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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EL PASO ENERGY CORPORATION,
EL PASO ENERGY ACQUISITION CO.
AND
CRYSTAL GAS STORAGE, INC.
OCTOBER 15, 1999
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER............................................. 1
SECTION 1.1. The Merger............................... 1
SECTION 1.2. Effective Time........................... 1
SECTION 1.3. Effects of the Merger.................... 1
SECTION 1.4. Certificate of Incorporation and
By-laws............................................... 1
SECTION 1.5. Directors................................ 2
SECTION 1.6. Officers................................. 2
SECTION 1.7. Effect on Capital Stock.................. 2
(a) Capital Stock of Sub.................. 2
(b) Cancellation of Treasury Stock and
Parent Owned Stock.............................. 2
(c) Conversion of Shares.................. 2
(d) Conversion of Senior Preferred
Stock........................................... 2
(e) Shares of Dissenting Stockholders..... 2
ARTICLE II
EXCHANGE PROCEDURE..................................... 3
SECTION 2.1. Exchange of Certificates................. 3
(a) Paying Agent.......................... 3
(b) Parent to Provide Funds............... 3
(c) Exchange Procedure.................... 3
(d) No Further Ownership Rights in
Shares.......................................... 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES......................... 4
SECTION 3.1. Representations and Warranties of the
Company............................................... 4
(a) Organization, Standing and Power...... 4
(b) Subsidiaries.......................... 4
(c) Capital Structure..................... 4
(d) Authority; Non-contravention.......... 5
(e) SEC Documents......................... 6
(f) Information Supplied.................. 6
(g) Absence of Certain Changes or
Events.......................................... 6
(h) State Takeover Statutes; Absence of
Supermajority Provision......................... 7
(i) Brokers.............................. 7
(j) Litigation........................... 7
(k) Employee Benefit Matters.............. 7
(l) Taxes................................ 9
(m) No Excess Parachute Payments........... 10
(n) Environmental Matters................. 10
(o) Compliance with Laws.................. 10
(p) Material Contracts and Agreements..... 10
(q) Title to Properties................... 11
(r) Intellectual Property................. 11
(s) Labor Matters......................... 11
(t) Undisclosed Liabilities............... 11
(u) Pipeline Imbalances................... 12
(v) Year 2000............................. 12
(w) Opinion of Financial Advisor.......... 12
(x) Board Recommendation.................. 12
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SECTION 3.2. Representations and Warranties of Parent and
Sub......................................................... 12
(a) Organization; Standing and Power...... 12
(b) Authority; Non-contravention.......... 12
(c) Information Supplied.................. 13
(d) Brokers............................... 13
(e) Litigation............................ 13
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS.............. 13
SECTION 4.1. Conduct of Business of the Company....... 13
(a) Ordinary Course....................... 13
(b) Changes in Employment Arrangements.... 15
(c) Severance............................. 15
(d) Other Actions......................... 15
(e) Internal Restructuring and Hattiesburg
Owner Trust Matters............................. 15
(f) Base Gas.............................. 16
ARTICLE V
ADDITIONAL AGREEMENTS.................................. 16
SECTION 5.1. Stockholder Approval; Preparation of
Proxy Statement....................................... 16
SECTION 5.2. Access to Information.................... 16
SECTION 5.3. Reasonable Efforts; Notification......... 17
SECTION 5.4. Employee Benefit Matters................. 19
SECTION 5.5. Indemnification.......................... 20
SECTION 5.6. Fees and Expenses........................ 21
SECTION 5.7. Public Announcements..................... 21
SECTION 5.8. Internal Restructuring................... 21
SECTION 5.9. Redemption of Senior Preferred Stock..... 21
ARTICLE VI
CONDITIONS PRECEDENT................................... 21
SECTION 6.1. Conditions to Each Party's Obligation to
Effect the Merger..................................... 21
(a) Stockholder Approval.................. 21
(b) Other Approvals....................... 21
(c) No Injunctions or Restraints.......... 21
SECTION 6.2. Conditions to Obligations of Parent and
Sub................................................... 22
SECTION 6.3. Condition to Obligations of the
Company............................................... 22
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER...................... 22
SECTION 7.1. Termination.............................. 22
SECTION 7.2. Procedure for Termination, Amendment,
Extension or Waiver................................... 23
SECTION 7.3. Effect of Termination.................... 23
SECTION 7.4. Amendment................................ 23
SECTION 7.5. Extension; Waiver........................ 23
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS............... 23
SECTION 8.1. Takeover Defenses of the Company and
Standstill Agreements................................. 23
SECTION 8.2. No Solicitation.......................... 24
SECTION 8.3. Fee and Expense Reimbursements........... 26
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ARTICLE IX
GENERAL PROVISIONS..................................... 26
SECTION 9.1. Nonsurvival of Representations and
Warranties............................................ 26
SECTION 9.2. Notices.................................. 26
SECTION 9.3. Definitions.............................. 27
SECTION 9.4. Interpretation........................... 28
SECTION 9.5. Counterparts............................. 28
SECTION 9.6. Entire Agreement; No Third-Party
Beneficiaries......................................... 28
SECTION 9.7. Governing Law............................ 28
SECTION 9.8. Assignment............................... 28
SECTION 9.9. Enforcement of the Agreement............. 28
SECTION 9.10. Performance by Sub....................... 29
SECTION 9.11. Severability............................. 29
Schedule I -- Company Disclosure Document................... S-1
Exhibit A -- Internal Restructuring Description............. A-1
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LIST OF DEFINED TERMS
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Acquisition Agreement....................................... 25
Acquisition Transaction..................................... 24
affiliate................................................... 27
Agreement................................................... 1
Applicable Period........................................... 24
CERCLA...................................................... 27
Certificates................................................ 3
Certificates of Merger...................................... 1
Code........................................................ 7
Company..................................................... 1
Company Benefit Plan........................................ 7
Company Charter............................................. 5
Company Financial Advisor................................... 12
Company HSR Documents....................................... 18
Company NOLs................................................ 9
Company Permits............................................. 10
Company Stockholder Approval................................ 7
Confidentiality and Standstill Agreements................... 23
conversion.................................................. 15
DGCL........................................................ 1
Dissenting Stockholders..................................... 1
Effective Time of the Merger................................ 1
environmental laws.......................................... 27
ERISA....................................................... 7
Exchange Act................................................ 5
Fairness Opinion............................................ 12
Gas Storage Expansion Project............................... 13
Governmental Entity......................................... 5
HSR Act..................................................... 5
include, includes or including.............................. 28
Indemnified Parties......................................... 19
Internal Restructuring...................................... 15
IRS......................................................... 8
knowledge................................................... 27
LBCL........................................................ 1
Liens....................................................... 4
material adverse change or material adverse effect.......... 27
Merger...................................................... 1
Merger Consideration........................................ 2
Notice of Superior Proposal................................. 24
Parent...................................................... 1
Parent Benefit Plan......................................... 19
Parent HSR Documents........................................ 18
Paying Agent................................................ 2
person...................................................... 28
Proxy Statement............................................. 5
Replacement Plan............................................ 19
SEC......................................................... 5
SEC Documents............................................... 5
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Securities Act.............................................. 6
Senior Preferred Stock...................................... 4
Severance Agreements........................................ 8
Share or Shares............................................. 1
Shareholders Agreement...................................... 1
Sub......................................................... 1
subsidiary.................................................. 28
superior proposal........................................... 25
Surviving Corporation....................................... 1
takeover proposal........................................... 24
Tax or Taxes................................................ 9
Tax Return.................................................. 9
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AGREEMENT AND PLAN OF MERGER dated as of October 15, 1999, among EL
PASO ENERGY CORPORATION, a Delaware corporation ("Parent"), EL PASO
ENERGY ACQUISITION CO., a Delaware corporation ("Sub") and a wholly
owned subsidiary of Parent, and CRYSTAL GAS STORAGE, INC., a Louisiana
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions of this Agreement and Plan of Merger (this "Agreement");
WHEREAS, in order to effectuate such acquisition of the Company, the
respective Boards of Directors of Parent, Sub and the Company have approved the
merger of the Company with and into Sub (the "Merger"), upon the terms and
subject to the conditions of this Agreement, whereby each issued and outstanding
share of common stock, $.01 par value, of the Company (singularly "Share" and
plurally "Shares") not owned directly or indirectly by Parent or the Company,
except (unless the Merger is approved by eighty percent or more of the Company's
total voting power, in which event there will be no dissenters rights) Shares
held by persons who object to the Merger and comply with all the provisions of
Louisiana law concerning the right of holders of Shares to dissent from the
Merger and require appraisal of their Shares ("Dissenting Stockholders"), will
be converted into the right to receive $57 per Share;
WHEREAS, contemporaneously with the execution and delivery of this
Agreement certain stockholders of the Company have executed and delivered a
Shareholders Agreement pursuant to which they have entered into certain
agreements with Parent and Sub regarding the Shares beneficially owned by them
(the "Shareholders Agreement"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions
hereof and in accordance with the Delaware General Corporation Law (the "DGCL")
and the Louisiana Business Corporation Law (the "LBCL"), the Company shall be
merged with and into Sub at the Effective Time of the Merger. Following the
Merger, the separate corporate existence of the Company shall cease and Sub
shall continue as the surviving corporation (the "Surviving Corporation") and
shall succeed to and assume all the rights and obligations of the Company in
accordance with the DGCL and the LBCL.
SECTION 1.2. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the parties
shall file certificates of merger or other appropriate documents (in any such
case, the "Certificates of Merger") executed in accordance with the relevant
provisions of the DGCL and the LBCL. The Merger shall become effective at such
time as the Certificates of Merger are duly filed with the Delaware and
Louisiana Secretaries of State, which the parties agree will be done
simultaneously, or simultaneously at such other time as Sub and the Company
shall agree should be specified in the Certificates of Merger (the time the
Merger becomes effective being the "Effective Time of the Merger").
