AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VALLEY RESOURCES, INC.,
SOUTHERN UNION COMPANY
AND
SUG ACQUISITION CORPORATION
DATED AS OF NOVEMBER 30, 1999
TABLE OF CONTENTS
ARTICLE I THE MERGER....................................................... 1
Section 1.1 The Merger................................................. 1
Section 1.2 Effects of the Merger..................................... 1
Section 1.3 Effective Time of the Merger.............................. 2
Section 1.4 Directors and Officers.................................... 2
Section 1.5 Other Transactions........................................ 2
Section 1.6 Certificate of Incorporation; By-laws..................... 2
Section 1.7 Directors and Officers.................................... 2
ARTICLE II TREATMENT OF SHARES............................................. 3
Section 2.1 Effect of the Merger on Capital Stock..................... 3
Section 2.2 Exchange of Certificates.................................. 3
ARTICLE III THE CLOSING..................................................... 5
Section 3.1 Closing................................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 5
Section 4.1 Organization And Qualification............................ 5
Section 4.2 Subsidiaries.............................................. 6
Section 4.3 Capitalization............................................ 6
Section4.4 Authority; Non-contravention; Statutory Approvals;
Compliance.............................................. 7
Section 4.5 Reports and Financial Statement........................... 9
Section 4.6 Absence of Certain Changes or Events...................... 10
Section 4.7 Litigation................................................ 10
Section 4.8 Tax Matters............................................... 11
Section 4.9 Employee Matters; ERISA................................... 13
Section 4.10 Environmental Protection.................................. 17
Section 4.11 Regulation as a Utility................................... 19
Section 4.12 Vote Required............................................. 19
Section 4.13 Opinion of Financial Advisor.............................. 19
Section 4.14 Ownership of Parent Common Stock.......................... 20
Section 4.15 Intellectual Property..................................... 20
Section 4.16 Title to Assets........................................... 20
Section 4.17 Indebtedness.............................................. 20
Section 4.18 Machinery and Equipment................................... 20
Section 4.19 Insurance................................................. 20
Section 4.20 Regulatory Proceedings.................................... 21
Section 4.21 The Company Rights Agreement.............................. 21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT........................ 21
Section 5.1 Organization and Qualification............................ 21
Section 5.2 Authority; Statutory Approvals............................ 21
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.......................... 22
Section 6.1 Covenants of the Company.................................. 22
Section 6.2 Covenant of the Company; Alternative Proposals............ 28
Section 6.3 Employment Agreement...................................... 29
ARTICLE VII ADDITIONAL AGREEMENTS........................................... 30
Section 7.1 Access to Information..................................... 30
Section 7.2 Proxy Statement........................................... 30
Section 7.3 Regulatory Matters........................................ 32
Section 7.4 Company Shareholders'Approval............................. 32
Section 7.5 Directors'and Officers'Indemnification.................... 33
Section 7.6 Disclosure Schedules...................................... 34
Section 7.7 Public Announcements...................................... 34
Section 7.8 Certain Employee Agreements............................... 34
Section 7.9 Employee Benefit Plans.................................... 35
Section 7.10 Company Stock Plans....................................... 36
Section 7.11 Expenses.................................................. 37
Section 7.12 Further Assurances........................................ 37
Section 7.13 Community Involvement..................................... 37
Section 7.14 Financial Statements to be Provided....................... 37
ARTICLE VIII CONDITIONS...................................................... 38
Section 8.1 Conditions to Each Party's Obligation to Effect
the Mergers............................................. 38
Section 8.2 Conditions to Obligation of Parent to Effect
the Mergers............................................. 38
Section 8.3 Conditions to Obligation of the Company to Effect
the Mergers............................................. 40
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER............................... 40
Section 9.1 Termination............................................... 40
Section 9.2 Effect of Termination..................................... 43
Section 9.3 Termination Fee; Expenses................................. 43
Section 9.4 Amendment................................................. 43
Section 9.5 Waiver.................................................... 43
ARTICLE X GENERAL PROVISIONS.............................................. 44
Section 10.1 Non-survival.............................................. 44
Section 10.2 Brokers................................................... 44
Section 10.3 Notices................................................... 44
Section 10.4 Miscellaneous............................................. 45
Section 10.5 Interpretation............................................ 45
Section 10.6 Counterparts; Effect...................................... 46
Section 10.7 Parties in Interest....................................... 46
Section 10.8 Waiver of Jury Trial...................................... 46
Section 10.9 Enforcement............................................... 46
Section 10.10 Construction of Agreement................................. 46
INDEX OF DEFINED TERMS
1935 Act..................................................................... 6
Affiliate.................................................................... 9
Agreement.................................................................... 1
Alternative Proposal......................................................... 29
Bristol...................................................................... 2
Bristol Merger............................................................... 2
Closing...................................................................... 5
Closing Agreement............................................................ 12
Closing Date................................................................. 5
Code......................................................................... 12
Company...................................................................... 1
Company Certificates......................................................... 3
Company Common Stock......................................................... 3
Company Disclosure Schedule.................................................. 34
Company Financial Statements................................................. 10
Company Material Adverse Effect.............................................. 6
Company Merger............................................................... 2
Company Preferred Stock...................................................... 6
Company Required Consents.................................................... 8
Company Required Statutory Approvals......................................... 8
Company Rights Agreement..................................................... 3
Company SEC Reports.......................................................... 10
Company Shareholders'Approval................................................ 19
Company Special Meeting...................................................... 32
Company Stock Plans.......................................................... 36
Confidentiality Agreement.................................................... 30
Contract..................................................................... 7
control...................................................................... 9
controlled by................................................................ 9
Controlled Group Liability................................................... 13
Covered Company Employees.................................................... 35
Disclosure Schedules......................................................... 34
Effective Time............................................................... 2
Employee Benefit Plan........................................................ 13
Employment Agreement......................................................... 29
Environmental Claim.......................................................... 18
Environmental Laws........................................................... 19
Environmental Permits........................................................ 17
ERISA........................................................................ 13
ERISA Affiliate.............................................................. 13
Exchange Act................................................................. 9
Exchange Agent............................................................... 3
FERC......................................................................... 21
Final Order.................................................................. 39
GAAP......................................................................... 10
Governmental Authority....................................................... 8
Hazardous Materials.......................................................... 19
Indemnified Parties.......................................................... 33
Initial Termination Date..................................................... 40
IRS.......................................................................... 14
Joint Venture................................................................ 6
Knowledge.................................................................... 9
Legislative Actions.......................................................... 28
Liens........................................................................ 6
Merger....................................................................... 1
Merger Consideration......................................................... 3
Merger Sub................................................................... 1
Mergers...................................................................... 2
Multiemployer Plan........................................................... 13
Multiple Employer Plan....................................................... 15
Parent....................................................................... 1
Parent Disclosure Schedule................................................... 34
Parent Material Adverse Effect............................................... 22
Parent Required Statutory Approvals.......................................... 22
Paying Agent................................................................. 3
PBGC......................................................................... 14
PCBs......................................................................... 19
Plan......................................................................... 13
Proxy Statement.............................................................. 30
Qualified Plans.............................................................. 14
RelatedDocuments............................................................. 7
Release...................................................................... 19
RIBCA........................................................................ 1
Rights....................................................................... 3
SEC.......................................................................... 9
Securities Act............................................................... 9
SERP......................................................................... 35
Subsidiary................................................................... 6
Surviving Corporation........................................................ 1
Tax Return................................................................... 11
Tax Ruling................................................................... 12
Taxes........................................................................ 11
Termination Fee.............................................................. 43
under common control with.................................................... 9
Valley....................................................................... 2
Valley Merger................................................................ 2
VEBA......................................................................... 14
Violation.................................................................... 8
Withdrawal Liability......................................................... 13
AGREEMENT AND PLAN OF MERGER, dated as of November 30, 1999 (this
"Agreement"), by and among Valley Resources, Inc., a Rhode Island corporation
(the "Company"), Southern Union Company, a Delaware corporation ("Parent"), and
SUG Acquisition Corporation, a Rhode Island corporation and a wholly-owned
subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in a business
combination transaction on the terms stated herein; and
WHEREAS, the respective Boards of Directors of the Company, Parent and
Merger Sub have approved and deemed it advisable and in the best interests of
their respective shareholders to consummate the transactions contemplated herein
under which the businesses of the Company and Parent would be combined by means
of the merger of Merger Sub with and into the Company and the subsequent mergers
of the Company and its regulated subsidiaries into Parent;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub
shall be merged with and into the Company (the "Merger") in accordance with the
laws of the State of Rhode Island. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall be the
surviving corporation in the Merger and shall continue its corporate existence
under the laws of the State of Rhode Island. The effects and the consequences of
the Merger shall be as set forth in Section 1.2. Throughout this Agreement, the
term the "Company" shall refer to the Company prior to the Merger and the term
"Surviving Corporation" shall refer to the Company in its capacity as the
surviving corporation in the Merger.
Section 1.2 Effects of the Merger. Pursuant to the Merger, (i) the Articles
of Incorporation of the Surviving Corporation shall be amended and restated at
and as of the Effective Time to be identical to the Articles of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended as provided by law, except that Article 1 of the Articles of
Incorporation shall be changed so that the name of the Surviving Corporation
shall be "Valley Resources, Inc." and (ii) the By-laws of the Surviving
Corporation shall be amended and restated at and as of the Effective Time to be
identical to the By-laws of Merger Sub, as in effect immediately prior to the
Effective Time, until thereafter amended as provided by law, except that the
By-laws shall be changed so that the name of the Surviving Corporation shall be
"Valley Resources, Inc." Subject to the foregoing, the additional effects of the
Merger shall be as provided in Section 7-1.1-69 of the Rhode Island Business
Corporation Act (the "RIBCA").
Section 1.3 Effective Time of the Merger. On the Closing Date (as defined
in Section 3.1), with respect to the Merger, a duly executed Articles of Merger
complying with Section 7-1.1-65 of the RIBCA shall be filed with the Secretary
of the State of Rhode Island. The Merger shall become effective upon the
issuance of a Certificate of Merger by the Secretary of State of the State of
Rhode Island (the "Effective Time").
Section 1.4 Directors and Officers. The directors and officers of Merger
Sub immediately prior to the Effective Time shall be the directors and officers
of the Surviving Corporation and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by the RIBCA.
Section 1.5 Other Transactions. Immediately after the Effective Time, the
Surviving Corporation shall adopt an agreement and plan of merger pursuant to
which Valley Gas Company ("Valley"), a wholly-owned Subsidiary (as defined in
Section 4.1) of the Company, shall merge with and into the Surviving Corporation
on the Closing Date, with the Surviving Corporation being the surviving
corporation, by complying with the requirements of the RIBCA (the "Valley
Merger"). Immediately following the consummation of the Valley Merger, the
Surviving Corporation shall adopt an agreement and plan of merger pursuant to
which Bristol and ▇▇▇▇▇▇ Gas Company ("Bristol"), a wholly-owned Subsidiary of
the Company, shall merge with and into the Surviving Corporation on the Closing
Date, with the Surviving Corporation being the surviving corporation, by
complying with the requirements of the RIBCA (the "Bristol Merger"). Immediately
following the consummation of the Bristol Merger, Parent shall adopt an
agreement and plan of merger pursuant to which the Surviving Corporation shall
merge with and into Parent on the Closing Date, with Parent being the surviving
corporation by complying with the requirements of the RIBCA and the Delaware
General Corporation Law (the "Company Merger"). The Merger, the Bristol Merger,
the Valley Merger and the Company Merger shall hereinafter be referred to
collectively as the "Mergers."
Section 1.6 Certificate of Incorporation; By-laws. Pursuant to the Company
Merger, the Restated Certificate of Incorporation of Parent, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of Parent until thereafter amended as provided by law and (ii) the
By-laws of Parent, as in effect immediately prior to the Effective Time, shall
be the By-laws of Parent until thereafter amended as provided by law.
Section 1.7 Directors and Officers. The directors and officers of Parent
immediately prior to the Effective Time will be the directors and officers of
Parent after consummation of the Company Merger, each to hold office in
accordance with Restated Certificate of Incorporation and By-laws of Parent.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Merger Sub:
(a) Shares of Merger Sub Stock. Each share of common stock, $1.00 par
value, of Merger Sub that is issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
nonassessable share of common stock, $1.00 par value, of the Surviving
Corporation.
(b) Cancellation of Certain Company Common Stock. Each share of common
stock, $1.00 par value, of the Company (the "Company Common Stock") that is
owned by the Company as treasury stock and all shares of Company Common Stock
that are owned by Parent shall be canceled and shall cease to exist, and no
stock of Parent or other consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the provisions of this
Section 2.1, each share of Company Common Stock (which shall be deemed to
include without limitation each related associated preferred stock purchase
right (collectively, the "Rights") issued pursuant to the Rights Agreement,
dated as of June 18, 1991, between the Company and State Street Bank and Trust
Company, as Rights Agent (the "Company Rights Agreement"), which will be
terminated at the Effective Time (any reference in this Agreement to Company
Common Stock will be deemed to include without limitation the associated
Rights)), other than shares canceled pursuant to Section 2.1(b), issued and
outstanding immediately prior to the Effective Time shall by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right of each holder thereof to receive $25.00 in cash (the "Merger
Consideration").
Section 2.2 Exchange of Certificates.
(a) Deposit with Exchange Agent. As soon as practicable after the Effective
Time, Parent shall deposit with a bank or trust company as may be selected by
Parent and be reasonably acceptable to the Company (the "Exchange Agent"),
pursuant to an agreement in form and substance reasonably acceptable to Parent
and the Company, an amount of cash representing the aggregate Merger
Consideration.
