-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U7yer/DfLWskkaURj2Qz5eZh6ueU6x69ghQ5G0EYAEyVmXqfu8QsUNGjz94XS7IN M78w8VcsxrUU5kD2cHG0PQ== 0000093397-98-000011.txt : 19980814 0000093397-98-000011.hdr.sgml : 19980814 ACCESSION NUMBER: 0000093397-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: CSX SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMOCO CORP CENTRAL INDEX KEY: 0000093397 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 363353184 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00170 FILM NUMBER: 98686014 BUSINESS ADDRESS: STREET 1: 200 E RANDOLPH DR STREET 2: MAIL CODE 3107A CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3128566111 FORMER COMPANY: FORMER CONFORMED NAME: STANDARD OIL CO /IN/ DATE OF NAME CHANGE: 19850425 10-Q 1 AMOCO CORPORATION 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-170-2 AMOCO CORPORATION (Exact name of registrant as specified in its charter) INDIANA 36-1812780 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 200 EAST RANDOLPH DRIVE, CHICAGO, ILLINOIS 60601 (Address of principal executive offices) (Zip Code) 312-856-6111 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address, and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares outstanding as of June 30, 1998--954,195,558 PART I-- FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Income (millions of dollars, except as noted) Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Sales and other operating revenues..................... $ 6,874 $ 7,664 $13,507 $15,740 Consumer excise taxes.......... 912 868 1,758 1,683 Equity in income of affiliates and other income............. 135 92 299 194 Total revenues............... 7,921 8,624 15,564 17,617 Cost and Expenses: Purchased crude oil, natural gas, petroleum products and merchandise.................. 3,682 4,215 7,366 8,673 Operating expenses............. 1,187 1,210 2,293 2,430 Petroleum exploration expenses, including exploratory dry holes........................ 159 129 301 285 Selling and administrative expenses..................... 552 475 1,111 1,007 Taxes other than income taxes.. 1,057 1,060 2,053 2,105 Depreciation, depletion, amortization, and retire- ments and abandonments....... 756 530 1,304 1,092 Interest expense............... 109 94 203 172 Total costs and expenses..... 7,502 7,713 14,631 15,764 Income before income taxes....... 419 911 933 1,853 Income taxes..................... 132 289 260 557 Net income....................... $ 287 $ 622 $ 673 $ 1,296 Weighted average number of shares of common stock outstanding (in thousands): Basic.......................... 956,001 984,358 959,021 987,466 Assuming dilution.............. 960,572 989,743 963,540 992,813 Per Share Data (Based on weighted average shares outstanding): Net income (basic)............... $ .30 $ .63 $ .70 $ 1.31 Net income (assuming dilution)... $ .30 $ .63 $ .70 $ 1.30 Cash dividends................... $ .375 $ .35 $ .75 $ .70 All share data reflect the March 31, 1998 two-for-one common stock split. Consolidated Statement of Financial Position (millions of dollars) June 30, Dec. 31, ASSETS 1998 1997 Current assets: Cash......................................... $ 143 $ 166 Marketable securities -- at cost (corporate securities, except $5 at June 30, 1998, and $104 at December 31, 1997 which represents state and municipal securities)............ 769 979 Accounts and notes receivable (less allowances of $11 at June 30, 1998, and $10 on December 31, 1997).................. 3,304 3,585 Inventories Crude oil and products..................... 967 914 Materials and supplies..................... 253 260 Prepaid expenses, income taxes and other..... 918 1,140 Total current assets....................... 6,354 7,044 Investments and Other Assets: Investments and related advances............. 2,289 2,099 Long-term receivables and other assets....... 962 803 3,251 2,902 Properties--at cost, less accumulated depre- ciation, depletion and amortization of $27,994 at June 30, 1998, and $26,814 at December 31, 1997............................ 22,669 22,543 Total assets............................... $ 32,274 $ 32,489 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term obligations..... $ 140 $ 218 Short-term obligations....................... 1,380 751 Accounts payable............................. 2,376 3,026 Accrued liabilities.......................... 889 785 Taxes payable (including income taxes)....... 1,046 1,264 Total current liabilities.................. 5,831 6,044 Long-term obligations: Debt......................................... 5,327 4,639 Capitalized leases........................... 81 80 5,408 4,719 Deferred Credits and Other Non-Current Liabilities: Income taxes................................. 2,848 2,868 Other........................................ 2,280 2,408 5,128 5,276 Minority Interest.............................. 163 131 Shareholders' Equity: Common stock (authorized 1,600,000,000 shares; issued and outstanding at June 30, 1998 --954,195,558; December 31, 1997 --966,047,616 shares)...................... 2,542 2,568 Earnings retained and invested in the business................................... 13,352 13,900 Accumulated other comprehensive income: Pension liability adjustment............... (31) (31) Foreign currency translation adjustment.... (119) (118) 15,744 16,319 Total liabilities and shareholders' equity. $ 32,274 $ 32,489 Consolidated Statement of Cash Flows (millions of dollars) Six Months Ended June 30, 1998 1997 Cash Flows from Operating Activities: Net income................................... $ 673 $ 1,296 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, amortization, and retirements and abandonments......... 1,304 1,092 Decrease in receivables.................... 267 399 Increase in inventories.................... (46) (154) Decrease in payables and accrued liabilities.............................. (873) (475) Deferred taxes and other items............. (305) (55) Net cash provided by operating activities.. 1,020 2,103 Cash Flows from Investing Activities: Capital expenditures......................... (1,452) (1,527) Proceeds from dispositions of property and other assets........................... 381 182 Net investments, advances and business acquisitions............................... (151) (470) Other........................................ (17) 11 Net cash used in investing activities...... (1,239) (1,804) Cash Flows from Financing Activities: New long-term obligations.................... 744 337 Repayment of long-term obligations........... (131) (83) Cash dividends paid.......................... (722) (694) Issuances of common stock.................... 27 69 Acquisitions of common stock................. (561) (658) Increase in short-term obligations........... 629 289 Net cash used in financing activities...... (14) (740) Decrease in Cash and Marketable Securities................................... (233) (441) Cash and Marketable Securities- Beginning of Period.......................... 1,145 1,321 Cash and Marketable Securities-End of Period... $ 912 $ 880 Basis of Financial Statement Preparation The consolidated financial statements contained herein are unaudited and have been prepared from the books and records of Amoco Corporation ("Amoco" or the "Corporation"). In the opinion of management, the consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of results of operations, financial position and cash flows in conformity with generally accepted accounting principles. Certain information in the Consolidated Statement of Cash Flows has been reclassified to conform to the new presentation. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that all derivatives be recognized at fair value as either assets or liabilities in the statement of financial position. The effect of adoption of SFAS No. 133 is not known at this time, but is not expected to be material to Amoco's financial position or results of operations. Implementation of SFAS No. 133 is required no later than the quarter ending March 31, 2000. Amoco adopted Statement of Position ("SOP") 98-1, "Accounting For the Costs of Computer Software Developed or Obtained for Internal Use" in the first quarter of 1998. The SOP requires costs of computer software developed for internal use to be capitalized as a long-lived asset. The capitalized costs are amortized over the estimated useful life of the software. The amount capitalized, which would have been expensed previously, was approximately $57 million after tax in the first six months of 1998 with $22 million capitalized during the second quarter. Shown below is Amoco's comprehensive income. Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 Net income............................ $ 287 $ 622 $ 673 $1,296 Other comprehensive income, after tax. 3 13 (1) (75) Comprehensive income.................. $ 290 $ 635 $ 672 $1,221 Item 2. Management's Discussion and Analysis Results of Operations Net income for the second quarter of 1998 was $287 million, or $.30 per share, compared to second-quarter 1997 earnings of $622 million, or $.63 per share. Basic and fully diluted per-share data were the same. Second-quarter 1998 results included favorable tax adjustments of $106 million related to Canadian operations. Earnings were reduced by $214 million for impairment of the value of operations in Colombia. The impairment of the Opon field in Colombia reflected lower than anticipated natural gas production and related reserve estimates. The charge also reflected impairment of the adjacent Termo Santander power plant because of the unavailability of an economic fuel supply. Excluding these items, second-quarter 1998 earnings would have been $395 million compared with second-quarter 1997 earnings of $622 million. The earnings decline primarily resulted from lower worldwide crude oil prices, which for Amoco dropped over $5.00 per barrel in the United States compared with the year-earlier levels, reflecting an oversupply of crude oil on world markets, and lower worldwide demand resulting in part from the economic crisis in Asia. For the first six months of 1998, Amoco reported earnings of $738 million, excluding the Colombian impairment charge of $214 million, favorable tax adjustments of $106 million and the first- quarter gain of $43 million on asset divestitures. This compared with $1,296 million for the first half of 1997. The decrease in earnings in 1998 primarily reflected lower crude oil prices and chemical margins. Partly offsetting were higher petroleum products earnings due to improved refining margins and sales volumes. Sales and other operating revenues totaled $6.9 billion for the second quarter of 1998, 10 percent lower than the $7.7 billion reported in the corresponding 1997 period. For the first six months of 1998, sales and other operating revenues declined 14 percent to $13.5 billion from 1997 revenues of $15.7 billion. The decline in revenues in both periods reflected lower prices for crude oil and refined products. The increase in other income for the second quarter and year-to- date 1998 reflected gains associated with the divestitures of North American exploration and production ("E&P") properties. The divestitures, which began in the third quarter of 1997, were part of the Corporation's strategy to upgrade and refocus the portfolio of E&P assets. Purchases of crude oil, natural gas, petroleum products and merchandise totaled $3.7 billion for the second quarter of 1998, down 13 percent from the second quarter of 1997. For the first six months of 1998, purchases totaled $7.4 billion, 15 percent below the comparable 1997 period. The decrease in both periods was primarily attributable to lower crude oil purchase prices. Petroleum exploration expenses of $159 million for the second quarter of 1998 increased 23 percent from the second quarter of 1997, mainly due to higher dry hole costs in the United States and overseas. For the first six months of 1998, exploration expenses increased six percent over the six-month period in 1997, reflecting higher exploration costs in the United States offset by lower costs overseas. The increase in depreciation, depletion, amortization, and retirements and abandonments for both the quarter and year-to- date periods primarily reflected the previously mentioned impairment charge for Colombian assets. The increase in interest expense for the second quarter and first six months of 1998, compared with the prior-year's periods, reflected higher debt balances. For the 12 months ended June 30, 1998, return on average shareholders' equity was 13.1 percent compared with 17.5 percent for the 12 months ended June 30, 1997. Return on average capital employed was 10.1 percent for the 12-month period ended June 30, 1998, compared with 13.4 percent for the corresponding prior-year period. Results by Industry Segment Three Months Six Months Ended Ended June 30, June 30, (millions of dollars) 1998 1997 1998 1997 Exploration and Production United States................. $ 154 $ 209 $ 367 $ 574 Canada........................ 74 22 107 103 Overseas...................... (249) 67 (224) 194 Subtotal...................... (21) 298 250 871 Petroleum Products.............. 230 185 329 213 Chemicals....................... 115 185 218 332 Corporate and Other Operations*. (37) (46) (124) (120) Net Income.................... $ 287 $ 622 $ 673 $1,296 * Corporate and other operations include net interest and general corporate expenses, as well as the results of investments in technology companies, real estate interests and other activities. Exploration and Production Operating Statistics Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 Net Production of Natural Gas(million cubic feet per day) United States............ 2,271 2,415 2,266 2,399 Canada................... 760 727 769 749 Overseas................. 1,417 962 1,372 1,006 Total................... 4,448 4,104 4,407 4,154 Amoco's share of affiliates' production (included in overseas).............. 169 - 151 - Net Production of Crude Oil and NGL(thousand barrels per day) United States--crude oil. 155 164 153 167 --NGL....... 114 110 109 115 Canada--crude oil........ 63 52 62 51 --NGL.............. 10 10 10 10 Overseas................. 304 295 302 301 Total................... 646 631 636 644 Amoco's share of affiliates' production (included in overseas).............. 46 - 47 - Exploration and Production - U. S. U.S. E&P operations earned $154 million in the second quarter of 1998. The decrease, compared with second-quarter 1997 earnings of $209 million, resulted from lower crude oil and natural gas liquids ("NGL") prices, and lower production volumes. Partly offsetting were higher natural gas prices. For the first six months of 1998, U.S. E&P results were $367 million compared with $574 million earned during the comparable period in 1997. Included in 1998 earnings was a first-quarter $43 million gain on asset divestitures. Excluding that gain, the earnings decline reflected lower energy prices and production volumes and higher exploration expenses. Amoco's U.S. natural gas prices averaged approximately $1.85 per thousand cubic feet ("mcf") during the second quarter and the first six months of 1998, about $.15 per mcf higher than the second quarter of 1997, but $.20 per mcf below average natural gas prices for the first half of 1997. For the second quarter, Amoco's average crude oil prices decreased about $5.00 per barrel and averaged approximately $12.70 per barrel. Amoco's crude oil prices for the first six months of 1998 averaged $13.25 per barrel, a 31 percent drop from the comparable period in 1997. Natural gas production decreased six percent compared with the second quarter and first six months of 1997. Second-quarter 1998 crude oil and NGL production declined two percent from a year ago. Year-to-date crude oil and NGL production declined seven percent from the comparable period in 1997. The production decline reflected dispositions and normal field declines. Partially offsetting was increased production from the deepwater Gulf of Mexico, Tuscaloosa, Cotton Valley and Overthrust areas. Exploration and Production - Canada Canadian E&P operations earned $24 million in the second quarter of 1998, excluding tax benefits of $50 million, compared with 1997 second-quarter earnings of $22 million. Favorably affecting results were higher production volumes and natural gas prices, offset by lower crude oil prices. For the first half of 1998, earnings were $57 million, excluding tax benefits of $50 million, compared with 1997 year-to-date earnings of $103 million. The decline in earnings primarily resulted from lower crude oil and natural gas prices. Amoco's Canadian natural gas prices for the second quarter averaged approximately $1.35 per mcf, $.20 per mcf higher than the same period in 1997. For the first six months, Canadian natural gas prices averaged $1.30 per mcf, $.20 per mcf below the 1997 level. Amoco's crude oil prices in Canada averaged $7.50 per barrel for the second quarter and first half of 1998. Crude oil prices declined about $6.50 per barrel below the second quarter of 1997 and almost $8.00 per barrel below the first six months of 1997, reflecting lower industry prices and increased heavy oil production. Natural gas production increased five percent during the second quarter of 1998 compared with the same period in 1997. For the first six months, natural gas production increased three percent. Incremental development production more than offset the effect of asset dispositions and normal field declines. Exploration and Production - Overseas Overseas E&P operations reported a loss of $35 million in the second quarter of 1998, excluding $214 million related to impairment of the value of the Opon field and power plant facility in Colombia. The loss in the second quarter of 1998 compared with second-quarter 1997 earnings of $67 million. The decrease primarily resulted from lower crude oil prices, partly offset by increased natural gas production. For the first half of 1998, overseas E&P operations reported a loss of $10 million, excluding the Colombian impairment charge. This compared with earnings of $194 million for the 1997 six- month period. The decrease mainly resulted from lower crude oil prices and less favorable currency effects compared with 1997. Weighted average overseas crude oil prices dropped approximately $5.00 per barrel during the second quarter of 1998 compared with the similar period in 1997. Comparing the first half of 1998 with the same period in 1997, crude oil prices dropped over $6.00 per barrel. Natural gas production increased in the second quarter and first half of 1998 mainly as a result of higher production in the United Kingdom, Argentina and Trinidad. Crude oil production was up three percent compared with the second quarter of 1997. For the six-month period, crude oil production was about the same as the 1997 period. Petroleum Products Operating Statistics Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 U.S. Refined Product Sales (thousand barrels per day) Gasoline................. 699 684 664 635 Distillates.............. 350 332 356 331 Other products........... 232 202 213 179 Total................... 1,281 1,218 1,233 1,145 Input to U.S. Crude Units (thousand barrels per day) 997 961 933 919 Refinery Utilization Rate 98% 95% 92% 91% Petroleum Products operations earned $230 million during the second quarter of 1998 compared with second-quarter 1997 earnings of $185 million. The increase reflected improved refining efficiencies and strong gasoline sales volumes. The stronger earnings performance in the first half of 1998 over the same period in 1997 reflected higher gasoline and distillate sales volumes and margins, and higher asphalt margins. In the second quarter, U.S. refined product sales volumes grew by five percent in comparison with 1997's second quarter. Year-to- date sales volumes grew by eight percent. Chemicals Chemicals earned $115 million in the second quarter of 1998 and $218 million for the first six months of 1998, down 38 and 34 percent, respectively, from the comparable 1997 periods. The decrease reflected the continued impact of industry capacity additions resulting in oversupply, which put downward pressure on margins across most commodity product lines. Partly offsetting were higher purified terephthalic acid ("PTA") and polypropylene volumes, which increased 13 and three percent, respectively, for the quarter and eight percent and five percent, respectively, for the first half of 1998. Corporate and Other Operations Corporate and other operations include net interest and general corporate expenses as well as investments in technology companies, real estate interests and other activities. Corporate and other operations reported net expenses of $85 million in the second quarter of 1998, excluding $48 million of favorable adjustments related to Canadian taxes. This compared with net expenses of $46 million in the corresponding 1997 period. The increase in corporate and other operations net expenses reflected higher net interest and tax expense. For the first half of 1998, corporate and other operations reported net expenses of $172 million, excluding $48 million of favorable adjustments related to Canadian taxes. The $52 million increase in net expenses over the corresponding 1997 period resulted from higher interest and tax expense partially offset by favorable currency effects. Subsequent Event On August 11, 1998, Amoco and The British Petroleum Company p.l.c. ("BP") announced that the companies signed a merger agreement. Subject to standard approvals and contingencies, Amoco will merge with a subsidiary of BP. Under the agreement, Amoco shareholders will be entitled to receive for each Amoco common share held at closing, 3.97 BP ordinary shares. Such shares will be delivered in the form of American Depository Receipts, which represent six BP ordinary shares. Following the merger, BP shareholders will hold approximately 60 percent and Amoco shareholders approximately 40 percent of the capital of the combined company on a diluted basis. BP will be renamed BP Amoco p.l.c. For additional information see Exhibits 2(a), 2(b) and 2(c) included in this Form 10-Q. Liquidity and Capital Resources Cash flows from operating activities for the first six months of 1998 amounted to $1,020 million compared with $2,103 million in the prior-year period. Working capital of $523 million at June 30, 1998 compared with $1.0 billion at December 31, 1997. The Corporation's current ratio was 1.09 to 1 at June 30, 1998, compared with 1.17 to 1 at year-end 1997. As a matter of policy, Amoco practices asset and liability management techniques that are designed to minimize its investment in non-cash working capital. This does not impair operational flexibility since the Corporation has ready access to both short- and long-term debt markets. Amoco's debt totaled $6.8 billion at June 30, 1998 and $5.6 billion at year-end 1997. Debt as a percentage of debt-plus- equity was 30.1 percent at June 30, 1998, and 25.4 percent at year-end 1997. Amoco Corporation guarantees the public debt obligations of Amoco Company and the public notes, bonds and debentures of Amoco Canada Petroleum Company Ltd. ("Amoco Canada"). Amoco also guarantees certain outstanding loans of equity-basis affiliates, which at June 30, 1998, totaled $349 million. Cash dividends paid in the first half of 1998 totaled $722 million. Amoco was into the second year of a two-year, $2 billion stock repurchase program which was discontinued as a result of the merger agreement between Amoco and BP. Through June 1998, 40 million shares of Amoco's common stock were repurchased, on a post-split basis, at a cost of $1.8 billion. Stock repurchased under the program was in addition to shares purchased for benefit plan purposes. The Corporation believes its strong financial position will permit the financing of business needs and opportunities as they arise. Short-term borrowings totaled $1.4 billion at June 30, 1998, an increase of $629 million since year-end 1997. Short-term obligations, such as commercial paper borrowings, give the Corporation the flexibility to meet short-term working capital and other temporary requirements. At June 30, 1998, bank lines of credit available to support outstanding commercial paper borrowings amounted to $790 million, all of which were supported by commitment fees. The Corporation also may utilize its favorable access to long- term debt markets to finance profitable growth opportunities and for ongoing operations. Amoco Company issued $500 million of ten- year, 6% guaranteed notes during the second quarter of 1998. A $500 million shelf registration statement on file with the Securities and Exchange Commission was withdrawn during the second quarter of 1998. Capital and exploration expenditures for the first six months of 1998 totaled $1,753 million, excluding $196 million for Amoco's share of equity-basis affiliates' spending. This compared with $1,812 million for the similar 1997 period, excluding $89 million for Amoco's share of affiliates' spending. Approximately 70 percent of the 1998 expenditures was spent in E&P operations. Amoco has been addressing the issue of preparing its computer systems to properly handle date information in the year 2000 and beyond. This has involved the implementation of new systems and upgrading of computer information technology where needed. In addition Amoco has reviewed its information and process control systems, as well as other electronic control systems, to identify all critical equipment and software that will need to be altered or replaced to be prepared for the year 2000. The upgrading and replacement of these systems is underway and will occur primarily during the three years ending in December 1999, with the bulk of this work being completed by the end of 1998. Incremental costs related to this effort are expected to reduce income by about $55 million before tax in 1998, and by about $100 million for the 1997 through 1999 period. The Amoco year 2000 process will assess the year 2000 readiness of critical suppliers and customers who are addressing similar issues in their businesses and systems. Interruptions in supplies or customer orders (or other failures of third parties on which the Corporation relies) resulting from year 2000 issues could adversely affect Amoco's business. The Corporation is in the process of reviewing its business resumption and contingency plans to mitigate the impact of possible third party failures where cost effective. The Corporation has provided in its accounts for the reasonably estimable future costs of probable environmental remediation obligations relating to various oil and gas operations, refineries, marketing sites and chemical locations, including multiparty sites at which Amoco and certain of its subsidiaries have been identified as potentially responsible parties by the U.S. Environmental Protection Agency. Such estimated costs will be refined over time as remedial requirements and regulations become better defined. However, any additional environmental costs cannot be reasonably estimated at this time due to uncertainty of timing, the magnitude of contamination, future technology, regulatory changes and other factors. Although future costs could have a significant effect on the results of operations in any one period, they are not expected to be material in relation to Amoco's liquidity or consolidated financial position. In total, the accrued liability represents a reasonable best estimate of Amoco's remediation liability. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Statements in this report that are not historical facts, including statements about industry and company growth, estimates of expenditures and savings, and other trend projections are forward looking statements. These statements are based on current expectations and involve risk and uncertainties. Actual future results or trends may differ materially depending on a variety of factors. These include specific factors identified in the discussion accompanying such forward looking statements, industry product supply, demand and pricing, political stability and economic growth in relevant areas of the world, the Corporation's successful execution of its internal performance plans, development and use of new technology, successful partnering, actions of competitors, natural disasters, and other changes to business conditions. PART II--OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the description of the challenge by the Internal Revenue Service of certain foreign income taxes as credits against the Corporation's U.S. taxes that otherwise would have been payable for the years 1980 through 1992 in Part II, Item 1 of Amoco's Form 10-Q for the quarter ended March 31, 1998. Seven proceedings instituted by governmental authorities are pending or known to be contemplated against Amoco and certain of its subsidiaries under federal, state or local environmental laws, each of which could result in monetary sanctions in excess of $100,000. No individual proceeding is, nor are the proceedings as a group, expected to have a material adverse effect on Amoco's liquidity, consolidated financial position or results of operations. Amoco estimates that in the aggregate the monetary sanctions reasonably likely to be imposed from these proceedings amount to approximately $3.9 million. Amoco has various other suits and claims pending against it among which are several class actions for substantial monetary damages which in Amoco's opinion are not meritorious. While it is impossible to estimate with certainty the ultimate legal and financial liability in respect to these other suits and claims, Amoco believes that, while the aggregate amount could be significant, it will not be material in relation to its liquidity or its consolidated financial position. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Shown below is summarized financial information for Amoco's wholly owned subsidiary, Amoco Company. Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 (millions of dollars) Total revenues(including excise taxes)........... $ 7,233 $ 7,826 $14,169 $15,900 Net income.............. $ 158 $ 546 $ 455 $ 1,102 June 30, Dec. 31, 1998 1997 (millions of dollars) Current assets................. $ 6,032 $ 6,442 Total assets................... $29,927 $30,062 Current liabilities............ $ 4,865 $ 5,165 Long-term debt-affiliates...... $ 5,022 $ 4,739 -other........... $ 3,505 $ 2,791 Deferred credits............... $ 4,725 $ 4,663 Minority interest.............. $ 120 $ 119 Shareholder's equity........... $11,609 $12,505 Shown below is summarized financial information for Amoco's wholly owned subsidiary, Amoco Canada. Three Months Six Months Ended Ended June 30, June 30, 1998 1997 1998 1997 (millions of dollars) Revenues................ $ 858 $ 1,057 $ 1,833 $ 2,407 Net income(loss)........ $ 131 $ (4) $ 159 $ 137 June 30, Dec. 31, 1998 1997 (millions of dollars) Current assets.................. $ 828 $ 1,479 Total assets.................... $ 3,860 $ 4,217 Current liabilities............. $ 551 $ 948 Non-current liabilities......... $ 2,924 $ 3,043 Shareholder's equity............ $ 385 $ 226 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number 2(a) The August 11, 1998, press release announcing the merger agreement between Amoco and BP. 2(b) Agreement and Plan of Merger among Amoco, BP and Eagle Holdings, Inc., dated August 11, 1998. 2(c) Stock Option Agreement between Amoco and BP. 12 Statement Setting Forth Computation of Ratio of Earnings to Fixed Charges. 27 Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter ended June 30, 1998. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Amoco Corporation (Registrant) Date: August 13, 1998 A. J. NOCCHIERO A. J. Nocchiero Vice President and Controller (Duly Authorized and Chief Accounting Officer) EX-2 2 EXHIBIT 2 (A) Exhibit 2 (a) [LOGO] Amoco Corporation Mail Code 2304 200 East Randolph Drive Chicago, Illinois 60601-7125 Jim Fair For Immediate Release Manager, Communications Services Phone: 312-856-5566 Internet: www.amoco.com BP AND AMOCO MERGE TO ENTER GLOBAL TOP TRIO OF OIL MAJORS Largest ever industrial merger creates Britain's biggest company Combined current market capitalization of some $110 billion, with size and scale to access biggest projects for future growth Agreed equity split of 60 per cent to BP and 40 per cent to Amoco Run by chief executive Sir John Browne and integrated management team Target of at least $2 billion extra to annual pre-tax earnings by end-2000 Aims for strong annual growth and top competitive returns Prime positions in key producing areas, retail markets, petrochemicals and emerging regions. Chicago (August 11) - BP and Amoco today announced that they have agreed to join forces to create one of the strongest and most competitive international energy and petrochemicals groups in the world. The two companies intend to unite their global operations through an agreed merger. The executive management of the new group will be headed by BP chief executive Sir John Browne and the board will be co-chaired by BP chairman Peter Sutherland and Amoco chairman Larry Fuller. The combined enterprise, which is the largest ever industrial merger, will be called BP Amoco p.l.c. It will be headquartered in London and will be Britain's biggest company. BP's earnings in 1997 were $4.6 billion and Amoco's totaled $2.7 billion. Combined revenues were $108 billion and capital employed $53 billion. Current combined market capitalization of some $110 billion would take the united group into the world's top trio of oil majors. Sir John Browne described the BP-Amoco link-up as "a superb alliance of equals with complementary strategic and geographical strengths which effectively creates a new super- major that can better serve our millions of customers world- wide". In a joint statement following approval of the transaction by the boards of BP and Amoco, he and Larry Fuller said the move was expected to deliver synergies from cost-savings that would add at least $2 billion pre-tax a year by end- 2000 to the earnings already separately targeted by the two companies - and possible upside beyond that. "We are uniting two excellent portfolios of assets and people to create a group that will have the financial resources, scale and global reach to compete effectively in the 21st century," they said. DISTINCTIVE RETURN: "International competition in the industry is already fierce and will grow more acute as new players emerge. In such a climate the best investment opportunities will go increasingly to companies that have the size and financial strength to take on those large-scale projects that offer a truly distinctive return." The merger will be effected by the issue of new BP shares, in the form of American Depository Receipts, in exchange for Amoco common stock, with BP shareholders owning 60 per cent and Amoco shareholders owning 40 per cent of the combined group. The board of BP Amoco will comprise 13 directors from BP, of whom six will be executive directors, and nine directors from Amoco, of whom two will be executive directors. Sir John Browne will be CEO of BP Amoco. He will also be chairman of the management committee and Larry Fuller deputy chairman. The two will co-chair the transition team responsible for integrating the operations of the new group. BP deputy CEO Rodney Chase and Amoco president Bill Lowrie will be deputy CEOs and presidents of BP Amoco. Mr. Chase will have responsibility for exploration & production and Mr. Lowrie for refining & marketing, and chemicals. BP chief financial officer John Buchanan will be CFO. As co-chairman of the new group, Mr. Fuller will remain an executive director until his retirement in the first half of 2000. The world-wide headquarters of the BP Amoco group will be in London. Amoco's head office in Chicago will be headquarters for the group's North American refining, marketing and transportation business and, in due course, the world-wide chemicals business. AMOCO BRAND: Exploration and production operations for the Western Hemisphere will be managed from Houston, Texas, where both BP and Amoco currently have offices. The Amoco brand will be extended over time to all BP's retail gasoline and convenience store outlets in the US. Retail sites elsewhere in the world will continue to carry the BP brand. The initial synergies of $2 billion from the transaction are expected to come from a mix of reductions in staff in areas of overlap, more focused exploration, streamlining of business processes, improved procurement and rationalization where operations are duplicated. The BP Amoco group will have combined reserves of around 14.8 billion barrels of oil and gas equivalent and daily production of some three million barrels. It will have prime positions in established major oil and gas provinces of the world, including the North Sea and North America. It will be the largest producer of oil and gas in the US, with output from Alaska, the Gulf of Mexico and the Lower 48 states. Amoco is already the biggest gas producer in the US and Canada. It will have key positions and enhanced opportunities for access to new acreage in regions expected to supply a growing share of global energy demand in the 21st century. These include Algeria, Angola, Argentina, Australia, Azerbaijan, Bolivia, Canada, Colombia, Egypt, Kazakhstan, Kuwait, Norway, Oman, Russia and Siberia, Trinidad, the UAE and Venezuela. TOP MARKETER: Amoco is one of the leading gasoline marketers in the US and a market-leader in premium gasoline. Based on 1997 sales, the new group will share top place for retail sales east of the Rocky Mountains, with first or second position in some 20 states. World-wide, it will be a top- tier marketer of fuels, served by a global refining network with key refineries among the top performers in their regions. Combining the chemicals operations of BP and Amoco will create a business with revenues of some $13 billion that marries the strengths of BP in Europe and Amoco in the US, and provides a powerful platform for expansion in Asia where both companies already have significant investments. The new chemicals business will be one of the world's largest petrochemicals companies, with leading positions in seven core products - acetic acid, acrylonitrile, aromatics, purified terephthalic acid (PTA), alpha-olefins, purified isophthalic acid (PIA) and polypropylene - and a portfolio of key proprietary technologies. Both BP and Amoco have significant investments in solar energy and share strong records and reputations for sound operating practices, and environmental and social responsibility. FIRST-CLASS PEOPLE: Concluding their joint statement on the new group, Sir John Browne and Larry Fuller said: "Through this transaction, we are creating an energy business for the new millennium, a business that has the first-class people, the financial resources and the leading-edge technology to supply our millions of customers world-wide with cleaner, premium-quality products at competitive prices. "The managements of BP and Amoco already have a shared financial philosophy. The targets our two companies have previously set are very similar - powerful annual earnings growth, a strongly-competitive return on capital, and dividends growing in line with underlying earnings. This transaction gives us the financial strength, flexibility and global reach to pursue growth opportunities that will underpin those targets and to extend them over the longer term." A summary of the proposed merger agreement is set out in Part lll of this release. The companies said they intend to publish detailed information for dispatch to shareholders within the next three months. Subject to shareholder approval and regulatory consents, the conclusion of the merger is targeted for the end of the year. Investment bank advisers are J P Morgan for BP and Morgan Stanley for Amoco. August 11, 1998 Safe Harbor Language Regarding Forward Looking Statements: The statements contained in this press release, particularly those regarding synergies, performance, costs, dividends, returns, divestments, reserves and growth are or may be forward looking statements and actual results may differ materially from the statements made depending on a variety of factors, including successful integration of BP and Amoco operations. Additional information concerning factors that could cause the actual results to differ materially from those in the forward looking statements are contained in BP's Annual Report on Form 20-F and Amoco's Annual Report on Form 10-K filed with the US Securities and Exchange Commission. CONTACTS FOR FURTHER INFORMATION BP LONDON AMOCO CHICAGO Roddy Kennedy - Press Office Jim Fair - Media Relations Tel: 44 (0)171 496 4624 Tel: (1) 312-856 5566 David Peattie - Investor Relations Chuck Koepke - Investor Relations Tel: 44 (0)171 496 4717 Tel: (1) 312- 856 6431 BP AMERICA AMOCO LONDON Tom Koch - Press Office Harry MacMillan - Public Affairs Tel: (1) 212 451 8019 44 (0)181 849 7271 Terry Lamore - Investor Relations Tel: (1) 212 451 8034 BROKER CONTACTS FOR BP FOR AMOCO Rod Peacock - J P Morgan London Gordon Dyal - Morgan Stanley Tel: 44 (0)171 325 5664 Tel: (1) 212 761 4457 Harry Hampson - J P Morgan London Tel: 44 (0)171 325 5536 Jes Staley - J P Morgan New York Tel: (1) 212 648 0069 Stephen Robinson - Merrill Lynch, London Tel: 44 (0)171 772 2608 Mike Ryan - Merrill Lynch, New York Tel: (1) 212 449 3697 David Mayhew - Cazenove & Co Tel: 44 (0)171 825 9453 Satellite feed today, August 11th, of executive comments and Amoco B-roll: Times of feed: 2:45 p.m. to 3:00 p.m. EDT 3:45 p.m. to 4:00 p.m. EDT Satellite coordinates: C-Band, Galaxy 6/Transponder 5 Part ll FACTS AND STATISTICS The BP Group 1997 replacement cost pre-exceptional earnings of $4.6 billion 1997 revenues exceeding $71 billion Capital employed in 1997 was $30.7 billion Capital budget for 1998 of $6 billion Some 56,450 employees world-wide at end-1997 In business since 1909 Over 375,000 shareholders. Exploration & Production 1997 world-wide net production of over 1.25 million barrels a day of crude oil and natural gas liquids and around 1.66 billion cubic feet of natural gas a day Estimated net proven liquid reserves of 6.85 billion barrels; estimated net proven natural gas reserves of 10.5 trillion cubic feet Exploration activities in 16 countries and production activities in 11 countries Largest oil producer in the US with over 8 per cent of the oil produced in the country coming from BP fields Largest oil producer in the UK North Sea. Refining and Marketing Total oil product sales of 3.3 million barrels a day 17,900 service stations world-wide Refinery throughput of around 1.8 million barrels a day Owned or part-owned refineries in 12 countries, including the UK, France, Spain, the US, Australia, South Africa and Singapore One of the largest marketers of aviation fuels, serving customers at more than 600 airports Leading supplier of fuels and lubricants to the shipping industry with facilities at more than 800 ports. Chemicals Produces around 9.4 million metric tons of product a year World's largest supplier of acetic acid and its derivatives to the market A leading European manufacturer of polyethylene which is used in a range of modern products from food packaging to gas pipes More than 90 per cent of the world's manufacturing capacity for acrylonitrile uses BP's proprietary process BP has the world's largest acrylonitrile plant at Green Lake, Texas One of Europe's biggest styrenics producers and the top supplier of oxygenated solvents Europe's leading producer of polybutene, used in cable insulation, fuel additives and adhesives. Solar World's second largest photovoltaic company In 1997 sales reached $80 million, up 33 per cent on 1996 Manufactures the highest-efficiency solar cells in volume production. Amoco Corporation 1997 earnings of $2.7 billion 1997 revenues exceeding $36 billion Capital employed in 1997 was $22 billion Capital budget for 1998 of $3.9 billion Some 43,000 employees world-wide at end-1997 In business since 1889 Over 340,000 shareholders. Exploration & Production 1997 world-wide net production averaged 637,000 barrels of crude oil and natural gas liquids per day and more than 4 billion cubic feet of natural gas per day Proven liquid reserves of 2.4 billion barrels; proven natural gas reserves of more than 21 trillion cubic feet Exploration activities in some 20 countries, production activities in 14 countries Largest North American private natural gas producer; second largest reserves holder. Refining and Marketing Total oil product sales of 1.2 million barrels a day 9,300 service stations, all in the US Five US refineries process a total of about 1 million barrels of crude oil daily. Chemicals Capacity of some 13 million metric tons of product a year World's largest producer of purified terephthalic acid (PTA), used to make polyester fibers, cassette tapes, photographic film and many types of plastic containers World's largest producer of paraxylene, used in making PTA World's largest producer of polybutene World's largest producer of poly alpha-olefins and second-biggest producer of linear alpha-olefins A leading world-wide producer of polypropylene, used in synthetic fabrics and fibers World's largest producer of woven polypropylene carpet- backing A leading supplier to the unsaturated polyester and paint and coatings markets. Solar Amoco is 50 per cent owner of Solarex Corporation, the largest producer of photovoltaic solar panels in the US. NOTE: BP earnings are quoted UK GAAP and Amoco earnings US GAAP. Part lll 1. Principal Terms Under the terms of the Merger: Amoco shareholders will be entitled to receive for each Amoco common share held at closing, 3.97 BP ordinary shares. Such shares will be delivered in the form of BP Amoco American Depository Receipts ("ADRs"), which represent six BP ordinary shares. Following the Merger, BP shareholders will hold approximately 60 per cent and Amoco shareholders approximately 40 per cent of the capital of the combined company on a diluted basis. BP will be renamed BP Amoco p.l.c. BP Amoco's shares will remain listed on the London Stock Exchange. BP Amoco will apply to list the new ADRs to be issued to Amoco shareholders in connection with the Merger, together with its existing ADRs, on the New York Stock Exchange. 2. Structure of the Transaction The Merger will be effected in accordance with the terms of an Agreement and Plan of Merger dated as of August 11, 1998 (the "Merger Agreement"), entered into between BP, Eagle Holdings, Inc., a wholly-owned US subsidiary of BP, and Amoco. Under the terms of the Merger, each share of common stock of Amoco will effectively be canceled and re-issued to BP in exchange for new BP ordinary shares to be delivered in the form of ADRs. On completion of the Merger BP will acquire the entire issued share capital of Amoco. Following closing, Amoco will be called BP-Amoco Corporation. 3. Merger Agreement The Merger Agreement sets out the conditions to the closing of the Merger. It also contains certain termination rights, mutual representations and warranties and various convenants relating to the operation of the businesses of BP and Amoco in the period until closing. The Merger Agreement requires BP and Amoco to effect the Merger unless any one of the conditions to the implementation of the Merger is not satisfied or waived by August, 31 1999 or either BP or Amoco exercises one of its limited termination rights. The Merger Agreement also provides for termination fees to be paid by one party to the other in certain circumstances. a) Principal Conditions The conditions to the implementation of the Merger include BP and Amoco shareholder approvals, receipt of certain regulatory and tax approvals and the absence of any governmental order prohibiting the Merger. b) Termination rights The circumstances in which either party is able to terminate the Merger Agreement include: if either Amoco or BP shareholders do not approve the Merger and related transactions; if the other party enters into negotiations with any other person in relation to an acquisition offer for that party or that party's board recommends such a transaction; if the board of the other party withdraws or adversely modifies its recommendation of the Merger; or if there is a material breach of covenant or warranty by the other party. c) Termination payments The parties have agreed that Amoco will make a payment to BP of up to US$950 million (making a total of US$1 billion payable to BP when considered together with the US$50 million payable under the Stock Option Agreement) if the Merger Agreement is terminated in the following circumstances: Amoco fails to obtain shareholder approval of the Merger at a time when a third party has made an alternative proposal; the directors of Amoco withdraw or adversely amend their approval of the Merger or recommend an alternative transaction; or Amoco recommends to its shareholders an alternative proposal by a third party. In the event of a termination based on the failure to obtain shareholder approval, the termination payment will be limited to US$500 million, with an additional US$450 million payable to BP only in the event that Amoco enters into an agreement for an alternative transaction. Similarly, the parties have agreed that BP will make a payment to Amoco of up to US$1 billion if the transaction is terminated for identical reasons relating to BP and in the same circumstances. 