EXHIBIT 2.3
BUG STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 29, 1996
by and among LONG ISLAND LIGHTING COMPANY, a New York corpora-
tion ("LILCO"), and THE BROOKLYN UNION GAS COMPANY, a New York
corporation (the "COMPANY").
WHEREAS, concurrently with the execution and delivery
of this Agreement, (i) LILCO, the Company and NYECO Corp., a
New York corporation ("NYECO"), are entering into an Agreement
and Plan of Exchange, dated as of the date hereof (the "EX-
CHANGE AGREEMENT"), which provides, among other things, upon
the terms and subject to the conditions thereof, for the ex-
change of outstanding shares of capital stock of each of LILCO
and the Company for newly issued shares of capital stock of
NYECO (the "BINDING SHARE EXCHANGE"), and (ii) the Company and
LILCO are entering into a certain stock option agreement dated
as of the date hereof whereby LILCO grants to the Company an
option with respect to certain shares of LILCO's common stock
on the terms and subject to the conditions set forth therein
(the "LILCO STOCK OPTION AGREEMENT"); and
WHEREAS, as a condition to LILCO's willingness to
enter into the Exchange Agreement, LILCO has requested that the
Company agree, and the Company has so agreed, to grant to LILCO
an option with respect to certain shares of the Company's com-
mon stock, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, to induce LILCO to enter into the
Exchange Agreement, and in consideration of the mutual cov-
enants and agreements set forth herein and in the Exchange
Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants LILCO
an irrevocable option (the "COMPANY OPTION") to purchase up to
9,948,682 shares, subject to adjustment as provided in Section
11 (such shares being referred to herein as the "COMPANY
SHARES") of common stock, par value $.33-1/3 per share, of the
Company (the "COMPANY COMMON STOCK") (being 19.9% of the number
of shares of Company Common Stock outstanding on the date
hereof) in the manner set forth below at a price (the "EXERCISE
PRICE") per Company Share of $30.0375 (which is equal to the
Fair Market Value (as defined below) of a Company Share on the
date hereof) payable, at LILCO's option, (a) in cash or (b)
subject to the Company's having obtained the approvals of any
Governmental Authority required for the Company to acquire the
LILCO Shares (as defined below) from LILCO, which approvals the
Company shall use best efforts to obtain, in shares of common
stock, par value $5.00 per share, of LILCO ("LILCO SHARES") in
either case in accordance with Section 4 hereof. Notwithstand-
ing the foregoing, in no event shall the number of Company
Shares for which the Company Option is exercisable exceed 19.9%
of the number of issued and outstanding shares of Company Com-
mon Stock. As used herein, the "FAIR MARKET VALUE" of any
share shall be the average of the daily closing sales price for
such share on the New York Stock Exchange (the "NYSE") during
the 10 NYSE trading days prior to the fifth NYSE trading day
preceding the date such Fair Market Value is to be determined.
Capitalized terms used herein but not defined herein shall have
the meanings set forth in the Exchange Agreement.
2. EXERCISE OF OPTION. The Company Option may be
exercised by LILCO, in whole or in part, at any time or from
time to time after the Exchange Agreement becomes terminable by
LILCO under circumstances which could entitle LILCO to termina-
tion fees under either Section 9.3(a) of the Exchange Agreement
(provided that the events specified in Section 9.3(a)(ii)(x) of
the Exchange Agreement shall have occurred, although the events
specified in Section 9.3(a)(ii)(y) thereof need not have oc-
curred) or Section 9.3(b) of the Exchange Agreement (regardless
of whether the Exchange Agreement is actually terminated or
whether there occurs a closing of any Business Combination in-
volving a Target Party or a closing by which a Target Party
becomes a subsidiary), any such event by which the Exchange
Agreement becomes so terminable by LILCO being referred to
herein as a "TRIGGER EVENT." The Company shall notify LILCO
promptly in writing of the occurrence of any Trigger Event, it
being understood that the giving of such notice by the Company
shall not be a condition to the right of LILCO to exercise the
Company Option. In the event LILCO wishes to exercise the Com-
pany Option, LILCO shall deliver to the Company a written no-
xxxx (an "EXERCISE NOTICE") specifying the total number of Com-
pany Shares it wishes to purchase. Each closing of a purchase
of Company Shares (a "CLOSING") shall occur at a place, on a
date and at a time designated by LILCO in an Exercise Notice
delivered at least two business days prior to the date of the
Closing. The Company Option shall terminate upon the earlier
of: (i) the Effective Time; (ii) the termination of the Ex-
change Agreement pursuant to Section 9.1 thereof (other than
upon or during the continuance of a Trigger Event); or (iii)
180 days following any termination of the Exchange Agreement
upon or during the continuance of a Trigger Event (or if, at
the expiration of such 180 day period the Company Option cannot
be exercised by reason of any applicable judgment, decree, or-
der, law or regulation, 10 business days after such impediment
to exercise shall have been removed or shall have become final
and not subject to appeal, but in no event under this clause
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(iii) later than June 30, 1998). Notwithstanding the forego-
ing, the Company Option may not be exercised if LILCO is in
material breach of any of its material representations or war-
ranties, or in material breach of any of its covenants or
agreements, contained in this Agreement or in the Exchange
Agreement. Upon the giving by LILCO to the Company of the Ex-
ercise Notice and the tender of the applicable aggregate Exer-
cise Price, LILCO shall be deemed to be the holder of record of
the Company Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be
closed or that certificates representing such Company Shares
shall not then be actually delivered to LILCO.
3. CONDITIONS TO CLOSING. The obligation of the
Company to issue the Company Shares to LILCO hereunder is sub-
ject to the conditions, which (other than the conditions de-
scribed in clauses (i), (iii) and (iv) below) may be waived by
the Company in its sole discretion, that (i) all waiting peri-
ods, if any, under the HSR Act, applicable to the issuance of
the Company Shares hereunder shall have expired or have been
terminated; (ii) the Company Shares, and any LILCO Shares which
are issued in payment of the Exercise Price, shall have been
approved for listing on the NYSE upon official notice of issu-
ance; (iii) all consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any fed-
eral, state or local administrative agency or commission or
other federal, state or local Governmental Authority, if any,
required in connection with the issuance of the Company Shares
hereunder shall have been obtained or made, as the case may be,
including, without limitation, if applicable, the approval of
the SEC under Section 10 of the 1935 Act of the acquisition of
the Company Shares by LILCO and, if applicable, the acquisition
by the Company of the LILCO Shares constituting the Exercise
Price hereunder; and (iv) no preliminary or permanent injunc-
tion or other order by any court of competent jurisdiction pro-
hibiting or otherwise restraining such issuance shall be in
effect.
4. CLOSING. At any Closing, (a) the Company will
deliver to LILCO or its designee a single certificate in de-
finitive form representing the number of the Company Shares
designated by LILCO in its Exercise Notice, such certificate to
be registered in the name of LILCO and to bear the legend set
forth in Section 12, and (b) LILCO will deliver to the Company
the aggregate price for the Company Shares so designated and
being purchased by (i) wire transfer of immediately available
funds or certified check or bank check or (ii) subject to the
condition in Section 1(b), a certificate or certificates repre-
senting the number of LILCO Shares being issued by LILCO in
consideration thereof, as the case may be. For the purposes of
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this Agreement, the number of LILCO Shares to be delivered to
the Company shall be equal to the quotient obtained by dividing
