registered under the Securities Act
or an exemption from such registration is available. The undersigned
understands that such exemptions are limited and the undersigned has
obtained advice of counsel as to the nature and conditions of such
exemptions, including information with respect to the applicability to the
sale of such securities of Rules 144 and 145(d) promulgated under the
Securities Act.
A. The undersigned hereby represents to and covenants with UDS that
the undersigned will not sell, transfer or otherwise dispose of any UDS
Common Stock received by the undersigned in exchange for shares of Topna
Common Stock pursuant to the Arrangement except (i) pursuant to an
effective registration statement under the Securities Act, (ii) by a sale
made in conformity with the provisions of Rule 145 (and otherwise in
accordance with Rule 144 under the Securities Act if the undersigned is an
affiliate of UDS and if so required at the time), or (iii) in a
transaction which, in the opinion of independent counsel reasonably
satisfactory to UDS or as described in a "no-action" or interpretive
letter from the Staff of the Securities and Exchange Commission (the
"Commission"), is not required to be registered under the Securities Act.
B. The undersigned understands that, [except as provided in the
Stockholder Agreement to which the undersigned is a party], UDS is under
no obligation to register the sale, transfer or other disposition of UDS
Common Stock by the undersigned or on behalf of the undersigned under the
Securities Act or, except as provided in paragraph F.1 below, to take any
other action necessary in order to make compliance with an exemption from
such registration available.
C. The undersigned also understands that stop transfer instructions
will be given to UDS's transfer agent with respect to the UDS Common Stock
issued to the undersigned and that there will be placed on the
certificates for the UDS Common Stock issued to the undersigned, 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 APRIL 15, 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND ULTRAMAR DIAMOND SHAMROCK CORPORATION, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF ULTRAMAR
DIAMOND SHAMROCK.
D. The undersigned also understands that unless a sale or transfer
is made in conformity with the provisions of Rule 145, or pursuant to a
registration statement, UDS reserves the right to place the following
legend on the certificates issued to the undersigned's transferees:
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 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 AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
E. In the event of a sale of UDS Common Stock pursuant to Rule 145,
the undersigned will supply UDS with evidence of compliance with such
Rule, in the form of customary sellers' and brokers' Rule 145
representation letters or as UDS may otherwise reasonably request. The
undersigned understands that UDS may instruct its transfer agent to
withhold the transfer of any UDS Common Stock disposed of by the
undersigned in a manner inconsistent with this letter.
F. By UDS's acceptance of this Agreement, UDS hereby agrees with the
undersigned as follows:
1. For so long as necessary to permit the undersigned to sell the
UDS Common Stock pursuant to Rule 145 and, to the extent applicable, Rule
144 under the Securities Act, UDS will (a) use its reasonable best efforts
to (i) file, on a timely basis, all reports and data required to be filed
with the Commission by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) furnish to
the undersigned upon request a written statement as to whether UDS has
complied with such reporting requirements during the 12 months preceding
any proposed sale of UDS Common Stock by the undersigned under Rule 145
and Rule 144. UDS has filed all reports required to be filed with the
Commission under Section 13 of the Exchange Act during the preceding 12
months.
2. It is understood and agreed that the legends set forth in
paragraphs C and D above will be removed by delivery of substitute
certificates without such legend if such legend is not required for
purposes of the Securities Act or this Agreement. It is understood and
agreed that such legends and the stop orders referred to above will be
removed if (i) one year will have elapsed from the date the undersigned
acquired UDS Common Stock received in the Arrangement and the provisions
of Rule 145(d)(2) are then available to the undersigned, (ii) two years
will have elapsed from the date the undersigned acquired the UDS Common
Stock received in the Arrangement and the provisions of Rule 145(d)(3) are
then applicable to the undersigned, (iii) UDS has received either an
opinion of counsel, which opinion and counsel will be reasonably
satisfactory to UDS, or a "no action" letter obtained from the staff of
the Commission, to the effect that the UDS Common Stock subject thereto
may be transferred free of the restrictions imposed by Rule 144 or 145
under the Securities Act, or (iv) in the event of a sale of UDS Common
Stock received by the undersigned in the Arrangement which has been
registered under the Securities Act or made in conformity with the
provisions of Rule 145; and, in the case of (i) and (ii) above, UDS has
received either an opinion of counsel, which opinion and counsel will be
reasonably satisfactory to UDS, or a "no action" letter obtained from the
staff of the Commission, to the effect that the restrictions imposed by
Rule 145 under the Securities Act no longer apply to the undersigned.
The undersigned acknowledges that it has carefully reviewed this
letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of UDS Common
Stock received by the undersigned in the Arrangement.
Very truly yours,
[Name]
Accepted this ___ day of
_________, 1997 by:
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By:
Name:
Title: