EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JANUARY 17, 2000
BY AND BETWEEN
EL PASO ENERGY CORPORATION
EL PASO MERGER COMPANY
AND
THE COASTAL CORPORATION
TABLE OF CONTENTS
ARTICLE I................................................................2
Section 1.1 The Merger............................................2
Section 1.2 The Closing; Effective Time...........................2
Section 1.3 Subsequent Actions....................................2
Section 1.4 Certificate of Incorporation; By-laws; Directors
and Officers of the Surviving Corporation.............3
ARTICLE II...............................................................3
Section 2.1 Treatment of Common Stock and Preferred Stock.........3
Section 2.2 Cancellation of Excluded Shares.......................4
Section 2.3 Conversion of Common Stock of Merger Sub..............4
Section 2.4 Exchange Agent; Exchange Procedures...................5
Section 2.5 Transfer Books; Lost, Stolen or Destroyed
Certificates..........................................6
Section 2.6 No Fractional Share Certificates; Termination
of Exchange Fund......................................7
Section 2.7 Options...............................................7
Section 2.8 Appraisal Rights......................................9
Section 2.9 Dividends............................................10
Section 2.10 Certain Adjustments..................................10
ARTICLE III.............................................................10
Section 3.1 Organization and Qualification; Subsidiaries.........10
Section 3.2 Restated Certificate of Incorporation and
By-laws..............................................11
Section 3.3 Capitalization.......................................11
Section 3.4 Power and Authority; Authorization; Valid
and Binding..........................................13
Section 3.5 No Conflict; Required Filings and Consents...........13
Section 3.6 SEC Reports; Financial Statements....................14
Section 3.7 Absence of Certain Changes...........................16
Section 3.8 Litigation; Liabilities..............................16
Section 3.9 Compliance; Permits..................................17
Section 3.10 Employee Matters; ERISA..............................17
Section 3.11 Labor Matters........................................20
Section 3.12 Environmental Matters................................20
Section 3.13 Board Action; Vote Required..........................23
Section 3.14 Opinion of Financial Advisor.........................24
Section 3.15 Brokers..............................................24
Section 3.16 Tax Matters..........................................24
Section 3.17 Public Utility Holding Company Act of 1935...........25
Section 3.18 Restrictions on Business Activities..................25
Section 3.19 Year 2000............................................25
Section 3.20 Accounting Matters...................................25
ARTICLE IV..............................................................26
Section 4.1 Organization and Qualification; Subsidiaries.........26
Section 4.2 Restated Certificate of Incorporation and
By-laws of Parent and Merger Sub.....................27
Section 4.3 Capitalization.......................................27
Section 4.4 Power and Authority; Authorization; Valid
and Binding..........................................28
Section 4.5 No Conflict; Required Filings and Consents...........29
Section 4.6 SEC Reports; Financial Statements....................30
Section 4.7 Absence of Certain Changes...........................31
Section 4.8 Litigation; Liabilities..............................32
Section 4.9 Compliance; Permits..................................32
Section 4.10 Employee Matters; ERISA..............................33
Section 4.11 Labor Matters........................................35
Section 4.12 Environmental Matters................................35
Section 4.13 Board Action; Vote Required..........................37
Section 4.14 Opinion of Financial Advisor.........................38
Section 4.15 Brokers..............................................38
Section 4.16 Tax Matters..........................................38
Section 4.17 Public Utility Holding Company Act of 1935...........39
Section 4.18 Restrictions on Business Activities..................39
Section 4.19 Year 2000............................................39
Section 4.20 Accounting Matters...................................39
ARTICLE V...............................................................39
Section 5.1 Interim Operations of the Company....................39
Section 5.2 Interim Operations of Parent.........................42
Section 5.3 No Solicitation......................................44
ARTICLE VI..............................................................47
Section 6.1 Meetings of Stockholders.............................47
Section 6.2 Filings; Other Action................................47
Section 6.3 Publicity............................................48
Section 6.4 Registration Statements..............................48
Section 6.5 Listing Application..................................49
Section 6.6 Reserved.............................................49
Section 6.7 Expenses.............................................50
Section 6.8 Access to Information................................50
Section 6.9 Insurance; Indemnity.................................50
Section 6.10 Employee Benefit Plans...............................51
Section 6.11 Governance Matters...................................53
Section 6.12 Affiliates...........................................55
Section 6.13 Pooling-of-Interests.................................56
Section 6.14 Takeover Statutes....................................57
Section 6.15 Tax-Free Merger......................................57
Section 6.16 Section 16(b)........................................57
Section 6.17 Reasonable Best Efforts..............................57
ARTICLE VII.............................................................60
Section 7.1 Conditions to Obligations of the Parties.............60
Section 7.2 Additional Conditions to Obligations of
Parent...............................................61
Section 7.3 Additional Conditions to Obligations of the
Company..............................................62
ARTICLE VIII............................................................63
Section 8.1 Termination..........................................63
Section 8.2 Effect of Termination................................65
Section 8.3 Amendment............................................67
Section 8.4 Extension; Waiver....................................68
ARTICLE IX..............................................................68
Section 9.1 Non-Survival of Representations, Warranties
and Agreements.......................................68
Section 9.2 GOVERNING LAW........................................68
Section 9.3 Notices..............................................68
Section 9.4 Certain Definitions; Interpretation..................69
Section 9.5 Headings.............................................71
Section 9.6 Severability.........................................71
Section 9.7 Assignment; Binding Effect; No Third Party
Beneficiaries........................................71
Section 9.8 ENFORCEMENT..........................................72
Section 9.9 Counterparts.........................................72
Section 9.10 Entire Agreement.....................................72
EXHIBITS
Exhibit A Methodology for Valuation of Company Options
Exhibit B Form of Amendments to By-laws of Parent
Exhibit C Form of Affiliate Letter of the Company's Affiliates
Exhibit D Form of Affiliate Letter of Parent's Affiliates
INDEX OF DEFINED TERMS
DEFINED TERM Page No.
Acquisition Agreement.....................................................45
Acquisition Transaction...................................................46
Action....................................................................51
affiliate.................................................................70
Agreement..................................................................1
Amended By-laws...........................................................53
Applicable Period.........................................................44
By-laws Amendment.........................................................53
Cap Amount................................................................50
Closing....................................................................2
Closing Date...............................................................2
Coastal Limited Preferred Stock...........................................11
Code.......................................................................1
Combination Director......................................................53
Combination Transaction...................................................53
Common Exchange Ratio......................................................4
Company....................................................................1
Company Certificate........................................................4
Company Class A Common Stock...............................................4
Company Common Stock.......................................................1
Company Converted Preferred Stock..........................................4
Company Converted Stock....................................................4
Company Defined Benefit Plan..............................................19
Company Director..........................................................53
Company Disclosure Letter.................................................10
Company Employee Plans....................................................18
Company Employees.........................................................51
Company Equity Equivalent Security........................................12
Company ERISA Affiliate...................................................18
Company Material Adverse Effect...........................................69
Company Option.............................................................7
Company Permits...........................................................17
Company Preferred Stock...................................................11
Company SEC Reports.......................................................15
Company Stock Option Agreement.............................................1
Company Termination Fee...................................................65
Company Trust Securities..................................................11
Confidentiality Agreement.................................................50
control...................................................................70
D&T........................................................................7
DE Appraisal Provisions....................................................9
DGCL.......................................................................2
Dissenting Shares..........................................................9
DLJ.......................................................................38
DOJ.......................................................................58
Effective Time.............................................................2
Environmental Costs.......................................................22
Environmental Laws........................................................23
Environmental Matter......................................................22
Environmental Permits.....................................................21
EPTPC Preferred Stock.....................................................26
ERISA.....................................................................17
Exchange Act..............................................................14
Exchange Agent.............................................................5
Exchange Fund..............................................................5
Exchange Ratios............................................................4
Excluded Common Shares.....................................................4
Excluded Preferred Shares..................................................4
Excluded Shares............................................................4
Feline Prides.............................................................12
FERC......................................................................14
Form S-4..................................................................48
GAAP.......................................................................1
Governmental Entity.......................................................14
Hazardous Substances......................................................22
Holding Company Act.......................................................25
HSR Act...................................................................14
Indemnified Party.........................................................51
Initial Period............................................................54
IRS.......................................................................18
Joint Proxy Statement/Prospectus..........................................49
knowledge.................................................................70
Leviathan Employee Options................................................27
Merger.....................................................................1
Merger Sub.................................................................1
Xxxxxxx Xxxxx.............................................................24
New Plans.................................................................52
Notice....................................................................44
NYSE.......................................................................7
Old Plans.................................................................52
Parent.....................................................................1
Parent Certificates........................................................5
Parent Common Stock........................................................2
Parent Defined Benefit Plan...............................................34
Parent Directors' Nominating Committee....................................53
Parent Disclosure Letter..................................................26
Parent Employee Plans.....................................................33
Parent Employees..........................................................52
Parent Equity Equivalent Security.........................................28
Parent ERISA Affiliate....................................................33
Parent Material Adverse Effect............................................69
Parent Options............................................................28
Parent Permits............................................................33
Parent Preferred Stock....................................................27
Parent Rights Agreement...................................................28
Parent SEC Reports........................................................30
Parent Stock Issuance.....................................................28
Parent Stock Market Price..................................................7
Parent Stock Option Agreement..............................................1
Parent Termination Fee....................................................66
Parent Trust Securities...................................................28
PBGC......................................................................18
PCBs......................................................................23
Person....................................................................70
Post-Merger Material Adverse Effect.......................................58
PwC........................................................................7
Regulatory Law............................................................59
Representatives...........................................................44
SEC........................................................................1
Securities Act............................................................14
Series A Company Preferred Stock..........................................12
Series A Exchange Ratio....................................................4
Series B Company Preferred Stock..........................................12
Series B Exchange Ratio....................................................4
Series C Company Preferred Stock..........................................12
Series C Exchange Ratio....................................................4
Stock Option Agreements....................................................1
Subsidiary................................................................70
Superior Proposal.........................................................46
Surviving Corporation......................................................2
Takeover Proposal.........................................................45
Tax.......................................................................70
Termination Date..........................................................63
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 17, 2000 (this
"Agreement"), by and among El Paso Energy Corporation, a Delaware
corporation ("Parent"), El Paso Merger Company, a Delaware corporation and
a wholly owned subsidiary of Parent ("Merger Sub"), and The Coastal
Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have determined that a merger of Merger Sub with and into
the Company (the "Merger") is in the best interests of their respective
companies and stockholders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits and have
approved the transactions provided for herein upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger will qualify as a tax-free reorganization under
Section 368 of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder (the "Code"), and that this
Agreement will be, and is hereby, adopted as a plan of reorganization for
purposes of the Code;
WHEREAS, it is intended that the Merger will be accounted for as
a pooling of interests under United States generally accepted accounting
principles ("GAAP") and the applicable rules and regulations of the
Securities and Exchange Commission (the "SEC");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to
enter into this Agreement, Parent and the Company are executing and
delivering a Stock Option Agreement, dated as of the date hereof (the
"Company Stock Option Agreement"), pursuant to which the Company is
granting to Parent an option to purchase, under certain circumstances, for
a purchase price of $34.14375 per share, up to 31,834,515 shares of common
stock, par value $.33-1/3 per share, of the Company (together with any
associated preferred stock or similar purchase rights, the "Company Common
Stock"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the Company's willingness to
enter into this Agreement, Parent and the Company are executing and
delivering a Stock Option Agreement, dated as of the date hereof (the
"Parent Stock Option Agreement", and together with the Company Stock Option
Agreement, the "Stock Option Agreements"), pursuant to which Parent is
granting to the Company an option to purchase, under certain circumstances,
for a purchase price of $37.80 per share, up to 35,080,566 shares of common
stock, par value $3.00 per share, of Parent (together with any associated
preferred stock purchase rights, the "Parent Common Stock").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Section 1.1 The Merger. (a) Subject to and upon the terms and
conditions of this Agreement and in accordance with the provisions of
Section 251 of the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2(b)), Merger Sub shall be merged
with and into the Company and the separate corporate existence of Merger
Sub shall cease. The Company shall continue as the surviving corporation
(the "Surviving Corporation") in the Merger and, as of the Effective Time,
shall be a wholly-owned subsidiary of Parent. The effects and consequences
of the Merger shall be as specified in this Agreement and in Section 259(a)
of the DGCL.
Section 1.2 The Closing; Effective Time. (a) The closing of the Merger
(the "Closing") shall take place (i) at the offices of Fried, Frank,
Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
at 10:00 A.M. local time, on the first business day on which the last to be
satisfied or waived of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii) at such other
place, time and/or date as Parent and the Company shall agree (the date of
the Closing, the "Closing Date").
(b) On the Closing Date, Parent, Merger Sub and the Company shall
cause a certificate of merger with respect to the Merger, meeting the
requirements of the DGCL, to be properly executed and filed with the
Secretary of State of the State of Delaware in accordance with the
applicable provisions of the DGCL. The Merger shall become effective at the
time at which the certificate of merger with respect thereto shall be duly
filed with Secretary of State of the State of Delaware, or at such later
time specified in such certificate of merger as shall be agreed by Parent
and the Company (the time that the Merger becomes effective, the "Effective
Time").
Section 1.3 Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to continue in, vest, perfect or confirm
of record or otherwise the Surviving Corporation's right, title or interest
in, to or under any of the rights, properties, privileges, franchises or
assets of either of its constituent corporations acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the
Merger, or otherwise to carry out the intent of this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either of the constituent
corporations of the Merger, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out
the intent of this Agreement.
Section 1.4 Certificate of Incorporation; By-laws; Directors and
Officers of the Surviving Corporation. Unless otherwise agreed by Parent
and the Company prior to the Closing:
(i) The Restated Certificate of Incorporation of the Company
shall constitute at and after the Effective Time (until amended as provided
by applicable law and such Restated Certificate of Incorporation, as
applicable) the certificate of incorporation of the Surviving Corporation.
(ii) The Amended and Restated By-laws of the Company in
effect immediately prior to the Effective Time shall constitute at and
after the Effective Time (until amended as provided by applicable law and
the certificate of incorporation and by-laws, as applicable) the by-laws of
the Surviving Corporation.
(iii) The officers of the Company immediately prior to the
Effective Time shall continue to serve in their respective offices of the
Surviving Corporation from and after the Effective Time, until their
successors are elected or appointed and qualified or until their
resignation or removal.
(iv) The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation from and
after the Effective Time, until their successors are elected or appointed
and qualified or until their resignation or removal. Prior to the Effective
Time, the Board of Directors of the Company will approve the appointment of
such directors of Merger Sub as directors of the Surviving Corporation.
ARTICLE II
Section 2.1 Treatment of Common Stock and Preferred Stock. (a) At the
Effective Time, without any action on the part of any holder thereof (but
subject to Sections 2.4, 2.5, 2.6 and 2.8 of this Agreement), (i) each
share of Company Common Stock, and each share of Class A Common Stock, par
value $.33-1/3 per share, of the Company ("Company Class A Common Stock"),
issued and outstanding immediately prior to the Effective Time, and all
rights in respect thereof, shall forthwith cease to exist and (other than
those shares held in the treasury of the Company, by Parent or by any of
their respective Subsidiaries (collectively, the "Excluded Common Shares"))
shall be converted into the right to receive 1.230 validly issued, fully
paid and nonassessable shares of Parent Common Stock (the "Common Exchange
Ratio"), and (ii) each share of Series A Company Preferred Stock (defined
in Section 3.3), Series B Company Preferred Stock (defined in Section 3.3)
and Series C Company Preferred Stock (defined in Section 3.3)
(collectively, the "Company Converted Preferred Stock"), issued and
outstanding immediately prior to the Effective Time, and all rights in
respect thereof, shall forthwith cease to exist and (other than those
shares of Company Converted Preferred Stock held in the treasury of the
Company, by Parent or by any of their respective Subsidiaries
(collectively, the "Excluded Preferred Shares" and, together with the
Excluded Common Shares, the "Excluded Shares")) each such share of Series A
Company Preferred Stock shall be converted into the right to receive 9.133
validly issued, fully paid and nonassessable shares of Parent Common Stock
(the "Series A Exchange Ratio"), each such share of Series B Company
Preferred Stock shall be converted into the right to receive 9.133 validly
issued, fully paid and nonassessable shares of Parent Common Stock (the
"Series B Exchange Ratio") and each such share of Series C Company
Preferred Stock shall be converted into the right to receive 17.980 validly
issued, fully paid and nonassessable shares of Parent Common Stock (the
"Series C Exchange Ratio", and together with the Common Exchange Ratio, the
Series A Exchange Ratio and the Series B Exchange Ratio, the "Exchange
Ratios").
(b) Upon consummation of the Merger, except as otherwise provided
herein: (i) each certificate (other than certificates representing Excluded
Shares) ("Company Certificate") that immediately prior to the Effective
Time represented issued and outstanding shares of Company Common Stock,
Company Class A Common Stock or Company Converted Preferred Stock
(together, "Company Converted Stock") shall evidence, commencing
immediately after the Effective Time, the right to receive shares of Parent
Common Stock on the basis set forth in Section 2.1(a).
Section 2.2 Cancellation of Excluded Shares. At the Effective Time,
without any action on the part of the holder thereof, each Excluded Share
shall forthwith cease to be outstanding and shall be canceled and retired,
and no shares of stock or other securities of Parent, the Company or the
Surviving Corporation shall be issuable, and no payment or other
consideration shall be made or paid, in respect thereof.
Section 2.3 Conversion of Common Stock of Merger Sub. At the Effective
Time, without any action on the part of the holder thereof, each share of
common stock of Merger Sub that is issued and outstanding immediately prior
to the Effective Time shall be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
Section 2.4 Exchange Agent; Exchange Procedures. (a) Subject to the
terms and conditions of this Agreement, at or prior to the Effective Time,
Parent shall appoint BankBoston, N.A., or such other exchange agent
selected by Parent that is reasonably acceptable to the Company (the
"Exchange Agent"), to effect the exchange of shares of Company Converted
Stock (other than Dissenting Shares (as defined in Section 2.8(b)) for
shares of Parent Common Stock in accordance with the provisions of this
Article II. As soon as reasonably practicable following the Effective Time,
Parent shall deposit, or cause to be deposited, with the Exchange Agent,
for exchange in accordance with this Article II, certificates representing
shares of Parent Common Stock ("Parent Certificates") in an amount
sufficient to allow the Exchange Agent to make all deliveries of Parent
Certificates in exchange for Company Certificates in connection with the
Merger, as contemplated by this Section 2.4 and any cash payable in respect
of fractional shares in accordance with Section 2.6(a) hereof and any
dividends or other distributions payable in accordance with Section 2.4(b)
(the "Exchange Fund").
(b) Parent shall instruct the Exchange Agent to mail to each
record holder of shares of Company Converted Stock as soon as reasonably
practicable after the Effective Time (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title
to shares of Company Converted Stock shall pass, only upon the delivery of
a Company Certificate or Company Certificates representing such shares to
the Exchange Agent, and which letter shall otherwise be in such form and
have such other provisions as Parent shall reasonably specify, which form
shall be reasonably acceptable to the Company) and (ii) instructions for
use in effecting the surrender of Company Certificates for Parent
Certificates and cash in lieu of fractional shares, if any. Commencing
immediately after the Effective Time, upon the surrender to the Exchange
Agent of a Company Certificate, together with a duly executed and completed
letter of transmittal and all other documents and other materials
reasonably required by the Exchange Agent to be delivered in connection
therewith, the holder thereof shall be entitled to receive a Parent
Certificate or Parent Certificates representing the number of whole shares
of Parent Common Stock into which the shares of the Company Converted Stock
which immediately prior to the Effective Time were represented by such
Company Certificate so surrendered shall have been converted in accordance
with the provisions of Section 2.1, together with a cash payment in lieu of
fractional shares, if any, in accordance with Section 2.6(a). Unless and
until any Company Certificate is so surrendered, no dividends or other
distributions, if any, payable to the holders of record of shares of Parent
Common Stock as of any date subsequent to the Effective Time shall be paid
to the holder of such Company Certificate in respect thereof. Upon the
surrender of any Company Certificate, the record holder of the Parent
Certificate or Parent Certificates representing shares of Parent Common
Stock issued in exchange therefor shall be entitled to receive, (i) at the
time of surrender, the amount of any dividends or other distributions in
respect of such shares of Parent Common Stock having a record date after
the Effective Time and a payment date prior to the surrender date, and (ii)
at the appropriate payment date, the amount of dividends or other
distributions in respect of such shares of Parent Common Stock having a
record date after the Effective Time and a payment date subsequent to the
date of such surrender. No interest shall be payable in respect of the
payment of dividends or distributions pursuant to the immediately preceding
sentence.