(b) Exchange and Payment Procedures. As soon as practicable after the
Effective Time, Parent shall cause Parent's transfer agent and registrar, as
paying agent (the "Paying Agent"), to mail to each holder of record as of the
Effective Time of a certificate or certificates representing the shares of
Company Common Stock ("Company Certificates") that have been converted pursuant
to Section 2.1(c): (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon actual delivery of the Company Certificates
to the Paying Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for effecting the surrender
of the Company Certificates and receiving the Merger Consideration to which such
holder shall be entitled therefor pursuant to Section 2.1. Upon surrender of a
Company Certificate for cancellation to the Paying Agent or to such other agent
or agents as may be appointed by Parent, together with a duly executed letter of
transmittal and such other documents as the Paying Agent may require, the holder
of such Company Certificate shall be entitled to receive in exchange therefor
the Merger Consideration to which such holder is entitled in accordance with
Section 2.1(c), and the Company Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to any person
other than the person in whose name the surrendered Company Certificate is
registered, it shall be a condition of payment that the Company Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other Taxes (as defined in Section 4.8) required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Company Certificate surrendered or shall have established to the
satisfaction of Parent that such Tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Company Certificate
(other than a certificate representing shares of Company Common Stock to be
canceled in accordance with Section 2.1(b)) shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender
the Merger Consideration contemplated by Section 2.1. No interest will be paid
or will accrue on any cash payable to holders of Company Certificates pursuant
to the provisions of this Article II.
(c) Investment of Funds. The Exchange Agent shall invest the funds
representing the aggregate Merger Consideration, as directed by the Parent, in
(i) direct obligations of the United States of America, (ii) obligations for
which the full faith and credit of the United States of America is pledged to
provide for the payment of principal and interest or (iii) commercial paper
rated the highest quality by either ▇▇▇▇▇'▇ Investors Service, Inc. or Standard
and Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.;
provided, however, that, notwithstanding anything to the contrary in this
Agreement, if the Exchange Agent is not able or refuses to so invest such funds,
the Parent may deposit such funds in trust with another bank or trust company
which has a net capital of not less than $100,000,000, as may be selected by
Parent, so long as the Exchange Agent is allowed to draw on such funds to the
extent required to pay the Merger Consideration. Any net earnings with respect
to such funds shall be the property of and paid over to Parent as and when
requested by Parent.
(d) Lost, Stolen or Destroyed Certificates. In the event any Company
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Company Certificate to be
lost, stolen or destroyed, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Company Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II;
provided, however, that the person to whom the Merger Consideration is paid
shall, if required by Parent, as a condition precedent to the payment thereof,
give the Exchange Agent a bond in such sum as it may ordinarily require and
indemnify Parent in a manner satisfactory to it against any claim that may be
made against Parent with respect to the Company Certificate claimed to have been
lost, stolen or destroyed.
(e) Closing of Transfer Books. After the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no transfers on the
stock transfer books of the Surviving Corporation of shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Company Certificates are presented to Parent, they shall be
canceled and exchanged for the appropriate amount of Merger Consideration as
provided in Section 2.1 and in this Section 2.2.
(f) Termination of Exchange Agent. All funds held by the Exchange Agent for
payment to the holders of unsurrendered Company Certificates and unclaimed at
the end of one year from the Effective Time shall be returned to Parent, after
which time any holder of unsurrendered Company Certificates shall look as a
general creditor only to Parent for payment of such funds to which such holder
may be due, subject to applicable law.
(g) Escheat. Neither the Surviving Corporation nor Parent shall be liable
to any holder of Company Common Stock for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. Any amounts remaining unclaimed by holders of any such shares of
Company Common Stock five years after the Effective Time (or such earlier date
immediately prior to the time at which such amounts would otherwise escheat to
or become property of any Governmental Authority (as defined in Section 4.4(c))
shall, to the extent permitted by applicable law, become the property of Parent,
free and clear of any claims or interest of any such holders or their
successors, assigns or personal representatives previously entitled thereto.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, New York, New York, at 10:00
a.m., Eastern time, on a date selected by Parent and reasonably satisfactory to
the Company which is no more than five business days following the date on which
the last of the conditions set forth in Article VIII hereof is fulfilled or, if
permissible, waived (other than conditions that by their nature are required to
be performed on the Closing Date, but subject to satisfaction of such
conditions), or at such other time and date and place as the Company and Parent
shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization And Qualification. The Company and each of its
Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders of the Rhode
Island and all other regulatory authorities, in each such case, to own, lease
and operate its assets and properties to the extent owned, leased and operated
and to carry on its business as it is now being conducted and is duly qualified
and in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its assets and properties makes such
qualification necessary, other than in such jurisdictions where the failure to
be so qualified and in good standing will not, when taken together with all
other such failures, have a material adverse effect (i) on the business,
properties, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole or (ii) on the ability of the Company and its
Subsidiaries to consummate the Mergers in accordance with this Agreement and the
Related Documents (as defined in Section 4.4(a)) (any such material adverse
effect being hereafter referred to as a "Company Material Adverse Effect"). As
used in this Agreement, the term "Subsidiary" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) of which a majority of the outstanding capital stock or other
voting securities having the power under ordinary circumstances to elect
directors or similar members of the governing body of such corporation or entity
(or otherwise having the power to direct the business and policies of that other
corporation or other entity) shall at the time be held, directly or indirectly,
by such person.
Section 4.2 Subsidiaries. Section 4.2(i) of the Company Disclosure Schedule
(as defined in Section 7.6) sets forth a description of all Subsidiaries and
Joint Ventures (as defined below) of the Company and its Subsidiaries, including
the name of each such entity, the state or jurisdiction of its incorporation or
organization, the Company's or its Subsidiary's interest therein and a brief
description of the principal line or lines of business conducted by each such
entity. Except as set forth in Section 4.2(ii) of the Company Disclosure
Schedule, none of the Company's Subsidiaries is a "public utility company," a
"holding company," a "subsidiary company" or an "affiliate" of any "public
utility company" or of any "holding company" within the meaning of Section
2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility Holding Company Act
of 1935, as amended (the "1935 Act"). Except as set forth in Section 4.2(i) of
the Company Disclosure Schedule, all of the issued and outstanding shares of
capital stock owned, directly or indirectly, by the Company of each Subsidiary
or Joint Venture of the Company are validly issued, fully paid, nonassessable
and free of preemptive rights, and are owned, directly or indirectly, by the
Company free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever (collectively, "Liens"),
and there are no outstanding subscriptions, options, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating the
Company or any Subsidiary of the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of its capital stock or
obligating it to grant, extend or enter into any such agreement or commitment.
As used in this Agreement, the term "Joint Venture" of a person shall mean any
corporation or other entity (including partnerships and other business
associations) that is not a Subsidiary of such person, in which such person or
one or more of its Subsidiaries owns an equity interest, other than equity
interests held for passive investment purposes which are less than 2% of any
class of the outstanding voting securities or equity of any such entity.
Section 4.3 Capitalization. The authorized capital stock of the Company
consists of (i) 20,000,000 shares of Company Common Stock and (ii) 500,000
shares of preferred stock, $100 par value (the "Company Preferred Stock"). As of
the close of business on November 29, 1999, there were issued and outstanding
4,991,264 shares of Company Common Stock. No shares of Company Preferred Stock
are issued or outstanding. There are no shares of Company Common Stock or
Company Preferred Stock reserved for issuance upon exercise of outstanding
Company stock options or stock appreciation rights. All of the issued and
outstanding shares of the capital stock of the Company are validly issued, fully
paid, nonassessable and free of preemptive rights. Except as set forth in
Section 4.3 of the Company Disclosure Schedule, there are no outstanding
subscriptions, options, stock appreciation rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating the
Company or any Subsidiary of the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of the capital stock of the
Company or any Subsidiary of the Company, or obligating the Company or any of
its Subsidiaries to grant, extend or enter into any such agreement or
commitment.
Section 4.4 Authority; Non-contravention; Statutory Approvals; Compliance.
(a) Authority. The Company and each applicable Subsidiary of the Company
has all requisite corporate power and authority to enter into this Agreement and
the Related Documents and, subject to obtaining the Company Shareholders'
Approval (as defined in Section 4.12), the Company Required Statutory Approvals
(as defined in Section 4.4(c)) and the Legislative Actions (as defined in
Section 6.1(y)), to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Related Documents and the
consummation by the Company and its Subsidiaries of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company and its Subsidiaries, subject to
obtaining the Company Shareholders' Approval. This Agreement has been, and as of
the Closing the Related Documents to be executed by the Company and its
applicable Subsidiaries will be, duly and validly executed and delivered by the
Company or its applicable Subsidiary, as the case may be, and, assuming the due
authorization, execution and delivery by the other signatories hereto and
thereto, constitutes or will constitute, as the case may be, the valid and
binding obligations of the Company or its applicable Subsidiary, as the case may
be, enforceable against it in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, insolvency or other
laws affecting the enforcement of creditors' rights generally and subject to the
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity). As used in this Agreement, the term (i) "Related
Documents" shall mean any Contract provided for in this Agreement to be entered
into by one or more of the parties hereto or their respective Subsidiaries in
connection with the Mergers, and (ii) "Contract" shall mean any agreement,
contract, document, instrument, obligation, promise, commitment or undertaking
(whether written or oral) to which any person is a party or by which any person
or its assets may be bound.
(b) Non-Contravention. The execution and delivery of this Agreement and the
Related Documents by the Company and its Subsidiaries do not, and the
consummation of the transactions contemplated hereby and thereby will not,
violate, conflict with, or result in a breach of any provision of, or constitute
a default (with notice or lapse of time) under, or result in the termination or
modification of, or accelerate the performance required by, or result in a right
of termination, cancellation, or acceleration of any obligation or the loss of a
benefit under, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries or any of its Joint Ventures
(any such violation, conflict, breach, default, right of termination,
modification, cancellation or acceleration, loss or creation, a "Violation" with
respect to the Company, its Subsidiaries and Joint Ventures) pursuant to any
provisions of (i) the articles of incorporation, by-laws or similar governing
documents of the Company, subject to Section 4.4(b)(i) of the Company Disclosure
Schedule, any of its Subsidiaries or any of its Joint Ventures, (ii) subject to
obtaining the Company Required Statutory Approvals and the receipt of the
Company Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority applicable to the Company, any of its Subsidiaries or any of its Joint
Ventures, or any of their respective properties or assets or (iii) subject to
obtaining the third-party consents or other approvals set forth in Section
4.4(b)(iii) of the Company Disclosure Schedule (the "Company Required
Consents"), any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease, commitment, security agreement,
loan agreement, or other instrument, obligation, agreement or other Contract of
any kind to which the Company, any of its Subsidiaries or any of its Joint
Ventures is a party or by which any of such persons or any of their properties
or assets may be bound or affected, excluding from the foregoing clauses (ii)
and (iii) such Violations as would not have, individually or in the aggregate, a
Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 4.4(c) of the
Company Disclosure Schedule (the "Company Required Statutory Approvals"), no
declaration, filing or registration with, or notice to or authorization, consent
or approval of, any court, federal, state, local or foreign governmental or
regulatory body (including a stock exchange or other self-regulatory body) or
authority (each, a "Governmental Authority") is necessary for the execution and
delivery of this Agreement and the Related Documents by the Company and its
Subsidiaries or Joint Ventures or the consummation by the Company and its
Subsidiaries or Joint Ventures of the transactions contemplated hereby and
thereby, the failure to obtain, make or give which are, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, it being
understood that references in this Agreement to "obtaining" such Company
Required Statutory Approvals shall mean making such declarations, filings or
registrations, giving such notices, obtaining such authorizations, consents or
approvals and having such waiting periods expire as are necessary to avoid a
violation of law.
(d) Compliance; Contracts. Except as set forth in Section 4.10 of the
Company Disclosure Schedule, or as disclosed in the Company SEC Reports (as
defined in Section 4.5) delivered to Parent prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries nor any of its Joint Ventures is
in violation of, is under investigation with respect to any violation of, or has
been given notice of, or been charged with any violation of, or failure to
comply with, any law, statute, order, rule, regulation, tariff, franchise
agreement, principle of common law, ordinance or judgment (including, without
limitation, any applicable Environmental Law, as defined in Section 4.10(i)(ii))
of any Governmental Authority except for violations that, individually and in
the aggregate, do not have a Company Material Adverse Effect. The Company and
its Subsidiaries and Joint Ventures have all permits, licenses, franchises and
other governmental authorizations, consents and approvals necessary to conduct
their respective businesses and to own, operate and vote all of their respective
assets as currently conducted in all respects, except those which the failure to
obtain would not, individually or in the aggregate, have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries nor any of its
Joint Ventures nor to the Knowledge (as defined below) of any of the foregoing,
any other party thereto, is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
or is occurring which, with lapse of time or action by a third party, could
result in a default by any party thereto under, (i) its articles of
incorporation or by-laws or similar governing document or (ii) any commitment,
deed of trust, franchise, permit, concession, security agreement, obligation,
agreement, indenture, mortgage, loan agreement, note, lease, bond, or other
Contract, license, approval or other instrument to which it is a party or by
which it is bound or to which any of its property is subject, except for
breaches, violations or defaults that, individually and in the aggregate, do not
have a Company Material Adverse Effect. Set forth in Section 4.4(d) of the
Company Disclosure Schedule is a list as the date hereof of all Contracts to
which any of the Company or any of its Subsidiaries is a party involving a total
commitment by or to any party thereto of more than $125,000 on an annual basis
or more than $500,000 on its remaining term which cannot be terminated on no
more than sixty (60) days' notice without penalty or additional cost to the
Company or its applicable Subsidiary as the terminating party. Except as
disclosed in the Company SEC Reports delivered to Parent prior to the date of
this Agreement, and with such exceptions as are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, each
Contract to which the Company or any of its Subsidiaries is a party is in full
force and effect and constitutes the valid and binding obligation of the parties
thereto, enforceable against such party in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors' rights
generally and subject to the general principles of equity (regardless of whether
enforcement is sought in a court of law or equity). For purposes of this
Agreement, (i) an individual will be deemed to have "Knowledge" of a particular
fact or other matter if such individual is actually aware of such fact or other
matter and (ii) a person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director or officer of such person or any Subsidiary of it has
actual knowledge after reasonable inquiry of such fact or other matter.