SECTION 1.3. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL and in Louisiana Revised Statute 12:115, which
constitutes a provision of the LBCL.
SECTION 1.4. Certificate of Incorporation and By-laws.
(a) The Certificate of Incorporation of Sub, as in effect at the
Effective Time of the Merger, shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as
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provided therein or by applicable law; provided that such Certificate of
Incorporation shall be amended hereby as of the Effective Time of the
Merger to change the name of Sub to Crystal Gas Storage, Inc.
(b) The By-laws of Sub as in effect at the Effective Time of the Merger
shall be the By-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
SECTION 1.5. Directors. The directors of Sub at the Effective Time of the
Merger shall be the directors of the Surviving Corporation and shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.6. Officers. The officers of Sub at the Effective Time of the
Merger shall be the officers of the Surviving Corporation and shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.7. Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any Shares:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. All Shares
that are owned directly or indirectly by the Company as treasury stock or
by any wholly owned subsidiary of the Company and any Shares owned by
Parent, Sub or any other wholly owned subsidiary of Parent shall be
canceled, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Subject to Section 1.7(d), each issued and
outstanding Share (other than Shares to be canceled in accordance with
Section 1.7(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, $57 per Share (the "Merger
Consideration").
(d) Conversion of Senior Preferred Stock. To the extent that any shares
of Senior Preferred Stock are issued and outstanding at the Effective Time
of the Merger, each such share shall be converted into one share of senior
preferred stock of the Surviving Corporation having terms identical to the
terms of the Senior Preferred Stock and having no alteration or change in
the powers, preferences or rights given to the holders of shares of such
senior preferred stock of the Surviving Corporation from those of the
holders of shares of Senior Preferred Stock.
(e) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary (unless the Merger is approved by eighty percent
or more of the Company's total voting power, in which event there will be
no dissenters rights), any issued and outstanding Shares held by a
Dissenting Stockholder shall not be converted as described in Section
1.7(c) but shall become the right to receive such consideration as may be
determined to be due to such Dissenting Stockholder pursuant to the laws of
the State of Louisiana; provided, however, that Shares outstanding
immediately prior to the Effective Time of the Merger and held by a
Dissenting Stockholder who shall, after the Effective Time of the Merger,
withdraw his demand for appraisal or lose his right of appraisal, in either
case pursuant to the LBCL, shall be deemed to be converted, as of the
Effective Time of the Merger, into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any
written demands for appraisal of Shares received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent
of Parent, voluntarily make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
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ARTICLE II
EXCHANGE PROCEDURE
SECTION 2.1. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time of the Merger, Parent
shall select a bank or trust company to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration upon surrender of
certificates representing Shares.
(b) Parent to Provide Funds. Parent shall take all steps necessary to
enable and cause the Surviving Corporation to provide the Paying Agent on a
timely basis funds necessary to pay for the Shares pursuant to Section 1.7.
(c) Exchange Procedure. Promptly after the Effective Time of the Merger,
the Paying Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time of the Merger
represented outstanding Shares (the "Certificates"), other than the
Company, Parent and any subsidiary of the Company or Parent, (i) a letter
of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Paying Agent and which shall be in a form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 1.7(c), and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. If payment is to be
made to a person other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of payment that such
Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.1, each Certificate
shall be deemed at any time after the Effective Time of the Merger to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 1.7(c).
Notwithstanding the foregoing, neither the Paying Agent nor any party shall
be liable to a former stockholder of the Company for any cash or interest
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. If any Certificates shall not have been
surrendered prior to seven years after the Effective Time of the Merger (or
immediately prior to such earlier date on which any payment pursuant to
this Section 2.1 would otherwise escheat to or become the property of any
governmental body or agency) the payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto. Any funds made available to the Paying
Agent that remain unclaimed by holders of Certificates for six months after
the Effective Time of the Merger shall be delivered to the Surviving
Corporation upon demand and any holder of Certificates who has not
theretofore complied with this Section 2.1(c) shall thereafter look only to
Parent for payment of their claim for Merger Consideration.
(d) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article II
shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares that were outstanding
immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, Parent and Sub as follows, subject
to any exceptions specified in the Company Disclosure Document in the form
attached hereto as Schedule I to the extent such exceptions reference a specific
Section of this Article III:
(a) Organization, Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Louisiana and has the requisite corporate power and authority to
carry on its business as now being conducted. The Company is duly qualified
to do business and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified to do business or in good standing (individually
or in the aggregate) would not have, or be reasonably likely to have, a
material adverse effect on the Company.
(b) Subsidiaries. The Company's subsidiaries are corporations, limited
liability companies or general partnerships that are duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of organization and have the requisite corporate power and
authority (or comparable power and authority in the case of limited
liability companies or general partnerships) to carry on their respective
businesses as they are now being conducted and to own, operate and lease
the assets they now own, operate or hold under lease. The Company's
subsidiaries are duly qualified to do business and are in good standing in
each jurisdiction in which the nature of their respective businesses or the
ownership or leasing of their respective properties makes such
qualification necessary, other than in such jurisdictions where the failure
to be so qualified or in good standing would not have, or be reasonably
likely to have, a material adverse effect on the Company. All the
outstanding shares of capital stock of the Company's subsidiaries that are
corporations, and all the ownership interests of the Company in its other
subsidiaries, have been duly authorized and validly issued and are, except
in the case of any subsidiary that is a general partnership, fully paid and
non-assessable and were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any person. All
such stock and ownership interests are owned of record and beneficially by
the Company or by a wholly owned subsidiary of the Company, free and clear
of all liens, pledges, security interests, charges, claims and other
encumbrances of any kind or nature ("Liens"). Except for the capital stock
of, or ownership interests in, its subsidiaries, the Company does not own,
directly or indirectly, any capital stock, equity interest or other
ownership interest in any corporation, partnership, association, joint
venture, limited liability company or other entity.
(c) Capital Structure. The authorized capital stock of the Company
consists of 20,000,000 shares of common stock, $.01 par value, and
51,200,773 shares of preferred stock, $.01 par value, of which 21,488,353
shares have been designated $.06 Senior Convertible Voting Preferred Stock
(Non-Cumulative) and 27,717,570 of which have been designated Series A
Preferred Stock. At the close of business on June 30, 1999, (i) 2,668,122
Shares were issued and outstanding, (ii) 192,875 Shares were reserved for
issuance pursuant to options granted under the Company's Employee Stock
Option Plan, (iii) no Shares were reserved for issuance pursuant to options
not yet granted under the Company's Employee Stock Option Plan, (iv)
7,360,753 shares of $.06 Senior Convertible Voting Preferred Stock ("Senior
Preferred Stock") were issued and outstanding, (v) 16,562 Shares were
reserved for issuance upon conversion of such outstanding shares of Senior
Preferred Stock and (vi) no shares of Series A Preferred Stock were issued
or outstanding. Except as set forth above, no shares of capital stock or
other equity or voting securities of the Company are reserved for issuance
or outstanding. All outstanding shares of capital stock of the Company are,
and all such Shares issuable upon the exercise of stock options or
conversion of Senior Preferred Stock will be when issued thereunder,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. No capital stock has been issued by the Company since June 30,
1999, other than Shares issued pursuant to options outstanding on or prior
to such date in accordance with their terms at such date. Except for
options described above and Senior
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Preferred Stock described above, there are no outstanding or authorized
securities, options, warrants, calls, rights, commitments, preemptive
rights, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party, or by which any of them is
bound, obligating the Company or any of its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, any shares of capital
stock or other equity or voting securities of, or other ownership interests
in, the Company or of any of its subsidiaries or obligating the Company or
any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking.
(d) Authority; Non-contravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
Company Stockholder Approval, to consummate the transactions contemplated
hereby and to take such actions, if any, as shall have been taken with
respect to the matters referred to in Section 3.1(h). The execution and
delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
Company Stockholder Approval. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. The execution and
delivery of this Agreement by the Company do not, and the consummation of
the transactions contemplated hereby and compliance with the provisions
hereof will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result
in the creation of any lien, security interest, charge or encumbrance upon
any of the properties or assets of the Company or any of its subsidiaries
under, any provision of (i) the Amended and Restated Articles of
Incorporation, as amended (the "Company Charter"), or By-laws of the
Company or any provision of the comparable organizational documents of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its subsidiaries
or their respective properties or assets or (iii) subject to governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in the case of clause
(ii), any such conflicts, violations, defaults, rights or liens, security
interests, charges or encumbrances that individually or in the aggregate
would not have, or be reasonably likely to have, a material adverse effect
on the Company and would not, or be reasonably likely to, materially impair
the ability of the Company to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including local
authorities (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (i) the filing
of a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the Securities and Exchange Commission (the
"SEC") of (A) a proxy statement relating to the Company Stockholder
Approval (such proxy statement as amended or supplemented from time to
time, the "Proxy Statement") and (B) such reports under Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
may be filed in connection with this Agreement and the transactions
contemplated hereby, and (iii) the filing of the Certificates of Merger
with the Delaware and Louisiana Secretaries of State with respect to the
Merger as provided in the DGCL and the LBCL and appropriate documents with
the relevant authorities of other jurisdictions in which the Company is
qualified to do
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business and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made would not have, or be reasonably likely to have, a material adverse
effect on the Company.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since January
1, 1998 (such documents, together with all exhibits and schedules thereto
and documents incorporated by reference therein, collectively referred to
herein as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and other adjustments
described therein).
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
Proxy Statement will, at the date the Proxy Statement is first mailed to
the Company's stockholders and at the time of the Company's stockholders
meeting convened for the purpose of obtaining the Company Stockholder
Approval, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement, as it relates to the Company
Stockholders Meeting, will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents, since December 31, 1998, the Company has conducted its business
only in the ordinary course consistent with past practice, and there has
not been (i) any event or circumstance that has had or been reasonably
likely to have a material adverse effect with respect to the Company; (ii)
any declaration, setting aside or payment of any dividend (whether in cash,
stock or property) with respect to any of the Company's capital stock;
(iii) (A) any granting by the Company or any of its subsidiaries to any
executive officer of the Company or any of its subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with
prior practice or as was required under employment agreements in effect as
of December 31, 1998, (B) any granting by the Company or any of its
subsidiaries to any such executive officer of any increase in severance or
termination pay, except as was required under employment, severance or
termination agreements in effect as of December 31, 1998, or (C) except in
accordance with past practice as to executive officers, any entry by the
Company or any of its subsidiaries into any employment, severance or
termination agreement with any such executive officer; (iv) any damage,
destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a material adverse effect on the
Company; (v) any change in accounting methods, principles or practices by
the Company materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally accepted
accounting principles; or (vi) any event which, if it had taken place
following the execution of this Agreement, would not have been permitted by
Section 4.1.
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(h) State Takeover Statutes; Absence of Supermajority Provision. The
Company has taken all action to assure that no state takeover statute or
similar statute or regulation, shall apply to the Merger or, the
Shareholders Agreement, or any of the other transactions contemplated
hereby or by the Shareholders Agreement. Except for the approval of the
Merger by the holders of two-thirds of the voting power of Shares and
Senior Preferred Stock, present at the meeting of stockholders held for
such purpose, voting together as a class pursuant to which each Share is
entitled to one vote and each share of Senior Preferred Stock is entitled
to .001 votes per share (unless the shares of Senior Preferred Stock have
been called for redemption prior to such meeting and the provisions of
Louisiana Revised Statute 12:75 shall have been satisfied so that such
shares shall not be entitled to vote at such meeting) ("Company Stockholder
Approval"), no other stockholder action on the part of the Company is
required for approval of the Merger and the transactions contemplated
hereby.
(i) Brokers. Except for Xxxxxxx, Xxxxx & Co., which has rendered the
Fairness Opinion referred to in Section 3.1(u) and whose fees are to be
paid by the Company, no broker, investment banker or other person is
entitled to receive from the Company or any of its subsidiaries any
investment banking, brokerage or finder's fees in connection with this
Agreement or the transactions contemplated hereby, including any fee for
any opinion rendered by any investment banker. The engagement letter
between the Company and Xxxxxxx, Sachs & Co. provided to Parent on or prior
to the date of this Agreement constitutes the entire understanding of the
Company and Xxxxxxx, Xxxxx & Co. with respect to the matters referred to
therein, and has not been amended or modified, nor will it be amended or
modified prior to the Effective Time of the Merger.
(j) Litigation. Except as disclosed in the SEC Documents, there is no
suit, action, proceeding or investigation pending or, to the best of the
Company's knowledge, threatened against or affecting the Company or any of
its subsidiaries that has had or could reasonably be expected to have a
material adverse effect on the Company or prevent, hinder or materially
delay the ability of the Company to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries which has had,
or which, insofar as reasonably can be foreseen, in the future could have,
any such effect.
(k) Employee Benefit Matters. As used in this Section 3.1(k), the term
"Employer" shall mean the Company as defined in the preamble of this
Agreement and any member of a controlled group or affiliated service group,
as defined in sections 414(b), (c), (m) and (o) of the Internal Revenue
Code of 1986, as amended ("Code"), of which the Company is a member.
(i) With respect to each employee welfare benefit plan, employee
pension benefit plan and employee benefit plan as defined in sections
3(1), 3(2), and 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which have been or are sponsored by,
participated in, or contributed to by the Employer at any time during
the three-year period ending on the date of this Agreement, or with
respect to which the Employer may have any liability, and except for any
matter that would not individually or in the aggregate have, or be
reasonably likely to have, a material adverse effect on the Company, to
the extent applicable: (A) the plan is in substantial compliance with
the Code and ERISA, including all reporting and disclosure requirements
of Part 1 of Subtitle B of Title I of ERISA; (B) the appropriate Form
5500 has been timely filed for each year of its existence; (C) there has
been no transaction described in section 406 or section 407 of ERISA or
section 4975 of the Code unless exempt under section 408 of ERISA or
section 4975 of the Code, as applicable; (D) the bonding requirements of
section 412 of ERISA have been satisfied; (E) there is no issue pending
nor any issue resolved adversely to the Employer which may subject the
Company to the payment of a penalty, interest, tax or other amount, (F)
the plan can be unilaterally terminated or amended on no more than 90
days notice; (G) all contributions or other amounts payable by the
Employer as of the Effective Time of the Merger with respect to the plan
have either been paid or accrued in the Employer's most recent financial
statements included in the SEC Documents and (H) no notice has been
received or given by the Employer of an increase or proposed increase in
the cost of any such plan or any other employee
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benefit agreement or arrangement, including deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock
purchase plans, golden parachute agreements, severance pay plans or
agreements, dependent care plans, cafeteria plans, employee assistance
programs, scholarship programs, employment contracts and other similar
plans, agreements and arrangements that are currently in effect or were
maintained within three years of the date hereof, or have been approved
before this date but are not yet effective, for the benefit of
directors, officers or employees, or former directors, officers or
employees (or their beneficiaries) of the Employer (each, a "Company
Benefit Plan"). There are no pending or, to the Company's knowledge,
threatened or anticipated claims (other than routine claims for
benefits), actions, arbitrations, investigations or suits by, on behalf
of or against any Company Benefit Plan or their related trusts. The
Company has made available to Parent true and correct copies of all of
the Company Benefit Plans.
(ii) Neither the Company nor any entity (whether or not incorporated)
that was at any time during the six years before the date of this
Agreement treated as a single employer together with the Company under
section 414 of the Code has ever maintained, had any obligation to
contribute to or incurred any liability with respect to a pension plan
that is or was subject to the provisions of Title IV of ERISA or section
412 of the Code. Neither the Company nor any entity (whether or not
incorporated) that was at any time during the six years before the date
of this Agreement treated as a single employer together with the Company
under section 414 of the Code has ever maintained, had an obligation to
contribute to, or incurred any liability with respect to a multiemployer
pension plan as defined in section 3(37) of ERISA. During the last six
years, the Company has not maintained, had an obligation to contribute
to or incurred any liability with respect to a voluntary employees
beneficiary association that is or was intended to satisfy the
requirements of section 501(c)(9) of the Code. No plan, arrangement or
agreement will cause the Employer to have liability for severance pay as
a result of the Merger, except as otherwise set forth in the Amended and
Restated Executive Compensation and Severance Agreements between the
Company and each of the persons named in the Company Disclosure Document
and the Severance Plan described therein, covering employees who are not
parties to Amended and Restated Executive Compensation and Severance
Agreements (collectively the "Severance Agreements"). The Employer does
not provide employee benefits, including without limitation, death,
post-retirement medical or health coverage (whether or not insured) or
contribute to or maintain any employee benefit plan which provides for
benefit coverage following termination of employment except (A) as is
required by section 4980B(f) of the Code or other applicable statute,
(B) death benefits or retirement benefits under any employee pension
benefit plan as defined in section 3(2) of ERISA, (C) benefits the full
cost of which is borne by the current or former employee (or his
beneficiary), nor has it made any representations, agreements, covenants
or commitments to provide that coverage, or (D) deferred compensation
benefits which have been accrued as liabilities on the books of the
Employer and disclosed on its financial statements included in the SEC
Documents. All group health plans maintained by the Employer have been
operated in material compliance with section 4980B(f) of the Code.
(iii) All Company Benefit Plans that are intended to qualify under
section 401(a) of the Code have been submitted to and approved as
qualifying under section 401(a) of the Code by the Internal Revenue
Service ("IRS") or the applicable remedial amendment period will not
have ended prior to the Effective Time of the Merger.
(iv) Except as expressly provided in this Agreement or the Severance
Agreements and except pursuant to certain options under the Company's
Employee Stock Option Plan as described in section 3.1(c), the
transactions contemplated by this Agreement will not accelerate the time
of payment or vesting, or increase the amount, of compensation or
benefits due any director, officer or employee or former director,
officer or employee (including any beneficiary) of the Employer.
(v) With respect to any entity (whether or not incorporated) that is
both treated as a single employer together with the Company under
section 414 of the Code and located outside of the
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Xxxxxx Xxxxxx, any benefit plans maintained by it for the benefit of its
directors, officers, employees or former employees (or any of their
beneficiaries) are in compliance with applicable laws pertaining to such
plans in the jurisdiction of such entity, except where such failure to
be in compliance would not, either individually or in the aggregate,
have, or be reasonably likely to have, a material adverse effect on the
Company.
(l) Taxes. (i) Each of the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of
which the Company or any of its subsidiaries is or has been a member, has
timely filed (taking into account any extensions) all Tax Returns required
to be filed by it on or before the Effective Time of the Merger and has
timely paid or deposited (or the Company has paid or deposited on its
behalf) all Taxes and estimated Taxes which are required to be paid or
deposited before the Effective Time of the Merger. Each of the Tax Returns
filed by the Company or any of its subsidiaries is accurate and complete in
all material respects. The Company has delivered or made available to
Parent accurate and complete copies of all Tax Returns of the Company and
its subsidiaries that have been requested by Parent. The Company shall give
Parent an opportunity to review and comment upon any Tax Returns of the
Company and its subsidiaries to be filed after the date of this Agreement.
No extension or waiver of the limitation period applicable to any of the
Tax Returns of the Company or its subsidiaries has been granted, and no
such extension or waiver has been requested from any of the Company or its
subsidiaries. The most recent consolidated financial statements of the
Company contained in the filed SEC Documents reflect an adequate reserve
for all Taxes payable by the Company and its subsidiaries for all taxable
periods and portions thereof through the date of such financial statements;
(ii) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries, no
requests for waivers of the time to assess any such Taxes have been
granted or are pending, and there are no tax liens upon any assets of
the Company or any of its subsidiaries (except for liens for ad valorem
Taxes not yet delinquent and other Taxes not yet due and payable) and no
claim has been made by any 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 in that jurisdiction. There are no current
examinations of any Tax Return of the Company or any of its subsidiaries
being conducted and there are no settlements of any prior examinations
which could reasonably be expected to materially adversely affect any
taxable period for which the statute of limitations has not run.
