share of Anadarko common stock subject to such Anadarko deferred share award. This amount will be payable within five business days following the completion of the merger or, if later, the earliest date that would not result in the imposition of tax under Section 409A of the Code.
For additional information on Anadarko’s stock-based awards, see “The Merger—Interests of Directors and Executive Officers of Anadarko in the Merger” beginning on page .
Anadarko Stockholders’ Appraisal Rights
Under Delaware law, holders of Anadarko common stock may be entitled to receive payment in cash for the fair value of their shares of Anadarko common stock as determined by the Delaware Court of Chancery, together with interest, if any, as determined by the court, in lieu of the consideration Anadarko stockholders would otherwise be entitled to pursuant to the merger agreement. These rights are known as appraisal rights.
Anadarko stockholders electing to exercise appraisal rights must comply with the provisions of Section 262 of the DGCL in order to perfect their appraisal rights under Delaware law.
The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by an Anadarko stockholder to exercise appraisal rights in connection with the merger, does not constitute any legal or other advice and does not constitute a recommendation that holders of Anadarko common stock exercise their appraisal rights under Section 262 of the DGCL. This summary, however, is not a complete statement of all applicable requirements and is qualified in its entirety by reference to Section 262 of the DGCL, a copy of the full text of which appears in Annex D to this proxy statement/prospectus and is incorporated by reference herein. Failure to follow any of the statutory procedures set forth in Section 262 of the DGCL may result in a termination or waiver of appraisal rights. All references in this summary to a “stockholder” are to the record holder of shares of Anadarko common stock unless otherwise indicated, and all references in this summary to “Section 262” are to Section 262 of the DGCL.
Where a proposed merger for which appraisal rights are available is to be submitted for approval at a meeting of stockholders, Section 262 requires the corporation to notify each of its stockholders (as of the record date for notice of such meeting) not less than 20 days before the meeting that appraisal rights are available. A copy of Section 262 must be included with such notice. This proxy statement/prospectus constitutes the notice to Anadarko stockholders required by Section 262 of the availability of appraisal rights, and the required copy of Section 262 is contained in Annex D to this proxy statement/prospectus. If an Anadarko stockholder wishes to consider exercising appraisal rights, such stockholder should carefully review the text of Section 262, a copy of which is contained in Annex D to this proxy statement/prospectus, because failure to comply with the requirements of Section 262 may result in the loss of appraisal rights under Delaware law.
If you are a record holder of shares of Anadarko common stock and wish to exercise your right to seek an appraisal of your shares, you must satisfy each of the following conditions:
| • | You must properly deliver to Anadarko an effective written demand for appraisal of your shares before the vote with respect to the merger proposal in compliance with the requirements of Section 262. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or voting against the adoption of the merger agreement. Voting against or failing to vote for the adoption of the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262. |
| • | You must not vote in favor of, or consent in writing to, the adoption of the merger agreement or otherwise withdraw, waive or lose your appraisal rights. A vote in favor of adoption of the merger agreement, by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously delivered written demands for appraisal. A proxy which does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement. Therefore, an Anadarko stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the merger proposal or abstain from voting on the merger proposal. |
| • | You must continue to hold your shares of Anadarko common stock through the effective date of the merger. Therefore, a stockholder who is the record holder of shares of Anadarko common stock on the date the written demand for appraisal is made but who thereafter transfers the shares prior to the effective date of the merger will lose any right to appraisal with respect to such shares. |
| • | Unless Anadarko or another Anadarko stockholder (or any other person who is the beneficial owner of shares of Anadarko common stock held either in a voting trust or by a nominee on behalf of such person) who has complied with the requirements of Section 262 and who is otherwise entitled to appraisal rights has done so, you must file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares held by all Anadarko stockholders entitled to appraisal within 120 days after the effective date of the merger. Anadarko is under no obligation to file any petition and has no intention of doing so. Accordingly, if you wish to have your shares of Anadarko common stock appraised, you should initiate all necessary action to perfect your appraisal rights in respect of your shares of Anadarko common stock within the time period and in the manner prescribed in Section 262. |
In addition, Section 262 requires the Delaware Court of Chancery to dismiss appraisal proceedings as to all shares of Anadarko capital stock if, immediately before the merger, such shares were listed on a national securities exchange unless (i) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of Anadarko stock eligible for appraisal, or (ii) the value of the consideration provided in the merger for such total number of shares entitled to appraisal exceeds $1 million (such conditions, the “ownership thresholds”). Because Anadarko’s common stock is listed on a national securities exchange and is expected to continue to be listed on such exchange immediately before the merger, at least one of the ownership thresholds must be met in order for Anadarko stockholders to be entitled to seek appraisal with respect to such shares of common stock.
