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EXHIBIT A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MARCH 13, 1999
BY AND BETWEEN
EL PASO ENERGY CORPORATION
AND
SONAT INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE I................................................................... 8
Section 1.1 Organization of Merger Sub.................................. 8
Section 1.2 The Parent Merger and Alternative Merger.................... 8
Section 1.3 The Closing; Effective Time................................. 9
Section 1.4 Subsequent Actions.......................................... 9
Section 1.5 Certificate of Incorporation; By-laws; Directors and
Officers of the Surviving Corporation....................... 9
ARTICLE II.................................................................. 10
Section 2.1 Treatment of Common Stock................................... 10
Section 2.2 Cancellation of Excluded Shares............................. 12
Section 2.3 Conversion of Common Stock of Merger Sub.................... 12
Section 2.4 Exchange Agent; Exchange Procedures......................... 12
Section 2.5 Transfer Books; Lost, Stolen or Destroyed Certificates...... 13
Section 2.6 No Fractional Share Certificates; Termination of Exchange
Fund........................................................ 13
Section 2.7 Options..................................................... 14
Section 2.8 Appraisal Rights............................................ 15
Section 2.9 Dividends................................................... 15
Section 2.10 Certain Adjustments......................................... 15
ARTICLE III................................................................. 15
Section 3.1 Organization and Qualification; Subsidiaries................ 15
Section 3.2 Restated Certificate of Incorporation and By-laws........... 16
Section 3.3 Capitalization.............................................. 16
Section 3.4 Power and Authority; Authorization; Valid and Binding....... 16
Section 3.5 No Conflict; Required Filings and Consents.................. 17
Section 3.6 SEC Reports; Financial Statements........................... 17
Section 3.7 Absence of Certain Changes.................................. 18
Section 3.8 Litigation; Liabilities..................................... 19
Section 3.9 Compliance; Permits......................................... 19
Section 3.10 Employee Matters; ERISA..................................... 19
Section 3.11 Labor Matters............................................... 21
Section 3.12 Environmental Matters....................................... 21
Section 3.13 Board Action; Company Rights Agreement; Vote Required....... 23
Section 3.14 Opinion of Financial Advisor................................ 24
Section 3.15 Brokers..................................................... 24
Section 3.16 Tax Matters................................................. 24
Section 3.17 Public Utility Holding Company Act of 1935.................. 24
Section 3.18 Restrictions on Business Activities......................... 24
Section 3.19 Year 2000................................................... 24
Section 3.20 Accounting Matters.......................................... 25
ARTICLE IV.................................................................. 25
Section 4.1 Organization and Qualification; Subsidiaries................ 25
Section 4.2 Restated Certificate of Incorporation and By-laws of
Parent...................................................... 25
Section 4.3 Capitalization.............................................. 26
Section 4.4 Power and Authority; Authorization; Valid and Binding....... 26
Section 4.5 No Conflict; Required Filings and Consents.................. 27
Section 4.6 SEC Reports; Financial Statements........................... 27
Section 4.7 Absence of Certain Changes.................................. 28
Section 4.8 Litigation; Liabilities..................................... 28
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Section 4.9 Compliance; Permits......................................... 29
Section 4.10 Employee Matters; ERISA..................................... 29
Section 4.11 Labor Matters............................................... 31
Section 4.12 Environmental Matters....................................... 31
Section 4.13 Board Action; Vote Required................................. 32
Section 4.14 Opinion of Financial Advisor................................ 32
Section 4.15 Brokers..................................................... 33
Section 4.16 Tax Matters................................................. 33
Section 4.17 Public Utility Holding Company Act of 1935.................. 33
Section 4.18 Restrictions on Business Activities......................... 33
Section 4.19 Year 2000................................................... 33
Section 4.20 Accounting Matters.......................................... 34
ARTICLE V................................................................... 34
Section 5.1 Interim Operations of the Company........................... 34
Section 5.2 Interim Operations of Parent................................ 35
Section 5.3 No Solicitation............................................. 37
ARTICLE VI.................................................................. 38
Section 6.1 Meetings of Stockholders.................................... 38
Section 6.2 Filings; Other Action....................................... 39
Section 6.3 Publicity................................................... 39
Section 6.4 Registration Statements..................................... 39
Section 6.5 Listing Application......................................... 40
Section 6.6 Further Action.............................................. 40
Section 6.7 Expenses.................................................... 40
Section 6.8 Access to Information....................................... 41
Section 6.9 Insurance; Indemnity........................................ 41
Section 6.10 Employee Benefit Plans...................................... 41
Section 6.11 Certain Appointments........................................ 43
Section 6.12 Affiliates.................................................. 43
Section 6.13 Pooling-of-Interests........................................ 43
Section 6.14 Certificate of Designation; Depositary Agreement............ 44
Section 6.15 Takeover Statutes........................................... 44
Section 6.16 Tax-Free Merger............................................. 44
Section 6.17 Name; Headquarters.......................................... 44
Section 6.18 Employment Matters.......................................... 44
Section 6.19 Section 16(b)............................................... 44
Section 6.20 Reasonable Best Efforts..................................... 44
ARTICLE VII................................................................. 46
Section 7.1 Conditions to Obligations of the Parties.................... 46
Section 7.2 Additional Conditions to Obligations of Parent.............. 47
Section 7.3 Additional Conditions to Obligations of the Company......... 47
ARTICLE VIII................................................................ 48
Section 8.1 Termination................................................. 48
Section 8.2 Effect of Termination....................................... 49
Section 8.3 Amendment................................................... 50
Section 8.4 Extension; Waiver........................................... 50
ARTICLE IX.................................................................. 50
Section 9.1 Non-Survival of Representations, Warranties and
Agreements.................................................. 50
Section 9.2 GOVERNING LAW............................................... 51
Section 9.3 Notices..................................................... 51
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Section 9.4 Certain Definitions; Interpretation......................... 51
Section 9.5 Headings.................................................... 52
Section 9.6 Severability................................................ 52
Section 9.7 Assignment; Binding Effect; No Third Party Beneficiaries.... 53
Section 9.8 Enforcement................................................. 53
Section 9.9 Counterparts................................................ 53
Section 9.10 Entire Agreement............................................ 53
EXHIBITS
Exhibit A-1 Form of Initial Certificate of Incorporation of Merger Sub
Exhibit A-2 Form of Initial By-laws of Merger Sub
Exhibit B-1 Form of Restated Certificate of Incorporation of Parent as of the
Effective Time in the event the Parent Merger is consummated
Exhibit B-2 Form of By-laws of Parent
Exhibit C Form of Restated Certificate of Incorporation of the Company as of
the Effective Time in the event the Alternative Merger is
consummated
Exhibit D Form of Depositary Agreement
Exhibit E Form of Certificate of Designation, Preferences and Rights of the
__% Senior Cumulative Exchangeable Preferred Stock of El Paso
Energy Corporation
Exhibit F Form of Affiliate Letter of the Company's Affiliates
Exhibit G Form of Affiliate Letter of Parent's Affiliates
Exhibit H Form of Termination and Consulting Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇.
[These Exhibits have been omitted from the joint proxy statement/prospectus and
are available upon request]
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INDEX OF DEFINED TERMS
DEFINED TERM PAGE NO.
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ACM......................................................... 23
Acquisition Agreement....................................... 37
Acquisition Transaction..................................... 38
Action...................................................... 41
affiliate................................................... 52
Agreement................................................... 7
Alternative Merger.......................................... 8
Alternative Merger Excluded Shares.......................... 11
Alternative Surviving Corporation........................... 8
Applicable Period........................................... 37
Applicable Transaction...................................... 8
Cap Amount.................................................. 41
Certificate of Designation.................................. 11
Closing..................................................... 9
Closing Date................................................ 9
Code........................................................ 7
Common Conversion Number.................................... 11
Company..................................................... 7
Company Certificate......................................... 10
Company Common Stock........................................ 7
Company Defined Benefit Plan................................ 20
Company Designees........................................... 43
Company Disclosure Letter................................... 15
Company Employee Plans...................................... 19
Company Equity Equivalent Security.......................... 16
Company ERISA Affiliate..................................... 20
Company Material Adverse Effect............................. 51
Company Options............................................. 14
Company Permits............................................. 19
Company Preferred Stock..................................... 16
Company Rights Agreement.................................... 16
Company SEC Reports......................................... 18
Company Stock Option Agreement.............................. 7
Company Termination Fee..................................... 49
Confidentiality Agreement................................... 23
control..................................................... 52
Depositary.................................................. 11
Depositary Agreement........................................ 11
Depositary Receipt.......................................... 11
Depositary Share............................................ 11
Depositary Share Conversion Number.......................... 11
DGCL........................................................ 8
DLJ......................................................... 32
DOJ......................................................... 45
Effective Time.............................................. 9
Environmental Costs......................................... 22
Environmental Laws.......................................... 23
Environmental Matter........................................ 22
Environmental Permits....................................... 21
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DEFINED TERM PAGE NO.
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ERISA....................................................... 19
Exchange Act................................................ 17
Exchange Agent.............................................. 12
Exchange Fund............................................... 12
Exchange Ratio.............................................. 10
FERC........................................................ 17
Form S-4.................................................... 39
GAAP........................................................ 7
Governmental Entity......................................... 17
Hazardous Substances........................................ 22
Holding Company Act......................................... 24
HSR Act..................................................... 17
Indemnified Party........................................... 41
IRS......................................................... 20
Joint Proxy Statement/Prospectus............................ 39
knowledge................................................... 52
▇▇▇▇▇ Voting Agreement...................................... 7
Major Company Stockholders.................................. 7
Merger...................................................... 8
Merger Sub.................................................. 8
▇▇▇▇▇▇▇ ▇▇▇▇▇............................................... 24
Newco....................................................... 8
Notice...................................................... 37
NYSE........................................................ 11
Parent...................................................... 7
Parent Certificates......................................... 12
Parent Common Stock......................................... 7
Parent Defined Benefit Plan................................. 30
Parent Designees............................................ 43
Parent Disclosure Letter.................................... 25
Parent Employee Plans....................................... 29
Parent Equity Equivalent Security........................... 26
Parent ERISA Affiliate...................................... 29
Parent Material Adverse Effect.............................. 52
Parent Meeting.............................................. 8
Parent Merger............................................... 8
Parent Merger Excluded Shares............................... 10
Parent Permits.............................................. 29
Parent Preferred Stock...................................... 11, 26
Parent Rights Agreement..................................... 26
Parent SEC Reports.......................................... 27
Parent Stock Option Agreement............................... 7
Parent Surviving Corporation................................ 8
Parent Termination Fee...................................... 50
Parent Trust Securities..................................... 26
PBGC........................................................ 20
PCBs........................................................ 23
Person...................................................... 52
Regulatory Law.............................................. 45
Representatives............................................. 37
Revised Merger.............................................. 9
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DEFINED TERM PAGE NO.
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SEC......................................................... 7
Securities Act.............................................. 17
Stock Option Agreements..................................... 7
Subsidiary.................................................. 52
Superior Proposal........................................... 38
Surviving Corporation....................................... 8
Takeover Proposal........................................... 37
Tax......................................................... 52
Termination Date............................................ 48
Voting Agreements........................................... 7
Zilkha Voting Agreement..................................... 7
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of March 13,
1999 (this "Agreement"), by and between EL PASO ENERGY CORPORATION, a Delaware
corporation ("Parent"), and SONAT INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that a business combination between Parent and the Company is in the
best interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits and have approved the transactions provided for herein upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, it is intended that the business combination between Parent and
the Company will qualify as a tax-free reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, it is intended that the business combination between Parent and
the Company will be accounted for as a pooling of interests under United States
generally accepted accounting principles ("GAAP") and the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent and the Company are executing and delivering a Stock Option
Agreement, dated as of the date hereof (the "Company Stock Option Agreement"),
pursuant to which the Company is granting to Parent an option to purchase, under
certain circumstances, for a purchase price of $27.238 per share, up to
21,899,515 shares of common stock, par value $1.00 per share, of the Company
(together with the associated preference share purchase rights, the "Company
Common Stock");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to the Company's willingness to enter into this
Agreement, Parent and the Company are executing and delivering a Stock Option
Agreement, dated as of the date hereof (the "Parent Stock Option Agreement", and
together with the Company Stock Option Agreement, the "Stock Option
Agreements"), pursuant to which Parent is granting to the Company an option to
purchase, under certain circumstances, for a purchase price of $37.725 per
share, up to 24,349,638 shares of common stock, par value $3.00 per share, of
Parent (together with the associated preferred stock purchase rights, the
"Parent Common Stock"); and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in his individual capacity and in his
capacity as trustee of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Major
Company Stockholders") are executing and delivering a Voting Agreement, dated as
of the date hereof (the "Zilkha Voting Agreement"), pursuant to which each of
the Major Company Stockholders is agreeing to vote all of his or its shares of
Company Common Stock in favor of the approval and adoption of this Agreement and
the transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. are executing and delivering a Voting
Agreement, dated as of the date hereof (the "▇▇▇▇▇ Voting Agreement," and
together with the Zilkha Voting Agreement, the "Voting Agreements"), pursuant to
which he is agreeing to vote all of his shares of Company Common Stock in favor
of the approval and adoption of this Agreement and the transactions contemplated
hereby.
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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
Section 1.1 Organization of Merger Sub. As promptly as practicable
following the execution of this Agreement, Parent shall (i) duly organize under
the laws of the State of Delaware a wholly owned subsidiary corporation ("Merger
Sub"), (ii) cause directors of Merger Sub to be duly elected or appointed, (iii)
cause the directors of Merger Sub to elect officers of Merger Sub, (iv) cause
the directors of Merger Sub to duly ratify and approve this Agreement and the
Alternative Merger (as defined in Section 1.2(b)) and cause the officers of
Merger Sub to duly execute and deliver on behalf of Merger Sub such
documentation as is necessary to make Merger Sub a party hereto, (v) in its
capacity as sole stockholder of Merger Sub, duly approve and adopt this
Agreement and the Alternative Merger in accordance with the Delaware General
Corporation Law (the "DGCL"), and (vi) cause the directors and officers of
Merger Sub to take such steps as are necessary for Merger Sub to perform its
obligations hereunder. The initial certificate of incorporation and bylaws of
Merger Sub shall be substantially in the forms of the certificate of
incorporation and bylaws set forth in Exhibit A-1 hereto and Exhibit A-2 hereto,
respectively.
Section 1.2 The Parent Merger and Alternative Merger. (a) Subject to
paragraph (b) of this Section 1.2, at the Effective Time (as defined in Section
1.3(b)) and subject to and upon the terms and conditions of this Agreement and
in accordance with the provisions of Section 251 of the DGCL, the Company shall
be merged with and into Parent (such merger, the "Parent Merger"), the separate
corporate existence of the Company shall cease, and Parent shall continue as the
surviving corporation (sometimes referred to herein as the "Parent Surviving
Corporation") in the Parent Merger. The effects and consequences of the Parent
Merger shall be as specified in this Agreement and in Section 259(a) of the
DGCL.
(b) Notwithstanding paragraph (a) of this Section 1.2, in the event that
this Agreement and the Parent Merger are not approved by the requisite vote of
the stockholders of Parent pursuant to the DGCL at a duly noticed and held
stockholders' meeting, including any adjournments or postponements thereof (a
"Parent Meeting"), at the Effective Time and subject to and upon the terms and
conditions of this Agreement and in accordance with the provisions of Section
251 of the DGCL, Merger Sub shall be merged with and into the Company (such
merger the "Alternative Merger") and the separate existence of Merger Sub shall
cease. The Company shall continue as the surviving corporation (the "Alternative
Surviving Corporation") in the Alternative Merger and, as of the Effective Time,
shall be a wholly-owned subsidiary of Parent. The effects and consequences of
the Alternative Merger shall be as specified in this Agreement and in Section
259(a) of the DGCL. The Parent Surviving Corporation shall, in the event the
Parent Merger is consummated, and the Alternative Surviving Corporation shall,
in the event the Alternative Merger is consummated, sometimes be referred to
herein as the "Surviving Corporation"; and the Parent Merger shall, in the event
the Parent Merger is consummated, and the Alternative Merger shall, in the event
the Alternative Merger is consummated, sometimes be referred to herein as the
"Merger." In the event that the approval of the stockholders of Parent
referenced in the first sentence of this paragraph (b) is obtained at a Parent
Meeting, each reference herein to the "Applicable Transaction" shall be deemed
to be a reference to the Parent Merger, and in the event that such approval of
the stockholders of Parent is not obtained at a Parent Meeting called to vote
with respect thereto, each reference herein to the "Applicable Transaction"
shall be deemed to be a reference to the Alternative Merger.
(c) Notwithstanding any other provision of this Agreement, the Company
agrees with Parent that, at the request of Parent at any time prior to the
effective date of the Form S-4 (as defined in Section 6.4), the form of the
business combination contemplated by this Agreement may be amended to substitute
for the Parent Merger a business combination in which Parent and the Company
will form a Delaware corporation, which will be half-owned by each of Parent and
the Company ("Newco") and will cause
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Newco to form two wholly owned subsidiaries, one of which will merge with and
into Parent and one of which will merge with and into the Company, and as a
result of which each outstanding share of Parent Common Stock and Company Common
Stock will be converted into the right to receive one share of common stock of
Newco (together with one associated preferred stock purchase right of Newco)
(the "Revised Merger"); provided that the Revised Merger will only be effected
if such transaction would reduce the transaction costs associated with the
consummation of the Parent Merger and would not adversely affect the holders of
Company Common Stock; and provided further that such amendment shall not affect
Parent's obligation to effect the Alternative Merger if required pursuant to
this Agreement. If the Revised Merger is being substituted for the Parent
Merger, the parties shall execute an appropriate amendment to this Agreement in
a form mutually acceptable to Parent and the Company to provide for the Revised
Merger.
Section 1.3 The Closing; Effective Time. (a) The closing of the Applicable
Transaction (the "Closing") shall take place (i) at the offices of Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
10:00 A.M. local time, on the first business day on which the last to be
satisfied or waived of the conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (ii) at such other place, time and/or date
as Parent and the Company shall agree (the date of the Closing, the "Closing
Date").
(b) On the Closing Date, Parent and the Company shall cause a certificate
of merger with respect to the Applicable Transaction, meeting the requirements
of Section 251 of the DGCL, to be properly executed and filed with the Secretary
of State of the State of Delaware in accordance with the applicable provisions
of the DGCL. The Applicable Transaction shall become effective at the time at
which the certificate of merger with respect thereto shall be duly filed with
Secretary of State of the State of Delaware, or at such later time specified in
such certificate of merger as shall be agreed by Parent and the Company (the
time that the Applicable Transaction becomes effective, the "Effective Time").
Section 1.4 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
Section 1.5 Certificate of Incorporation; By-laws; Directors and Officers
of the Surviving Corporation. (a) Unless otherwise agreed by Parent and the
Company prior to the Closing, in the event the Parent Merger is consummated:
(i) At the Effective Time, the Restated Certificate of Incorporation
of Parent shall be amended to read in its entirety as set forth in Exhibit
B hereto. As so amended, such Restated Certificate of Incorporation shall
constitute at and after the Effective Time (until amended as provided by
applicable law and such Restated Certificate of Incorporation, as
applicable) the certificate of incorporation of the Parent Surviving
Corporation.
(ii) The By-laws of Parent shall be amended immediately prior to the
Effective Time to read in its entirety as set forth in Exhibit B-2 as so
amended, such By-laws shall constitute at and after the Effective Time
(until amended as provided by applicable law and the applicable certificate
of incorporation and bylaws) the By-laws of the Parent Surviving
Corporation.
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(iii) The officers of Parent immediately prior to the Effective Time
shall continue to serve in their respective offices of the Parent Surviving
Corporation from and after the Effective Time, until their successors are
elected or appointed and qualified or until their resignation or removal;
and
(iv) The directors of Parent Surviving Corporation as of the Effective
Time shall be determined in accordance with Section 6.11 hereof. The
directors of Parent Surviving Corporation determined in accordance with
Section 6.11 hereof shall be the directors of the Parent Surviving
Corporation from and after the Effective Time, until their successors are
elected or appointed and qualified or until their resignation or removal.