(i) the product of (x) the number of Company Shares with re-
spect to which the Company Option is being exercised and (y)
the Exercise Price by (ii) the Fair Market Value of the LILCO
Shares on the date immediately preceding the date the Exercise
Notice is delivered to the Company. The Company shall pay all
expenses, and any and all United States federal, state and lo-
cal taxes and other charges that may be payable in connection
with the preparation, issue and delivery of stock certificates
under this Section 4 in the name of LILCO or its designee.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to LILCO that (a) except as
set forth in Section 4.1 of the Nassau Disclosure Schedule, the
Company is a corporation duly organized, validly existing and
in active status under the laws of the State of New York and
has the corporate power and authority to enter into this Agree-
ment and, subject to obtaining the applicable approval of
shareholders of the Company for the repurchase of Company
Shares pursuant to Section 7(a) below under circumstances where
Section 513(e) of the NYBCL would be applicable (the "BUYBACK
APPROVALS") and subject to any regulatory approvals referred to
herein and to the provisions of Section 513(a) of the NYBCL, if
applicable, to carry out its obligations hereunder, (b) 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 and no other corporate pro-
ceedings on the part of the Company are necessary to authorize
this Agreement or any of the transactions contemplated hereby
(other than any required Buyback Approvals), (c) such corporate
action (including the approval of the Board of Directors of the
Company) is intended to render inapplicable to this Agreement
and the Exchange Agreement and the transactions contemplated
hereby and thereby, the provisions of the NYBCL referred to in
Section 4.15 of the Exchange Agreement, (d) this Agreement has
been duly executed and delivered by the Company, constitutes a
valid and binding obligation of the Company and, assuming this
Agreement constitutes a valid and binding obligation of LILCO,
is enforceable against the Company in accordance with its
terms, (e) the Company has taken all necessary corporate action
to authorize and reserve for issuance and to permit it to is-
xxx, upon exercise of the Company Option, and at all times from
the date hereof through the expiration of the Company Option
will have reserved, 9,948,682 authorized and unissued Company
Shares, such amount being subject to adjustment as provided in
Section 11, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable, (f) upon delivery of the
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Company Shares to LILCO upon the exercise of the Company Op-
tion, LILCO will acquire the Company Shares free and clear of
all claims, liens, charges, encumbrances and security interests
of any nature whatsoever, (g) except as described in Section
4.4(b) of the Exchange Agreement, the execution and delivery of
this Agreement by the Company does not, and the consummation by
the Company of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or lapse of
time, or both) under, or result in the termination of, or ac-
celerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets
(any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "VIOLATION")
of the Company or any of its subsidiaries, pursuant to, (A) any
provision of the certificate of incorporation or by-laws of the
Company, (B) any provisions of any loan or credit agreement,
note, mortgage, indenture, lease, Company benefit plan or other
agreement, obligation, instrument, permit, concession, xxxx-
chise, license or (C) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or
its properties or assets, which Violation, in the case of each
of clauses (B) and (C), could reasonably be expected to have a
material adverse effect on the Company and its subsidiaries
taken as a whole, (h) except as described in Section 4.4(c) of
the Exchange Agreement or Section 1(b) or Section 3 hereof, the
execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority,
(i) none of the Company, any of its affiliates or anyone acting
on its or their behalf has issued, sole or offered any security
of the Company to any person under circumstances that would
cause the issuance and sale of the Company Shares, as contem-
plated by this Agreement, to be subject to the registration
requirements of the Securities Act as in effect on the date
hereof and, assuming the representations of LILCO contained in
Section 6(h) are true and correct, the issuance, sale and de-
livery of the Company Shares hereunder would be exempt from the
registration and prospectus delivery requirements of the Secu-
rities Act, as in effect on the date hereof (and the Company
shall not take any action which would cause the issuance, sale
and delivery of the Company Shares hereunder not to be exempt
from such requirements), and (j) any LILCO Shares acquired pur-
suant to this Agreement will be acquired for the Company's own
account, for investment purposes only and will not be acquired
by the Company with a view to the public distribution thereof
in violation of any applicable provision of the Securities Act.