4. Stock Option Agreement Amoco has granted BP an option to purchase 189,783,270 shares of Amoco Common Stock at a price per share of $41.00. This represents approximately 19.9 per cent of the outstanding Amoco Common Stock. The stock option is exercisable in circumstances in which a termination fee also is payable by Amoco to BP. The stock option includes terms limiting the aggregate maximum amount receivable by BP under the stock option agreement and termination fees, when considered together, to US$1 billion. 5. Dividends BP and Amoco will continue to pay quarterly dividends in the ordinary course prior to the implementation of the Merger. BP's gross scrip dividend share will continue to be available in respect of dividends paid prior to March 31, 1999. BP Amoco intends to continue paying four dividends a year. Its dividend policy will be to pay out approximately 50 per cent of through-cycle earnings. BP is considering reconstituting its share capital in US dollars in line with the accounts of the group, dividend declaration and the currency of its material business operations. 6. Accounting and tax implications It is intended that BP Amoco will have a calendar financial year-end. The accounts of the group will be published in US dollars and will be prepared in accordance with UK GAAP, with a reconciliation to US GAAP. _ END _ EX-2 3 EXHIBIT 2 (B) Exhibit 2 (b) EXECUTION COPY AGREEMENT AND PLAN OF MERGER Among THE BRITISH PETROLEUM COMPANY p.l.c., AMOCO CORPORATION and EAGLE HOLDINGS, INC. Dated as of August 11, 1998 This AGREEMENT AND PLAN OF MERGER, dated as of August 11, 1998 (this "Agreement"), among THE BRITISH PETROLEUM COMPANY p.l.c. ("BP"), an English public limited company, AMOCO CORPORATION, an Indiana corporation ("Amoco"), and EAGLE HOLDINGS, INC., an Indiana corporation and a direct, wholly owned subsidiary of BP ("Merger Sub" and, together with Amoco, the "Constituent Corporations"); W I T N E S S E T H : WHEREAS, the respective Boards of Directors of each of Amoco, BP and Merger Sub (each, a "Party" and, together, the "Parties") have each determined that it is in the best interest of their respective companies and shareholders to combine their respective businesses as BP Amoco p.l.c. to conduct their operations on a unified basis, under the governance arrangements set forth herein; WHEREAS, in futherance of such combination, the respective Boards of Directors of Amoco and Merger Sub have each adopted this Agreement and approved the merger (the "Merger") of Merger Sub with and into Amoco in accordance with the Indiana Business Corporation Law, as amended (the "BCL"), and upon the terms and subject to the conditions set forth herein; WHEREAS, it is intended that, for U.S. federal income tax purposes, the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code"); WHEREAS, it is intended that, for financial accounting purposes, the Merger shall be accounted for as a "pooling of interests" under generally accepted accounting principles in the United States ("U.S. GAAP"), and using merger accounting methods under generally accepted accounting principles in the United Kingdom ("U.K. GAAP"); WHEREAS, as an inducement to the willingness of BP to enter into this Agreement, the board of directors of Amoco has approved the grant to BP of an option to purchase shares of common stock, without par value, of Amoco ("Amoco Common Shares") pursuant to a stock option agreement, dated as of the date of this Agreement, between Amoco and BP (the "Stock Option Agreement"), and each of Amoco and BP has duly authorized, executed and delivered the Stock Option Agreement as of the date hereof; and WHEREAS, Amoco and BP desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I THE CLOSING AND THE MERGER 1.1. Closing. The closing of the Merger (the "Closing") shall take place (i) at 9:00 A.M. (New York time) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York, on the third business day after the day on which the last to be fulfilled or waived of the conditions set forth in Article IV (other than those conditions that by their nature are to be fulfilled at the Closing, but subject to the fulfillment or waiver of such conditions) shall be fulfilled or waived in accordance with this Agreement or (ii) at such other places and time and/or on such other date as Amoco and BP may agree in writing (the "Closing Date"). It is the intention of the Parties to target December 31, 1998 as the Closing Date, based on the currently anticipated timetable for the Merger. 1.2. The Merger. 1.2.1. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.2.2), Merger Sub shall be merged with and into Amoco in accordance with the BCL, whereupon the separate existence of Merger Sub shall cease, and Amoco shall be the surviving corporation in the Merger (the "Surviving Corporation"). 1.2.2. As soon as practicable after satisfaction or waiver (to the extent herein permitted) of the conditions to the obligations of the parties to consummate the Merger set forth in Article IV, Amoco and Merger Sub will file articles of merger (the "Articles of Merger") with the Secretary of State of the State of Indiana and make all other filings or recordings required by applicable law in connection with the Merger. The Merger shall become effective at such time as the Articles of Merger are duly filed with the Secretary of State of the State of Indiana or at such later time as is specified in the Articles of Merger (the "Effective Time"). 1.2.3. From and after the Effective Time, title to all real estate and other property owned by each of the Constituent Corporations shall be vested in the Surviving Corporation and the Surviving Corporation shall have all liabilities of the Constituent Corporations, all as provided under the BCL. 1.3. Conversion and Exchange of Shares. At the Effective Time: 1.3.1. Each Amoco Common Share owned by BP or any Subsidiary (as defined in Section 2.1.1) of BP or Amoco immediately prior to the Effective Time (each, an "Excluded Amoco Share") shall, by virtue of the Merger, and without any action on the part of the holder thereof, no longer be outstanding, shall be cancelled and retired without payment of any consideration therefor and shall cease to exist. 1.3.2. Each Amoco Common Share outstanding immediately prior to the Effective Time, other than Excluded Amoco Shares, shall be converted into and shall be cancelled in exchange for the right to receive 3.97 (the "Exchange Ratio") ordinary shares, of nominal value 25p each ("BP Ordinary Shares"), which shall be in the form of American depositary shares, each representing the right to receive six BP Ordinary Shares, or such other form of BP Ordinary Shares as BP and Amoco may agree in accordance with Section 1.4.7 (the "BP Depositary Shares"), and the BP Depositary Shares shall be evidenced by one or more receipts ("BP ADRs") issued in accordance with the Amended and Restated Deposit Agreement, dated as of August 1, 1992, as amended through the date hereof (as it may be amended with the consent of Amoco from time to time, the "Deposit Agreement"), among BP, Morgan Guaranty Trust Company of New York, as Depositary (the "Depositary"), and the holders of BP ADRs, or such other arrangements as BP and Amoco may agree (the "Merger Consideration"). At the Effective Time, all Amoco Common Shares shall no longer be outstanding, shall be canceled and retired and shall cease to exist, and each certificate (a "Certificate") formerly representing any of such Amoco Common Shares (other than Excluded Amoco Shares) shall thereafter represent only the right to the Merger Consideration and the right, if any, to receive pursuant to Section 1.6 cash in lieu of fractional BP Depositary Shares, respectively, and any distribution or dividend pursuant to Section 1.4.6, in each case without interest. The BP Ordinary Shares and BP Depositary Shares issued as provided in this Section 1.3.2 shall be of the same class and shall have the same terms as the currently outstanding BP Ordinary Shares and the currently outstanding BP Depositary Shares, respectively. BP shall, following the Closing, pay all stamp duties, stamp duty reserve tax and other taxes and similar levies imposed in connection with the issuance or creation of the BP Depositary Shares and any BP ADRs in connection therewith. 1.3.3. Each share of common stock of Merger Sub, no par value ("Merger Sub Common Stock"), outstanding immediately prior to the Effective Time shall be cancelled and, in consideration for the allotment of the BP Ordinary Shares referred to in Section 1.3.4 below, the Surviving Corporation shall issue to BP at the Effective Time such number of shares of common stock as is equal to the number of shares of Merger Sub Common Stock with the same rights, powers and privileges as the Amoco Common Shares and shall constitute the only outstanding shares of common stock of the Surviving Corporation. 1.3.4. In consideration of the issue to BP by the Surviving Corporation of shares of common stock of the Surviving Corporation pursuant to Section 1.3.3 hereof, BP shall allot (subject to satisfaction of the condition set forth in Section 4.1.5 hereof) such number of BP Ordinary Shares as is equal to the number of Amoco Common Shares outstanding as of the Effective Time (other than the Excluded Amoco Shares) multiplied by the Exchange Ratio to permit the issuance of BP Depositary Shares to the holders of such Amoco Common Shares for the purpose of giving effect to the issue of the Merger Consideration referred to in Section 1.3.2 of this Agreement. 1.3.5. In the event that, subsequent to the date of this Agreement but prior to the Effective Time, Amoco changes the number of Amoco Common Shares, or BP changes the number of BP Ordinary Shares, issued and outstanding as a result of a stock split, reverse stock split, stock dividend, recapitalization, redenomination of share capital or other similar transaction, the Exchange Ratio and other items dependent thereon shall be appropriately adjusted. 1.4. Surrender and Payment. 1.4.1. Prior to the Effective Time, BP shall appoint the Depositary or, failing the Depositary, another agent acceptable to Amoco as exchange agent (the "Exchange Agent") for the purpose of exchanging Certificates for BP ADRs as provided in Section 1.3.2. Promptly after the Effective Time, the Surviving Corporation will send, or will cause the Exchange Agent to send, to each holder of record as of the Effective Time of Amoco Common Shares a letter of transmittal, in such form as Amoco and BP may reasonably agree, for use in effecting delivery of Amoco Common Shares to the Exchange Agent. To the extent required, the Exchange Agent will requisition from the Depositary, from time to time, such number of BP ADRs as are issuable in respect of Amoco Common Shares properly delivered to the Exchange Agent. BP shall, prior to the Effective Time, conditionally allot the BP Ordinary Shares referred to in Section 1.3.4, subject to the terms and conditions of this Agreement. 1.4.2. Each holder of any Amoco Common Shares that have been converted into a right to receive the consideration set forth in Section 1.3.2, upon surrender to the Exchange Agent of a Certificate or Certificates, together with a properly completed letter of transmittal covering the Amoco Common Shares represented by such Certificate or Certificates, will be entitled to receive (i) the number of whole BP Depositary Shares included in the Merger Consideration in respect of such Amoco Common Shares in the form of BP ADRs, and (ii) a check in the amount (after giving effect to any required tax withholdings) of (A) any cash in lieu of fractional shares to be paid pursuant to Section 1.6, plus (B) any cash dividends or other distributions that such holder has the right to receive pursuant to Section 1.4.6. Until so surrendered, each Certificate shall, after the Effective Time, represent for all purposes only the right to receive the number of whole BP Depositary Shares included in the Merger Consideration and the applicable amounts provided in the foregoing clause (ii). 1.4.3. If any BP ADRs are to be issued to a person other than the registered holder of the Amoco Common Shares represented by the Certificate or Certificates surrendered with respect thereto, it shall be a condition to such issue that the Certificate or Certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person requesting such issue shall pay to the Exchange Agent any transfer or other taxes required as a result of such issue to a person other than the registered holder of such Amoco Common Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. 1.4.4. After the close of the stock transfer books of Amoco on the day prior to the Effective Time, there shall be no further registration of transfers of Amoco Common Shares that were outstanding prior to the Effective Time. After the Effective Time, Certificates presented to the Surviving Corporation for transfer shall be cancelled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article I. 1.4.5. Any BP Ordinary Shares allotted in respect of BP Depositary Shares pursuant to this Article I and any cash in lieu of fractional interests of BP Ordinary Shares to be paid pursuant to Section 1.6, plus any cash dividend or other distribution that such holder has the right to receive pursuant to Section 1.4.6, that remains unclaimed by the holders of Amoco Common Shares six months after the Effective Time shall (i) (as to BP Ordinary Shares so allotted) be deemed to have lapsed, and (ii) (as to any cash) be returned to BP upon demand. Any such holder who has not delivered his Amoco Common Shares to the Exchange Agent in accordance with this Article I prior to that time shall thereafter look only to BP and the Surviving Corporation for issuance of BP Ordinary Shares in respect of his Amoco Common Shares and payment of cash dividends or other distributions in respect thereof, issuable and/or payable pursuant to Section 1.4.6. Notwithstanding the foregoing, BP shall not be liable to any holder of Amoco Common Shares for any securities delivered or any amount paid to a public official pursuant to applicable abandoned property laws. Any BP Ordinary Shares remaining unclaimed by holders of Amoco Common Shares three years after the Effective Time (or such earlier date immediately prior to such time as such securities would otherwise escheat to or become property of any governmental entity or as is otherwise provided by applicable Law(as defined herein)) shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation or BP, as the case may be, free and clear of any claims or interest of any Person previously entitled thereto. 1.4.6. No dividends, interest or other distributions with respect to securities of BP or the Surviving Corporation issuable with respect to Amoco Common Shares shall be paid to the holder of any unsurrendered Certificates until such Certificates are surrendered as provided in this Section. Subject to the effect of applicable Law, upon such surrender, there shall be issued and/or paid to the holder of the BP Depositary Shares issued in exchange therefor, without interest, (A) at the time of such surrender, the dividends or other distributions payable with respect to such BP Depositary Shares with a record date after the Effective Time and a payment date on or prior to the date of such surrender and not previously paid and (B) at the appropriate payment date, the dividends or other distributions payable with respect to such BP Depositary Shares with a record date after the Effective Time but with a payment date subsequent to such surrender. For purposes of dividends or other distributions in respect of BP Depositary Shares, all BP Depositary Shares to be issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time. 1.4.7. Option to Issue BP Ordinary Shares. BP and Amoco may jointly determine that it is more practical and desirable for BP to cause BP Ordinary Shares to be issued to the holders of Amoco Common Shares in complete satisfaction of BP's obligations under this Article I or cause the BP Ordinary Shares to be redenominated in a currency other than sterling or issued in bearer or registered form (which may or may not be in the form of BP Depositary Shares evidenced by BP ADRs). If BP and Amoco make the requisite determination under this Section, then all references in this Agreement to BP Depositary Shares or BP ADRs issuable to such persons, shall mean BP Ordinary Shares as so redenominated and in such form as is hereafter agreed by the Parties and any BP Depositary Shares or other certificates, or BP ADRs evidencing such BP Depositary Shares or other certificates, if any, representing such redenominated BP Ordinary Shares. 1.5. Amoco Stock Options. 1.5.1. At the Effective Time, all employee and director stock options to purchase Amoco Common Shares (each, an "Amoco Stock Option") which are then outstanding and unexercised shall cease to represent a right to acquire Amoco Common Shares and shall be converted automatically into options to purchase BP Ordinary Shares, and BP shall assume each such Amoco Stock Option subject to the terms of any of the Amoco Stock Plans (as defined in Section 2.1.2.1), and the agreements evidencing grants thereunder; provided, however, that from and after the Effective Time, (i) the number of BP Ordinary Shares purchasable upon exercise of each such Amoco Stock Option shall be equal to the number of Amoco Common Shares that were purchasable under such Amoco Stock Option immediately prior to the Effective Time multiplied by the Exchange Ratio, subject to adjustment as provided in Section 1.3.5, and rounding down to the nearest whole BP Ordinary Share (or, if issued in the form of BP Depositary Shares, the nearest whole BP Depositary Share), and (ii) the per BP Ordinary Share exercise price under each such Amoco Stock Option shall be obtained by dividing the per share exercise price of each such Amoco Stock Option by the Exchange Ratio, subject to adjustment as provided in Section 1.3.5, and rounding down to the nearest cent. Notwithstanding the foregoing, the number of BP Ordinary Shares and the per BP Ordinary Share exercise price of each Amoco Stock Option which is intended to be an "incentive stock option" (as defined in Section 422 of the Code) shall be adjusted in accordance with the requirements of Section 424 of the Code. Accordingly, with respect to any incentive stock options, fractional BP Ordinary Shares shall be rounded down to the nearest whole number of BP Ordinary Shares (or, if applicable, BP Depositary Shares) and where necessary the per BP Ordinary Share exercise price shall be rounded up to the nearest cent. BP Ordinary Shares to be issued upon the exercise of Amoco Stock Options, shall, unless otherwise requested by the holders of such Amoco Stock Options, be delivered in the form of BP Depositary Shares represented by depositary receipts having the same terms as BP ADRs. 1.5.2. Prior to the Effective Time, BP shall make available for issuance the number of BP Ordinary Shares necessary to satisfy BP's obligations under Section 1.5.1. At the Effective Time, BP shall file with the Securities and Exchange Commission (the "SEC") a registration statement on an appropriate form or a post- effective amendment to a previously filed registration statement under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the BP Ordinary Shares and the BP ADRs subject to options issued pursuant to Section 1.5.1, and shall use its best reasonable efforts to maintain the current status of the prospectus contained therein, as well as comply with any applicable state securities or "blue sky" laws, for so long as such options remain outstanding. 1.6. Fractional BP Depositary Shares. No fraction of a BP Depositary Share will be issued, but in lieu thereof each holder of Amoco Common Shares otherwise entitled to receive a fraction of a BP Depositary Share will be entitled to receive in accordance with the provisions of this Section 1.6 from the Exchange Agent a cash payment in lieu of such fraction of a BP Depositary Share representing such holder's proportionate interest in the net proceeds from the sale by the Exchange Agent on behalf of all such holders of the aggregate of the fractions of BP Depositary Shares which would otherwise be issued ("Excess Shares"). The sale of the Excess Shares by the Exchange Agent shall be executed on the New York Stock Exchange, Inc. (the "NYSE") through one or more member firms of the NYSE and shall be executed in round lots to the extent practicable. Until the net proceeds of such sale or sales have been distributed to the holders of Amoco Common Shares, the Exchange Agent will hold such proceeds in trust for the holders of Amoco Common Shares (the "Common Shares Trust"). BP shall pay all commissions, transfer taxes and other out-of-pocket transaction costs, including the expenses and compensation, of the Exchange Agent incurred in connection with such sale of the Excess Shares. The Exchange Agent shall determine the portion of the Common Shares Trust to which each holder of Amoco Common Shares shall be entitled, if any, by multiplying the amount of the aggregate net proceeds comprising the Common Shares Trust by a fraction the numerator of which is the amount of the fractional BP Depositary Share interest to which such holder of Amoco Common Shares is entitled and the denominator of which is the aggregate amount of fractional share interests to which all holders of Amoco Common Shares are entitled. As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Amoco Common Shares in lieu of any fractional BP Depositary Share interests, the Exchange Agent shall make available such amounts to such holders of Amoco Common Shares without interest. 1.7. The Surviving Corporation. 1.7.1. The articles of incorporation of Amoco in effect at the Effective Time shall be the articles of incorporation of the Surviving Corporation until amended in accordance with applicable law. 1.7.2. The bylaws of Amoco in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. 1.7.3. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Merger Sub at the Effective Time shall be the directors of the Surviving Corporation, and (ii) the officers of Amoco at the Effective Time shall be the officers of the Surviving Corporation. 1.8. Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by BP, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate, BP Depositary Shares and any cash payable and any unpaid dividends or other distributions in respect thereof pursuant to Section 1.4.2 upon due surrender of and deliverable in respect of the Amoco Common Shares represented by such Certificate pursuant to this Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1. Representations and Warranties of Amoco and BP. Except as set forth in the corresponding sections or subsections of the disclosure letter, dated the date hereof and signed by an authorized officer, delivered by Amoco to BP or by BP to Amoco (each a "Disclosure Letter," and the "Amoco Disclosure Letter" and the "BP Disclosure Letter," respectively), as the case may be, Amoco (except for subparagraphs 2.1.2.2, 2.1.3.2, 2.1.5.2, 2.1.9(ii), 2.1.11.2 and 2.1.12 below and references in paragraph 2.1.1 below to documents made available by BP to Amoco) hereby represents and warrants to BP, and BP (except for subparagraphs 2.1.2.1, 2.1.3.1, 2.1.5.1, 2.1.8, 2.1.9(i) and 2.1.11.1 below and references in paragraph 2.1.1 below to documents made available by Amoco to BP), hereby represents and warrants to Amoco, that: 2.1.1. Organization, Good Standing and Qualification. Each of it and its Subsidiaries (as defined below) is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority, and has been duly authorized by all necessary approvals and orders, to own, operate and lease its properties and assets and to carry on its business as presently conducted and is duly qualified to do business and is in good standing in each jurisdiction where the ownership, operation or leasing of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in good standing, or to have such power or authority, when taken together with all other such failures, is not reasonably likely to have a Material Adverse Effect (as defined below) on it. Amoco has made available to BP complete and correct copies of its articles of incorporation and by-laws, and BP has made available to Amoco complete and correct copies of its memorandum and articles of association, in all cases as amended to date. Such articles of incorporation and by-laws or memorandum and articles of association, as the case may be, as so made available are in full force and effect. As used in this Agreement, the term (i) "Subsidiary" means, with respect to Amoco, any entity, whether incorporated or unincorporated, in which Amoco owns, directly or indirectly, more than fifty percent of the securities or other ownership interests having by their terms ordinary voting power to elect more than fifty percent of the directors or other persons performing similar functions, or the management and policies of which Amoco otherwise has the power to direct, and, with respect to BP, any body corporate which is a subsidiary or subsidiary undertaking, in each case within the meaning of the Companies Act of 1985 of the United Kingdom, as amended (the "Companies Act"), (ii) "Material Adverse Effect" means, with respect to any Person (as defined below), a material adverse effect on the financial condition, properties, business or results of operations of such Person and its Subsidiaries taken as a whole, (iii) "Person" shall mean any individual, corporation (including not-for- profit), general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, association, organization, Governmental Entity (as defined in paragraph 2.1.4 (Governmental Filings; No Violations)) or other entity of any kind or nature, and (iv) "Affiliate" shall have the meaning specified in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 2.1.2. Capital Structure. 2.1.2.1. The authorized capital stock of Amoco consists of 1,600,000,000 Amoco Common Shares, of which 953,684,773 Amoco Common Shares were issued and outstanding as of the close of business on August 4, 1998, 50,000,000 shares of Voting Preferred Stock, without par value ("Amoco Voting Preferred Shares"), and 50,000,000 shares of Non-Voting Preferred Stock, without par value ("Amoco Non-Voting Preferred Shares"), none of which Amoco Voting Preferred Shares or Amoco Non-Voting Preferred Shares is outstanding as of the date hereof. All of the outstanding Amoco Common Shares have been duly authorized and validly issued and are fully paid and nonassessable. Amoco has no Amoco Common Shares, Amoco Voting Preferred Shares or Amoco Non-Voting Preferred Shares reserved for or otherwise subject to issuance, except that (i) as of the close of business on August 4, 1998, there were 36,319,340 Amoco Common Shares subject to issuance pursuant to options outstanding under the plans of Amoco identified in paragraph 2.1.2.1 of the Amoco Disclosure Letter as being the only compensation or benefit plans or agreements pursuant to which Amoco Common Shares may be issued (the "Amoco Stock Plans") and (ii) as of the date hereof, there are not less than 189,783,270 Amoco Common Shares reserved for issuance pursuant to the Stock Option Agreement. Each of the outstanding shares of capital stock or other ownership interests of each of Amoco's Subsidiaries that constitutes a "Significant Subsidiary" (as defined in Rule 1-02(w) of Regulation S-X promulgated under the Exchange Act) is duly authorized, validly issued, fully paid and nonassessable and owned by Amoco or a direct or indirect wholly owned subsidiary of Amoco, in each case free and clear of any lien, pledge, security interest, claim or other encumbrance. Except as set forth above, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind which obligate Amoco or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of Amoco or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire from Amoco or any of its Subsidiaries, any securities of Amoco or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Amoco Common Shares issuable pursuant to the Stock Option Agreement have been duly reserved for issuance by Amoco, and upon any issuance of such Amoco Common Shares in accordance with the terms of the Stock Option Agreement, such Amoco Common Shares will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any lien, pledge, security interest, claim or other encumbrance. Amoco does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the shareholders of Amoco on any matter. 2.1.2.2. The authorized share capital of BP is 2,000 million (pound sterling). As of the close of business on August 4, 1998, the allotted share capital of BP consisted of 5,851,031,121 ordinary shares of nominal value 25p each ("BP Ordinary Shares"), not more than 7,232,838 shares of 8% cumulative first preference shares, of nominal value 1 (pound sterling) each ("BP First Preference Shares"), and not more than 5,473,414 9% cumulative second preference shares, of nominal value 1 (pound sterling) each ("BP Second Preference Shares"). All of the outstanding BP Ordinary Shares, BP First Preference Shares and BP Second Preference Shares have been, and the BP Ordinary Shares to be issued as Merger Consideration shall be, duly authorized and validly issued and are or will be, as the case may be, fully paid or credited as fully paid. BP has no BP Ordinary Shares, BP First Preference Shares, or BP Second Preference Shares reserved for or otherwise subject to issuance. Of the BP Ordinary Shares described in the first sentence of this paragraph, as of the close of business on August 4, 1998, there were 37,956,426 BP Ordinary Shares held by the BP Employee Share Scheme (Jersey) Ltd. in relation to the option schemes identified in subparagraph 2.1.2.2 of the BP Disclosure Letter as being the only compensation or benefit plans or agreements pursuant to which BP Ordinary Shares may be issued (the "Option Schemes"). Each of the outstanding shares of capital stock or other ownership interests of each of BP's Significant Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by BP or a direct or indirect wholly owned Subsidiary of BP, in each case free and clear of any lien, pledge, security interest, claim or other encumbrance. Except as set forth above or as contemplated by this Agreement, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind which obligate BP or any of its Subsidiaries to issue or to sell any shares of capital stock or other securities of BP or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire from BP or any of its Subsidiaries, any securities of BP or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. BP does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the shareholders of BP on any matter. 2.1.3. Corporate Authority; Approval and Fairness. 2.1.3.1. Amoco has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and the Stock Option Agreement and to consummate the Merger and the other transactions contemplated hereby and thereby, subject only to the approval of the Merger by the vote of the holders of not less than a majority of all of the votes entitled to be cast at the Amoco Shareholders Meeting (as defined in Section 3.4 (Shareholders Meetings)) by holders of Amoco Common Shares (the "Amoco Requisite Vote"). The execution and delivery of this Agreement and the Stock Option Agreement have been duly authorized by all necessary corporate action on the part of Amoco and, assuming the due authorization, execution and delivery of this Agreement and the Stock Option Agreement by BP, this Agreement and the Stock Option Agreement constitute valid and binding agreements of Amoco enforceable against Amoco in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles (the "Bankruptcy and Equity Exception"). The Board of Directors of Amoco (A) has approved this Agreement, the Stock Option Agreement, the Merger and the other transactions contemplated hereby and thereby and (B) has received the opinion of its financial advisor, Morgan Stanley & Co. Incorporated, to the effect that, as of the date of this Agreement, the Exchange Ratio is fair to the holders of Amoco Common Shares from a financial point of view. 2.1.3.2. BP has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and the Stock Option Agreement and to consummate the Merger and the other transactions contemplated hereby and thereby, subject only to the approval of the Merger and the other transactions contemplated hereby by, on a show of hands, not less than the requisite majority of the holders of the outstanding BP Ordinary Shares, BP First Preference Shares and BP Second Preference Shares (collectively, the "BP Shares") present in person or, on a poll, by the holders of not less than the requisite majority of the votes attaching to the BP Shares who vote in person or by proxy at the BP Shareholders Meeting (as defined in Section 3.4 (Shareholders Meetings)) (the "BP Requisite Vote"). The execution and delivery of this Agreement and the Stock Option Agreement have been duly authorized by all necessary corporate action on the part of BP, and, assuming the due authorization, execution and delivery of this Agreement and the Stock Option Agreement by Amoco, this Agreement and the Stock Option Agreement constitute valid and binding agreements of BP, enforceable against BP in accordance with their terms, subject to the Bankruptcy and Equity Exception. The Board of Directors of BP has approved this Agreement, the Stock Option Agreement, the Merger and the other transactions contemplated hereby and thereby and the Board of Directors has received the opinion of its financial advisor, Morgan Guaranty Trust Company of New York, to the effect that, as of the date of this Agreement, the Exchange Ratio is fair, from a financial point of view, to BP. 2.1.4. Governmental Filings; No Violations. 2.1.4.1. Other than the necessary filings, notices, approvals, confirmations, consents, declarations and/or decisions (A) pursuant to Sections 1.2.2 and 3.3.1, (B) under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act, the Securities Act of 1933, as amended (the "Securities Act") and the Exon-Florio provisions of the Omnibus Trade and Competitiveness Act of 1988 ("Exon-Florio"), (C) to comply with the rules and regulations of the NYSE or the London Stock Exchange Limited (the "LSE"), (D) from the European Commission, in accordance with Article 6(1)(b), 8(2) or 10(6) of Council Regulation (EEC) No 4064/89 as amended (the "Regulation") (insofar as the Merger constitutes a concentration with a Community dimension within the scope of the Regulation), (E) from the UK Office of Fair Trading that it is not the intention of the UK Secretary of State for Trade and Industry to refer the Merger or any matters arising therefrom to the UK Monopolies and Mergers Commission (the "MMC") or from the Secretary of State for Trade and Industry in the event that the Merger or any matters arising therefrom are referred to the MMC (insofar as the Merger qualifies for investigation by the MMC under the UK Fair Trading Act 1973 or a referral is made by the European Commission to the UK Competent Authority under Article 9 of the Regulation) and (F) from H.M. Treasury pursuant to section 765 of the Income and Corporation Taxes Act 1988 (or the confirmation from H.M. Treasury or the Inland Revenue that no such consent is required to the transactions contemplated by this Agreement) (such filings, notices, approvals, confirmations, consents, declarations and/or decisions to be made, given or obtained by Amoco being, if any, the "Amoco Required Consents" and by BP being the "BP Required Consents"), no filings, notices, declarations and/or decisions are required to be made by it with, nor are any approvals or other confirmations or consents required to be obtained by it from, any governmental or regulatory (including stock exchange) authority, agency, court, commission, body or other governmental entity (including the Panel on Takeovers and Mergers) ("Governmental Entity"), in connection with the execution and delivery by it of this Agreement and the Stock Option Agreement and the consummation by it of the Merger and the other transactions contemplated hereby and thereby, except those the failure of which to make, give or obtain, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on it or prevent, materially delay or materially impair its ability to consummate the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. 2.1.4.2. The execution, delivery and performance of this Agreement and the Stock Option Agreement by it do not, and the consummation by it of the Merger and the other transactions contemplated hereby and thereby (including, in the case of BP, the allotment of BP Ordinary Shares and the deposit of BP Ordinary Shares with the Depositary against issuance of BP Depositary Shares in accordance with the Deposit Agreement) will not, constitute or result in (A) a breach or violation of, or a default under, its articles of incorporation or by-laws, in the case of Amoco, or memorandum or articles of association, in the case of BP, or the comparable governing instruments of any of the Significant Subsidiaries of Amoco and BP (in each case as amended from time to time), (B) subject to making, giving or obtaining all necessary filings, notices, approvals, confirmations, declarations and/or decisions in Subparagraph 2.1.4.1 and all other necessary third-party consents as set forth in Subparagraph 2.1.4.2 of its Disclosure Letter, a breach or violation of, or a default under, the acceleration of any obligations or the creation of a lien, pledge, security interest, right of purchase, sale or termination or other encumbrance on the assets of it or any of its Subsidiaries (with or without notice, lapse of time or both) pursuant to any agreement, lease, license, contract, note, mortgage, indenture, arrangement or other obligation ("Contracts") binding upon it or any of its Subsidiaries or any law, ordinance, regulation, judgment, order, decree, arbitration, award, license or permit of any Governmental Entity ("Law") or governmental or non-governmental permit or license to which it or any of its Subsidiaries is subject, or (C) any change in the rights or obligations of either Party under any of its Contracts, except, in the case of clause (B) or (C) above, for any breach, violation, default, acceleration, creation or change that, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on it or prevent, materially delay or materially impair its ability to consummate the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. 2.1.5. Reports; Financial Statements. 2.1.5.1. Amoco has made available to BP copies of each registration statement, report, proxy statement or information statement prepared by it or its Subsidiaries and filed with the SEC since December 31, 1997 (December 31, 1997 being the "Amoco Audit Date"), including Amoco's Annual Report on Form 10-K for the year ended December 31, 1997, each in the form (including exhibits, annexes and any amendments thereto) filed with the SEC (collectively, including any such registration statement, report, proxy statement or information statement filed with the SEC subsequent to the date hereof, the "Amoco Reports"). As of their respective dates, the Amoco Reports did not, and any Amoco Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each of the consolidated statements of financial condition included in or incorporated by reference into the Amoco Reports (including the related notes and schedules) fairly presents, or will fairly present, in all material respects, the consolidated financial position of Amoco and its Subsidiaries as of its date and each of the related consolidated statements of income, shareholders' equity and cash flows included in or incorporated by reference into the Amoco Reports (including any related notes and schedules) fairly presents, or will fairly present in all material respects, the consolidated results of operations, retained earnings and changes in financial position, as the case may be, of Amoco and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with U.S. GAAP consistently applied during the periods involved except as may be noted therein. 2.1.5.2. BP has made available to Amoco copies of (A) each registration statement, report or annual report prepared by it or its Subsidiaries and filed with the SEC since December 31, 1997 (the "BP Audit Date," with the BP Audit Date and the Amoco Audit Date each being referred to herein as the relevant Party's "Audit Date"), including BP's Annual Report on Form 20-F for the year ended December 31, 1997, each in the form (including exhibits, annexes and any amendments thereto) filed with the SEC and each quarterly report distributed by BP to its shareholders (collectively, including any such registration statement, report or annual report filed with the SEC or, in the case of quarterly reports, distributed to BP shareholders subsequent to the date hereof, the "BP Reports"); and (B) all circulars, reports and other documents distributed by BP to its shareholders since its Audit Date. As of their respective dates, the BP Reports did not, and any BP Report filed, distributed or delivered subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each of the audited consolidated balance sheets of BP and its Subsidiaries included in or incorporated by reference into the BP Reports (including the related notes and schedules) fairly presents, or will fairly present, in all material respects, the consolidated financial position of BP and its Subsidiaries as of its date, and each of the related consolidated statements of income, changes in shareholders' interest, total recognized gains and losses and cash flows included in or incorporated by reference into the BP Reports (including any related notes and schedules) fairly presents, or will fairly present, in all material respects, the consolidated results of its operations, retained earnings and cash flows of BP and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with U.K. GAAP consistently applied during the periods involved except as may be noted therein. The related notes reconciling to U.S. GAAP such consolidated balance sheet, consolidated statement of income, statement of changes in shareholders' interest, and statement of cash flows comply in all material respects with the requirements of the SEC applicable to such reconciliation. The Amoco Reports and the BP Reports are collectively referred to herein as the "Reports." 2.1.6. Absence of Certain Changes. Except as disclosed in the Reports filed prior to the date hereof, or as expressly contemplated by this Agreement, since its respective Audit Date it and its Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses, and there has not been (i) any change in the financial condition, properties, business or results of operations of it and its Subsidiaries except those changes that, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect on it; (ii) any declaration, setting aside or payment of any dividend or other distribution in cash, stock or property in respect of its capital stock, except for dividends or other distributions on its capital stock publicly announced prior to the date hereof and except as expressly permitted hereby; (iii) any split in its capital stock, combination, subdivision or reclassification of any of its capital stock or issuance or authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except as expressly contemplated hereby or, in the case of Amoco, in the Stock Option Agreement; or (iv) any change by it in accounting principles, practices or methods except as required by changes in U.S. GAAP or U.K. GAAP, as the case may be. Since its respective Audit Date, except as provided for herein or as disclosed in the Reports filed prior to the date hereof, there has not been any increase in the compensation payable or that could become payable by it or any of its Subsidiaries to officers or key employees or any amendment of any of its compensation or benefit plans or agreements other than increases or amendments in the ordinary course or as contemplated by this Agreement. 2.1.7. Litigation and Liabilities. Except as disclosed in the Reports filed prior to the date hereof, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the knowledge of, in the case of Amoco, its Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or General Counsel ("Amoco Officers"), and, in the case of BP, its Chief Executive Officer, Deputy Chief Executive Officer, Chief Financial Officer or General Counsel ("BP Officers"), threatened against it or any of its Affiliates or (ii) obligations or liabilities, whether or not accrued, contingent or otherwise and whether or not required to be disclosed, or any other facts or circumstances of which, in the case of Amoco, the Amoco Officers, and, in the case of BP, the BP Officers, have knowledge that would reasonably be expected to result in any claims against, or obligations or liabilities of, it or any of its Affiliates, except, in each case, for those that, individually or in the aggregate, have not had and are not reasonably likely to have a Material Adverse Effect on it or prevent, materially delay or materially impair its ability to consummate the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. 2.1.8. Takeover Statutes. The board of directors of Amoco has taken or will take all appropriate and necessary action such that the "Business Combinations" provisions of the BCL ( 23-1-43-1 et seq.) will not have any effect on the Merger or the other transactions contemplated by this Agreement, and the Stock Option Agreement. No other "fair price," "moratorium," "control share acquisition" or other similar anti-takeover statute or regulation, including such Business Combinations provisions of the BCL (each, a "Takeover Statute"), and no anti-takeover provision in the amended articles of incorporation or by-laws of Amoco is, or at the Effective Time will be, applicable to the Merger or any of the other transactions contemplated by this Agreement and the Stock Option Agreement. 2.1.9. Brokers and Finders. Neither it nor any of its Subsidiaries, officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the execution and delivery of this Agreement, the Stock Option Agreement, the Merger or the other transactions contemplated by this Agreement and the Stock Option Agreement, except that (i) Amoco has retained Morgan Stanley & Co. Incorporated as its financial advisors, the arrangements with which have been disclosed to BP prior to the date hereof and (ii) BP has employed Morgan Guaranty Trust Company of New York, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Cazenove & Co. as its financial advisors, the arrangements with which have been disclosed to Amoco prior to the date hereof. 2.1.10. Accounting Treatment. It is not aware of any fact or circumstance with respect to itself or the Merger that would cause the Merger to fail to (i) qualify as a pooling of interests under U.S. GAAP or (ii) be accounted for using merger accounting methods under U.K. GAAP. 2.1.11. Ownership of Other Party's Common Stock. 2.1.11.1. Neither Amoco nor any of its Subsidiaries "beneficially owns" (as such term is defined in Rule 13d-3 under the Exchange Act) any BP Ordinary Shares or BP Depositary Shares. 2.1.11.2. Neither BP nor any of its Subsidiaries "beneficially owns" (as such term is defined in Rule 13d-3 under the Exchange Act) any Amoco Common Shares. 2.1.12. Merger Sub's Operations. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated hereby and has not (i) engaged in any business activities, (ii) conducted any operations other than in connection with the transactions contemplated hereby or (iii) incurred any liabilities other than in connection with the transactions contemplated hereby. The execution and delivery of this Agreement has been duly authorized by all necessary corporate action on the part of Merger Sub and, assuming the due authorization, execution and delivery of this Agreement by Amoco, this Agreement constitutes a valid and binding agreement of Merger Sub enforceable against Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception. BP, as Merger Sub's sole stockholder has approved Merger Sub's execution of this Agreement. ARTICLE III COVENANTS 3.1. Interim Operations. Each of Amoco and BP covenants and agrees as to itself and its Subsidiaries that, after the date hereof and until the Effective Time (unless the other Party shall otherwise approve in writing and except as otherwise expressly contemplated by or provided in this Agreement, or as required by applicable Law): 3.1.1. the business of it and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and each of its Subsidiaries shall use its best reasonable efforts to preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, creditors, regulators, lessors, employees and business associates; 3.1.2. it shall not (i) amend its articles of incorporation or by- laws, in the case of Amoco, or memorandum and articles of association, in the case of BP; (ii) split, combine, subdivide or reclassify its outstanding shares of capital stock; (iii) subject to Section 3.10.2, declare, set aside or pay any dividend or distribution payable in cash, stock or property in respect of any capital stock other than (A) in the case of Amoco, regular quarterly cash dividends consistent with past practice, including periodic dividend increases and (B) in the case of BP, regular quarterly cash dividends and scrip alternative in respect thereof payable under BP's gross scrip dividend scheme, in each case, consistent with past practice, including periodic dividend increases, and regular cash dividends on the issued and outstanding BP First Preference Shares and BP Second Preference Shares; or (iv) repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise acquire (except for repurchases, redemptions or acquisitions (A) required by the terms of its capital stock or securities outstanding on the date hereof or (B) required by or in connection with the respective terms as of the date hereof of, any Amoco Stock Plans, in the case of Amoco, or Option Schemes, in the case of BP, or any dividend reinvestment plans as in effect on the date hereof in the ordinary course of the operation of such plans), any shares of the capital stock of BP or Amoco, as the case may be, or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; 3.1.3. neither it nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind to acquire, the capital stock of BP or Amoco, as the case may be, of any class (other than (x) in the case of Amoco, Amoco Common Shares issuable pursuant to options outstanding on the date hereof under the Amoco Stock Plans or pursuant to the Stock Option Agreement, additional options or rights to acquire Amoco Common Shares granted under the terms of any Amoco Stock Plan as in effect on the date hereof in the ordinary course of the operation of such Amoco Stock Plan, (y) in the case of BP, BP Ordinary Shares issuable or transferable pursuant to options outstanding on the date hereof under the Option Schemes and additional options or rights to acquire BP Ordinary Shares granted under the terms of any Option Scheme as in effect on the date hereof in the ordinary course of the operation of such Option Scheme and the BP Ordinary Shares to be issued in February, 1999, in lieu of dividends pursuant to BP's gross scrip dividend scheme, and (z) issuances of securities in connection with grants or awards of stock-based compensation made in accordance with paragraph 3.1.4 hereof); (ii) incur or modify any significant indebtedness or other liability except in the ordinary and usual course of business, pursuant to financial plans previously communicated to the other Party, or for long-term indebtedness incurred in connection with the refinancing of existing indebtedness, without first consulting with the other Party; or (iii) make any decision or commitment with respect to a significant investment or divestment except in the ordinary and usual course of business or pursuant to financial plans previously communicated to the other Party without first consulting with the other Party; 3.1.4. neither it nor any of its Subsidiaries shall terminate, establish, adopt, enter into, make any new grants or awards of stock-based compensation or other benefits under, amend or otherwise modify any compensation or benefit plan or agreement or increase the salary, wage, bonus or other compensation of any directors, officers or employees except for grants or awards to directors, officers and employees of it or its Subsidiaries under existing compensation or benefit plans or agreements in the normal and usual course of business (which shall include normal periodic performance reviews) and related compensation and benefit increases, annual reestablishment of compensation or benefit plans or agreements and the provision of individual compensation or benefit plans or agreements for newly hired or appointed officers and employees and the adoption of compensation or benefit plans or agreements for employees of new Subsidiaries or for actions necessary to satisfy existing contractual obligations under compensation or benefit plans or agreements existing as of the date hereof; 3.1.5. neither it nor any of its Subsidiaries shall take any action or omit to take any action for the purpose of preventing, delaying or impeding the consummation of the Merger or the other transactions contemplated by this Agreement and the Stock Option Agreement including any action or omission that would cause (i) the Merger to (A) fail to qualify as a "pooling of interests" under U.S. GAAP or fail to be accounted for using merger accounting methods under U.K. GAAP (and each Party agrees to use its best reasonable efforts to remove any impediment that would cause the Merger to fail to qualify as a "pooling-of-interests" under U.S. GAAP or fail to be accounted for using merger accounting methods under U.K. GAAP) or (B) fail to qualify as a reorganization under Section 368(a) of the Code or (ii) the exchange of Amoco Common Stock for BP Ordinary Shares in the Merger to fail to qualify for nonrecognition of gain (except with respect to cash received in lieu of fractional BP Depositary Shares); and 3.1.6. neither it nor any of its Subsidiaries shall authorize or enter into an agreement to do any of the foregoing. 3.2. Acquisition Proposals. 3.2.1. Each of Amoco and BP agrees that, subject to paragraph 3.2.3 and except as expressly contemplated by this Agreement, neither it nor any of its Subsidiaries nor any of the officers or directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' officers, directors, employees, investment bankers, attorneys, accountants, financial advisors, agents or other representatives (collectively, with respect to each of Amoco and BP, such Person's "Representatives") not to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, dual-holding company transaction, consolidation or similar transaction involving Amoco or BP, or any purchase of, or offer to purchase, all or substantially all of the equity securities of Amoco or BP, as the case may be, or of its and its Subsidiaries' assets taken as a whole (any such proposal or offer being hereinafter referred to as an "Acquisition Proposal"). Each of Amoco and BP further agrees that neither it nor any of its Subsidiaries nor any of its or its Subsidiaries' officers or directors shall, and that it shall direct and use its best efforts to cause its Representatives not to, directly or indirectly, have any discussions with or provide any confidential information or data to any Person relating to an Acquisition Proposal or engage in any negotiations concerning an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal; provided, however, that nothing contained in this Agreement shall prevent either Amoco or BP or its board of directors from (i) making any disclosure to its shareholders if, in the good faith judgment of its board of directors, failure so to disclose would be inconsistent with its obligations under applicable Law; (ii) negotiating with or furnishing information to any Person who has made a bona fide written Acquisition Proposal which did not result from a breach of this Section 3.2.1; or (iii) recommending such an Acquisition Proposal to its shareholders, if and only to the extent that, in the case of actions referred to in clause (ii) or clause (iii), such Acquisition Proposal is a Superior Proposal (as defined below). For purposes of this Agreement, a "Superior Proposal" means in respect of Amoco or BP, as applicable, any Acquisition Proposal by a third party (y) on terms which the board of directors of such Party determines in its good faith judgment (i) after consultation with its financial advisors (whose advice shall be communicated to the other Party), to be more favorable from a financial point of view to its shareholders than the Merger and the other transactions contemplated hereby and (ii) to be more favorable to such Party than the Merger and the other transactions contemplated hereby after taking into account any additional constituencies (including shareholders) and other relevant factors permitted under the Laws of the State of Indiana, in the case of Amoco, and the Laws of England or any requirement of any regulatory authority therein (including the City Code on Takeovers and Merger (the "City Code")), in the case of BP, and after giving the other Party at least seven business days to respond to such third party Acquisition Proposal and (z) which the board of directors of such Party determines in its good faith judgment to constitute a transaction that is reasonably likely to be consummated on the terms set forth, taking into account all legal, financial, regulatory and other aspects of such proposal. Each of Amoco and BP agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal. Each of Amoco and BP also agrees that if it has not already done so, it will promptly request each Person, if any, that has heretofore executed a confidentiality agreement within the 12 months prior to the date hereof in connection with its consideration of any Acquisition Proposal to return or destroy all confidential information heretofore furnished to such Person by or on behalf of it or any of its Subsidiaries. 3.2.2. Each of Amoco and BP agrees that it will take the necessary steps promptly to inform its Subsidiaries and its and its Subsidiaries' Representatives of the obligations undertaken in this Section 3.2 (Acquisition Proposals). Each of Amoco and BP agrees that it will notify the other promptly if any such inquiries, proposals or offers relating to or constituting an Acquisition Proposal are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, any of its or its Subsidiaries' Representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposals or offers and thereafter shall keep the other informed, on a current basis, of the status and material terms of any such proposals or offers. 3.2.3. Nothing contained herein shall prohibit a Party from taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act with respect to an Acquisition Proposal by means of a tender or exchange offer or, in the case of BP, taking such action and making such recommendations as the directors of BP reasonably consider necessary so as to comply with any obligations imposed on them or BP by the City Code or the Takeover Panel in relation to any Acquisition Proposal (provided that it is hereby acknowledged, for the avoidance of doubt, that no provision of the City Code requires BP or its directors to solicit or initiate any Acquisition Proposal). 3.3. Information Supplied. 3.3.1. Registration Statement. 3.3.1.1. Each of BP and Amoco shall cooperate and promptly prepare and BP shall file with the SEC as soon as practicable a Registration Statement on Form F-4 (the "Form F-4") under the Securities Act, with respect to the issuance of the BP Depositary Shares and the BP ADRs in the Merger and, if applicable, the allotment of BP Ordinary Shares in the Merger, a portion of which Form F-4 shall also serve as the Amoco Proxy Statement (as defined in Section 3.3.1.2), the prospectus with respect to the BP Depositary Shares and BP ADRs issuable in the Merger and, so far as appropriate, the BP Documents (as defined in Section 3.3.2). The Parties will cause the Form F-4 to comply as to form in all material respects with the applicable provisions of the Securities Act and the rules and regulations thereunder. Each of BP and Amoco shall use its respective best reasonable efforts to have the Form F-4 declared effective by the SEC as promptly as practicable after such filing. BP shall use its reasonable efforts to obtain, prior to the effective date of the Form F-4, all necessary state securities law or "Blue Sky" permits or approvals required to carry out the transactions contemplated by this Agreement. BP will advise Amoco, promptly after it receives notice thereof, of the time when the Form F-4 has become effective or any supplement or amendment has been filed, the issuance of any stop order, the suspension of the qualification of the BP ADRs or BP Ordinary Shares issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Amoco Proxy Statement or the Form F-4 or comments thereon and responses thereto or requests by the SEC for additional information. 3.3.1.2. Amoco and BP each agrees, as to itself and its Subsidiaries, that none of the information supplied or to be supplied by it or its Subsidiaries for inclusion or incorporation by reference in the Form F-4, including, without limitation the proxy statement/prospectus constituting a part thereof (the "Amoco Proxy Statement"), and any amendment or supplement thereto will, at the time the Form F-4 becomes effective under the Securities Act, at the date of mailing to shareholders and at the time or times of the Amoco 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 the light of the circumstances under which they were made, not misleading. If at any time prior to the date of the Amoco Shareholders Meeting any information relating to Amoco or BP, or any of their respective Affiliates, officers or directors, should be discovered by Amoco or BP which should be set forth in an amendment to the Form F-4 or a supplement to the Amoco Proxy Statement, so that such document would not include any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other Party and, to the extent required by Law, an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by law, disseminated to the Amoco shareholders. 3.3.1.3. Each of BP and Amoco will use its best reasonable efforts to cause the BP Documents and the Amoco Proxy Statement, respectively, to be mailed to its shareholders as promptly as practicable after the date hereof. 3.3.2. Amoco and BP shall cooperate and promptly prepare and BP shall file with the LSE (a) a circular to be sent to BP shareholders in connection with the BP Shareholders Meeting (as defined in Section 3.4 (Shareholders Meetings)) (the "BP Circular"), containing (i) a notice convening the BP Shareholders Meeting, (ii) such other information (if any) as may be required by the LSE and (iii) such other information as BP and Amoco shall agree to include therein; and (b) listing particulars relating to BP and its Subsidiaries and the BP Ordinary Shares (the "BP Listing Particulars," and the BP Circular and the BP Listing Particulars together being the "BP Documents"). Amoco and BP each agrees, as to itself and its Subsidiaries, that the BP Documents and any supplements thereto and any other circulars or documents issued to shareholders, employees or debentureholders of BP, will contain all particulars relating to Amoco and BP required to comply in all material respects with all United Kingdom statutory and other legal provisions (including, without limitation, the Companies Act, the Financial Services Act 1986 (the "FSA") and the rules and regulations made thereunder, and the rules and requirements of the LSE) and all such information contained in such documents will be substantially in accordance with the facts and will not omit anything material likely to affect the import of such information. 3.4. Shareholders Meetings. Amoco will take all action necessary to convene a meeting of the holders of Amoco Common Shares at which the holders of Amoco Common Shares shall consider approval of the Merger and the other transactions contemplated hereby (the "Amoco Shareholders Meeting") as promptly as practicable after the Form F-4 has been declared effective by the SEC. BP will take all action necessary to convene an extraordinary general meeting of BP shareholders at which resolutions will be proposed to approve the Merger and the other transactions contemplated hereby (the "BP Shareholders Meeting") as promptly as practicable after the BP Documents are cleared by the LSE and the Form F-4 has been declared effective by the SEC. BP shall include in the notice of meeting referred to above, resolutions inter alia to approve: (i) the Merger and the other transactions contemplated hereby; (ii) a change of name of BP to BP Amoco p.l.c.; (iii) an alteration to BP's articles of association to permit BP to declare and pay dividends in U.S. dollars; and (iv) the appointment of the Persons referred to in Section 3.8.3 as directors of BP, in each case subject to and with effect at the Effective Time. BP and Amoco each agrees to use all reasonable efforts such that, to the extent practical, the Amoco Shareholders Meeting and the BP Shareholders Meeting shall be held as promptly as practicable after the conditions precedent to holding such meetings have been fulfilled. Subject to fiduciary obligations and the requirements of applicable Law and the terms of this Agreement, including the provisions of Section 3.2 (Acquisition Proposals), the board of directors of each of BP and Amoco shall recommend to its respective shareholders the approval of the Merger and the other transactions contemplated hereby and shall use best reasonable efforts to solicit such approval. 3.5. Filings; Other Actions; Notification. 3.5.1. Amoco and BP shall each cooperate with the other and (i) use (and shall use best reasonable efforts to cause their respective Subsidiaries to use) all their respective best reasonable efforts promptly to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable under this Agreement, the Stock Option Agreement and applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents, (ii) use (and shall use best reasonable efforts to cause their respective Subsidiaries to use) all their respective best reasonable efforts to obtain as promptly as practicable all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any third party (other than Amoco Required Consents and BP Required Consents) necessary, proper or advisable to consummate the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement, and (iii) use (and shall use best reasonable efforts to cause their respective Subsidiaries to use) their respective best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable to obtain the Amoco Required Consents or BP Required Consents, as the case may be; provided that neither Party shall be required by this Section 3.5.1(iii) to accept or agree to any conditions, terms or restrictions in connection with any such Amoco Required Consent or BP Required Consent, as the case may be, which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect on BP or Amoco after the Effective Time (it being understood that, for this purpose, materiality shall be considered with reference to the total equity market value of BP and Amoco). Subject to applicable Laws relating to the exchange of information, Amoco and BP shall have the right to review in advance, and to the extent practicable each will consult the other on, all the information relating to Amoco and its Subsidiaries or BP and its Subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. In exercising the foregoing right, each of Amoco and BP shall act reasonably and as promptly as practicable. 3.5.2. Amoco and BP each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Form F-4, the Amoco Proxy Statement, the BP Circular or any other necessary or appropriate filing, notice, statement, registration, submission of information or application made by or on behalf of Amoco or BP or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. 3.5.3. Amoco and BP each shall keep the other apprised of the status of matters relating to completion of the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement, including promptly furnishing the other with copies of notices or other communications received by Amoco or BP, as the case may be, or any of its Subsidiaries, from any third party and/or any Governmental Entity with respect to the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. Amoco and BP each shall give prompt notice to the other of any change that is reasonably likely to result in a Material Adverse Effect on it or of any failure of any condition set forth in Article IV to the other Party's obligations to effect the Merger. 3.5.4. Prior to making any filing, notice, petition, statement, registration, submission of information or application to or with any third party and/or Governmental Entity (including any domestic or foreign national securities exchange) in connection with the consummation of the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement and except as may be required by Law or by obligations pursuant to any listing agreement with or rules of any domestic or foreign national securities exchange, each Party shall make all reasonable efforts to consult with the other Party with respect to the content of such filing, notice, petition, statement, registration, submission of information or application and to provide the other Party with copies of the proposed filing, notice, petition, statement, registration, statement of information or application. Amoco and BP each shall not agree to participate in any meeting with any Governmental Entity in respect of any filings, investigation or other inquiry relating to the Merger and the other transactions contemplated by this Agreement unless it consults with the other Party in advance and, to the extent practicable and permitted by such Governmental Entity, gives the other Party the opportunity to attend and participate thereat. 3.5.5. In the event any claim, action, suit, investigation or other proceeding by any Governmental Entity or other Person or other legal or administrative proceeding is commenced that questions the validity or legality of this Agreement, the Stock Option Agreement, or the Merger or the other transactions contemplated by this Agreement and the Stock Option Agreement or claims damages in connection therewith, the Parties agree to cooperate and use their best efforts, subject to the limitations set forth in Section 3.5.2, to defend against and respond thereto. 