(c) Parent, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the shares of the Parent
Common Stock and cash in lieu of fractional shares otherwise payable to any
holder of shares of the Company Converted Stock pursuant to this Article
II, and from any dividends or other distributions which such holder is
entitled to receive pursuant to Section 2.4(b), such amounts as Parent, the
Surviving Corporation and/or the Exchange Agent is required to deduct or
withhold therefrom under the Code and/or any applicable provision of state,
local or foreign law.
Section 2.5 Transfer Books; Lost, Stolen or Destroyed Certificates.
(a) The stock transfer books of the Company shall be closed at the
Effective Time and no transfer of any shares of Company Converted Stock
shall thereafter be recorded on any of such stock transfer books. In the
event of a transfer of ownership of any shares of the Company Converted
Stock that is not registered in the stock transfer records of the Company
at the Effective Time, a Parent Certificate or Parent Certificates
representing the number of whole shares of Parent Common Stock into which
such shares of the Company Converted Stock shall have been converted in the
Merger shall be issued to the transferee together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 2.6(a), and
payment of dividends or distributions, if any, in accordance with Section
2.4(b) only if the Company Certificate or Company Certificates are
surrendered as provided in Section 2.4 (but subject to Section 2.5(b)
hereof), accompanied by all documents required to evidence and effect such
transfer and evidence of payment of any applicable stock transfer taxes.
(b) In the event any Company Certificate shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Company Certificate, upon the delivery of a duly
executed affidavit of that fact by the holder thereof, Parent Certificates
in accordance with Section 2.4, cash in lieu of fractional shares, if any,
in accordance with Section 2.6(a), and payment of dividends and
distributions, if any, in accordance with Section 2.4(b); provided,
however, that Parent may, in its discretion, require the owner of such
lost, stolen or destroyed Company Certificate to deliver a bond in such sum
as Parent may reasonably direct as indemnity against any claim that may be
made against Parent, the Company, the Surviving Corporation or the Exchange
Agent with respect to that Company Certificate alleged to have been lost,
stolen or destroyed.
Section 2.6 No Fractional Share Certificates; Termination of Exchange
Fund. (a) No scrip or certificates for fractional shares of Parent Common
Stock will be issued upon the surrender for exchange of Company
Certificates, and no fractional interest in a share of Parent Common Stock
will entitle the holder thereof to vote or receive dividends or
distributions or any other rights of a stockholder of Parent, with respect
to any such fractional share interest. Each Person entitled to receive, but
for this Section 2.6(a), a fractional share of Parent Common Stock shall be
entitled to receive an amount of cash (rounded to the nearest whole cent)
equal to the product of (i) such fraction, multiplied by (ii) the average
of the closing prices (such average, the "Parent Stock Market Price") of
the shares of Parent Common Stock on the New York Stock Exchange (the
"NYSE") Composite Transaction Reporting System as reported in The Wall
Street Journal (but subject to correction for typographical or other
manifest errors in such reporting) over the four trading day period
immediately preceding the Closing Date.
(b) Any portion of the Exchange Fund which remains undistributed
one year after the Effective Time shall be delivered to Parent upon demand,
and each holder of shares of the Company Converted Stock who has not
theretofore surrendered such holder's Company Certificates in accordance
with the provisions of this Article II shall thereafter look only to Parent
for satisfaction of such holder's claims for shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock payable in
accordance with Section 2.6(a) and any dividends or distributions payable
in accordance with Section 2.4(b). Notwithstanding the foregoing, none of
Parent, the Company, the Surviving Corporation or the Exchange Agent shall
be liable to any former holder of shares of Company Converted Stock for any
shares or amounts properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
Section 2.7 Options. (a) In connection with the Merger, each option to
purchase shares of Company Common Stock or Company Class A Common Stock (a
"Company Option") that will be outstanding immediately prior to the
Effective Time shall be cancelled as of the Effective Time, and, in
consideration thereof, the holder thereof shall have the right to receive a
number of shares of Parent Common Stock, decreased to the nearest whole
share, having an aggregate value (calculated based on the Parent Stock
Market Price) equal to the value of such Company Option immediately prior
to the Effective Time, as calculated jointly by PricewaterhouseCoopers LLP
("PwC") and Deloitte & Touche LLP ("D&T") on the basis of the methodology
set forth on Exhibit A. Parent shall pay cash to the holders of Company
Options based on the Parent Stock Market Price in lieu of issuing
fractional shares of Parent Common Stock, unless PwC and/or D&T shall
advise Parent and/or the Company that it would be unable to deliver at the
Closing the letter referred to in the second sentence of Section 6.13(a) or
the second sentence of 6.13(b), as applicable, if cash is so paid in lieu
of issuing fractional shares of Parent Common Stock. Notwithstanding the
foregoing, in the event that PwC and/or D&T shall advise Parent and/or the
Company that it would be unable to deliver at the Closing the letter
referred to in the second sentence of Section 6.13(a) or the second
sentence of 6.13(b), as applicable, if Company Options are cancelled as
contemplated by this Section 2.7(a), the provisions of this Section 2.7(a)
shall be inapplicable. The Company shall use reasonable best efforts, in
consultation with Parent, to obtain necessary consents, adopting necessary
amendments to stock plans or otherwise to effect the cancellation and
exchange of Company Options; provided that each such consent and amendment
shall provide that if the provisions of this Section 2.7(a) are
inapplicable by reason of the immediately preceding sentence, such consent
or amendment shall be void ab initio. The Company, Parent or an applicable
affiliate of either of them, shall be entitled to deduct from other
compensation payable to any holder of a Company Option any sums required by
federal, state or local tax law to be withheld with respect to the issuance
of shares of Parent Common Stock pursuant to this Section 2.7. In the
alternative, such holder may be required to pay such sums directly to the
applicable entity. Parent shall have no obligation under this Section 2.7
to issue shares of Parent Common Stock to any such holder until payment of
such sums has been received by the applicable entity.
(b) Subject to Section 2.7(c), in the event that Section 2.7(a)
is inapplicable as provided in the third sentence of Section 2.7(a), the
Company shall take all action necessary with respect to each Company Option
outstanding immediately prior to the Effective Time such that as of the
Effective Time: (i) each such Company Option shall entitle the holder
thereof to purchase solely such number of shares of Parent Common Stock as
is equal to the product of (x) the number of shares of Company Converted
Stock subject to such Company Option immediately prior to the Effective
Time and (y) the Common Exchange Ratio; and (ii) the exercise price per
share of Parent Common Stock subject to any such Company Option as of and
after the Effective Time shall be equal to (x) the exercise price per share
of the Company Converted Stock subject to such Company Option immediately
prior to the Effective Time divided by (y) the Common Exchange Ratio.
(c) The number of shares of Parent Common Stock deliverable upon
exercise of each Company Option to which Section 2.7(b) applies shall, at
and after the Effective Time as contemplated by Section 2.7(b), be rounded,
if necessary, to the nearest whole share of Parent Common Stock, and the
exercise price with respect thereto shall be rounded, if necessary, to the
nearest one one-hundredth of a cent (it being understood that all options
exercisable at the same price and granted on the same date to the same
individual shall be aggregated for this purpose); provided, however, that
any adjustment to an "incentive stock option" shall be consistent with
Section 422 of the Code. If Section 2.7(b) is applicable, each Company
Option shall be assumed by Parent and shall be subject to the same terms
and conditions as in effect immediately prior to the Effective Time
(including, without limitation, any applicable vesting schedule), but
giving effect to the Merger.
(d) If Section 2.7(b) is applicable, as soon as practicable after
the Effective Time, Parent shall deliver to the holders of Company Options
a notice stating that the agreements evidencing the grants of such Company
Options shall continue in effect on the same terms and conditions (subject
to the adjustments, if any, required by this Section 2.7 after giving
effect to the transactions contemplated hereby and the terms of the
applicable stock plan).
(e) If Section 2.7(b) is applicable, Parent shall take all
corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Company Options
and shall use reasonable best efforts to ensure that such shares are listed
on the NYSE upon issuance. If Section 2.7(b) is applicable, as soon as
practicable after the Effective Time, Parent shall file with the SEC a
registration statement on Form S-8 of the SEC (if available) (or any
successor or other appropriate form) with respect to the shares of Parent
Common Stock issuable upon the exercise of such Company Options and shall
use reasonable best efforts to maintain the effectiveness of such
registration statement, and to maintain the current status of the
prospectus or prospectuses contained therein, until all such Company
Options have been exercised, expired or forfeited.
Section 2.8 Appraisal Rights. (a) In accordance with Section 262 of
the DGCL, no appraisal rights shall be available to holders of shares of
Company Common Stock, Company Class A Common Stock, Series A Company
Preferred Stock and Series B Company Preferred Stock in connection with the
Merger.
(b) Notwithstanding anything in this Agreement to the contrary,
shares of Series C Company Preferred Stock ("Dissenting Shares") in respect
of which the holders thereof comply with all applicable procedures set
forth in Section 262 of the DGCL with respect to the right of stockholders
to dissent from a merger and receive fair value for their shares (the "DE
Appraisal Provisions") shall not be converted into Parent Common Stock,
pursuant to this Article II but shall entitle the holder thereof to receive
such consideration as may be determined to be due in respect of such
Dissenting Shares pursuant to the DE Appraisal Provisions; provided,
however, that any holder of Dissenting Shares who shall have failed to
perfect or shall have withdrawn or lost such holder's rights to appraisal
of such Dissenting Shares, in each case under the DE Appraisal Provisions,
shall forfeit the right to appraisal of such Dissenting Shares, and such
Dissenting Shares shall be converted into Parent Common Stock pursuant to
this Article II. The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by the
Company and any other related instruments served pursuant to the DE
Appraisal Provisions and received by the Company, and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for
appraisal under the DE Appraisal Provisions. The Company shall not, except
with the prior written consent of Parent, negotiate or make any payment
with respect to any demands for appraisal or offer to settle or settle any
such demands.
Section 2.9 Dividends. Parent and the Company shall coordinate with
each other the declaration of, and the setting of record dates and payment
dates for, dividends in respect of their respective shares of capital stock
so that, in respect of any fiscal quarter, holders of shares of Company
Converted Stock do not (i) receive more than one dividend in respect of
both (x) shares of Company Converted Stock and (y) shares of Parent Common
Stock received pursuant to the Merger in exchange therefor or (ii) fail to
receive a dividend in respect of both (x) shares of Company Converted Stock
and (y) shares of Parent Common Stock received pursuant to the Merger.
Section 2.10 Certain Adjustments. If between the date of this
Agreement and the Effective Time, whether or not permitted pursuant to the
terms hereof, the outstanding shares of Company Converted Stock or Parent
Common Stock shall be changed into a different number of shares or other
securities by reason of any stock split, combination, merger,
consolidation, reorganization or other transaction (other than any
conversion of outstanding shares of Company Class A Common Stock or Company
Converted Preferred Stock into shares of Company Common Stock in accordance
with its terms), or any dividend payable in stock shall be declared thereon
with a record date within such period, the applicable Exchange Ratios (and
the number of shares of Parent Common Stock issuable in the Merger) and the
form of securities issuable in the Merger shall be appropriately adjusted
to provide the holders of shares of Company Converted Stock the same
economic effect as contemplated by this Agreement prior to such event.
ARTICLE III
Except as set forth in the corresponding sections or subsections
of the disclosure letter, dated the date of this Agreement, delivered by
the Company to Parent (the "Company Disclosure Letter"), the Company hereby
represents and warrants to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of the Subsidiaries
of the Company is a corporation or other business entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, and each of the Company and its Subsidiaries
has the requisite corporate or similar organizational power and authority
to own, operate or lease its properties and to carry on its business as it
is now being conducted, and is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except as would not, in the
aggregate, have, or reasonably be expected to have, a Company Material
Adverse Effect (as defined in Section 9.4).
(b) Except as disclosed in the Company SEC Reports (as defined in
Section 3.6) filed prior to the date of this Agreement, and except as would
not, in the aggregate, have, or reasonably be expected to have, a Company
Material Adverse Effect, (i) other than the 12,000,000 outstanding 8.375%
Trust Originated Preferred Securities of Coastal Finance I (the "Company
Trust Securities") and the 4,000,000 outstanding shares of Participating
Cumulative Variable Rate Voting Preferred Stock of Coastal Securities
Company Limited (the "Coastal Limited Preferred Stock"), all of the
outstanding shares of capital stock and other equity securities of the
Subsidiaries of the Company are owned, directly or indirectly, by the
Company free and clear of all liens, pledges, security interests, or other
encumbrances, (ii) all of the outstanding shares of capital stock or other
equity securities of the Subsidiaries of the Company have been validly
issued and are fully paid and nonassessable, and (iii) there are no
subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) entitling any person to purchase or otherwise acquire from the
Company or any of its Subsidiaries at any time, or upon the happening of
any stated event, any shares of capital stock or other equity securities of
any of the Subsidiaries of the Company. There are no outstanding
obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other equity securities, or any securities convertible,
exchangeable or exercisable for or into, shares of capital stock or other
equity securities of any Subsidiary of the Company.
Section 3.2 Restated Certificate of Incorporation and By-laws. The
Company has furnished or otherwise made available to Parent a complete and
correct copy of the Company's Restated Certificate of Incorporation and
Amended and Restated By-laws, in each case as amended to the date of this
Agreement. Such Restated Certificate of Incorporation and Amended and
Restated By-laws and all similar organizational documents of the
Subsidiaries of the Company are in full force and effect. The Company is
not in violation of its Restated Certificate of Incorporation or Amended
and Restated By-laws and, except as would not, in the aggregate, have, or
reasonably be expected to have, a Company Material Adverse Effect, none of
the Subsidiaries of the Company is in violation of any similar
organizational documents of Subsidiaries of the Company.
Section 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of 500,000,000 shares of Company Common Stock, 2,700,000
shares of Company Class A Common Stock and 50,000,000 shares of serial
Preferred Stock, par value $.33-1/3 per share (the "Company Preferred
Stock"). 123,169 shares of Company Preferred Stock have been designated as
"$1.19 Cumulative Convertible Preferred Stock, Series A" ("Series A Company
Preferred Stock"); 348,015 shares of Company Preferred Stock have been
designated as "$1.83 Cumulative Convertible Preferred Stock, Series B"
("Series B Company Preferred Stock"); 100,000 shares of Company Preferred
Stock have been designated as "$5.00 Cumulative Convertible Preferred
Stock, Series C" ("Series C Company Preferred Stock"); 8,000,000 shares of
Company Preferred Stock have been designated as "$2.125 Cumulative
Preferred Stock, Series H"; and no other shares of Company Preferred Stock
are subject to any designation. At the close of business on January 14,
2000, (i) 213,309,958 shares of Company Common Stock were issued and
outstanding, (ii) 344,508 shares of Company Class A Common Stock were
issued and outstanding, (iii) 52,938 shares of Series A Company Preferred
Stock were issued and outstanding, (iv) 58,155 shares of Series B Company
Preferred Stock were issued and outstanding, (v) 26,680 shares of Series C
Company Preferred Stock were issued and outstanding, and (vi) no other
shares of capital stock of the Company were issued and outstanding. At the
close of business on January 14, 2000, 4,395,950 shares of Company Common
Stock, and no other shares of capital stock of the Company were held by the
Company in its treasury. No shares of capital stock of the Company are held
by any of the Company's Subsidiaries. All of the issued and outstanding
shares of Company Common Stock, Company Class A Common Stock and Company
Preferred Stock are validly issued, fully paid, nonassessable and free of
preemptive rights. At the close of business on January 12, 2000, Company
Options exercisable for 7,016,983 shares of Company Common Stock, in the
aggregate, and no shares of Company Class A Common Stock, in the aggregate,
were outstanding. As of the date of this Agreement, other than (i) the
option granted pursuant to the Company Stock Option Agreement, (ii) shares
of Company Class A Common Stock, each of which is convertible into one
share of Company Common Stock, (iii) shares of Series A Company Preferred
Stock, each of which is convertible into 7.325 shares of Company Common
Stock and .01 shares of Company Class A Common Stock, (iv) shares of Series
B Company Preferred Stock, each of which is convertible into 7.325 shares
of Company Common Stock and .01 shares of Company Class A Common Stock, (v)
shares of Series C Company Preferred Stock, each of which is convertible
into 14.421 shares of Company Common Stock and 0.197 shares of Company
Class A Common Stock, and (vi) 18,400,000 "FELINE PRIDES" of the Company
(consisting of 17,000,000 "Income PRIDES" and 1,400,000 "Growth PRIDES"),
in respect of which between 9,906,560 and 12,085,120 shares of Company
Common Stock, in the aggregate, are issuable (the "Feline Prides"), and
(vii) Company Options, the Company did not have outstanding any
subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) entitling any person to purchase or otherwise acquire from the
Company or any of its Subsidiaries at any time, or upon the happening of
any stated event, any shares of the capital stock of the Company (each of
the foregoing, a "Company Equity Equivalent Security"). From the close of
business on January 14, 2000, no shares of Company Common Stock or Company
Equity Equivalent Securities (other than the option granted pursuant to the
Stock Option Agreement) have been issued, sold or otherwise transferred by
the Company (except in connection with the exercise, conversion or exchange
of outstanding Company Equity Equivalent Securities).
(b) As of the date of this Agreement, there are no outstanding
obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or any Company Equity Equivalent Securities (except in
connection with the exercise, conversion or exchange of outstanding Company
Equity Equivalent Securities). As of the date of this Agreement, there are
no bonds, debentures, notes or other indebtedness issued and outstanding
having the right to vote together with the Company's stockholders on any
matter in respect of which the Company's stockholders are entitled to vote.
Section 3.4 Power and Authority; Authorization; Valid and Binding. The
Company has the necessary corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreements and to perform its
obligations hereunder and thereunder, as applicable, except that the
consummation of the Merger is subject to the adoption of this Agreement by
the Company's stockholders as set forth in Section 3.13(b). The execution
and delivery of this Agreement and the Stock Option Agreements by the
Company and the performance by it of its obligations hereunder and
thereunder, as applicable, have been duly authorized by all necessary
corporate action on the part of the Company, except that the consummation
of the Merger is subject to the adoption of this Agreement by the Company's
stockholders as set forth in Section 3.13(b). This Agreement and the Stock
Option Agreements have been duly executed and delivered by the Company, and
assuming the corporate authority of, and the due authorization, execution
and delivery by, Parent and Merger Sub, each of such agreements constitutes
a legal, valid and binding obligation of the Company enforceable against it
in accordance with the terms hereof and thereof, as applicable, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
Section 3.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery by the Company of this Agreement and the Stock
Option Agreements do not and will not, and the performance by Company of
its obligations hereunder and thereunder do not and will not, (i) violate
or conflict with the Restated Certificate of Incorporation or the Amended
and Restated By-laws of the Company, (ii) subject to obtaining or making
the notices, reports, filings, waivers, consents, approvals or
authorizations referred to in paragraph (b) below and to the adoption of
this Agreement by the stockholders of the Company as set forth in Section
3.13(b), conflict with or violate any law, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries or by which any
of their respective property is bound or affected, (iii) result in any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, impair the Company's or any
of its Subsidiaries' rights under or alter the rights or obligations of any
other party to, give to others any rights of termination, cancellation,
vesting, modification, alteration or acceleration of any obligation under,
result in the creation of a lien, claim or encumbrance on any of the
properties or assets of the Company or any of its Subsidiaries pursuant to,
require the consent of any other party to, or result in any obligation on
the part of the Company or any of its Subsidiaries to repurchase (with
respect to a debenture, bond or note), pursuant to any agreement, contract,
instrument, debenture, bond, note, indenture, permit, license or franchise
to which the Company or any of its Subsidiaries is a party or by which the
Company, any of its Subsidiaries or any of their respective property is
bound or affected, except, in the case of clauses (ii) and (iii) above, as
would not, in the aggregate, have, or reasonably be expected to have, a
Company Material Adverse Effect.