(iii) None of the Company or its subsidiaries is, or has been, a
party to or bound by any tax indemnity agreement, tax sharing agreement,
tax allocation agreement or similar contract.
(iv) For federal income Tax purposes, the net operating losses of the
Company and its subsidiaries as reflected on the federal income Tax
Returns of the Company and its subsidiaries (the "Company NOLs") exceed
the gain the Company and the subsidiaries will recognize as a result of
the Internal Restructuring, the Merger, and any other transactions
contemplated by this Agreement. The Company NOLs are not subject to any
limitations (e.g., under Section 382 of the Code, Section 384 of the
Code, or the consolidated return regulations).
(v) The limited liability company subsidiaries of the Company
resulting from the Internal Restructuring are, or will be at the
Effective Time of the Merger, treated as disregarded entities for
federal income Tax purposes and the assets of such subsidiaries are, or
will be at the Effective Time of the Merger, treated as owned directly
by the Company for federal income Tax purposes.
(vi) At the Effective Time of the Merger, no subsidiary of the
Company will be treated as a partnership for federal income Tax
purposes.
(vii) No person is required to withhold any amounts pursuant to
Section 1445 of the Code from any payments of Merger Consideration made
to holders of Shares pursuant to the Merger. The Company has delivered
or made available to Parent accurate and complete copies of all audit
reports and similar documents relating to Tax Returns of the Company and
its subsidiaries;
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(viii) As used herein, "Tax" or "Taxes" shall mean all taxes of any
kind, including, without limitation, those on or measured by or referred
to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, estimated, excise,
severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any Governmental
Entity, domestic or foreign. As used herein, "Tax Return" shall mean any
return, report, statement or information required to be filed with any
Governmental Entity with respect to Taxes.
(m) No Excess Parachute Payments. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined by the IRS in proposed Treasury
Regulation section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Company Benefit Plan currently
in effect would not be characterized as an "excess parachute payment" (as
such term is defined in section 280G(b)(1) of the Code).
(n) Environmental Matters. Except as would not have, or be reasonably
likely to have, a material adverse effect on the Company, (i) the business
operations of the Company and its subsidiaries are being conducted, and to
the Company's knowledge have at all times been conducted, in compliance
with all limitations, restrictions, standards and requirements established
under environmental laws, (ii) no facts or circumstances exist that impose
on the Company or any of its subsidiaries an obligation under environmental
laws to conduct any removal, remediation, or similar response action, or
that would form the basis of any claim, action, lawsuit, proceeding or
investigation against, or any liability of, the Company or any of its
subsidiaries under any environmental law, (iii) there is no obligation,
undertaking or liability arising out of or relating to environmental laws
that the Company or any of its subsidiaries has agreed to, assumed or
retained, by contract or otherwise, or that has been imposed on the Company
or any of its subsidiaries by any writ, injunction, decree, order or
judgment, (iv) neither the Company nor any of its subsidiaries has received
any written request for information, or been notified that it is a
potentially responsible party, under CERCLA or any similar state law, and
(v) there are no lawsuits, claims, actions, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company
or any of its subsidiaries that arise out of or relate to environmental
laws.
(o) Compliance with Laws. The Company and its subsidiaries hold all
required, necessary or applicable permits, licenses, variances, exemptions,
orders, franchises and approvals of all Governmental Entities, except where
the failure to so hold would not have, or be reasonably likely to have, a
material adverse effect on the Company (the "Company Permits"). The Company
and its subsidiaries are in compliance with the terms of the Company
Permits except where the failure to so comply would not have, or be
reasonably likely to have, a material adverse effect on the Company.
Neither the Company nor any of its subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation, rule, permit or order
of any Federal, state or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or order
of any court or other Governmental Entity, applicable to the Company or any
of its subsidiaries or their respective business, assets or operations,
except for violations and failures to comply that have not had,
individually or in the aggregate, or could not individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Company.
(p) Material Contracts and Agreements. All material contracts of the
Company or its subsidiaries have been included in the SEC Documents, except
for those contracts not required to be filed pursuant to the rules and
regulations of the SEC. Set forth on Section 3.1(p) of the Company
Disclosure Document is a complete and accurate listing of all hedging and
forward sale arrangements (i) to which the Company or any of its
subsidiaries is party or (ii) by which any of the Company's or any of its
subsidiaries' assets are bound.
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(q) Title to Properties.
(i) Each of the Company and each of its subsidiaries has good and
defensible title to, or valid leasehold interests in, all its material
assets and properties purported to be owned by it in the SEC Documents,
except for such assets and properties as are no longer used or useful in
the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in
the aggregate, do not and will not materially interfere with its ability
to conduct its business as currently conducted or as reasonably expected
to be conducted. All such assets and properties, other than assets and
properties in which the Company or any of the subsidiaries has leasehold
interests, are free and clear of all Liens, other than those set forth
in the SEC Documents and except for Liens, that, in the aggregate, do
not and will not materially interfere with the ability of the Company or
any of its subsidiaries to conduct business as currently conducted or as
reasonably expected to be conducted.
(ii) Except as would not have, or be reasonably likely to have, a
material adverse effect on the Company, each of the Company and each of
its subsidiaries has complied in all material respects with the terms of
all leases to which it is a party and under which it is in occupancy,
and all such leases are in full force and effect. Each of the Company
and each of its subsidiaries enjoys peaceful and undisturbed possession
under all such leases.
(r) Intellectual Property. The Company and its subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service
marks, service xxxx rights, copyrights, technology, know-how, processes and
other proprietary intellectual property rights and computer programs which
are material to the condition (financial or otherwise) or conduct of the
business and operations of the Company and its subsidiaries taken as a
whole. To the Company's knowledge, (i) the use of such patents, patent
rights, trademarks, trademark rights, service marks, service xxxx rights,
trade names, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs by the
Company and its subsidiaries does not infringe on the rights of any person,
subject to such claims and infringements as do not, in the aggregate, give
rise to any liability on the part of the Company and its subsidiaries which
has had or could have a material adverse effect on the Company, and (ii) no
person is, in any manner that has had or could have a material adverse
effect on the Company, infringing on any right of the Company or any of its
subsidiaries with respect to any such patents, patent rights, trademarks,
trademark rights, service marks, service xxxx rights, trade names,
copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs. No claims are pending
or, to the Company's knowledge, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the rights of
any person with regard to any patent, license, trademark, trade name,
service xxxx, copyright or other intellectual property right.
(s) Labor Matters. There are no collective bargaining agreements or
other labor union agreements or understandings to which the Company or any
of its U.S. subsidiaries is a party or by which any of them is bound, nor
is it or any of its subsidiaries the subject of any proceeding asserting
that it or any subsidiary has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or
conditions. To the Company's knowledge, during the five-year period ending
on the date of this Agreement, neither the Company nor any of its
subsidiaries has encountered any labor union organizing activity, or had
any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
(t) Undisclosed Liabilities. Except as set forth in the SEC Documents,
at the date of the most recent audited financial statements of the Company
included in the SEC Documents, neither the Company nor any of its
subsidiaries had, and since such date neither the Company nor any of such
subsidiaries has incurred (except in the ordinary course of business), any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), which, individually or in the aggregate, have had
or could reasonably be expected to have a material adverse effect on the
Company.
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(u) Pipeline Imbalances. There are no physical natural gas cumulative
imbalances with respect to the Company's or any of its subsidiaries'
properties.
(v) Year 2000. The systems operated or used by the Company or any of its
Subsidiaries are capable of providing 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, 1999, except, in the aggregate, as would not
have, or be reasonably likely to have, a material adverse effect on the
Company.
(w) Opinion of Financial Advisor. The Company's financial advisor,
Xxxxxxx, Xxxxx & Co. (the "Company Financial Advisor"), has delivered to
the Board of Directors of the Company an oral opinion, to be confirmed in
writing (the "Fairness Opinion") to the effect that, as of the date of this
Agreement, the consideration to be received by the holders of Shares in the
Merger is fair to such holders from a financial point of view. Subject to
the prior review by the Company Financial Advisor, the Fairness Opinion
shall be included in the Proxy Statement.
(x) Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has by unanimous vote (i) determined that
this Agreement and the transactions contemplated hereby, including the
Merger and the transactions contemplated thereby, are fair to and in the
best interests of the stockholders of the Company, and (ii) resolved to
recommend to the holders of the Shares that they approve the Merger and the
transactions contemplated thereby.
SECTION 3.2. Representations and Warranties of Parent and Sub. Parent and
Sub represent and warrant to, and agree with, the Company as follows:
(a) Organization; Standing and Power. Parent and Sub are corporations
duly organized, validly existing and in good standing under laws of their
states of incorporation and have the requisite corporate power and
authority to carry on their business as now being conducted. Parent and Sub
are duly qualified to do business and in good standing in each jurisdiction
in which the nature of their business or the ownership or leasing of their
properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified to do business
(individually or in the aggregate) would not have, or be reasonably likely
to have, a material adverse effect on Parent.