3.6. Access. In order to facilitate consummation of the Merger and the other transactions contemplated by this Agreement, the Parties hereby agree that upon reasonable request to any executive officer of BP or Amoco, as the case may be, designated for the purpose, and except as may otherwise be required by applicable Law, Amoco and BP each shall (and shall cause its Subsidiaries to) afford the other's Representatives access, during normal business hours throughout the period prior to the Effective Time, to its properties, books, contracts and records and, during such period, each shall (and shall cause its Subsidiaries to) furnish promptly to the other all information concerning its business, properties and personnel as may reasonably be requested, provided that no receipt of information pursuant to this Section shall affect or be deemed to modify any representation or warranty made by Amoco or BP hereunder, and provided, further, that the foregoing shall not require Amoco or BP to permit any inquiry, or to disclose any information, that in the reasonable judgment of Amoco or BP, as the case may be, would (i) violate any antitrust or competition Law or (ii) result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to confidentiality to third parties if Amoco or BP, as the case may be, shall have used reasonable efforts to obtain the consent of such third party to such inspection or disclosure. All such information shall be governed by the terms of the Confidentiality Agreement, dated July 24, 1998, between the Parties (the "Confidentiality Agreement"), including without limitation all such information disclosed in the Disclosure Letters, and Amoco and BP, and each of their respective Subsidiaries, shall use their respective best reasonable efforts to maintain the confidentiality of all such information disclosed in the Disclosure Letters. 3.7. Publicity. The initial press release concerning this Agreement, the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement shall be a joint press release, and thereafter Amoco and BP shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement. 3.8. Benefits and Other Matters. 3.8.1 Employee Benefits. 3.8.1.1. Employee Benefits. It is the specific intention that the compensation and benefit programs (including annual and long- term incentive programs) to be provided by BP and its Subsidiaries for current and former employees and directors of Amoco will be competitive with those provided generally by large industrial companies for each respective home-country market, both with respect to the type and variety of programs as well as the level of compensation and benefits afforded. 3.8.1.2. (a) For at least two years following the Effective Time (such period, the "Initial Period"), BP shall provide or cause to be provided to current and former employees and directors of Amoco and its Subsidiaries compensation and benefits that are at least as favorable in the aggregate as the compensation and benefits they were entitled to receive immediately prior to the Effective Time (including, without limitation, benefits pursuant to qualified and non-qualified restoration retirement plans, savings plans, medical plans and programs, deferred compensation arrangements, incentive plans, and retiree benefit plans, policies and arrangements); provided, however, that, with respect to employees who are subject to collective bargaining, all benefits shall be provided in accordance with the applicable collective bargaining or other labor agreements; and provided, further, that all incentive, bonus and similar plans shall after the Effective Time be substantially performance-based. BP shall cause Amoco's general severance program as in effect immediately prior to the Effective Time to continue without any reduction in benefits for at least two years following the Effective Time. (b) Following the Effective Time, BP shall, and shall cause its Subsidiaries to, recognize service with Amoco and its Subsidiaries and any predecessor entities (and any other service credited by Amoco under similar benefit plans) prior to the Effective Time for all purposes (including, without limitation, eligibility to participate, vesting, benefit accrual, eligibility to commence benefits and severance) under any benefit plans of BP or its Subsidiaries in which the particular employee or former employee of Amoco (or its respective Subsidiaries) participates; provided, however, that the foregoing shall not result in any duplication of benefits. From and after the Effective Time, BP shall, and shall cause its Subsidiaries to, recognize any and all appropriate out-of-pocket expenses of each employee or former employee of Amoco and its Subsidiaries for purposes of determining such employee's and former employee's (including their beneficiaries and dependents) deductible and copayment expenses. 3.8.1.3. (a) From and after the Effective Time, BP shall honor, and shall cause its Subsidiaries to honor, in accordance with its terms, each existing employment, change of control, severance and termination agreement between Amoco or any of its Subsidiaries, and any officer, director or employee of such company, including without limitation all legal and contractual obligations pursuant to outstanding restoration plans, bonus deferral plans, vested and accrued benefits and similar employment and benefit arrangements and agreements in effect as of the Effective Time. (b) At or prior to the Effective Time, BP shall enter into employment agreements substantially in the form previously provided by Amoco to BP with the Amoco officers, and on the principal terms, identified in the Amoco Disclosure Letter. 3.8.2. Director and Officer Liability. (a) BP agrees that all rights to indemnification and all limitations on liability existing in favor of any Indemnitee (as defined below) in respect of acts or omissions of such Indemnitees on or prior to the Effective Time as provided in the articles of incorporation and by-laws of Amoco or an agreement between an Indemnitee and Amoco or its Subsidiaries in effect as of the date hereof shall continue in full force and effect in accordance with the terms thereof. (b) For six years after the Effective Time, BP shall indemnify and hold harmless the individuals who on or prior to the Effective Time were officers or directors of Amoco or any of its Subsidiaries (the "Indemnitees") to the same extent as set forth in Subsection (a) above with respect to all actions or omissions by them in their capacities as officers or directors of Amoco, or taken by them at the request of, Amoco or any of its Subsidiaries. In the event any claim in respect of which indemnification is available pursuant to the foregoing provisions is asserted or made within such six-year period, all rights to indemnification shall continue until such claim is disposed of or all judgments, orders, decrees or other rulings in connection with such claim are duly satisfied. (c) For six years after the Effective Time, BP shall procure the provision of officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time covering each such Person currently covered by Amoco's officers' and directors' liability insurance policy on terms with respect to coverage and in amounts no less favorable than those of such policy in effect on the date hereof; provided, however, that during such period, BP shall procure as much coverage as can be obtained for the remainder of such period for an annual premium not in excess of 300% of the current annual premium paid by Amoco for its existing coverage. (d) The obligations of BP under this Section 3.8.2 shall not be terminated or modified in such a manner as to adversely affect any Indemnitee to whom this Section 3.8.2 applies without the consent of such affected Indemnitee (it being expressly agreed that the Indemnitees to whom this Section 3.8.2 applies shall be third party beneficiaries of this Section 3.8.2). 3.8.3. Directors of BP. At the Effective Time, the board of directors of BP shall consist of 22 directors, 13 of which shall be directors designated prior to the Effective Time by BP, of which seven shall be non-executive directors, and nine of which shall be directors designated by Amoco, of which seven shall be non-executive directors, and such Amoco and BP director designees shall be the "New Directors." Those New Directors shall be nominated for election by shareholders with effect from the Effective Time. BP agrees to procure such resignations of its respective directors as may be necessary so that at the Effective Time the New Directors are the only directors of BP. BP shall be entitled to designate the chairman of each of the nominating, compensation and policy committees of the BP board of directors. Following the Effective Time, a majority of the meetings of the board of directors of BP in each year shall be held in London. 3.8.4. Officers. At the Effective Time, the following persons, so long as they are willing and able to serve, shall be duly appointed to the following offices: (A) Peter Sutherland and Larry Fuller to the office of Co-Chairman, (B) Sir John Browne to the office of Chief Executive Officer of BP Amoco p.l.c., and (C) such persons as are as set forth in Section 3.8.4 of the Amoco Disclosure Letter (the "List of New Officers"), to the offices set forth therein. If at or immediately prior to the Effective Time, any person designated on the List of New Officers shall be unwilling or unable to serve, a person to fill such position shall be designated by mutual agreement of BP and Amoco. 3.9. Expenses. Except as otherwise provided in Section 5.5 (Effect of Termination and Abandonment), whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement, the Stock Option Agreement, the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement shall be paid by the party incurring such expense, except that the parties shall share equally the costs and expenses of filing, printing and distributing the Form F-4, the Amoco Proxy Statement, the BP Documents and related documents. 3.10. Other Actions by Amoco and BP. 3.10.1. Takeover Statutes. If any Takeover Statute is or may become applicable to the Merger or the other transactions contemplated by this Agreement and the Stock Option Agreement, each of Amoco and BP and its board of directors shall, subject to applicable Law, grant such approvals and take such actions as are necessary so that the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and the Stock Option Agreement, and otherwise act to eliminate or minimize the effects of such Takeover Statute on such transactions. 3.10.2. Dividends. For a period of at least five years after the Closing, dividends on the BP Ordinary Shares will be declared in U.S. dollars. After the date of this Agreement, each of BP and Amoco shall coordinate with the other the declaration of any dividends in respect of BP Ordinary Shares and Amoco Common Shares and the record dates and payment dates related thereto, it being the intention of the Parties that record dates with respect to such dividends do not occur more or less frequently than once each calendar quarter with respect to BP Ordinary Shares or Amoco Common Shares. 3.11. Listing Applications/Establishment of BP ADRs. BP shall promptly prepare and submit to the LSE a listing application with respect to the BP Ordinary Shares, and to the NYSE a listing application in respect of the BP ADRs issuable in the Merger, and shall use its best efforts to obtain, prior to the Effective Time, approval for the listing of such BP Ordinary Shares, in the case of the LSE, subject to allotment, and such BP ADRs, in the case of the NYSE, subject to official notice of issuance under the symbol "BPA", or such other symbol as the Parties agree. BP will enter into all necessary agreements with the Depositary and other parties to establish the BP ADRs issuable pursuant to the Merger. 3.12. Letters of Accountants. (a) Amoco shall use its best reasonable efforts to cause to be delivered to BP "comfort" letters of PricewaterhouseCoopers LLP, Amoco's independent public accountants, dated the effective date of the Form F-4 and the Closing Date, respectively, and addressed to BP and its directors, in form reasonably satisfactory to BP and customary in scope and substance for "comfort" letters delivered by independent public accountants in connection with registration statements similar to the Form F-4. (b) BP shall use its best reasonable efforts to cause to be delivered to Amoco "comfort" letters of Ernst & Young, BP's independent public accountants, dated the effective date of the Form F-4 and the Closing Date, respectively, and addressed to Amoco and its directors, in form reasonably satisfactory to Amoco and customary in scope and substance for "comfort" letters delivered by independent public accountants in connection with registration statements similar to the Form F-4. 3.13. Agreements of Rule 145 Affiliates. 3.13.1. Prior to the date of the Amoco Shareholders Meeting, Amoco shall cause to be prepared and delivered to BP a list identifying all persons who, at the time of the Amoco Shareholders Meeting, Amoco believes may be deemed to be "affiliates" of Amoco for purposes of applicable interpretation regarding use of the "pooling-of-interests" accounting method or for purposes of Rule 145 under the Securities Act (the "Amoco Rule 145 Affiliates"). BP shall be entitled to place restrictive legends on any BP ADRs received by such Amoco Rule 145 Affiliates. Amoco shall use its best efforts to cause each person who is identified as an Amoco Rule 145 Affiliate in such list to deliver to BP, at or prior to the date of the Amoco Shareholders Meeting, a written agreement, in the form to be approved by the Parties, that such Amoco Rule 145 Affiliate will not sell, pledge, transfer or otherwise dispose of any BP ADRs issued to such Amoco Rule 145 Affiliate pursuant to the Merger, except pursuant to an effective registration statement or in compliance with Rule 145 or an exemption from the registration requirements of the Securities Act. Amoco shall use its best efforts to cause each person who is identified as an Amoco Rule 145 Affiliate in such list to sign on or prior to the date of the Amoco Stockholders Meeting a written agreement, in the form to be approved by Amoco and BP, that such party will not sell or in any other way reduce such party's risk relative to any Amoco Common Shares held prior to the Closing or BP ADRs received in the Merger (within the meaning of Section 201.01 of the SEC's Codification of Financial Policies), until such time as financial results (including combined sales net income) covering at least 30 days of post-merger operations have been published, except as permitted by and in accordance with Staff Accounting Series Release 135 and SEC Staff Accounting Bulletins No. 65 and 76 (or any successor thereto) issued by the SEC. Any BP Ordinary Shares held by any Amoco Rule 145 Affiliate shall not be transferable, regardless of whether such affiliate has provided the applicable written agreement referred to in this Section, if such transfer, either alone or in the aggregate with other transfers by affiliates, would preclude BP's ability to account for the business combination to be effected by the Merger as a pooling of interests. BP shall not register the transfer of any BP Ordinary Shares unless such transfer is made in compliance with the foregoing. 3.13.2. Prior to the Effective Time, BP shall cause to be prepared and delivered to Amoco a list identifying all persons who, at the time of the BP Shareholders Meeting, BP believes may be deemed to be "affiliates" of BP for purposes of Rule 145 under the Securities Act (the "BP Rule 145 Affiliates"). BP shall use its best efforts to cause each person who is identified as a BP Rule 145 Affiliates in such list to sign on or prior to the thirtieth day prior to the Effective Time a written agreement, in the form to be approved by Amoco and BP, that such party will not sell or in any other way reduce such party's risk relative to any BP Ordinary Shares owned by such party (within the meaning of Section 201.01 of the SEC's Codification of Financial Policies, until such time as financial results (including combined sales and net income) covering at least 30 days of post-merger operations have been published, except as permitted by and in accordance with Staff Accounting Series Release 135 and SEC Staff Accounting Bulletins No. 65 and 76 (or any successor thereto) issued by the SEC. Any BP Ordinary Shares held by any BP Rule 145 Affiliate shall not be transferable, regardless of whether such affiliate has provided the applicable written agreement referred to in this Section, if such transfer, either alone or in the aggregate with other transfers by affiliates, would preclude BP's ability to account for the business combination to be effected by the Merger as a pooling of interests. BP shall not register the transfer of any BP Ordinary Shares unless such transfer is made in compliance with the foregoing. 3.14. Accounting and Tax Matters. The Parties agree that after the Closing the primary consolidated financial statements of BP shall be prepared in accordance with U.K. GAAP in U.S. dollars. Further, for a period of time not less than five years from the date of the Closing, BP shall prepare supplemental consolidated financial statements, which include a restatement or recalculation prepared in accordance with U.S. GAAP in U.S. dollars. Subsequent to the Closing, neither Party shall take any action that would cause, or omit to take any action the omission of which would cause, (i) the Merger to fail to qualify as a pooling of interests under U.S. GAAP or to be accounted for using merger accounting methods under U.K. GAAP, (ii) the Merger to fail to qualify as a reorganization under Section 368(a) of the Code or (iii) the conversion of Amoco Common Stock into BP Ordinary Shares to fail to qualify for nonrecognition of gain (except with respect to cash received in lieu of fractional BP Depositary Shares) and in connection therewith shall satisfy the tax reporting and filing requirements contained in the Code. 3.15. BP SEC Filings. Within 45 days after the end of each of its first three fiscal quarters, BP agrees that it will make filings with the SEC on Form 6-K, providing for such disclosures as are comparable to those required by Form 10-Q. BP further agrees that it will make any requisite filings on Form 20-F with the SEC within 90 days after the end of its fiscal year. ARTICLE IV CONDITIONS 4.1. Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of BP, Merger Sub and Amoco to effect the Merger are subject to the satisfaction or waiver of each of the following conditions: 4.1.1. Shareholder Approvals. The Merger and the other transactions contemplated by this Agreement shall have been duly approved by holders of Amoco Common Shares constituting the Amoco Requisite Vote and by the shareholders of BP constituting the BP Requisite Vote. 4.1.2. Regulatory Consents. All Amoco Required Consents and BP Required Consents from or with any Governmental Entity (collectively, "Governmental Consents") in connection with the consummation of the Merger and the other transactions contemplated hereby shall have been made or obtained, and such Governmental Consents shall not contain any terms or impose any condition or restriction relating or applying to, or requiring changes in or limitations on, the operation of any asset or businesses of Amoco, BP or any of their respective Subsidiaries which term, condition or restriction, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect on BP or Amoco after the Effective Time (it being understood that, for this purpose, materiality shall be considered with reference to the total equity market value of BP and Amoco). 4.1.3. Laws and Orders. No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits the consummation of the Merger or the other transactions contemplated by this Agreement and that, individually or in the aggregate with all other such Laws, is reasonably likely to have a Material Adverse Effect on Amoco or BP or that would materially frustrate the express intent and purposes of this Agreement (collectively, an "Order"), and no Governmental Entity shall have instituted or threatened any proceeding seeking any such Order. 4.1.4. Effectiveness of Form F-4. The Form F-4 shall have become effective and no stop order with respect thereto shall be in effect. 4.1.5. Exchange Listing. The BP Ordinary Shares to be issued pursuant to the Merger shall have been admitted to the Official List of the LSE and such admission shall have become effective in accordance with the rules and regulations of the LSE and the BP ADRs shall have been authorized for listing on the NYSE, subject to official notice of issuance. 4.2. Conditions to Obligations of BP. The obligation of BP to effect the Merger is also subject to the satisfaction or waiver by BP prior to the Effective Time of the following conditions: 4.2.1. Representations and Warranties of Amoco. The representations and warranties of Amoco set forth in this Agreement (i) to the extent qualified by Material Adverse Effect or any other materiality qualification shall be true and correct and (ii) to the extent not qualified by Material Adverse Effect or any other materiality qualification shall be true and correct (provided that this clause (ii) shall be deemed satisfied so long as any failures of such representations and warranties to be true and correct, taken together, do not have a Material Adverse Effect on Amoco) as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of an earlier date), and BP shall have received a certificate signed on behalf of Amoco by an executive officer of Amoco to such effect. 4.2.2. Performance of Obligations of Amoco. Amoco shall have performed all material obligations required to be performed by it under this Agreement at or prior to the Closing Date, and BP shall have received a certificate signed on behalf of Amoco by an executive officer of Amoco to such effect. 4.2.3. Consents Under Agreements. BP shall have obtained the consent or approval of each Person whose consent or approval shall be required in order to consummate the Merger and the other transactions contemplated by this Agreement under any Contract to which BP or any of its Subsidiaries is a party, except those for which the failure to obtain such consent or approval, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on BP or is not reasonably likely to prevent or materially impair the ability of BP to consummate the Merger and the other transactions contemplated by this Agreement. 4.2.4. Accounting Letters. BP shall have received letters from Ernst & Young confirming that under U.S. GAAP and U.K. GAAP, respectively, they concur with BP management's conclusion that no conditions exist that would preclude BP from being a party to a business combination for which pooling-of-interests accounting would be available under U.S. GAAP and the use of merger accounting methods would be available under U.K. GAAP. 4.3. Conditions to Obligation of Amoco. The obligation of Amoco to effect the Merger is also subject to the satisfaction or waiver by Amoco prior to the Effective Time of the following conditions: 4.3.1. Representations and Warranties. The representations and warranties of BP set forth in this Agreement (i) to the extent qualified by Material Adverse Effect or any other materiality qualification shall be true and correct, and (ii) to the extent not qualified by Material Adverse Effect or any other materiality qualification shall be true and correct (provided that this clause (ii) shall be deemed satisfied so long as any failures of such representations and warranties to be true and correct, taken together, do not have a Material Adverse Effect on BP) as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation and warranty expressly speaks as of an earlier date), and Amoco shall have received a certificate signed on behalf of BP by an executive officer of BP to such effect. 4.3.2. Performance of Obligations of BP. BP shall have performed all material obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Amoco shall have received a certificate signed on behalf of BP by an executive officer of BP to such effect. 4.3.3. Consents Under Agreements. Amoco shall have obtained the consent or approval of each Person whose consent or approval shall be required in order to consummate the Merger and the other transactions contemplated by this Agreement under any Contract to which Amoco or any of its Subsidiaries is a party, except those for which the failure to obtain such consent or approval, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect on Amoco or is not reasonably likely to prevent or materially impair the ability of Amoco to consummate the Merger and the other transactions contemplated by this Agreement. 