(b) Except for (i) applicable filings required under the
premerger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), (ii) required filings with and the approval of
the Federal Energy Regulatory Commission (the "FERC"), (iii) applicable
filings and approvals under federal, state, local or foreign regulatory
laws, and applicable requirements of foreign, state or local public utility
or similar commissions or agencies, all of which are set forth in the
Company Disclosure Letter, (iv) the filing of a certificate of merger with
respect to the Merger as required by the DGCL, (v) filings with the SEC
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder (the "Securities Act"), and the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (the "Exchange Act"),
(vi) applicable filings with the NYSE, and (vii) any filings required or
approvals necessary pursuant to any state securities or "blue sky" laws,
neither the Company nor any of its Subsidiaries is required to submit any
notice, report or other filing to any governmental or regulatory authority,
court, agency, commission or other governmental entity or any securities
exchange or other self-regulatory body, domestic or foreign ("Governmental
Entity"), and no waiver, consent, approval, order or authorization of any
Governmental Entity is required to be obtained by the Company or any of its
Subsidiaries, in connection with the execution, delivery or performance of
this Agreement except for such notices, reports, filings, waivers,
consents, approvals or authorizations that, if not made or obtained, would
not, in the aggregate, have, or reasonably be expected to have, a Company
Material Adverse Effect.
Section 3.6 SEC Reports; Financial Statements. (a) The Company has
filed all forms, reports, statements and other documents (including all
annexes, exhibits, schedules, amendments and supplements thereto) required
to be filed by it with the SEC since January 1, 1997, has delivered or made
available to Parent all forms, reports, statements, schedules and other
documents (except for preliminary materials) (including all annexes,
exhibits, schedules, amendments and supplements thereto) filed by it with
the SEC since January 1, 1997 (such forms, reports, statements, schedules
and documents filed by the Company with the SEC, including any such forms,
reports, statements and other documents filed by the Company with the SEC
after the date of this Agreement and prior to the Closing Date are referred
to herein, collectively, as the "Company SEC Reports") and with respect to
the Company SEC Reports filed by the Company after the date of this
Agreement and prior to the Closing Date, will deliver or make available to
Parent all of such Company SEC Reports in the form filed with the SEC. As
of their respective filing dates, the Company SEC Reports (including all
information incorporated therein by reference) (i) complied as to form in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(b) Each of the consolidated balance sheets of the Company and
its Subsidiaries (including all related notes) included in the financial
statements contained in the Company SEC Reports (or incorporated therein by
reference) present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of the respective
dates indicated, and each of the statements of consolidated operations,
statements of consolidated cash flows and statements of consolidated common
stock and other stockholders' equity of the Company and its subsidiaries
(including all related notes) contained in such financial statements
present fairly, in all material respects, the consolidated results of
operations and cash flows of the Company and its subsidiaries for the
respective periods indicated, in each case in conformity with GAAP applied
on a consistent basis throughout the periods involved (except for changes
in accounting principles disclosed in the notes thereto) and the rules and
regulations of the SEC, except that unaudited interim financial statements
are subject to normal and recurring year-end adjustments and any other
adjustments described therein and do not include certain notes and other
information which may be required by GAAP but which are not required under
the Exchange Act. The financial statements included in the Company SEC
Reports are in all material respects in accordance with the books and
records of the Company and its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty
is being made in this Section 3.6 with respect to information or statements
(including financial information and statements) that are provided by
Parent and set forth in any Company SEC Report filed after the date hereof
or with respect to any Parent SEC Reports (as defined in Section 4.6)
incorporated therein by reference.
Section 3.7 Absence of Certain Changes. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement and as
otherwise contemplated or permitted hereby, since September 30, 1999 (a)
the Company and its Subsidiaries have conducted their respective businesses
in all material respects in the ordinary course of such businesses and
there have not been any changes to the condition (financial or otherwise),
assets, liabilities, business or results of operations of the Company and
its Subsidiaries, or any other developments with respect to the Company or
any of its Subsidiaries, in each case whether or not in the ordinary course
of business, that, in the aggregate with all other changes and
developments, have had, or would reasonably be expected to have, a Company
Material Adverse Effect, and (b) there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) in respect of any shares of the capital stock or
other equity securities, or any securities convertible, exercisable or
exchangeable for or into shares of capital stock or other equity
securities, of the Company or any of its Subsidiaries, other than (v)
quarterly cash dividends of $.0625 per share in respect of the outstanding
shares of Company Common Stock, (w) quarterly cash dividends of $.05625 per
share in respect of the outstanding shares of Company Class A Common Stock,
(x) dividends and distributions in respect of the outstanding shares of
Company Preferred Stock, Feline Prides and Company Trust Securities in
accordance with their respective terms, (y) quarterly dividends in respect
of the outstanding shares of the Coastal Limited Preferred Stock in
accordance with the terms thereof, and (z) dividends and distributions by
Subsidiaries of the Company; (ii) any change by the Company to its
accounting policies, practices or methods; (iii) other than in connection
with the exercise, exchange or conversion of Company Equity Equivalent
Securities, any repurchase, redemption or other acquisition of any shares
of capital stock or other equity securities or any securities convertible,
exchangeable or exercisable for or into shares of capital stock or other
equity securities, of the Company or any of its Subsidiaries; (iv) except
as required by applicable law or pursuant to contractual obligations
existing as of September 30, 1999, (w) any execution, establishment,
adoption or amendment of, or acceleration of rights or benefits under, any
agreement relating to severance, any Company Employee Plan (as defined in
Section 3.10), any employment or consulting agreement or any collective
bargaining agreement, (x) any increase in the compensation payable or to
become payable to any officer, director or employee of the Company or any
of its Subsidiaries (except increases in the ordinary course of business),
(y) any grant of any severance or termination pay to any officer or
director of the Company, or (z) any grant of any stock options or other
equity related awards (other than in the ordinary course consistent with
past practice); or (v) any agreement or commitment entered into with
respect to the foregoing.
Section 3.8 Litigation; Liabilities. (a) Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, there are no
civil, criminal or administrative actions, suits, claims, proceedings or
investigations pending or, to the knowledge of the Company, threatened,
against the Company or any of its Subsidiaries or any of their respective
assets or properties, except as would not, in the aggregate, have, or
reasonably be expected to have, a Company Material Adverse Effect.
(b) Except as set forth in the Company SEC Reports filed prior to
the date of this Agreement, neither the Company nor any of its Subsidiaries
has or is subject to any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (a) adequately reflected on the unaudited
consolidated balance sheet of the Company and its Subsidiaries (including
any related notes thereto) as of September 30, 1999 included in the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999, or (b) which, in the aggregate, would not have, or reasonably be
expected to have, a Company Material Adverse Effect.
Section 3.9 Compliance; Permits. (a) Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which its or any
of their respective assets or properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, easement, right-of-way or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or its or any of their respective assets
or properties is bound or affected, except for such conflicts, defaults or
violations which, in the aggregate, would not have, or reasonably be
expected to have, a Company Material Adverse Effect.
(b) Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, the Company and its Subsidiaries hold all
permits, licenses, easements, rights-of-way, variances, exemptions,
consents, certificates, orders and approvals which are material to the
operation of the businesses of the Company and its Subsidiaries
(collectively, the "Company Permits"), except where the failure to hold
such Company Permits, in the aggregate, would not have, or reasonably be
expected to have, a Company Material Adverse Effect. The Company and its
Subsidiaries are in compliance with the terms of the Company Permits,
except as described in the Company SEC Reports filed prior to the date of
this Agreement or where the failure to so comply, in the aggregate, would
not have, or reasonably be expected to have, a Company Material Adverse
Effect.
Section 3.10 Employee Matters; ERISA. (a) The Company Disclosure
Letter lists all employee pension benefit plans (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder ("ERISA")), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA), all bonus,
stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other or similar material fringe or
employee benefit plans, programs or arrangements, all consulting agreements
with former officers and directors of the Company and all employment,
termination, change-in-control or severance agreements, in each case,
pursuant to which the Company or any of its Subsidiaries may have any
liability that is material to the Company and its Subsidiaries, taken as a
whole (together, the "Company Employee Plans"), excluding, however,
employee benefit plans that are primarily subject to the laws of any
jurisdiction outside of the United States.
(b) Except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, no material liability under Title IV of ERISA
has been or is reasonably expected to be incurred by the Company or any
Subsidiary of the Company or any entity which is considered a single
employer with the Company or any Subsidiary of the Company under Section
4001(a)(15) of ERISA or Section 414 of the Code (a "Company ERISA
Affiliate"), other than liabilities for premium payments to the Pension
Benefit Guaranty Corporation ("PBGC") and liabilities that have previously
been satisfied.
(c) Except as disclosed in the Company SEC Reports filed prior to
the date hereof, none of the Company Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person, other than
health continuation coverage as required by Section 4980B of the Code or
Part 6 of Title I of ERISA, and none of the Company Employee Plans is a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA.
Except as set forth in the Company SEC Reports filed prior to the date of
this Agreement and except, in the aggregate, as would not have, or
reasonably be expected to have, a Company Material Adverse Effect, (i) no
party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Company Employee Plan which could subject
the Company or any Company ERISA Affiliate, directly or indirectly, to any
tax, penalty or other liability for prohibited transactions under ERISA or
Section 4975 of the Code; (ii) no fiduciary of any Company Employee Plan
has breached any of the responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA; (iii) all Company Employee Plans have
been established and maintained substantially in accordance with their
terms and have operated in compliance with the requirements of applicable
law, and the Company and its Subsidiaries have performed all obligations
required to be performed by them under and are not in default under or in
violation of any of the Company Employee Plans; (iv) each Company Employee
Plan which is intended to be qualified under Section 401(a) of the Code is
so qualified, is the subject of a favorable determination letter from the
Internal Revenue Service ("IRS"), and, to the Company's knowledge, nothing
has occurred which may reasonably be expected to result in the revocation
of such determination; (v) all contributions required to be made with
respect to any Company Employee Plan pursuant to Section 412 of the Code
and Section 302 of ERISA, or pursuant to the terms of the Company Employee
Plan or any collective bargaining agreement, have been made on or before
their due dates (including any extensions thereof); (vi) with respect to
each Company Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the 30 day notice
requirement has been waived under the regulations to Section 4043 of ERISA)
has occurred for which there is any outstanding liability to the Company or
any Company ERISA Affiliate, nor would the execution, delivery or
consummation of the transactions contemplated hereby constitute a
reportable event for which the 30-day requirement has not been waived; and
(vii) no Company Employee Plan is under audit or investigation by the IRS,
the Department of Labor or the PBGC nor, to the knowledge of the Company,
is any such audit or investigation threatened.
(d) The Company Disclosure Letter sets forth a true and complete
list of each current or former employee, officer or director of the Company
or any of its Subsidiaries who holds (i) any Company Option as of the date
of this Agreement, together with the number of shares of Company Common
Stock subject to such option, the exercise price of such option, the vested
and unvested portion of such option, and the expiration date of such option
or (ii) any shares of Company Common Stock that are restricted and the
date(s) of lapse of such restrictions. In addition, the Company Disclosure
Letter sets forth, in the aggregate, (i) the number of shares of Company
Common Stock underlying all other outstanding rights under Company Employee
Plans (other than plans that are qualified plans under Section 401(a) of
the Code) to receive shares of Company Common Stock, to the extent that
such shares of Company Common Stock are not included in the number of
shares set forth in the third sentence of Section 3.3, and (ii)
compensation based on the value of shares of Company Common Stock.
(e) The PBGC has not notified the Company regarding the
institution of proceedings to terminate any Company Employee Plan that is
subject to Title IV of ERISA (each, a "Company Defined Benefit Plan"). The
Company Defined Benefit Plans have no accumulated or waived funding
deficiencies within the meaning of Section 412 of the Code nor have any
extensions of any amortization period within the meaning of Section 412 of
the Code or 302 of ERISA been applied for with respect thereto.
(f) To the knowledge of the Company, all employee benefit plans
of the Company and any of its Subsidiaries that are primarily subject to
the laws of any jurisdiction outside of the United States have been
maintained in compliance with all applicable law (including, if they are
intended to qualify for special tax treatment, applicable tax laws), except
for noncompliance that would not individually or in the aggregate have, or
reasonably be expected to have, a Company Material Adverse Effect.
(g) The execution and delivery of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) (i) constitute an
event under any Company Employee Plan, trust or loan that will or may
result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any current or
former employee of the Company or any Subsidiary of the Company, or (ii)
result in the triggering or imposition of any restrictions or limitations
on the right of the Company or any Subsidiary of the Company to amend or
terminate any Company Employee Plan.
Section 3.11 Labor Matters. Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement, (i) there are no
controversies pending or, to the knowledge of the Company, threatened
between the Company or any of its Subsidiaries and any of their respective
employees, which controversies, in the aggregate, have had, or would
reasonably be expected to have, a Company Material Adverse Effect; (ii)
neither the Company nor any of its Subsidiaries is in breach of any
material collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its Subsidiaries which, in
the aggregate, would have, or reasonably be expected to have, a Company
Material Adverse Effect, nor does the Company know of any activities or
proceedings of any labor union to organize any significant number of such
employees; and (iii) neither the Company nor any of its Subsidiaries is in
breach of any material collective bargaining agreement or other labor union
contract, nor does the Company have any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect
to any employees of the Company or any of its Subsidiaries except, in the
aggregate, as would not have, or reasonably be expected to have, a Company
Material Adverse Effect.
Section 3.12 Environmental Matters. Except as set forth in the Company
SEC Reports filed prior to the date of this Agreement and except for those
matters, in the aggregate, that would not have, or reasonably be expected
to have, a Company Material Adverse Effect:
(a) The Company and each of its Subsidiaries, and, to the
knowledge of the Company, their respective predecessors, if any, have been
at all times operated, and are, in full compliance in all material respects
with all applicable Environmental Laws, including all limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable
Environmental Laws.
(b) The Company and each of its Subsidiaries have obtained, are
in compliance with, and have made all appropriate filings for issuance or
renewal of, all material permits, licenses, authorizations, registrations
and other governmental consents required by, applicable Environmental Laws
("Environmental Permits"), including, without limitation, those regulating
emissions, discharges or releases of Hazardous Substances, or the use,
storage, treatment, transportation, release, emission and disposal of raw
materials, by-products, wastes and other substances used or produced by or
otherwise relating to the business of the Company or any of its
Subsidiaries.
(c) All of the Company's and its Subsidiaries' owned and, to the
knowledge of the Company, leased real property are free of any Hazardous
Substances (except those authorized pursuant to and in accordance with
Environmental Permits held by the Company and its Subsidiaries) and free of
all contamination arising from, relating to or resulting from any release,
discharge or emission of Hazardous Substances.
(d) There are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries that are based on or related to any
Environmental Matters or the failure to have any required Environmental
Permits.
(e) There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions
or plans: (1) that are reasonably likely to give rise to any liability or
other obligation under any Environmental Laws that is reasonably likely to
require the Company or any of its Subsidiaries to incur any actual or
potential Environmental Costs, or (2) that are reasonably likely to form
the basis of any claim, action, suit, proceeding, hearing, investigation or
inquiry against or involving the Company or any of its Subsidiaries based
on or related to any Environmental Matter or that could require the Company
or any of its Subsidiaries to incur any Environmental Costs.
(f) There are no underground or aboveground storage tanks,
incinerators or surface impoundments at, on, or about, under or within any
real property owned, operated or controlled in whole or in part by the
Company or any of its Subsidiaries.
(g) Neither the Company nor any of its Subsidiaries has received
any notice (written or oral) or other communication that any of them is or
may be a potentially responsible person or otherwise liable in connection
with any waste disposal site allegedly containing any Hazardous Substances,
or other location used for the disposal of any Hazardous Substances, or
notice of any failure of the Company or any of its Subsidiaries to comply
in any material respect with any Environmental Law or the requirements of
any Environmental Permit.
(h) Neither the Company nor any of its Subsidiaries has used any
waste disposal site, or otherwise disposed of, transported, or arranged for
the transportation of, any Hazardous Substances to any place or location,
or in violation of any Environmental Laws.
(i) Neither the Company nor any of its Subsidiaries has been in
violation of any Environmental Laws, nor has it been requested or required
by any Governmental Entity to perform any investigatory or remedial
activity or other action in connection with any actual or alleged release
of Hazardous Substances or any other Environmental Matter.
For the purposes of this Agreement, the following terms shall
have the meanings indicated:
"Environmental Costs" means, without limitation, any actual or
potential cleanup costs, remediation, removal or other response costs
(which without limitation shall include costs to cause the representing
party or its Subsidiaries to come into compliance with Environmental Laws),
investigation costs (including without limitation fees of consultants,
counsel and other experts in connection with any environmental
investigation, testing, audits or studies), losses, liabilities or
obligations (including without limitation, liabilities or obligations under
any lease or other contract), payments, damages (including without
limitation any actual, punitive or consequential damages under any
statutory laws, common law cause of action or contractual obligations or
otherwise, including without limitation damages (a) to third parties for
personal injury or property damage, or (b) to natural resources), civil or
criminal fines or penalties, judgments and amounts paid in settlement
arising out of or relating to or resulting from any Environmental Matter.
"Environmental Matter" means any matter arising out of, relating
to, or resulting from pollution, contamination, protection of the
environment, human health or safety, health or safety of employees,
sanitation, and any matters relating to emissions, discharges,
disseminations, releases or threatened releases, of Hazardous Substances
into the air (indoor and outdoor), surface water, groundwater, soil, land
surface or subsurface, buildings, facilities, real or personal property or
fixtures or otherwise arising out of, relating to, or resulting from the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, release or threatened release of Hazardous Substances.
"Hazardous Substances" means any pollutants, contaminants, toxic
or hazardous or extremely hazardous substances, materials, wastes,
constituents, compounds, chemicals, natural or man-made elements or forces
(including, without limitation, petroleum or any by-products or fractions
thereof, any form of natural gas, Xxxxxx Amendment materials, lead,
asbestos and asbestos-containing materials), building construction
materials and debris, polychlorinated biphenyls ("PCBs") and PCB-containing
equipment, radon and other radioactive elements, ionizing radiation,
electromagnetic field radiation and other non-ionizing radiation, sonic
forces and other natural forces, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables,
corrosives and urea formaldehyde foam insulation that are regulated by, or
may now or in the future form the basis of liability under, any
Environmental Laws.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. xx.xx.
9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. xx.xx. 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. xx.xx. 6901 et seq., the Toxic Substances Control
Act, 15 U.S.C. xx.xx. 2601 et seq., the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. xx.xx. 136 et seq., the Clean Air Act, 42 U.S.C.
xx.xx. 7401 et. seq., the Clean Water Act (Federal Water Pollution Control
Act), 33 U.S.C. xx.xx. 1251 et seq., the Safe Drinking Water Act, 42 U.S.C.
xx.xx. 300f et seq., the Occupational Safety and Health Act, 29 U.S.C.
xx.xx. 641, et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
xx.xx. 1801, et seq., as any of the above statutes have been or may be
amended from time to time, all rules and regulations promulgated pursuant
to any of the above statutes, and any other foreign, federal, state or
local law, statute, ordinance, rule or regulation governing Environmental
Matters, as the same have been or may be amended from time to time,
including any common law cause of action providing any right or remedy
relating to Environmental Matters, all indemnity agreements and other
contractual obligations (including leases, asset purchase and merger
agreements) relating to environmental matters, and all applicable judicial
and administrative decisions, orders, and decrees relating to Environmental
Matters.