(b) Authority; Non-contravention. Parent and Sub have the requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Sub and the consummation by Parent and Sub
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by Parent and Sub and constitutes a
valid and binding obligation of Parent and Sub, enforceable against Parent
and Sub in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws or judicial decisions now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement by Parent and Sub do
not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of
a material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Parent or Sub or any of their subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of Sub or of Parent or any
comparable organizational documents of their subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to Parent or Sub or any of their subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation or arbitration award applicable
to Parent or Sub or any of their subsidiaries or their respective
properties or assets, other than,
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in the case of clause (ii), any such conflicts, violations or defaults that
individually or in the aggregate would not materially impair the ability of
Parent and Sub to perform their respective obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity is required by or with respect to
Parent or Sub or any of their subsidiaries in connection with the execution
and delivery of this Agreement by Parent and Sub or the consummation by
Parent and Sub of the transactions contemplated hereby, except for (i) the
filing by Parent of a premerger notification and report form under the HSR
Act, (ii) the filing with the SEC of such reports under Sections 13 of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby and (iii) filings in Delaware by Sub in
connection with the Merger.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Proxy
Statement will at the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the Company's stockholder meeting
at which Company Stockholder Approval is sought, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(d) Brokers. Except for Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, whose fees are to be paid by Parent, no broker, investment
banker or other person, is entitled to any broker's, finder's 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
Sub, including any fee for any opinion rendered by any investment banker.
(e) Litigation. There is no suit, action, proceeding or investigation
pending or, to the knowledge of Parent, threatened against or affecting
Parent or any of its subsidiaries that could reasonably be expected to
prevent, hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its subsidiaries having, or which,
insofar as reasonably can be foreseen, in the future could have, any such
effect.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business of the Company.
(a) Ordinary Course. During the period from the date of this Agreement
to the Effective Time of the Merger (except as otherwise specifically
contemplated by the terms of this Agreement), the Company shall and shall
cause its subsidiaries to carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
conducted at the date hereof (including the on-going expansion project at
the Company's Mississippi gas storage operations (the "Gas Storage
Expansion Project"), which is being undertaken in the ordinary course of
business) and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them, in each case
consistent with past practice, to the end that their goodwill and ongoing
businesses shall be unimpaired to the fullest extent possible at the
Effective Time of the Merger. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this
Agreement, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly-owned
subsidiary of the Company to the Company or a wholly-owned subsidiary of
the Company, (B) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or (C)
other than in
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connection with the Senior Preferred Stock Redemption, purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any
of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities (other than, in
the case of the Company, the issuance of Shares upon the exercise of
options or conversion of Senior Preferred Stock outstanding on the date
of this Agreement (as identified and described in Section 3.1(c)) in
accordance with their current terms);
(iii) amend the Company Charter, By-laws or other comparable charter
or organizational document;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of,
or by any other manner, any business or any corporation, partnership,
association, joint venture, limited liability company or other entity or
division thereof or (B) any assets that would be material, individually
or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of supplies and inventory in the ordinary course
of business consistent with past practice;
(v) sell, lease, mortgage, pledge, xxxxx x Xxxx on or otherwise
encumber or dispose of any of its properties or assets, except (A) sales
of inventory in the ordinary course of business consistent with past
practice, (B) other transactions involving not in excess of $500,000 in
the aggregate and (C) the creation of Liens in connection with working
capital borrowings under revolving credit facilities incurred in
accordance with Section 4.1(a)(vi);
(vi) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the
Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter
into any arrangement with respect to any of the foregoing, except for
working capital borrowings under revolving credit facilities that are
(1) incurred in the ordinary course of business, (2) on terms customary
for facilities of this type and (3) prepayable without premium or
penalty; provided the Company notifies Parent of the entering into of
any such facilities and of any drawdowns made thereunder; or (B) make
any loans, advances or capital contributions to, or investments in, any
other person, other than to the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) make or incur any new capital expenditure not included in the
Company's approved capital expenditure budget for 1999 set forth as on
Section 4.1(a)(vii) of the Company Disclosure Document or not in
conjunction with the Gas Storage Expansion Project as contemplated by
Section 4.1(a)(vii) of the Company Disclosure Document with respect to
1999, which, singly or in the aggregate with all other expenditures,
would exceed $500,000 or enter into any material agreements or
commitments with respect to capital expenditures without the prior
written consent of Parent (which consent shall not be unreasonably
withheld);
(viii) make any material election relating to Taxes or settle or
compromise any material Tax liability;
(ix) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with
their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or
the notes thereto) of the Company included in the SEC Documents or
incurred in the ordinary course of business consistent with past
practice;
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(x) release any party from or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(xi) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or
reorganization;
(xii) enter into any new collective bargaining agreement;
(xiii) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC or the Financial
Accounting Standards Board;
(xiv) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or
compromises in consultation and cooperation with Parent, and, with
respect to any such settlement, with the prior written consent of
Parent, such consent not to be unreasonably withheld;
(xv) enter into any forward sale or hedging arrangements with respect
to natural gas transportation or storage or any other products; or
(xvi) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Changes in Employment Arrangements. Neither the Company nor any of
its subsidiaries shall adopt or amend (except as may be required by law)
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or other arrangement (including any Company Benefit
Plan) for the benefit of any employee, director or former director or
employee, increase the compensation or benefits of any officer of the
Company or any of its subsidiaries, or, except as provided in an existing
Company Benefit Plan or in the ordinary course of business consistent with
past practice, increase the compensation or benefits of any employee or
former employee or pay any benefit not required by any existing plan,
arrangement or agreement.
(c) Severance. Neither the Company nor any of its subsidiaries shall
grant any new or modified severance or termination arrangement or increase
or, except as required under the existing terms of a Company Benefit Plan,
accelerate any benefits payable under its severance or termination pay
policies in effect on the date hereof.
(d) Other Actions. The Company shall not, and shall not permit any of
its subsidiaries to, take any action that would, or that could reasonably
be expected to, result in any of the representations and warranties of the
Company set forth in this Agreement becoming untrue.
(e) Internal Restructuring and Hattiesburg Owner Trust
Matters. Notwithstanding any provision of this Section 4.1 to the contrary,
the Company shall be permitted to take the actions necessary to achieve the
internal restructuring of its subsidiaries, to the extent described in
Exhibit A hereto (the "Internal Restructuring"), so that immediately prior
to the Effective Time of the Merger each and every subsidiary of the
Company, other than any subsidiary which is at present a general
partnership or limited liability company, shall have been converted into,
or otherwise become by merger or otherwise (collectively "conversion"), a
new single member limited liability company organized under the Delaware
Limited Liability Company Act. Further, if requested by Parent, the Company
shall use its reasonable efforts to own or acquire ownership of, or cause a
subsidiary to own or acquire ownership of, all Investor Certificates issued
under the Hattiesburg Owner Trust Agreement. If Parent makes such request,
Sub shall timely advance to the Company any funds necessary to effectuate
the acquisition of all Investor Certificates issued under the Hattiesburg
Owner Trust not owned by the Company or any subsidiary as of the date
hereof, which advance shall be evidenced by an unsecured promissory note of
the Company, in a form reasonably acceptable to the Company and Sub, which
shall be payable by the Company to Sub on the date six months from the date
of such advance and which shall bear simple interest at 8 1/2% per annum,
payable in arrears. The Company shall, upon the occasion of it and its
subsidiaries owning all
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such Investor Certificates, take all reasonable efforts to terminate the
trust created by the Hattiesburg Owner Trust Agreement and the other
agreements benefitting such trust, including that certain Collateral
Sharing and Security Agreement dated November 21, 1995, that certain
Guarantee dated November 21, 1995 and that certain Sales and Servicing
Agreement dated November 21, 1995, as amended by the First Amendment
thereto dated January 31, 1996.
(f) Base Gas. Subject to changes in fuel gas and gas used to settle
operational balancing accounts, the Company will maintain its current base
gas levels at its gas storage facilities, which levels the Company believes
are adequate to meet current contractual needs and to avoid damage to the
storage facilities.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement.
(a) The Company will, as soon as practicable following the execution of
this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders for the purpose of approving and adopting this Agreement
and approving related matters. The Company will, through its Board of
Directors, recommend to its stockholders approval and adoption of this
Agreement, except to the extent that the Board of Directors of the Company
shall have withdrawn its approval or recommendation of this Agreement or
the Merger solely to the extent permitted by Section 8.2(b).
(b) The Company will, as soon as practicable following the execution of
this Agreement, prepare and file a preliminary Proxy Statement with the SEC
and will use its best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
stockholders. The Company will notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement,
the Company will promptly prepare and mail to its stockholders such an
amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably and timely
objects.
(c) The Company shall cooperate with Parent with respect to setting a
record date for any necessary vote of stockholders regarding the Merger and
will set such date as and when requested by Parent.
SECTION 5.2. Access to Information.
(a) During the period from the date hereof to the Effective Time of the
Merger, except to the extent otherwise required by United States regulatory
considerations:
(i) The Company shall, and shall cause each of its subsidiaries,
officers, employees, counsel, financial advisors and other
representatives to, afford to Parent, and to Parent's accountants,
counsel, financial advisors and other representatives, reasonable access
to the Company's and its subsidiaries' respective properties, books,
contracts, commitments and records and, during such period, the Company
shall, and shall cause each of its subsidiaries, officers, employees,
counsel, financial advisors and other representatives to, furnish
promptly to Parent,
(A) a copy of each report, schedule, registration statement and
other document filed by the Company during such period pursuant to
the requirements of Federal or state securities laws and
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(B) all other information concerning its business, properties,
financial condition, operations and personnel as Parent may from time
to time reasonably request so as to afford Parent a reasonable
opportunity to make at its sole cost and expense such review,
examination and investigation of the Company and its subsidiaries as
Parent may reasonably desire to make. The Company agrees to advise
Parent of all material developments with respect to the Company, its
subsidiaries and their respective assets and liabilities.
(ii) The Company agrees to request KPMG LLP to permit
PricewaterhouseCoopers LLP to review and examine the work papers of KPMG
LLP with respect to the Company and its subsidiaries, and the officers
of the Company will furnish to Parent such financial and operating data
and other information with respect to the business and properties of the
Company and its subsidiaries as Parent shall from time to time
reasonably request.