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6. REPRESENTATIONS AND WARRANTIES OF LILCO. LILCO
represents and warrants to the Company that (a) LILCO is a cor-
poration duly organized, validly existing and in good standing
under the laws of the State of New York and has the corporate
power and authority to enter into this Agreement and to carry
out its obligations hereunder, (b) the execution and delivery
of this Agreement by LILCO and the consummation by LILCO of the
transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of LILCO and no
other corporate proceedings on the part of LILCO are necessary
to authorize this Agreement or any of the transactions contem-
plated hereby, (c) this Agreement has been duly executed and
delivered by LILCO and constitutes a valid and binding obliga-
tion of LILCO, and, assuming this Agreement constitutes a valid
and binding obligation of the Company, is enforceable against
LILCO in accordance with its terms, (d) prior to any delivery
of LILCO Shares in consideration of the purchase of Company
Shares pursuant hereto, LILCO will have taken all necessary
corporate action to authorize for issuance and to permit it to
issue such LILCO Shares, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable, and to render
inapplicable to the receipt by the Company of the LILCO Shares
the provisions of the NYBCL referred to in Section 5.15 of the
Exchange Agreement, (e) upon any delivery of such LILCO Shares
to the Company in consideration of the purchase of Company
Shares pursuant hereto, the Company will acquire the LILCO
Shares free and clear of all claims, liens, charges, encum-
brances and security interests of any nature whatsoever, (f)
except as described in Section 5.4(b) of the Exchange Agree-
ment, the execution and delivery of this Agreement by LILCO
does not, and the consummation by LILCO of the transactions
contemplated hereby will not, violate, conflict with, or result
in the breach of any provision of, or constitute a default
(with or without notice or lapse of time, or both) under, or
result in any Violation by LILCO or any of its subsidiaries,
pursuant to (A) any provision of the certificate of incorpora-
tion or by-laws of LILCO, (B) any provisions of any loan or
credit agreement, note, mortgage, indenture, lease, LILCO ben-
efit plan or other agreement, obligation, instrument, permit,
concession, franchise, license or (C) any judgment, order, xx-
xxxx, statute, law, ordinance, rule or regulation applicable to
LILCO or its properties or assets, which Violation, in the case
of each of its clauses (B) and/or (C), would have a material
adverse effect on LILCO and its subsidiaries taken as a whole,
(g) except as described in Section 5.4(c) of the Exchange
Agreement or Section 1(b) or Section 3 hereof, the execution
and delivery of this Agreement by LILCO does not, and the con-
summation by LILCO of the transactions contemplated hereby will
not, require any consent, approval, authorization or permit of,
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or filing with or notification to, any Governmental Authority
and (h) any Company Shares acquired upon exercise of the
Company Option will be acquired for LILCO's own account, for
investment purposes only and will not be, and the Company
Option is not being, acquired by LILCO with a view to the pub-
lic distribution thereof in violation of any applicable provi-
sion of the Securities Act.
7. CERTAIN REPURCHASES.
(a) LILCO PUT. At the request of LILCO by written
notice at any time during which the Company Option is exercis-
able pursuant to Section 2 (the "REPURCHASE PERIOD"), the Com-
pany (or any successor entity thereof) shall repurchase from
LILCO all or any portion of the Company Option, at the price
set forth in subparagraph (i) below, or, at the request of
LILCO by written notice at any time prior to December 31, 1997
(provided that such date shall be extended to June 30, 1998
under the circumstances where the date after which either party
may terminate the Exchange Agreement pursuant to Section 9.1(b)
of the Exchange Agreement has been extended to June 30, 1998),
the Company (or any successor entity thereof) shall repurchase
from LILCO all or any portion of the Company Shares purchased
by LILCO pursuant to the Company Option, at the price set forth
in subparagraph (ii) below:
(i) the difference between the "MARKET/OFFER
PRICE" for shares of Company Common Stock as of the
date LILCO gives notice of its intent to exercise its
rights under this Section 7 (defined as the higher of
(A) the price per share offered as of such date pur-
suant to any tender or exchange offer or other offer
with respect to a Business Combination which was made
prior to such date and not terminated or withdrawn as
of such date (the "OFFER PRICE") and (B) the Fair
Market Value of Company Common Stock as of such date
(the "MARKET PRICE")) and the Exercise Price, multi-
plied by the number of Company Shares purchasable
pursuant to the Company Option (or portion thereof
with respect to which LILCO is exercising its rights
under this Section 7), but only if the Market/Offer
Price is greater than the Exercise Price;
(ii) the product of (x) the sum of (A) the Ex-
ercise Price paid by LILCO per Company Share acquired
pursuant to the Company Option and (B) the difference
between the Market/Offer Price and the Exercise
Price, but only if the Market/Offer Price is greater
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than the Exercise Price, and (y) the number of Com-
pany Shares to be repurchased pursuant to this Sec-
tion 7. For purposes of this clause (ii), the Offer
Price shall be the highest price per share offered
pursuant to a tender or exchange offer or other Busi-
ness Combination offer during the Repurchase Period
prior to the delivery by LILCO of a notice of repur-
chase.