Section 3.13 Board Action; Vote Required. (a) The Company's Board of
Directors has unanimously approved (including, with respect to Parent,
Merger Sub and their respective affiliates and associates, for purposes of
rendering inapplicable Section 203 of the DGCL to) this Agreement, the
Stock Option Agreements and the transactions contemplated hereby and
thereby, has determined that the transactions contemplated hereby and
thereby are fair to and in the best interests of Company and its
stockholders and has resolved to recommend to stockholders that they vote
in favor of approving and adopting this Agreement and the Merger. No "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute applicable to the Company will prevent or otherwise
delay the consummation of transactions contemplated hereby.
(b) In accordance with the DGCL, the affirmative vote of the
holders of a majority of the voting power of all outstanding shares of
Company Common Stock, Company Class A Common Stock, Series A Company
Preferred Stock, Series B Company Preferred Stock and Series C Company
Preferred Stock, voting together as a single class (with each share of
Company Common Stock and each share of each such series of Company
Preferred Stock entitling the holder thereof to one vote and each share of
Company Class A Common Stock entitling the holder thereof to 100 votes) is
necessary to approve and adopt this Agreement and the Merger. Such vote is
the only vote or approval of holders of shares of any class or series of
the Company's capital stock required in connection with this Agreement, the
Stock Option Agreements and the transactions contemplated hereby and
thereby.
Section 3.14 Opinion of Financial Advisor. The Board of Directors of
the Company has received the written opinion of Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), dated as of the date of this
Agreement, to the effect that, subject to the qualifications and
limitations contained therein, as of the date of this Agreement, the
Exchange Ratios are fair from a financial point of view to the holders of
shares of Company Converted Stock (other than Parent and its affiliates).
Section 3.15 Brokers. Xxxxxxx Xxxxx is the only broker, finder,
investment banker or other person entitled to any brokerage, finder's,
investment banking or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its Subsidiaries. The Company
has previously provided to Parent a copy of the letter agreement, dated
January 3, 2000, between Xxxxxxx Xxxxx and the Company giving rise to a fee
to Xxxxxxx Xxxxx.
Section 3.16 Tax Matters. (a) Except as would not, in the aggregate,
have, or reasonably be expected to have, a Company Material Adverse Effect,
the Company and its Subsidiaries (i) have timely filed all federal, state
and foreign Tax returns required to be filed by any of them for Tax years
ended prior to the date of this Agreement or requests for extensions have
been timely filed and any such request has been granted and has not
expired, and all such returns are correct and complete and (ii) have paid
or accrued in accordance with GAAP all Taxes shown to be due and payable on
such returns.
(b) Except as would not, in the aggregate, have, or reasonably be
expected to have, a Company Material Adverse Effect, there is no dispute or
claim concerning any Tax liability of any of the Company and its
Subsidiaries claimed or raised by any authority in writing.
(c) No written claims that, in the aggregate, could reasonably be
expected to have a Company Material Adverse Effect have been made by an
authority in a jurisdiction where any of the Company and its Subsidiaries
does not file Tax returns that it is or may be subject to Taxation by that
jurisdiction.
(d) Except as would not, in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect, none of the Company and
its Subsidiaries has waived any statute of limitations in respect of income
Taxes or agreed to any extension of time with respect to an income Tax
assessment or deficiency.
(e) Neither the Company nor any of its Subsidiaries has taken or
agreed to take any action, nor does the Company have any knowledge of any
fact, agreement, plan or other circumstance with respect to the Company or
its Subsidiaries, which would reasonably be expected to prevent the Merger
from qualifying as a "reorganization" within the meaning of Section 368 of
the Code.
Section 3.17 Public Utility Holding Company Act of 1935. The Company
is not a "holding company," a "subsidiary company" of a "holding company,"
an "affiliate of a holding company," or a "public utility company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as
amended, and rules and regulations thereunder (the "Holding Company Act").
Section 3.18 Restrictions on Business Activities. Except for this
Agreement or as set forth in the Company SEC Reports filed prior to the
date of this Agreement, there is no judgment, injunction, order or decree
or material agreement (including, without limitation, agreements containing
provisions restricting the Company or any of its Subsidiaries from entering
or engaging in any line of business, agreements containing geographic
restrictions on the Company's or any of its Subsidiaries' ability to
operate their respective businesses and agreements containing rights of
first refusal, rights of first offer, exclusivity, "requirements" or
similar provisions) binding upon the Company or any of its Subsidiaries
which has or would reasonably be expected to have the effect of materially
prohibiting or impairing the conduct of the businesses of the Company or
any of its Subsidiaries or, to the Company's knowledge, after the Effective
Time, Parent or any of its Subsidiaries, taken together.
Section 3.19 Year 2000. Except as set forth in the Company SEC Reports
filed prior to the date of this Agreement, the systems operated or used by
the Company or any of its Subsidiaries have been providing, and are capable
of continuing to provide, uninterrupted millennium functionality on and
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 and before December
31, 1999, except, in the aggregate, as would not have, or reasonably be
expected to have, a Company Material Adverse Effect.
Section 3.20 Accounting Matters. Neither the Company nor any of its
Subsidiaries has taken or agreed to take action, nor does the Company have
any knowledge of any fact or circumstance with respect to the Company or
its Subsidiaries, which would prevent the Merger from being accounted for
as a pooling-of-interests under GAAP or the rules and regulations of the
SEC. D&T has advised the Company that it is not aware as of the date of
this Agreement of any reason why D&T would be unable to deliver at the
Closing the letter referred to in the second sentence of Section 6.13(b).
ARTICLE IV
Except as set forth in the corresponding sections or subsections
of the disclosure letter, dated the date of this Agreement, delivered by
Parent to the Company (the "Parent Disclosure Letter"), Parent hereby
represents and warrants to the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. (a) Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Each of the
Subsidiaries of Parent is a corporation or other business entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, and each of Parent and its
Subsidiaries has the requisite corporate or similar organizational power
and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the
nature of its activities makes such qualification necessary, except as
would not, in the aggregate, have, or reasonably be expected to have, a
Parent Material Adverse Effect (as defined in Section 9.4). Since the date
of its incorporation, Merger Sub has not engaged in any activities other
than in connection with or as contemplated by this Agreement.
(b) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.6) filed prior to the date hereof, and except as would not, in
the aggregate, have, or reasonably be expected to have, a Parent Material
Adverse Effect, (i) other than preference and common units representing
limited partner interests in El Paso Energy Partners, L.P. (formerly known
as Leviathan Gas Pipeline, L.P.) ("Leviathan") held by the public and
6,000,000 outstanding shares of 8 1/4% Cumulative Preferred Stock, Series
A, par value $50 per share, of El Paso Tennessee Pipeline Co. (the "EPTPC
Preferred Stock"), all of the outstanding shares of capital stock and other
equity securities of the Subsidiaries of Parent are owned, directly or
indirectly, by Parent free and clear of all liens, pledges, security
interests, or other encumbrances, (ii) all of the outstanding shares of
capital stock or other equity securities of the Subsidiaries of Parent have
been validly issued and are fully paid and nonassessable, (iii) other than
options and other rights to purchase preference or common units
representing limited partner interests in Leviathan awarded to employees,
officers, directors, advisors and consultants of Leviathan ("Leviathan
Employee Options"), there are no subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any character
(contingent or otherwise) entitling any person to purchase or otherwise
acquire from Parent or any of its Subsidiaries at any time, or upon the
happening of any stated event, any shares of capital stock or other equity
securities of any of the Subsidiaries of Parent and there are no
outstanding obligations, contingent or otherwise, of Parent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock or other equity securities, or any securities convertible,
exchangeable or exercisable for or into shares of capital stock or other
equity securities, of any Subsidiary of Parent. There are no outstanding
obligations, contingent or otherwise, of Parent or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock or
other equity securities, or any securities convertible, exchangeable or
exercisable for or into, shares of capital stock or other equity securities
of any Subsidiary of Parent (except in connection with the exercise of
Leviathan Employee Options).
Section 4.2 Restated Certificate of Incorporation and By-laws of
Parent and Merger Sub. Parent has furnished or otherwise made available to
the Company a complete and correct copy of Parent's Restated Certificate of
Incorporation and By-laws and Merger Sub's Certificate of Incorporation and
By-laws, in each case as amended to the date of this Agreement. The
Restated Certificate of Incorporation and By-laws of Parent and all similar
organizational documents of Subsidiaries of Parent are in full force and
effect. Parent is not in violation of its Restated Certificate of
Incorporation or By-laws and Merger Sub is not in violation of its
Certificate of Incorporation or By-laws and, except as would not, in the
aggregate, have, or reasonably be expected to have, a Parent Material
Adverse Effect, none of the Subsidiaries of Parent (other than Merger Sub)
is in violation of any similar organizational documents of Subsidiaries of
Parent.
Section 4.3 Capitalization. (a) The authorized capital stock of Parent
consists of 750,000,000 shares of Parent Common Stock and 50,000,000 shares
of serial Preferred Stock, par value $.01 per share (the "Parent Preferred
Stock"). The 7,500,000 shares of the Parent Preferred Stock have been
designated as "Series A Junior Participating Preferred Stock" and, other
than as contemplated or permitted hereby, no other shares of Parent
Preferred Stock are subject to any designation. At the close of business on
December 31, 1999, 235,440,039 shares of Parent Common Stock (including
5,845,269 shares held in Parent's Benefit Protection Trust), and no shares
of Parent Preferred Stock, were issued and outstanding. At the close of
business on January 12, 2000, 3,102,296 shares of Parent Common Stock and
no shares of Parent Preferred Stock were held by Parent in its treasury. No
shares of capital stock of Parent are held by any of Parent's Subsidiaries.
All of the issued and outstanding shares of Parent Common Stock are validly
issued, fully paid, nonassessable and free of preemptive rights. At the
close of business on December 31, 1999, 22,581,204 options to purchase
shares of Parent Common Stock ("Parent Options"), exercisable for
22,581,204 shares of Parent Common Stock, in the aggregate, were
outstanding. As of the date of this Agreement, other than (i) the option
granted pursuant to the Parent Stock Option Agreement, (ii) preferred stock
purchase rights (none of which are exercisable) issued pursuant to the
Amended and Restated Shareholder Rights Agreement (the "Parent Rights
Agreement"), effective January 20, 1999, between the Parent and BankBoston,
N.A., as rights agent, (iii) 6,500,000 4-3/4% Trust Convertible Preferred
Securities of El Paso Energy Capital Trust I (the "Parent Trust
Securities") (and the underlying 4-3/4% Subordinated Convertible Debentures
due 2028 of Parent in the aggregate principal amount of $325 million)
convertible into 8,048,730 shares of Parent Common Stock, in the aggregate,
and (iv) Parent Options, Parent does not have outstanding any
subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) entitling any person to purchase or otherwise acquire from
Parent or any of its Subsidiaries at any time, or upon the happening of any
stated event, any shares of the capital stock of Parent (each of the
foregoing, a "Parent Equity Equivalent Security"). From the close of
business on December 31, 1999 through the date of this Agreement, no shares
of Parent Common Stock, and from the close of business on January 12, 2000
through the date of this Agreement, no Parent Equity Equivalent Securities,
have been issued, sold or otherwise transferred by Parent (except in
connection with the exercise, conversion or exchange of outstanding Parent
Equity Equivalent Securities).
(b) As of the date of this Agreement, there are no outstanding
obligations, contingent or otherwise, of Parent or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Parent Common
Stock or any Parent Equity Equivalent Securities (except in connection with
the exercise, conversion or exchange of outstanding Parent Equity
Equivalent Securities). As of the date of this Agreement, there are no
bonds, debentures, notes or other indebtedness issued and outstanding
having the right to vote together with Parent's stockholders on any matter
in respect of which the Parent's stockholders are entitled to vote.
Section 4.4 Power and Authority; Authorization; Valid and Binding.
Each of Parent and Merger Sub has the necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option
Agreements, as applicable, and to perform its obligations hereunder and
thereunder, as applicable, except that the issuance of the shares of Parent
Common Stock pursuant to the Merger (the "Parent Stock Issuance") is
subject to the approval of the stockholders of Parent as set forth in
Section 4.13(c). The execution and delivery of this Agreement by Parent and
Merger Sub and of the Stock Option Agreements by Parent, and the
performance by each of its respective obligations hereunder and thereunder,
as applicable, have been duly authorized by all necessary corporate action
on the part of Parent and Merger Sub, except that the Parent Stock Issuance
is subject to the approval of the stockholders of Parent as set forth in
Section 4.13(c). This Agreement has been duly executed and delivered by
Parent and Merger Sub, and the Stock Option Agreements have been duly
executed and delivered by Parent, and assuming the corporate authority of,
and the due authorization, execution and delivery by, the Company, each of
such agreements constitutes a legal, valid and binding obligation of Parent
and Merger Sub, as applicable, enforceable against Parent and Merger Sub,
as applicable, in accordance with the terms hereof or thereof, as
applicable, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 4.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery by Parent and Merger Sub of this Agreement, and the
execution and delivery by Parent of the Stock Option Agreements, do not and
will not, and the performance by Parent and Merger Sub of its obligations
hereunder and thereunder, as applicable, do not and will not, (i) violate
or conflict with the Restated Certificate of Incorporation or By-laws of
Parent or the Certificate of Incorporation or By-laws of Merger Sub, (ii)
subject to obtaining or making the notices, reports, filings, waivers,
consents, approvals or authorizations referred to in paragraph (b) below
and to the approval by Parent's stockholders of the Parent Stock Issuance
as set forth in Section 4.13(c), conflict with or violate any law,
regulation, order, judgment or decree applicable to Parent or any of its
Subsidiaries or by which any of their respective property is bound or
affected, (iii) subject to the approval by Parent's stockholders of the
Parent Stock Issuance as set forth in Section 4.13(c), result in any breach
of or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, impair Parent's or any of its
Subsidiaries' rights under or alter the rights or obligations of any other
party to, give to others any rights of termination, cancellation, vesting,
modification, alteration or acceleration of any obligation under, result in
the creation of a lien, claim or encumbrance on any of the properties or
assets of Parent or any of its Subsidiaries pursuant to, require the
consent of any other party to, or result in any obligation on the part of
Parent or any of its Subsidiaries to repurchase (with respect to a
debenture, bond or note), pursuant to any agreement, contract, instrument,
debenture, bond, note, indenture, permit, license or franchise to which
Parent or any of its Subsidiaries is a party or by which Parent, any of its
Subsidiaries or any of their respective property is bound or affected,
except, in the case of clauses (ii) and (iii) above, as would not, in the
aggregate, have, or reasonably be expected to have, a Parent Material
Adverse Effect.
(b) Except for (i) applicable filings required under the
premerger notification requirements of the HSR Act, (ii) required filings
with and approvals of the FERC, (iii) applicable filings and approvals
under federal, state, local or foreign regulatory laws, and applicable
requirements of foreign, state or local public utility or similar
commissions or agencies, all of which are set forth in the Parent
Disclosure Letter, (iv) the filing of a certificate of merger with respect
to the Merger as required by the DGCL, (v) filings with the SEC under the
Securities Act and the Exchange Act, (vi) applicable filings with the NYSE,
and (vii) any filings required or approvals necessary pursuant to any state
securities or "blue sky" laws, neither Parent nor any of its Subsidiaries
is required to submit any notice, report or other filing to any
Governmental Entity, and no waiver, consent, approval, order or
authorization of any Governmental Entity is required to be obtained by
Parent or any of its Subsidiaries, in connection with the execution,
delivery or performance of this Agreement except for such notices, reports,
filings, waivers, consents, approvals or authorizations that, if not made
or obtained, would not, in the aggregate, have, or reasonably be expected
to have, a Parent Material Adverse Effect.
Section 4.6 SEC Reports; Financial Statements. (a) Parent (with
respect to the period prior to August 1, 1998, for purposes of this Section
4.6, all references to the "Parent" shall be deemed to refer to El Paso
Natural Gas Company) has filed all forms, reports, statements, schedules
and other documents (including all annexes, exhibits, schedules, amendments
and supplements thereto) required to be filed by it with the SEC since
January 1, 1997, has delivered or made available to the Company all forms,
reports, statements, schedules and other documents (except for preliminary
materials) (including all annexes, exhibits, schedules, amendments and
supplements thereto) filed by it with the SEC since January 1, 1997 (such
forms, reports, statements, schedules and documents filed by Parent with
the SEC, including any such forms, reports, statements, schedules and other
documents filed by Parent with the SEC after the date of this Agreement and
prior to the Closing Date, are referred to herein, collectively, as the
"Parent SEC Reports") and with respect to the Parent SEC Reports filed by
Parent after the date of this Agreement and prior to the Closing Date, will
deliver or make available to the Company all of such Parent SEC Reports in
the form filed with the SEC. As of their respective filing dates, the
Parent SEC Reports (including all information incorporated therein by
reference) (i) complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and
(ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated balance sheets of Parent and its
Subsidiaries (including all related notes) included in the financial
statements contained in the Parent SEC Reports (or incorporated therein by
reference) present fairly, in all material respects, the consolidated
financial position of Parent as of the respective dates indicated, and each
of the consolidated statements of income, consolidated statements of cash
flows and consolidated statements of changes in stockholders' equity of
Parent (including all related notes) contained in such financial statements
present fairly, in all material respects, the consolidated results of
operations and cash flows of Parent and its Subsidiaries for the respective
periods indicated, in each case in conformity with GAAP applied on a
consistent basis throughout the periods involved (except for changes in
accounting principles disclosed in the notes thereto) and the rules and
regulations of the SEC, except that unaudited interim financial statements
are subject to normal and recurring year-end adjustments and any other
adjustments described therein and do not include certain notes and other
information which may be required by GAAP but which are not required under
the Exchange Act. The financial statements included in the Parent SEC
Reports are in all material respects in accordance with the books and
records of Parent and its Subsidiaries.
(c) Notwithstanding the foregoing, no representation or warranty
is being made in this Section 4.6 with respect to information or statements
(including financial information and statements) that are provided by the
Company and set forth in any Parent SEC Report filed after the date hereof
or with respect to any Company SEC Reports incorporated therein by
reference.
Section 4.7 Absence of Certain Changes. Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement and as
otherwise contemplated or permitted hereby, since September 30, 1999, (a)
Parent and its Subsidiaries have conducted their respective businesses in
all material respects in the ordinary course of such businesses and there
have not been any changes to the condition (financial or otherwise),
assets, liabilities, business or results of operations of Parent and its
Subsidiaries, or any other developments with respect to Parent or any of
its Subsidiaries, in each case whether or not in the ordinary course of
business, that, in the aggregate with all other changes and developments,
have had, or would reasonably be expected to have, a Parent Material
Adverse Effect, and (b) there has not been (i) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) in respect of any shares of the capital stock or other
equity securities, or any securities convertible, exercisable or
exchangeable for or into shares of capital stock or other equity
securities, of Parent or any of its Subsidiaries, other than (v) regular
quarterly cash dividends of $.206 per share in respect of the outstanding
shares of Parent Common Stock, (w) dividends and distributions in respect
of the Parent Trust Securities in accordance with the terms thereof, (x)
regular distributions in respect of the outstanding preference and common
units representing partner interests in Leviathan, (y) regular quarterly
dividends in respect of the outstanding EPTPC Preferred Stock in accordance
with the terms thereof and (z) dividends and distributions by Subsidiaries
of Parent; (ii) any change by Parent to its accounting policies, practices
or methods; (iii) other than in connection with the exercise, exchange or
conversion of Parent Equity Equivalent Securities and Leviathan Employee
Options, any repurchase, redemption or other acquisition of any shares of
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable for or into shares of capital stock or other
equity securities, of Parent or any of its Subsidiaries; or (iv) except as
required by applicable law or pursuant to contractual obligations existing
as of September 30, 1999, (w) any execution, establishment, adoption or
amendment of, or acceleration of rights or benefits under, any agreement
relating to severance, any Parent Employee Plan, any employment or
consulting agreement or any collective bargaining agreement, (x) any
increase in the compensation payable or to become payable to any officer,
director or employee of Parent or any of its Subsidiaries (except increases
in the ordinary course of business), (y) any grant of any severance or
termination pay to any officer or director of Parent, or (z) any grant of
any stock options or other equity related awards other than in the ordinary
course consistent with past practice; or (v) any agreement or commitment
entered into with respect to the foregoing.