(b) Unless otherwise agreed by Parent and the Company prior to the Closing,
in the event the Alternative Merger is consummated:
(i) At the Effective Time, the Restated Certificate of Incorporation
of the Company shall be amended to read in its entirety as set forth in
Exhibit C hereto. As so amended, such Restated Certificate of Incorporation
shall constitute at and after the Effective Time (until amended as provided
by applicable law and such Restated Certificate of Incorporation, as
applicable) the certificate of incorporation of the Alternative Surviving
Corporation.
(ii) The By-laws of the Company in effect immediately prior to the
Effective Time shall constitute at and after the Effective Time (until
amended as provided by applicable law and the certificate of incorporation
and bylaws, as applicable) the By-laws of the Alternative Surviving
Corporation.
(iii) The officers of the Company immediately prior to the Effective
Time shall continue to serve in their respective offices of the Alternative
Surviving Corporation from and after the Effective Time, until their
successors are elected or appointed and qualified or until their
resignation or removal.
(iv) The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Alternative Surviving Corporation from
and after the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal.
(v) The By-laws of Parent shall be amended immediately prior to the
Effective Time to read in its entirety as set forth in Exhibit B-2.
ARTICLE II
Section 2.1 Treatment of Common Stock. (a) Subject to paragraph (b) of
this Section 2.1, at the Effective Time, without any action on the part of any
holder thereof (but subject to Sections 2.4, 2.5 and 2.6 of this Agreement), (i)
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time, and all rights in respect thereof, shall forthwith cease to
exist and (other than those shares held in the treasury of the Company, by
Parent or by any of their respective Subsidiaries (collectively, the "Parent
Merger Excluded Shares")) shall be converted into a right to receive one validly
issued, fully paid and nonassessable share of Parent Common Stock (the "Exchange
Ratio") and (ii) each issued and/or outstanding share of Parent Common Stock
shall remain issued and/or outstanding, as applicable, as one share of Parent
Common Stock. Subject to paragraph (b) of this Section 2.1 and except as
otherwise provided herein, each certificate (a "Company Certificate") that
immediately prior to the Effective Time represented issued and outstanding
shares of Company Common Stock (other than Parent Merger Excluded Shares) shall
evidence the right to receive Parent Common Stock on the basis set forth in this
paragraph (a) (subject to Sections 2.4, 2.5 and 2.6 of this Agreement).
(b) Notwithstanding paragraph (a) of this Section 2.1, in the event the
Alternative Merger is being consummated, at the Effective Time, without any
action on the part of any holder thereof (but subject to Sections 2.4, 2.5 and
2.6 of this Agreement), each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time, and all rights in respect
thereof, shall forthwith cease to exist and (other than those shares held in the
treasury of the Company, by Parent or by any of their
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respective Subsidiaries (collectively, the "Alternative Merger Excluded
Shares")) shall be converted into the right to receive: (1) that fraction of a
validly issued, fully paid and nonassessable share of Parent Common Stock
(including any associated fractional preferred stock purchase right) that is
equal to the Common Conversion Number and (2) that fraction of a validly issued,
fully paid and nonassessable Depositary Share that is equal to the Depositary
Share Conversion Number (each as defined below).
For purposes of this Agreement:
"Common Conversion Number" means the result obtained by dividing (x) (i)
the maximum number of shares of Parent Common Stock that may be issued by Parent
as of the date prior to the Closing Date without obtaining the approval of
stockholders of Parent pursuant to the rules and regulations of the New York
Stock Exchange (the "NYSE") minus (ii) the number of shares of Parent Common
Stock required pursuant to Section 2.7 to be reserved for issuance upon exercise
of Company Options (as defined in Section 2.7) outstanding immediately prior to
the Effective Time by (y) the number of shares of Company Common Stock
(excluding Alternative Merger Excluded Shares) outstanding immediately prior to
the Effective Time as certified to Parent by the principal registrar and
transfer agent of the Company.
"Depositary" means BankBoston, N.A. or such other depositary selected by
Parent that is reasonably acceptable to the Company.
"Depositary Agreement" means the Depositary Agreement between Parent and
the Depositary substantially in the form attached as Exhibit D hereto.
"Depositary Receipt" means a depositary receipt issued by the Depositary to
evidence a Depositary Share.
"Depositary Share" means a unit representing such fractional interest in a
whole share of Parent Preferred Stock that has a "Liquidation Preference" (as
set forth in the Certificate of Designation (as defined below)) equal to $100.
Each Depositary Share shall be evidenced by a Depositary Receipt issued to the
person entitled to such fractional interest and which shall entitle the holder
thereof, pursuant to the Depositary Agreement, to rights equivalent to those of
a holder of a whole share of Parent Preferred Stock (to the extent of such
fractional interest therein).
"Depositary Share Conversion Number" means the result obtained by dividing
(a) the product of (x) (i) the Exchange Ratio (ii) minus the Common Conversion
Number and (y) the Implied Price (as defined below) by (b) the "Liquidation
Preference" (as set forth in the Certificate of Designation) of such fractional
interest in a whole share of Parent Preferred Stock that is represented by each
Depositary Share. The "Implied Price" shall mean the average of the closing
prices of the shares of Parent Common Stock on the NYSE Composite Transaction
Reporting System as reported in The Wall Street Journal (but subject to
correction for typographical or other manifest errors in such reporting) over
the 10 trading day period immediately preceding the second trading day prior to
the date of the meeting of the Company's stockholders contemplated by Section
6.1; provided that the Implied Price shall in no event be less than $32.00, or
greater than $44.50.
"Parent Preferred Stock" means the series of voting preferred stock of
Parent to be designated as Cumulative Preferred Stock having the powers, rights,
designations and preferences and the qualifications, limitations and
restrictions described in the form of Certificate of Designation therefor
attached hereto as Exhibit E hereto (the "Certificate of Designation");
provided, however, that the Rate (as defined in the Certificate of Designation)
shall be such percentage, to be jointly determined by the financial advisors in
Sections 3.14 and 4.14 hereof, that such financial advisors believe would cause
the trading price per Depositary Share on a fully distributed basis after the
Effective Time to be as nearly equal as possible to the Liquidation Preference
(as set forth in the Certificate of Designation) of the fractional interest in a
whole share of Parent Preferred Stock that is represented by one Depositary
Share. In the event that such financial advisors are unable to agree on the
Rate, the parties shall direct the financial advisors identified in Sections
3.14 and 4.14 to jointly select a nationally recognized investment bank to
determine the Rate. The determination of such investment bank shall be binding
on the parties hereto.
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Notwithstanding paragraph (a) of this Section 2.1, in the event that the
Alternative Merger is consummated, except as otherwise provided herein, each
Company Certificate (other than Company Certificates representing Alternative
Merger Excluded Shares) shall evidence, commencing immediately after the
Effective Time, the right to receive shares of Parent Common Stock and
Depositary Shares on the basis set forth in this paragraph (b) (subject to
Sections 2.4, 2.5 and 2.6 of this Agreement).
Section 2.2 Cancellation of Excluded Shares. At the Effective Time,
without any action on the part of the holder thereof, in the event the Parent
Merger is consummated, each Parent Merger Excluded Share, and in the event the
Alternative Merger is consummated, each Alternative Merger Excluded Share, as
applicable, shall forthwith cease to be outstanding and shall be canceled and
retired, and no shares of stock or other securities of Parent, the Company or
the Surviving Corporation shall be issuable, and no payment or other
consideration shall be made or paid, in respect thereof.
Section 2.3 Conversion of Common Stock of Merger Sub. In the event the
Alternative Merger is consummated, at the Effective Time, without any action on
the part of the holder thereof, each share of common stock of Merger Sub that is
issued and outstanding immediately prior the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
Section 2.4 Exchange Agent; Exchange Procedures. (a) Subject to the terms
and conditions of this Agreement, at or prior to the Effective Time, Parent
shall appoint BankBoston, N.A., or such other exchange agent selected by Parent
that is reasonably acceptable to the Company (the "Exchange Agent"), to effect
the exchange of shares of Company Common Stock for, in the event the Parent
Merger is consummated, shares of Parent Common Stock or, in the event the
Alternative Merger is consummated, shares of Parent Common Stock and Depositary
Shares, in each case in accordance with the provisions of this Article II. As
soon as reasonably practicable following the Effective Time, Parent shall
deposit, or cause to be deposited, with the Exchange Agent, for exchange in
accordance with this Article II, in the event the Parent Merger is consummated,
certificates representing shares of Parent Common Stock ("Parent Certificates"),
and in the event the Alternative Merger is consummated, Parent Certificates and
Depositary Receipts in amounts sufficient to allow the Exchange Agent to make
all deliveries of Parent Certificates and Depositary Receipts in exchange for
Company Certificates in connection with the Applicable Transaction, as
contemplated by this Section 2.4 and any cash payable in respect of fractional
shares in accordance with Section 2.6(a) hereof and any dividends or other
distributions payable in accordance with Section 2.4(a) (the "Exchange Fund").
(b) Parent shall instruct the Exchange Agent to mail to each record holder
of shares of Company Common Stock as soon as reasonably practicable after the
Effective Time (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to shares of Company Common Stock
shall pass, only upon the delivery of a Company Certificate or Company
Certificates representing such shares to the Exchange Agent, and which letter
shall otherwise be in such form and have such other provisions as Parent shall
reasonably specify, which form shall be reasonably acceptable to the Company)
and (ii) instructions for use in effecting the surrender of Company Certificates
for Parent Certificates (and, if applicable, Depositary Receipts) and cash in
lieu of fractional shares, if any. Commencing immediately after the Effective
Time, upon the surrender to the Exchange Agent of a Company Certificate,
together with a duly executed and completed letter of transmittal and all other
documents and other materials reasonably required by the Exchange Agent to be
delivered in connection therewith, the holder thereof shall be entitled to
receive a Parent Certificate or Parent Certificates representing the number of
whole shares of Parent Common Stock (and, if applicable, a Depositary Receipt or
Depositary Receipts representing whole Depositary Shares) into which the shares
of the Company Common Stock which immediately prior to the Effective Time were
represented by such Company Certificate so surrendered shall have been converted
in accordance with the provisions of Section 2.1, together with a cash payment
in lieu of fractional shares, if any, in accordance with Section 2.6(a). Unless
and until any Company Certificate is so surrendered, no dividends or other
distributions, if any, payable to the holders of record of shares of Parent
Common Stock (and, if applicable, to holders of record of Depositary Shares) as
of any date subsequent to the Effective Time
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shall be paid to the holder of such Company Certificate in respect thereof. Upon
the surrender of any Company Certificate, the record holder of the Parent
Certificate or Parent Certificates representing shares of Parent Common Stock
(and, if applicable, a Depositary Receipt or Depositary Receipts representing
Depositary Shares) issued in exchange therefor shall be entitled to receive, (i)
at the time of surrender, the amount of any dividends or other distributions in
respect of such shares of Parent Common Stock (and, if applicable, Depositary
Shares) having a record date after the Effective Time and a payment date prior
to the surrender date, and (ii) at the appropriate payment date, the amount of
dividends or other distributions in respect of such shares of Parent Common
Stock (and, if applicable, Depositary Shares) having a record date after the
Effective Time and a payment date subsequent to the date of such surrender. No
interest shall be payable in respect of the payment of dividends or
distributions pursuant to the immediately preceding sentence.
(c) The Parent, the Surviving Corporation and the Exchange Agent shall be
entitled to deduct and withhold from the shares of the Parent Common Stock (and,
if applicable, Depositary Shares) and cash in lieu of fractional shares
otherwise payable to any holder of shares of the Company Common Stock pursuant
to this Article II, and from any dividends or other distributions which such
holder is entitled to receive pursuant to Section 2.4(b), such amounts as
Parent, the Surviving Corporation and/or the Exchange Agent is required to
deduct or withhold therefrom under the Code and/or any applicable provision of
state, local or foreign law.
Section 2.5 Transfer Books; Lost, Stolen or Destroyed Certificates. (a)
The stock transfer books of the Company shall be closed at the Effective Time
and no transfer of any shares of Company Common Stock shall thereafter be
recorded on any of such stock transfer books. In the event of a transfer of
ownership of any shares of the Company Common Stock that is not registered in
the stock transfer records of the Company at the Effective Time, a Parent
Certificate or Parent Certificates representing the number of whole shares of
Parent Common Stock (and, if applicable, a Depositary Receipt or Depositary
Receipts representing whole Depositary Shares) into which such shares of the
Company Common Stock shall have been converted in the Applicable Transaction
shall be issued to the transferee together with a cash payment in lieu of
fractional shares, if any, in accordance with Section 2.6(a), and payment of
dividends or distributions, if any, in accordance with Section 2.4(b) only if
the Company Certificate or Company Certificates are surrendered as provided in
Section 2.4 (but subject to Section 2.5(b) hereof), accompanied by all documents
required to evidence and effect such transfer and evidence of payment of any
applicable stock transfer taxes.
(b) In the event any Company Certificate shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Company Certificate, upon the delivery of a duly executed affidavit of
that fact by the holder thereof, Parent Certificates in accordance with Section
2.4, cash in lieu of fractional shares, if any, in accordance with Section
2.6(a), and payment of dividends and distributions, if any, in accordance with
Section 2.4(b); provided, however, that Parent may, in its discretion, require
the owner of such lost, stolen or destroyed Company Certificate to deliver a
bond in such sum as Parent may reasonably direct as indemnity against any claim
that may be made against Parent, the Company, the Surviving Corporation or the
Exchange Agent with respect to that Company Certificate alleged to have been
lost, stolen or destroyed.
Section 2.6 No Fractional Share Certificates; Termination of Exchange
Fund. (a) No scrip or certificates for fractional shares of Parent Common Stock
(and, if applicable, fractional Depositary Shares) will be issued upon the
surrender for exchange of Company Certificates, and no fractional interest in a
share of Parent Common Stock (and, if applicable, in any fractional Depositary
Share) will entitle the holder thereof to vote or receive dividends or
distributions or any other rights of a stockholder of Parent, with respect to
any such fractional share interest. Each Person entitled to receive, but for
this Section 2.6(a), a fractional share of Parent Common Stock (and/or, if
applicable, fractional Depositary Shares) shall be entitled to receive an amount
of cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the average of the closing prices of the shares of
Parent Common Stock on the NYSE Composite Transaction Reporting System as
reported in The Wall Street
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Journal (but subject to correction for typographical or other manifest errors in
such reporting) over the four trading day period immediately preceding the
Closing Date.
(b) Any portion of the Exchange Fund which remains undistributed one year
after the Effective Time shall be delivered to Parent upon demand, and each
holder of shares of the Company Common Stock who has not theretofore surrendered
such holder's Company Certificates in accordance with the provisions of this
Article II shall thereafter look only to Parent for satisfaction of such
holder's claims for shares of Parent Common Stock (and, if applicable,
Depositary Shares), any cash in lieu of fractional shares of Parent Common Stock
(and, if applicable, fractional Depositary Shares) payable in accordance with
Section 2.6(a) and any dividends or distributions payable in accordance with
Section 2.4(b). Notwithstanding the foregoing, none of Parent, the Company, the
Surviving Corporation or the Exchange Agent shall be liable to any former holder
of shares of Company Common Stock for any shares or amounts properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
Section 2.7 Options. (a) All options to purchase shares of Company Common
Stock ("Company Options"), and all options to purchase shares of Parent Common
Stock ("Parent Options"), outstanding at the Effective Time under any stock
option plan or other arrangement of the Company shall remain outstanding
following the Effective Time. Prior to the Effective Time, the Company shall
take all action necessary with respect to each of its stock option plans or
other arrangements pursuant to which Company Options will be outstanding
immediately prior to the Effective Time such that as of the Effective Time (i)
each Company Option shall entitle the holder thereof to purchase such number of
shares of Parent Common Stock as is equal to the product of (x) the number of
shares of Company Common Stock subject to such option immediately prior to the
Effective Time and (y) the Exchange Ratio (whether or not the Applicable
Transaction is the Parent Merger) and (ii) the exercise price per share of
Parent Common Stock subject to any such Company Option as of and after the
Effective Time shall be equal to (x) the exercise price per share of the Company
Common Stock subject to such Company Option immediately prior to the Effective
Time divided by (y) the Exchange Ratio (whether or not the Applicable
Transaction is the Parent Merger). As of the Effective Time, Parent shall assume
all obligations of the Company in respect of outstanding Company Options.
(b) Notwithstanding the foregoing, the number of shares of Parent Common
Stock deliverable upon exercise of each Company Option at and after the
Effective Time as contemplated by paragraph (a) above shall be rounded, if
necessary, to the nearest whole share of Parent Common Stock, and the exercise
price with respect thereto shall be rounded, if necessary, to the nearest one
one-hundredth of a cent (it being understood that all options exercisable at the
same price and granted on the same date to the same individual shall be
aggregated for this purpose). Other than as provided in paragraph (a) above and
in the prior sentence of this paragraph (b), as of and after the Effective Time,
each Company Option shall be subject to the same terms and conditions as in
effect immediately prior to the Effective Time, but giving effect to the
Applicable Transaction.
(c) As soon as practicable after the Effective Time, Parent shall deliver
(i) to the holders of Company Options which become fully vested and exercisable
by virtue of the Applicable Transaction a notice stating that by virtue of the
Applicable Transaction and pursuant to the terms of the relevant Company
Employee Plan (as defined in Section 3.10(a)) such Company Options have become
fully vested and exercisable and (ii) to the holders of all Company Options a
notice stating that the agreements evidencing the grants of such Company Options
shall continue in effect on the same terms and conditions (subject to the
adjustments, if any, required by this Section 2.7 after giving effect to the
transactions contemplated hereby and the terms of the relevant Company Employee
Plan).
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of Company Options and shall use reasonable best efforts to ensure that
such shares are listed on the NYSE upon issuance. As soon as practicable after
the Effective Time, Parent shall file with the SEC a registration statement on
Form S-8 of the SEC (if available) (or any successor or other appropriate form)
with respect to the shares of Parent Common
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Stock issuable upon the exercise of such options and shall use reasonable best
efforts to maintain the effectiveness of such registration statement, and to
maintain the current status of the prospectus or prospectuses contained therein,
until all such options have been exercised, expired or forfeited.
Section 2.8 Appraisal Rights. In accordance with Section 262 of the DGCL,
no appraisal rights shall be available to holders of shares of Parent Common
Stock or Company Common Stock in connection with the Parent Merger or the
Alternative Merger.
Section 2.9 Dividends. Parent and the Company shall coordinate with each
other the declaration of, and the setting of record dates and payment dates for,
dividends in respect of their respective shares of common stock so that, in
respect of any fiscal quarter, holders of shares of Company Common Stock do not
(i) receive dividends in respect of both (x) shares of Company Common Stock and
(y) any shares of Parent Common Stock received pursuant to the Applicable
Transaction in exchange therefor or (ii) fail to receive a dividend in respect
of both (x) shares of Company Common Stock and (y) shares of Parent Common Stock
received pursuant to the Applicable Transaction.
Section 2.10 Certain Adjustments. If between the date of this Agreement
and the Effective Time, whether or not permitted pursuant to the terms hereof,
the outstanding shares of Company Common Stock or Parent Common Stock shall be
changed into a different number of shares or other securities by reason of any
stock split, combination, merger, consolidation, reorganization or other
transaction, or any dividend payable in stock shall be declared thereon with a
record date within such period, the Exchange Ratio, the formula for calculating
the Common Conversion Number and the Depositary Share Conversion Number, as
applicable, and the form of securities issuable in the Applicable Transaction
shall be appropriately adjusted to provide the holders of shares of Company
Common Stock the same economic effect as contemplated by this Agreement prior to
such event.
ARTICLE III
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated the date of this Agreement, delivered by the Company to
Parent (the "Company Disclosure Letter"), the Company hereby represents and
warrants to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Subsidiaries of the Company is a
corporation or other business entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, and each of the Company and its Subsidiaries has the requisite
corporate or similar organizational power and authority to own, operate or lease
its properties and to carry on its business as it is now being conducted, and is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary,
except as would not, in the aggregate, have, or reasonably be expected to have,
a Company Material Adverse Effect (as defined in Section 9.3).