(iii) The Company shall promptly notify Parent of any notices from or
investigations by Governmental Entities that could materially affect the
Company's business or assets or the consummation of the Merger. Parent
will promptly notify the Company of any notices from or investigations
by Governmental Entities that could materially affect Parent's
consummation of the Merger.
(b) Except as required by law and without limiting in any way the
continued efficacy of the Confidentiality and Standstill Agreement referred
to in Section 8.1, each of the Company and Parent shall, and shall cause
its respective directors, officers, employees, accountants, counsel,
financial advisors and representatives and affiliates to, (i) hold in
confidence, unless compelled to disclose by judicial or administrative
process, or, in the opinion of its counsel, by other requirements of law,
all nonpublic information concerning the other party furnished in
connection with the transactions contemplated by this Agreement until such
time as such information becomes publicly available (otherwise than through
the wrongful act of such person), (ii) not release or disclose such
information to any other person, except in connection with this Agreement
to its auditors, attorneys, financial advisors, other consultants and
advisors, and (iii) not use such information for any competitive or other
purpose other than with respect to its consideration and evaluation of the
transactions contemplated by this Agreement. Any investigation by any party
of the assets and business of the other party and its subsidiaries shall
not affect any representations and warranties hereunder or either party's
right to terminate this Agreement as provided in Article VII.
(c) In the event of the termination of this Agreement, each party
promptly will deliver to the other party (and destroy all electronic data
reflecting the same) all documents, work papers and other material (and any
reproductions or extracts thereof and any notes or summaries thereto)
obtained by such party or on its behalf from such other party or its
subsidiaries as a result of this Agreement or in connection therewith so
obtained before or after the execution hereof.
SECTION 5.3. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, except to the extent otherwise required by United States
regulatory considerations and otherwise provided in this Section 5.3, each
of the parties agrees to use reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and
the making of all necessary registrations and filings (including filings
with Governmental Entities, if any) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any
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additional instruments necessary to consummate the transactions
contemplated by this Agreement. In connection with and without limiting the
foregoing, each of the Company and Parent and its respective Board of
Directors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable
to the Merger, (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, take all action necessary to
ensure that the Merger may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and (iii) cooperate with each
other in the arrangements for refinancing any indebtedness of, or obtaining
any necessary new financing for, the Company and the Surviving Corporation.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate in any respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations or warranties or
covenants or agreements of the parties or the conditions to the obligations
of the parties hereunder.
(c) (i) Each of the parties hereto (and, in the case of the Company, its
ultimate controlling person, as necessary) shall file a premerger
notification and report form under the HSR Act with respect to the Merger
as promptly as reasonably possible following execution and delivery of this
Agreement. Each of the parties (and, in the case of the Company, its
ultimate controlling person, as necessary) agrees to use reasonable efforts
to promptly respond to any request for additional information pursuant to
Section (e)(1) of the HSR Act.
(ii) Except as otherwise required by United States regulatory
considerations, the Company will furnish to Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, counsel to Parent and Sub, copies of all
correspondence, filings or communications (or memoranda setting forth
the substance thereof (collectively, "Company HSR Documents")) between
the Company, or any of its respective representatives, on the one hand,
and any Governmental Entity, or members of the staff of such agency or
authority, on the other hand, with respect to this Agreement or the
Merger; provided, however, that (x) with respect to documents and other
materials filed by or on behalf of the Company with the Antitrust
Division of the Department of Justice, the Federal Trade Commission, or
any state attorneys general that are available for review by Parent and
Sub, copies will not be required to be provided to Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx and (y) with respect to any Company HSR Documents (1)
that contain any information which, in the reasonable judgment of
Fulbright & Xxxxxxxx L.L.P., should not be furnished to Parent or Sub
because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of the Company to furnish any such Company HSR Documents to
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx shall be satisfied by the
delivery of such Company HSR Documents on a confidential basis to Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx pursuant to a confidentiality
agreement in form and substance reasonably satisfactory to Parent.
Except as otherwise required by United States regulatory considerations,
Parent and Sub will furnish to Fulbright & Xxxxxxxx L.L.P., counsel to
the Company, copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof (collectively, "Parent HSR
Documents")) between Parent, Sub or any of their respective
representatives, on the one hand, and any Governmental Entity, or member
of the staff of such agency or authority, on the other hand, with
respect to this Agreement or the Merger; provided, however, that (x)
with respect to documents and other materials filed by or on behalf of
Parent or Sub with the Antitrust Division of the Department of Justice,
the Federal Trade Commission, or any state attorneys general that are
available for review by the Company, copies will not be required to be
provided to Fulbright & Xxxxxxxx L.L.P. and (y) with respect to any
Parent HSR Documents (1) that contain information which, in the
reasonable judgment of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, should
not be furnished to the Company because of antitrust considerations or
(2) relating to a request for additional information pursuant to Section
(e)(1) of the HSR Act, the obligation of Parent and Sub
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to furnish any such Parent HSR Documents to Fulbright & Xxxxxxxx L.L.P.
shall be satisfied by the delivery of such Parent HSR Documents on a
confidential basis to Fulbright & Xxxxxxxx L.L.P. pursuant to a
confidentiality agreement in form and substance reasonably satisfactory
to the Company.
(iii) At the election of Parent, the Company and Parent shall use
reasonable efforts to defend all litigation under the Federal or state
antitrust laws of the United States which if adversely determined would,
in the reasonable opinion of Parent (based on the advice of outside
counsel), be likely to result in the failure of the condition set forth
in Section 6.1(c) not being satisfied, and to appeal any order, judgment
or decree, which if not reversed, would result in the failure of such
condition. Notwithstanding the foregoing, nothing contained in this
Agreement shall be construed so as to require Parent, Sub or the
Company, or any of their respective subsidiaries or affiliates, to sell,
license, dispose of, or hold separate, or to operate in any specified
manner, any assets or businesses of Parent, Sub, the Company or the
Surviving Corporation (or to require Parent, Sub, the Company or any of
their respective subsidiaries or affiliates to agree to any of the
foregoing). The obligations of each party under Section 5.3(a) to use
reasonable efforts with respect to antitrust matters shall be limited to
compliance with the reporting provisions of the HSR Act and with its
obligations under this Section 5.3(c).
SECTION 5.4. Employee Benefit Matters.
(a) Parent may cause any Company Benefit Plan, other than the Severance
Agreements, to be terminated or discontinued at or after the Effective Time
of the Merger, provided that, to the extent Parent or its affiliates
maintain a benefit plan of the same type for employees of Parent or any of
its affiliates ("Parent Benefit Plan"), Parent shall take all actions
necessary or appropriate to permit the Company employees participating in
such Company Benefit Plan to immediately thereafter participate in such
Parent Benefit Plan of the same type maintained by Parent or any of its
affiliates for their employees generally (a "Replacement Plan"); provided,
however, that if the Company Benefit Plan that is so terminated or
discontinued is a group health plan, then Parent shall permit each Company
employee participating in such group health plan and his or her eligible
dependents to be covered under a Replacement Plan under the terms and
conditions of the Replacement Plan as modified to the extent necessary to
(i) provide medical and dental benefits to each such Company employee and
such eligible dependents effective immediately upon the cessation of
coverage of such individuals under such group health plan, (ii) credit to
such Company employee, for the year during which such coverage under such
Replacement Plan begins, with any deductibles and copayments already
incurred during such year under such group health plan, and (iii) waive any
preexisting condition restrictions to the extent that the preexisting
condition restrictions were satisfied under such group health plan. Parent,
the Surviving Corporation, their affiliates, and the Parent Benefit Plans
(including, without limitation, the Replacement Plans) shall recognize each
Company employee's years of service and level of seniority with the Company
and its subsidiaries for purposes of terms of employment and eligibility,
vesting and benefit determination under the Parent Benefit Plans (other
than benefit accruals under any defined benefit pension plan). Nothing in
this Agreement shall be construed to require Parent to provide any
particular type or amount of benefits for any person under any Parent
Benefit Plan.
(b) At the Effective Time of the Merger, each outstanding option to
purchase Shares shall be canceled and the holder thereof shall be entitled
to receive at the Effective Time of the Merger from the Company in
consideration for such cancellation a cash payment of an amount equal to
(i) the excess, if any, of (A) the Merger Consideration over (B) the
exercise price per Share subject to such option, multiplied by (ii) the
number of Shares subject to such option. All amounts payable pursuant to
this Section 5.4(b) shall be subject to any required withholding of taxes.
Prior to the Effective Time of the Merger, the Board of Directors of the
Company will take any corporate action necessary with respect to
outstanding options to effectuate the provisions of this Section 5.4(b).
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SECTION 5.5. Indemnification.
(a) The Company shall, and from and after the Effective Time of the
Merger, Parent and the Surviving Corporation shall, indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time of the Merger, an
officer or director of the Company or any of its Subsidiaries or an
employee of the Company or any of its Subsidiaries who acts as a fiduciary
under any Company Benefit Plans (but, with respect to such employees, only
to the extent (if any) indemnified by the Company as of the date hereof)
(the "Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection
with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part
out of the fact that such person is or was a director, officer or such
employee of the Company or any subsidiary whether pertaining to any matter
existing or occurring at or prior to the Effective Time of the Merger and
whether asserted or claimed prior to, or at or after, the Effective Time of
the Merger (including arising out of or relating to the Merger, the
consummation of the transactions contemplated herein, and any action taken
in connection therewith). Any Indemnified Party wishing to claim
indemnification under this Section 5.5, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the
Company (or after the Effective Time of the Merger, Parent and the
Surviving Corporation), but the failure so to notify shall not relieve a
party from any liability that it may have under this Section 5.5, except to
the extent such failure materially prejudices such party. Parent or the
Surviving Corporation shall have the right to assume the defense thereof.
If Parent of the Surviving Corporation does not assume the defense, the
Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict between the positions of any
two or more Indemnified Parties. The Indemnified Party will cooperate in
the defense of any such matter. Parent shall not be liable for any
settlement effected without its prior written consent.