(e) Except as set forth in Section 4.4(e) of the Company Disclosure
Schedule, there is no "non-competition" or other similar Contract that restricts
the ability of the Company or any of its Affiliates to conduct business in any
geographic area or that would reasonably be likely to restrict Parent or any of
its Affiliates to conduct business in any geographic area. As used in this
Agreement, the term "Affiliate" shall mean, with respect to any person, any
other person that directly, or through one or more intermediaries, controls or
is controlled by or is under common control with such first person. As used in
this definition, "control" (including with correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
or power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
Section 4.5 Reports and Financial Statements. The filings required to be
made by the Company and its Subsidiaries and Joint Ventures since January 1,
1996 under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the 1935 Act
and applicable state public utility laws and regulations have been filed with
the Securities and Exchange Commission (the "SEC") or the appropriate state
public utilities commission, as the case may be, including all forms,
statements, financial statements, reports, agreements (oral or written) and all
documents, exhibits, schedules, amendments and supplements appertaining thereto,
were duly made and complied (or, with respect to such documents to be filed
after the date of this Agreement, will be duly made and will comply), as of
their respective dates, in all material respects with all applicable
requirements of the appropriate statute and the rules and regulations
thereunder. The Company has made available to Parent a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by the Company with the SEC since January 1, 1997 (as such documents,
including those filed after the date of this Agreement, have since the time of
their filing been amended, the "Company SEC Reports"). As of their respective
dates, the Company SEC Reports did (or 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 therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company included in
the Company SEC Reports (collectively, the "Company Financial Statements") have
been (or will be) prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements
as permitted by Form 10-Q of the SEC) and fairly present (or will fairly
present) the consolidated financial position of the Company and its Subsidiaries
as of the dates thereof and the consolidated results of operations and cash
flows for the periods then ended. True, accurate and complete copies of the
articles of incorporation and by-laws of the Company, each of its Subsidiaries
and each of its Joint Ventures have been made available to Parent. The Company
SEC Reports delivered to Parent prior to the date of this Agreement accurately
disclose all material regulation of the Company and each of its Subsidiaries and
Joint Ventures that relates to the utility business of any of the Company and
each of its Subsidiaries and Joint Ventures.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports delivered to Parent prior to the date of this Agreement,
from August 31, 1999, the Company and each of its Subsidiaries have conducted
their businesses only in the ordinary course of business consistent with past
practice, and there has not been, and no fact or condition exists which,
individually or in the aggregate, would have or, insofar as reasonably can be
foreseen, could have, a Company Material Adverse Effect.
Section 4.7 Litigation. Except as disclosed in the Company SEC Reports
delivered to Parent prior to the date of this Agreement or as set forth in
Section 4.8(g) or Section 4.10 of the Company Disclosure Schedule, (a) there are
no claims, suits, actions or proceedings pending or, to the Knowledge of the
Company and its Subsidiaries, threatened, nor are there any investigations,
requests for information, or reviews pending or, to the Knowledge of the Company
and its Subsidiaries, threatened against, relating to or affecting the Company
or any of its Subsidiaries, and (b) there are no judgments, decrees,
injunctions, rules or orders of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator applicable to the Company
or any of its Subsidiaries, except for any of the foregoing under clauses (a)
and (b) that, individually and in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect. There is no claim, suit,
action or proceeding pending that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, the Mergers
or any of the transactions contemplated hereby.
Section 4.8 Tax Matters. "Taxes," as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, sales
and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes or charges imposed by any governmental
entity, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes. "Tax Return," as used in this Agreement, means a
report, return or other written information required to be supplied to a
governmental entity with respect to Taxes.
(a) Filing of Timely Tax Returns. Except as set forth in Section 4.8(a) of
the Company Disclosure Schedule, the Company and each of its Subsidiaries have
duly filed (or there has been filed on its behalf) within the time prescribed by
law all material Tax Returns (including withholding Tax Returns) required to be
filed by each of them under applicable law. Any such Tax Returns were and are in
all material respects true, complete and correct.
(b) Payment of Taxes. Except as set forth in Section 4.8(a) of the Company
Disclosure Schedule, the Company and each of its Subsidiaries have, within the
time and in the manner prescribed by law, paid all Taxes (including withholding
Taxes) required to have been paid except for those contested in good faith and
for which adequate reserves have been taken.
(c) Tax Reserves. All material Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
the most recent financial statements contained in the Company Financial
Statements delivered to Parent prior to the date of this Agreement are properly
reflected in such financial statements in accordance with GAAP, and the unpaid
Taxes of the Company and its Subsidiaries do not exceed the amount shown
therefor on such financial statements, adjusted for the Taxes incurred in the
ordinary course of business through the Effective Time.
(d) Extensions of Time for Filing Tax Returns. Except as set forth in
Section 4.8(d) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries have requested any extension of time within which to file
any material Tax Return, which Tax Return has not since been filed.
(e) Waivers of Statute of Limitations. Neither the Company nor any of its
Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(f) Expiration of Statute of Limitations. The statute of limitations for
the assessment of all material Taxes has expired for all applicable material Tax
Returns of the Company and each of its Subsidiaries, or those material Tax
Returns have been examined by the appropriate taxing authorities for all periods
through the date hereof, and no deficiency for any material Taxes has been
proposed, asserted or assessed against the Company or any of its Subsidiaries
that has not been resolved and paid in full.
(g) Audit, Administrative and Court Proceedings. Except as set forth in
Section 4.8(g) of the Company Disclosure Schedule, no material claims, audits,
disputes, controversies, examinations, investigations or other proceedings are
presently pending, or, to the Knowledge of the Company and its Subsidiaries,
threatened, with regard to any Taxes or Tax Returns of the Company or any of its
Subsidiaries.
(h) Tax Rulings. Neither the Company nor any of its Subsidiaries has
received a Tax Ruling (as defined below) or entered into a Closing Agreement (as
defined below) with any taxing authority that would have a continuing effect
after the Closing Date. "Tax Ruling," as used in this Agreement, shall mean a
written ruling of a taxing authority relating to Taxes. "Closing Agreement," as
used in this Agreement, shall mean a written and legally binding agreement with
a taxing authority relating to Taxes.
(i) Availability of Tax Returns. The Company has provided or made available
to Parent complete and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by the Company or any of its Subsidiaries (or any
predecessors thereto) for all open years, (ii) all audit reports received from
any taxing authority relating to any Tax Return filed by the Company or any of
its Subsidiaries and (iii) any Closing Agreements entered into by the Company or
any of its Subsidiaries with any taxing authority.
(j) Tax Sharing Agreements. Except as set forth in Section 4.8(j) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any agreement, understanding or arrangement relating to allocating or
sharing of Taxes.
(k) Liability for Others. Neither the Company nor any of its Subsidiaries
has any liability for any material Taxes of any person other than the Company
and its Subsidiaries (i) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii) as a transferee or
successor, (iii) by contract or (iv) otherwise.
(1) Code Section 897. To the Knowledge of the Company and its Subsidiaries
after due inquiry, no foreign person owns or has owned beneficially more than
five percent of the total fair market value of Company Common Stock during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Internal Revenue
Code of 1986, as amended (the "Code").
(m) Code Section 280G. Neither the Company nor any of its Subsidiaries is a
party to any agreement that could result in a non-deductible expense under
Section 280G of the Code.
(n) Code Section 481. Neither the Company nor any of its Subsidiaries has
agreed to or is required to make any adjustment pursuant to Section 481 of the
Code.
(o) Code Section 341(f). Neither the Company nor any of its Subsidiaries
has made an election under Section 341(f) of the Code.
(p) Code Section 355. Neither the Company nor any of its Subsidiaries has
made a distribution or has been the subject of a distribution intended to
qualify under Section 355 of the Code.
Section 4.9 Employee Matters; ERISA.
(a) For purposes of this Section 4.9, the following terms have the
definitions set forth below:
(i) "Controlled Group Liability" means any and all liabilities (a)
under Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (b) as a result of a failure to comply with the minimum
funding requirements of Section 302 of ERISA or Section 412 of the Code,
(c) under Section 4971 of the Code, and (d) as a result of a failure to
comply with the continuation coverage requirements of Section 601 et seq.
of ERISA and Section 4980B of the Code, other than such liabilities that
arise solely out of, or relate solely to, the Employee Benefit Plans.
(ii) "ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or
that is a member of the same "controlled group" as the first entity, trade
or business pursuant to Section 4001(a)(14) of ERISA.
(iii) An "Employee Benefit Plan" means any employee benefit plan,
program, policy, practice, agreement or other arrangement providing
benefits to any current or former employee, officer or director of the
Company or any of its Subsidiaries or any beneficiary or dependent thereof
that is sponsored or maintained by the Company or any of its Subsidiaries
or to which the Company or any of its Subsidiaries contributes or is
obligated to contribute, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of Section
3(l) of ERISA, any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (whether or not such plan is subject to ERISA) and
any bonus, incentive, deferred compensation, vacation, sick leave,
disability, stock purchase, stock option, stock award, phantom stock, stock
appreciation right, severance, employment, change of control or fringe
benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) or 3(37) of ERISA.
(vi) "Withdrawal Liability" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan,
as those terms are defined in Part I of Subtitle E of Title IV of ERISA or
under the terms of the Multiemployer Plan.
(b) Section 4.9(b) of the Company Disclosure Schedule includes a complete
list of all Employee Benefit Plans and, with respect to executive welfare
benefit plans and nonqualified pension, savings and deferred compensation plans,
states the number of employees participating in or covered by such plans. Such
list identifies all Plans which are funded with or provide benefits in the form
of Company Common Stock or other securities of the Company or its Subsidiaries.
(c) With respect to each Plan, the Company has delivered to Parent a true,
correct and complete copy of: (i) each writing constituting a part of such Plan,
including without limitation all plan documents, trust agreements, and insurance
contracts and other funding vehicles, and a description of each unwritten plan;
(ii) the three most recent Annual Reports (Form 5500 Series) and accompanying
schedules, if any; (iii) the current summary plan description and any material
modifications thereto, if required to be furnished under ERISA; (iv) the most
recent annual financial report, if any; (v) the three most recent actuarial
reports, if any; (vi) the most recent determination letter from the Internal
Revenue Service (the "IRS"), if any; (vii) the three most recent Pension Benefit
Guaranty Corporation ("PBGC") Forms 1; and (viii) loan documents in connection
with loans by the Plan. Prior to the date of this Agreement, the Company has
delivered to Parent a true, correct and complete copy of each current employee
handbook relating to employees of the Company or any of its Subsidiaries. Except
as specifically provided in the foregoing documents delivered to Parent, there
are no amendments to any Plan that have been adopted or approved nor has the
Company or any of its Subsidiaries undertaken to make any such amendments or to
adopt or approve any new Plan.
(d) Section 4.9(b) of the Company Disclosure Schedule identifies each Plan
that is intended to be a "qualified plan" within the meaning of Section 401(a)
of the Code ("Qualified Plans"). The IRS has issued a favorable determination
letter with respect to each Qualified Plan and the related trust that has not
been revoked, and, to the Knowledge of the Company and its Subsidiaries, nothing
has occurred since the date of such determination letter which cannot be
remedied by timely amendment and which would adversely affect the qualified
status of such plan. Section 4.9(b) of the Company Disclosure Schedule
identifies each Plan or related trust which is intended to meet the requirements
of Code Section 501(c)(9) (a "VEBA"), and except as disclosed in Section 4.9(d)
of the Company Disclosure Schedule, each such VEBA meets such requirements, has
received a favorable determination letter from the IRS, and provides no
disqualified benefits (as such term is defined in Code Section 4976(b)).
(e) All contributions required to be made to any Plan by applicable law or
regulation or by any Plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Plan,
have been timely made or paid in full. Each Plan that is an employee welfare
benefit plan under Section 3(l) of ERISA (i) is funded through an insurance
company contract or a contract with a health maintenance organization, (ii) is,
or is funded through, a VEBA identified as such in Section 4.9(b) of the Company
Disclosure Schedule, or (iii) is unfunded.
(f) With respect to each Employee Benefit Plan, the Company and its
Subsidiaries have substantially complied, and are now in substantial compliance,
with all provisions of ERISA, the Code and all laws and regulations applicable
to such Employee Benefit Plans and each Plan has been administered in all
material respects in accordance with its terms and the terms of any applicable
collective bargaining agreement. There is not now, nor do any circumstances now
exist that could reasonably be expected to give rise to, any requirement for the
posting of security with respect to a Plan or the imposition of any Lien on the
assets of the Company or any of its Subsidiaries under ERISA or the Code. To the
Knowledge of the Company and its Subsidiaries, no non-exempt prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary duty has occurred with respect to any Plan, and no event has
occurred which would subject the Company or Parent to any material liability for
any excise tax, tax on unrelated business taxable income, penalty, or fine under
ERISA or the Code.