(b) Except as disclosed in the Company SEC Reports (as defined in Section
3.6) filed prior to the date of this Agreement, and except as would not, in the
aggregate, have, or reasonably be expected to have, a Company Material Adverse
Effect, (i) all of the outstanding shares of capital stock and other equity
securities of the Subsidiaries of the Company are owned, directly or indirectly,
by the Company free and clear of all liens, pledges, security interests, or
other encumbrances, (ii) all of the outstanding shares of capital stock or other
equity securities of the Subsidiaries of the Company have been validly issued
and are fully paid and nonassessable, (iii) there are no subscriptions, options,
warrants, calls, commitments, agreements, conversion rights or other rights of
any character (contingent or otherwise) entitling any person to purchase or
otherwise acquire from the Company or any of its Subsidiaries at any time, or
upon the happening of any stated event, any shares of capital stock or other
equity securities of any of the Subsidiaries of the Company. There are no
outstanding obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock
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or other equity securities, or any securities convertible, exchangeable or
exercisable for or into, shares of capital stock or other equity securities of
any Subsidiary of the Company.
Section 3.2 Restated Certificate of Incorporation and By-laws. The Company
has furnished or otherwise made available to Parent a complete and correct copy
of the Company's Restated Certificate of Incorporation and By-laws, in each case
as amended to the date of this Agreement. Such Restated Certificate of
Incorporation and By-laws and all similar organizational documents of the
Subsidiaries of the Company are in full force and effect. The Company is not in
violation of its Restated Certificate of Incorporation or By-laws and, except as
would not, in the aggregate, have, or reasonably be expected to have, a Company
Material Adverse Effect, none of the Subsidiaries of the Company is in violation
of any similar organizational documents of Subsidiaries of the Company.
Section 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of 400,000,000 shares of Company Common Stock and 10,000,000
shares of Serial Preference Stock, par value $1.00 per share (the "Company
Preferred Stock"). 1,000,000 shares of Company Preferred Stock have been
designated "Series A Participating Preference Stock," and, other than as
contemplated or permitted hereby, no other shares of Company Preferred Stock are
subject to any designation. At the close of business on March 11, 1999,
110,047,818 shares of Company Common Stock were issued and outstanding. No
shares of Company Preferred Stock are issued and outstanding. 1,325,788 shares
of Company Common Stock, and no shares of Company Preferred Stock, are held by
the Company in its treasury. No shares of capital stock of the Company are held
by any of the Company's Subsidiaries. All of the issued and outstanding shares
of Company Common Stock are validly issued, fully paid, nonassessable and free
of preemptive rights. At the close of business on March 10, 1999, Company
Options exercisable for 3,434,775 shares of Company Common Stock, in the
aggregate, were outstanding. As of the date of this Agreement, other than (i)
the option granted pursuant to the Company Stock Option Agreement, (ii) the
preference share purchase rights (none of which are exercisable) issued pursuant
to the Rights Agreement (the "Company Rights Agreement"), dated as of January 8,
1996, as amended, between the Company and Chemical Mellon Shareholder Services,
L.L.C., as rights agent, and (iii) the Company Options, the Company did not have
outstanding any subscriptions, options, warrants, calls, commitments,
agreements, conversion rights or other rights of any character (contingent or
otherwise) entitling any person to purchase or otherwise acquire from the
Company or any of its Subsidiaries at any time, or upon the happening of any
stated event, any shares of the capital stock of the Company (each of the
foregoing, a "Company Equity Equivalent Security"). From the close of business
on March 10, 1999, no shares of Company Common Stock or Company Equity
Equivalent Securities (other than the option granted pursuant to the Stock
Option Agreement) have been issued, sold or otherwise transferred by the Company
(except (x) in connection with the exercise, conversion or exchange of
outstanding Company Equity Equivalent Securities and (y) as described in Section
5.1 of the Company Disclosure Letter).
(b) As of the date of this Agreement, there are no outstanding obligations,
contingent or otherwise, of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any Company Equity Equivalent Securities (except in connection with the
exercise, conversion or exchange of outstanding Company Equity Equivalent
Securities). As of the date of this Agreement, there are no bonds, debentures,
notes or other indebtedness issued and outstanding having the right to vote
together with the Company's stockholders on any matter in respect of which the
Company's stockholders are entitled to vote.
Section 3.4 Power and Authority; Authorization; Valid and Binding. The
Company has the necessary corporate power and authority to execute and deliver
this Agreement and the Stock Option Agreements and to perform its obligations
hereunder and thereunder, as applicable, except that the consummation of the
Parent Merger or, if applicable, the Alternative Merger is subject to the
adoption of this Agreement by the Company's stockholders as set forth in Section
3.13(c). The execution and delivery of this Agreement and the Stock Option
Agreements by the Company and the performance by it of its obligations hereunder
and thereunder, as applicable, have been duly authorized by all necessary
corporate action on the part of the Company, except that the consummation of the
Parent Merger or, if applicable, the Alternative Merger is subject to the
adoption of this Agreement by the Company's stockholders as set
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forth in Section 3.13(c). This Agreement and the Stock Option Agreements have
been duly executed and delivered by the Company, and assuming the corporate
authority of, and the due authorization, execution and delivery by, Parent, each
of such agreements constitutes a legal, valid and binding obligation of the
Company enforceable against it in accordance with the terms hereof and thereof,
as applicable, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 3.5 No Conflict; Required Filings and Consents. (a) The execution
and delivery by the Company of this Agreement and the Stock Option Agreements do
not and will not, and the performance by Company of its obligations hereunder
and thereunder do not and will not, (i) violate or conflict with the Restated
Certificate of Incorporation or By-laws of the Company, (ii) subject to
obtaining or making the notices, reports, filings, waivers, consents, approvals
or authorizations referred to in paragraph (b) below and to the adoption of this
Agreement by the stockholders of the Company as set forth in Section 3.13(c),
conflict with or violate any law, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any of their
respective property is bound or affected, (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, impair the Company's or any of its Subsidiaries'
rights under or alter the rights or obligations of any other party to, give to
others any rights of termination, cancellation, vesting, modification,
alteration or acceleration of any obligation under, result in the creation of a
lien, claim or encumbrance on any of the properties or assets of the Company or
any of its Subsidiaries pursuant to, require the consent of any other party to,
or result in any obligation on the part of the Company or any of its
Subsidiaries to repurchase (with respect to a debenture, bond or note), pursuant
to any agreement, contract, instrument, debenture, bond, note, indenture,
permit, license or franchise to which the Company or any of its Subsidiaries is
a party or by which the Company, any of its Subsidiaries or any of their
respective property is bound or affected, except, in the case of clauses (ii)
and (iii) above, as would not, in the aggregate, have, or reasonably be expected
to have, a Company Material Adverse Effect.
(b) Except for (i) applicable filings required under the premerger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), (ii)
required filings with and the approval of the Federal Energy Regulatory
Commission (the "FERC"), (iii) applicable filings and approvals under federal,
state, local or foreign regulatory laws, and applicable requirements of foreign,
state or local public utility or similar commissions or agencies, all of which
are set forth in the Company Disclosure Letter, (iv) the filing of a certificate
of merger with respect to the Applicable Transaction as required by the DGCL,
(v) filings with the SEC under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), (vi) applicable filings with the NYSE, and (vii) any filings
required or approvals necessary pursuant to any state securities or "blue sky"
laws, neither the Company nor any of its Subsidiaries is required to submit any
notice, report or other filing to any governmental or regulatory authority,
court, agency, commission or other governmental entity or any securities
exchange or other self-regulatory body, domestic or foreign ("Governmental
Entity"), and no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained by the Company or any of its
Subsidiaries, in connection with the execution, delivery or performance of this
Agreement except for such notices, reports, filings, waivers, consents,
approvals or authorizations that, if not made or obtained, would not, in the
aggregate, have, or reasonably be expected to have, a Company Material Adverse
Effect.
Section 3.6 SEC Reports; Financial Statements. (a) The Company has filed
all forms, reports, statements and other documents (including all annexes,
exhibits, schedules, amendments and supplements thereto) required to be filed by
it with the SEC since January 1, 1997, has delivered or made available to Parent
all forms, reports, statements, schedules and other documents (except for
preliminary materials) (including all annexes, exhibits, schedules, amendments
and supplements thereto) filed by it with the SEC since January 1, 1997 (such
forms, reports, statements, schedules and documents filed by the Company with
the SEC, including any such forms, reports, statements and other documents filed
by the Company
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with the SEC after the date of this Agreement and prior to the Closing Date, are
referred to herein, collectively, as the "Company SEC Reports"), and with
respect to the Company SEC Reports filed by the Company after the date of this
Agreement and prior to the Closing Date, will deliver or make available to
Parent all of such Company SEC Reports in the form filed with the SEC. As of
their respective filing dates, the Company SEC Reports (including all
information incorporated therein by reference) (i) complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and (ii) did not contain any untrue statement of a material
fact or omit to state a 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.
(b) Each of the consolidated balance sheets of the Company and its
Subsidiaries (including all related notes) included in the financial statements
contained in the Company SEC Reports (or incorporated therein by reference)
present fairly, in all material respects, the consolidated financial position of
the Company and its Subsidiaries as of the respective dates indicated, and each
of the consolidated statements of income, consolidated statements of cash flows
and consolidated statements of changes in stockholders' equity of the Company
and its Subsidiaries (including all related notes) contained in such financial
statements present fairly, in all material respects, the consolidated results of
operations, cash flows and changes in stockholders' equity of the Company and
its Subsidiaries for the respective periods indicated, in each case in
conformity with GAAP applied on a consistent basis throughout the periods
involved (except for changes in accounting principles disclosed in the notes
thereto) and the rules and regulations of the SEC, except that unaudited interim
financial statements are subject to normal and recurring year-end adjustments
and any other adjustments described therein and do not include certain notes and
other information which may be required by GAAP but which are not required under
the Exchange Act. The financial statements included in the Company SEC Reports
are in all material respects in accordance with the books and records of the
Company and its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty is being
made in this Section 3.6 with respect to information or statements (including
financial information and statements) that are provided by Parent and set forth
in any Company SEC Report filed after the date hereof or with respect to any
Parent SEC Reports (as defined in Section 4.6) incorporated therein by
reference.
Section 3.7 Absence of Certain Changes. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement and as otherwise
contemplated or permitted hereby, since September 30, 1998 (a) the Company and
its Subsidiaries have conducted their respective businesses in all material
respects in the ordinary course of such businesses and there have not been any
changes to the condition (financial or otherwise), assets, liabilities, business
or results of operations of the Company and its Subsidiaries, or any other
developments with respect to the Company or any of its Subsidiaries, in each
case whether or not in the ordinary course of business, that, in the aggregate
with all other changes and developments, have had, or would reasonably be
expected to have, a Company Material Adverse Effect, and (b) there has not been
(i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) in respect of any shares of
the capital stock or other equity securities, or any securities convertible,
exercisable or exchangeable for or into shares of capital stock or other equity
securities, of the Company or any of its Subsidiaries, other than (x) quarterly
cash dividends of $.27 per share in respect of the outstanding Company Common
Stock and (y) dividends and distributions by wholly owned Subsidiaries of the
Company; (ii) any change by the Company to its accounting policies, practices or
methods; (iii) other than in connection with the exercise, exchange or
conversion of Company Equity Equivalent Securities, any repurchase, redemption
or other acquisition of any shares of capital stock or other equity securities
or any securities convertible, exchangeable or exercisable for or into shares of
capital stock or other equity securities, of the Company or any of its
Subsidiaries; (iv) except as required by applicable law or pursuant to
contractual obligations existing as of September 30, 1998, (w) any execution,
establishment, adoption or amendment of, or acceleration of rights or benefits
under, any agreement relating to severance, any Company Employee Plan, any
employment or consulting agreement or any collective bargaining agreement, (x)
any increase in the compensation payable or to become payable to any officer,
director or employee of the Company or any of
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its Subsidiaries (except increases in the ordinary course of business), (y) any
grant of any severance or termination paid to any officer or director of the
Company, or (z) any grant of any stock options or other equity related awards
other than in the ordinary course consistent with past practice; or (v) any
agreement or commitment entered into with respect to the foregoing. The Company
has determined prior to the date of this Agreement all annual increases in the
ordinary course of business to the compensation of officers of the Company
contemplated to be made in calendar year 1999.
Section 3.8 Litigation; Liabilities. (a) Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, there are no
civil, criminal or administrative actions, suits, claims, proceedings or
investigations pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries or any of their respective assets or
properties, except as would not, in the aggregate, have, or reasonably be
expected to have, a Company Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports filed prior to the date
of this Agreement, neither the Company nor any of its Subsidiaries has or is
subject to any liabilities (absolute, accrued, contingent or otherwise), except
liabilities (a) adequately reflected on the unaudited consolidated balance sheet
of the Company and its Subsidiaries (including any related notes thereto) as of
September 30, 1998 included in the Company's Quarterly Report of Form 10-Q for
the quarter ended September 30, 1998, or (b) which, in the aggregate, would not
have, or reasonably be expected to have, a Company Material Adverse Effect.
Section 3.9 Compliance; Permits. (a) Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries is in conflict with, or in default or violation of, (i)
any law, rule, regulation, order, judgment or decree applicable to the Company
or any of its Subsidiaries or by which its or any of their respective assets or
properties is bound or affected or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, easement, right-of-way
or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
its or any of their respective assets or properties is bound or affected, except
for such conflicts, defaults or violations which, in the aggregate, would not
have, or reasonably be expected to have, a Company Material Adverse Effect.
(b) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, the Company and its Subsidiaries hold all permits, licenses,
easements, rights-of-way, variances, exemptions, consents, certificates, orders
and approvals which are material to the operation of the businesses of the
Company and its Subsidiaries (collectively, the "Company Permits"), except where
the failure to hold such Company Permits, in the aggregate, would not have, or
reasonably be expected to have, a Company Material Adverse Effect. The Company
and its Subsidiaries are in compliance with the terms of the Company Permits,
except as described in the Company SEC Reports or where the failure to so
comply, in the aggregate, would not have, or reasonably be expected to have, a
Company Material Adverse Effect.
Section 3.10 Employee Matters; ERISA. (a) The Company Disclosure Letter
lists all employee pension benefit plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA")), all employee welfare benefit
plans (as defined in Section 3(1) of ERISA), all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other or similar material fringe or employee benefit plans, programs or
arrangements, all consulting agreements with former officers and directors of
the Company and all employment, termination, change-in-control or severance
agreements, in each case, pursuant to which the Company or any of its
Subsidiaries may have any liability that is material to the Company and its
Subsidiaries, taken as a whole (together, the "Company Employee Plans"),
excluding, however, employee benefit plans that are primarily subject to the
laws of any jurisdiction outside of the United States.
(b) Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement, no material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by the Company or any Subsidiary of the
Company or any entity which is considered a single employer with the Company or
any Subsidiary of the Company under Section 4001(a)(15) of ERISA or Section 414
of the
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Code (a "Company ERISA Affiliate"), other than liabilities for premium payments
to the Pension Benefit Guaranty Corporation ("PBGC") and liabilities that have
previously been satisfied.
(c) Except as disclosed in the Company SEC Reports filed prior to the date
hereof, none of the Company Employee Plans promises or provides retiree medical
or other retiree welfare benefits to any person, other than health continuation
coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA,
and none of the Company Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA. Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement and except, in the aggregate,
as would not have, or reasonably be expected to have, a Company Material Adverse
Effect, (i) no party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Company Employee Plan which could subject the
Company or any Company ERISA Affiliate, directly or indirectly, to any tax,
penalty or other liability for prohibited transactions under ERISA or Section
4975 of the Code; (ii) no fiduciary of any Company Employee Plan has breached
any of the responsibilities or obligations imposed upon fiduciaries under Title
I of ERISA; (iii) all Company Employee Plans have been established and
maintained substantially in accordance with their terms and have operated in
compliance with the requirements of applicable law, and the Company and its
Subsidiaries have performed all obligations required to be performed by them
under and are not in default under or in violation of any of the Company
Employee Plans; (iv) each Company Employee Plan which is intended to be
qualified under Section 401(a) of the Code is so qualified, is the subject of a
favorable determination letter from the Internal Revenue Service ("IRS"), and,
to the Company's knowledge, nothing has occurred which may reasonably be
expected to result in the revocation of such determination; (v) all
contributions required to be made with respect to any Company Employee Plan
pursuant to Section 412 of the Code and Section 302 of ERISA, or pursuant to the
terms of the Company Employee Plan or any collective bargaining agreement, have
been made on or before their due dates (including any extensions thereof); (vi)
with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the 30 day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) has occurred for which there is any outstanding liability to the Company
or any Company ERISA Affiliate, nor would the execution, delivery or
consummation of the transactions contemplated hereby constitute a reportable
event for which the 30-day requirement has not been waived; and (vii) no Company
Employee Plan is under audit or investigation by the IRS, the Department of
Labor or the PBGC nor, to the knowledge of the Company, is any such audit or
investigation threatened.
(d) The Company Disclosure Letter sets forth a true and complete list of
each current or former employee, officer or director of the Company or any of
its Subsidiaries who holds (i) any Company Option as of the date of this
Agreement, together with the number of shares of Company Common Stock subject to
such option, the exercise price of such option, the vested and unvested portion
of such option, whether such option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code, and the expiration date
of such option or (ii) any shares of Company Common Stock that are restricted
and the date(s) of lapse of such restrictions. In addition, the Company
Disclosure Letter sets forth, in the aggregate, the number of shares of Company
Common Stock underlying (i) all other outstanding rights under Company Employee
Plans (other than plans that are qualified plans under Section 401(a) of the
Code) to receive shares of Company Common Stock, to the extent that such shares
of Company Common Stock are not included in the number of shares set forth in
the third sentence of Section 3.3, and (ii) compensation based on the value of
shares of Company Common Stock.
(e) The PBGC has not notified the Company regarding the institution of
proceedings to terminate any Company Employee Plan that is subject to Title IV
of ERISA (each, a "Company Defined Benefit Plan"). The Company Defined Benefit
Plans have no accumulated or waived funding deficiencies within the meaning of
Section 412 of the Code nor have any extensions of any amortization period
within the meaning of Section 412 of the Code or 302 of ERISA been applied for
with respect thereto.
(f) To the knowledge of the Company, all employee benefit plans of the
Company and any of its Subsidiaries that are primarily subject to the laws of
any jurisdiction outside of the United States have
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been maintained in compliance with all applicable law (including, if they are
intended to qualify for special tax treatment, applicable tax laws), except for
noncompliance that would not individually or in the aggregate have a Company
Material Adverse Effect.
(g) The execution and delivery of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under any Company
Employee Plan, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any current or former employee of the Company or any Subsidiary of the
Company, or (ii) result in the triggering or imposition of any restrictions or
limitations on the right of the Company or any Subsidiary of the Company to
amend or terminate any Company Employee Plan. No payment or benefit which is
required to be paid or distributed, prior to or after the Closing, by Parent,
the Company, the Parent Surviving Corporation or any of their respective
Subsidiaries under any Company Employee Plan or any other plan, program or
arrangement of the Company to any current or former employee of the Company or
any Subsidiary of the Company will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
Section 3.11 Labor Matters. Except as set forth in the Company SEC Reports
filed prior to the date of this Agreement, (i) there are no controversies
pending or, to the knowledge of the Company, threatened, between the Company or
any of its Subsidiaries and any of their respective employees, which
controversies, in the aggregate, have had, or would reasonably be expected to
have, a Company Material Adverse Effect; (ii) neither the Company nor any of its
Subsidiaries is in breach of any material collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or its
Subsidiaries which, in the aggregate, would have, or reasonably be expected to
have, a Company Material Adverse Effect, nor does the Company know of any
activities or proceedings of any labor union to organize any significant number
of such employees; and (iii) neither the Company nor any of its Subsidiaries is
in breach of any material collective bargaining agreement or other labor union
contract, nor does the Company have any knowledge of any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of the Company or any of its Subsidiaries except, in the aggregate, as
would not have, or reasonably be expected to have, a Company Material Adverse
Effect.
Section 3.12 Environmental Matters. Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement and except for those matters,
in the aggregate, that would not have, or reasonably be expected to have, a
Company Material Adverse Effect:
(a) The Company and each of its Subsidiaries, and, to the knowledge of
the Company, their respective predecessors, if any, have been at all times
operated, and are, in full compliance in all material respects with all
applicable Environmental Laws, including all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables contained in all applicable Environmental Laws.