(b) Parent shall purchase and maintain in effect for the benefit of the
Indemnified Parties for a period of six years after the Effective Time of
the Merger, directors' and officers' liability insurance of at least the
same coverage and amounts containing terms and conditions that are no less
advantageous in any material respect to the Indemnified Parties than that
maintained by the Company and its Subsidiaries as of the date of this
Merger Agreement with respect to matters arising before the Effective Time
of the Merger, provided that Parent shall not be required to pay an annual
premium of such insurance in excess of three times the last annual premium
paid by the Company prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(c) All rights to indemnification for acts or omissions occurring prior
to the Effective Time of the Merger now existing in favor of the
Indemnified Parties as provided in the charter documents or by-laws of the
Company or its subsidiaries and in any indemnification agreements to which
they are parties shall survive the Merger, and the Surviving Corporation
shall continue such indemnification rights for acts or omissions prior to
the Effective Time of the Merger in full force and effect in accordance
with their terms and Parent shall be financially responsible therefor.
(d) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then and in each such case, proper provisions shall
be made, and Parent shall cause them to be so made, so that the successors
and assigns of the Surviving Corporation, which, in the reasonable good
faith opinion of the Surviving Corporation, shall be financially
responsible persons or entities, assume the obligations set forth in this
Section 5.5.
(e) The provisions of this Section 5.5 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each
Indemnified Party, his heirs and representatives.
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SECTION 5.6. Fees and Expenses. Except as provided in Article VIII, all
fees and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.
SECTION 5.7. Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except
that each party may respond to questions from stockholders and Parent may
respond to inquiries from financial analysts and media representatives in a
manner consistent with its past practice and each party may make such disclosure
as may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange without prior consultation to
the extent such consultation is not reasonably practicable. The parties agree
that the initial press release or releases to be issued in connection with the
execution of this Agreement shall be mutually agreed upon prior to the issuance
thereof.
SECTION 5.8. Internal Restructuring. Parent, Sub and the Company will each
use their reasonable efforts to aid and permit the Company to achieve the
Internal Restructuring, and in such regards Parent and Sub specifically agree
that no representation, warranty, covenant or other agreement herein contained
shall be breached to the extent the Internal Restructuring results in the
acceleration of the payment of any indebtedness of the Company or any subsidiary
thereof listed on Section 5.8 of the Company Disclosure Document (whether on
account of the Internal Restructuring causing a default under any agreement or
instrument relating to such indebtedness or otherwise) and that Sub shall, as
the Surviving Corporation, be responsible for any such accelerated payment,
including any penalty, premium or "make-whole" payment associated therewith
listed on Section 5.8 of the Company Disclosure Document.
SECTION 5.9. Redemption of Senior Preferred Stock. Parent shall no later
than three business days prior to the date scheduled for the meeting to be held
in respect of the Company Stockholder Approval instruct the Company to take all
steps necessary to mail a notice of redemption of the Senior Preferred Stock at
such time as specified by Parent (including at any time not later than the date
one business day before the date scheduled for such meeting). When so instructed
by Parent, the Company shall take all steps necessary to mail such notice of
redemption in accordance with the Company Charter and to satisfy the provisions
of Louisiana Revised Statute 12:75 regarding the deposit of funds necessary so
that the Senior Preferred Stock shall no longer have any voting rights and shall
no longer be outstanding. When Parent so instructs, Sub shall timely advance to
the Company any funds necessary to effectuate such deposit, which advance shall
be evidenced by an unsecured promissory note of the Company, in a form
reasonably acceptable to the Company and Sub, which shall be payable by the
Company to Sub on the date six months from the date of such advance and which
shall bear simple interest at 8 1/2% per annum, payable quarterly in arrears.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction prior to the Effective Time of the Merger of the following
conditions:
(a) Stockholder Approval. Company Stockholder Approval shall have been
obtained upon a vote at a duly held meeting of stockholders of the Company
or at any adjournment thereof.
(b) Other Approvals. All authorizations, consents, orders or approvals
of, or declarations or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have
been filed, shall have occurred or shall have been obtained.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or
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prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts, subject to the limitations set forth in Section 5.3 hereof, to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered.
SECTION 6.2. Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are subject to the following conditions:
(a) that Company shall have performed in all material respects all
obligations to be performed by it under this Agreement prior to the
Effective Time of the Merger;
(b) each of the representations and warranties of the Company contained
in Section 3.1 and shall be true and correct in all material respects
(disregarding for these purposes any materiality qualifications contained
therein) when made and as of the Effective Time of the Merger 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);
(c) the Company's case under Chapter 11 of the Bankruptcy Code shall
have been closed under Section 350 of the Bankruptcy Code in a manner
satisfactory to Parent.
(d) the Internal Restructuring shall have been completed, no later than
immediately prior to the Effective Time of the Merger, in accordance with
Exhibit A to the reasonable satisfaction of Parent and Sub.
SECTION 6.3. Condition to Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the conditions that (a) Parent and
Sub shall have performed in all material respects all obligations to be
performed by them under this Agreement prior to the Effective Time of the
Merger, and (b) each of the representations and warranties of Parent and Sub
contained in Section 3.2 shall be true and correct in all material respects
(disregarding for these purposes any materiality qualifications contained
therein) when made and as of the Effective Time of the Merger 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).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Company Stockholder Approval shall not have been obtained upon
a vote at a duly held meeting of stockholders of the Company or at any
adjournment thereof;
(ii) if the Merger shall not have been consummated on or before March
31, 2000, unless the failure to consummate the Merger is the result of a
material breach of this Agreement by the party seeking to terminate this
Agreement; provided, however, that the passage of such period shall be
tolled for any part thereof during which any party shall be subject to a
nonfinal order, decree or ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger or the calling or
holding of a meeting of the stockholders of the Company called to
approve the Merger and the other matters contemplated hereby; or
(iii) if any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued
an order, decree or ruling or shall have taken any other action
permanently enjoining, restraining or otherwise prohibiting the purchase
of Shares pursuant to
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the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by the Company or Parent in accordance with the provisions of
Section 8.2;
(d) by Parent, if the Company breaches any of its representations or
warranties herein or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement which breach or
failure (x) would give rise to the failure of a condition set forth in
Section 6.2(a) or 6.2(b) and (y) cannot be or has not been cured within 30
days following receipt of written notice of such breach; or
(e) by the Company, if Parent or Sub breaches any of its representations
or warranties herein or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement which breach or
failure (x) would give rise to the failure of a condition set forth in
Section 6.3(a) or 6.3(b) and (y) cannot be or has not been cured within 30
days following receipt of written notice of such breach.
SECTION 7.2. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.4 or an extension or waiver pursuant to Section
7.5 shall, in order to be effective, require in the case of Parent, Sub or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
SECTION 7.3. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any further
liability or obligation on the part of Parent, Sub or the Company, or any
director, officer, employee or stockholder thereof, other than the
confidentiality provisions of Sections 5.2(b) and (c) and the provisions of
Sections 3.1(i), 3.2(d), 5.6, 7.3, 8.2, 8.3, the proviso of the last sentence of
Section 8.1 and Article IX.
SECTION 7.4. Amendment. This Agreement may be amended by the parties at any
time before or after Company Stockholder Approval is obtained; provided,
however, that after such Approval, there shall be made no amendment that by law
requires further approval by such stockholders without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 7.5. Extension; Waiver. At any time prior to the Effective Time of
the Merger, the parties may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or the other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
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 such rights.
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
SECTION 8.1. Takeover Defenses of the Company and Standstill
Agreements. The Company shall take such action with respect to any anti-takeover
provisions in its charter or afforded it by statute to the extent necessary to
consummate the Merger on the terms set forth in this Agreement. The Company
hereby waives the provisions of the letter agreements dated July 30, 1999, and
July 30, 1999, between the Company and Parent and the Company and El Paso Energy
Marketing Company, respectively (such letter agreements being herein referred to
collectively as the "Confidentiality and Standstill Agreements"), prohibiting
the purchase of Shares or acting to influence or control the Company, solely in
connection with the transactions contemplated hereby; provided, however, that
upon termination of this Agreement, such waiver shall no longer be effective.
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SECTION 8.2. No Solicitation.
(a) The Company shall not, nor shall it permit any of its subsidiaries
to, nor shall it authorize or permit any officer, director or employee of,
or any investment banker, attorney or other advisor, agent or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit or initiate the submission of any takeover
proposal, (ii) enter into any agreement (other than confidentiality and
standstill agreements in accordance with the immediately following proviso)
with respect to any takeover proposal, or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal; provided, however, in the
case of this clause (iii), that to the extent required by the fiduciary
obligations of the Board of Directors of the Company, determined in good
faith by the members thereof based on the advice of outside counsel, the
Company may at any point prior to Company Stockholder Approval (the
"Applicable Period"), and subject to the Company's providing written notice
to Parent of its decision to take such action and compliance with Section
8.2(f), in response to an unsolicited request therefor received other than
in contravention of this Section 8.2(a), furnish information to any person
or "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
pursuant to a confidentiality agreement on substantially the same terms as
provided in the Confidentiality and Standstill Agreements referred to in
Section 8.1 hereof and otherwise enter into discussions and negotiations
with such person or group as to any superior proposal such person or group
has made. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
officer, director or employee of the Company or any of its subsidiaries or
any investment banker, attorney or other advisor, agent or representative
of the Company, whether or not such person is purporting to act on behalf
of the Company or otherwise, shall be deemed to be a material breach of
this Agreement by the Company. For purposes of this Agreement, "takeover
proposal" means (i) any proposal, other than a proposal by Parent or any of
its affiliates, for a merger or other business combination involving the
Company, (ii) any proposal or offer, other than a proposal or offer by
Parent or any of its affiliates, to acquire from the Company or any of its
affiliates in any manner, directly or indirectly, an equity interest in the
Company or any subsidiary, any voting securities of the Company or any
subsidiary or a material amount of the assets of the Company and its
subsidiaries, taken as a whole, or (iii) any proposal or offer, other than
a proposal or offer by Parent or any of its affiliates, to acquire from the
stockholders of the Company by tender offer, exchange offer or otherwise
more than 20% of the outstanding Shares. 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, is
referred to herein as an "Acquisition Transaction".