(b) REDELIVERY OF LILCO SHARES. If LILCO elected to
purchase Company Shares pursuant to the exercise of the Company
Option by the issuance and delivery of LILCO Shares, then the
Company shall, if so requested by LILCO, in fulfillment of its
obligation pursuant to clause (a) of Section 7(a)(ii)(x) (that
is, with respect to the Exercise Price only and without limita-
tion to its obligation to pay additional consideration under
clause (b) of Section 7(a)(ii)(x)), redeliver the certificate
for such LILCO Shares to LILCO, free and clear of all liens,
claims, damages, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if less than all of the
Company Shares purchased by LILCO pursuant to the Company Op-
tion are to be repurchased pursuant to this Section 7, then
LILCO shall issue to the Company a new certificate representing
those LILCO Shares which are not due to be redelivered to LILCO
pursuant to this Section 7 as they constituted payment of the
Exercise Price for the Company Shares not being repurchased.
(c) PAYMENT AND REDELIVERY OF COMPANY OPTION OR
SHARES. In the event LILCO exercises its rights under this
Section 7, the Company shall, within 10 business days there-
after, pay the required amount to LILCO in immediately avail-
able funds and LILCO shall surrender to the Company the Company
Option or the certificates evidencing the Company Shares pur-
chased by LILCO pursuant thereto, and LILCO shall warrant that
it owns the Company Option or such shares and that the Company
Option or such shares are then free and clear of all liens,
claims, damages, charges and encumbrances of any kind or nature
whatsoever.
(d) LILCO CALL. If LILCO has elected to purchase
Company Shares pursuant to the exercise of the Company Option
by the issuance and delivery of LILCO Shares, notwithstanding
that LILCO may no longer hold any such Company Shares or that
LILCO elects not to exercise its other rights under this Sec-
tion 7, LILCO may require, at any time or from time to time
prior to December 31, 1997 (provided that such date shall be
extended to June 30, 1998 under the circumstances where the
date after which either party may terminate the Exchange Agree-
ment pursuant to Section 9.1(b) of the Exchange Agreement has
been extended to June 30, 1998), the Company to sell to LILCO
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any such LILCO Shares at the Fair Market Value that had been
attributed to such LILCO Shares pursuant to Section 4 plus in-
terest at the rate of 6.5% per annum on such amount from the
Closing Date relating to the exchange of such LILCO Shares pur-
suant to Section 4 to the closing date under this Section 7(d)
less any dividends on such LILCO Shares paid during such period
or declared and payable to stockholders of record on a date
during such period.
(e) REPURCHASE PRICE REDUCED AT LILCO'S OPTION. In
the event the repurchase price specified in Section 7(a) would
subject the purchase of the Company Option or the Company
Shares purchased by LILCO pursuant to the Company Option to a
vote of the shareholders of the Company pursuant to Section
513(e) of the NYBCL, then LILCO may, at its election, reduce
the repurchase price to an amount which would permit such re-
purchase without the necessity for such a shareholder vote.
8. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expira-
tion Date, neither party shall, directly or indirectly, by op-
eration of law or otherwise, sell, assign, pledge, or otherwise
dispose of or transfer any Restricted Shares beneficially owned
by such party, other than (i) pursuant to Section 7, or (ii) in
accordance with Section 9(b) or Section 10.
(b) PERMITTED SALES. Following the termination of
the Exchange Agreement, a party shall be permitted to sell any
Restricted Shares beneficially owned by it if such sale is made
pursuant to a tender or exchange offer that has been approved
or recommended, or otherwise determined to be fair to and in
the best interests of the shareholders of the other party, by a
majority of the members of the Board of Directors of such other
party which majority shall include a majority of directors who
were directors prior to the announcement of such tender or ex-
change offer.