Section 4.8 Litigation; Liabilities. (a) Except as disclosed in
the Parent SEC Reports filed prior to the date of this Agreement, there are
no civil, criminal or administrative actions, suits, claims, proceedings,
or investigations pending or, to the knowledge of Parent, threatened,
against Parent or any of its Subsidiaries or any of their respective assets
or properties, except as would not, in the aggregate, have, or reasonably
be expected to have, a Parent Material Adverse Effect.
(b) Except as set forth in the Parent SEC Reports filed prior to
the date of this Agreement, neither Parent nor any of its Subsidiaries has
or is subject to any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (a) adequately reflected on the unaudited
consolidated balance sheet of Parent and its Subsidiaries (including any
related notes thereto) as of September 30, 1999 included in Parent's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, or
(b) which, in the aggregate, would not have, or reasonably be expected to
have, a Parent Material Adverse Effect.
Section 4.9 Compliance; Permits. (a) Except as disclosed in the
Parent SEC Reports filed prior to the date of this Agreement, neither
Parent nor any of its Subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its Subsidiaries or by which its or any of
their respective assets or properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise, easement, right-of-way or other instrument or obligation
to which Parent or any of its Subsidiaries is a party or by which Parent or
any of its Subsidiaries or its or any of their respective assets or
properties is bound or affected, except for such conflicts, defaults or
violations which, in the aggregate, would not have, or reasonably be
expected to have, a Parent Material Adverse Effect.
(b) Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, Parent and its Subsidiaries hold all permits,
licenses, easements, rights-of-way, variances, exemptions, consents,
certificates, orders and approvals which are material to the operation of
the businesses of Parent and its Subsidiaries (collectively, the "Parent
Permits"), except where the failure to hold such Parent Permits, in the
aggregate, would not have, or reasonably be expected to have, a Parent
Material Adverse Effect. Parent and its Subsidiaries are in compliance with
the terms of the Parent Permits, except as described in the Parent SEC
Reports filed prior to the date hereof or where the failure to so comply,
in the aggregate, would not have, or reasonably be expected to have, a
Parent Material Adverse Effect.
Section 4.10 Employee Matters; ERISA. (a) The Parent Disclosure Letter
lists all employee pension benefit plans (as defined in Section 3(2) of
ERISA), all employee welfare benefit plans (as defined in Section 3(1) of
ERISA), all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other or similar
material fringe or employee benefit plans, programs or arrangements, all
consulting agreements with former officers and directors of Parent and all
employment, termination, change-in-control or severance agreements, in each
case, pursuant to which Parent or any of its Subsidiaries may have any
liability material to Parent and its Subsidiaries, taken as a whole
(together, the "Parent Employee Plans"), excluding, however, employee
benefit plans that are primarily subject to the laws of any jurisdiction
outside the United States.
(b) Except as disclosed in the Parent SEC Reports filed prior to
the date hereof, no material liability under Title IV of ERISA has been or
is reasonably expected to be incurred by the Parent or any Subsidiary of
the Parent or any entity which is considered a single employer with the
Parent or any Subsidiary of the Parent under Section 4001(a)(15) of ERISA
or Section 414 of the Code (a "Parent ERISA Affiliate"), other than
liabilities for premium payments to the PBGC and liabilities that have
previously been satisfied.
(c) Except as disclosed in the Parent SEC Reports filed prior to
the date of this Agreement, none of the Parent Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person,
other than health continuation coverage as required by Section 4980B of the
Code or Part 6 of Title I of ERISA, and none of the Parent Employee Plans
is a "multiemployer plan" as such term is defined in Section 3(37) of
ERISA. Except as set forth in the Parent SEC Reports filed prior to the
date of this Agreement and except, in the aggregate, as would not have, or
reasonably be expected to have, a Parent Material Adverse Effect, (i) no
party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Parent Employee Plan which could subject
Parent or any Parent ERISA Affiliate, directly or indirectly, to any tax,
penalty or other liability for prohibited transactions under ERISA or
Section 4975 of the Code; (ii) no fiduciary of any Parent Employee Plan has
breached any of the responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA; (iii) all Parent Employee Plans have
been established and maintained substantially in accordance with their
terms and have operated in compliance with the requirements of applicable
law, and Parent and its Subsidiaries have performed all obligations
required to be performed by them under and are not in default under or in
violation of any of Parent Employee Plans; (iv) each Parent Employee Plan
which is intended to be qualified under Section 401(a) of the Code is so
qualified, is the subject of a favorable determination letter from the IRS,
and, to Parent's knowledge, nothing has occurred which may reasonably be
expected to result in the revocation of such determination; (v) all
contributions required to be made with respect to any Parent Employee Plan
pursuant to Section 412 of the Code and Section 302 of ERISA, or pursuant
to the terms of Parent Employee Plan or any collective bargaining
agreement, have been made on or before their due dates (including any
extensions thereof); (vi) with respect to each Parent Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding
any such event for which the 30 day notice requirement has been waived
under the regulations to Section 4043 of ERISA) has occurred for which
there is any outstanding liability to Parent or any Parent ERISA Affiliate,
nor would the execution, delivery or consummation of the transactions
contemplated hereby constitute a reportable event for which the 30-day
requirement has not been waived; and (vii) no Parent Employee Plan is under
audit or investigation by the IRS, the Department of Labor or the PBGC nor,
to the knowledge of Parent, is any such audit or investigation threatened.
(d) The Parent Disclosure Letter sets forth a true and complete
list of each current or former officer or director of Parent or any of its
Subsidiaries who holds (i) any Parent Option as of the date of this
Agreement, together with the number of shares of Parent Common Stock
subject to such option, the exercise price of such option, the vested and
unvested portion of such option, and the expiration date of such option; or
(ii) any shares of Parent Common Stock that are restricted and the date(s)
of lapse of such restrictions. In addition, the Parent Disclosure Letter
sets forth, in the aggregate, (i) the number of shares of Parent Common
Stock underlying all other outstanding rights under Parent Employee Plans
(other than plans that are qualified plans under Section 401(a) of the
Code) to receive shares of Parent Common Stock, to the extent that such
shares of Parent Common Stock are not included in the number of shares set
forth in the third sentence of Section 4.3, and (ii) compensation based on
the value of shares of Parent Common Stock.
(e) The PBGC has not notified Parent regarding the institution of
proceedings to terminate any Parent Employee Plan that is subject to Title
IV of ERISA (each, a "Parent Defined Benefit Plan"). The Parent Defined
Benefit Plans have no accumulated or waived funding deficiencies within the
meaning of Section 412 of the Code nor have any extensions of any
amortization period within the meaning of Section 412 of the Code or 302 of
ERISA been applied for with respect thereto.
(f) To the knowledge of Parent, all employee benefit plans of
Parent and any of its Subsidiaries that are primarily subject to the laws
of any jurisdiction outside of the United States have been maintained in
compliance with all applicable law (including, if they are intended to
qualify for special tax treatment, applicable tax laws), except for
noncompliance that would not individually or in the aggregate have, or
reasonably be expected to have, a Parent Material Adverse Effect.
(g) The execution and delivery of, and performance of the
transactions contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) (i) constitute an
event under any Parent Employee Plan, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any current or former employee
of Parent or any Subsidiary of Parent, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Parent or
any Subsidiary of Parent to amend or terminate any Parent Employee Plan.
Section 4.11 Labor Matters. Except as set forth in the Parent SEC
Reports filed prior to the date of this Agreement, (i) there are no
controversies pending or, to the knowledge of Parent, threatened, between
Parent or any of its Subsidiaries and any of their respective employees,
which controversies, in the aggregate, have had, or would reasonably be
expected to have, a Parent Material Adverse Effect; (ii) neither Parent nor
any of its Subsidiaries is in breach of any material collective bargaining
agreement or other labor union contract applicable to persons employed by
Parent or its Subsidiaries which, in the aggregate, would have, or
reasonably be expected to have, a Parent Material Adverse Effect, nor does
Parent know of any activities or proceedings of any labor union to organize
any significant number of such employees; and (iii) neither Parent nor any
of its Subsidiaries is in breach of any material collective bargaining
agreement or other labor union contract, nor does Parent have any knowledge
of any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by
or with respect to any employees of Parent or any of its Subsidiaries
except, in the aggregate, as would not have, or reasonably be expected to
have, a Parent Material Adverse Effect.
Section 4.12 Environmental Matters. Except as set forth in the Parent
SEC Reports filed prior to the date of this Agreement and except for those
matters, in the aggregate, that would not have, or reasonably be expected
to have, a Parent Material Adverse Effect:
(a) Parent and each of its Subsidiaries, and, to the knowledge of
Parent, their respective predecessors, if any, have been at all times
operated, and are, in full compliance in all material respects with all
applicable Environmental Laws, including all limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables contained in all applicable Environmental Laws.
(b) Parent and each of its Subsidiaries have obtained, are in
compliance with, and have made all appropriate filings for issuance or
renewal of, all material Environmental Permits, including, without
limitation, those regulating emissions, discharges, or releases of
Hazardous Substances, or the use, storage, treatment, transportation,
release, emission and disposal of raw materials, by-products, wastes and
other substances used or produced by or otherwise relating to the business
of Parent or any of its Subsidiaries.
(c) All of Parent's and its Subsidiaries' owned and, to the
knowledge of Parent, leased real property are free of any Hazardous
Substances (except those authorized pursuant to and in accordance with
Environmental Permits held by Parent and its Subsidiaries) and free of all
contamination arising from, relating to, or resulting from any release,
discharge or emission of Hazardous Substances.
(d) There are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the knowledge of Parent, threatened against
Parent or any of its Subsidiaries that are based on or related to any
Environmental Matters or the failure to have any required Environmental
Permits.
(e) There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions
or plans: (1) that are reasonably likely to give rise to any liability or
other obligation under any Environmental Laws that may require Parent or
any of its Subsidiaries to incur any actual or potential Environmental
Costs, or (2) that are reasonably likely to form the basis of any claim,
action, suit, proceeding, hearing, investigation or inquiry against or
involving Parent or any of its Subsidiaries based on or related to any
Environmental Matter or that could require Parent or any of its
Subsidiaries to incur any Environmental Costs.
(f) There are no underground or aboveground storage tanks,
incinerators or surface impoundments at, on, or about, under or within any
real property owned, operated or controlled in whole or in part by Parent
or any of its Subsidiaries.
(g) Neither Parent nor any of its Subsidiaries has received any
notice (written or oral) or other communication that any of them is or may
be a potentially responsible person or otherwise liable in connection with
any waste disposal site allegedly containing any Hazardous Substances, or
other location used for the disposal of any Hazardous Substances, or notice
of any failure of Parent or any of its Subsidiaries to comply in any
material respect with any Environmental Law or the requirements of any
Environmental Permit.
(h) Neither Parent nor any of its Subsidiaries has used any waste
disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Substances to any place or location, or in
violation of any Environmental Laws.
(i) Neither Parent nor any of its Subsidiaries has been in
violation of any Environmental Laws, nor has it been requested or required
by any Governmental Entity to perform any investigatory or remedial
activity or other action in connection with any actual or alleged release
of Hazardous Substances or any other Environmental Matter.
Section 4.13 Board Action; Vote Required. (a) Parent's Board of
Directors has unanimously approved (including, with respect to the Company
and its affiliates and associates, for purposes of rendering inapplicable
Section 203 of the DGCL and Article 12 of Parent's Restated Certificate of
Incorporation to) this Agreement and the Stock Option Agreements, and the
transactions contemplated hereby and thereby, has determined that the
transactions contemplated hereby and the Parent Stock Issuance are fair to
and in the best interests of Parent and its stockholders and has resolved
to recommend to its stockholders that they vote in favor of the Parent
Stock Issuance. No "fair price," "moratorium," "control share acquisition"
or other similar anti-takeover statute applicable to Parent will prevent or
otherwise delay the consummation of the transaction as contemplated hereby.
(b) The Board of Directors of Parent has taken all necessary
actions such that, (i) none of the Company or any of its "Affiliates" shall
become an "Acquiring Person" (each as defined in the Parent Rights
Agreement), and (ii) no "Distribution Date," "Stock Acquisition Date" or
"Triggering Event" (each as defined in the Parent Rights Agreement) shall
have occurred or shall occur, in each case by reason of the execution,
delivery or performance of this Agreement or the Stock Option Agreements or
any announcement thereof.
(c) In accordance with the rules and regulations of the NYSE, the
affirmative vote in favor of the Parent Stock Issuance of a majority of the
votes cast by holders of outstanding shares of Parent Common Stock
(provided that the total number of the votes cast represents over 50% of
all of the votes eligible to be cast by holders of shares of Parent Common
Stock) is necessary to approve the Parent Stock Issuance. Such vote is the
only vote or approval of holders of shares of any class or series of
Parent's capital stock required in connection with this Agreement, the
Stock Option Agreements and the transactions contemplated hereby and
thereby.
Section 4.14 Opinion of Financial Advisor. The Board of Directors of
Parent has received the written opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation ("DLJ"), dated as of the date of this Agreement, to
the effect that, subject to the qualifications and limitations contained
therein, as of the date of this Agreement, the Common Exchange Ratio is
fair to Parent from a financial point of view.
Section 4.15 Brokers. DLJ is the only broker, finder or investment
banker or other person entitled to any brokerage, finder's, investment
banking or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or any of its Subsidiaries. Parent has previously
provided to the Company a copy of the letter agreement between DLJ and
Parent giving rise to a fee to DLJ.
Section 4.16 Tax Matters. (a) Except as would not, in the aggregate,
have, or reasonably be expected to have a Parent Material Adverse Effect,
Parent and its Subsidiaries (i) have timely filed all federal, state and
foreign Tax returns required to be filed by any of them for Tax years ended
prior to the date of this Agreement or requests for extensions have been
timely filed and any such request has been granted and has not expired, and
all such returns are correct and complete and (ii) have paid or accrued in
accordance with GAAP all Taxes shown to be due and payable on such returns.
(b) Except as would not, in the aggregate, have, or reasonably be
expected to have a Parent Material Adverse Effect, there is no dispute or
claim concerning any Tax liability of any of Parent and its Subsidiaries
claimed or raised by any authority in writing.
(c) No written claims that, in the aggregate, could reasonably be
expected to have a Parent Material Adverse Effect have been made by an
authority in a jurisdiction where any of Parent and its Subsidiaries does
not file Tax returns that it is or may be subject to Taxation by that
jurisdiction.
(d) Except as would not, in the aggregate, have, or reasonably be
expected to have, a Parent Material Adverse Effect, none of Parent and its
Subsidiaries has waived any statute of limitations in respect of income
Taxes or agreed to any extension of time with respect to an income Tax
assessment or deficiency.
(e) Neither Parent nor any of its Subsidiaries has taken or
agreed to take any action, nor does Parent have any knowledge of any fact,
agreement, plan or other circumstance with respect to Parent or its
Subsidiaries, which would reasonably be expected to prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368 of the
Code.
Section 4.17 Public Utility Holding Company Act of 1935. Parent is not
a "holding company," a "subsidiary company" of a "holding company," an
"affiliate of a holding company," or a "public utility company," as such
terms are defined in the Holding Company Act.
Section 4.18 Restrictions on Business Activities. Except for this
Agreement or as set forth in Parent SEC Reports filed prior to the date of
this Agreement, there is no judgment, injunction, order or decree or
material agreement (including, without limitation, agreements containing
provisions restricting Parent or any of its Subsidiaries from entering or
engaging in any line of business, agreements containing geographic
restrictions on Parent's or any of its Subsidiaries' ability to operate
their respective businesses and agreements containing rights of first
refusal, rights of first offer, exclusivity, "requirements" or similar
provisions) binding upon Parent or any of its Subsidiaries which has or
would reasonably be expected to have the effect of materially prohibiting
or impairing the conduct of the business of Parent or any of its
Subsidiaries or, to the knowledge of Parent, after the Effective Time,
Parent or any of its Subsidiaries, including the Company, taken together.
Section 4.19 Year 2000. Except as set forth in the Parent SEC Reports
filed prior to the date of this Agreement, the systems operated or used by
Parent or any of its Subsidiaries have been providing and are capable of
continuing to provide uninterrupted millennium functionality on and after
January 1, 2000 to share, record, process and present data in substantially
the same manner and with the same functionality as such systems share,
record, process and present such data falling on and before December 31,
1999, except, in the aggregate, as would not have, or reasonably be
expected to have, a Parent Material Adverse Effect.
Section 4.20 Accounting Matters. Neither Parent nor any of its
Subsidiaries has taken or agreed to take any action, nor does Parent have
any knowledge of any fact or circumstance with respect to Parent or its
Subsidiaries, which would prevent the Merger from being accounted for as a
pooling-of-interests under GAAP or the rules and regulations of the SEC.
PwC has advised Parent that it is not aware as of the date of this
Agreement of any reason why PwC would be unable to deliver at the Closing
the letter referred to in the second sentence of Section 6.13(a).
ARTICLE V
Section 5.1 Interim Operations of the Company. Between the date of
this Agreement and the Effective Time, the Company shall, and shall cause
each of its Subsidiaries to (unless Parent shall otherwise approve in
writing or except as otherwise contemplated by this Agreement or disclosed
in the Company Disclosure Letter):
(i) conduct its business in all material respects in the
ordinary course consistent with past practice and, to the extent consistent
therewith, use reasonable best efforts to (x) preserve intact its business
organization, (y) keep available the services of its officers and employees
and (z) maintain its existing relations and goodwill with customers,
suppliers, regulators, distributors, creditors, lessors and others having
business dealings with it; provided that the failure of any officer or
employee of the Company or its Subsidiaries to remain an officer or
employee of the Company or its Subsidiaries shall not constitute a breach
of this covenant;
(ii) not (A) amend the Restated Certificate of Incorporation
or Amended and Restated By-laws of the Company; (B) split, combine,
subdivide or reclassify its outstanding shares of capital stock or other
equity securities; (C) declare, set aside or pay any dividend or
distribution payable in cash, stock or property in respect of any of its
shares of capital stock or other equity securities, or securities
convertible into, exercisable for or exchangeable for, any of its shares of
capital stock or other equity securities, other than (v) quarterly cash
dividends of $.0625 per share in respect of the outstanding shares of
Company Common Stock, declared, set aside and paid at such times during the
quarter as is consistent with past practice; (w) quarterly cash dividends
of $.05625 per share in respect of the outstanding shares of Company Class
A Common Stock, declared, set aside and paid at such times during the
quarter as is consistent with past practice; (x) dividends and
distributions pursuant to the terms of the Company Preferred Stock, the
Company Trust Securities and the Feline Prides; (y) regular quarterly
dividends in respect of the outstanding shares of Coastal Limited Preferred
Stock in accordance with the terms thereof; and (z) dividends and
distributions by Subsidiaries of the Company; (D) repurchase, redeem or
otherwise acquire or permit any of its Subsidiaries to purchase, redeem or
otherwise acquire, any shares of its capital stock or other equity
securities, or securities convertible into, exercisable for or exchangeable
for, any of its shares of capital stock or other equity securities (it
being understood that this clause (D) shall not prohibit the exercise,
exchange or conversion of Company Equity Equivalent Securities); or (E)
enter into any agreement or letter of intent, agreement in principle or
similar arrangement to (x) sell, transfer or otherwise dispose of, in the
aggregate, a material amount of assets or properties or any material
business, by merger, consolidation, transfer or acquisition of shares of
capital stock or otherwise or (y) purchase or otherwise acquire assets,
properties and businesses except for (1) acquisitions contemplated by and
in accordance with the Company's capital expenditures budget for the year
2000 previously delivered to Parent, (2) acquisitions not contemplated by
such capital expenditures budget not to exceed an additional $200 million
in the aggregate, and (3) subject to the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed, additional
acquisitions not contemplated by such capital expenditures budget not to
exceed an additional $300 million in the aggregate;
(iii) not take any action that to the knowledge of the
Company would prevent the Merger from qualifying for pooling of interests
accounting treatment under GAAP and the rules and regulations of the SEC or
would prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368 of the Code;
(iv) except as required by applicable law or pursuant to
contractual obligations in effect as of the date of this Agreement, not (A)
execute, establish, adopt or amend, or accelerate rights or benefits under,
any agreement relating to severance or change-in-control, any Company
Employee Plan, any employment or consulting agreement with current or
former officers or directors or any collective bargaining agreement, (B)
increase the compensation payable or to become payable to any of its
officers, directors or employees (except for increases in the ordinary
course of business consistent with past practices), (C) grant any severance
or termination pay to any officer or director of the Company, or (D) grant
any stock options or other equity related awards;
(v) not issue, deliver, grant, sell, pledge or otherwise
dispose of shares of any class of its capital stock, other equity
securities, or any securities convertible, exercisable or exchangeable for
or into, any such shares or other equity securities, except upon the
exercise, exchange or conversion of Company Equity Equivalent Securities;
(vi) not change its accounting policies, practices or
methods except as required by GAAP or by the rules and regulations of the
SEC;
(vii) not take any action to render inapplicable, or to
exempt any third party from, any provision of the Restated Certificate of
Incorporation of the Company or any statute referred to in Section 6.14;
(viii) not take any action that would be reasonably likely
to result in any of the conditions set forth in Article VII of this
Agreement not being satisfied or that would impair the ability of the
Company to consummate the transactions contemplated hereby in accordance
with the terms hereof or delay such consummation;
(ix) not take any action to cause the shares of Company
Common Stock to cease to be listed on the NYSE;
(x) not waive any of its rights under, or release any other
party from such other party's obligation under, or amend any provision of
any standstill agreement;
(xi) not issue, deliver, grant, sell, pledge or otherwise
dispose of any bonds, debentures, notes or other indebtedness, in each case
having the right to vote together with the Company's stockholders on any
matter; and
(xii) not enter into any commitments or agreements to do any
of the foregoing.