(g) With respect to each Plan that is subject to Title IV of ERISA, the
minimum funding requirements of Section 302 of ERISA or Section 412 of the Code,
or Section 4971 of the Code: (i) there does not exist any accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA, whether or not waived; (ii) as of August 31, 1999, the fair market value
of the assets of each such Plan that is a defined benefit plan equals or exceeds
the "projected benefit obligation" (within the meaning of Financial Accounting
Standard No. 87) under such Plan, based upon the actuarial assumptions set forth
in the most recent actuarial report for such Plan; (iii) no reportable event
within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred since December 31, 1994 in respect
of any such Plan which is a defined benefit Plan; (iv) all premiums to the PBGC
have been timely paid in full; (v) no liability (other than for premiums to the
PBGC not yet due and for the payment of benefits and contributions in the
ordinary course) under Title IV of ERISA has been incurred by the Company or any
of its Subsidiaries; (vi) to the Knowledge of the Company and its Subsidiaries,
the PBGC has not instituted proceedings to terminate any such Plan and no
condition exists that presents a material risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such Plan;
and (vii) neither the Company nor any of its Subsidiaries has taken any action
to terminate such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a plan that has two
or more contributing sponsors at least two of which are not under common
control, within the meaning of Section 4063 of ERISA (a "Multiple Employer
Plan"). None of the Company and its Subsidiaries nor any of their respective
ERISA Affiliates has, at any time during the last six years, contributed to or
been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan. None of the Company and its Subsidiaries nor any of their respective ERISA
Affiliates has incurred any Withdrawal Liability or other liability that has not
been satisfied in full.
(i) There does not now exist, nor do any circumstances exist that could
reasonably be expected to result in, any Controlled Group Liability to the
Company, any of its Subsidiaries, or Parent with respect to any employee benefit
plan of any ERISA Affiliate of the Company or any its Subsidiaries. Without
limiting the generality of the foregoing, neither the Company nor any of its
Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in Section 4069 or Section 4204 or 4212(c) of ERISA since
December 31, 1993.
(j) Except as set forth in Section 4.9(j) of the Company Disclosure
Schedule and except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA or applicable state law, the
Company and its Subsidiaries have no material liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents of former employees.
(k) Neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby will (either alone
or in conjunction with any other event) cause any amount to be payable, cause
the accelerated funding, vesting, exercisability, payment or delivery of, or
increase the amount or value of, any payment or benefit to any current or former
employee, officer or director of the Company or any of its Subsidiaries.
(l) Section 4.9(l)(i) of the Company Disclosure Schedule sets forth a list
as of no more than thirty (30) days prior to the date of this Agreement, of all
the present officers and employees of the Company and its Subsidiaries,
indicating each employee's base salary or wage rate and identifying those who
are union employees and those who are part-time employees. Except as set forth
in Section 4.9(l)(ii) of the Company Disclosure Schedule, as of the date of this
Agreement, no labor union or other collective bargaining unit has been certified
or recognized by the Company or any of its Subsidiaries. The Company has
provided to Parent a true, complete and correct copy of each collective
bargaining agreement covering employees of the Company and its Subsidiaries. No
labor organization or group of employees of the Company or any of its
Subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of the Company
or any of its Subsidiaries, threatened to be brought or filed with the National
Labor Relations Board or any other labor relations tribunal or authority. There
are no organizing activities, strikes, work stoppages, slowdowns, lockouts,
arbitrations or material grievances, or other material labor disputes pending
or, to the Knowledge of the Company or any of its Subsidiaries, threatened
against or involving the Company or any of its Subsidiaries. Each of the Company
and its Subsidiaries is in compliance in all material respects with all
applicable laws and collective bargaining agreements respecting employment and
employment practices, terms and conditions of employment, wages and hours and
occupational safety and health.
(m) There are no pending or, to the Knowledge of the Company and its
Subsidiaries, threatened claims (other than claims for benefits in the ordinary
course), lawsuits or arbitrations, and, to the Knowledge of the Company and its
Subsidiaries, there is no set of circumstances which may reasonably give rise to
a claim or lawsuit, against the Plans, any fiduciaries thereof with respect to
their duties to the Plans, or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in a material liability. No
Plan is the subject of any pending, or, to the Knowledge of the Company and its
Subsidiaries, threatened, governmental audit or investigation.
(n) Except as set forth in Section 4.9(n) of the Company Disclosure
Schedule, the Company and its Subsidiaries, as applicable, have reserved the
right to unilaterally amend and terminate each Plan which is an "employee
welfare benefit plan," as such term is defined in Section 3(1) of ERISA, which
provides health or life insurance benefits after termination of employment.
(o) Except as set forth in Section 4.9(o) of the Company Disclosure
Schedule, as of the date of this Agreement, none of the Company and its
Subsidiaries is a party to any employment agreement with any employee pertaining
to any of the Company and its Subsidiaries.
Section 4.10 Environmental Protection. Except as set forth in Section 4.10
of the Company Disclosure Schedule or as disclosed in the Company SEC Reports
delivered to Parent prior to the date of this Agreement:
(a) Compliance. Except where the failure to be in such compliance would
not, individually or in the aggregate, have a Company Material Adverse Effect,
(i) the Company and each of its Subsidiaries are in compliance with all
applicable Environmental Laws (as defined in Section 4.10(i)(ii)) and (ii)
neither the Company nor any of its Subsidiaries has received any communication
from any Governmental Authority or any written communication from any other
person that alleges that the Company or any of its Subsidiaries is not in
compliance with applicable Environmental Laws.
(b) Environmental Permits. The Company and each of its Subsidiaries has
obtained or has applied for all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental Permits")
necessary for the construction of its facilities or the conduct of its
operations, and all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency
approval, and the Company and its Subsidiaries are in compliance with all terms
and conditions of the Environmental Permits, and the Company reasonably believes
that any transfer, renewal or reapplication for any Environmental Permit
required as a result of the Mergers can be accomplished in the ordinary course
of business, except where the failure to obtain or to be in such compliance
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
(c) Environmental Claims. There are no Environmental Claims (as defined in
Section 4.10(i)(i)) pending or, to the Knowledge of the Company and its
Subsidiaries, threatened (i) against the Company or any of its Subsidiaries or
Joint Ventures, or (ii) against any real or personal property or operations that
the Company or any of its Subsidiaries owns, leases or manages, in whole or in
part, that, if adversely determined, would have, individually or in the
aggregate, a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials the aggregate
liability for which would not have a Company Material Adverse Effect, there have
been no Releases (as defined in Section 4.10(i)(iv)) of any Hazardous Material
(as defined in Section 4.10(i)(iii)) that would be reasonably likely to (i) form
the basis of any Environmental Claim against the Company or any of its
Subsidiaries or Joint Ventures, or (ii) to the Knowledge of the Company and its
Subsidiaries, cause damage or diminution of value to any of the operations or
real properties owned, leased or managed, in whole or in part, by the Company or
any of its Subsidiaries or Joint Ventures.
(e) Predecessors. The Company and its Subsidiaries have no Knowledge of any
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any Environmental
Claim, in each case against any person or entity (including, without limitation,
any predecessor of the Company or any of its Subsidiaries) whose liability the
Company or any of its Subsidiaries or Joint Ventures retained, succeeded to,
acquired, or assumed, either contractually or by operation of law, or against
any real or personal property which the Company or any of its Subsidiaries or
Joint Ventures formerly owned, leased or managed, in whole or in part, except
for Releases of Hazardous Materials the liability for which would not have,
individually or in the aggregate, a Company Material Adverse Effect.
(f) Listed Sites. There have been no Hazardous Materials generated by the
Company or any of its Subsidiaries or Joint Ventures (or predecessors of any of
them) that have been disposed of or come to rest at any site that has been
included in any published federal, state, or local priority list of hazardous or
toxic waste sites.
(g) Environmental Reports. A copy of all environmental investigations,
studies, audits, tests, reviews or analyses relating to the Company or any of
its Subsidiaries or Joint Ventures conducted by any of them or any consultant
engaged by any of them within the last three years have been provided to Parent
prior to the date of this Agreement.
(h) Liens. The real property owned, operated or leased by the Company and
its Subsidiaries is not subject to any Lien, securing the costs of environmental
remediation, arising under Environmental Laws.
(i) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, investigations, requests for information, proceedings or notices of
noncompliance or violation by any person or entity (including any
Governmental Authority) alleging potential liability (including, without
limitation, potential responsibility for or liability for enforcement
costs, investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural-resources damages, property damages,
personal injuries, fines or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location, whether or not
owned, operated, leased or managed by the Company, Parent or any of their
respective Subsidiaries or Joint Ventures; or (B) circumstances forming the
basis of any violation, alleged violation of, or failure to comply with any
Environmental Law; or (C) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(ii) "Environmental Laws" means all federal, state, local laws, rules,
ordinances and regulations relating to pollution, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), protection of human health as it
relates to the environment, or occupational health and safety, including,
without limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, damage to the environment, resource
extraction or other activities that could have impact on the Environment,
or the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, coal tar residue, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs") in regulated concentrations; and (B) any
chemicals, materials or substances which are now defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants," "hazardous constituents" or words
of similar import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited
or regulated under any Environmental Law in a jurisdiction in which the
Parent, the Company or any of their Subsidiaries or Joint Ventures operates
or has stored, treated or disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
Section 4.11 Regulation as a Utility. Except as set forth in Section 4.11
of the Company Disclosure Schedule, neither the Company nor any "associate
company," "subsidiary company" or "affiliate" (as such terms are defined in the
▇▇▇▇ ▇▇▇) of the Company is subject to regulation as (a) a "holding company," a
"public-utility company," a "subsidiary company" or an "affiliate" of a "holding
company," within the meaning of Sections 2(a)(7), 2(a)(5), 2(a)(8) and 2(a)(11),
respectively, of the 1935 Act, (b) a "public utility" under the Power Act, (c) a
"natural-gas company" under the Natural Gas Act or (d) a public utility or
public service company (or similar designation) by any state in the United
States other than Rhode Island or by any foreign country.
Section 4.12 Vote Required. The approval of the Merger by a majority of the
shares entitled to be voted by the holders of Company Common Stock (the "Company
Shareholders' Approval") is the only vote of the holders of any class or series
of the capital stock of the Company or any of its Subsidiaries required to
approve this Agreement, the Mergers and the other transactions contemplated
hereby.
Section 4.13 Opinion of Financial Advisor. The Company has received the
opinion of PaineWebber Incorporated, dated as of the date of this Agreement, to
the effect that the Merger Consideration is fair from a financial point of view
to the holders of Company Common Stock, and a copy of such opinion will be
provided to Parent promptly after the execution of this Agreement.
Section 4.14 Ownership of Parent Common Stock. The Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of common stock of Parent.
Section 4.15 Intellectual Property. Neither the Company nor any of its
Subsidiaries has any Knowledge of (i) any infringement or claimed infringement
by the Company or any of its Subsidiaries of any patent or patent license
rights, trademarks or copyrights of others or (ii) any infringement of the
patent or patent license rights, trademarks or copyrights owned by or under
license to the Company or any of its Subsidiaries, except for any such
infringements of the type described in clause (i) or (ii) that are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect.
Section 4.16 Title to Assets. Except as disclosed in the Company SEC
Reports delivered to Parent prior to the date of this Agreement, none of the
assets of the Company or any of its Subsidiaries are subject to any Lien.
Section 4.17 Indebtedness. All outstanding principal amounts of
indebtedness for borrowed money of the Company and its Subsidiaries as of
November 23, 1999 are set forth in Section 4.17 of the Company Disclosure
Schedule.
Section 4.18 Machinery and Equipment. Except for normal wear and tear, and
with such other exceptions as are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, the machinery and
equipment of the Company and its Subsidiaries are in good operating condition
and in a state of reasonable maintenance and repair.
Section 4.19 Insurance. Section 4.19 of the Company Disclosure Schedule
sets forth a list of all policies of insurance held by the Company and its
Subsidiaries as of the date of this Agreement. Since September 30, 1997, the
assets and the business of the Company and its Subsidiaries have been
continuously insured with what the Company reasonably believes are reputable
insurers against all risks and in such amounts normally insured against by
companies of the same type and in the same line of business as the Company and
its Subsidiaries. No notice of cancellation, non-renewal or material increase in
premiums has been received by any of the Company and its Subsidiaries with
respect to such policies, and none of the Company and its Subsidiaries has
Knowledge of any fact or circumstance that could reasonably be expected to form
the basis for any cancellation, non-renewal or material increase in premiums,
except for such cancellations, non-renewals and increases which are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect. None of the Company and its Subsidiaries is in default with
respect to any provision contained in any such policy or binder nor has there
been any failure to give notice or to present any claim relating to the business
or the assets of the Company and its Subsidiaries under any such policy or
binder in a timely fashion or in the manner or detail required by the policy or
binder, except for such defaults or failures which are not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse Effect.
There are no outstanding unpaid premiums (except premiums not yet due and
payable), and no notice of cancellation or renewal with respect to, or
disallowance of any claim under, any such policy or binder has been received by
the Company and its Subsidiaries, except for such non-payments of premiums,
cancellations, renewals or disallowances which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect.
Section 4.20 Regulatory Proceedings. Except as disclosed in the Company SEC
Reports delivered to Parent prior to the date of this Agreement, other than
purchase gas adjustment provisions, none of the Company or its Subsidiaries all
or part of whose rates or services are regulated by a Governmental Authority (a)
has rates that have been or are being collected subject to refund, pending final
resolution of any rate proceeding pending before a Governmental Authority or on
appeal to the courts, or (b) is a party to any rate proceedings before a
Governmental Authority that are, individually or in the aggregate, reasonably
likely to result in any orders having a Company Material Adverse Effect.
Section 4.21 The Company Rights Agreement. Prior to the date of this
Agreement, the Company has delivered to Parent a true and complete copy of the
Company Rights Agreement. The consummation of the transactions contemplated by
this Agreement will not result in the triggering of any right or entitlement of
the holders of the Company Common Stock or other Company securities under the
Company Rights Agreement. Neither the Company nor any of its Subsidiaries is a
party to any agreement similar to the Company Rights Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all requisite corporate power and
authority, and Parent has been duly authorized by all necessary approvals and
orders of the Florida, Missouri, Pennsylvania and Texas regulatory authorities
and the Federal Energy Regulatory Commission (the "FERC"), to own, lease and
operate its assets and properties to the extent owned, leased and operated and
to carry on its business as it is now being conducted.