9. REGISTRATION RIGHTS. Following the termination
of the Exchange Agreement, each party hereto (a "DESIGNATED
HOLDER") may by written notice (the "REGISTRATION NOTICE") to
the other party (the "REGISTRANT") request the Registrant to
register under the Securities Act all or any part of the Re-
stricted Shares beneficially owned by such Designated Holder
(the "REGISTRABLE SECURITIES") pursuant to a bona fide firm
commitment underwritten public offering in which the Designated
Holder and the underwriters shall effect as wide a distribution
of such Registrable Securities as is reasonably practicable and
shall use their best efforts to prevent any person (including
any Group (as used in Rule 13d-5 under the Exchange Act)) and
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its affiliates from purchasing through such offering Restricted
Shares representing more than 1% of the outstanding shares of
common stock of the Registrant on a fully diluted basis (a
"PERMITTED OFFERING"). The Registration Notice shall include a
certificate executed by the Designated Holder and its proposed
managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "MANAGER"),
stating that (i) they have a good faith intention to commence
promptly a Permitted Offering and (ii) the Manager in good
faith believes that, based on the then prevailing market condi-
tions, it will be able to sell the Registrable Securities at a
per share price equal to at least 80% of the then Fair Market
Value of such shares. The Registrant (and/or any person desig-
nated by the Registrant) shall thereupon have the option exer-
cisable by written notice delivered to the Designated Holder
within 10 business days after the receipt of the Registration
Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities proposed to be so sold for cash at a
price (the "OPTION PRICE") equal to the product of (i) the num-
ber of Registrable Securities to be so purchased by the Xxxxx-
xxxxx and (ii) the then Fair Market Value of such shares. Any
such purchase of Registrable Securities by the Registrant (or
its designee) hereunder shall take place at a closing to be
held at the principal executive offices of the Registrant or at
the offices of its counsel at any reasonable date and time des-
ignated by the Registrant and/or such designee in such notice
within 20 business days after delivery of such notice. Any
payment for the shares to be purchased shall be made by deliv-
ery at the time of such closing of the Option Price in immedi-
ately available funds.
If the Registrant does not elect to exercise its op-
tion pursuant to this Section 10 with respect to all Regis-
trable Securities, it shall use its best efforts to effect, as
promptly as practicable, the registration under the Securities
Act of the unpurchased Registrable Securities proposed to be so
sold; provided, however, that (i) neither party shall be en-
titled to more than an aggregate of two effective registration
statements hereunder and (ii) the Registrant will not be re-
quired to file any such registration statement during any pe-
riod of time (not to exceed 40 days after such request in the
case of clause (A) below or 90 days in the case of clauses (B)
and (C) below) when (A) the Registrant is in possession of ma-
terial non-public information which it reasonably believes
would be detrimental to be disclosed at such time and, in the
opinion of counsel to the Registrant, such information would
have to be disclosed if a registration statement were filed at
that time; (B) the Registrant is required under the Securities
Act to include audited financial statements for any period in
such registration statement and such financial statements are
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not yet available for inclusion in such registration statement;
or (C) the Registrant determines, in its reasonable judgment,
that such registration would interfere with any financing, ac-
quisition or other material transaction involving the Xxxxx-
xxxxx or any of its affiliates. The Registrant shall use its
reasonable best efforts to cause any Registrable Securities
registered pursuant to this Section 10 to be qualified for sale
under the securities or Blue-Sky laws of such jurisdictions as
the Designated Holder may reasonably request and shall continue
such registration or qualification in effect in such jurisdic-
tion; provided, however, that the Registrant shall not be re-
quired to qualify to do business in, or consent to general ser-
vice of process in, any jurisdiction by reason of this provi-
sion.
The registration rights set forth in this Section 10
are subject to the condition that the Designated Holder shall
provide the Registrant with such information with respect to
such holder's Registrable Securities, the plans for the distri-
bution thereof, and such other information with respect to such
holder as, in the reasonable judgment of counsel for the Xxxxx-
xxxxx, is necessary to enable the Registrant to include in such
registration statement all material facts required to be dis-
closed with respect to a registration thereunder.