Section 5.2 Interim Operations of Parent. Between the date of this
Agreement and the Effective Time, Parent shall, and shall cause each of its
Subsidiaries to (unless the Company shall otherwise approve in writing or
except as otherwise expressly contemplated by this Agreement or disclosed
in the Parent Disclosure Letter):
(i) conduct its business in all material respects in the
ordinary course and to the extent consistent therewith, use reasonable best
efforts to (x) preserve intact its business organization, (y) keep
available the services of its officers and employees and (z) maintain its
existing relations and goodwill with customers, suppliers, regulators,
distributors, creditors, lessors, and others having business dealings with
it; provided that the failure of any officer or employee of Parent or its
Subsidiaries to remain an officer or employee of Parent or its Subsidiaries
shall not constitute a breach of this covenant;
(ii) not (A) amend the Restated Certificate of Incorporation
or By-laws of Parent (other than to increase the number of authorized
shares of Parent Common Stock and/or Parent Preferred Stock); (B) split,
combine, subdivide or reclassify its outstanding shares of capital stock or
other equity securities; (C) declare, set aside or pay any dividend or
distribution (payable in cash, stock or property in respect of any of its
shares of capital stock or other equity securities, or securities
convertible into, exercisable for or exchangeable for, any of its shares of
capital stock or other equity securities, other than (v) quarterly cash
dividends of $.206 per share in respect of the outstanding shares of Parent
Common Stock, declared, set aside and paid at such times during the quarter
as is consistent with past practice, (w) dividends and distributions in
respect of the Parent Trust Securities in accordance with the terms
thereof; (x) regular distributions in respect of the outstanding preference
and common units representing partner interests in Leviathan, (y) regular
quarterly dividends in respect of the outstanding EPTPC Preferred Stock in
accordance with the terms thereof; and (z) dividends and distributions by
Subsidiaries of Parent; (D) repurchase, redeem or otherwise acquire or
permit any of its Subsidiaries to purchase, redeem or otherwise acquire,
any shares of its capital stock or other equity securities, or securities
convertible into, exercisable for or exchangeable for, any of its shares of
capital stock or other equity securities (it being understood that this
clause (D) shall not prohibit the exercise, exchange or conversion of
Parent Equity Equivalent Securities); or (E) enter into any agreement,
letter of intent, agreement in principle or similar agreement to sell,
transfer or otherwise dispose of, or purchase or otherwise acquire assets
of any business that generated net revenues or net income in the most
recently completed fiscal year constituting, or is comprised of net assets
having a book value equal to, 25% or more of the consolidated net revenue
or net income of Parent for its most recently completed fiscal year (taking
into account the merger of Sonat Inc. with and into Parent and the
restatement of the financial statement of Parent in connection therewith),
or the consolidated net assets of Parent, as applicable, by merger,
consolidation, transfer or acquisition of shares of capital stock or
otherwise;
(iii) not take any action that to the knowledge of Parent
would prevent the Merger from qualifying for pooling of interests
accounting treatment under GAAP and the rules and regulations of the SEC or
would prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368 of the Code;
(iv) except as required by applicable law or pursuant to
contractual obligations in effect as of the date of this Agreement, not (A)
execute, establish, adopt or amend, or accelerate rights or benefits under,
any agreement relating to severance or change-in-control or any Parent
Employee Plan (provided that Parent and its Subsidiaries shall be permitted
hereunder to (i) enter into or amend consulting, employment or collective
bargaining agreements and (ii) amend its Key Executive Severance Protection
Plan and Employee Severance Protection Plan to exclude the employees of the
Company and its Subsidiaries from participating therein following the
Effective Time), (B) increase the compensation payable or to become payable
to any of its officers, directors or employees (except for increases in the
ordinary course of business consistent with past practices), (C) grant any
severance or termination pay to any officer or director of Parent, or (D)
grant any stock options or other equity related awards;
(v) not issue, deliver, grant, sell, pledge or otherwise
dispose of shares of any class of its capital stock, other equity
securities, or any securities convertible, exercisable or exchangeable for
or into, any such shares or other equity securities, except (x) upon the
exercise, exchange or conversion of Parent Equity Equivalent Securities,
(y) trust securities (which are not directly or indirectly convertible into
or exercisable or exchangeable for shares of Parent Common Stock) in
connection with financing transactions and (z) in connection with a
purchase or acquisition permitted under Section 5.2 (ii)(E), provided that
the issuance, delivery, grant, sale, pledge or other disposition does not
require the approval of the stockholders of Parent under the rules of the
NYSE or applicable law; and provided, further that, without the consent of
the Company (not to be unreasonably withheld), Parent may issue or deliver
in the aggregate in connection with such permitted purchases and
acquisitions, no more than 37.5 million shares of Parent Common Stock (the
issuance of securities exercisable, exchangeable or convertible for shares
of Parent Common Stock shall, for this purpose, be deemed an issuance of
the number of shares of Parent Common Stock into which such securities are
exercisable, exchangeable or convertible);
(vi) not change its accounting policies, practices or
methods except as required by GAAP or by the rules and regulations of the
SEC;
(vii) not (x) take any action to amend the Parent Rights
Agreement, (y) redeem the rights subject to the Parent Rights Agreement or
(z) take any action to render inapplicable, or to exempt any third party
from, any provision of the Parent Rights Agreement, the Restated
Certificate of Incorporation of Parent or any statute referred to in
Section 6.14;
(viii) not take any action to cause the shares of Parent
Common Stock to cease to be listed on the NYSE;
(ix) not take any action that would be reasonably likely to
result in any of the conditions set forth in Article VII hereof not being
satisfied or that would impair the ability of Parent to consummate the
transactions contemplated hereby in accordance with the terms hereof or
delay such consummation;
(x) not waive any of its rights under, or release any other
party from such other party's obligations under, or amend any provision of,
any standstill agreement;
(xi) not issue, deliver, grant, sell, pledge or otherwise
dispose of any bonds, debentures, notes or other indebtedness, in each case
having the right to vote together with Parent's stockholders on any matter;
and
(xii) not enter into any commitments or agreements to do any
of the foregoing.
Section 5.3 No Solicitation. (a) Neither the Company nor Parent shall,
nor shall either permit its respective Subsidiaries to, or authorize any of
its or its Subsidiaries' officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other representatives
("Representatives") to, (i) directly or indirectly, initiate, solicit or
encourage, or take any action to facilitate the making of, any Takeover
Proposal (defined below), or (ii) directly or indirectly engage in
negotiations with or provide any confidential information or data to any
person relating to any Takeover Proposal; provided, however, that at any
time prior to the date of the stockholders' meetings contemplated by
Section 6.1 (the "Applicable Period"), the Company or Parent, as
applicable, may, in response to a Superior Proposal (as defined below)
which was not solicited by it and which did not otherwise result from a
breach of this Section 5.3(a), and subject to providing prior written
notice of its decision to take such action to the other party (the
"Notice") and compliance with Section 5.3(c), following delivery of the
Notice (x) furnish information with respect to the Company or Parent, as
applicable, and/or its Subsidiaries to any person making a Superior
Proposal pursuant to a customary confidentiality agreement (as determined
by such party after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such Superior
Proposal.
(b) Neither the Board of Directors of the Company nor any
committee thereof, nor the Board of Directors of Parent nor any committee
thereof, shall (x) unless such Board or committee shall have determined in
good faith that adverse developments affecting the other party have caused
the Merger to be contrary to the best interests of its stockholders,
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to the other party, such Board of Directors' approval or recommendation, in
the case of the Company, of the Merger or this Agreement and, in the case
of Parent, of the Parent Stock Issuance, (y) approve any letter of intent,
agreement in principle, acquisition agreement or similar agreement (other
than a confidentiality agreement in connection with a Superior Proposal
which is entered into by such party in accordance with Section 5.3(a))
relating to any Takeover Proposal (each, an "Acquisition Agreement"), or
(z) approve or recommend, or propose to approve or recommend, any Takeover
Proposal. Notwithstanding the foregoing, in response to a Superior Proposal
which was not solicited by the Company or Parent, as applicable, and which
did not otherwise result from a breach of Section 5.3(a), the Board of
Directors of the Company, or the Board of Directors of Parent, as
applicable, may (subject to this sentence) terminate this Agreement and
concurrently with or after such termination, if it so chooses, cause the
Company or Parent, as applicable, to enter into any Acquisition Agreement
with respect to any Superior Proposal, but only at a time that is during
the Applicable Period and is after the fifth business day following the
party's delivery of written notice advising the other party that the Board
of Directors of the Company, or the Board of Directors of Parent, as
applicable, has resolved to accept a Superior Proposal (subject to such
termination), specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal.
(c) Each party promptly shall advise the other party orally and
in writing of any Takeover Proposal or any inquiry with respect to or that
could reasonably be expected to lead to any Takeover Proposal, the identity
of the person making any such Takeover Proposal or inquiry and the material
terms of any such Takeover Proposal or inquiry. Such party shall keep the
other party fully informed of the status and material terms of any such
Takeover Proposal or inquiry.
(d) The Company and Parent shall each immediately cease and cause
to be terminated all existing discussions and negotiations, if any, with
any other persons conducted heretofore with respect to any Takeover
Proposal.
For purposes of this Agreement, a "Takeover Proposal" with
respect to the Company or Parent, as applicable, means any inquiry,
proposal or offer from any person relating to (i) any direct or indirect
acquisition or purchase of a business that constitutes 25% or more of the
net revenues, net income or assets of the Company or Parent, as applicable,
and its Subsidiaries, taken as a whole, or 25% or more of the common stock
or voting power (or of securities or rights convertible into or exercisable
for such common stock or voting power) of the Company or Parent, as
applicable, (ii) any tender offer or exchange offer that if consummated
would result in any person beneficially owning 25% or more of the common
stock or voting power (or of securities or rights convertible into or
exercisable for such common stock or voting power) of the Company or
Parent, as applicable, or (iii) any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or Parent, as applicable, or any of its
Subsidiaries that constitutes 25% or more of the net revenues, net income
or assets of the Company or Parent, as applicable, and its Subsidiaries
taken as a whole, in each case other than the transactions contemplated by
this Agreement, the Stock Option Agreements or transactions permitted under
Sections 5.1 or 5.2, as applicable. Each of the transactions referred to in
clauses (i) - (iii) of the foregoing definition of Takeover Proposal, other
than the transactions contemplated by this Agreement or by the Stock Option
Agreements and transactions permitted under Sections 5.1 or 5.2, as
applicable, is referred to herein as an "Acquisition Transaction."
For purposes of this Agreement, a "Superior Proposal" with
respect to the Company or Parent, as applicable, means any proposal made by
a third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock or Parent
Common Stock, as applicable, then outstanding or at least 50% of the assets
of the Company or Parent, as applicable, and its Subsidiaries, taken
together, and if (x) the proposal is otherwise on terms which the Board of
Directors of the Company or Parent, as applicable, determines in its good
faith judgment (based on the advice of a financial advisor of nationally
recognized reputation and such other matters as the Board of Directors of
the Company or Parent, as applicable, deems relevant) to be more favorable
to the Company's stockholders or Parent's stockholders, as applicable, than
the Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
the Company or Parent, as applicable, is reasonably capable of being
obtained by such third party and (y) such Board of Directors, after
considering such matters as such Board of Directors deems relevant
(including the advice of outside counsel), determines in good faith that,
in the case of the Company and Parent, furnishing information to the third
party, participating in discussions or negotiations with respect to the
Superior Proposal or withdrawing or modifying its recommendation with
respect to the Merger (in the case of the Company) or the Parent Stock
Issuance (in the case of Parent) or recommending a Takeover Proposal, or
terminating this Agreement, is required for the Board of Directors of the
Company or Parent, as applicable, to comply with its fiduciary duties to
the Company or Parent, as applicable, and its stockholders under applicable
law.
(e) Nothing contained in this Agreement shall prohibit the
Company or Parent or their respective Boards of Directors from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act.
ARTICLE VI
Section 6.1 Meetings of Stockholders. Each of Parent and the Company
will take all action necessary in accordance with applicable law and its
certificate of incorporation and by-laws to call, give notice of, convene
and hold a meeting of its stockholders as promptly as practicable to
consider and vote upon, in the case of the Company, the approval and
adoption of this Agreement and the Merger and, in the case of Parent, the
approval of the Parent Stock Issuance. Subject to any changes permitted by
Section 5.3(b), the Board of Directors of the Company shall recommend that
the stockholders of the Company vote in favor of the approval and adoption
of this Agreement and the Merger and the Board of Directors of Parent shall
recommend that the stockholders of Parent vote in favor of the Parent Stock
Issuance and such recommendations shall be included in the Joint Proxy
Statement/Prospectus (as defined in Section 6.4); provided, however, that
nothing contained in Section 5.3(b) or this Section 6.1 shall require the
Board of Directors of either party to make any recommendation or refrain
from making any recommendation with respect to a Superior Proposal, which
such Board of Directors, after considering such matters as such Board of
Directors deems relevant (including the advice of outside counsel),
determines in good faith would result in a breach of its fiduciary duty
under applicable law. Each of such parties shall take all lawful action
necessary or advisable to solicit the approval of its respective
stockholders including, without limitation, timely mailing to its
stockholders the Joint Proxy Statement/Prospectus as promptly as
practicable after the Form S-4 (as defined in Section 6.4) shall be
declared effective. The parties shall coordinate and cooperate with respect
to the timing of such meetings and shall, unless otherwise agreed, hold
such meetings on the same day.
Section 6.2 Filings; Other Action. (a) Subject to the terms and
conditions herein provided, each of the Company and Parent shall (i)
cooperate with the other in (x) determining which other notices, reports or
filings are required to be made prior to the Effective Time with, and which
other waivers, consents, approvals or authorizations are required to be
obtained prior to the Effective Time in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby; and (y) timely making all such notices, reports or
filings and timely seeking all such waivers, consents, approvals or
authorizations; and (ii) furnish the other party with such necessary
information regarding itself and its Subsidiaries and reasonable assistance
as such other party and its affiliates may reasonably request in connection
with their preparation of necessary notices, reports or filings, or
submissions of information to any Governmental Entity.
(b) Each of Parent and the Company shall give prompt notice to
the other party of the following:
(x) the occurrence of or failure to occur of any event the
occurrence or failure of which to occur would be likely to result in (i)
any condition set forth in Article VII being incapable of being satisfied
or (ii) a Company Material Adverse Effect or a Parent Material Adverse
Effect, as applicable;
(y) any failure of such party to comply in any material
respect with any of its covenants or agreements hereunder; and
(z) such party becoming aware that statements relating to
such party or any of its Subsidiaries set forth in the Joint Proxy
Statement/Prospectus or the Form S-4 contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make such statements therein, in light of
the circumstance under which they were made, not misleading.
Notwithstanding the foregoing, the delivery of any notice
pursuant to this Section 6.2(b) shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 6.3 Publicity. The parties agree that the initial press
release with respect to this Agreement and the transactions contemplated
hereby shall be a joint press release (to include such text as the parties
may mutually agree). Thereafter, subject to their respective legal
obligations (including requirements of securities exchanges and other
similar regulatory bodies), Parent and the Company shall consult with each
other and use their reasonable best efforts to agree upon the text of any
press release before issuing any such press release or otherwise making
public statements with respect to the transactions contemplated hereby and
in making any public statement or disclosure required by any Governmental
Entity, securities exchange or other similar regulatory body with respect
thereto.
Section 6.4 Registration Statements. The parties shall cooperate and
promptly prepare, and Parent shall file with the SEC as soon as practicable
a registration statement on Form S-4 (the "Form S-4") under the Securities
Act, with respect to the shares of Parent Common Stock issuable pursuant to
the transactions contemplated hereby, a portion of which Form S-4 shall
also serve as the joint proxy statement with respect to the meetings of the
stockholders of each of Parent and the Company in connection with this
Agreement and the transactions contemplated hereby and a prospectus with
respect to the shares of Parent Common Stock issuable pursuant to the
transactions contemplated hereby (the "Joint Proxy Statement/Prospectus").
The parties will cause the Joint Proxy Statement/Prospectus and the Form
S-4 to comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act. The parties agree to
use reasonable best efforts and shall cooperate to have the Form S-4
declared effective by the SEC as promptly as practicable and to keep the
Form S-4 effective as long as is necessary to consummate the Merger and
Parent shall use reasonable best efforts to obtain, prior to the effective
date of the Form S-4, all necessary state securities law or "blue sky"
permits or approvals required in connection with the issuance of shares of
Parent Common Stock pursuant to the transactions contemplated hereby
(provided that Parent shall not be required to qualify to do business in
any jurisdiction in which it is not now so qualified). Each of Parent and
the Company agrees that the information provided by it for inclusion in the
Form S-4 and the Joint Proxy Statement/Prospectus and each amendment or
supplement thereto, at the time of mailing thereof to stockholders, at the
time of the respective meetings of the stockholders of the parties, and at
the time it is filed or becomes effective, will not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of
Parent and the Company will advise the other promptly after it receives
notice thereof of the time when the Form S-4 has or is to become effective
or when any supplement or amendment has been filed, the issuance of any
stop order, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the Form S-4. Each of Parent and the Company will
provide the other with reasonable opportunity to review and comment on any
amendments or supplements to the Form S-4 and/or the Joint Proxy
Statement/Prospectus prior to filing such amendments or supplements with
the SEC, and further agree that each party will be provided with such
number of copies of all filings made with the SEC as such party shall
reasonably request. No filings of the Form S-4 or the Joint Proxy
Statement/Prospectus (or any amendments or supplements to either of them)
shall be made without the approval of Parent and the Company (which consent
shall not be unreasonably withheld).
Section 6.5 Listing Application. Parent shall promptly prepare and
submit to the NYSE a listing application with respect to the shares of
Parent Common Stock issuable pursuant to the transactions contemplated
hereby, and Parent shall use reasonable best efforts to obtain, prior to
the Effective Time, approval for the listing of such shares of Parent
Common Stock on the NYSE, subject to official notice of issuance.
Section 6.6 Reserved.