4.3.4. Tax Opinion. Amoco shall have received an opinion from Wachtell, Lipton, Rosen & Katz, dated as of the Effective Time, substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion, the Merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code and that no gain or loss will be recognized by the stockholders of Amoco who exchange Amoco Common Stock solely for BP ADRs pursuant to the Merger (except with respect to cash received in lieu of fractional BP Depositary Shares). Such opinion may note that "5% shareholders" will qualify for such nonrecognition treatment only if they enter into a "gain recognition agreement" under regulations promulgated under Section 367 of the Code. In rendering such opinion, counsel may require and rely upon certain representations of BP and Amoco reasonably requested by such counsel. 4.3.5. Accounting Letters. Amoco shall have received letters from PricewaterhouseCoopers LLP confirming that under U.S. GAAP and U.K. GAAP, respectively, they concur with Amoco management's conclusion that no conditions exist that would preclude Amoco from being a party to a business combination for which pooling-of- interests accounting would be available under U.S. GAAP and the use of merger accounting methods would be available under U.K. GAAP. ARTICLE V TERMINATION 5.1. Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approvals by shareholders of Amoco and BP referred to in paragraph 4.1.1 (Shareholder Approvals), by mutual written consent of Amoco and BP, by action of their respective boards of directors. 5.2. Termination by Either BP or Amoco. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by action of the board of directors of either BP or Amoco if (i) the Merger shall not have been consummated by August 31, 1999, whether such date is before or after the date of approval by the shareholders of Amoco or BP (the "Termination Date"), (ii) any Order permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger shall have become final and non-appealable, whether before or after the approval by the shareholders of Amoco or BP, (iii) the Amoco Requisite Vote shall not have been obtained at the duly held Amoco Shareholders Meeting, including any adjournments or postponements thereof, or (iv) the BP Requisite Vote shall not have been obtained at the duly held BP Shareholders Meeting, including any adjournments or postponements thereof; provided that the right to terminate this Agreement shall not be available to a Party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the failure of the Merger to be consummated. 5.3. Termination by Amoco. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by shareholders of Amoco referred to in paragraph 4.1.1 (Shareholder Approvals), by action of the board of directors of Amoco, if (i) the board of directors of BP shall have withdrawn or adversely modified its approval or recommendation to shareholders of the Merger or failed to reconfirm such recommendation within seven business days after a written request by Amoco to do so; or (ii) BP or its board of directors shall take any of the actions described in clause (ii) or clause (iii) of the proviso to Section 3.2.1 (Acquisition Proposals); or (iii) there shall be a breach by BP of any representation, warranty, covenant or agreement contained in this Agreement which would result in a failure of a condition set forth in paragraph 4.3.1 or 4.3.2 and cannot be or is not cured prior to the Termination Date. 5.4. Termination by BP. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by the shareholders of BP referred to in paragraph 4.1.1 (Shareholder Approvals), by action of the board of directors of BP, if (i) the board of directors of Amoco shall have withdrawn or adversely modified its approval or recommendation to shareholders of the Merger or failed to reconfirm such recommendation within seven business days after a written request by BP to do so; or (ii) Amoco or its board of directors shall take any of the actions described in clause (ii) or clause (iii) of the proviso to Section 3.2.1 (Acquisition Proposals); or (iii) there shall be a breach by Amoco of any representation, warranty, covenant or agreement contained in this Agreement which would result in a failure of a condition set forth in paragraph 4.2.1 or 4.2.2 and cannot be or is not cured prior to the Termination Date. 5.5. Effect of Termination and Abandonment. 5.5.1. In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article V, this Agreement (other than as set forth in Section 6.1 (Survival)) shall become void and of no effect with no liability on the part of either Party (or of any of its Representatives); provided, however, that no such termination shall relieve either Party of any liability for damages resulting from any willful and intentional breach of this Agreement or from any obligation to pay, if applicable, the amounts payable pursuant to Section 5.5.2 or 5.5.3. 5.5.2. In the event that (i) this Agreement is terminated by either Amoco or BP pursuant to Section 5.2(iii) and at the time of the Amoco Shareholders Meeting (or at any adjournment thereof) an Acquisition Proposal exists with respect to Amoco or (ii) this Agreement is terminated by BP pursuant to Section 5.4(i), 5.4(ii) (solely with respect to the recommendation by Amoco or the Board of Directors of Amoco of an Acquisition Proposal with respect to Amoco) or 5.4(iii) (solely with respect to a willful and intentional breach of Section 3.2), then Amoco shall promptly, but in no event later than two days after the date of such termination, pay to BP a termination payment equal to the Amoco Termination Amount (as defined below), which amount shall be exclusive of any expenses to be paid pursuant to Section 3.9 (Expenses), payable by wire transfer of same day funds. The term "Amoco Termination Amount" shall mean, in the case of termination by BP pursuant to clause (ii) of the preceding sentence, $950,000,000 or, in the case of termination by Amoco or BP pursuant to clause (i) of the preceding sentence, "Amoco Termination Amount" shall mean $500,000,000, plus, if (x) Amoco executes and delivers an agreement with respect to any Acquisition Proposal (an "Amoco Alternative Agreement") or (y) an Acquisition Proposal with respect to Amoco is consummated, in any such case, within 12 months from the date of termination, an additional $450,000,000 (which additional amount shall be paid promptly by wire transfer in same day funds, and in no event later than two days after the earliest date on which the event requiring Amoco to pay such additional sum occurs). In the event that the board of directors of Amoco recommends the acceptance by Amoco shareholders of a third-party tender or exchange offer for the Amoco Common Shares, such recommendation shall be treated for purposes of this paragraph as though an Amoco Alternative Agreement had been executed. Amoco acknowledges that the agreements contained in this Section 5.5.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, BP would not enter into this Agreement; accordingly, if Amoco fails promptly to pay any amount due pursuant to this Section 5.5.2, and, in order to obtain such payment, BP commences a suit which results in a judgment against Amoco for the payment set forth in this Section 5.5.2, Amoco shall pay to BP its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the Amoco Termination Amount from each date for payment until the date of such payment at the prime rate of Citibank N.A. in effect on the date such payment was required to be made plus 2 percent. 5.5.3. In the event that (i) this Agreement is terminated by either Amoco or BP pursuant to Section 5.2(iv) and at the time of the BP Shareholders Meeting (or at any adjournment thereof) an Acquisition Proposal exists with respect to BP or (ii) this Agreement is terminated by Amoco pursuant to Section 5.3(i), 5.3(ii) (solely with respect to the recommendation by BP or the board of directors of BP of an Acquisition Proposal with respect to BP) or 5.3(iii) (solely with respect to a willful and intentional breach of Section 3.2), then BP shall promptly, but in no event later than two days after the date of such termination, pay to Amoco a termination payment equal to the BP Termination Amount (as defined below), which amount shall be exclusive of any expenses to be paid pursuant to Section 3.9 (Expenses), payable by wire transfer of same day funds. The term "BP Termination Amount" shall mean, in the case of termination by Amoco pursuant to clause (ii) of the preceding sentence, $1,000,000,000 or, in the case of termination by Amoco or BP pursuant to clause (i) of the preceding sentence, "BP Termination Amount" shall mean $500,000,000, plus, if (x) BP executes and delivers an agreement with respect to any Acquisition Proposal (a "BP Alternative Agreement") or (y) an Acquisition Proposal with respect to BP is consummated, in any such case, within 12 months from the date of termination, an additional $500,000,000 (which additional amount shall be paid promptly by wire transfer in same day funds, and in no event later than two days after the earliest date on which the event requiring BP to pay such additional sum occurs). In the event that the board of directors of BP recommends the acceptance by BP shareholders of a third-party tender offer or exchange offer for the BP Ordinary Shares, such recommendation shall be treated for purposes of this paragraph as though a BP Alternative Agreement had been executed. BP acknowledges that the agreements contained in this Section 5.5.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Amoco would not enter into this Agreement; accordingly, if BP fails promptly to pay any amount due pursuant to this Section 5.5.3, and, in order to obtain such payment, Amoco commences a suit which results in a judgment against BP for the payment set forth in this Section 5.5.3, BP shall pay to Amoco its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the BP Termination Amount from each date for payment until the date of such payment at the prime rate of Citibank N.A. in effect on the date such payment was required to be made plus 2 percent. ARTICLE VI MISCELLANEOUS AND GENERAL 6.1. Survival. This Article VI and the agreements of Amoco and BP contained in Sections 3.8 (Benefits and Other Matters), 3.9 (Expenses), 3.10.2 (Dividends), 3.14 (Accounting and Tax Matters) and 3.15 (BP SEC Filings) shall survive the Effective Time. This Article VI (other than Section 6.2 (Modification or Amendment), Section 6.3 (Waiver of Conditions) and Section 6.12 (Assignment)), the representations and warranties contained in Section 2.1.3 (Corporate Authority; Approval and Fairness), the agreements of Amoco and BP contained in Section 3.9 (Expenses), Section 5.5 (Effect of Termination and Abandonment), and the last sentence of Section 3.6 (Access) shall survive the termination of this Agreement. All other representations, warranties, agreements and covenants in this Agreement shall not survive the Effective Time or the termination of this Agreement. 6.2. Modification or Amendment. This Agreement may be modified or amended by agreement of the Parties, by action taken or authorized by their respective boards of directors, at any time prior to the Effective Time; provided, however, that, after approval by shareholders of the matters presented at the Amoco Shareholders Meeting or the BP Shareholders Meeting, no modification or amendment shall be made which under applicable Law requires further approval by such shareholders without such further approval. This Agreement may not be modified or amended except by an instrument in writing executed and delivered by duly authorized officers of each of the Parties. 6.3. Waiver of Conditions. Any provision of this Agreement may be waived prior to the Effective Time if, and only if, such waiver is in writing and signed by the Party against whom the waiver is to be effective. 6.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise herein provided, the rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law. 6.5. Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 6.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. 6.6.1. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE, EXCEPT TO THE EXTENT THAT IN THE CASE OF AMOCO OR MERGER SUB, THE INDIANA BUSINESS CORPORATION LAW AND, IN THE CASE OF BP, THE COMPANIES ACT AND ENGLISH LAW ARE APPLICABLE. The parties hereby irrevocably submit to the jurisdiction of the federal courts of the United States of America located in the Borough of Manhattan, New York State solely in respect of the interpretation and enforcement of the provisions of this Agreement and the Stock Option Agreement and in respect of the transactions contemplated hereby and thereby and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the Parties irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such Parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 6.7 (Notices), or in such other manner as may be permitted by Law, shall be valid and sufficient service thereof. 6.6.2. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE STOCK OPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.6. 6.7. Notices. Notices, requests, instructions or other documents to be given under this Agreement shall be in writing and shall be deemed given, (i) when sent if sent by facsimile, provided that the facsimile is promptly confirmed by telephone confirmation thereof, (ii) when delivered, if delivered personally to the intended recipient, and (iii) one business day later, if sent by overnight delivery via a national courier service, and in each case, addressed to a Party at the following address for such Party: if to Amoco: Amoco Corporation 200 East Randolph Drive Chicago, IL 60601 Attention: Stephen F. Gates, Esq. Telecopier: (312) 856-2039 with copies to Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Andrew R. Brownstein, Esq. Telecopier: (212) 403-2000 and Freshfields 65 Fleet Street London EC4Y 1HS Attention: William P.L. Lawes, Esq. Telecopier: (44) 171-832-7001 if to BP or Merger Sub: The British Petroleum Company p.l.c Britannic House 1 Finsbury Circus London EC2M 7BA Attention: Peter B.P. Bevan, Esq. Telecopier: (44) 171-496-4571 with copies to Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Benjamin F. Stapleton, Esq. Telecopier: (212) 558-3588 and Linklaters & Paines One Silk Street London EC2Y 8HQ Attention: David W. Cheyne, Esq. Telecopier: (44) 171-456-2222 or to such other Persons or addresses as may be designated in writing by the Party to receive such notice as provided above. 6.8. Entire Agreement. This Agreement (including any exhibits hereto), the Amoco Disclosure Letter, the BP Disclosure Letter, the Stock Option Agreement and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, between the Parties with respect to the subject matter hereof. References herein to this Agreement shall for all purposes be deemed to include references to the Amoco Disclosure Letter and the BP Disclosure Letter. Except as set forth in Section 3.8.2 (Director and Officer Liability), this Agreement is not intended to confer upon any Person other than the Parties any rights or remedies hereunder. No employee or former employee of Amoco or BP who is not a director of Amoco or BP shall be deemed a third party beneficiary with respect to any provision of this Agreement. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE STOCK OPTION AGREEMENT OR ANY OTHER AGREEMENT CONTEMPLATED HEREBY OR THEREBY, NONE OF AMOCO, BP OR MERGER SUB MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING. 6.9. Obligations of BP and of Amoco. Whenever this Agreement requires a Subsidiary of BP to take any action, such requirement shall be deemed to include an undertaking on the part of BP to use best reasonable efforts to cause such Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of Amoco to take any action, such requirement shall be deemed to include an undertaking on the part of Amoco to use best reasonable efforts to cause such Subsidiary to take such action. 6.10. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision unless the substitution of such provision would materially frustrate the express intent and purposes of this Agreement and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 6.11. Interpretation. The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." 6.12. Assignment. This Agreement shall not be assignable by operation of law or otherwise, and any purported assignment in violation of this provision shall be void. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of BP, Amoco and Merger Sub as of the date hereof. THE BRITISH PETROLEUM COMPANY p.l.c. By: /s/ Peter D. Sutherland Name: Peter D. Sutherland Title: Chairman By: /s/ John Browne Name: John Browne Title: Chief Executive Officer AMOCO CORPORATION By: /s/ H. Laurance Fuller Name: H. Laurance Fuller Title: Chairman and Chief Executive Officer EAGLE HOLDINGS, INC. By: /s/ Peter B. P. Bevan Name: Peter B. P. Bevan Title: President EX-2 4 EXHIBIT 2 (C) Exhibit 2(c) STOCK OPTION AGREEMENT, dated as of the 11th day of August, 1998 (this "Agreement"), between Amoco Corporation, an Indiana corporation ("Issuer"), and The British Petroleum Company p.l.c., an English public limited company (including any assigns permitted under Section11 hereof, "Grantee"). RECITALS A. The Merger Agreement. Prior to the entry into this Agreement and prior to the grant of the Option (as defined in Section1(a)), Issuer, Grantee, and Eagle Holdings, Inc., an Indiana corporation and a wholly-owned subsidiary of Grantee ("Merger Sub"), have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which Grantee and Issuer intend to effect the Merger (as defined in the Merger Agreement). B. The Stock Option Agreement. As an inducement and condition to Grantee's willingness to enter into the Merger Agreement, and in consideration thereof, the board of directors of Issuer has approved the grant to Grantee of the Option pursuant to this Agreement and the acquisition of Common Stock (as defined below) by Grantee pursuant to this Agreement; provided, that such grant was expressly conditioned upon, and made to have no effect until after, execution and delivery by Issuer, Grantee and Merger Sub of the Merger Agreement. C. Capitalized Terms. Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein and in the Merger Agreement, the parties hereto agree as follows: 1. The Option. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option (the "Option") to purchase, subject to the terms hereof, up to 189,783,270 fully paid and nonassessable shares ("Option Shares") of common stock, without par value ("Common Stock"), of Issuer at a price per share in cash equal to $41.00 (subject to adjustment in accordance with this Agreement, the "Option Price"); provided, however, that in no event shall the number of Option Shares exceed 19.9% of the shares of Common Stock issued and outstanding at the time of exercise (without giving effect to the Option Shares issued or issuable under the Option) (the "Maximum Applicable Percentage"). The number of Option Shares purchasable upon exercise of the Option and the Option Price are subject to adjustment as set forth herein. (b) In the event that any additional shares of Common Stock are issued or otherwise become outstanding after the date of this Agreement (other than pursuant to this Agreement), the aggregate number of Option Shares purchasable upon exercise of the Option shall automatically be increased (without any further action on the part of Issuer or Grantee being necessary) so that, taking into consideration any such issuance, such aggregate number equals the Maximum Applicable Percentage. (c) The Option Price with respect to the Option Shares as to which Grantee may propose to exercise this Option pursuant to Section 2, or to request the repurchase of this Option by Issuer pursuant to Section 9 (in either case, the "Proposed Exercise Shares"), shall not be greater than, and shall be adjusted downward to the extent necessary to be, the Maximum Option Price (as defined below). The "Maximum Option Price" with respect to any Proposed Exercise Shares shall be that price per share in cash at which the Option must be exercisable in order to result in a Total Profit (as defined in Section 19) to Grantee, determined as of the date of such proposal, of $50,000,000, assuming that this Option were exercised on such date for all of the Option Shares subject to this Option and assuming that all of such Option Shares were sold for cash at the closing market price on the New York Stock Exchange, Inc. (the "NYSE") for the Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions). 2. Exercise; Closing. (a) Conditions to Exercise; Termination. Grantee may exercise the Option, in whole but not in part, by giving a written notice thereof as provided in Section 2(d) within 180 days following the occurrence of a Triggering Event (as defined in Section 2(b)) unless prior to the giving of such notice the Effective Time (as defined in the Merger Agreement) shall have occurred. The Option shall terminate upon either (i)the occurrence of the Effective Time or (ii) the close of business on the earlier of (x) the day 180 days after the date that Issuer has paid to Grantee the maximum amount of the Amoco Termination Amount which could be payable pursuant to Section 5.5.2 of the Merger Agreement and (y) the date that Grantee is no longer potentially entitled to receive any payment upon termination of the Merger Agreement pursuant to Section5.5.2 of the Merger Agreement. (b) Triggering Event. A "Triggering Event" shall have occurred if the Merger Agreement is terminated and Grantee becomes entitled to receive the maximum amount of the Amoco Termination Amount which could be payable pursuant to Section 5.5.2 of the Merger Agreement. (c) Notice of Triggering Event by Issuer. Issuer shall notify Grantee promptly in writing of the occurrence of any Triggering Event and the number of shares of Common Stock issued and outstanding as of the date of such notice, it being understood that the giving of such notice by Issuer shall not be a condition to the right of Grantee to exercise the Option. (d) Notice of Exercise by Grantee. If Grantee shall be entitled to and wishes to exercise the Option, it shall send to Issuer a written notice (an "Exercise Notice" and the date of which is referred to herein as the "Notice Date") specifying (i) the total amount payable to Issuer on the exercise of the Option in respect of the Option Shares and (ii)a place and date (the "Closing Date") not earlier than three business days nor later than 60 business days from the Notice Date for the closing of such purchase (the "Closing"); provided, that if a filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or prior notification to or approval of any other regulatory authority in the U.S., U.K. or elsewhere is required in connection with such purchase, Grantee and Issuer, as required, promptly after the giving of the Exercise Notice shall file any and all required notices, applications or other documents necessary for approval and shall expeditiously process the same and in such event the period of time referred to in clause(ii) shall commence on the date on which Grantee furnishes to Issuer a supplemental written notice setting forth the Closing Date, which notice shall be furnished as promptly as practicable after all required notification periods shall have expired or been terminated and all required approvals shall have been obtained and all requisite waiting periods shall have passed. Each of Grantee and the Issuer agrees to use all reasonable efforts to cooperate with and provide information to Issuer or Grantee, as the case may be, with respect to any required notice or application for approval to such regulatory authority. (e) Payment of Purchase Price. At the Closing, Grantee shall pay to Issuer the aggregate Option Price for the Option Shares in immediately available funds by a wire transfer to a bank account designated by Issuer; provided, that failure or refusal of Issuer to designate such a bank account shall not preclude Grantee from exercising the Option. (f) Delivery of Common Stock. At the Closing, simultaneously with the payment of the purchase price by Grantee, Issuer shall deliver to Grantee or such other person as Grantee may nominate in writing, a certificate or certificates representing the number of Option Shares purchased by Grantee. (g) Restrictive Legend. Certificates for Common Stock delivered at the Closing may be endorsed with a restrictive legend that shall read substantially as follows: "The transfer of the shares represented by this certificate is subject to resale restrictions arising under the Securities Act of 1933, as amended." It is understood and agreed that the above legend shall be removed by delivery of substitute certificate(s) without such reference if Grantee shall have delivered to Issuer a copy of a letter from the staff of the Securities and Exchange Commission, or a written opinion of counsel, in form and substance reasonably satisfactory to Issuer, to the effect that such legend is not required for purposes of the Securities Act of 1933, as amended. In addition, such certificates shall bear any other legend as may be required by applicable law. (h) Ownership of Record; Tender of Purchase Price; Expenses. Upon the tender of the applicable purchase price in immediately available funds (following the giving of the Exercise Notice), Grantee shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of Issuer may then be closed or that certificates representing such shares of Common Stock may not have been delivered to Grantee. Issuer shall pay all expenses, and any and all federal, national, state, provincial and local taxes and other charges worldwide that may be payable in connection with the preparation, issuance and delivery of stock certificates under this Section2 in the name of Grantee or its nominee, assignee, transferee or designee. 