Section 5.2 Authority; Statutory Approvals.
(a) Authority. Each of Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement and, subject to the applicable
Parent Required Statutory Approvals (as defined in Section 5.2(b)), to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Merger Sub. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming
the due authorization, execution and delivery by the other signatories hereto,
constitutes a valid and binding obligation of Parent and Merger Sub enforceable
against them in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and subject to the
general principles of equity (regardless of whether enforcement is sought in a
court of law or equity).
(b) Statutory Approval. Except as described in Section 5.2(b) of the Parent
Disclosure Schedule (as defined in Section 7.6) (the "Parent Required Statutory
Approvals"), no declaration, filing or registration with, or notice to or
authorization, consent or approval of, any Governmental Authority is necessary
for the execution and delivery of this Agreement by Parent or Merger Sub or the
consummation by Parent or Merger Sub of the transactions contemplated hereby,
the failure to obtain, make or give which would have, individually or in the
aggregate, a material adverse effect on the ability of Parent and Merger Sub to
consummate the Mergers in accordance with this Agreement (any such material
adverse effect being hereafter referred to as a "Parent Material Adverse
Effect"), it being understood that references in this Agreement to "obtaining"
such Parent Required Statutory Approvals shall mean making such declarations,
filings or registrations; giving such notices; obtaining such authorizations,
consents or approvals; and having such waiting periods expire as are necessary
to avoid a violation of law.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Company. From the date hereof until the
Effective Time or earlier termination of this Agreement, the Company agrees as
follows, as to itself and to each of its Subsidiaries, except as expressly
consented to in writing by Parent:
(a) Ordinary Course of Business. The Company shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and use
all commercially reasonable efforts to (i) not make or permit any material
change in the general nature of its business, (ii) preserve intact their present
business organizations and goodwill, preserve the goodwill and relationships
with customers, suppliers and others having business dealings with them, (iii)
subject to prudent management of workforce needs and ongoing programs currently
in force, keep available the services of their present officers and employees as
a group, (iv) maintain and keep material properties and assets in as good repair
and condition as at present, subject to ordinary wear and tear, and maintain
supplies and inventories in quantities consistent with past practice, and (v)
preserve all franchises, tariffs, certificates of public convenience and
necessity, licenses, authorizations and other governmental rights and permits.
(b) Dividends. The Company shall not, nor shall it permit any of its
Subsidiaries to: (i) declare or pay any dividends on or make other distributions
in respect of any capital stock other than (A) dividends by a wholly-owned
Subsidiary of the Company to the Company or another wholly-owned Subsidiary of
the Company, and (B) regular dividends on Company Common Stock with usual record
and payment dates that do not exceed the current rate of $0.75 per share of
Company Common Stock per year, (ii) split, combine or reclassify any of its
capital stock or the capital stock of any of its Subsidiaries or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of, or in substitution for, shares of its capital stock or the capital stock of
any of its Subsidiaries, or (iii) redeem, repurchase or otherwise acquire any
shares of its capital stock or the capital stock of any of its Subsidiaries,
other than redemptions, repurchases and other acquisitions of shares of capital
stock in connection with the administration of employee benefit and dividend
reinvestment plans as in effect on the date hereof in the ordinary course of the
operation of such plans consistent with past practice.
(c) Issuance of Securities. Except as set forth in Section 6.1(c) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its Subsidiaries to, issue, agree to issue, deliver, sell, award, pledge,
dispose of or otherwise encumber or authorize or propose the issuance, delivery,
sale, award, pledge, disposal or other encumbrance of, any shares of their
capital stock of any class or any securities convertible into or exchangeable
for, or any rights, warrants or options to acquire, any such shares or
convertible or exchangeable securities.
(d) Compliance With Law. The Company shall, and shall cause its
Subsidiaries to, comply in all material respects with all applicable legal
requirements and permits, including without limitation those relating to the
filing of reports and the payment of Taxes due to be paid prior to the Closing,
other than those contested in good faith with adequate reserves set forth in the
Company Financial Statements delivered to Parent prior to the date of this
Agreement.
(e) Charter Documents; Other Actions. The Company shall not, nor shall it
permit any of its Subsidiaries to, (i) amend or propose to amend its respective
articles of incorporation, by-laws or regulations, or similar organizational
documents or (ii) take or fail to take any other action, which in any such case
would reasonably be expected to prevent or materially impede or interfere with
the Mergers.
(f) Acquisitions. Except as disclosed in Section 6.1(f) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
business organization or division thereof, or otherwise acquire or agree to
acquire any material amount of assets.
(g) Contracts. The Company and its Subsidiaries shall not enter into any
transaction or any Contract involving a total commitment by or to any party
thereto of more than $125,000 on a yearly basis or more than $500,000 on its
remaining term which cannot be terminated on no more than 60 days' notice
without penalty or cost to the Company or any of its Subsidiaries as a
terminating party. Without limiting the prior sentence, the Company shall not,
except in the ordinary course of business consistent with past practice, modify,
amend, terminate, renew or fail to use reasonable business efforts to renew any
material Contract to which the Company or any of its Subsidiaries is a party or
waive, release or assign any material rights or claims with respect thereto.
(h) Capital Expenditures. The Company shall not, nor shall it permit any of
its Subsidiaries to, make capital expenditures in an aggregate amount in excess
of the amount budgeted by the Company or its Subsidiaries for capital
expenditures as set forth in Section 6.1(h) of the Company Disclosure Schedule.
(i) No Dispositions. The Company shall not, nor shall it permit any of
its Subsidiaries to, sell, lease, license, encumber or otherwise dispose of, any
of its respective assets, other than encumbrances or dispositions in the
ordinary course of business consistent with past practice.
(j) Indebtedness. The Company shall not, nor shall it permit any of its
Subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation, the
issuance of debt securities or warrants or rights to acquire debt) or enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing other than (i) short-term indebtedness in the ordinary
course of business consistent with past practice which is subject to redemption
or prepayment at any time at the option of the Company or its applicable
Subsidiary on no more than 30 days' notice without any penalty or premium or
(ii) arrangements between the Company and its wholly-owned Subsidiaries or among
its wholly-owned Subsidiaries.
(k) Compensation, Benefits; Employees. Except as may be required by
applicable law or under existing Employee Benefit Plans or collective bargaining
agreements, as may be required to facilitate or obtain a determination letter
from the IRS that a plan is a Qualified Plan, or as expressly contemplated by
this Agreement, the Company shall not, nor shall it permit any of its
Subsidiaries to, (i) enter into, adopt or amend or increase the amount or
accelerate the payment or vesting of any benefit or amount payable under any
Employee Benefit Plan, or otherwise increase the compensation or benefits of any
director, officer or other employee of the Company or any of its Subsidiaries,
except for normal increases in compensation and benefits (including incentive
compensation) or actions in the ordinary course of business, that are consistent
with the Company's past practice of adjusting compensation and benefits to
reflect the average compensation and benefits as determined by general industry
or market surveys; provided that prior to implementing any such increases on the
basis of such surveys the Company shall advise Parent of its intention so to
increase compensation or benefits and of the basis therefor and shall otherwise
consult with Parent concerning such proposed increases, or (ii) enter into or
amend any employment, severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or arrangement
with any director or officer or other employee. This subsection (k) is not
intended to (A) restrict the Company or its Subsidiaries from granting
promotions to officers or employees based upon job performance or workplace
requirements in the ordinary course of business consistent with past practice or
(B) restrict the Company's ability to make available to employees the plans,
benefits and arrangements that have customarily and consistent with past
practices been available to officers and employees in the context of such
merit-based promotion. The Company and its Subsidiaries shall not hire any new
employee unless such employee is a bona fide replacement for a presently-filled
position with the Company or a Subsidiary as of the date hereof.
(l) 1935 Act. The Company shall not, nor shall it permit any of its
Subsidiaries to, engage in any activities which would cause a change in its
status, or that of its Subsidiaries, under the 1935 Act.
(m) Accounting. The Company shall not, nor shall it permit any of its
Subsidiaries to, make any changes in their accounting methods, principles and
practices, except as required by law, rule, regulation or GAAP.
(n) Cooperation, Notification. The Company shall, and shall cause its
Subsidiaries to, (i) confer on a regular and frequent basis with one or more
representatives of Parent to discuss, subject to applicable law, material
operational matters and the general status of its ongoing operations, (ii)
promptly notify Parent of any significant changes in its business, properties,
assets, condition (financial or other), results of operations or prospects,
(iii) advise Parent of any change or event which has had or, insofar as
reasonably can be foreseen, is reasonably likely to result in a Company Material
Adverse Effect, and (iv) without limiting the Company's and its Subsidiaries'
obligations under Section 6.1(u)(i), promptly provide Parent with copies of all
filings made by the Company or any of its Subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
(o) Third-Party Consents. The Company shall, and shall cause its
Subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents and other consents required to consummate the
transactions contemplated hereby. The Company shall promptly notify Parent of
any failure or prospective failure to obtain any such consents and, if requested
by Parent, shall provide copies of all the Company Required Consents obtained by
the Company to Parent.
(p) Discharge of Liabilities. The Company shall not, nor shall it
permit any of its Subsidiaries to, pay, discharge or satisfy any material
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice (which includes
the payment of final and unappealable judgments) or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company SEC Reports delivered to Parent prior to the
date of this Agreement, or incurred in the ordinary course of business
consistent with past practice.
(q) Insurance. The Company shall, and shall cause its Subsidiaries to,
maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies engaged
in the electric and gas utility industry.
(r) Permits. The Company shall, and shall cause its Subsidiaries to, use
reasonable efforts to maintain in effect all existing governmental permits
pursuant to which the Company or any of its Subsidiaries operate.
(s) No Rights Triggered. The Company shall ensure that the entering into of
this Agreement and the Related Documents and the consummation of the
transactions contemplated hereby and thereby and any other action or combination
of actions, or any other transactions contemplated hereby and thereby, do not
and will not result, directly or indirectly, in the grant of any rights to any
person under any Contract (other than the employment agreements disclosed in
Section 6.1(s) of the Company Disclosure Schedule) to which it or any of its
Subsidiaries is a party or otherwise. In addition, the Company shall not amend
or waive any rights in a manner that would adversely affect any party's ability
to consummate the Mergers or the economic benefits of the Mergers to Parent.
(t) Taxes. The Company shall not, and shall cause its Subsidiaries not
to, (i) make or rescind any express or deemed material election relating to
Taxes, (ii) settle or compromise any material claim, audit, dispute,
controversy, examination, investigation or other proceeding relating to Taxes,
(iii) materially change any of its methods of reporting income or deductions for
federal income Tax purposes, except as may be required by applicable law, or
(iv) file any material Tax Return other than in a manner consistent with past
custom and practice.
(u) The Company and its Subsidiaries shall:
(i) Not file any material application, petition, motion, order, brief,
settlement or agreement in any material proceeding before any Governmental
Authority which involves the Company or any of its Subsidiaries, and
appeals related thereto without, to the extent reasonably practicable,
consulting Parent; provided, however, that if such proceeding is reasonably
likely to have a Company Material Adverse Effect, the Company shall not
make any such filing without the consent of Parent, which consent shall not
be unreasonably withheld or delayed;
(ii) Not engage in or modify, except in the ordinary course of
business, any material intercompany transactions involving any other
Subsidiary of the Company;
(iii) Not make any changes in financial policies or practices, or
strategic or operating policies or practices;
(iv) Not make any loan or advance to any officer, director,
shareholder, employee or any other person other than advances for business
purposes to employees in the ordinary course of business;
(v) Not purchase, sell, lease, dispose of or otherwise transfer or
make any Contract for the purchase, sale, lease, disposition or transfer
of, or subject to Lien, any of the assets of the Company or its
Subsidiaries other than in the ordinary course of business; and
(vi) Not terminate any existing gas purchase, exchange or
transportation contract necessary to supply firm gas at all city gate
delivery points or enter into any new contract for the supply,
transportation, storage or exchange of gas with respect to the Company's or
its Subsidiaries' regulated gas distribution operations or renew or extend
or negotiate any existing contract providing for the same where such
contract is not terminable within sixty (60) days without penalty without
obtaining Parent's prior written consent; provided, however, that if the
Company provides Parent with a copy of any such proposed new Contract,
Parent shall be deemed to have consented to the entering into of such
Contract if Parent does not notify the Company of its disapproval of such
Contract by the end of the second business day after receipt by Parent of
such copy of such proposed new Contract.
(v) Customer Notifications. At any time and from time to time as reasonably
requested by Parent prior to the Closing Date, each of the Company and its
Subsidiaries will permit Parent at Parent's expense to insert preprinted
single-page customer education materials into billing documentation to be
delivered to customers affected by this Agreement; provided, however, that the
Company has reviewed in advance and consented to the content of such materials,
which consent shall not be unreasonably withheld or delayed. Other means of
notifying customers may be employed by either the Company or Parent, at the
expense of the initiating party, but in no event shall any notification be
initiated without the prior consent of the other party (which consent shall not
be unreasonably withheld or delayed).
(w) Company Bondholders' Consent. The Company shall use its reasonable best
efforts to obtain consents from all holders of each series of First Mortgage
Bonds issued under the Indenture of First Mortgage dated as of December 15, 1992
between Valley, the Company, as Guarantor, and State Street Bank and Trust
Company, as Trustee, and from all holders of each series of debentures issued
under the Indenture between the Company and Mellon Bank, N.A., dated as of
September 1, 1997, each as amended or supplemented from time to time, to such
amendments to such Indentures as requested by Parent.