(b) The Company and each of its Subsidiaries have obtained, are in
compliance with, and have made all appropriate filings for issuance or
renewal of, all material permits, licenses, authorizations, registrations
and other governmental consents required by applicable Environmental Laws
("Environmental Permits"), including, without limitation, those regulating
emissions, discharges or releases of Hazardous Substances, or the use,
storage, treatment, transportation, release, emission and disposal of raw
materials, by-products, wastes and other substances used or produced by or
otherwise relating to the business of the Company or any of its
Subsidiaries.
(c) All of the Company's and its Subsidiaries' owned or, to the
knowledge of the Company, leased real property is free of any Hazardous
Substances (except those authorized pursuant to and in accordance with
Environmental Permits held by the Company and its Subsidiaries) and free of
all contamination arising from, relating to or resulting from any release,
discharge or emission of Hazardous Substances.
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(d) There are no claims, notices, civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings pending
or, to the knowledge of the Company, threatened against the Company or any
of its Subsidiaries that are based on or related to any Environmental
Matters or the failure to have any required Environmental Permits.
(e) There are no past or present conditions, events, circumstances,
facts, activities, practices, incidents, actions, omissions or plans: (1)
that is reasonably likely to give rise to any liability or other obligation
under any Environmental Laws that is reasonably likely to require the
Company or any of its Subsidiaries to incur any actual or potential
Environmental Costs, or (2) that is reasonably likely to form the basis of
any claim, action, suit, proceeding, hearing, investigation or inquiry
against or involving the Company or any of its Subsidiaries based on or
related to any Environmental Matter or that could require the Company or
any of its Subsidiaries to incur any Environmental Costs.
(f) There are no underground or aboveground storage tanks,
incinerators or surface impoundments at, on, or about, under or within any
real property owned, operated or controlled in whole or in part by the
Company or any of its Subsidiaries.
(g) Neither the Company nor any of its Subsidiaries has received any
notice (written or oral) or other communication that any of them is or may
be a potentially responsible person or otherwise liable in connection with
any waste disposal site allegedly containing any Hazardous Substances, or
other location used for the disposal of any Hazardous Substances, or notice
of any failure of the Company or any of its Subsidiaries to comply in any
material respect with any Environmental Law or the requirements of any
Environmental Permit.
(h) Neither the Company nor any of its Subsidiaries has used any waste
disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Substances to any place or location, or in
violation of any Environmental Laws.
(i) Neither the Company nor any of its Subsidiaries has been in
violation of any Environmental Laws, nor has it been requested or required
by any Governmental Entity to perform any investigatory or remedial
activity or other action in connection with any actual or alleged release
of Hazardous Substances or any other Environmental Matter.
For the purposes of this Agreement, the following terms shall have the
meanings indicated:
"Environmental Costs" means, without limitation, any actual or
potential cleanup costs, remediation, removal or other response costs
(which without limitation shall include costs to cause the representing
party or its Subsidiaries to come into compliance with Environmental Laws),
investigation costs (including without limitation fees of consultants,
counsel and other experts in connection with any environmental
investigation, testing, audits or studies), losses, liabilities or
obligations (including without limitation, liabilities or obligations under
any lease or other contract), payments, damages (including without
limitation any actual, punitive or consequential damages under any
statutory laws, common law cause of action or contractual obligations or
otherwise, including without limitation damages (a) to third parties for
personal injury or property damage, or (b) to natural resources), civil or
criminal fines or penalties, judgments and amounts paid in settlement
arising out of or relating to or resulting from any Environmental Matter.
"Environmental Matter" means any matter arising out of, relating to,
or resulting from pollution, contamination, protection of the environment,
human health or safety, health or safety of employees, sanitation, and any
matters relating to emissions, discharges, disseminations, releases or
threatened releases, of Hazardous Substances into the air (indoor and
outdoor), surface water, groundwater, soil, land surface or subsurface,
buildings, facilities, real or personal property or fixtures or otherwise
arising out of, relating to, or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, handling,
release or threatened release of Hazardous Substances.
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes,
constituents, compounds, chemicals, natural or man-made
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elements or forces (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, ▇▇▇▇▇▇ Amendment
materials, lead, asbestos and asbestos-containing materials ("ACM"),
building construction materials and debris, polychlorinated biphenyls
("PCBs") and PCB-containing equipment, radon and other radioactive
elements, ionizing radiation, electromagnetic field radiation and other
non-ionizing radiation, sonic forces and other natural forces, infectious,
carcinogenic, mutagenic, or etiologic agents, pesticides, defoliants,
explosives, flammables, corrosives and urea formaldehyde foam insulation)
that are regulated by, or may now or in the future form the basis of
liability under, any Environmental Laws.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. sec.sec.
9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. sec.sec. 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. sec.sec. 6901 et seq., the Toxic Substances Control
Act, 15 U.S.C. sec.sec. 2601 et seq., the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. sec.sec. 136 et seq., the Clean Air Act, 42
U.S.C. sec.sec. 7401 et. seq., the Clean Water Act (Federal Water Pollution
Control Act), 33 U.S.C. sec.sec. 1251 et seq., the Safe Drinking Water Act,
42 U.S.C. sec.sec. 300f et seq., the Occupational Safety and Health Act, 29
U.S.C. sec.sec. 641, et seq., the Hazardous Materials Transportation Act,
49 U.S.C. sec.sec. 1801, et seq., as any of the above statutes have been or
may be amended from time to time, all rules and regulations promulgated
pursuant to any of the above statutes, and any other foreign, federal,
state or local law, statute, ordinance, rule or regulation governing
Environmental Matters, as the same have been or may be amended from time to
time, including any common law cause of action providing any right or
remedy relating to Environmental Matters, all indemnity agreements and
other contractual obligations (including leases, asset purchase and merger
agreements) relating to environmental matters, and all applicable judicial
and administrative decisions, orders, and decrees relating to Environmental
Matters.
Section 3.13 Board Action; Company Rights Agreement; Vote Required. (a)
The Company's Board of Directors has unanimously approved (including, with
respect to Parent, Merger Sub and their respective affiliates and associates,
for purposes of Section 203 of the DGCL, Article SEVENTH of the Company's
Restated Certificate of Incorporation, the Capital Stock Agreement of Citrus
Corp. dated June 30, 1986 and paragraph 6 of the Confidentiality Agreement dated
February 5, 1999, between Parent and the Company (the "Confidentiality
Agreement") this Agreement, the Stock Option Agreements and the transactions
contemplated hereby and thereby (including the Voting Agreements), has
determined that the transactions contemplated hereby are fair to and in the best
interests of Company and its stockholders and has resolved to recommend to
stockholders that they vote in favor of approving and adopting this Agreement,
the Parent Merger and the Alternative Merger. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute applicable to
the Company will prevent or otherwise delay the consummation of transactions
contemplated hereby.
(b) The Board of Directors of the Company has taken all necessary actions
such that, (i) none of Parent, Merger Sub, the Surviving Corporation or any of
their affiliates shall become an "Acquiring Person" (as defined in the Company
Rights Agreement), and (ii) no "Distribution Date," "Shares Acquisition Date"
(each as defined in the Company Rights Agreement) or any event which would
entitle any holders of Rights (as defined in the Company Rights Agreement) to
purchase any shares of the Surviving Corporation, Merger Sub, the Company or
Parent or any of their respective affiliates pursuant to Section 13 of the
Company Rights Agreement, shall have occurred or shall occur, in each case by
reason of the execution, delivery or performance of this Agreement, the Stock
Option Agreements or the Voting Agreements or any announcement thereof.
(c) The affirmative vote of the holders of a majority of all outstanding
shares of Company Common Stock is necessary to approve and adopt this Agreement,
the Parent Merger and the Alternative Merger. Such vote is the only vote or
approval of holders of shares of any class or series of the Company's capital
stock required in connection with this Agreement, the Stock Option Agreements
and the transactions contemplated hereby and thereby.
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Section 3.14 Opinion of Financial Advisor. The Board of Directors of the
Company has received the written opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), dated as of the date of this Agreement, to the
effect that, subject to the qualifications and limitations contained therein, as
of the date of this Agreement, the consideration to be received by the holders
of shares of Company Common Stock (other than Parent and its affiliates) in the
Parent Merger or the Alternative Merger is fair to such holders from a financial
point of view.
Section 3.15 Brokers. ▇▇▇▇▇▇▇ ▇▇▇▇▇ is the only broker, finder, investment
banker or other person entitled to any brokerage, finder's, investment banking
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries. The Company has previously provided to
Parent a copy of the letter agreement, dated February 1, 1999, between ▇▇▇▇▇▇▇
▇▇▇▇▇ and the Company giving rise to a fee to ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Section 3.16 Tax Matters. (a) Except as would not, in the aggregate, have
or reasonably be expected to have, a Company Material Adverse Effect, the
Company and its Subsidiaries (i) have timely filed all federal, state and
foreign Tax returns required to be filed by any of them for Tax years ended
prior to the date of this Agreement or requests for extensions have been timely
filed and any such request has been granted and has not expired, and all such
returns are correct and complete and (ii) have paid or accrued in accordance
with GAAP all Taxes shown to be due and payable on such returns.
(b) There is no dispute or claim concerning any Tax liability of any of the
Company and its Subsidiaries claimed or raised by any authority in writing.
(c) No written claims that, in the aggregate, could reasonably be expected
to have a Company Material Adverse Effect have been made by an authority in a
jurisdiction where any of the Company and its Subsidiaries does not file Tax
returns that it is or may be subject to Taxation by that jurisdiction.
(d) None of the Company and its Subsidiaries has waived any statute of
limitations in respect of income Taxes or agreed to any extension of time with
respect to an income Tax assessment or deficiency.
(e) Neither the Company nor any of its Subsidiaries has taken or agreed to
take any action, nor does the Company have any knowledge of any fact or
circumstance with respect to the Company or its Subsidiaries, which would
prevent the Parent Merger or the Alternative Merger from qualifying as a
"reorganization" within the meaning of Section 368 of the Code.
Section 3.17 Public Utility Holding Company Act of 1935. The Company is
not a "holding company," a "subsidiary company" of a "holding company," or an
"affiliate of a holding company," or a "public utility company" as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended, and
rules and regulations thereunder (the "Holding Company Act").
Section 3.18 Restrictions on Business Activities. Except for this
Agreement or as set forth in the Company SEC Reports filed prior to the date of
this Agreement, there is no judgment, injunction, order or decree or material
agreement (including, without limitation, agreements containing provisions
restricting the Company or any of its Subsidiaries from entering or engaging in
any line of business, agreements containing geographic restrictions on the
Company's or any of its Subsidiaries' ability to operate their respective
businesses and agreements containing rights of first refusal, rights of first
offer, exclusivity, "requirements" or similar provisions) binding upon the
Company or any of its Subsidiaries which has or would reasonably be expected to
have the effect of materially prohibiting or impairing the conduct of the
businesses of the Company or any of its Subsidiaries or, to the Company's
knowledge, after the Effective Time, Parent or any of its Subsidiaries, taken
together.
Section 3.19 Year 2000. Except as set forth in the Company SEC Reports
filed prior to the date of this Agreement, the systems operated or used by the
Company or any of its Subsidiaries are capable of providing or are being adapted
to provide uninterrupted millennium functionality on or after January 1, 2000 to
share, record, process and present data in substantially the same manner and
with the same functionality as such systems share, record, process and present
such data on or before December 31,
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1999, except, in the aggregate, as would not have, or reasonably be expected to
have, a Company Material Adverse Effect. The costs of the adaptations referred
to in the prior sentence, in the aggregate, will not have a Company Material
Adverse Effect.
Section 3.20 Accounting Matters. Neither the Company nor any of its
Subsidiaries has taken or agreed to take action, nor does the Company have any
knowledge of any fact or circumstance with respect to the Company or its
Subsidiaries, which would prevent the business combination to be effected
pursuant to the Parent Merger from being accounted for as a pooling-of-interests
under GAAP or the rules and regulations of the SEC. Ernst & Young LLP ("E&Y")
has advised the Company that it is not aware as of the date of this Agreement of
any reason why E&Y would be unable to deliver at the Closing the letter referred
to in the second sentence of Section 6.13(b).
ARTICLE IV
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated the date of this Agreement, delivered by Parent to the
Company (the "Parent Disclosure Letter"), Parent hereby represents and warrants
to the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. (a) Parent
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Subsidiaries of Parent
is a corporation or other business entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, and each of Parent and its Subsidiaries has the requisite
corporate or similar organizational power and authority to own, operate or
lease its properties and to carry on its business as it is now being
conducted, and is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned, operated or leased or the nature of its activities makes
such qualification necessary, except as would not, in the aggregate, have,
or reasonably be expected to have, a Parent Material Adverse Effect (as
defined in Section 9.3).
(b) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.6) filed prior to the date hereof, and except as would not, in
the aggregate, have, or reasonably be expected to have, a Parent Material
Adverse Effect, (i) all of the outstanding shares of capital stock and
other equity securities) of the Subsidiaries of Parent are owned, directly
or indirectly, by Parent free and clear of all liens, pledges, security
interests, or other encumbrances, (ii) all of the outstanding shares of
capital stock or other equity securities of the Subsidiaries of Parent have
been validly issued and are fully paid and nonassessable, (iii) there are
no subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) entitling any person to purchase or otherwise acquire from
Parent or any of its Subsidiaries at any time, or upon the happening of any
stated event, any shares of capital stock or other equity securities of any
of the Subsidiaries of Parent and there are no outstanding obligations,
contingent or otherwise, of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or
other equity securities, or any securities convertible, exchangeable or
exercisable for or into shares of capital stock or other equity securities,
of any Subsidiary of Parent. There are no outstanding obligations,
contingent or otherwise, of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or
other equity securities, or any securities convertible, exchangeable or
exercisable for or into, shares of capital stock or other equity securities
of any Subsidiary of Parent.
Section 4.2 Restated Certificate of Incorporation and By-laws of
Parent. Parent has furnished or otherwise made available to the Company a
complete and correct copy of Parent's Restated Certificate of Incorporation
and By-laws, in each case as amended to the date of this Agreement. Such
Restated Certificate of Incorporation and By-laws of Parent and all similar
organizational documents of Subsidiaries of Parent are in full force and
effect. Parent is not in violation of its Restated Certificate of
Incorporation or By-laws and, except as would not, in the aggregate, have,
or
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reasonably be expected to have, a Parent material Adverse Effect, none of
the Subsidiaries of Parent is in violation of any similar organizational
documents of Subsidiaries of Parent.
Section 4.3 Capitalization. (a) The authorized capital stock of
Parent consists of 275,000,000 shares of Parent Common Stock and 25,000,000
shares of serial Preferred Stock, par value $.01 per share (the "Parent
Preferred Stock"). 2,750,000 shares of the Parent Preferred Stock have been
designated as "Series A Junior Participating Preferred Stock" and, other
than as contemplated or permitted hereby, no other shares of Parent
Preferred Stock are subject to any designation. At the close of business on
March 12, 1999, 122,359,989 shares of Parent Common Stock (including
1,360,000 shares held in Parent's Benefit Protection Trust), and no shares
of Parent Preferred Stock, were issued and outstanding. 2,869,162 shares of
Parent Common Stock and no Shares of Parent Preferred Stock are held by
Parent in its treasury. No shares of capital stock of Parent are held by
any of Parent's Subsidiaries. All of the issued and outstanding shares of
Parent Common Stock are validly issued, fully paid, nonassessable and free
of preemptive rights. At the close of business on March 12, 1999, 9,610,855
Parent Options, exercisable for 9,610,855 shares of Parent Common Stock, in
the aggregate, were outstanding. As of the date of this Agreement, other
than (i) the options granted pursuant to the Parent Stock Option Agreement,
(ii) the preferred stock purchase rights (none of which are exercisable)
issued pursuant to the Amended and Restated Shareholder Rights Agreement
(the "Parent Rights Agreement"), effective January 20, 1999, between the
Parent and BankBoston, N.A., as rights agent, (iii) the 6,500,000 4 3/4%
Trust Convertible Preferred Securities of El Paso Energy Capital Trust I
(the "Parent Trust Securities") (and the underlying 4 3/4% Subordinated
Convertible Debentures due 2028 of Parent in the aggregate principal amount
of $325 million) outstanding and (iv) the Parent Options, the Parent does
not have outstanding any subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) entitling any person to purchase or otherwise
acquire from Parent or any of its Subsidiaries at any time, or upon the
happening of any stated event, any shares of the capital stock of Parent
(each of the foregoing, a "Parent Equity Equivalent Security"). From the
close of business on March 12, 1999 through the date of this Agreement, no
shares of Parent Common Stock have been issued, sold or otherwise
transferred by Parent (except in connection with the exercise, conversion
or exchange of outstanding Parent Equity Equivalent Securities).
(b) As of the date of this Agreement, there are no outstanding
obligations, contingent or otherwise, of Parent or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Parent Common
Stock or any Parent Equity Equivalent Securities (except in connection with
the exercise, conversion or exchange of outstanding Parent Equity
Equivalent Securities). As of the date of this Agreement, there are no
bonds, debentures, notes or other indebtedness issued and outstanding
having the right to vote together with Parent's stockholders on any matter
in respect of which the Parent's stockholders are entitled to vote.
Section 4.4 Power and Authority; Authorization; Valid and
Binding. Parent has the necessary corporate power and authority to execute
and deliver this Agreement and the Stock Option Agreements and to perform
its obligations hereunder and thereunder, as applicable, except that the
consummation of Parent Merger is subject to the approval of the
stockholders of Parent as set forth in Section 4.13(c). The execution and
delivery of this Agreement and the Stock Option Agreements by Parent, and
the performance by it of its obligations hereunder and thereunder, as
applicable, have been duly authorized by all necessary corporate action on
the part of Parent, except that the consummation of Parent Merger is
subject to the approval of the stockholders of Parent as set forth in
Section 4.13(c). This Agreement and the Stock Option Agreements have been
duly executed and delivered by Parent, and assuming the corporate authority
of, and the due authorization, execution and delivery by, the Company, each
of such agreements constitutes a legal, valid and binding obligation of
Parent enforceable against Parent in accordance with the terms hereof or
thereof, as applicable, subject to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and
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similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 4.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery by Parent of this Agreement and the Stock Option
Agreements do not and will not, and the performance by Parent of its
obligations hereunder and thereunder do not and will not, (i) violate or
conflict with the Restated Certificate of Incorporation or By-laws of
Parent, (ii) subject to obtaining or making the notices, reports, filings,
waivers, consents, approvals or authorizations referred to in paragraph (b)
below and to the adoption of this Agreement by Parent's stockholders as set
forth in Section 4.13(c) in connection with a Parent Merger, conflict with
or violate any law, regulation, order, judgment or decree applicable to
Parent or any of its Subsidiaries or by which any of their respective
property is bound or affected, (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, impair Parent's or any of its Subsidiaries' rights
under or alter the rights or obligations of any other party to, give to
others any rights of termination, cancellation, vesting, modification,
alteration or acceleration of any obligation under, result in the creation
of a lien, claim or encumbrance on any of the properties or assets of
Parent or any of its Subsidiaries pursuant to, require the consent of any
other party to, or result in any obligation on the part of Parent or any of
its Subsidiaries to repurchase (with respect to a debenture, bond or note),
pursuant to any agreement, contract, instrument, debenture, bond, note,
indenture, permit, license or franchise to which Parent or any of its
Subsidiaries is a party or by which Parent, any of its Subsidiaries or any
of their respective property is bound or affected, except, in the case of
clauses (ii) and (iii) above, as would not, in the aggregate, have, or
reasonably be expected to have, a Parent Material Adverse Effect.