A registration effected under this Section 10 shall
be effected at the Registrant's expense, except for underwrit-
ing discounts and commissions and the fees and the expenses of
counsel to the Designated Holder, and the Registrant shall pro-
vide to the underwriters such documentation (including certifi-
xxxxx, opinions of counsel and "comfort" letters from auditors
as are customary in connection with underwritten public offer-
ings as such underwriters may reasonably require. In connec-
tion with any such registration, the parties agree (i) to in-
demnify each other and the underwriters in the customary man-
ner, (ii) to enter into an underwriting agreement in form and
substance customary for transactions of such type with the Man-
ager and the other underwriters participating in such offering
and (iii) to take all further actions which shall be reasonably
necessary to effect such registration and sale (including, if
the Manager deems it necessary, participating in road-show pre-
sentations).
The Registrant shall be entitled to include (at its
expense) additional Shares of its common stock in a registra-
tion effected pursuant to this Section 10 only if and to the
extent the Manager determines that such inclusion will not ad-
versely affect the prospects of success of such offering.
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10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Without limitation to any restriction on the Company contained
in this Agreement or in the Exchange Agreement, in the event of
any change in Company Common Stock by reason of stock divi-
dends, splitups, mergers (other than the Binding Share Ex-
changes), recapitalizations, combinations, exchange of shares
or the like, the type and number of shares or securities sub-
ject to the Company Option, and the purchase price per share
provided in Section 1, shall be adjusted appropriately to re-
store to LILCO its rights hereunder, including the right to
purchase from the Company (or its successors) shares of Company
Common Stock representing 19.9% of the Outstanding Company Com-
mon Stock for the aggregate Exercise Price calculated as of the
date of this Agreement as provided in Section 1.
11. RESTRICTIVE LEGENDS. Each certificate repre-
senting shares of Company Common Stock issued to LILCO here-
under, and LILCO Shares, if any, delivered to the Company at a
Closing, shall include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF ANY EXEMPTION FROM SUCH REGIS-
TRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUB-
JECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF DE-
CEMBER 29, 1996, A COPY OF WHICH MAY BE OBTAINED FROM
THE ISSUER UPON REQUEST.
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act in the above legend
shall be removed by delivery of substitute certificate(s) with-
out such reference if LILCO or the Company, as the case may be,
shall have delivered to the other party a copy of a letter from
the staff of the Securities and Exchange Commission, or an
opinion of counsel, in form and substance satisfactory to the
other party, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the pro-
visions to this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference
if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in
the preceding clauses (i) and (ii) are both satisfied. In ad-
dition, such certificates shall bear any other legend as may be
required by law. Certificates representing shares sold in a
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registered public offering pursuant to Section 10 shall not be
required to bear the legend set forth in Section 12.
12. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective suc-
cessors and permitted assigns. Except as expressly provided
for in this Agreement, neither this Agreement nor the rights or
the obligations of either party hereto are assignable, except
by operation of law, or with the written consent of the other
party. Nothing contained in this Agreement, express or im-
plied, is intended to confer upon any person other than the
parties hereto and their respective permitted assigns any
rights or remedies of any nature whatsoever by reason of this
Agreement. Any Restricted Shares sold by a party in compliance
with the provisions of Section 10 shall, upon consummation of
such sale, be free of the restrictions imposed with respect to
such shares by this Agreement, unless and until such party
shall repurchase or otherwise become the beneficial owner of
such shares, and any transferee of such shares shall not be
entitled to the registration rights of such party.
13. SPECIFIC PERFORMANCE. The parties recognize and
agree that if for any reason any of the provisions of this
Agreement are not performed in accordance with their specific
terms or are otherwise breached, immediate and irreparable harm
or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled
to an injunction restraining any violation or threatened xxxxx-
tion of the provisions of this Agreement. In the event that
any action should be brought in equity to enforce the provi-
sions of the Agreement, neither party will allege, and each
party hereby waives the defense, that there is adequate remedy
at law.