If you fail to comply with any of these conditions or at least one of the ownership thresholds is not met and the merger is completed, you will be entitled to receive the merger consideration, but you will have no appraisal rights with respect to your shares of Anadarko common stock. All demands for appraisal should be addressed to Anadarko Petroleum Corporation, 1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046, Attention: Corporate Secretary, and must be delivered before the vote on the merger proposal is taken at the special meeting and should be executed by, or on behalf of, the record holder of the shares of Anadarko common stock. The demand must reasonably inform Anadarko of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares.
Only a holder of record of shares of Anadarko common stock immediately prior to the effective time of the merger may assert appraisal rights for the shares of stock registered in that holder’s name. To be effective, a demand for appraisal by a holder of Anadarko common stock must be made by, or in the name of, such registered stockholder, fully and correctly, as the stockholder’s name appears on his, her or its Anadarko stock certificate(s) (or in the stock ledger). Beneficial owners who do not also hold the shares of record may not directly make appraisal demands to Anadarko. The beneficial holder must, in such cases, have the registered owner, such as a broker, bank or other nominee, submit the required demand in respect of those shares. If shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal should be made by or for the fiduciary; and if the shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as authorized agent for the record owner. A record owner, such as a broker, who holds shares as a nominee for others, may exercise his, her or its right of appraisal with respect to the shares held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares as to which appraisal is sought. Where no number of shares is expressly mentioned, the demand will be presumed to cover all shares held in the name of the record owner.
If an Anadarko stockholder holds shares of Anadarko common stock in a brokerage account or in other nominee form and wishes to exercise appraisal rights, such stockholder should consult with his, her or its broker or the other nominee to determine the appropriate procedures to cause the broker or other nominee to make a demand for appraisal of those shares.
If the merger is completed, Anadarko (which is the surviving corporation in the merger) must, within ten days after the effective date of the merger, give written notice that the merger has become effective to each former Anadarko stockholder who has properly delivered a written demand for appraisal and who did not vote in favor of the merger proposal. Within 120 days after the effective date of the merger, any Anadarko stockholder who has complied with Section 262 will, upon written request to Anadarko, be entitled to receive a written statement setting forth the aggregate number of shares not voted in favor of the merger proposal and with respect to which demands for appraisal rights have been received and the aggregate number of holders of such shares. A person who is the beneficial owner of shares of Anadarko common stock held in a voting trust or by a nominee on behalf of such person may, in such person’s own name, request from Anadarko the statement described in the previous sentence. Such written statement will be mailed to the requesting Anadarko stockholder or beneficial owner within ten days after such written request is received by Anadarko or within ten days after expiration of the period for delivery of demands for appraisal, whichever is later. Within 120 days after the effective date of the merger, either Anadarko or any Anadarko stockholder who has complied with the requirements of Section 262 and who is otherwise entitled to appraisal rights may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares held by all Anadarko stockholders entitled to appraisal. A person who is the beneficial owner of shares of Anadarko common stock held in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file the petition described in the previous sentence. Upon the filing of the petition by an Anadarko stockholder or beneficial owner, service of a copy of such petition shall be made upon Anadarko. Anadarko has no obligation to file such a petition in the event any Anadarko stockholders exercise appraisal rights, there is no present intent on the part of Anadarko to file an appraisal petition, and Anadarko stockholders seeking to exercise appraisal rights should not assume that Anadarko will file such a petition or that it will initiate any negotiations with respect to the fair value of such shares. Accordingly, the failure of an Anadarko stockholder to file such a petition within the period specified could result in the loss or termination of appraisal rights, and Anadarko stockholders who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed by Section 262.