(x) Financing Activities. The Company shall, and shall cause its
Subsidiaries to, cooperate, to the fullest extent commercially reasonable and
practicable, with Parent's requests with respect to refinancing by the Company
and its Subsidiaries of the current maturities of any of their indebtedness, and
any repurchase, redemption or prepayment by the Company or any of its
Subsidiaries of any of their indebtedness that may be required prior to or
because of the Mergers or that Parent may request that the Company or any of its
Subsidiaries effect prior to the Mergers, so as to permit Parent to have the
maximum opportunity to refinance, on or promptly after the Closing Date without
any penalty except as may be due pursuant to the terms of the Company's or its
Subsidiaries' indebtedness as in effect on the date of this Agreement, any of
the Company's or its Subsidiaries' indebtedness outstanding on the Closing Date;
provided, however, that neither the Company nor any of its Subsidiaries shall be
required to consummate prior to the Effective Time any such refinancing,
repurchase, redemption or repayment requested by Parent.
(y) Legislative Action. The Company shall, and shall cause its Subsidiaries
to, use commercially reasonable efforts to cause the Rhode Island Legislature
to: (i) unconditionally amend the legislative charter of Valley to expressly and
unconditionally approve and authorize the Valley Merger, (ii) unconditionally
amend the legislative charter of Bristol to expressly and unconditionally
approve and authorize the Bristol Merger, (iii) expressly and unconditionally
approve and authorize the Company Merger, and (iv) expressly and unconditionally
permit Parent to qualify to do business in Rhode Island in accordance with the
RIBCA, notwithstanding contrary provisions of Section 7-1.1-3 and Section
7-1.1-99 (collectively, the "Legislative Actions"). All Legislative Actions
shall be in form and substance reasonably acceptable to Parent. The Company
shall, and shall cause its Subsidiaries to, cooperate with Parent to effect the
Legislative Actions as soon as practicable after the date of this Agreement.
Section 6.2 Covenant of the Company; Alternative Proposals. (a) From and
after the date hereof, the Company agrees (i) that it will not, its Subsidiaries
will not, and it will not authorize or permit any of its or its Subsidiaries'
officers, directors, employees, agents and representatives (including, without
limitation, any investment banker, financial advisor, attorney or accountant
retained by it or any of its Subsidiaries or any of the foregoing) to, directly
or indirectly, encourage, initiate or solicit (including by way of furnishing
information) or take any other action designed or which could be reasonably
expected to facilitate any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders) which
constitutes or may reasonably be expected to lead to an Alternative Proposal (as
defined below) from any person or engage in any discussion or negotiations
concerning, or provide any non-public information or data to make or implement
or otherwise in any way cooperate or facilitate the making of an Alternative
Proposal; (ii) that it will immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussions or
negotiations with any parties conducted heretofore with a view of formulating an
Alternative Proposal; and (iii) that it will notify Parent orally and in writing
of any such inquiry, offer or proposals, within one business day of the receipt
thereof, and that it shall keep Parent informed of the status of any such
inquiry, offer or proposal; provided, however, that notwithstanding any other
provision hereof, the Company may (1) at any time prior to the time at which the
Company Shareholders' Approval shall have been obtained, engage in discussions
or negotiations with a third party who (without solicitation in violation of the
terms of this Agreement) seeks to initiate such discussions or negotiations and
may furnish such third party information concerning the Company and its
business, properties and assets if, and only to the extent that, (A) (x) the
third party has first made an Alternative Proposal that, in the good faith
judgment of the Company's Board of Directors (after consulting with its
financial and legal advisors) is financially superior to the Company's
shareholders than the Merger and has demonstrated that it will have adequate
sources of financing to consummate such Alternative Proposal, and (y) the Board
of Directors of the Company shall conclude in good faith, based upon the advice
of outside counsel and such other matters as the Board of Directors of the
Company deems relevant, that such actions are necessary for the Company's Board
of Directors to act in a manner consistent with its fiduciary duties to
shareholders under applicable law, and (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Company (x) provides at least two business days' prior written notice to
Parent to the effect that it intends to furnish information to, or intends to
enter into discussions or negotiations with, such person or entity, and of the
identity of the person or group making the Alternative Proposal and the material
terms thereof, including a copy of any offer or proposal submitted in writing,
and (y) receives from such person an executed confidentiality agreement
containing the same terms and conditions as the Confidentiality Agreement (as
defined in Section 7.1) except that such confidentiality agreement shall not
prohibit such person from making an unsolicited Alternative Proposal, and (2)
comply with Rule 14e-2 promulgated under the Exchange Act with regard to a
tender or exchange offer. "Alternative Proposal" shall mean any merger,
acquisition, consolidation, reorganization, business combination, share
exchange, tender offer, exchange offer or similar transaction involving the
Company or any of the Company's Subsidiaries, or any proposal or offer to
acquire in any manner, directly or indirectly, a material equity interest in or
a material portion of the assets of the Company or any of the Company's
Subsidiaries, including any single or multi-step transaction or series of
related transactions.
(b) Neither the Board of Directors of the Company nor any committee thereof
may, (i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by the Board of
Directors of the Company or such committee of the Merger or this Agreement, (ii)
approve or recommend or propose publicly to approve or recommend an Alternative
Proposal or (iii) cause the Company or any of its Subsidiaries to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Alternative Proposal. Notwithstanding the foregoing,
prior to the time at which the Company Shareholders' Approval has been obtained,
in response to an Alternative Proposal (without solicitation in violation of the
terms of this Agreement) from a third party, if the Board of Directors of the
Company determines, in its good faith judgment, after consultation with and the
receipt of the advice of its financial advisor and outside counsel, that such
proposal is financially superior to the Company's shareholders than the Merger
and that failure to do any of the actions set forth in clauses (i), (ii) or
(iii) above of this Section 6.2(b) would create a reasonable possibility of a
breach of the fiduciary duties of the Company's Board of Directors under
applicable law, the Board of Directors of the Company may (i) withdraw or modify
its approval or recommendation of the Merger or this Agreement, approve or
recommend an Alternative Proposal or cause the Company to enter into an
Alternative Proposal and (ii) negotiate with a third party with respect to such
Alternative Proposal, and subject to the Company having paid to Parent the fees
described in Section 9.3 hereof and having entered into a definitive agreement
with respect to such Alternative Proposal, terminate this Agreement; provided,
however, that prior to entering into a definitive agreement with respect to an
Alternative Proposal, the Company shall give Parent at least five (5) days'
notice thereof, and shall cause its representatives to negotiate with Parent to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms; provided, further, that if the Company and Parent are unable to
reach an agreement on such adjustments within five (5) days after such notice
from the Company, the Company may enter into such definitive agreement, subject
to the provisions of Article IX.
Section 6.3 Employment Agreement. Parent and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ have
entered into an employment agreement in the form attached hereto as Exhibit A
(the "Employment Agreement"), which will become effective upon consummation of
the Merger.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information.
(a) Upon reasonable notice and during normal business hours, the Company
shall, and shall cause its Subsidiaries to, afford to the officers, directors,
employees, accountants, counsel, investment bankers, financial advisors and
other representatives of Parent reasonable access, throughout the period prior
to the Effective Time, to all of its and its Subsidiaries' properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and during such period, the Company shall, and shall cause its Subsidiaries to,
furnish promptly to Parent access to each report, schedule and other document
filed or received by it or any of its Subsidiaries pursuant to the requirements
of federal or state securities laws or filed with or sent to the SEC, the
Department of Justice, the Federal Trade Commission or any other federal or
state regulatory agency or commission. Each party shall, and shall cause its
Subsidiaries to, afford to the officers, directors, employees, accountants,
counsel, investment bankers and other representatives of the other reasonable
access to all information concerning themselves, their subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably requested
by the other party in connection with any filings, applications or approvals
required or contemplated by this Agreement. Each party shall, and shall cause
its Subsidiaries and representatives to, hold in strict confidence all
Information (as defined in the Confidentiality Agreement) concerning the other
parties furnished to it in connection with the transactions contemplated by this
Agreement in accordance with Confidentiality Agreement dated November 1, 1999
between the Company and Parent, as it may be amended from time to time (the
"Confidentiality Agreement").
(b) As promptly as practicable after Parent's request, the Company will
furnish such financial and operating data and other information pertaining to
the Company or its Subsidiaries and their businesses and assets as Parent may
reasonably request; provided, however, that nothing herein will obligate the
Company or any of its Subsidiaries to take actions that would unreasonably
disrupt its ordinary course of business or violate the terms of any legal
requirement or Contract to which the Company or its Subsidiary is a party or to
which any of its assets is subject in providing such information, or to incur
any costs with respect to Parent's external auditors (or the Company's or its
Subsidiaries' external auditors in the event a report by such auditors is
requested by Parent) providing accounting services with respect to issuing an
auditor's report required by or for Parent.
Section 7.2 Proxy Statement.
(a) (i) As soon as practicable after the date hereof, the Company shall
take such reasonable steps as are necessary for the prompt preparation and
filing with the SEC of a proxy statement relating to the Company Special Meeting
(as defined in Section 7.4(a)) (together with any amendments thereto or
supplements thereto, the "Proxy Statement"). Each of Parent and the Company
shall furnish all information concerning it, its officers and directors, and the
holders of its capital stock as the other may reasonably request in connection
with the preparation and filing of the Proxy Statement. The Company will use all
commercially reasonable efforts to cause the Proxy Statement to be cleared by
the SEC as promptly as practicable after filing and as promptly as practicable
after such clearance, the Company shall mail the Proxy Statement to its
shareholders entitled to notice of and to vote at the Company Special Meeting.
As promptly as practical after consultation between Parent and the Company, the
Company shall respond to any comments made by the SEC with respect to the Proxy
Statement.
(ii) The Company agrees that information supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement shall not,
at the date of the mailing of the Proxy Statement (or any supplement
thereto) and at the time of the Company Special 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 Company Special Meeting any event or
circumstance relating to the Company or any of its Subsidiaries, or its or
their respective officers or directors, should be discovered by the Company
that should be set forth in a supplement to the Proxy Statement, the
Company shall promptly inform Parent. All documents that the Company is
responsible for filing with the SEC in connection with the transactions
contemplated hereby shall comply as to form in all material respects with
the applicable requirements of the Securities Act and the regulations
thereunder and the Exchange Act and the regulations thereunder.
(iii) Parent agrees that information supplied by Parent for inclusion
or incorporation by reference in the Proxy Statement shall not, at the date
of the mailing of the Proxy Statement (or any supplement thereto) or at the
time of the Company Special 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 are made, not misleading. If at any
time prior to the Company Special Meeting any event or circumstance
relating to Parent or any of its Subsidiaries, or to their respective
officers or directors, should be discovered by Parent that should be set
forth in a supplement to the Proxy Statement, Parent shall promptly inform
the Company.
(iv) No representation, warranty, covenant or agreement is made by or
on behalf of the Company with respect to information supplied by any other
person other than its Subsidiaries for inclusion in the Proxy Statement. No
representation, warranty, covenant or agreement is made by or on behalf of
Parent with respect to information supplied by any other person for
inclusion in the Proxy Statement. No filing of, or amendment or supplement
to, the Proxy Statement shall be made by the Company without providing
Parent with the opportunity to review and comment thereon; provided,
however, that no such filing, amendment or supplement (i) that relates to
Parent or any of its Subsidiaries or (ii) that is reasonably likely to have
a material adverse effect on Parent or any of its Subsidiaries, shall be
made without Parent's prior written approval. If at any time prior to the
Company Special Meeting any information relating to any party hereto or any
of their respective officers, directors, shareholders or Subsidiaries,
should be discovered by any party hereto which should be set forth in an
amendment or supplement to the Proxy Statement so that the Proxy Statement
would not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and
an appropriate amendment or supplement describing such information shall be
promptly prepared, filed with the SEC and, to the extent required by law,
disseminated to the shareholders of the Company.
(b) Letter of the Company's Accountant. Following receipt by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, the Company's independent auditor, of an appropriate request from the
Company pursuant to SAS No. 72, the Company shall use its best efforts to cause
to be delivered to Parent a letter of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP dated a date within two
business days before the date of the Proxy Statement, and addressed to Parent,
in form and substance reasonably satisfactory to Parent and customary in scope
and substance for the "cold comfort" letters delivered by independent public
accountants in connection with proxy statements similar to the Proxy Statement.
Section 7.3 Regulatory Matters. Each party hereto shall cooperate and use
its commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain no
later than the Initial Termination Date (as defined in Section 9.1(b)), as such
date may be extended pursuant to Section 9.1(b), all necessary permits,
consents, approvals and authorizations of all Governmental Authorities necessary
or advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, the Company Required Statutory Approvals, the
Parent Required Statutory Approvals and the Legislative Actions. Notwithstanding
anything to the contrary contained in this Agreement, including this Section
7.3, neither Parent, nor any of Parent's Affiliates shall be required to divest
themselves of any of their respective assets or properties or agree to limit the
ownership or operation by Parent or any of Parent's Affiliates of any assets
including any of the assets of the Company and its Subsidiaries and Joint
Ventures.
Section 7.4 Company Shareholders' Approval.
(a) Company Special Meeting. Subject to the provisions of Section 7.4(b),
the Company shall, as soon as reasonably practicable after the date hereof (i)
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Special Meeting") for the purpose of
securing the Company Shareholders' Approval, (ii) distribute to its shareholders
the Proxy Statement in accordance with applicable federal and state law and with
its articles of incorporation and by-laws, (iii) subject to the fiduciary duties
of its Board of Directors, recommend to its shareholders the approval of this
Agreement and the transactions contemplated hereby, (iv) solicit from its
shareholders proxies in favor of the Merger and take all other action reasonably
necessary, or, in the reasonable opinion of Parent, advisable to secure the
Company Shareholders' Approval, and (v) cooperate and consult with Parent with
respect to each of the foregoing matters.
