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FIRST DIVISION
March 1, 2004

No. 1-00-3333

JUSTICE McBRIDE delivered the opinion of the court:

Plaintiff-appellant, USX Corporation (USX), appeals from anadministrative decision rendered by defendant-appellee, JesseWhite, as Illinois Secretary of State (Secretary), in which theSecretary denied certain statements of correction and petitions forrefund of franchise taxes filed by USX in connection with a mergerthat occurred on February 11, 1986. USX sought review in the trialcourt. The trial court affirmed the Secretary's decision on thebasis that the merger did not amount to a statutory merger forfranchise tax purposes under the Illinois Business Corporation Actof 1983 (Act) (805 ILCS 5/15.70 (West 2000)). USX appeals.

We state the following background facts before addressingthe issues raised by this appeal. In 1986, USX, a Delawarecorporation, sought to acquire 100% stock ownership of Texas Oiland Gas Corporation (TXO), also a Delaware corporation. USXaccomplished this combination by way of a reverse triangularmerger⁽¹⁾ transaction. To do so, USX created a wholly owned,limited-purpose subsidiary, XCO Subsidiary Corp. (XCO), also aDelaware corporation. On October 26, 1985, USX contributed $100 toXCO in exchange for 100 shares of XCO common stock. On October 29,1985, USX, TXO, and XCO, entered into an "Amended and RestatedAgreement and Plan of Merger" (Agreement). The Agreement began bystating the following:

"AGREEMENT AND PLAN OF MERGER, dated asof October 29, 1985 (the 'Agreement'), asamended on December 12, 1985, among UnitedStates Steel Corporation, a Delawarecorporation ('Parent'), XCO Subsidiary Corp.,A Delaware corporation and a wholly ownedsubsidiary of Parent ('Sub'), and Texas Oil &Gas Corp., a Delaware corporation (the'Company').

WHEREAS, to induce Parent and Sub toenter into this Agreement and upon theirrequest as a condition to their willingness toenter into this Agreement, the Company hasentered into a Purchase Option Agreement (the'Purchase Option Agreement') and a StockOption Agreement (the 'Stock OptionAgreement') of even date herewith Parent; and

WHEREAS, Parent and certain shareholdersof the Company have entered into a ShareholderAgreement of even date herewith (the'Shareholder Agreement');

NOW, THEREFORE, the parties agree to asfollows:

ARTICLE 1

THE MERGER

SECTION 1.1 Surviving Corporation

(a) at the Effective Time (as defined inSection 1.2) and in accordance with theprovisions of the Agreement and the DelawareGeneral corporation Law (the 'Delaware Law'),Sub shall be merged with and into the Company(the 'Merger'), which shall be the survivingcorporation (hereinafter sometimes called the'Surviving Corporation') and which shallcontinue its corporate existence under thelaws of the State of Delaware."

Under the Agreement, the USX board of directors created anexchange ratio in which each TXO shareholder received a .6333 shareof newly issued USX stock in exchange for each share of TXO stock. The stockholders of both USX and TXO approved the Agreement. As aresult, the TXO shareholders surrendered 210,302,337 shares of TXOstock which were converted into 133,184,470 newly issued shares ofUSX stock. The shareholders of TXO received this newly issued USXstock in exchange for relinquishing ownership of TXO. In addition,each share of XCO stock held by USX was converted into one share ofTXO stock. In total, USX's 100 shares of XCO stock were convertedinto 100 shares of TXO stock and XCO merged into TXO with TXOsurviving the merger.

As a result of these transactions, USX owned 100 shares of TXOstock, representing 100% ownership of TXO, making TXO a whollyowned subsidiary of USX. XCO, which had merged into TXO,disappeared.

On February 11, 1986, a certificate of merger was filed by TXOthrough its president and chief executive officer, Forrest Hoglund,under section 251(c) of the General Corporation Law of Delaware. Del. Code Ann. tit. 8,