3. Covenants of Issuer. In addition to its other agreements and covenants herein, Issuer agrees: (a) Shares Reserved for Issuance. To maintain, free from preemptive rights, sufficient authorized but unissued or treasury shares of Common Stock so that the Option may be fully exercised without additional authorization of Common Stock after giving effect to all other options, warrants, convertible securities and other rights of third parties to purchase shares of Common Stock from Issuer, and to issue the appropriate number of shares of Common Stock pursuant to the terms of this Agreement; (b) No Avoidance. Not to avoid or seek to avoid (whether by charter amendment or through reorganization, consolidation, merger, issuance of rights, dissolution or sale of assets, or by any other voluntary act) the observance or performance of any of the covenants, agreements or conditions to be observed or performed hereunder by Issuer; and (c) Further Assurances. Promptly after the date hereof to take all actions as may from time to time be required (including (i) complying with all applicable premerger notification, reporting and waiting period requirements under the HSR Act and (ii) in the event that prior notification to or approval of any other regulatory authority in the U.S., U.K. or elsewhere is necessary before the Option may be exercised, cooperating fully with Grantee in preparing and processing the required notices or applications) in order to permit Grantee to exercise the Option and purchase Option Shares pursuant to such exercise and to take all action necessary to protect the rights of Grantee against dilution. 4. Representations and Warranties of Issuer. Issuer hereby represents and warrants to Grantee as follows: (a) Merger Agreement. Issuer hereby makes each of the representations and warranties contained in Sections 2.1.2.1, 2.1.3.1, and 2.1.4 of the Merger Agreement as they relate to Issuer and this Agreement, as if such representations were set forth herein. (b) Shares Reserved for Issuance; Capital Stock. The Option Shares issuable in accordance with the terms of this Agreement have been duly reserved for issuance by Issuer and upon any issuance of such shares in accordance with the terms hereof, such Option Shares will be duly authorized, validly issued, fully paid and nonassessable, and will be delivered free and clear of any lien, pledge, security interest, claim or other encumbrance (other than those created by this Agreement) and not subject to any preemptive rights. 5. Representations and Warranties of Grantee. Grantee hereby represents and warrants to Issuer that Grantee has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby; the execution and delivery of this Agreement have been duly authorized by all necessary corporate action on the part of Grantee, and, assuming the due authorization, execution and delivery of this Agreement by Issuer, constitutes a valid and binding agreement of Grantee enforceable against Grantee in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. 6. Replacement. Upon (i)receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Agreement, (ii)receipt by Issuer of reasonably satisfactory indemnification in the case of loss, theft or destruction and (iii)surrender and cancellation of this Agreement in the case of mutilation, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by any person other than the holder of the new Agreement. 7. Adjustments. In addition to the adjustment to the total number of Option Shares pursuant to Section1(b) and the adjustment to the Option Price pursuant to Section 1(c), the total number of Option Shares purchasable upon the exercise of the Option hereof and the Option Price shall be subject to adjustment from time to time as follows: (a) In the event of any change in the outstanding shares of Common Stock by reason of stock dividends, split- ups, mergers, recapitalizations, combinations, subdivisions, conversions, extraordinary dividends or distributions, exchanges of shares or the like, the type and number of Option Shares purchasable upon exercise of the Option shall be appropriately adjusted, and proper provision shall be made in the agreements governing any such transaction, so that (i) Grantee shall receive upon exercise of the Option the number and class of shares, other securities, property or cash that Grantee would have received in respect of the Option Shares purchasable upon exercise of the Option if the Option had been exercised and such Option Shares had been issued to Grantee immediately prior to such event or the record date therefor, as applicable; and (ii) in the event any additional shares of Common Stock are to be issued or otherwise become outstanding as a result of any such change (other than pursuant to an exercise of the Option), the number of Option Shares purchasable upon exercise of the Option shall be increased so that, after such issuance the number of Option Shares so purchasable equals the Maximum Applicable Percentage of the number of shares of Common Stock issued and outstanding immediately after the consummation of such change; and (b) Whenever the number of Option Shares purchasable upon exercise hereof is adjusted as provided in this Section7, the Option Price shall be adjusted by multiplying the Option Price by a fraction, the numerator of which is equal to the number of Option Shares purchasable prior to the adjustment and the denominator of which is equal to the number of Option Shares purchasable after the adjustment. 8. Registration. (a) Upon the occurrence of a Triggering Event, Issuer shall, at the request of Grantee included in the Exercise Notice, as promptly as practicable prepare, file and keep current a shelf registration statement under the Securities Act covering all Option Shares issued and issuable pursuant to the Option and shall use its best efforts to cause such registration statement to become effective and remain current in order to permit the sale or other disposition of any Option Shares issued upon exercise of the Option in accordance with any plan of disposition requested by Grantee; provided, however, that Issuer may postpone filing a registration statement relating to a registration request by Grantee under this Section8 for a period of time (not in excess of 30 days) if in its judgment such filing would require the disclosure of material information that Issuer has a bona fide business purpose for preserving as confidential. Issuer will use its best efforts to cause such registration statement first to become effective and then to remain effective for 270 days from the day such registration statement first becomes effective or until such earlier date as all shares registered shall have been sold by Grantee. In connection with any such registration, Issuer and Grantee shall provide each other with representations, warranties, indemnities, contribution and other agreements customarily given in connection with such registrations. If requested by Grantee in connection with such registration, Issuer shall become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating Issuer in respect of representations, warranties, indemnities, contribution and other agreements customarily made by issuers in such underwriting agreements. (b) In the event that Grantee so requests, the closing of the sale or other disposition of the Option Shares or other securities pursuant to a registration statement filed pursuant to Section8(a) shall occur substantially simultaneously with the exercise of the Option. 9. Repurchase of Option and/or Shares. (a)Repurchase; Repurchase Price. Following the occurrence of a Triggering Event, (i)at the request of Grantee, given in writing within 180 days of such occurrence (or such later period as provided in Section2(d) with respect to any required notification, application or approval or in Section10), Issuer shall repurchase the Option from Grantee, in whole but not in part, at a price (the "Option Repurchase Price") equal to the number of Option Shares then purchasable upon exercise of the Option multiplied by the amount by which the market/offer price (as defined below) exceeds the applicable Option Price (giving effect to the Maximum Option Price) and (ii)at the request of Grantee, given in writing within 180days of such occurrence (or such later period as provided in Section2(d) with respect to any required notification, application or approval or in Section10), Issuer shall repurchase all Option Shares then owned by Grantee at a price (the "Option Share Repurchase Price") equal to the number of such Option Shares multiplied by the market/offer price. The term "market/offer price" shall mean the highest of (x)the price per share of Common Stock at which a tender or exchange offer for Common Stock has been made, (y)the price per share of Common Stock to be paid by any third party pursuant to an agreement with Issuer and (z)the highest trading price for shares of Common Stock on the NYSE (or, if the Common Stock is not then listed on the NYSE, any other national securities exchange or automated quotation system on which the Common Stock is then listed or quoted) within the six-month period immediately preceding the delivery of the Repurchase Notice. In the event that a tender or exchange offer is made for the Common Stock or an agreement is entered into for a merger, share exchange, consolidation, recapitalization, reorganization or similar transaction involving consideration other than cash, the value of the securities or other property issuable or deliverable in exchange for the Common Stock shall (I) if such consideration is in securities and such securities are listed on a national securities exchange, be determined to be the highest trading price for such securities on such national securities exchange within the six-month period immediately preceding the delivery of the Repurchase Notice or (II) if such consideration is not securities, or if in securities and such securities are not traded on a national securities exchange, be determined in good faith by a nationally recognized investment banking firm selected by Issuer. (b) Method of Repurchase. Grantee may exercise its right to require Issuer to repurchase the Option, in whole but not in part, or all Option Shares then owned by Grantee pursuant to this Section9 by surrendering for such purpose to Issuer, at its principal office, this Agreement or certificates for such Option Shares, as applicable, accompanied by a written notice or notices stating that Grantee elects to require Issuer to repurchase the Option or such Option Shares in accordance with the provisions of this Section9 (such notice, a "Repurchase Notice"). As promptly as practicable, and in any event within 2 business days after the surrender of this Agreement or certificates representing Option Shares and the receipt of the Repurchase Notice relating thereto, Issuer shall deliver or cause to be delivered to Grantee the applicable Option Repurchase Price or the Option Share Repurchase Price. (c) Effect of Statutory or Regulatory Restraints on Repurchase. To the extent that, upon or following the giving of a Repurchase Notice, Issuer is prohibited under applicable law or regulation from repurchasing the Option or any Option Shares subject to such Repurchase Notice (and Issuer hereby undertakes to use its reasonable best efforts to obtain all required regulatory and legal approvals and to file any required notices as promptly as practicable in order to accomplish such repurchase), Issuer shall immediately so notify Grantee in writing and thereafter deliver or cause to be delivered, from time to time, to Grantee the portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is no longer prohibited from delivering, within 2 business days after the date on which it is no longer so prohibited; provided, however, that upon notification by Issuer in writing of such prohibition, Grantee may, within 5 days of receipt of such notification from Issuer, revoke in writing its Repurchase Notice, whether in whole or to the extent of the prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to Grantee that portion of the Option Repurchase Price or the Option Share Repurchase Price that Issuer is not prohibited from delivering; and (ii) deliver to Grantee, as appropriate, (A) with respect to the Option, a new stock option agreement evidencing the right of Grantee to purchase that number of Option Shares for which the surrendered stock option agreement was exercisable at the time of delivery of the Repurchase Notice less the number of shares as to which the Option Repurchase Price has theretofore been delivered to Grantee, or (B) with respect to Option Shares, a certificate for the Option Shares as to which the Option Share Repurchase Price has not theretofore been delivered to Grantee. Notwithstanding anything to the contrary in this Agreement, including, without limitation, the time limitations on the exercise of the Option, Grantee may give notice of exercise of the Option for 180days after a notice of revocation has been issued pursuant to this Section 9(c) and thereafter exercise the Option in accordance with the applicable provisions of this Agreement. (d) Acquisition Transactions. In addition to any other restrictions or covenants, Issuer hereby agrees that, in the event that Grantee delivers a Repurchase Notice, it shall not enter or agree to enter into an agreement or series of agreements relating to a merger with or into or the consolidation with any other person or entity, the sale of all or substantially all of the assets of Issuer or any similar transaction or disposition unless the other party or parties to such agreement or agreements agree to assume in writing Issuer's obligations under Section 9(a) and, notwithstanding any notice of revocation delivered pursuant to the proviso to Section9(c), Grantee may require such other party or parties to perform Issuer's obligations under Section 9(a) unless such party or parties are prohibited by law or regulation from such performance, in which case such party or parties shall be subject to the obligations of the Issuer under Section9(c). 10. Extension of Exercise Periods. The 180-day periods for exercise of certain rights under Sections 2 and 9 shall be extended in each such case at the request of Grantee to the extent necessary to avoid liability by Grantee under Section 16(b) of the Exchange Act by reason of such exercise. 11. Assignment. Neither party hereto may assign or delegate any of its rights or obligations under this Agreement or the Option to any other person without the express written consent of the other party, except that this Agreement or the Option may be assigned to any direct or indirect wholly owned Subsidiary of Grantee. Any attempted assignment or delegation in contravention of the preceding sentence shall be null and void. 12. Filings; Other Actions. Each of Grantee and Issuer will use its best efforts to make all filings with, and to obtain consents of, all third parties and governmental authorities necessary for the consummation of the transactions contemplated by this Agreement. 13. Specific Performance. The parties hereto acknowledge that damages would be an inadequate remedy for a breach of this Agreement by either party hereto and that the obligations of the parties hereto shall be specifically enforceable through injunctive or other equitable relief. 14. Severability; Etc. If any term, provision, covenant, or restriction contained in this Agreement is held by a court or a federal or state regulatory agency of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired, or invalidated. If for any reason such court or regulatory agency determines that Grantee is not permitted to acquire pursuant to Section 2, or Issuer is not permitted to repurchase pursuant to Section9, the full number of Option Shares provided in Section 1(a) hereof (as adjusted pursuant to Sections 1(b) and 7 hereof), it is the express intention of Issuer to allow Grantee to acquire such lesser number of shares as may be permissible, without any amendment or modification hereof. 15. Notices. Notices, requests, instructions or other documents to be given under this Agreement shall be in writing and shall be deemed given (i)when sent if sent by facsimile, provided that the facsimile is promptly confirmed by telephone confirmation thereof, (ii)when delivered, if delivered personally to the intended recipient, and (iii)one business day later, if sent by overnight delivery via a national courier service, and in each case addressed to a party at the respective addresses of the parties set forth in the Merger Agreement. 16. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE. The parties hereby irrevocably submit to the jurisdiction of the Federal courts of the United States of America located in the Borough of Manhattan, New York State solely in respect of the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated hereby and thereby and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a Federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section15, or in such other manner as may be permitted by Law, shall be valid and sufficient service thereof. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i)NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii)EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv)EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION16. 17. Expenses. Except as otherwise expressly provided herein or in the Merger Agreement, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expense, except that Issuer shall be responsible for all fees and expenses (other than underwriting discounts or commissions) relating to the registration of securities pursuant to Section 8. 18. Entire Agreement, Etc. This Agreement, the Confidentiality Agreement (as such term is defined in the Merger Agreement) and the Merger Agreement (including any exhibits thereto, the Amoco Disclosure Letter and the BP Disclosure Letter) constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, between the parties, with respect to the subject matter hereof. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. This Agreement is not intended to confer upon any person or entity, other than the parties hereto, and their respective successors and permitted assigns, any rights or remedies hereunder. 19. Limitation on Profit. (a) Notwithstanding any other provision of this Agreement, in no event shall Grantee's Total Profit (as hereinafter defined) plus any Amoco Termination Amount (or part thereof) paid to Grantee pursuant to Section5.5.2 of the Merger Agreement exceed in the aggregate $1billion (the "Maximum Amount") and, if it otherwise would exceed such amount, Grantee, at its sole election, shall either (i) reduce the number of Option Shares subject to this Option, (ii) deliver to the Issuer for cancellation Option Shares previously purchased by Grantee, (iii) pay cash to the Issuer, or (iv)any combination thereof, so that Grantee's actually realized Total Profit, when aggregated with such Amoco Termination Amount (or part thereof) so paid to Grantee shall not exceed the Maximum Amount taking into account the foregoing actions. (b) Notwithstanding any other provision of this Agreement, this Option may not be exercised for a number of Option Shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) which, together with any Amoco Termination Amount (or part thereof) theretofore paid to Grantee, would exceed the Maximum Amount; provided, that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any subsequent date. (c) As used herein, the term "Total Profit" shall mean the aggregate amount (before taxes) of the following: (i) (x) the amount received by Grantee pursuant to Issuer's repurchase of the Option or any Option Shares pursuant to Section 9, less, in the case of any repurchase of Option Shares, (y) Grantee's purchase price for such Option Shares, as the case may be, and (ii) (x) the net cash amounts or the fair market value of any property received by Grantee pursuant to the sale of Option Shares (or any other securities into which such Option Shares are converted or exchanged), but in no case less than the fair market value of such Option Shares, less (y) Grantee's purchase price for such Option Shares. (d) As used herein, the term "Notional Total Profit" with respect to the Option Shares as to which Grantee may propose to exercise this Option shall be the Total Profit determined as of the date of such proposal assuming that this Option were exercised on such date for such number of Option Shares and assuming that such Option Shares were sold for cash at the closing market price on the NYSE for the Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions). 20. Captions. The Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by duly authorized officers of the parties hereto as of the day and year first hereinabove written. AMOCO CORPORATION By: /s/ H. Laurance Fuller Name: H. Laurance Fuller Title: Chairman and Chief Executive Officer THE BRITISH PETROLEUM COMPANY p.l.c. By: /s/ Peter D. Sutherland Name: Peter D. Sutherland Title: Chairman By: /s/ John Browne Name: John Browne Title: Chief Executive Officer EX-12 5 EXHIBIT 12 EXHIBIT 12 AMOCO CORPORATION ______________________ STATEMENT SETTING FORTH COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (millions of dollars, except ratios) Six Months Ended Year Ended December 31, June 30, 1998 1997 1996 1995 1994 1993 Determination of Income: Consolidated earnings before income taxes and minority interest... $ 932 $3,771 $3,965 $2,404 $2,491 $2,506 Fixed charges expensed by consolidated companies.. 242 452 412 406 316 350 Adjustments for certain companies accounted for by the equity method... 59 66 69 25 7 11 Adjusted earnings plus fixed charges........... $1,233 $4,289 $4,446 $2,835 $2,814 $2,867 Determination of Fixed Charges: Consolidated interest on indebtedness (including interest capitalized)... $ 193 $ 363 $ 317 $ 317 $ 288 $ 299 Consolidated rental expense representative of an interest factor... 49 102 107 89 23 50 Adjustments for certain companies accounted for by the equity method.... 34 7 8 6 5 8 Total fixed charges...... $ 276 $ 472 $ 432 $ 412 $ 316 $ 357 Ratio of earnings to fixed charges........... 4.5 9.1 10.3 6.9 8.9 8.0 EX-27 6 EXHIBIT 27
5 This schedule contains summary financial information extracted from the Consolidated Statement of Income and the Consolidated Statement of Financial Position and is qualified in its entirety by reference to such financial statements. 0000093397 AMOCO CORPORATION 1,000,000 6-MOS DEC-31-1998 JAN-1-1998 JUN-30-1998 143 769 3315 11 1220 6354 50663 27994 32274 5831 5327 0 0 2542 13202 32274 13507 15564 9960 9960 3357 0 203 933 260 673 0 0 0 673 .70 .70
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