(b) Except for (i) applicable filings required under the premerger
notification requirements of the HSR Act, (ii) required filings with and
approvals of the FERC, (iii) applicable filings and approvals under
federal, state, local or foreign regulatory laws, and applicable
requirements of foreign, state or local public utility or similar
commissions or agencies, all of which are set forth in the Parent
Disclosure Letter, (iv) the filing of a certificate of merger with respect
to the Applicable Transaction as required by the DGCL, (v) filings with the
SEC under the Securities Act and the Exchange Act, (vi) applicable filings
with the NYSE, and (vii) any filings required or approvals necessary
pursuant to any state securities or "blue sky" laws, neither Parent nor any
of its Subsidiaries is required to submit any notice, report or other
filing to any Governmental Entity, and no waiver, consent, approval, order
or authorization of any Governmental Entity is required to be obtained by
Parent or any of its Subsidiaries, in connection with the execution,
delivery or performance of this Agreement except for such notices, reports,
filings, waivers, consents, approvals or authorizations that, if not made
or obtained, would not, in the aggregate, have, or reasonably be expected
to have, a Parent Material Adverse Effect.
Section 4.6 SEC Reports; Financial Statements. (a) Parent (with
respect to the period prior to August 1, 1998, for purposes of this Section
4.6, all references to the "Parent" shall be deemed to refer to El Paso
Natural Gas Company) has filed all forms, reports, statements, schedules
and other documents (including all annexes, exhibits, schedules, amendments
and supplements thereto) required to be filed by it with the SEC since
January 1, 1997, has delivered or made available to the Company all forms,
reports, statements, schedules and other documents (except for preliminary
materials) (including all annexes, exhibits, schedules, amendments and
supplements thereto) filed by it with the SEC since January 1, 1997 (such
forms, reports, statements, schedules and documents filed by Parent with
the SEC, including any such forms, reports, statements, schedules and other
documents filed by Parent with the SEC after the date of this Agreement and
prior to the Closing Date, are referred to herein, collectively, as the
"Parent SEC Reports"), and with respect to the Parent SEC Reports filed by
Parent after the date of this Agreement and prior to the Closing Date, will
deliver or make available to the Company all of such Parent SEC Reports in
the form filed with the SEC. As of their respective filing dates, the
Parent SEC Reports (including all information incorporated therein by
reference) (i) complied as to form in all material respects with the
requirements of the Securities Act
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or the Exchange Act, as applicable, and (ii) did not contain any untrue
statement of a material fact or omit to state a 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.
(b) Each of the consolidated balance sheets of Parent and its
Subsidiaries (including all related notes) included in the financial
statements contained in the Parent SEC Reports (or incorporated therein by
reference) present fairly, in all material respects, the consolidated
financial position of Parent and its Subsidiaries as of the respective
dates indicated, and each of the consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
changes in stockholders' equity of Parent and its Subsidiaries (including
all related notes) contained in such financial statements present fairly,
in all material respects, the consolidated results of operations, cash
flows and changes in stockholders' equity of Parent and its Subsidiaries
for the respective periods indicated, in each case in conformity with GAAP
applied on a consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes thereto) and the
rules and regulations of the SEC, except that unaudited interim financial
statements are subject to normal and recurring year-end adjustments and any
other adjustments described therein and do not include certain notes and
other information which may be required by GAAP but which are not required
under the Exchange Act. The financial statements included in the Parent SEC
Reports are in all material respects in accordance with the books and
records of Parent and its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty is
being made in this Section 4.6 with respect to information or statements
(including financial information and statements) that are provided by the
Company and set forth in any Parent SEC Report filed after the date hereof
or with respect to any Company SEC Reports incorporated therein by
reference.
Section 4.7 Absence of Certain Changes. Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement and as
otherwise contemplated or permitted hereby, since December 31, 1998, (a)
Parent and its Subsidiaries have conducted their respective businesses in
all material respects in the ordinary course of such businesses and there
have not been any changes to the condition (financial or otherwise),
assets, liabilities, business or results of operations of Parent and its
Subsidiaries, or any other developments with respect to Parent or any of
its Subsidiaries, in each case whether or not in the ordinary course of
business, that, in the aggregate with all other changes and developments,
have had, or would reasonably be expected to have, a Parent Material
Adverse Effect, and (b) there has not been (i) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) in respect of any shares of the capital stock or other
equity securities, or any securities convertible, exercisable or
exchangeable for or into shares of capital stock or other equity
securities, of Parent or any of its Subsidiaries, other than (x) regular
quarterly cash dividends of $.20 per share in respect of the outstanding
Parent Common Stock and (y) dividends and distributions by wholly owned
Subsidiaries of Parent; (ii) any change by Parent to its accounting
policies, practices or methods; (iii) other than in connection with the
exercise, exchange or conversion of Parent Equity Equivalent Securities,
any repurchase, redemption or other acquisition of any shares of capital
stock or other equity securities or any securities convertible,
exchangeable or exercisable for or into shares of capital stock or other
equity securities, of Parent or any of its Subsidiaries; or (iv) except as
required by applicable law or pursuant to contractual obligations existing
as of September 30, 1998, (w) any execution, establishment, adoption or
amendment of, or acceleration of rights or benefits under, any agreement
relating to severance, any Parent Employee Plan, any employment or
consulting agreement or any collective bargaining agreement, (x) any
increase in the compensation payable or to become payable to any officer,
director or employee of Parent or any of its Subsidiaries (except increases
in the ordinary course of business), (y) any grant of any severance or
termination paid to any officer or director of Parent, or (z) any grant of
any stock options or other equity related awards other than in the ordinary
course consistent with past practice; or (v) any agreement or commitment
entered into with respect to the foregoing.
Section 4.8 Litigation; Liabilities. (a) Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement, there are no
civil, criminal or administrative actions, suits, claims,
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proceedings, or investigations pending or, to the knowledge of Parent,
threatened, against Parent or any of its Subsidiaries or any of their
respective properties, except as would not, in the aggregate, have, or
reasonably be expected to have, a Parent Material Adverse Effect.
(b) Except as set forth in the Parent SEC Reports filed prior to the
date of this Agreement, neither Parent nor any of its Subsidiaries has or
is subject to any liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) adequately reflected on the unaudited consolidated
balance sheet of Parent and its Subsidiaries (including any related notes
thereto) as of December 31, 1998 included in Parent's Annual Report of Form
10-K for the quarter ended December 31, 1998, or (b) which, in the
aggregate, would not have, or reasonably be expected to have, a Parent
Material Adverse Effect.
Section 4.9 Compliance; Permits. (a) Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement, neither
Parent nor any of its Subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which its or any of
their respective assets or properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, easement, right-of-way or other instrument or obligation
to which Parent or any of its Subsidiaries is a party or by which Parent or
any of its Subsidiaries or its or any of their respective assets or
properties is bound or affected, except for such conflicts, defaults or
violations which, in the aggregate, would not have, or reasonably be
expected to have, a Parent Material Adverse Effect.
(b) Except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement, Parent and its Subsidiaries hold all permits,
licenses, easements, rights-of-way, variances, exemptions, consents,
certificates, orders and approvals which are material to the operation of
the businesses of Parent and its Subsidiaries (collectively, the "Parent
Permits"), except where the failure to hold such Parent Permits, in the
aggregate, would not have, or reasonably be expected to have, a Parent
Material Adverse Effect. Parent and its Subsidiaries are in compliance with
the terms of the Parent Permits, except as described in the Parent SEC
Reports filed prior to the date hereof or where the failure to so comply,
in the aggregate, would not have, or reasonably be expected to have, a
Parent Material Adverse Effect.
Section 4.10 Employee Matters; ERISA. (a) The Parent Disclosure
Letter lists all employee pension benefit plans (as defined in Section 3(2)
of ERISA), all employee welfare benefit plans (as defined in Section 3(1)
of ERISA), all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other or similar
material fringe or employee benefit plans, programs or arrangements, all
consulting agreements with former officers and directors of Parent and all
employment, termination, change-in-control or severance agreements, in each
case, pursuant to which Parent or any of its Subsidiaries may have any
liability material to Parent and its Subsidiaries, taken as a whole
(together, the "Parent Employee Plans"), excluding, however, employee
benefit plans that are primarily subject to the laws of any jurisdiction
outside the United States.
(b) Except as disclosed in the Parent SEC Reports filed prior to the
date hereof, no material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by the Parent or any Subsidiary of the
Parent or any entity which is considered a single employer with the Parent
or any Subsidiary of the Parent under Section 4001(a)(15) of ERISA or
Section 414 of the Code (a "Parent ERISA Affiliate"), other than
liabilities for premium payments to the PBGC and liabilities that have
previously been satisfied.
(c) Except as disclosed in the Parent SEC Reports filed prior to the
date of this Agreement, none of the Parent Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person,
other than health continuation coverage as required by Section 4980B of the
Code or Part 6 of Title I of ERISA, and none of the Parent Employee Plans
is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA. Except as set forth in the Parent SEC Reports filed prior to the
date of this Agreement and except, in the aggregate, as would not have, or
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reasonably be expected to have, a Parent Material Adverse Effect, (i) no
party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Parent Employee Plan which could subject
Parent or any Parent ERISA Affiliate, directly or indirectly, to any tax,
penalty or other liability for prohibited transactions under ERISA or
Section 4975 of the Code; (ii) no fiduciary of any Parent Employee Plan has
breached any of the responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA; (iii) all Parent Employee Plans have
been established and maintained substantially in accordance with their
terms and have operated in compliance with the requirements of applicable
law, and Parent and its Subsidiaries have performed all obligations
required to be performed by them under and are not in default under or in
violation of any of Parent Employee Plans; (iv) each Parent Employee Plan
which is intended to be qualified under Section 401(a) of the Code is so
qualified, is the subject of a favorable determination letter from the IRS,
and, to Parent's knowledge, nothing has occurred which may reasonably be
expected to result in the revocation of such determination; (v) all
contributions required to be made with respect to any Parent Employee Plan
pursuant to Section 412 of the Code and Section 302 of ERISA, or pursuant
to the terms of Parent Employee Plan or any collective bargaining
agreement, have been made on or before their due dates (including any
extensions thereof); (vi) with respect to each Parent Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding
any such event for which the 30 day notice requirement has been waived
under the regulations to Section 4043 of ERISA) has occurred for which
there is any outstanding liability to Parent or any Parent ERISA Affiliate,
nor would the execution, delivery or consummation of the transactions
contemplated hereby constitute a reportable event for which the 30-day
requirement has not been waived; and (vii) no Parent Employee Plan is under
audit or investigation by the IRS, the Department of Labor or the PBGC nor,
to the knowledge of Parent, is any such audit or investigation threatened.
(d) The Parent Disclosure Letter sets forth a true and complete list
of each current or former officer or director of Parent or any of its
Subsidiaries who holds (i) any Parent Option as of the date of this
Agreement, together with the number of shares of Parent Common Stock
subject to such option, the exercise price of such option, the vested and
unvested portion of such option, whether such option is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option; or (ii) any shares of Parent
Common Stock that are restricted and the date(s) of lapse of such
restrictions. The Parent Disclosure Letter also sets forth the number of
options outstanding as of the date hereof and the different exercise prices
and expiration dates for such options. In addition, the Parent Disclosure
Letter sets forth, in the aggregate, the number of shares of Parent Common
Stock underlying (i) all other outstanding rights under Parent Employee
Plans (other than plans that are qualified plans under Section 401(a) of
the Code) to receive shares of Parent Common Stock, to the extent that such
shares of Parent Common Stock are not included in the number of shares set
forth in the second sentence of Section 4.3, and (ii) compensation based on
the value of shares of Parent Common Stock.
(e) The PBGC has not notified Parent regarding the institution of
proceedings to terminate any Parent Employee Plan that is subject to Title
IV of ERISA (each, a "Parent Defined Benefit Plan"). The Parent Defined
Benefit Plans have no accumulated or waived funding deficiencies within the
meaning of Section 412 of the Code nor have any extensions of any
amortization period within the meaning of Section 412 of the Code or 302 of
ERISA been applied for with respect thereto.
(f) To the knowledge of Parent, all employee benefit plans of Parent
and any of its Subsidiaries that are primarily subject to the laws of any
jurisdiction outside of the United States have been maintained in
compliance with all applicable law (including, if they are intended to
qualify for special tax treatment, applicable tax laws), except for
noncompliance that would not individually or in the aggregate have a Parent
Material Adverse Effect.
(g) The execution and delivery of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) (i) constitute an event
under any Parent Employee Plan, trust or loan that will or may result in
any
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payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation
to fund benefits with respect to any current or former employee of Parent
or any Subsidiary of Parent, or (ii) result in the triggering or imposition
of any restrictions or limitations on the right of the Parent or any
Subsidiary of Parent to amend or terminate any Parent Employee Plan. No
payment or benefit which is required to be paid or distributed, prior to or
after the Closing, by Parent, the Company, the Parent Surviving Corporation
or any of their respective Subsidiaries under any Parent Employee Plan or
any other plan, program or arrangement of Parent to any current or former
employee of Parent or any Subsidiary of Parent will be characterized as an
"excess parachute payment," within the meaning of Section 280G(b)(1) of the
Code.
Section 4.11 Labor Matters. Except as set forth in the Parent SEC
Reports filed prior to the date of this Agreement, (i) there are no
controversies pending or, to the knowledge of Parent, threatened, between
Parent or any of its Subsidiaries and any of their respective employees,
which controversies, in the aggregate, have had, or would reasonably be
expected to have, a Parent Material Adverse Effect; (ii) neither Parent nor
any of its Subsidiaries is in breach of any material collective bargaining
agreement or other labor union contract applicable to persons employed by
Parent or its Subsidiaries which, in the aggregate, would have, or
reasonably be expected to have, a Parent Material Adverse Effect, nor does
Parent know of any activities or proceedings of any labor union to organize
any significant number of such employees; and (iii) neither Parent nor any
of its Subsidiaries is in breach of any material collective bargaining
agreement or other labor union contract, nor does Parent have any knowledge
of any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by
or with respect to any employees of Parent or any of its Subsidiaries
except, in the aggregate, as would not have, or reasonably be expected to
have, a Parent Material Adverse Effect.
Section 4.12 Environmental Matters. Except as set forth in the Parent
SEC Reports filed prior to the date of this Agreement and except for those
matters, in the aggregate, that would not have, or reasonably be expected
to have, a Parent Material Adverse Effect:
(a) Parent and each of its Subsidiaries, and, to the knowledge of
Parent, their respective predecessors, if any, have been at all times
operated, and are, in full compliance in all material respects with all
applicable Environmental Laws, including all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in all applicable Environmental Laws.
(b) Parent and each of its Subsidiaries have obtained, are in
compliance with, and have made all appropriate filings for issuance or
renewal of, all material Environmental Permits, including, without
limitation, those regulating emissions, discharges, or releases of
Hazardous Substances, or the use, storage, treatment, transportation,
release, emission and disposal of raw materials, by-products, wastes and
other substances used or produced by or otherwise relating to the
business of Parent or any of its Subsidiaries.
(c) All of Parent's and its Subsidiaries' owned or, to the
knowledge of Parent, leased real property is free of any Hazardous
Substances (except those authorized pursuant to and in accordance with
Environmental Permits held by Parent and its Subsidiaries) and free of
all contamination arising from, relating to, or resulting from any
release, discharge or emission of Hazardous Substances.
(d) There are no claims, notices, civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings
pending or, to the knowledge of Parent, threatened against Parent or any
of its Subsidiaries that are based on or related to any Environmental
Matters or the failure to have any required Environmental Permits.
(e) There are no past or present conditions, events, circumstances,
facts, activities, practices, incidents, actions, omissions or plans:
(1) that is reasonably likely to give rise to any liability or other
obligation under any Environmental Laws that may require Parent or any
of its Subsidiaries to incur any actual or potential Environmental
Costs, or (2) that is reasonably likely
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to form the basis of any claim, action, suit, proceeding, hearing,
investigation or inquiry against or involving Parent or any of its
Subsidiaries based on or related to any Environmental Matter or that
could require Parent or any of its Subsidiaries to incur any
Environmental Costs.
(f) There are no underground or aboveground storage tanks,
incinerators or surface impoundments at, on, or about, under or within
any real property owned, operated or controlled in whole or in part by
Parent or any of its Subsidiaries.
(g) Neither Parent nor any of its Subsidiaries has received any
notice (written or oral) or other communication that any of them is or
may be a potentially responsible person or otherwise liable in
connection with any waste disposal site allegedly containing any
Hazardous Substances, or other location used for the disposal of any
Hazardous Substances, or notice of any failure of Parent or any of its
Subsidiaries to comply in any material respect with any Environmental
Law or the requirements of any Environmental Permit.
(h) Neither Parent nor any of its Subsidiaries has used any waste
disposal site, or otherwise disposed of, transported, or arranged for
the transportation of, any Hazardous Substances to any place or
location, or in violation of any Environmental Laws.
(i) Neither Parent nor any of its Subsidiaries has been in
violation of any Environmental Laws, nor has it been requested or
required by any Governmental Entity to perform any investigatory or
remedial activity or other action in connection with any actual or
alleged release of Hazardous Substances or any other Environmental
Matter.
Section 4.13 Board Action; Vote Required. (a) Parent's Board of
Directors has unanimously approved (including, with respect to the Company
and its affiliates and associates, for purposes of Section 203 of the DGCL,
Article 12 of Parent's Restated Certificate of Incorporation and paragraph
6 of the Confidentiality Agreement) this Agreement, the Stock Option
Agreements, the Voting Agreements and the transactions contemplated hereby
and thereby, has adopted a resolution in accordance with Section 151 of the
DGCL providing for the issuance, in the event the Alternative Merger is
consummated, of shares of Parent Preferred Stock having the powers, rights,
designations and preferences and the qualifications, limitations and
restrictions described in the Certificate of Designation, has determined
that the transactions contemplated hereby and, in the event the Alternative
Merger is consummated, the issuance of shares of Parent Common Stock,
Parent Preferred Stock and the Depositary Shares pursuant thereto are fair
to and in the best interests of Parent and its stockholders and has
resolved to recommend to its stockholders that they vote in favor of this
Agreement and the Parent Merger. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute applicable to
Parent will prevent or otherwise delay the consummation of the transaction
as contemplated hereby.
(b) The Board of Directors of Parent has taken all necessary actions
such that, (i) none of the Company or any of its affiliates shall become an
"Acquiring Person" (each as defined in the Parent Rights Agreement), and
(ii) no "Distribution Date," "Stock Acquisition Date" or "Triggering Event"
(each as defined in the Parent Rights Agreement) shall have occurred or
shall occur, in each case by reason of the execution, delivery or
performance of this Agreement or the Stock Option Agreements or any
announcement thereof.
(c) The affirmative vote of the holders of a majority of all
outstanding shares of Parent Common Stock is necessary to approve and adopt
this Agreement and the Parent Merger. Such vote is the only vote or
approval of holders of shares of any class or series of Parent's capital
stock required in connection with this Agreement, the Stock Option
Agreements, the Voting Agreements and the transactions contemplated hereby
and thereby. No vote of the holders of shares of Parent Common Stock is
necessary in connection with the Alternative Merger.
Section 4.14 Opinion of Financial Advisor. The Board of Directors of
Parent has received the written opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation ("DLJ"), dated as of the date of this Agreement, to
the effect that, subject to the qualifications and limitations contained
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therein, as of the date of this Agreement, the Exchange Ratio pursuant to
the Parent Merger and the consideration to be paid by Parent in the
Alternative Merger, as the case may be, in each case is fair to Parent from
a financial point of view.
Section 4.15 Brokers. DLJ is the only broker, finder or investment
banker or other person entitled to any brokerage, finder's, investment
banking or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or any of its Subsidiaries. Parent has previously
provided to the Company a copy of the letter agreement between DLJ and
Parent giving rise to a fee to DLJ.
Section 4.16 Tax Matters. (a) Except as would not, in the aggregate,
have or reasonably be expected to have a Parent Material Adverse Effect,
Parent and its Subsidiaries (i) have timely filed all federal, state and
foreign Tax returns required to be filed by any of them for Tax years ended
prior to the date of this Agreement or requests for extensions have been
timely filed and any such request has been granted and has not expired, and
all such returns are correct and complete and (ii) have paid or accrued in
accordance with GAAP all Taxes shown to be due and payable on such returns.
(b) There is no dispute or claim concerning any Tax liability of any
of Parent and its Subsidiaries claimed or raised by any authority in
writing.
(c) No written claims that, in the aggregate, could reasonably be
expected to have a Parent Material Adverse Effect have been made by an
authority in a jurisdiction where any of Parent and its Subsidiaries does
not file Tax returns that it is or may be subject to Taxation by that
jurisdiction.