Section 6.7 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party hereto
incurring such costs or expenses except as expressly provided herein and
except that (a) the filing fees in respect of filings made pursuant to HSR
Act, (b) filing fees in connection with the filing of the Form S-4 and
Proxy Statement/Prospectus with the SEC, (c) all filing fees in connection
with any filings, permits or approvals made or obtained under applicable
state securities and "blue sky" laws, (d) all printing, mailing and related
expenses incurred in connection with the printing and mailing of the Proxy
Statement/Prospectus and (e) all other expenses not directly attributable
to any one of the parties, shall be shared equally by Parent and the
Company.
Section 6.8 Access to Information. (a) From the date of this Agreement
to the Effective Time, each of Parent and the Company shall, and shall
cause its respective Subsidiaries, and its and their Representatives to,
afford the Representatives of the other party reasonable access at
reasonable times upon reasonable notice to each of the party's and its
Subsidiaries' officers, employees, auditors, counsel, agents, properties,
offices and other facilities and to all of their respective books and
records, and shall furnish the other party with all financial, operating
and other data and information as such other party may reasonably request,
in each case only to the extent, in the judgment of counsel to such party,
permitted by law, including antitrust law.
(b) Each of Parent and the Company agrees that all information so
received from the other party shall be deemed received pursuant to the
Confidentiality Agreement, and that party shall, and shall cause its
affiliates and each of its and their Representatives to, comply with the
provisions of the Confidentiality Agreement, dated November 17, 1999,
between Parent and the Company (the "Confidentiality Agreement") with
respect to such information, and the provisions of the Confidentiality
Agreement are hereby incorporated herein by reference with the same effect
as if fully set forth in this Agreement.
Section 6.9 Insurance; Indemnity. (a) Parent shall cause the Surviving
Corporation to obtain and maintain in effect for not less than six years
after the Effective Time a directors' and officers' insurance policy or
policies insuring the Company's directors and officers for all liabilities
and costs (which policy or policies shall be substantially equivalent to
Parent's current policy or policies) with respect to acts or failures to
act prior to or as of the Effective Time (other than to the extent the
available limit of any such insurance policy may be reduced or exhausted by
reason of the payment of claims thereunder); provided, however, that in
order to maintain or procure such coverage, neither Parent nor the
Surviving Corporation, as applicable, shall be required to pay, in the
aggregate, an annual premium in excess of 200% of the current annual
premium paid by Parent for its existing coverage (the "Cap Amount"); and
provided, further, that if equivalent coverage cannot be obtained, or can
be obtained only by paying an annual premium in excess of the Cap Amount,
the Parent and the Surviving Corporation shall only be required to obtain
as much coverage as can be obtained by paying, in the aggregate, an annual
premium equal to the Cap Amount. From and after the Effective Time, the
Surviving Corporation shall, and, if applicable, Parent shall cause the
Surviving Corporation to, indemnify and hold harmless, and provide
advancement of expenses to, to the fullest extent permitted under
applicable law, each person who is a current or former officer or director
of the Company or any of its Subsidiaries (each, an "Indemnified Party")
against all losses, claims, damages, liabilities, costs or expenses
(including reasonable attorneys' fees), judgments, fines, penalties and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as
such, which acts or omissions occurred prior to or as of the Effective
Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), the indemnifying party shall control the
defense of such Action with counsel selected by it; provided, however, that
the Indemnified Party shall be permitted to participate in the defense of
such Action through counsel selected by it at the Indemnified Party's
expense. Unless rendered by a court of competent jurisdiction, any required
determination as to whether or not an Indemnified Party has met any
applicable standard for indemnification under applicable law shall be made
by independent counsel selected by such Indemnified Party and reasonably
satisfactory to Parent, whose fees and expenses shall be borne by Parent.
(b) Parent agrees that the provisions of the Company's Restated
Certificate of Incorporation and Amended and Restated By-laws in effect as
of the date of this Agreement affecting the Indemnified Parties' rights to
indemnification, limitation of liability and advancement of expenses shall
survive the consummation of the Merger and shall continue in full force and
effect, without any amendment thereto (unless required by law), for a
period of six years from the Effective Time.
(c) The provisions of this Section 6.9 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
Section 6.10 Employee Benefit Plans. (a) From and after the Effective
Time, subject to applicable law, Parent shall assume and honor the
obligations of the Company and its Subsidiaries under all existing Company
Employee Plans and shall perform the obligations of the Company and its
Subsidiaries under such Company Employee Plans in the same manner and to
the same extent that the Company and its Subsidiaries would have been
required to perform thereunder; provided, however, that, except as
otherwise explicitly provided, nothing herein shall be construed to
prevent, on or following the Effective Time, (i) the termination of
employment of any individual who immediately prior to the Effective Time
was an employee of the Company or any of its Subsidiaries (such employees,
the "Company Employees") or (ii) the amendment and termination of any
Company Employee Plan to the extent permitted by the terms thereof and
applicable law.
(b) Following the Effective Time, subject to applicable law,
Parent intends to, or intends to cause one or more of its Subsidiaries to,
provide compensation and employee benefits to the Company Employees which
will be substantially similar, in the aggregate, to the compensation and
employee benefits that Parent provides to similarly situated employees
other than the Company Employees (the employees other than the Company
Employees, the "Parent Employees") (excluding, however, participation in
the El Paso Energy Corporation Key Executive Severance Protection Plan and
the El Paso Energy Corporation Employee Severance Protection Plan),
including, without limitation, participation in the El Paso Energy
Corporation Employee Stock Purchase Plan.
(c) To the extent that any employee benefit plan is made
available to Company Employees on or following the Effective Time, Parent
shall, or shall cause one of its Subsidiaries to, grant Company Employees
credit for all service with the Company and its Subsidiaries prior to the
Effective Time for purposes of eligibility and vesting (but not benefit
accrual), to the extent that service of Parent Employees is recognized for
any such purpose. In addition, and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all Parent Employee
Plans, or any other employee benefit plans sponsored by Parent and its
Subsidiaries (such plans, collectively, the "New Plans") to the extent
coverage under such plan replaces coverage under a comparable Company
Employee Plan in which such employee participates immediately before or at
any time after the Effective Time (such plans, collectively, the "Old
Plans"); and (ii) for purposes of each New Plan providing medical, dental,
pharmaceutical, vision and/or disability benefits to any Company Employee,
Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such New Plan to be waived for such
employee and his or her covered dependents, and Parent shall cause any
eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on
the date such employee's participation in the corresponding New Plan begins
to be given full credit under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable
to such employee and his or her covered dependents for the applicable plan
year as if such amounts had been paid in accordance with such New Plan.
(d) (i) No written communication shall be made to Company
Employees regarding the compensation and employee benefits to be provided
at and following the Effective Time without the express consent of Parent,
which consent shall not be unreasonably withheld; and (ii) the Company
shall cause no oral communication to be made regarding compensation and
employee benefits that (x) establishes obligations of Parent or the
Surviving Corporation or any of their Subsidiaries other than as set forth
herein or (y) increases any such obligations.
(e) Without limiting the generality of the foregoing, Parent and
the Company agree to the matters set forth on Section 6.10 of the Parent
Disclosure Letter.
Section 6.11 Governance Matters. (a) Prior to the Effective Time, the
Board of Directors of Parent shall take all action necessary to cause the
By-laws of Parent to be amended as of the Effective Time to incorporate the
provisions set forth in Exhibit B (this amendment, the "By-laws Amendment,"
and Parent's By-laws as so amended, the "Amended By-laws").
(b) Prior to the Effective Time, the Board of Directors of Parent
shall take all action necessary to (i) cause the Board of Directors of
Parent to consist, as of the Effective Time, of 12 directors, (x) seven of
whom shall be persons designated by Parent prior to the Effective Time from
the then current directors of Parent, and (y) five of whom shall be persons
designated by the Company prior to the Effective Time from the then current
directors of the Company, and (ii) establish, as of the Effective Time, a
nominating committee of the Board of Directors of Parent (referred to
herein as the "Parent Directors' Nominating Committee") comprised of the
seven designees of Parent and a second nominating committee of the Board of
Directors of Parent (referred to herein as the "Company Directors'
Nominating Committee") comprised of the five designees of the Company.
Parent's designees shall include Xxxxxxx X. Xxxx and, if the Effective Time
occurs prior to December 31, 2000, Xxxxxx X. Xxxxx, Xx.; and the Company's
designees shall include Xxxxx X. Xxxxxxx. For purposes of this Agreement,
the term "Company Director" means, so long as such person is a director of
Parent, (i) any person designated by the Company pursuant to this paragraph
(b) who becomes a director of Parent at the Effective Time and (ii) any
person (other than a Combination Director (as defined below)) who
subsequently becomes a director of Parent and who is recommended or
designated by the Company Directors' Nominating Committee pursuant to
paragraph (c) below, provided that no more than one Company Director then
in office shall have been presently or formerly employed as an executive
officer or other employee of the Company; the term "Parent Director" means,
so long as such person is a director of Parent, (i) any person designated
by Parent pursuant to this paragraph (b) who is a director of Parent at the
Effective Time and (ii) any person (other than a Combination Director) who
subsequently becomes a director of Parent and who is recommended or
designated by the Parent Directors' Nominating Committee pursuant to
paragraph (c) below; and the term "Combination Director" means, so long as
a person is a director of Parent, (i) any person first elected or appointed
as a director of Parent in connection with a Combination Transaction
(defined below) and (ii) any person who becomes a director of Parent who is
nominated or designated by the Board to replace any Combination Director.
"Combination Transaction" means any merger, consolidation or other business
combination transaction the definitive agreement for which is first
approved by Parent's Board of Directors after the Effective Time (including
any acquisition of any business or Person pursuant to a stock or asset
purchase or otherwise) by or involving Parent or any Subsidiary of Parent.
(c) From and after the Effective Time and until December 31, 2002
(the "Initial Period"), the Board of Directors of Parent shall maintain the
existence of (i) the Company Directors' Nominating Committee which shall at
all times be comprised of all (and only) the Company Directors and (ii) the
Parent Directors' Nominating Committee which shall at all times be
comprised of all (and only) the Parent Directors. The Company Directors'
Nominating Committee shall be vested with the power and authority (i) to
recommend to the Board of Directors of Parent up to five candidates for
nomination by such Board of Directors for election at each annual meeting
of the stockholders of Parent and (ii) to designate persons to fill
vacancies on such Board of Directors as set forth below. The Parent
Directors' Nominating Committee shall be vested with the power and
authority (i) to recommend to the Board of Directors of Parent up to seven
candidates for nomination by such Board of Directors for election at each
annual meeting of the stockholders of Parent and (ii) to designate persons
to fill vacancies on such Board of Directors as set forth below. The Board
of Directors shall nominate for election at each annual meeting of
stockholders of Parent, and identify as candidates for election as
directors on the applicable notice of meeting required by the Amended
By-laws or accompanying document, and subject to the next sentence may only
nominate: (x) up to five candidates designated by the Company Directors'
Nominating Committee and (y) up to seven candidates designated by the
Parent Directors' Nominating Committee. In connection with any annual
meeting of the stockholders of Parent occurring after the completion of a
Combination Transaction, the Board of Directors of Parent may nominate, in
addition to the candidates nominated pursuant to the prior sentence,
candidates who, if elected, would be Combination Directors. In the event
that at any time during the Initial Period, a Company Director shall resign
from the Board of Directors of Parent, during the Initial Period, the
Company Directors' Nominating Committee shall have the sole power and
authority to fill the vacancy created by such resignation. In the event
that at any time during the Initial Period a Parent Director shall resign
from the Board of Directors of Parent, during the Initial Period, the
Parent Directors' Nominating Committee shall have the sole power and
authority to fill the vacancy created by such resignation. In the event
that any Combination Director shall resign from the Board of Directors of
Parent, the Board of Directors may designate a person to fill the vacancy
created by such resignation. During the Initial Period, no special meeting
of the stockholders of Parent may be called for the purpose of removing or
electing one or more directors of Parent (other than Combination Directors
or candidates who, if elected, would be Combination Directors) without the
approval of at least two-thirds of all of the Parent Directors and Company
Directors, voting together. During the Initial Period, the Board of
Directors of Parent shall consist of 12 directors; provided, however, that
the Board of Directors of Parent may increase the number of directors
solely in connection with one or more Combination Transactions. During the
Initial Period, the Board of Directors of Parent may take action
inconsistent with this paragraph (c) only with the approval of at least
two-thirds of all of the Parent Directors and Company Directors
respectively.
(d) The Board of Directors of Parent shall take all action
necessary so that, (w) if the Effective Time occurs prior to December 31,
2000, Xxxxxx X. Xxxxx, Xx. shall hold the position of Chairman of the Board
of Directors of Parent during the period from the Effective Time through
December 31, 2000, and Xxxxxxx X. Xxxx shall hold the position of Chairman
of the Board of Directors of Parent from and after January 1, 2001 (or any
earlier time at which Xxxxxx X. Xxxxx, Xx. is no longer Chairman of the
Board of Directors of Parent), (x) if the Effective Time occurs on or after
December 31, 2000 (or any earlier time at which Xxxxxx X. Xxxxx, Xx. shall
resign as Chairman of the Board of Directors of Parent), Xxxxxxx X. Xxxx
shall hold the position of Chairman of the Board of Directors of Parent
from the Effective Time, (y) Xxxxxxx X. Xxxx shall also hold the positions
of Chief Executive Officer and President of Parent from the Effective Time
and (z) as of the Effective Time, Xxxxx X. Xxxxxxx shall hold the position
of Vice Chairman of the Board of Directors of Parent and all senior
officers of Parent and its Subsidiaries involved in the operation of
Parent's and its Subsidiaries' non-regulated businesses shall report to
Xxxxx X. Xxxxxxx with respect to such non-regulated businesses, or Xxxxx X.
Xxxxxxx shall have such other authority and responsibilities as he and
Parent mutually agree upon. During the Initial Period, (a) Xxxxxxx X. Xxxx
may not be removed as Chief Executive Officer or President of Parent, (b)
the power and authority of the Chief Executive Officer, President or Vice
Chairman of Parent may not be reduced, (c) no action may be taken to deny
Xxxxxxx X. Xxxx the position of Chairman of the Board of Directors of
Parent in accordance with the foregoing sentence or to deny Xxxxx X.
Xxxxxxx the position of Vice Chairman of the Board of Directors of Parent
in accordance with the foregoing sentence, (d) Xxxxx X. Xxxxxxx shall not
be removed as Vice Chairman of the Board of Directors of Parent, (e)
Xxxxxxx X. Xxxx may not be removed as Chairman of the Board of Directors of
Parent, and (f) the power and authority of the Chairman or Vice Chairman
may not be reduced, in each case without the approval of at least
two-thirds of all Parent Directors and Company Directors, voting together.
Section 6.12 Affiliates. (a) Not less than 45 days prior to the
Closing Date, the Company shall have delivered to Parent a letter
identifying all Persons who, in the opinion of the Company may be, as of
the date this Agreement and the Merger are submitted for approval by the
Company's stockholders, its "affiliates" for purposes of SEC Accounting
Series Release No. 135 and/or for purposes of Rule 145 under the Securities
Act and Parent shall have delivered to the Company a letter identifying all
Persons who in the opinion of Parent may be, as of the date the Parent
Stock Issuance is submitted for approval of Parent's stockholders, its
"affiliates" for purposes of SEC Accounting Series Release No. 135. Each of
the Company and Parent shall use its reasonable best efforts to cause each
Person who is identified as an "affiliate" of it in the letter delivered by
it pursuant to the prior sentences to deliver, as promptly as practicable
but in no event later than 30 days prior to the Closing (or such later date
as the parties may agree), a signed agreement, in the case of affiliates of
the Company, to the Company and Parent substantially in the form attached
as Exhibit C hereto, and in the case of affiliates of Parent, if
applicable, to Parent substantially in the form attached as Exhibit D
hereto. Each of Parent and the Company shall, after the date hereof and
prior to the Closing, notify the other party from time to time after it has
delivered the letter described in the prior sentences of any Person not
identified in such letter who then is, or may be, such an "affiliate" and
use reasonable best efforts to cause each additional Person who is
identified as an "affiliate" to execute a signed agreement as set forth in
this Section 6.12(a).
(b) Parent shall use its reasonable best efforts to publish or
cause to be published no later than 30 days after the end of the first
month after the Effective Time (which month may be the month in which the
Effective Time occurs) in which there are at least 30 days of post-Merger
combined operations, combined sales and net income figures as contemplated
by and in accordance with the terms of SEC Accounting Series Release No.
135.
Section 6.13 Pooling-of-Interests. (a) Parent shall use reasonable
best efforts to cause to be delivered to the Company two letters from PwC,
one dated the date on which the Form S-4 shall become effective and one
dated the Closing Date, each addressed to Parent and the Company, in form
and substance reasonably satisfactory to the Company and customary in scope
and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form
S-4. Parent shall use reasonable best efforts to cause to be delivered to
the Company a letter from PwC, dated as of the Closing Date, stating that
PwC concurs with Parent's management's conclusion that accounting for the
Merger as a pooling-of-interests under Opinion 16 of the Accounting
Principles Board is appropriate if the Merger is closed and consummated in
accordance with the terms hereof.
(b) The Company shall use reasonable best efforts to cause to be
delivered to Parent two letters from D&T, one dated the date on which the
Form S-4 shall become effective and one dated the Closing Date, each
addressed to the Company and Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statement similar to the Form S-4. The Company shall use
reasonable best efforts to cause to be delivered to Parent a letter from
D&T, dated as of the Closing Date, stating that D&T concurs with the
Company's management's conclusion that the Company is eligible to
participate in a transaction accounted for as a pooling-of-interests under
Opinion 16 of the Accounting Principles Board.
(c) Each of the parties will use reasonable best efforts to cause
the Merger to be accounted for as a pooling-of-interests in accordance with
GAAP and the rules and regulations of the SEC, and each party agrees that
it will not take any action that it knows, or could reasonably expect, will
cause such accounting treatment not to be obtained.
Section 6.14 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation is or may become applicable to the transactions contemplated
hereby, each of the parties hereto and its Board of Directors shall grant
such approvals and take all such actions as are legally permissible so that
the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
Section 6.15 Tax-Free Merger. Each of the parties will use reasonable
best efforts to cause the Merger to qualify as a tax-free "reorganization"
under Section 368 of the Code. None of Parent, Merger Sub, the Company or
any of their respective Subsidiaries over which they exercise control,
shall knowingly take any action, or knowingly fail to take any action, that
would reasonably be expected to cause the Merger not to qualify as a
tax-free "reorganization" under Section 368 of the Code.
Section 6.16 Section 16(b). Parent and the Company shall take all such
steps as may be required to cause the transactions contemplated hereby and
any other dispositions of equity securities of the Company (including
derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each
individual who (a) is a director or officer of the Company or (b) at the
Effective Time, will become a director or officer of Parent, to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
Section 6.17 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations to consummate the Merger and the other transactions
contemplated by this Agreement as soon as practicable after the date
hereof, including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings, tax ruling requests and other documents and to obtain as promptly
as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits, tax rulings and authorizations necessary or advisable
to be obtained from any third party and/or any Governmental Entity in order
to consummate the Merger or any of the other transactions contemplated by
this Agreement and (ii) taking all reasonable steps as may be necessary to
obtain all such material consents, waivers, licenses, registrations,
permits, authorizations, tax rulings, orders and approvals. In furtherance
and not in limitation of the foregoing, each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR
Act and any other Regulatory Law (as defined below) with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to the HSR Act and
any other Regulatory Law and to take all other actions necessary to cause
the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable. Nothing in this Section 6.17 shall require
any of Parent and its Subsidiaries or the Company and its Subsidiaries to
sell, hold separate or otherwise dispose of or conduct their business in a
specified manner, or agree to sell, hold separate or otherwise dispose of
or conduct their business in a specified manner, or permit the sale,
holding separate or other disposition of, any assets of Parent, the Company
or their respective Subsidiaries or the conduct of their business in a
specified manner, whether as a condition to obtaining any approval from a
Governmental Entity or any other Person or for any other reason, if such
sales, holdings separate of assets or other dispositions or the conduct of
their business in a specified manner, individually or in the aggregate, are
not conditioned on the Closing or would, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
assets, results of operations or condition (financial or otherwise) of
Parent and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together, after giving effect to the Merger (a
"Post-Merger Material Adverse Effect"); it being understood that Parent and
its Subsidiaries shall not be obligated pursuant to this Agreement to take
any action that would reasonably be likely to have a material adverse
effect on or with respect to Tennessee Gas Pipeline Company or ANR Pipeline
Company and any such material adverse effect shall constitute a
"Post-Merger Material Adverse Effect", and that without the consent of
Parent, the Company shall not take any action that would reasonably be
likely to have a Post-Merger Material Adverse Effect.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.17(a) to obtain all requisite material
approvals and authorizations for the transactions contemplated by this
Agreement under the HSR Act or any other Regulatory Law, use its reasonable
best efforts to (i) cooperate in all respects with each other in connection
with any filing or submission and in connection with any investigation or
other inquiry, including any proceeding initiated by a party, (ii) promptly
inform the other party of any communication received by such party from, or
given by such party to, the Antitrust Division of the Department of Justice
(the "DOJ") or any other Governmental Entity and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the DOJ or such other applicable
Governmental Entity or other Person, give the other party the opportunity
to attend and participate in such meetings and conferences. For purposes of
this Agreement, "Regulatory Law" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of
trade or lessening of the competition.