14. ENTIRE AGREEMENT. This Agreement, the LILCO
Stock Option Agreement, the Confidentiality Agreement and the
Exchange Agreement (including the exhibits and schedules there-
to) constitute the entire agreement among the parties with re-
spect to the subject matter hereof and thereof and supersede
all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the sub-
ject matter hereof and thereof.
15. FURTHER ASSURANCES. Each party will execute and
deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate
the transactions contemplated hereby.
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16. VALIDITY. The invalidity or unenforceability of
any provisions of this Agreement shall not affect the validity
or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect. In the event any
court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto
shall negotiate in good faith the execution and delivery of an
amendment to this Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the
parties hereto with respect to such provision and the economic
effects thereof. If for any reason any such court or regula-
tory agency determines that LILCO is not permitted to acquire,
or the Company is not permitted to repurchase pursuant to Sec-
tion 7, the full number of shares of Company Common Stock pro-
vided in Section 1 hereof (as the same may be adjusted), it is
the express intention of the Company to allow LILCO to acquire
or to require the Company to repurchase such lesser number of
shares as may be permissible, without any amendment or modifi-
cation hereof. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement
or part hereof to be null, void or unenforceable, or order any
party to take any action inconsistent herewith, or not take any
action required herein, the other party shall not be entitled
to specific performance of such provision or part hereof or to
any other remedy, including but not limited to money damages,
for breach hereof or of any other provision of this Agreement
or part hereof as the result of such holding or order.
17. NOTICES. All notices and other communication
hereunder shall be in writing and shall be deemed given if (i)
delivered personally, or (ii) sent by reputable overnight cou-
rier service, or (iii) telecopied (which is confirmed), or (iv)
five days after being mailed by registered or certified mail
(return receipt requested) to the parties at the following ad-
dresses (or at such other address for a party as shall be
specified by like notice):
A. If to LILCO, to:
Long Island Lighting Company
000 Xxxx Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
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B. If to the Company, to:
The Brooklyn Union Gas Company
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
18. GOVERNING LAW; CHOICE OF FORUM. This Agreement
shall be governed by and construed in accordance with the laws
of the state of New York applicable to agreements made and to
be performed entirely within such state and without regard to
its choice of law principles. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any
federal court located in the state of New York or any New York
state court in the event any dispute arises out of this Agree-
ment or any of the transactions contemplated by this agreement,
(b) agrees that it will not attempt to deny or defeat such per-
xxxxx jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contem-
plated by this Agreement in any court other than a federal
court sitting in the state of New York or a New York state
court.
19. INTERPRETATION. When a reference is made in
this Agreement to a Section such reference shall be to a Sec-
tion of this Agreement unless otherwise indicated. Whenever
the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation". The descriptive headings herein are in-
serted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of
this Agreement.
20. COUNTERPARTS. This Agreement may be executed in
two counterparts, each of which shall be deemed to be an origi-
nal, but both of which, taken together, shall constitute one
and the same instrument.
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21. EXPENSES. Except as otherwise expressly pro-
vided herein or in the Exchange Agreement, all costs and ex-
penses incurred in connection with the transactions contem-
plated by this Agreement shall be paid by the party incurring
such expenses.
22. AMENDMENTS; WAIVER. This Agreement may be
amended by the parties hereto and the terms and conditions
hereof may be waived only by an instrument in writing signed on
behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving
compliance.
23. EXTENSION OF TIME PERIODS. The time periods for
exercise of certain rights under Sections 2, 6 and 7 shall be
extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expira-
tion of all statutory waiting periods; and (ii) to the extent
necessary to avoid any liability under Section 16(b) of the
Exchange Act by reason of such exercise.
24. REPLACEMENT OF COMPANY OPTION. Upon receipt by
the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Agreement, and
(in the case of loss, theft or destruction) of reasonably sat-
isfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly autho-
rized officers as of the date first above written.
LONG ISLAND LIGHTING COMPANY
By:/s/ Xx. Xxxxxxx X. Xxxxxxxxxxx
---------------------------------
Name: Xx. Xxxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
THE BROOKLYN UNION GAS COMPANY
By:/s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
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