If a petition for appraisal is duly filed by an Anadarko stockholder or beneficial owner and a copy of the petition is served on Anadarko, Anadarko will then be obligated, within 20 days after receiving service of a copy of the petition, to file with the office of the Register in Chancery in which such petition was filed a duly verified list containing the names and addresses of all Anadarko stockholders who have demanded an appraisal of their shares and with whom agreements as to the value of their shares have not been reached by Anadarko. The Delaware Court of Chancery is empowered to conduct a hearing upon the petition, and to determine those Anadarko stockholders who have complied with Section 262 and who have become entitled to the appraisal rights provided thereby. The Delaware Court of Chancery may require the Anadarko stockholders who have demanded appraisal for their shares represented by certificates (if any) to submit their certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any such Anadarko stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder. The Delaware Court of Chancery will also dismiss proceedings as to all Anadarko stockholders if neither of the ownership thresholds described above is met.
Where the proceedings are not dismissed or all demands for appraisal are not successfully withdrawn (as discussed further below in this summary), the appraisal proceedings will be conducted as to the shares of Anadarko common stock owned by all stockholders entitled to appraisal, in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. The Delaware Court of Chancery will thereafter determine the fair value of the shares of Anadarko common stock at the effective time of the merger held by all Anadarko stockholders who have properly demanded appraisal rights, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. Notwithstanding the foregoing, at any time before the entry of judgment in the proceedings, Anadarko may make a voluntary cash payment to each stockholder entitled to and seeking appraisal (which will be treated as an advance against the payment due to such Anadarko stockholder), in which case interest shall accrue thereafter only upon the sum of (i) the difference, if any, between the amount so paid and the fair value
of the shares as determined by the Delaware Court of Chancery, and (ii) interest theretofore accrued, unless paid at that time. When the value is determined, the Delaware Court of Chancery will direct the payment of such value, with interest thereon accrued during the pendency of the proceeding, if the Delaware Court of Chancery so determines, to the Anadarko stockholders entitled to receive the same, upon surrender by such holders of the certificates representing those shares or, in the case of book-entry shares, forthwith. Anadarko is under no obligation to make such voluntary cash payment prior to such entry of judgment.
In determining fair value and a fair rate of interest, if any, the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “fair price obviously requires consideration of all relevant factors involving the value of a company”.
Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger”. In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value”, but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered”.
Anadarko stockholders should be aware that the fair value of shares of Anadarko common stock as determined under Section 262 could be more than, the same as, or less than the value that such Anadarko stockholder is entitled to receive under the terms of the merger agreement. An opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262. Occidental and Anadarko do not anticipate offering more than the per share merger consideration to any Anadarko stockholder exercising appraisal rights and reserve the right to assert in any appraisal proceeding that, for purposes of Section 262, the fair value of a share of Anadarko common stock is less than the per share merger consideration. No representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery.
Costs of the appraisal proceeding may be imposed upon Anadarko and the Anadarko stockholders participating in the appraisal proceeding by the Delaware Court of Chancery as the Court deems equitable in the circumstances. Each Anadarko stockholder party to the appraisal proceeding is responsible for its own attorneys’ fees and expert witnesses’ fees and expenses, although, upon the application of an Anadarko stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any Anadarko stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, to be charged pro rata against the value of all shares entitled to appraisal. Any Anadarko stockholder who had demanded appraisal rights will not, after the effective time of the merger, be entitled to vote shares subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares, other than with respect to payment as of a record date prior to the effective time of the merger.
If no petition for appraisal is filed within 120 days after the effective date of the merger, or if an Anadarko stockholder (other than an Anadarko stockholder who has commenced an appraisal proceeding or joined that proceeding as a named party) delivers a written withdrawal of such stockholder’s demand for appraisal and an acceptance of the terms of the merger within 60 days after the effective date of the merger, then the right of that Anadarko stockholder to appraisal will cease and that Anadarko stockholder will be entitled to receive the merger consideration pursuant to the merger agreement. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any Anadarko stockholder without the prior approval of the Court, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that any Anadarko stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party will maintain the right to withdraw its demand for appraisal and to accept the merger consideration that such holder would have received pursuant to the merger agreement within 60 days after the effective date of the merger.