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except in connection with the termination of this Agreement
pursuant to Sections 7.1 (a), (b) or (e), (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by the Board of Directors of the Company or any
such committee of this Agreement or the Merger or take any action having
such effect or (ii) approve or recommend, or propose to approve or
recommend, any takeover proposal. Notwithstanding the foregoing, in the
event the Board of Directors of the Company receives (other than in
contravention of Section 8.2(a)) a takeover proposal that, in the exercise
of its fiduciary obligations (as determined in good faith by a majority of
the disinterested members thereof based on the advice of outside counsel),
it determines to be a superior proposal, the Board of Directors may, during
the Applicable Period only, withdraw or modify its approval or
recommendation of this Agreement or the Merger and may, during the
Applicable Period only and subject to compliance with the provisions of
this sentence terminate this Agreement, in each case at any time after
midnight on the third business day following Parent's receipt of written
notice (a "Notice of Superior Proposal") advising Parent that the Board of
Directors has received a takeover proposal which it has determined to be a
superior proposal and that the Board of Directors of the Company has
resolved to accept the superior proposal (subject to such termination),
specifying the material terms and conditions of such superior proposal,
identifying the person or group making such superior proposal and providing
Parent with a copy of all written materials submitted with respect to such
superior proposal, but only if Parent does not make, within three business
days of receipt of the Notice of Superior Proposal,
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a written offer that is at least as favorable, in the good faith reasonable
judgment of a majority of the members of the Board of Directors of the
Company (based on the advice of a financial advisor of nationally
recognized reputation), as the superior proposal. The Company (x) will not
enter into a binding agreement for a superior proposal referred to in the
previous sentence until at least the first calendar day following the third
business day after it has provided the written notice to Parent required
thereby, (y) will notify Parent promptly if its intention to enter into a
written agreement referred to in such notice shall change at any time after
giving such notification and (z) will not terminate this Agreement or enter
into a binding agreement for a superior proposal referred to in the
previous sentence if Parent has within the period referred to in clause (x)
of this sentence, made a written offer that is at least as favorable, in
the good faith reasonable judgment of a majority of the members of the
Board of Directors of the Company (based on the advice of a financial
advisor of nationally recognized reputation), as the superior proposal. Any
of the foregoing to the contrary notwithstanding, the Company may engage in
discussions with any person or group that has made an unsolicited takeover
proposal for the purpose of determining whether such proposal is a superior
proposal. Nothing contained herein shall prohibit the Company from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act.
(c) In the event that the Board of Directors of the Company or any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Sub the approval or recommendation
by the Board of Directors of the Company or any such committee of this
Agreement or the Merger or take any action having such effect, or (ii)
approve or recommend, or propose to approve or recommend, any takeover
proposal, or (iii) fail to reaffirm its approval or recommendation of this
Agreement and the Merger within two days after a request by Parent, Parent
may terminate this Agreement.
(d) For purposes of this Agreement, a "superior proposal" means any bona
fide takeover proposal to acquire, directly or indirectly, for
consideration consisting of cash, securities or a combination thereof, at
least a majority of the Shares then outstanding or at least 50% of the
assets of the Company and its subsidiaries taken as a whole, and (x)
otherwise on terms which a majority of the members of the Board of
Directors of the Company determines in its good faith reasonable judgment
(based on the written advice of a financial advisor of nationally
recognized reputation, a copy of which shall be provided to Parent) to be
more favorable to the Company's stockholders than the Merger and that
financing thereof is reasonably likely to be available, and (y) which 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,
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 superior proposal, as
applicable, or terminating this Agreement, is required for the Board of
Directors of the Company to comply with its fiduciary duties to the Company
and its stockholders under applicable law.
(e) For purposes of this Agreement, "Acquisition Agreement" means 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 the Company in accordance with
Section 8.2(a)).
(f) The Company promptly shall advise Parent 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. The Company shall provide
Parent with copies of all written materials received in connection with any
such takeover proposal and shall keep Parent fully informed of the status
and material terms of any such takeover proposal or inquiry.
(g) The Company 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.
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SECTION 8.3. Fee and Expense Reimbursements.
(a) The Company agrees to pay Parent a fee in immediately available
funds (in recognition of the fees and expenses incurred to date by Parent
in connection with the matters contemplated hereby) of $7,500,000 (i)
promptly upon the termination of the Agreement in the event this Agreement
is terminated by Parent or the Company as permitted by Section 8.2 or (ii)
if any Person shall have made a takeover proposal after the date hereof or
announced its intention to make a takeover proposal and thereafter this
Agreement is terminated by Parent or the Company pursuant to Section
7.1(b)(i) or 7.1(b)(ii), and within 18 months after the termination of this
Agreement any Acquisition Transaction involving the Company shall have been
consummated or an Acquisition Agreement with respect to an Acquisition
Transaction involving the Company shall have been entered into, then such
fee shall be paid upon the date the Acquisition Agreement is entered into,
or if no Acquisition Agreement is entered into, then upon the date the
Acquisition Transaction is consummated.
(b) In the event that (i) this Agreement is terminated by Parent or the
Company pursuant to Sections 7.1(b)(i) or (d) or (ii) if Parent is entitled
to a fee pursuant to Section 8.3(a), then in either case the Company shall
assume and pay, or reimburse Parent for, all reasonable and documented fees
and expenses incurred by Parent or Sub (including the reasonable and
documented fees and expenses of its counsel, accountants and financial
advisors) through the date of termination and which are specifically
related to the Merger, this Agreement and the matters contemplated by this
Agreement, but not to exceed $1,000,000 in the aggregate (or $500,000 in
the aggregate in the event a fee is paid pursuant to Section 8.3(a)),
promptly, but in no event later than five business days after submission of
a request for payment of the same.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective Time
of the Merger. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 9.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by facsimile
or sent by overnight courier to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
El Paso Energy Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: President
with a copy to
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
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(b) if to the Company, to
Crystal Gas Storage, Inc.
000 Xxxxxxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxx X. Xxxxxxx, Xx.
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxxxxxx X. Still, Esq.
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "environmental laws" means, as applicable, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. sec.sec.
9601 et seq. ("CERCLA"), 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., and the Oil
Pollution Act of 1990, 33 U.S.C. sec.sec. 2701 et seq., 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 in effect as of the date of this Agreement, or any common law
cause of action, contractual obligation, or judicial or administrative
decision, order or decree (all as have been amended from time to time)
regulating, governing or relating to pollution, contamination and/or
protection of the environment or human health.
(c) "knowledge" means, with respect to any matter stated herein to be
"to the Company's knowledge," or similar language, the actual knowledge of
the Chairman of the Board, the Chief Executive Officer, President, Chief
Financial Officer any Vice President of the Company or any person that has
responsibility for managing a functional area of the Company, and with
respect to any matter stated herein to be "to Parent's knowledge," or
similar language, the actual knowledge of the Chairman of the Board, the
Chief Executive Officer, President, any Vice President, Chief Financial
Officer or General Counsel of Parent.
(d) "material adverse effect" or "material adverse change" means, when
used in connection with the Company, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, liabilities, condition (financial or otherwise),
financial performance or results of operations of the Company and its
subsidiaries, taken as a whole, provided, however, that no such change or
effect shall be deemed to have occurred to the extent such change or effect
arises from conditions generally affecting the oil and gas or electric
power generation industries or from the United States or global economies.
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The term "material adverse effect" means, when used in respect of Parent or
Sub, any material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated by this Agreement.
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization or other entity; and
(f) a "subsidiary" of any person means any corporation, partnership,
association, joint venture, limited liability company or other entity in
which such person owns over 50% of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of
directors or other governing body of such other legal entity.
SECTION 9.4. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule 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 deemed to be followed by the words "without
limitation".
SECTION 9.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein and the schedules
attached hereto) and the Confidentiality and Standstill Agreements (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except for the provisions of Sections 5.4(b) and
5.5, are not intended to confer upon any person other than the parties any
rights or remedies hereunder.
SECTION 9.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except that matters pertaining to the merger of the Company into
Sub shall be governed by the DGCL and the LBCL to the extent of their
applicability to the Merger.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Parent
and/or Sub may assign all or any of their respective rights and obligations
hereunder to any affiliate, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.9. Enforcement of the Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any district court of
the United States located in the States of Texas (Southern District only),
Louisiana or Delaware or in any Delaware state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal district court sitting in the Southern District of
Texas or in Louisiana or any Federal or state court sitting in the State of
Delaware in the event any dispute between the parties hereto arises out of this
Agreement solely in connection with such a suit between the parties, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement in any court other than such a
Federal or state court.
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SECTION 9.10. Performance by Sub. Parent hereby agrees to cause Sub to
comply with its obligations under this Agreement.
SECTION 9.11. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
EL PASO ENERGY CORPORATION
By /s/ H. XXXXX XXXXXX
----------------------------------------
Name: H. Xxxxx Xxxxxx
-------------------------------------
Title: Executive Vice President and Chief
Financial Officer
--------------------------------------
EL PASO ENERGY ACQUISITION CO.
By /s/ XXXXX XXXX
----------------------------------------
Name: Xxxxx Xxxx
-------------------------------------
Title: Executive Vice President
--------------------------------------
CRYSTAL GAS STORAGE, INC.
By /s/ X.X. XXXXXXX, XX.
----------------------------------------
Name: X.X. Xxxxxxx, Xx.
-------------------------------------
Title: President & C.E.O.
--------------------------------------
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