(b) Meeting Date. The Company Special Meeting for the purpose of securing
the Company Shareholders' Approval shall be held on such date as the Company and
Parent shall mutually determine.
Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification and Insurance. For a period of six years after the
Effective Time, Parent will indemnify and hold harmless the present and former
officers and directors of the Company and its Subsidiaries (the "Indemnified
Parties") in respect of acts or omissions occurring prior to the Effective Time
to the extent provided under the Company's articles of incorporation and by-laws
in effect on the date hereof; provided, however, that if any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of such claims shall continue until the final disposition of any and all
such claims. For six years after the Effective Time, Parent will use its
reasonable best efforts to provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time covering
each such person currently covered by the Company's officers' and directors'
liability insurance policy on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof; provided,
however, that in satisfying its obligation under this Section, if the annual
premiums of such insurance coverage exceed 200% of the previous year's premiums,
Parent will be obligated to obtain a policy with the best coverage available, in
the reasonable judgment of the Board of Directors of Parent, for a cost not
exceeding such amount.
(b) Successors. In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then and in either such case, proper provisions must be made so that the
successors and assigns of Parent will assume the obligations set forth in this
Section 7.5.
(c) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of the date
hereof in favor of the employees, agents, directors and officers of the Company
and its Subsidiaries with respect to their activities as such prior to the
Effective Time, as provided in its respective articles of incorporation and
by-laws in effect on the date hereof, or otherwise in effect on the date hereof,
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time (or in the event any
relevant claim is asserted or made within such six-year period, until final
disposition of such claim).
(d) Benefit. The provisions of this Section 7.5 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (a) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by an authorized officer of Parent stating
the Parent Disclosure Schedule is being delivered pursuant to this Section
7.6(a), and (b) the Company has delivered to Parent a schedule (the "Company
Disclosure Schedule"), accompanied by a certificate signed by an authorized
officer of the Company stating the Company Disclosure Schedule is being
delivered pursuant to this Section 7.6(b). The Company Disclosure Schedule and
the Parent Disclosure Schedule are collectively referred to herein as the
"Disclosure Schedules." The Disclosure Schedules constitute an integral part of
this Agreement and modify the respective representations, warranties, covenants
or agreements of the parties hereto contained herein to the extent that such
representations, warranties, covenants or agreements expressly refer to the
Disclosure Schedules. Anything to the contrary contained herein or in the
Disclosure Schedules notwithstanding, any and all statements, representations,
warranties or disclosures set forth in the Disclosure Schedules shall be deemed
to have been made on and as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's disclosure
obligations imposed by law or the applicable regulations of any securities
exchange upon which such party's securities are listed, the Company and Parent
will cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this Agreement
or any of the transactions contemplated hereby and shall not issue any public
announcement or statement with respect hereto without the consent of the other
party (which consent shall not be unreasonably withheld).
Section 7.8 Certain Employee Agreements. Subject to Section 7.9, Parent
shall assume all contracts, agreements and collective bargaining agreements of
the Company and its Subsidiaries which apply to any current or former employee
or current or former director of the Company or any of its Subsidiaries;
provided, however, that the foregoing shall not prevent Parent from enforcing
such contracts, agreements and collective bargaining agreements in accordance
with their terms, including, without limitation, any reserved right to amend,
modify, suspend, revoke or terminate any such contract, agreement or collective
bargaining agreement. It is the present intention of Parent and the Company that
following the Effective Time there will be no involuntary reductions in force at
the Company or its Subsidiaries, but that Parent will achieve workforce
reductions through attrition; however, Parent reserves the right to respond as
it deems appropriate based on business conditions and regulatory environments.
If reductions in workforce in respect of employees of the Company and its
Subsidiaries become necessary, they shall be made on a fair and equitable basis,
in light of the circumstances and the objectives to be achieved, giving
consideration to previous work history, job experience, qualifications, and
business needs, and any employees whose employment is terminated or jobs are
eliminated by Parent shall be entitled to participate on a fair and equitable
basis in the job posting programs offered by Parent. Any workforce reductions
carried out following the Effective Time by Parent shall be done in accordance
with all applicable collective bargaining agreements, and all applicable laws
and regulations governing the employment relationship and termination thereof
including, without limitation, the Worker Adjustment and Retraining Notification
Act and regulations promulgated thereunder, and any comparable state or local
law.
Section 7.9 Employee Benefit Plans.
(a) Except as may be required by applicable law, each Plan in effect on the
date hereof (or as amended or established in accordance with or as permitted by
this Agreement) shall be maintained in effect with respect to the employees,
former employees, directors or former directors of the Company and any of its
Subsidiaries who are covered by such plans, programs, agreements or arrangements
immediately prior to the Effective Time until Parent determines otherwise on or
after the Effective Time, and Parent shall assume as of the Effective Time each
Plan maintained by the Company immediately prior to the Effective Time and
perform such plan, program, agreement or arrangement in the same manner and to
the same extent that the Company would be required to perform thereunder;
provided, however, that nothing herein contained shall limit any reserved right
contained in any such Plan to amend, modify, suspend, revoke or terminate any
such plan, program, agreement or arrangement; provided, further, that, except as
may be required by applicable law, Parent or its Subsidiaries shall provide to
the employees of the Company and its Subsidiaries who are employed immediately
prior to the Effective Time and who are not covered by a collective bargaining
agreement ("Covered Company Employees") for a period of no less than 24 months
following the Effective Time, base salary levels, bonus opportunity levels and
employer-provided benefits under Qualified Plans, supplemental retirement
benefit plans which are not Qualified Plans and welfare plans that are
comparable in the aggregate to those provided immediately prior to the Effective
Time. Without limiting the foregoing, each Covered Company Employee who is a
participant in any Plan shall receive credit for purposes of eligibility to
participate, vesting and eligibility to receive benefits (but specifically
excluding for benefit accrual purposes) under any replacement benefit plan of
Parent or any of its Subsidiaries or Affiliates in which such employee becomes a
participant for service credited for the corresponding purpose under any such
Plan, unless such crediting of service would operate to cause any such plan or
agreement to fail to comply with the applicable provisions of the Code and ERISA
or other applicable law. Notwithstanding the foregoing, but subject to Section
7.9(b), Parent acknowledges that each Covered Company Employee who is a
participant in the Valley Gas Company Supplemental Retirement Plan (the "SERP")
as of the date hereof shall continue to accrue benefits for 24 months after the
Effective Time under terms at least as favorable as the terms of the SERP in
effect on the date of this Agreement, taking into account service and
compensation earned while employed by Parent and its Subsidiaries after the
Effective Time. After the 24 months immediately following the Effective Time,
Parent agrees to maintain during the next 24-month period, for Covered Company
Employees who continue their service with Parent, base salary levels, bonus
opportunity and employer-provided benefits under Qualified Plans, supplemental
retirement benefit plans which are not Qualified Plans and welfare plans that
are appropriate for the market given Parent's financial circumstances, the
industry in which it operates, and regulatory considerations. No provision
contained in this Section 7.9 shall be deemed to constitute an employment
contract between Parent or any of its Subsidiaries and any individual, or a
waiver of Parent's or any of its Subsidiaries' right to discharge any employee
at any time, with or without cause.
(b) The Company shall take all necessary actions so that, effective no
later than immediately before the date the Company Shareholders' Approval is
obtained, (i) each of the SERP, the ▇▇▇▇▇▇ Merchants, Inc. Executive Deferred
Compensation Plan and all other executive benefit plans and programs of the
Company and its Subsidiaries shall be amended to the extent necessary so that
any provisions therein that prohibit or limit the amendment or termination
thereof following a change of control do not apply to individuals who are not
participants therein as of the date of this Agreement and (ii) subject to
applicable law and the provisions of any applicable collective bargaining
agreement, each Qualified Plan shall be amended to the extent necessary so that
any provisions therein that call for the waiver or elimination of vesting
requirements upon or following a change in control shall apply only to
individuals who are participants therein immediately before the Effective Time.
Section 7.9(b) of the Company Disclosure Schedule sets forth a list of all Plans
which contain provisions that either (x) prohibit or limit the amendment or
termination thereof following a change of control, or (y) call for the waiver or
elimination of vesting requirements upon a change of control.
(c) Parent will permit each of the Covered Company Employees to carry
forward all days of sick leave accrued prior to the Effective Time.
(d) For a 5-year period from the Effective Time, Parent agrees to provide
retiree medical plan coverage which is substantially comparable to the coverage
under the Company retiree medical plan as of the date hereof, subject to
Parent's right to adjust copayment and cost sharing provisions (which may be
continued in the same proportions to the Company-provided portions of cost) to
any former Covered Company Employee (and his or her eligible dependents) who is
currently receiving such benefits thereunder, or any active Covered Company
Employee (and his or her eligible dependents) who would be eligible for such
benefits if he or she retired on the Effective Time (or who, within 5 years of
the Effective Time, retires and is eligible to receive benefits thereunder).
Section 7.10 Company Stock Plans. With respect to each Plan that provides
for benefits in the form of Company Common Stock ("Company Stock Plans"), the
Company and Parent shall take all corporate action necessary or appropriate to
(i) provide for the issuance or purchase in the open market of common stock of
Parent rather than Company Common Stock, pursuant thereto, and otherwise to
amend such Company Stock Plans to reflect this Agreement and the Merger, (ii)
obtain shareholder or board of director approval with respect to such Company
Stock Plans to the extent such approval is required for purposes of the Code or
other applicable law, or to enable such Company Stock Plans to comply with Rule
16b-3 promulgated under the Exchange Act, (iii) reserve for issuance under such
Company Stock Plans or otherwise provide a sufficient number of shares of Parent
Common Stock for delivery upon payment of benefits, grant of awards or exercise
of options under such Company Stock Plans and (iv) as soon as practicable after
the Effective Time, file registration statements on Form S-8 (or any successor
or other appropriate forms), with respect to the shares of Parent Common Stock
subject to such Company Stock Plans to the extent such registration statement is
required under applicable law, and Parent shall use its best efforts to maintain
the effectiveness of such registration statements (and maintain the current
status of the prospectuses contained therein) for so long as such benefits and
grants remain payable and such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, the Company shall
administer the Company Stock Plans, where applicable, in a manner that complies
with Rule 16b-3 promulgated under the Exchange Act. This Section 7.10 shall not
limit any reserved right contained in any Plan to amend, modify, suspend, revoke
or terminate any such plan, program, agreement or arrangement.
Section 7.11 Expenses. Subject to Section 9.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 7.12 Further Assurances. Each party will, and will cause its
Subsidiaries to, execute such further documents and instruments and, subject to
the last sentence of Section 7.3 take such further actions as may reasonably be
requested by any other party in order to consummate the Mergers in accordance
with the terms hereof.
Section 7.13 Community Involvement. For two years after the Effective Time,
Parent will make at least $60,000 per year in charitable contributions to the
communities served by the Company prior to the Merger and otherwise maintain a
substantial level of involvement in community activities in the State of Rhode
Island that is similar to, or greater than, the level of community development
and related activities carried on by the Company.
Section 7.14 Financial Statements to be Provided. Upon Parent's request,
the Company shall (i) provide to Parent audited and unaudited financial
statements required to be included in (a) the proxy statements and the
registration statement contemplated by the Agreement of Merger, dated as of
October 4, 1999, by and between Parent and Fall River Gas Company and (b) the
proxy statement contemplated by the Agreement and Plan of Merger, dated as of
November 15, 1999, by and between Parent, ▇▇▇ Acquisition Corporation and
Providence Energy Corporation, and (ii) cause its independent accountants to
deliver to Parent, Fall River Gas Company and Providence Energy Corporation the
required consents in connection therewith.
Section 7.15 Officers of Valley Division. From the Effective Time until the
earlier of their resignation, removal by Parent, or reassignment by Parent in
the event of a restructuring of the Valley Division, the following individuals
shall serve the Valley Division of the New England Business Unit of Parent in
the following capacities:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as President and Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Vice President, Operations
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Vice President, Information Systems and Corporate Planning
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as Vice President, Chief Financial Officer and Treasurer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Vice President, Marketing and Development
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Assistant Vice President, Human Resources
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Assistant Vice President, Operations
▇▇▇▇ ▇. ▇▇▇ as Assistant Vice President, Gas Supply
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Assistant Vice President and Chief Engineer
Parent expressly reserves the right to restructure the operations of the
Valley Division or the New England Business Unit at any time and from time to
time in any manner that it deems appropriate in its sole discretion.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Mergers.
The respective obligations of each party to effect the Mergers shall be subject
to the satisfaction at or prior to the Closing of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5 by the joint action of the parties
hereto:
(a) Shareholder Approval. The Company Shareholders' Approval shall have
been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of the Mergers shall have been issued and be continuing in effect,
and the Mergers and the other transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation.
Section 8.2 Conditions to Obligation of Parent to Effect the Mergers. The
obligation of Parent to effect the Mergers shall be further subject to the
satisfaction, at or prior to the Closing, of the following conditions, except as
may be waived by Parent in writing pursuant to Section 9.5:
(a) Performance of Obligations of the Company. The Company (and its
appropriate Subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be true and correct (i) on and as
of the date hereof and (ii) on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time other than the date hereof or the Closing
Date, which need only be true and correct as of such date or time) except in the
case of clauses (i) and (ii) for such failures of representations or warranties
to be true and correct (without regard to any materiality qualifications
contained in any of such representations or warranties) which, individually and
in the aggregate, would not be reasonably likely to result in a Company Material
Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate signed
by an authorized officer of the Company, dated the Closing Date, to the effect
that the conditions set forth in Section 8.2(a) and Section 8.2(b) of this
Agreement have been satisfied.