(d) None of Parent and its Subsidiaries has waived any statute of
limitations in respect of income Taxes or agreed to any extension of time
with respect to an income Tax assessment or deficiency.
(e) Neither Parent nor any of its Subsidiaries has taken or agreed to
take any action, nor does Parent have any knowledge of any fact or
circumstance with respect to Parent or its Subsidiaries, which would
prevent Parent Merger or the Alternative Merger from qualifying as a
"reorganization" within the meaning of Section 368 of the Code.
Section 4.17 Public Utility Holding Company Act of 1935. Parent is
not a "holding company," a "subsidiary company" of a "holding company," an
"affiliate of a holding company," or a "public utility company," as such
terms are defined in the Holding Company Act.
Section 4.18 Restrictions on Business Activities. Except for this
Agreement or as set forth in Parent SEC Reports filed prior to the date of
this Agreement, there is no judgment, injunction, order or decree or
material agreement (including, without limitation, agreements containing
provisions restricting Parent or any of its Subsidiaries from entering or
engaging in any line of business, agreements containing geographic
restrictions on Parent's or any of its Subsidiaries' ability to operate
their respective businesses and agreements containing rights of first
refusal, rights of first offer, exclusivity, "requirements" or similar
provisions) binding upon Parent or any of its Subsidiaries which has or
would reasonably be expected to have the effect of materially prohibiting
or impairing the conduct of the business of Parent or any of its
Subsidiaries or, to the knowledge of Parent, after the Effective Time,
Parent or any of its Subsidiaries, taken together.
Section 4.19 Year 2000. Except as set forth in the Parent SEC Reports
filed prior to the date of this Agreement, the systems operated or used by
Parent or any of its Subsidiaries are capable of providing or are being
adapted to provide uninterrupted millennium functionality on or after
January 1, 2000 to share, record, process and present data in substantially
the same manner and with the same functionality as such systems share,
record, process and present such data falling on or before December 31,
1999, except, in the aggregate, as would not have, or reasonably be
expected to have, a Parent Material Adverse Effect. The costs of the
adaptations referred to in the prior sentence, in the aggregate, will not
have a Parent Material Adverse Effect.
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Section 4.20 Accounting Matters. Neither Parent nor any of its
Subsidiaries has taken or agreed to take any action, nor does Parent have
any knowledge of any fact or circumstance with respect to Parent or its
Subsidiaries, which would prevent the business combination to be effected
pursuant to the Parent Merger from being accounted for as a
pooling-of-interests under GAAP or the rules and regulations of the SEC.
PricewaterhouseCoopers LLP ("PWC") has advised Parent that it is not aware
as of the date of this Agreement of any reason why PWC would be unable to
deliver at the Closing the letter referred to in the second sentence of
Section 6.13(a).
ARTICLE V
Section 5.1 Interim Operations of the Company. Between the date of this
Agreement and the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to (unless Parent shall otherwise approve in writing or except as
otherwise contemplated by this Agreement or disclosed in the Company Disclosure
Letter):
(i) conduct its business in all material respects in the ordinary
course consistent with past practice and, to the extent consistent
therewith, use reasonable best efforts to (x) preserve intact its business
organization, (y) keep available the services of its officers and employees
and (z) maintain its existing relations and goodwill with customers,
suppliers, regulators, distributors, creditors, lessors and others having
business dealings with it; provided that the failure of any officer or
employee of the Company or its Subsidiaries to remain an officer or
employee of the Company or its Subsidiaries shall not constitute a breach
of this covenant;
(ii) not (A) amend the Restated Certificate of Incorporation or
By-laws of the Company; (B) split, combine, subdivide or reclassify its
outstanding shares of capital stock or other equity securities; (C)
declare, set aside or pay any dividend or distribution payable in cash,
stock or property in respect of any of its shares of capital stock or other
equity securities, or securities convertible into, exercisable for or
exchangeable for, any of its shares of capital stock or other equity
securities, other than (x) quarterly cash dividends of $.27 per share in
respect of the outstanding shares of Company Common Stock, declared, set
aside and paid at such times during the quarter as is consistent with past
practice, and (y) dividends and distributions by wholly owned Subsidiaries
of the Company; (D) repurchase, redeem or otherwise acquire or permit any
of its Subsidiaries to purchase, redeem or otherwise acquire, any shares of
its capital stock or other equity securities, or securities convertible
into, exercisable for or exchangeable for, any of its shares of capital
stock or other equity securities (it being understood that this clause (D)
shall not prohibit the exercise, exchange or conversion of Company Equity
Equivalent Securities); or (E) enter into any agreement or letter of
intent, agreement in principle or similar arrangement to sell, transfer or
otherwise dispose of, or purchase or otherwise acquire, in the aggregate, a
material amount of assets or properties or any material business by merger,
consolidation, transfer or acquisition of shares of capital stock or
otherwise;
(iii) not take any action that to the knowledge of the Company would
prevent the business combination to be effected pursuant to the Parent
Merger from qualifying for pooling of interests accounting treatment under
GAAP and the rules and regulations of the SEC or would prevent the business
combination to be effected pursuant to the Parent Merger or the Alternative
Merger, as applicable, from qualifying as a "reorganization" within the
meaning of Section 368 of the Code;
(iv) except as required by applicable law or pursuant to contractual
obligations in effect as of the date of this Agreement, not (A) execute,
establish, adopt or amend, or accelerate rights or benefits under, any
agreement relating to severance or change-in-control, any Company Employee
Plan, any employment or consulting agreement with current or former
officers or directors or any collective bargaining agreement, (B) increase
the compensation payable or to become payable to any of its officers,
directors or employees (except for increases in the ordinary course of
business consistent with past practices), (C) grant any severance or
termination pay to any officer or director of the Company, or (D) grant any
stock options or other equity related awards;
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(v) not issue, deliver, grant, sell, pledge or otherwise dispose of
shares of any class of its capital stock, other equity securities, or any
securities convertible, exercisable or exchangeable for or into, any such
shares or other equity securities, except upon the exercise, exchange or
conversion of Company Equity Equivalent Securities;
(vi) not change its accounting policies, practices or methods except
as required by GAAP or by the rules and regulations of the SEC;
(vii) not (x) take any action to amend the Company Rights Agreement,
(y) redeem the rights subject to the Company Rights Agreement, or (z) take
any action to render inapplicable, or to exempt any third party from, any
provision of the Restated Certificate of Incorporation of the Company or
any statute referred to in Section 6.15;
(viii) not take any action that would be reasonably likely to result
in any of the conditions set forth in Article VII of this Agreement not
being satisfied or that would impair the ability of the Company to
consummate the transactions contemplated hereby in accordance with the
terms hereof or delay such consummation;
(ix) not take any action to cause the shares of Company Common Stock
to cease to be listed on the NYSE;
(x) not waive any of its rights under, or release any other party from
such other party's obligation under, or amend any provision of any
standstill agreement;
(xi) not issue, deliver, grant, sell, pledge or otherwise dispose of
any bonds, debentures, notes or other indebtedness, in each case having the
right to vote together with the Company's stockholders on any matter; and
(xii) not enter into any commitments or agreements to do any of the
foregoing.
Section 5.2 Interim Operations of Parent. Between the date of this
Agreement and the Effective Time, Parent shall, and shall cause each of its
Subsidiaries to (unless the Company shall otherwise approve in writing or
except as otherwise expressly contemplated by this Agreement or disclosed
in the Parent Disclosure Letter):
(i) conduct its business in all material respects in the ordinary
course and, to the extent consistent therewith, use reasonable best
efforts to (x) preserve intact its business organization, (y) keep
available the services of its officers and employees and (z) maintain
its existing relations and goodwill with customers, suppliers,
regulators, distributors, creditors, lessors, and others having business
dealings with it; provided that the failure of any officer or employee
of Parent or its Subsidiaries to remain an officer or employee of Parent
or its Subsidiaries shall not constitute a breach of this covenant.
(ii) not (A) amend the Restated Certificate of Incorporation or
By-laws of Parent; (B) split, combine, subdivide or reclassify its
outstanding shares of capital stock or other equity securities; (C)
declare, set aside or pay any dividend or distribution payable in cash,
stock or property in respect of any of its shares of capital stock or
other equity securities, or securities convertible into, exercisable for
or exchangeable for, any of its shares of capital stock or other equity
securities, other than (x) quarterly cash dividends of $.20 per share in
respect of the outstanding shares of Parent Common Stock, declared, set
aside and paid at such times during the quarter as is consistent with
past practice, and (y) dividends and distributions by wholly owned
Subsidiaries of Parent; (D) repurchase, redeem or otherwise acquire or
permit any of its Subsidiaries to purchase, redeem or otherwise acquire,
any shares of its capital stock or other equity securities, or
securities convertible into, exercisable for or exchangeable for, any of
its shares of capital stock or other equity securities (it being
understood that this clause (D) shall not prohibit the exercise,
exchange or conversion of Parent Equity Equivalent Securities); or (E)
enter into any agreement, letter of intent, agreement in principle or
similar agreement to sell, transfer or otherwise dispose of, or purchase
or otherwise acquire assets of any business that
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generated net revenues or net income in the most recently completed
fiscal year constituting, or is comprised of net assets having a book
value equal to, 25% or more of the consolidated net revenue or net
income of Parent for its most recently completed fiscal year, or the
consolidated net assets of Parent, as applicable, by merger,
consolidation, transfer or acquisition of shares of capital stock or
otherwise;
(iii) not take any action that to the knowledge of Parent would
prevent the business combination to be effected pursuant to the Parent
Merger from qualifying for pooling of interests accounting treatment
under GAAP and the rules and regulations of the SEC or would prevent the
business combination to be effected pursuant to the Parent Merger or the
Alternative Merger, as applicable, from qualifying as a "reorganization"
within the meaning of Section 368 of the Code;
(iv) except as required by applicable law or pursuant to
contractual obligations in effect as of the date of this Agreement, not
(A) execute, establish, adopt or amend, or accelerate rights or benefits
under, any agreement relating to severance or change-in-control or any
Parent Employee Plan (provided that Parent and its Subsidiaries shall be
permitted hereunder to (i) enter into or amend consulting, employment
and collective bargaining agreements and (ii) to amend its Key Executive
Severance Protection Plan and Employee Severance Protection Plan to
exclude the employees of the Company and its Subsidiaries from
participating therein following the Effective Time), (B) increase the
compensation payable to any of its officers, directors or employees
(except for increases in the ordinary course consistent with past
practices), (C) grant any severance or termination pay to an officer or
director of Parent, or (D) grant any stock options or other equity
related awards;
(v) not issue, deliver, grant, sell, pledge or otherwise dispose of
shares of any class of its capital stock, other equity securities, or
any securities convertible, exercisable or exchangeable for or into, any
such shares as other equity securities, except (x) upon the exercise,
exchange or conversion of Parent Equity Equivalent Securities, and (y)
in connection with a purchase or acquisition permitted under Section 5.2
(ii)(E), provided that the issuance, delivery, grant, sale, pledge or
other disposition does not require the approval of the stockholders of
Parent under the rules of the NYSE or applicable law;
(vi) not change its accounting policies, practices or methods
except as required by GAAP or by the rules and regulations of the SEC;
(vii) not (x) take any action to amend the Parent Rights Agreement,
(y) redeem the rights subject to the Parent Rights Agreement or (z) take
any action to render inapplicable, or to exempt any third party from,
any provision of the Restated Certificate of Incorporation of Parent or
any statute referred to in Section 6.15.
(viii) not take any action to cause the shares of Parent Common
Stock to cease to be listed on the NYSE;
(ix) not take any action that would be reasonably likely to result
in any of the conditions set forth in Article VII hereof not being
satisfied or that would impair the ability of Parent to consummate the
transactions contemplated hereby in accordance with the terms hereof or
delay such consummation;
(x) not waive any of its rights under, or release any other party
from such other party's obligations under, or amend any provision of,
any standstill agreement;
(xi) not issue, deliver, grant, sell, pledge or otherwise dispose
of any bonds, debentures, notes or other indebtedness, in each case
having the right to vote together with Parent's stockholders on any
matter; and
(xii) not enter into any commitments or agreements to do any of the
foregoing.
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Section 5.3 No Solicitation. (a) Neither the Company nor Parent
shall, nor shall either permit its respective Subsidiaries to, or authorize
any of its officers, directors, employees, accountants, counsel, investment
bankers, financial advisors and other representatives ("Representatives")
to, (i) directly or indirectly, initiate, solicit or encourage, or take any
action to facilitate the making of any Takeover Proposal (defined below),
or (ii) directly or indirectly engage in negotiations or provide any
confidential information or data to any person relating to any Takeover
Proposal; provided, however, that at any time prior to the date of the
Company's stockholders' meeting contemplated by Section 6.1 (the
"Applicable Period"), in the case of the Company, or at any time prior to
the date of Parent's stockholders' meeting contemplated by Section 6.1, in
the case of Parent, the Company or Parent, as applicable, may, in response
to a Superior Proposal (as defined below) which was not solicited by it and
which did not otherwise result from a breach of this Section 5.3(a), and
subject to providing prior written notice of its decision to take such
action to the other party (the "Notice") and compliance with Section 5.3(c)
following delivery of the Notice (x) furnish information with respect to
the Company or Parent, as applicable, and/or its Subsidiaries to any person
making a Superior Proposal pursuant to a customary confidentiality
agreement (as determined by such party after consultation with its outside
counsel) and (y) participate in discussions or negotiations regarding such
Superior Proposal.
(b) (i) Neither the Board of Directors of the Company nor any
committee thereof shall (x) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by
the Board of Directors of the Company or any such committee of the Parent
Merger, the Alternative Merger or this Agreement, (y) approve any letter of
intent, agreement in principle, acquisition agreement or similar agreement
(other than a confidentiality agreement in connection with a Superior
Proposal which is entered into by such party in accordance with Section
5.3(a)) relating to any Takeover Proposal (each, an "Acquisition
Agreement"), or (z) approve or recommend, or propose to approve or
recommend, any Takeover Proposal. Notwithstanding the foregoing, in
response to a Superior Proposal which was not solicited by the Company and
which did not otherwise result from a breach of Section 5.3(a), the Board
of Directors for the Company may (subject to this sentence) terminate this
Agreement (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into any Acquisition Agreement with
respect to any Superior Proposal), but only at a time that is during the
Applicable Period and is after the fifth business day following Parent's
receipt of written notice advising Parent that the Board of Directors of
the Company has resolved to accept a Superior Proposal (subject to such
termination), specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(ii) Neither the Board of Directors of Parent nor any committee
thereof shall (x) withdraw or modify, or propose to withdraw or modify, in
a manner adverse to the Company, the approval by the Board of Directors of
Parent of this Agreement and the transactions contemplated hereby or the
recommendation by the Board of Directors of the Parent Merger, (y) approve
any Acquisition Agreement or (z) approve or recommend, or propose to
approve or recommend, any Takeover Proposal.
(c) Each party promptly shall advise the other party orally and in
writing of any Takeover Proposal or any inquiry with respect to or that
could reasonably be expected to lead to any Takeover Proposal, the identity
of the person making any such Takeover Proposal or inquiry and the material
terms of any such Takeover Proposal or inquiry. Such party shall keep the
other party fully informed of the status and material terms of any such
Takeover Proposal or inquiry.
(d) The Company and Parent shall each immediately cease and cause to
be terminated all existing discussions and negotiations, if any, with any
other persons conducted heretofore with respect to any Takeover Proposal.
For purposes of this Agreement, a "Takeover Proposal" with respect to
the Company or Parent, as applicable, means any inquiry, proposal or offer
from any person relating to (i) any direct or
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indirect acquisition or purchase of a business that constitutes 25% or more
of the net revenues, net income or the assets of the Company or Parent, as
applicable, and its Subsidiaries, taken as a whole, or 25% or more of any
class of equity securities of the Company or Parent, as applicable, or any
of its Subsidiaries, (ii) any tender offer or exchange offer that if
consummated would result in any person beneficially owning 25% or more of
any class of equity securities of the Company or Parent, as applicable, or
any of its Subsidiaries, or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or Parent, as applicable, or any of its
Subsidiaries that constitutes 25% or more of the net revenues, net income
or the assets of the Company or Parent, as applicable, and its Subsidiaries
taken as a whole, in each case other than the transactions contemplated by
this Agreement, the Stock Option Agreements and the Voting Agreements and
transactions permitted under Sections 5.1 or 5.2, as applicable. Each of
the transactions referred to in clauses (i) -- (iii) of the foregoing
definition of Takeover Proposal, other than the transactions contemplated
by this Agreement or by the Stock Option Agreements and the Voting
Agreements and transactions permitted under Sections 5.1 or 5.2, as
applicable, is referred to herein as an "Acquisition Transaction."
For purposes of this Agreement, a "Superior Proposal" with respect to
the Company or Parent, as applicable, means any proposal made by a third
party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock or Parent
Common Stock, as applicable, then outstanding or at least 50% of the assets
of the Company or Parent, as applicable, and its Subsidiaries, taken
together, and if (x) the proposal is otherwise on terms which the Board of
Directors of the Company or Parent, as applicable, determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation and such other matters as the Board of Directors of
the Company or Parent, as applicable, deems relevant) to be more favorable
to the Company's stockholders or Parent's stockholders, as applicable, than
the Parent Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
the Company or Parent, as applicable, is reasonably capable of being
obtained by such third party and (y) such Board of Directors, after
considering such matters as such Board of Directors deems relevant
(including the written opinion of outside counsel), determines in good
faith that, in the case of the Company and Parent, furnishing information
to the third party, participating in discussions or negotiations with
respect to the Superior Proposal or withdrawing or modifying its
recommendation or recommending a Takeover Proposal, as applicable, or, in
the case of the Company only, terminating this Agreement, is required for
the Board of Directors of the Company or Parent, as applicable, to comply
with its fiduciary duties to the Company or Parent, as applicable, and its
stockholders under applicable law.
(e) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act.
ARTICLE VI
Section 6.1 Meetings of Stockholders. Each of Parent and the Company will
take all action necessary in accordance with applicable law and its articles or
certificate of incorporation, as applicable, and bylaws to call, give notice of,
convene and hold a meeting of its stockholders as promptly as practicable to
consider and vote upon the approval and adoption of this Agreement, the Parent
Merger and the Alternative Merger in the case of the Company, or the approval
and adoption of this Agreement and the Parent Merger, in the case of Parent. The
Board of Directors of each such party shall recommend that its stockholders vote
in favor of the approval and adoption of this Agreement, the Parent Merger and
the Alternative Merger, in the case of the Company, or the approval and adoption
of this Agreement and the Parent Merger, in the case of Parent, and such
recommendations shall be included in the Joint Proxy
▇-▇▇
▇▇
▇▇▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇ (as defined in Section 6.4); provided, however, that
nothing contained in Section 5.3(b) or this Section 6.1 shall require the Board
of Directors of either party to make any recommendation or refrain from making
any recommendation with respect to a Superior Proposal, which such Board of
Directors, after considering such matters as such Board of Directors deems
relevant (including the written advice of outside counsel), determines in good
faith would result in a breach of its fiduciary duty under applicable law. Each
of such parties shall take all lawful action necessary or advisable to solicit
the approval of its respective stockholders including, without limitation,
timely mailing to its stockholders the Joint Proxy Statement/Prospectus as
promptly as practicable after the Form S-4 (as defined in Section 6.4) shall be
declared effective. The parties shall coordinate and cooperate with respect to
the timing of such meetings and shall, unless otherwise agreed, hold such
meetings on the same day.
Section 6.2 Filings; Other Action. (a) Subject to the terms and conditions
herein provided, each of the Company and Parent shall (i) cooperate with the
other in (x) determining which other notices, reports or filings are required to
be made prior to the Effective Time with, and which other waivers, consents,
approvals or authorizations are required to be obtained prior to the Effective
Time in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; and (y) timely making all
such notices, reports or filings and timely seeking all such waivers, consents,
approvals or authorizations; and (ii) furnish the other party with such
necessary information regarding itself and its Subsidiaries and reasonable
assistance as such other party and its affiliates may reasonably request in
connection with their preparation of necessary notices, reports or filings, or
submissions of information to any Governmental Entity.