(d) Statutory Approvals. The Company Required Statutory Approvals, the
Parent Required Statutory Approvals and all other approvals, consents, opinions
or rulings of Governmental Authorities required in order to consummate the
transactions contemplated hereby, shall have been obtained, such approvals shall
have become Final Orders (as defined below) and such Final Orders shall not
impose terms or conditions which, individually or in the aggregate, would be
reasonably likely to have a Company Material Adverse Effect or a material
adverse effect on the business, operations, properties, financial condition or
results of operation of Parent, or which would otherwise, in the reasonable
determination of Parent, be unduly burdensome to Parent in a manner that would
be, individually or in the aggregate, reasonably likely to have, a Company
Material Adverse Effect or a material adverse effect on the business,
operations, properties, financial condition or results of operation of Parent. A
"Final Order" means an action by a Governmental Authority as to which: (a) no
request for stay of the action is pending, no such stay is in effect and if any
time period is permitted by statute or regulation for filing any request for
such stay, such time period has passed; (b) no petition for rehearing,
reconsideration or application for review of the action is pending and the time
for filing any such petition or application has passed; (c) such Governmental
Authority does not have the action under reconsideration on its own motion and
the time in which such reconsideration is permitted has passed; and (d) no
appeal to a court, or a request for stay by a court of the Governmental
Authority's action is pending or in effect and the deadline for filing any such
appeal or request has passed. The applicable waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, with respect
to the transactions contemplated hereby, shall have expired or been terminated.
(e) No Company Material Adverse Effect. No Company Material Adverse Effect
shall have occurred, and there shall exist no fact or circumstance other than
facts and circumstances disclosed in the Company SEC Reports delivered to Parent
prior to the date of this Agreement which is reasonably likely to have a Company
Material Adverse Effect.
(f) Company Required Consents. Each of the Company Required Consents shall
have been obtained to the reasonable satisfaction of Parent, other than any such
consents which, if not obtained, are not, individually or in the aggregate,
reasonably likely to result in a Company Material Adverse Effect after the
Closing. In addition, all consents and approvals required under the terms of any
note, bond or indenture listed in Section 4.4(b) of the Company Disclosure
Schedule to which the Company or any of its Subsidiaries is a party, shall have
been obtained.
(g) Resignations. Each director of the Company, and each director of the
Subsidiaries of the Company, shall resign or retire as a director of the
applicable entity effective as of the Effective Time in accordance with such
entity's organizational documents and applicable provisions of the RIBCA or
other applicable state law, as the case may be; provided, however, that such
resignations (but not retirements) shall not cause the termination of any such
person's employment as an employee of the Company or its Subsidiaries.
(h) Tax Good Standing. Letters of Tax Good Standing shall have been
obtained for the Company and its Subsidiaries from the Rhode Island Department
of Taxation.
(i) Company Bondholders' Consent. All holders of each series of First
Mortgage Bonds issued and outstanding under the Indenture of First Mortgage,
dated as of December 15, 1992, between Valley, the Company, as Guarantor, and
State Street Bank and Trust Company, as Trustee, and all holders of each series
of debentures issued and outstanding under the Indenture between the Company and
Mellon Bank, N.A., dated as of September 1, 1997, each as amended or
supplemented from time to time, shall have consented to such amendments to such
Indentures as requested by Parent.
(j) Legislative Actions. The Legislative Actions shall have been completed.
Section 8.3 Conditions to Obligation of the Company to Effect the Mergers.
The obligation of the Company to effect the Mergers shall be further subject to
the satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by the Company in writing pursuant to Section 9.5:
(a) Performance of Obligations of Parent. Parent shall have performed in
all material respects its agreements and covenants contained in or contemplated
by this Agreement to be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement shall be true and correct (i) on and as of
the date hereof and (ii) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time other than the date hereof or the Closing
Date, which need only be true and correct as of such date or time) except in the
case of clauses (i) and (ii) for such failures of representations or warranties
to be true and correct (without regard to any materiality qualifications
contained in any of such representations and warranties) which, in the
aggregate, would not be reasonably likely to result in a Parent Material Adverse
Effect.
(c) Statutory Approvals. The Company Required Statutory Approvals and the
Parent Required Statutory Approvals shall have been obtained. The applicable
waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, with respect to the transactions contemplated hereby, shall have
expired or been terminated.
(d) Closing Certificates. The Company shall have received a certificate
signed by an authorized officer of Parent, dated the Closing Date, to the effect
that the conditions set forth in Section 8.3(a) and Section 8.3(b) of this
Agreement have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the shareholders of the
Company contemplated by this Agreement:
(a) by mutual written consent of the Company and Parent;
(b) by any party hereto, by written notice to the other parties, if the
Effective Time shall not have occurred on or before the date that is 15 months
from the date hereof (the "Initial Termination Date"); provided, however, that
if on the Initial Termination Date the conditions to the Closing set forth in
Section 8.2(d), 8.3(c) or 8.2(j) shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Initial Termination Date shall be extended to the 18-month
anniversary of the date hereof; and provided, further, that the right to
terminate this Agreement under this Section 9.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement or whose
breach of any agreement or covenant has been the cause of, or resulted directly
or indirectly in, the failure of the Effective Time to occur on or before the
Initial Termination Date or as it may be so extended;
(c) by any party hereto, by written notice to the other parties, if the
Company Shareholders' Approval shall not have been obtained at a duly held
Company Special Meeting, including any adjournments thereof, by the Initial
Termination Date;
(d) by any party hereto, by written notice to the other parties if any
state or federal law, order, rule or regulation is adopted or issued, which has
the effect of prohibiting the Mergers, or by any party hereto if any court of
competent jurisdiction in the United States or any State shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Mergers, and such order, judgment or decree shall have become
final and nonappealable;
(e) by the Company prior to the time at which the Company Shareholders'
Approval shall have been obtained, upon five days' prior written notice to
Parent, if the Board of Directors of the Company determines in good faith that
termination of this Agreement is necessary for the Board of Directors of the
Company to act in a manner consistent with its fiduciary duties to shareholders
under applicable law by reason of an Alternative Proposal meeting the
requirements of Section 6.2 having been made; provided that
(A) the Board of Directors of the Company shall determine based on
advice of outside counsel with respect to the Board of Directors' fiduciary
duties that notwithstanding a binding commitment to consummate an agreement of
the nature of this Agreement entered into in the proper exercise of its
applicable fiduciary duties, and notwithstanding all concessions which may be
offered by Parent in negotiation entered into pursuant to Section 6.2(b), it is
necessary pursuant to such fiduciary duties that the directors reconsider such
commitment as a result of such Alternative Proposal;
(B) the other provisions of Section 6.2(b) have been complied with by
the Company; and
(C) the Company's ability to terminate this Agreement pursuant to
Section 9.1(e) is conditioned upon the payment by the Company to Parent of the
amounts owed by it pursuant to Section 9.3;
(f) by the Company, by written notice to Parent, if (i) there exist
breaches of the representations and warranties of Parent made herein as of the
date hereof which breaches, individually or in the aggregate, would or would be
reasonably likely to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by Parent of
notice in writing from the Company, specifying the nature of such breaches and
requesting that they be remedied, or (ii) Parent shall have failed to perform
and comply with, in all material respects, its agreements and covenants
hereunder, and such failure to perform or comply shall not have been remedied
within 20 days after receipt by Parent of notice in writing from the Company,
specifying the nature of such failure and requesting that it be remedied;
(g) by Parent, by written notice to the Company, if (i) there exist
breaches of the representations and warranties of the Company made herein as of
the date hereof which breaches, individually or in the aggregate, would or would
be reasonably likely to result in a Company Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by the
Company of notice in writing from Parent, specifying the nature of such breaches
and requesting that they be remedied, (ii) the Company (or its appropriate
Subsidiaries) shall not have performed and complied with its agreements and
covenants contained in Sections 6.1(b) and 6.1(c) or shall have failed to
perform and comply with, in all material respects, its other agreements and
covenants hereunder, and such failure to perform or comply shall not have been
remedied within 20 days after receipt by the Company of notice in writing from
Parent, specifying the nature of such failure and requesting that it be
remedied, or (iii) the Board of Directors of the Company or any committee
thereof (A) shall withdraw or modify or proposes to withdraw or modify in any
manner adverse to Parent its approval or recommendation of this Agreement or the
transactions contemplated hereby, (B) shall fail to reaffirm such approval or
recommendation upon Parent's request within two days of such request, (C) shall
approve or recommend any acquisition of the Company or any of its Subsidiaries
or a material portion of their respective assets or any tender offer for the
shares of capital stock of the Company or any of its Subsidiaries or any other
Alternative Proposal, in each case by a party other than Parent or any of its
Affiliates, (D) causes the Company or any of its Subsidiaries to enter into a
definitive agreement related to the Alternative Proposal or (E) shall resolve to
take any of the actions specified in clause (A), (B), (C) or (D); or
(h) by Parent, by written notice to Company, if a third party, including a
group (as defined under the Exchange Act), acquires securities representing
greater than 50% of the voting power of the outstanding voting securities of
Company.
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent pursuant to Section 9.1, there shall
be no liability on the part of any party or its Affiliates, shareholders,
officers or directors, agents or other representatives hereunder; provided,
however, that (i) any fee payable under Section 9.3 is paid to Parent and (ii)
no such termination shall relieve any party of liability for any claims, damages
or losses suffered by the other party as a result of the negligent or willful
failure of a party to perform any obligations required to be performed by it
hereunder on or prior to the date of termination and (iii) the agreement
contained in the last sentence of Section 7.1(a) and Sections 7.11, 9.3, 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.9 and 10.10 shall survive any termination of
this Agreement.
Section 9.3 Termination Fee; Expenses.
(a) The Company shall pay Parent a fee of $5.0 million in cash
("Termination Fee") upon the termination of this Agreement by the Company
pursuant to Section 9.1(e) or by Parent pursuant to Section 9.1(g)(iii) or
9.1(h).
(b) Liquidated Damages; Prompt Payment. The parties agree that the
agreements contained in this Section 9.3 are an integral part of the
transactions contemplated by the Agreement and constitute liquidated damages and
not a penalty. If the Company fails to pay promptly to Parent the fee due under
Section 9.3, in addition to any amounts paid or payable pursuant to Section 9.3,
the Company shall pay the costs and expenses (including legal fees and expenses)
in connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the amount of
any unpaid fee at the prime rate published in The Wall Street Journal on the
date (or preceding business day if such date is not a business day) such fee was
required to be paid, compounded on a daily basis using a 360-day year.
Section 9.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the shareholders of the Company and prior to the Effective Time, but after such
approvals, no such amendment shall (a) alter or change the amount of the Merger
Consideration, or (b) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate, would
materially adversely affect the rights of holders of Company capital stock,
except for alterations or changes that could otherwise be adopted by the Board
of Directors of the Company, without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such party.
Except as otherwise expressly provided in this Agreement, neither the failure
nor any delay on the part of any party to exercise any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise or waiver of any such right, power or privilege preclude any other or
further exercise thereof, or the exercise of any other right, power or privilege
available to each party at law or in equity.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-survival. All representations, warranties and agreements
in this Agreement shall not survive the Merger, except as otherwise provided in
this Agreement and except for the agreements contained in this Section 10.1, in
Articles I and II and in Sections 7.5, 7.11, 9.3, 10.3, 10.4, 10.5, 10.6, 10.7,
10.8, 10.9 and 10.10.
Section 10.2 Brokers. The Company represents and warrants that, except for
PaineWebber Incorporated whose fees have been disclosed to Parent prior to the
date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Mergers or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company or any of its Subsidiaries. Parent represents and
warrants that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Mergers or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
Section 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (a) delivered personally, (b) sent by
reputable overnight courier service on the business day after mailing, (c)
telecopied (which is confirmed) (if confirmed during business hours) at the time
of such confirmation or (if confirmed outside of business hours) the next
business day or (d) mailed by registered or certified mail (return receipt
requested) five days after being so mailed, in each case to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) If to the Company, to:
Valley Resources, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
P.O. Box 7900
Cumberland, Rhode Island 06144
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Vice President, Chief Financial Officer,
Secretary and Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Parent or Merger Sub, to:
Southern Union Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Operating Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.4 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
other than the Confidentiality Agreement; and (b) shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties hereto. Any assignment in violation of the terms of this Agreement shall
be null and void ab initio. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York (without regard to its
principles of conflicts of law other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law), including all matters of construction, validity
and performance, except to the extent that the terms and consummation of the
Mergers are subject to the Delaware General Corporation Law or the RIBCA, in
which case such laws shall govern.
Section 10.5 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 10.6 Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective successors
and permitted assigns, and, except for rights of Indemnified Parties as set
forth in Section 7.5, nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 10.8 Waiver of Jury Trial. Each party to this Agreement waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any action, suit or proceeding arising out of this
Agreement.
Section 10.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Rhode Island or in the Southern District of New York in
the county of New York and the borough of Manhattan, or in Rhode Island state
court or in New York state court in the county of New York and the borough of
Manhattan, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
State of Rhode Island or in the Southern District of New York in the county of
New York and the borough of Manhattan, or any Rhode Island state court or in any
New York state court in the county of New York and the borough of Manhattan in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
federal or state court sitting in the State of Rhode Island or in the county of
New York and the borough of Manhattan.
Section 10.10 Construction of Agreement. The terms and provisions of this
Agreement represent the results of negotiations between the parties and their
representatives, each of which has been represented by counsel of its own
choosing, and neither of which has acted under duress or compulsion, whether
legal, economic or otherwise. Accordingly, the terms and provisions of this
Agreement shall be interpreted and construed in accordance with their usual and
customary meanings, and each of the parties hereto hereby waives the application
in connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the party
whose attorney prepared the executed draft or any earlier draft of this
Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
VALLEY RESOURCES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
SOUTHERN UNION COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Operating Officer
SUG ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