(b) Each of Parent and the Company shall give prompt notice to the other
party of the following:
(x) the occurrence of or failure to occur of any event the occurrence
or failure to occur of which would be likely to result in (i) any condition
set forth in Article VII being incapable of being satisfied or (ii) a
Company Material Adverse Effect or a Parent Material Adverse Effect, as
applicable;
(y) any failure of such party to comply in any material respect with
any of its covenants or agreements hereunder; and
(z) such party becoming aware that statements relating to such party
or any of its Subsidiaries set forth in the Joint Proxy
Statement/Prospectus or the Form S-4 contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make such statements therein, in light of
the circumstance under which they were made, not misleading.
Notwithstanding the foregoing, the delivery of any notice pursuant to this
Section 6.2(b) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.3 Publicity. The parties agree that the initial press release
with respect to this Agreement and the transactions contemplated hereby shall be
a joint press release (to include such text as the parties may mutually agree).
Thereafter, subject to their respective legal obligations (including
requirements of securities exchanges and other similar regulatory bodies),
Parent and the Company shall consult with each other and use their reasonable
best efforts to agree upon the text of any press release before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any public statement or
disclosure required by any Governmental Entity, securities exchange or other
similar regulatory body with respect thereto.
Section 6.4 Registration Statements. The parties shall cooperate and
promptly prepare, and Parent shall file with the SEC as soon as practicable a
registration statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the shares of Parent Common Stock issuable in the Parent Merger
and the shares of Parent Common Stock and the Depositary Shares issuable in the
Alternative Merger, a portion of which Form S-4 shall also serve as the joint
proxy statement with respect to the meetings of the stockholders of each of
Parent and the Company in connection with this Agreement and the transactions
contemplated hereby and a prospectus with respect to the shares of Parent Common
Stock and Depositary Shares issuable pursuant to the transactions contemplated
hereby (the "Joint Proxy
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Statement/Prospectus"). The parties will cause the Joint Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act. The parties agree to use reasonable best efforts and shall cooperate to
have the Form S-4 declared effective by the SEC as promptly as practicable and
to keep the Form S-4 effective as long as is necessary to consummate the
Applicable Transaction and Parent shall use reasonable best efforts to obtain,
prior to the effective date of the Form S-4, all necessary state securities law
or "blue sky" permits or approvals required in connection with the issuance of
shares of Parent Common Stock and Depositary Shares pursuant to the transactions
contemplated hereby (provided that Parent shall not be required to qualify to do
business in any jurisdiction in which it is not now so qualified). Each of
Parent and the Company agrees that the information provided by it for inclusion
in the Form S-4 and the Joint Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof to stockholders, at the time
of the respective meetings of the stockholders of the parties, and at the time
it is filed or becomes effective, will not include an 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. Each party will advise the other promptly
after it receives notice thereof of the time when the Form S-4 has or is to
become effective or when any supplement or amendment has been filed, the
issuance of any stop order, or any request by the SEC for amendment of the Joint
Proxy Statement/Prospectus or the Form S-4. The parties will provide each other
with reasonable opportunity to review and comment on any amendments or
supplements to the Form S-4 and/or the Joint Proxy Statement/Prospectus prior to
filing such amendments or supplements with the SEC, and further agree that each
party will be provided with such number of copies of all filings made with the
SEC as such party or Parent (if applicable) shall reasonably request. No filings
of the Form S-4 or the Joint Proxy Statement/Prospectus (or any amendments or
supplements to either of them) shall be made without the approval of both
parties (which consent shall not be unreasonably withheld).
Section 6.5 Listing Application. Parent shall promptly prepare and submit
to the NYSE a listing application with respect to the shares of Parent Common
Stock and Depositary Shares issuable in the transactions contemplated hereby,
and Parent shall use reasonable best efforts to obtain, prior to the Effective
Time, approval for the listing of such shares of Parent Common Stock and
Depositary Shares on the NYSE, subject to official notice of issuance.
Section 6.6 Further Action. Each of the parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, use reasonable best efforts
to perform such further acts and execute such documents as may be reasonably
required to effect the transactions contemplated hereby. Each of the parties
will comply in all material respects with all applicable laws and with all
applicable rules and regulations of any Governmental Entity in connection with
its execution, delivery and performance of this Agreement and the Stock Option
Agreements and the transactions contemplated hereby and thereby. Each of the
parties agrees to use reasonable best efforts to obtain in a timely manner all
necessary waivers, consents, approvals, orders, authorizations and opinions, to
effect all necessary registrations and to make all notices, reports and filings,
and use reasonable best efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated hereby.
Section 6.7 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including the Parent Merger and the Alternative Merger,
shall be paid by the party hereto incurring such costs or expenses except as
expressly provided herein and except that (a) the filing fees in respect of
filings made pursuant to the HSR Act, (b) filing fees in connection with the
filing of the Form S-4 and Proxy Statement/Prospectus with the SEC, (c) all
filing fees in connection with any filing, permits or approvals made or obtained
under applicable state securities and "blue sky" laws, (d) all printing, mailing
and related expenses incurred in connection with the printing and mailing of the
Proxy Statement/Prospectus and (e) all other expenses not directly attributable
to any one of the parties, shall be shared equally by Parent and the Company.
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Section 6.8 Access to Information. (a) From the date of this Agreement to
the Effective Time, each of Parent and the Company shall, and shall cause its
respective Subsidiaries, and its and their Representatives to, afford the
Representatives of the other party reasonable access at reasonable times upon
reasonable notice to each of the party's and its Subsidiaries' officers,
employees, auditors, counsel, agents, properties, offices and other facilities
and to all of their respective books and records, and shall furnish the other
party with all financial, operating and other data and information as such other
party may reasonably request, in each case only to the extent, in the judgment
of counsel to such party, permitted by law, including antitrust law.
(b) Each of Parent and the Company agrees that all information so received
from the other party shall be deemed received pursuant to the Confidentiality
Agreement, and that party shall, and shall cause its affiliates and each of its
and their Representatives to, comply with the provisions of the applicable
Confidentiality Agreement with respect to such information, and the provisions
of the Confidentiality Agreement are hereby incorporated herein by reference
with the same effect as if fully set forth in this Agreement.
Section 6.9 Insurance; Indemnity. (a) The Surviving Corporation shall,
and, if applicable, Parent shall cause the Surviving Corporation to, maintain in
effect for not less than six years after the Effective Time the current
directors' and officers' insurance policies (or policies containing
substantially similar coverage) of the Company with respect to acts or failures
to act prior to or as of the Effective Time (other than to the extent the
available limit of any such insurance policy may be reduced or exhausted by
reason of the payment of claims thereunder); provided, however, that in order to
maintain or procure such coverage, neither Parent nor the Surviving Corporation,
as applicable, shall be required to pay, in the aggregate, an annual premium in
excess of 200% of the current annual premium paid by Parent or the Company for
its existing coverage (the "Cap Amount"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap Amount, the Parent and the Surviving
Corporation shall only be required to obtain as much coverage as can be obtained
by paying, in the aggregate, an annual premium equal to the Cap Amount. From and
after the Effective Time, the Surviving Corporation shall, and, if applicable,
Parent shall cause the Surviving Corporation to, indemnify and hold harmless,
and provide advancement of expenses to, to the fullest extent permitted under
applicable law, each person who is a current or former officer or director of
the Company or Subsidiaries (each, an "Indemnified Party") against all losses,
claims, damages, liabilities, costs or expenses (including reasonable attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, which acts or omissions occurred prior to the Effective
Time. In the event of any such claim, action, suit, proceeding or investigation
(an "Action"), the indemnifying party shall control the defense of such Action
with counsel selected by it; provided, however, that the Indemnified Party shall
be permitted to participate in the defense of such Action through counsel
selected by it at the Indemnified Party's expense.
(b) Parent agrees that, in the event the Alternative Merger is consummated,
the provisions of the Company Restated Certificate of Incorporation and By-laws
in effect as of the date of this Agreement affecting the Indemnified Parties'
rights to indemnification, limitation of liability and advancement of expenses
shall survive the consummation of the Alternative Merger and shall continue in
full force and effect, without any amendment thereto (unless required by DGCL or
federal law), for a period of six years from the Effective Time. Parent agrees
that, in the event the Parent Merger is consummated the Indemnified Parties
shall for a period of six years after the Effective Time, be entitled to the
benefit of the provisions of Parent's Restated Certificate of Incorporation and
By-laws relating to indemnification, limitation of liability and advancement of
expenses of officers and directors of Parent.
(c) The provisions of this Section 6.9 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 6.10 Employee Benefit Plans. (a) From and after the Effective
Time, subject to applicable law, the Parent Surviving Corporation shall assume
and honor the obligations of the Company and its
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Subsidiaries under all existing Company Employee Plans and shall perform the
obligations of the Company and its Subsidiaries under such Company Employee
Plans in the same manner and to the same extent that the Company and its
Subsidiaries would have been required to perform thereunder; provided, however,
that, except as otherwise explicitly provided, nothing herein shall be construed
to prevent, on or following the Effective Time, (i) the termination of
employment of any individual who immediately prior to the Effective Time was an
employee of the Company or any of its Subsidiaries (such employees, the "Company
Employees") or (ii) the amendment and termination of any Company Employee Plan
to the extent permitted by the terms thereof and applicable law.
(b) Following the Effective Time, subject to applicable law, the Parent
Surviving Corporation intends to, or intends to cause one or more of its
Subsidiaries to, provide compensation and employee benefits to the Company
Employees which will be substantially similar, in the aggregate, to the
compensation and employee benefits that the Parent Surviving Corporation
provides to similarly situated employees other than the Company Employees (the
employees other than the Company Employees, the "Parent Employees") (excluding,
however, participation in the El Paso Energy Corporation Key Executive Severance
Protection Plan and the El Paso Energy Corporation Employee Severance Protection
Plan), including without limitation participation in the El Paso Energy
Corporation Employee Stock Purchase Plan (so long as such plan has been approved
by stockholders of Parent prior to the Effective Time and is in effect with
respect to the Parent Employees).
(c) To the extent that any employee benefit plan is made available to
Company Employees on or following the Effective Time, the Parent Surviving
Corporation shall, or shall cause one of its Subsidiaries to, grant Company
Employees credit for all service with the Company and its Subsidiaries prior to
the Effective Time for purposes of eligibility and vesting (but not benefit
accrual), to the extent that service of Parent Employees is recognized for any
such purpose. Notwithstanding the foregoing sentence, credit for service with
the Company and its Subsidiaries shall be given for the purposes of cash balance
pay credit, the Extended Illness Bank, Paid Time Off, and employee recognition
awards; provided, further, that the foregoing sentence shall not be applied to
service if its application would cause such plan to violate ERISA or the Code.
In addition, and without limiting the generality of the foregoing: (i) each
Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all Parent Employee Plans, or any other employee
benefit plans sponsored by the Parent Surviving Corporation and its Subsidiaries
(such plans, collectively, the "New Plans") to the extent coverage under such
plan replaces coverage under a comparable Company Employee Plan in which such
employee participates immediately before or at any time after the Effective Time
(such plans, collectively, the "Old Plans"); and (ii) for purposes of each New
Plan providing medical, dental, pharmaceutical, vision and/or disability
benefits to any Company Employee, the Parent Surviving Corporation shall cause
all pre-existing condition exclusions and actively-at-work requirements of such
New Plan to be waived for such employee and his or her covered dependents, and
the Parent Surviving Corporation shall cause any eligible expenses incurred by
such employee and his or her covered dependents during the portion of the plan
year of the Old Plan ending on the date such employee's participation in the
corresponding New Plan begins to be taken into account under such New Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such employee and his or her covered dependents for
the applicable plan year as if such amounts had been paid in accordance with
such New Plan.
(d) Without limiting the generality of the foregoing, Parent and the
Company agree to the matters set forth on Section 6.10 of the Parent Disclosure
Letter, and the Parent Surviving Corporation shall comply therewith.
(e) (i) No written communication shall be made to Company Employees
regarding the compensation and employee benefits to be provided at and following
the Effective Time without the express consent of Parent, which consent shall
not be unreasonably withheld; and (ii) the Company shall cause no oral
communication to be made regarding compensation and employee benefits that (x)
establishes obligations of Parent or the Parent Surviving Corporation or any of
their Subsidiaries other than as set forth herein or (y) increases any such
obligations.
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Section 6.11 Certain Appointments. The Board of Directors of Parent shall
take such action as is necessary so that as of the Effective Time it has 15
members, 9 of whom are persons designated by the Board of Directors of Parent
prior to the Effective Time (no more than one such person being an insider of
Parent) (the "Parent Designees") and 6 of whom are persons designated by the
Board of Directors of the Company prior to the Effective Time (no more than one
such person being an insider of the Company and no more than one such person
being a Major Company Stockholder) ("Company Designees"). If any Company
Designee or Parent Designee is over the age of 68 at the Effective Time, Parent
shall waive any age limitation applicable to members of the Board of Directors,
with respect to such Company Designee or Parent Designee, as applicable. After
the Effective Time, Parent will not discriminate between Company Designees and
Parent Designees in making any determination with respect to the waiver of the
age limitation applicable to members of the Board of Directors, it being
understood that such determinations are made on a case-by-case basis and it
being further understood that Parent waives such age limitation for ▇▇▇▇▇ ▇.
▇▇▇▇▇▇. Notwithstanding anything set forth in this Section 6.11, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
shall be nominated by the Parent's Board of Directors (or nominating committee
or other committee performing similar functions) for election to serve as a
director of Parent for so long as ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and members of his immediate
family and trusts therefor own at least 5% of the then outstanding shares of the
Parent Common Stock; provided, however, that, in the event the Alternative
Merger is consummated, and so long as Depositary Shares or shares of Parent
Preferred Stock remain outstanding, then, solely for purposes of determining
whether ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and members of his immediate family and trusts therefor
continue to own at least 5% of the then outstanding shares of Parent Common
Stock, each Depositary Share shall be deemed to constitute a number of shares of
Parent Common Stock equal to the result obtained by dividing (x) $100 by (y) the
Implied Price and each share of Parent Preferred Stock not represented by
Depositary Shares shall be deemed to constitute a number of shares of Parent
Common Stock equal to the result obtained by dividing (x) $5,000 by (y) the
Implied Price. As of and from the Effective Time through December 31, 2000,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. shall be the Non-Executive Chairman of the Parent's Board
of Directors and thereupon the Parent's Board of Directors shall appoint ▇▇▇▇▇▇▇
▇. ▇▇▇▇ Chairman of the Parent's Board of Directors to replace ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇.
Section 6.12 Affiliates. (a) Not less than 45 days prior to the Closing
Date, each of Parent and the Company (i) shall have delivered to the other party
a letter identifying all Persons who, in the opinion of the party delivering
such letter, may be, as of the date this Agreement is submitted for approval by
such party's shareholders, its "affiliates" for purposes of SEC Accounting
Series Release 135 and/or, in the case of the Company, for purposes of Rule 145
under the Securities Act, and (ii) shall use its reasonable best efforts to
cause each Person who is identified as an "affiliate" of it in such letter to
deliver, as promptly as practicable but in no event later than 30 days prior to
the Closing (or such later date as the parties may agree), a signed agreement,
in the case of affiliates of the Company, to the Company and Parent
substantially in the form attached as Exhibit F hereto, and in the case of
affiliates of Parent, to Parent and the Company substantially in the form
attached as Exhibit G hereto. Each of Parent and the Company shall, after the
date hereof and prior to the Closing, notify the other party from time to time
after the delivery of the letter described in the prior sentence of any Person
not identified in such letter who then is, or may be, such an "affiliate" and
use reasonable best efforts to cause each additional Person who is identified as
an "affiliate" to execute a signed agreement as set forth in this Section
6.12(a).
(b) Parent shall use its reasonable best efforts to publish or cause to be
published no later than 30 days after the end of the first month after the
Effective Time (which month may be the month in which the Effective Time occurs)
in which there are at least 30 days of post-Merger combined operations, combined
sales and net income figures as contemplated by and in accordance with the terms
of SEC Accounting Series Release No. 135.
Section 6.13 Pooling-of-Interests. (a) Parent shall use reasonable best
efforts to cause to be delivered to the Company two letters from PWC, one dated
the date on which the Form S-4 shall become effective and one dated the Closing
Date, each addressed to Parent and the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to
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the Form S-4. If the Parent Merger is being consummated, Parent shall use
reasonable best efforts to cause to be delivered to the Company a letter from
PWC, dated as of the Closing Date, stating that PWC concurs with Parent's
management's conclusion that accounting for the Parent Merger as a pooling-of-
interests under Opinion 16 of the Accounting Principles Board is appropriate if
the Parent Merger is closed and consummated in accordance with the terms hereof.
(b) The Company shall use reasonable best efforts to cause to be delivered
to Parent two letters from E&Y, one dated the date on which the Form S-4 shall
become effective and one dated the Closing Date, each addressed to the Company
and Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statement similar to the Form
S-4. If the Parent Merger is being consummated, the Company shall use reasonable
best efforts to cause to be delivered to Parent a letter from E&Y, dated as of
the Closing Date, stating that E&Y concurs with the Company's management's
conclusion that the Company is eligible to participate in a transaction
accounted for as a pooling-of-interests under Opinion 16 of the Accounting
Principles Board.
(c) Each of the parties will use reasonable best efforts to cause the
Parent Merger to be accounted for as a "pooling-of-interests" in accordance with
GAAP and the rules and regulations of the SEC, and each party agrees that it
will not take any action that it knows, or could reasonably expect, will cause
such accounting treatment not to be obtained.
Section 6.14 Certificate of Designation; Depositary Agreement. If the
Depositary Shares are required to be issued in the Merger, prior to or as of the
Effective Time, Parent shall file with the Secretary of State of the State of
Delaware a Certificate of Designation in the form of Exhibit E hereto (as
revised in accordance with Section 2.1(b) and shall enter into the Depositary
Agreement with the Depositary.
Section 6.15 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
is or may become applicable to the transactions contemplated hereby, each of the
parties hereto and its Board of Directors shall grant such approvals and take
all such actions as are legally permissible so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any such statute or regulation on the transactions contemplated hereby.
Section 6.16 Tax-Free Merger. Each of the parties will use reasonable best
efforts to cause the Applicable Transaction to qualify as a tax-free
"reorganization" under Section 368 of the Code.
Section 6.17 Name; Headquarters. After the Effective Time, the name of
Parent shall be "El Paso Energy Corporation" and the headquarters of Parent
shall continue to be located in Houston, Texas. The headquarters of the
Company's Subsidiary, Southern Natural Gas Company and the entities that as of
the date hereof are (x) Subsidiaries thereof and (y) operate natural gas
pipelines shall continue to be located in Birmingham, Alabama, after the
Effective Time.
Section 6.18 Employment Matters. (a) Parent shall or, if Section 1.2(c)
applies, shall cause Newco, to offer to enter into a termination and consulting
agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., to become effective as of the Effective
Time, which shall be in the form of Exhibit G to this Agreement.
Section 6.19 Section 16(b). Parent shall take all such steps as may be
required to cause the transactions contemplated hereby and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of the Company or (b) at the Effective Time, will become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Exchange Act.
Section 6.20 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate
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the Applicable Transaction and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof, including (i) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, tax ruling requests and other
documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, tax rulings and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Applicable Transaction or any
of the other transactions contemplated by this Agreement and (ii) taking all
reasonable steps as may be necessary to obtain all such material consents,
waivers, licenses, registrations, permits, authorizations, tax rulings, orders
and approvals. In furtherance and not in limitation of the foregoing, each party
hereto agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other Regulatory Law (as defined below) with
respect to the transactions contemplated hereby as promptly as practicable after
the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and any other Regulatory Law and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable. Nothing in this Section 6.20 shall require any
of Parent and its Subsidiaries or the Company and its Subsidiaries to sell, hold
separate or otherwise dispose of or conduct their business in a specified
manner, or agree to sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or permit the sale, holding separate or other
disposition of, any assets of Parent, the Company or their respective
Subsidiaries or the conduct of their business in a specified manner, whether as
a condition to obtaining any approval from a Governmental Entity or any other
Person or for any other reason, if such sales, holdings separate of assets or
other dispositions or the conduct of their business in a specified manner,
individually or in the aggregate, is not conditioned on the Closing or would,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, assets, results of operations or condition
(financial or otherwise) of Parent and its Subsidiaries (including the Surviving
Corporation and its Subsidiaries, taken together, after giving effect to the
Applicable Transaction; it being understood, moreover, that Parent and its
Subsidiaries shall not be obligated pursuant to this Agreement to take any
action that would reasonably likely have a material adverse effect on or with
respect to Tennessee Gas Pipeline Company.
(b) Each of Parent and the Company shall, in connection with the efforts
referenced in Section 6.20(a) to obtain all requisite material approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Regulatory Law, use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a party, (ii) promptly inform the other party of any
communication received by such party from, or given by such party to, the
Antitrust Division of the Department of Justice (the "DOJ") or any other
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby, and (iii) permit the other party to review
any communication given by it to, and consult with each other in advance of any
meeting or conference with, the DOJ or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other Person, and to
the extent permitted by the DOJ or such other applicable Governmental Entity or
other Person, give the other party the opportunity to attend and participate in
such meetings and conferences. For purposes of this Agreement, "Regulatory Law"
means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of the competition.
(c) Subject to the terms and conditions of this Agreement, in furtherance
and not in limitation of the covenants of the parties contained in Sections
6.20(a) and 6.20(b), if any administrative or judicial action or proceeding,
including and proceeding by a private party, is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Regulatory Law, each of
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Parent and the Company shall cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
6.20 shall limit a party's right to terminate this Agreement pursuant to Article
VIII.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Regulatory Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Regulatory Law, each of Parent and the
Company shall use reasonable best efforts to resolve any such objections or
challenge as such Governmental Entity or private party may have to such
transactions under such Regulatory Law so as to permit consummation of the
transactions contemplated by this Agreement.
ARTICLE VII
Section 7.1 Conditions to Obligations of the Parties. The respective
obligation of each of the parties hereto to consummate the transactions
contemplated hereby shall be subject to the satisfaction of each of the
following conditions:
(a) Stockholders' Approval. This Agreement, Parent Merger and the
Alternative Merger shall have been approved and adopted by the requisite
vote of the stockholders of the Company in accordance with the Restated
Certificate of Incorporation of the Company and DGCL.
(b) Legality. No statute, rule, regulation or other law and no order,
decree or injunction shall have been enacted, issued, promulgated, entered
or issued by any Governmental Entity of competent jurisdiction which is in
effect and has the effect of making the consummation of the Applicable
Transaction illegal or prevents or prohibits consummation of the
transactions contemplated hereby. Each party agrees that, in the event that
any such order, decree or injunction shall be entered or issued, it shall
use all reasonable best efforts to cause such order, decree or injunction
to be lifted or vacated.
(c) HSR Act. The waiting period (or any extension thereof) under the
HSR Act applicable to transactions contemplated hereby shall have expired
or been terminated.
(d) Regulatory Consents. All waivers, consents, approvals, orders and
authorizations of, and notices, reports and filings with, Governmental
Entities necessary for the consummation of the transactions contemplated
hereby (other than those matters addressed in Section 7.1(c)) shall have
been obtained or made and shall be in full force and effect without the
imposition of any terms, conditions, restrictions or limitations, except
for the imposition of any terms, conditions, restrictions and limitations
in respect of, and failures to have obtained or made, or failures to be in
full force and effect of, such waivers, consents, approvals, orders,
authorizations, notices, reports or filings which, in the aggregate, would
not have, or reasonably be expected to have, a Parent Material Adverse
Effect or a Company Material Adverse Effect.
(e) Form S-4 Effective; State Securities Approvals. The Form S-4 shall
have become effective, and no stop order suspending the effectiveness of
the Form S-4 shall then be in effect and no proceeding for that purpose
shall have been initiated or, to the knowledge of Parent or the Company,
threatened, and all material necessary approvals and permits under state
securities or "blue sky" laws relating to the issuance of shares of Parent
Common Stock, in the event the Parent Merger is being consummated, or
Parent Common Stock and Depositary Shares, in the event of the Alternative
Merger is being consummated, shall have been obtained.
(f) NYSE Listing. The shares of Parent Common Stock, in the event the
Parent Merger is being consummated, or Parent Common Stock and Depositary
Shares, in the event the Alternative Merger is being consummated, to be
issued pursuant to the Parent Merger or the Alternative Merger,
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as applicable, shall have been duly approved for listing on the NYSE,
subject to official notice of issuance.
(g) Pooling Letters. In the event the Parent Merger is being
consummated, the Company shall have received and delivered to Parent and
Parent's independent public accountants, a letter from E&Y, dated as of the
Closing Date, stating that E&Y concurs with the Company's management's
conclusion that the Company is eligible to participate in a transaction
with Parent accounted for as a pooling-of-interests under Opinion 16 of the
Accounting Principles Board, and Parent shall have received and delivered
to the Company and the Company's independent public accountants, a letter
from PWC, dated as of the Closing Date, stating that PWC concurs with
Parent's management's conclusion that accounting for the Parent Merger as a
pooling-of-interests under Opinion 16 of the Accounting Principles Board is
appropriate if the Parent Merger is closed and consummated in accordance
with the terms hereof.
Section 7.2 Additional Conditions to Obligations of Parent. The
obligations of Parent to consummate the transactions contemplated hereby shall
also be subject to the satisfaction or waiver of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct when
made and as of the Closing Date as if made on and as of such date (provided
that such representations and warranties which are by their express
provisions made as of a specific date need be true and correct only as of
such specific date), except to the extent that any failures of such
representations and warranties to be so true and correct, in the aggregate,
would not have, or reasonably be expected to have, a Company Material
Adverse Effect (disregarding for these purposes any materiality
qualifications therein contained).
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, except that the Company shall have performed
or complied in all respects with the covenants and agreements contained in
Section 5.1(ii).
(c) Certificate. Parent shall have received a certificate of an
executive officer of the Company that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Tax Opinions. Parent shall have received an opinion of Fried,
Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated as of the Closing Date, in form
and substance reasonably satisfactory to it, substantially to the effect
that, on the basis of the facts and assumptions described in the opinion,
the Applicable Transaction constitutes a tax-free reorganization under
Section 368 of the Code. In rendering such opinion, counsel may require and
rely upon representations and warranties and covenants, including those
contained herein, or in certificates of officers of Parent, the Company and
others.
Section 7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated hereby
shall also be subject to the satisfaction or waiver of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of Parent contained in this Agreement shall be true and correct when made,
and as of the Closing Date as if made on and as of such date (provided that
such representations and warranties which are expressly made as of a
specific date need be true and correct only as of such specific date),
except to the extent that any failures of such representations and
warranties to be so true and correct, in the aggregate, would not have, or
reasonably be expected to have, a Parent Material Adverse Effect
(disregarding for these purposes any materiality qualifiers therein
contained).
(b) Agreements and Covenants. Each of Parent and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied
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with by it on or prior to the Effective Time, except that Parent shall have
performed or complied in all respects with the covenants contained in
Section 5.2(ii).
(c) Certificate. The Company shall have received a certificate of an
executive officer of Parent that the conditions set forth in the paragraphs
(a) and (b) above have been satisfied.
(d) Tax Opinion. The Company shall have received the opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, dated as of the Closing Date, in form and
substance reasonably satisfactory to it, substantially to the effect that,
on the basis of the facts and assumptions described in the opinion, the
Applicable Transaction constitutes a tax-free reorganization under Section
368 of the Code. In rendering such opinion, counsel may require and rely
upon representations and covenants including those contained in this
Agreement or in certificates of officers of the parties and others.
ARTICLE VIII
Section 8.1 Termination. This Agreement may be terminated at any time
before the Effective Time, whether before or after this Agreement, the Parent
Merger and the Alternative Merger have been approved and adopted by the
stockholders of the Company or this Agreement and the Parent Merger have been
approved and adopted by the stockholders of Parent, as follows:
(a) by mutual written consent of each of Parent and the Company;
(b) by Parent or the Company, if the Effective Time shall not have
occurred on or before March 31, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date;
(c) by Parent or the Company, if a Governmental Entity shall have
issued an order, decree or injunction or taken any other action (in each
case, which the terminating party has used reasonable best efforts to
resist, resolve or lift, as applicable, in accordance with Section 6.20)
having the effect of making the transactions contemplated hereby illegal or
permanently prohibiting the consummation thereof, and such order, decree or
injunction shall have become final and nonappealable (but only if such
party shall have used all reasonable best efforts to cause such order,
decree or injunction to be lifted or vacated in accordance with Section
6.20);
(d) by either Company or Parent, if there shall have been a material
breach by the other of any of the other's representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 7.2(a) or (b) (in the case of a breach by the Company) or Section
7.3(a) or (b) (in the case of a breach by Parent), and such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 20 days after written notice thereof shall have been received
by the party alleged to be in breach;
(e) by Parent, if the Board of Directors of the Company or any
committee of the Board of Directors of the Company, whether or not
permitted pursuant to the terms hereof, (w) shall fail to reaffirm its
approval or recommendation of this Agreement, the Parent Merger and the
Alternative Merger within 15 days after a request by Parent (provided that
Parent make such request only once with respect to any Takeover Proposal),
(x) shall withdraw or modify in any manner adverse to Parent its approval
or recommendation of this Agreement, the Parent Merger and the Alternative
Merger, (y) shall approve or recommend any Takeover Proposal or Acquisition
Transaction involving the Company or (z) shall resolve to take any of the
actions specified in clause (w), (x) or (y) above;
(f) by either Parent or the Company, if the required approval and
adoption of this Agreement, the Parent Merger and the Alternative Merger by
the stockholders of the Company shall not have
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been obtained at a duly held stockholders meeting called for the purpose of
obtaining such approval, including any adjournments or postponements
thereof;
(g) by the Company, in accordance with Section 5.3(b); provided,
however, in order for the termination of this Agreement pursuant to this
Section (g) to be deemed effective, the Company shall have complied with
all provisions contained in Sections 5.3(a), (b) and (c), including the
notice provisions therein, and with applicable requirements of Section 8.2,
including the payment of the Company Termination Fee;
(h) by Parent, if a Share Acquisition Date shall have occurred
pursuant to the Company Rights Agreement and, assuming all of the rights
issued pursuant thereto shall have been exercised or exchanged for shares
of Company Common Stock, the Acquiring Person (as defined in the Company
Rights Agreement) would beneficially own (within the meaning of the Parents
Rights Agreement) 25% or more of the outstanding shares of Company Common
Stock; or
(i) by the Company, if a Stock Acquisition Date shall have occurred
pursuant to the Parent Rights Agreement and, assuming all of the rights
issued pursuant thereto shall have been exercised or exchanged for shares
of Parent Common Stock, the Acquiring Person (as defined in the Parent
Rights Agreement) would beneficially own (within the meaning of the Company
Rights Agreement) 25% or more of the outstanding shares of Parent Common
Stock.
Section 8.2 Effect of Termination. (a) (i) In the event that (x) (1) any
person shall have made a Takeover Proposal to the Company or to its stockholders
after the date hereof and thereafter this Agreement is terminated (i) by either
party pursuant to Section 8.1(b) or (ii) by either party pursuant to Section
8.1(f) and (2) within 12 months after the termination of this Agreement any
Acquisition Transaction involving the Company shall have been consummated or any
Acquisition Agreement with respect to an Acquisition Transaction involving the
Company shall have been entered into, (y) this Agreement is terminated by Parent
pursuant to Section 8.1(e) or Section 8.1(h) or (z) this Agreement is terminated
by the Company pursuant to Section 8.1(g), then, in any such case, the Company
shall in no event later than (i) the date an Acquisition Agreement is entered
into with respect to such Acquisition Transaction involving the Company, or if
no such agreement is entered into, upon the date of consummation of such
Acquisition Transaction involving the Company, in the case of a termination
described in clause (x), (ii) two days after such termination, in the case of a
termination described in the clause (y) or (iii) concurrently with such
termination, in the case of a termination described in clause (z), pay Parent a
fee of $150 million (the "Company Termination Fee"), which amount shall be
payable by wire transfer of same day funds to a bank account designated by
Parent.
(ii) In the event that (x) any person shall have made a Takeover Proposal
to the Company or its stockholders and thereafter this Agreement is terminated
by either party pursuant to Section 8.1(b) and within 12 months after such
termination any Acquisition Transaction involving the Company shall have been
consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving the Company shall have been entered into, or (y) this
Agreement is terminated by Parent pursuant to Section 8.1(e) or Section 8.1(h),
by either party pursuant to Section 8.1(f) or by the Company pursuant to Section
8.1(g), after any such termination, the Company shall reimburse Parent, promptly
after being requested to do so by Parent, for all out-of-pocket costs and
expenses incurred by Parent in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, reasonable fees
and expenses of accountants, attorneys and financial advisors and reasonable
fees and expenses otherwise allocated to the Parent pursuant to Section 6.7, up
to an aggregate of $10 million.
(b)(i) In the event that (x) (1) any person shall have made a Takeover
Proposal to Parent or to its stockholders and thereafter this Agreement is
terminated by either party pursuant to Section 8.1(b) and (2) within 12 months
after the termination of this Agreement any Acquisition Transaction involving
Parent shall have been consummated or any Acquisition Agreement with respect to
an Acquisition Transaction involving Parent shall have been entered into, or (y)
this Agreement is terminated by the Company pursuant to Section 8.1(i), then, in
any such case, Parent shall in no event later than (i) the date an Acquisition
Agreement is entered into with respect to such Acquisition Transaction involving
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Parent, or if no such agreement is entered into, upon the date of consummation
of such Acquisition Transaction involving Parent in the case of a termination
described in clause (x), or (ii) two days after such termination, in the case of
a termination described in the clause (y), pay the Company a fee of $150 million
(the "Parent Termination Fee"), which amount shall be payable by wire transfer
of same day funds to a bank account designated by the Company.
(ii) In the event that (x) any person shall have made a Takeover Proposal
to Parent or its stockholders and thereafter this Agreement is terminated by
either party pursuant to Section 8.1(b) and within 12 months after such
termination any Acquisition Transaction involving Parent shall have been
consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving Parent shall have been entered into, (y) this Agreement is
terminated by the Company pursuant to Section 8.1(i), after any such
termination, Parent shall reimburse the Company, promptly after being requested
to do so by the Company, for all out-of-pocket costs and expenses incurred by
the Company in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, reasonable fees and expenses of
accountants, attorneys and financial advisors and reasonable fees and expenses
otherwise allocated to the Company pursuant to Section 6.7, up to an aggregate
of $10 million.
(c) Each of the parties acknowledges that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, the parties would not enter into
this Agreement; accordingly, if either party fails to promptly pay the amount
due from it pursuant to this Section 8.2, and in order to obtain such payment
the other party commences a suit which results in a judgment for the fees and
expenses set forth in this Section 8.2, the other party shall pay to the party
bringing such suit its costs and expenses (including reasonable attorneys' fees)
in connection with such suit.
(d) In the event of termination of this Agreement pursuant to this Article
VIII, this Agreement (other than as set forth in Section 9.1) shall become void
and of no effect with no liability (other than as set forth in this Section 8.2)
on the part of any party hereto; provided, however, no such termination shall
relieve any party hereto from any liability for damages resulting from any
willful or intentional breach of this Agreement.
Section 8.3 Amendment. This Agreement may be amended by the parties hereto
pursuant to action of their respective Boards of Directors, at any time before
or after approval of the matters and transactions contemplated hereby by the
stockholders of Parent and the Company and prior to the Effective Time, but
after such approvals, no such amendment shall be made which, by law or in
accordance with the rules of any relevant stock exchange, requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
Section 8.4 Extension; Waiver. At any time prior to the Effective Time,
any party 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 of the other parties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for such party's benefit
contained herein. Any agreement to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by a duly authorized
officer of the party to be bound thereby. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
ARTICLE IX
Section 9.1 Non-Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that (a) the agreements set
forth in Sections 6.9 and 6.10 and such other agreements to be performed in
whole or in part after the
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Effective Time shall survive the Effective Time, and (b) the agreements set
forth in Sections 6.7, 6.8(b), 8.2 and 8.3 and this Article IX shall survive
termination indefinitely.
Section 9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.
Section 9.3 Notices. All notices or other communications under this
Agreement shall be in writing and shall be deemed given (a) on the date of
delivery, if delivered in person or by telecopy or facsimile (upon confirmation
of receipt), (b) on the first business day following the date of dispatch, if
delivered by a recognized next-day courier service, or (c) on the seventh
business day following the date of mailing, if delivered by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to the Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Sonat Inc.
AmSouth-Sonat Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent:
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Esq.
El Paso Energy Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇ ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 9.4 Certain Definitions; Interpretation. (a) For purposes of this
Agreement, the following terms shall have the following meanings:
(i) "Company Material Adverse Effect" means any changes in or effects
that in the aggregate together with all other changes and effects (x) are
materially adverse to the business, assets, liabilities, results of
operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, or (y) will prevent the Company's
consummating the transactions contemplated hereby or materially delay the
Company's ability to consummate the transactions contemplated hereby,
provided that, in determining whether a Company Material Adverse Effect has
occurred, changes or effects relating to the natural gas pipeline industry
and/or the oil and gas exploration and production industry and/or any other
industry in which the Company or its
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Subsidiaries are engaged generally or to United States or global economic
conditions or financial markets in general, shall not be considered.
(ii) "Parent Material Adverse Effect" means any changes in or effects
that in the aggregate together with all other changes and effects (x) are
materially adverse to the business, assets, liabilities, results of
operations or condition (financial or otherwise) of Parent and its
Subsidiaries taken as a whole or (y) will prevent Parent's consummating the
transactions contemplated hereby or materially delay Parent's ability to
consummate the transactions contemplated hereby, provided that, in
determining whether a Parent Material Adverse Effect has occurred, changes
or effects relating to the natural gas pipeline industry and/or the oil and
gas exploration and production industry and/or any other industry in which
Parent or its Subsidiaries are engaged generally or to United States or
global economic conditions or financial markets in general, shall not be
considered.
(iii) "affiliate" of a Person means (for all purposes other than
Section 6.12 in which Section "affiliate" shall have the meaning designated
therein) a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person.
(iv) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract
or credit arrangement or otherwise.
(v) "knowledge" of any party shall mean the actual knowledge of the
executive officers of that party.
(vi) "Person" and "person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(vii) "Subsidiary," of a Person means any corporation or other legal
entity of which such Person (either alone or through or together with any
other Subsidiary or Subsidiaries) is the general partner or managing entity
or of which 50% or more of the capital stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or others performing similar functions of such
corporation or other legal entity is directly or indirectly owned or
controlled by such Person (either alone or through or together with any
other Subsidiary or Subsidiaries).
(viii) "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, and including any liability for
the Taxes of any Person under Treas. Reg. sec. 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor,
by contract, or otherwise.
(b) When a reference is made in this Agreement to Articles, Sections,
Disclosure Letters or Exhibits, such reference is to an Article or a Section of,
or an Exhibit to, this Agreement, unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and 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 understood to be followed by the words "without
limitation."
Section 9.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this
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Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon a determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the maximum extent possible.
Section 9.7 Assignment; Binding Effect; No Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of Parent and the Company. Subject
to the preceding sentence, this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
except for Section 6.9 (Insurance; Indemnity), nothing in this Agreement,
express or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 9.8 ENFORCEMENT. THE PARTIES HERETO 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, SUBJECT TO THE NEXT SENTENCE HEREOF, THE PARTIES
SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS
AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY
COURT OF THE UNITED STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN
ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
EACH OF THE PARTIES HERETO (I) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL
JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY
DELAWARE STATE COURT IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (II) AGREES THAT IT
SHALL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR
OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (III) AGREES THAT IT SHALL NOT
BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING
IN THE STATE OF DELAWARE OR A DELAWARE STATE COURT.
Section 9.9 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all of the parties
hereto.
Section 9.10 Entire Agreement. This Agreement, the Confidentiality
Agreement and the Stock Option Agreements constitute the entire agreement
between the parties hereto and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the Company and Parent have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
SONAT INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Chairman, President and
Chief Executive Officer
EL PASO ENERGY CORPORATION
By:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
Title: Executive Vice President
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