(c) Subject to the terms and conditions of this Agreement, in
furtherance and not in limitation of the covenants of the parties contained
in Sections 6.17(a) and 6.17(b), if any administrative or judicial action
or proceeding, including any proceeding by a private party, is instituted
(or threatened to be instituted) challenging any transaction contemplated
by this Agreement as violative of any Regulatory Law, each of Parent and
the Company shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 6.17 shall limit a party's right to terminate this
Agreement pursuant to Article VIII. Each of the parties will comply in all
material respects with all applicable laws and with all applicable rules
and regulations of any Governmental Entity in connection with its
execution, delivery and performance of this Agreement and the Stock Option
Agreements and the transactions contemplated hereby and thereby.
(d) If any objections are asserted with respect to the
transactions contemplated hereby under any Regulatory Law or if any suit is
instituted by any Governmental Entity or any private party challenging any
of the transactions contemplated hereby as violative of any Regulatory Law,
each of Parent and the Company shall use reasonable best efforts to resolve
any such objections or challenge as such Governmental Entity or private
party may have to such transactions under such Regulatory Law so as to
permit consummation of the transactions contemplated by this Agreement.
ARTICLE VII
Section 7.1 Conditions to Obligations of the Parties. The respective
obligation of each of the parties hereto to consummate the transactions
contemplated hereby shall be subject to the satisfaction of each of the
following conditions:
(a) Stockholders' Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of
the Company in accordance with the DGCL and the Parent Stock Issuance shall
have been approved by the requisite vote of the stockholders of Parent in
accordance with the rules and regulations of the NYSE.
(b) Legality. No statute, rule, regulation or other law and no
order, decree or injunction shall have been enacted, issued, promulgated,
entered or issued by any Governmental Entity of competent jurisdiction
which is in effect and has the effect of making the consummation of the
Merger illegal or prevents or prohibits consummation of the transactions
contemplated hereby. Each party agrees that, in the event that any such
order, decree or injunction shall be entered or issued, it shall use all
reasonable best efforts to cause such order, decree or injunction to be
lifted or vacated.
(c) HSR Act. The waiting period (or any extension thereof) under
the HSR Act applicable to transactions contemplated hereby shall have
expired or been terminated.
(d) Regulatory Consents. All waivers, consents, approvals, orders
and authorizations of, and notices, reports and filings with, Governmental
Entities necessary for the consummation of the transactions contemplated
hereby (other than those matters addressed in Section 7.1(c)) shall have
been obtained or made and shall be in full force and effect without the
imposition of any terms, conditions, restrictions or limitations, except
for the imposition of any terms, conditions, restrictions and limitations
in respect of, and failures to have obtained or made, or failures to be in
full force and effect of, such waivers, consents, approvals, orders,
authorizations, notices, reports or filings which, in the aggregate, would
not have, or reasonably be expected to have a Post-Merger Material Adverse
Effect.
(e) Form S-4 Effective; State Securities Approvals. The Form S-4
shall have become effective, and no stop order suspending the effectiveness
of the Form S-4 shall then be in effect and no proceeding for that purpose
shall have been initiated or, to the knowledge of Parent or the Company,
threatened, and all material necessary approvals and permits under state
securities or "blue sky" laws relating to the issuance of shares of Parent
Common Stock, shall have been obtained.
(f) NYSE Listing. The shares of Parent Common Stock to be issued
pursuant to the transactions contemplated hereby shall have been duly
approved for listing on the NYSE, subject to official notice of issuance.
(g) Pooling Letters. The Company shall have received and
delivered to Parent and Parent's independent public accountants, a letter
from D&T, dated as of the Closing Date, stating that D&T concurs with the
Company's management's conclusion that the Company is eligible to
participate in a transaction with Parent accounted for as a
pooling-of-interests under Opinion 16 of the Accounting Principles Board,
and Parent shall have received and delivered to the Company and the
Company's independent public accountants, a letter from PwC, dated as of
the Closing Date, stating that PwC concurs with Parent's management's
conclusion that accounting for the Merger as a pooling-of-interests under
Opinion 16 of the Accounting Principles Board is appropriate if the Merger
is closed and consummated in accordance with the terms hereof.
Section 7.2 Additional Conditions to Obligations of Parent. The
obligations of Parent to consummate the transactions contemplated hereby
shall also be subject to the satisfaction or waiver of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct when made and as of the Closing Date as if made on and as of such
date (provided that such representations and warranties which are by their
express provisions made as of a specific date need be true and correct only
as of such specific date), except to the extent that any failures of such
representations and warranties to be so true and correct, in the aggregate,
would not have, or reasonably be expected to have, a Company Material
Adverse Effect (disregarding for these purposes any materiality
qualifications therein contained).
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, except that the Company shall have performed
or complied in all respects with the covenants and agreements contained in
Section 5.1(ii).
(c) Certificate. Parent shall have received a certificate of an
executive officer of the Company that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) Tax Opinions. Parent shall have received an opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, tax counsel to Parent, dated as of the
Closing Date, in form and substance reasonably satisfactory to it,
substantially to the effect that, on the basis of the facts and assumptions
described in the opinion, the Merger will constitute a tax-free
reorganization under Section 368 of the Code. The issuance of such opinion
shall be conditioned on the receipt by such tax counsel of customary
representation letters from each of Parent, Merger Sub and the Company, in
each case, in form and substance reasonably satisfactory to such tax
counsel. Each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
respect. The opinion condition referred to in this Section 7.2(d) shall not
be waivable after receipt of the approval of the stockholders of the
Company referred to in Section 7.1(a), unless further stockholder approval
is obtained with appropriate disclosure.
Section 7.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated
hereby shall also be subject to the satisfaction or waiver of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement shall be true and correct
when made, and as of the Closing Date as if made on and as of such date
(provided that such representations and warranties which are expressly made
as of a specific date need be true and correct only as of such specific
date), except to the extent that any failures of such representations and
warranties to be so true and correct, in the aggregate, would not have, or
reasonably be expected to have, a Parent Material Adverse Effect
(disregarding for these purposes any materiality qualifications therein
contained).
(b) Agreements and Covenants. Each of Parent and Merger Sub shall
have performed or complied with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, except that Parent shall have performed or complied in all
respects with the covenants contained in Section 5.2(ii).
(c) Certificate. The Company shall have received a certificate of
an executive officer of Parent that the conditions set forth in the
paragraphs (a) and (b) above have been satisfied.
(d) Tax Opinion. The Company shall have received the opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, tax counsel to the Company, dated
as of the Closing Date, in form and substance reasonably satisfactory to
it, substantially to the effect that, on the basis of the facts and
assumptions described in the opinion, the Merger will constitute a tax-free
reorganization under Section 368 of the Code. The issuance of such opinion
shall be conditioned on the receipt by such tax counsel of customary
representation letters from each of Parent, Merger Sub and the Company, in
each case, in form and substance reasonably satisfactory to such tax
counsel. Each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
respect. The opinion condition referred to in this Section 7.3(d) shall not
be waivable after receipt of the approval of the stockholders of the
Company referred to in Section 7.1(a), unless further stockholder approval
is obtained with appropriate disclosure.
ARTICLE VIII
Section 8.1 Termination. This Agreement may be terminated at any time
before the Effective Time, whether before or after this Agreement and the
Merger have been approved and adopted by the stockholders of the Company
and/or the Parent Stock Issuance has been approved by the stockholders of
Parent, as follows:
(a) by mutual written consent of each of Parent and the Company;
(b) by Parent or the Company, if the Effective Time shall not
have occurred by the conclusion of the twelfth month after the date of this
Agreement (the "Termination Date"); provided, however, that if (x) the
Effective Time has not occurred by such date by reason of nonsatisfaction
of any of the conditions set forth in Section 7.1(c) or Section 7.1(d), and
(y) all other conditions set forth in Article VII have been satisfied or
waived or are as of such date capable of being satisfied, than this
Agreement may only be terminated by Parent or the Company pursuant to this
clause (b) if the Effective Time shall not have occurred by the conclusion
of the fifteenth month after the date of this Agreement (which shall, in
such circumstances, be the "Termination Date"); and provided, further, that
the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) by Parent or the Company, if a Governmental Entity of
competent jurisdiction shall have issued an order, decree or injunction or
taken any other action (in each case, which the terminating party has used
reasonable best efforts to resist, resolve or lift, as applicable, in
accordance with Section 6.17) having the effect of making the transactions
contemplated hereby illegal or permanently prohibiting the consummation
thereof, and such order, decree or injunction shall have become final and
nonappealable (but only if such party shall have used all reasonable best
efforts to cause such order, decree or injunction to be lifted or vacated
in accordance with Section 6.17);
(d) by either Company or Parent, if there shall have been a
material breach by the other of any of the other's representations,
warranties, covenants or agreements contained in this Agreement, which
breach would result in the failure to satisfy one or more of the conditions
set forth in Section 7.2(a) or (b) (in the case of a breach by the Company)
or Section 7.3(a) or (b) (in the case of a breach by Parent), and such
breach shall be incapable of being cured or, if capable of being cured,
shall not have been cured within 20 days after written notice thereof shall
have been received by the party alleged to be in breach;
(e) (i) by Parent, if the Board of Directors of the Company or
any committee of the Board of Directors of the Company, whether or not
permitted pursuant to the terms hereof, (w) shall fail to reaffirm its
approval or recommendation of this Agreement and the Merger within 15 days
after a request by Parent (provided that Parent may make such request only
once with respect to any Takeover Proposal), (x) shall withdraw or modify
in any manner adverse to Parent its approval or recommendation of this
Agreement or the Merger, (y) shall approve or recommend any Takeover
Proposal or Acquisition Transaction involving the Company or (z) shall
resolve to take any of the actions specified in clauses (w), (x) or (y)
above;
(ii) by the Company, if the Board of Directors of Parent or
any committee of the Board of Directors of Parent, whether or not permitted
pursuant to the terms thereof, (w) shall fail to reaffirm its approval of
this Agreement, the Merger and the Parent Stock Issuance or its
recommendation of the Parent Stock Issuance within 15 days after a request
by the Company (provided that the Company may make such request only once
with respect to any Takeover Proposal), (x) shall withdraw or modify in any
manner adverse to the Company its approval of this Agreement, the Merger
and the Parent Stock Issuance or its recommendation of the Parent Stock
Issuance, (y) shall approve or recommend any Takeover Proposal or
Acquisition Transaction involving Parent or (z) shall resolve to take any
of the actions specified in clauses (w), (x) or (y) above;
(f) (i) by either Parent or the Company, if the required approval
and adoption of this Agreement and the Merger by the stockholders of the
Company shall not have been obtained at a duly held stockholders' meeting
called for the purpose of obtaining such approval, including any
adjournments or postponements thereof;
(ii) by either Parent or the Company if the required
approval of the Parent Stock Issuance by the stockholders of Parent shall
not have been obtained at a duly held stockholders' meeting called for the
purpose of obtaining such approval, including any adjournments or
postponements thereof; or
(g) (i) by the Company, in accordance with Section 5.3(b),
provided, however, in order for the termination of this Agreement pursuant
to this clause (i) of this Section (g) to be deemed effective, the Company
shall have complied with all provisions contained in Sections 5.3(a), (b)
and (c), including the notice provisions therein, and with applicable
requirements of Section 8.2, including the payment of the Company
Termination Fee; or (ii) by Parent, in accordance with Section 5.3(b),
provided, however, in order for the termination of this Agreement pursuant
to this clause (ii) of this Section (g) to be deemed effective, Parent
shall have complied with all provisions contained in Sections 5.3(a), (b)
and (c), including the notice provisions therein, and with applicable
requirements of Section 8.2, including the payment of the Parent
Termination Fee.
Section 8.2 Effect of Termination. (a) (i) In the event that (w) (1)
any Person shall have made a Takeover Proposal to the Company or to its
stockholders after the date hereof and thereafter this Agreement is
terminated (i) by either party pursuant to Section 8.1(b) or (ii) by either
party pursuant to Section 8.1(f)(i) and (2) within 12 months after the
termination of this Agreement any Acquisition Transaction involving the
Company shall have been consummated or any Acquisition Agreement with
respect to an Acquisition Transaction involving the Company shall have been
entered into, (x) any Person shall have made a Takeover Proposal to the
Company or its stockholders after the date hereof and thereafter this
Agreement is terminated by Parent pursuant to Section 8.1(e)(i), (y) (1)
this Agreement is terminated by Parent pursuant to Section 8.1(e)(i) (and
no Person shall have made a Takeover Proposal to the Company or its
stockholders after the date hereof and prior to termination of this
Agreement) and (2) within 3 months after the termination of this Agreement,
any Acquisition Transaction involving the Company shall have been
consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving the Company shall have been entered into, or (z) this
Agreement is terminated by the Company pursuant to Section 8.1(g)(i), then,
in any such case, the Company shall in no event later than (i) the date an
Acquisition Agreement is entered into with respect to an Acquisition
Transaction involving the Company, or if no such agreement is entered into,
upon the date of consummation of such Acquisition Transaction involving the
Company, in the case of a termination described in clauses (w) or (y), (ii)
two days after such termination, in the case of a termination described in
clause (x), or (iii) concurrently with such termination, in the case of a
termination described in clause (z), pay Parent a fee of $300 million (the
"Company Termination Fee"), which amount shall be payable by wire transfer
of same day funds to a bank account designated by Parent.
(ii) In the event that (w) any person shall have made a Takeover
Proposal to the Company or its stockholders after the date hereof and
thereafter this Agreement is terminated by either party pursuant to Section
8.1(b) and within 12 months after such termination any Acquisition
Transaction involving the Company shall have been consummated or any
Acquisition Agreement with respect to an Acquisition Transaction involving
the Company shall have been entered into, (x) (1) this Agreement is
terminated by Parent pursuant to Section 8.1(e)(i) (and no Person shall
have made a Takeover Proposal to the Company or its stockholders after the
date hereof and prior to termination of this Agreement) and (2) within 3
months after the termination of this Agreement, any Acquisition Transaction
involving the Company shall have been consummated or any Acquisition
Agreement with respect to an Acquisition Transaction involving the Company
shall have been entered into, (y) any Person shall have made a Takeover
Proposal to the Company or its stockholders and thereafter this Agreement
is terminated by Parent pursuant to Section 8.1(e)(i), or (z) this
Agreement is terminated by either party pursuant to Section 8.1(f)(i) or by
the Company pursuant to Section 8.1(g)(i), after any such termination, the
Company shall reimburse Parent, promptly after being requested to do so by
Parent, for all out-of-pocket costs and expenses incurred by Parent in
connection with this Agreement and the transactions contemplated hereby,
including, without limitation, reasonable fees and expenses of accountants,
attorneys and financial advisors and reasonable fees and expenses otherwise
allocated to Parent pursuant to Section 6.7, up to an aggregate of $10
million.
(b) (i) In the event that (w) (1) any Person shall have made a
Takeover Proposal to Parent or to its stockholders after the date hereof
and thereafter this Agreement is terminated (i) by either party pursuant to
Section 8.1(b) or (ii) by either party pursuant to Section 8.1(f)(ii) and
(2) within 12 months after the termination of this Agreement any
Acquisition Transaction involving Parent shall have been consummated or any
Acquisition Agreement with respect to an Acquisition Transaction involving
Parent shall have been entered into, (x) any Person shall have made a
Takeover Proposal to Parent or stockholders after the date hereof and
thereafter this Agreement is terminated by the Company pursuant to Section
8.1(e)(ii), (y) (1) this Agreement is terminated by the Company pursuant to
Section 8.1(e)(ii) (and no Person shall have made a Takeover Proposal to
Parent or its stockholders after the date hereof and prior to termination
of this Agreement) and (2) within 3 months after the termination of this
Agreement, any Acquisition Transaction involving Parent shall have been
consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving Parent shall have been entered into, or (z) this
Agreement is terminated by Parent pursuant to Section 8.1(g)(ii), then, in
any such case, Parent shall in no event later than (i) the date an
Acquisition Agreement is entered into with respect to an Acquisition
Transaction involving Parent, or if no such agreement is entered into, upon
the date of consummation of such Acquisition Transaction involving Parent,
in the case of a termination described in clauses (w) or (y), (ii) two days
after such termination, in the case of a termination described in clause
(x), or (iii) concurrently with such termination, in the case of a
termination described in clause (z), pay the Company a fee of $300 million
(the "Parent Termination Fee"), which amount shall be payable by wire
transfer of same day funds to a bank account designated by the Company.
(ii) In the event that (w) any person shall have made a Takeover
Proposal to Parent or its stockholders after the date hereof and thereafter
this Agreement is terminated by either party pursuant to Section 8.1(b) and
within 12 months after such termination any Acquisition Transaction
involving Parent shall have been consummated or any Acquisition Agreement
with respect to an Acquisition Transaction involving Parent shall have been
entered into, (x) (1) this Agreement is terminated by the Company pursuant
to Section 8.1(e)(ii) (and no Person shall have made a Takeover Proposal to
Parent or its stockholders after the date hereof and prior to termination
of this Agreement) and (2) within 3 months after the termination of this
Agreement, any Acquisition Transaction involving Parent shall have been
consummated or any Acquisition Agreement with respect to an Acquisition
Transaction involving Parent shall have been entered into, (y) any Person
shall have made a Takeover Proposal to Parent or its stockholders and
thereafter this Agreement is terminated by the Company pursuant to Section
8.1(e)(ii), or (z) this Agreement is terminated by either party pursuant to
Section 8.1(f)(ii) or by Parent pursuant to Section 8.1(g)(ii), after any
such termination, Parent shall reimburse the Company, promptly after being
requested to do so by the Company, for all out-of-pocket costs and expenses
incurred by the Company in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, reasonable
fees and expenses of accountants, attorneys and financial advisors and
reasonable fees and expenses otherwise allocated to the Company pursuant to
Section 6.7, up to an aggregate of $10 million.
(c) Each of the parties acknowledges that the agreements
contained in this Section 8.2 are an integral part of the transactions
contemplated in this Agreement and that, without these agreements, the
parties would not enter into this Agreement; accordingly, if either party
fails to promptly pay the amount due from it pursuant to this Section 8.2,
and in order to obtain such payment the other party commences a suit which
results in a judgment for the fees and expenses set forth in this Section
8.2, the other party shall pay to the party bringing such suit its costs
and expenses (including reasonable attorneys' fees) in connection with such
suit.
(d) In the event of termination of this Agreement pursuant to
this Article VIII, this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability (other than as set
forth in this Section 8.2) on the part of any party hereto; provided,
however, no such termination (and no payment made pursuant to Section
8.2(a) or 8.2(b)) shall relieve any party hereto from any liability for
damages resulting from any willful or intentional breach of this Agreement.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto pursuant to action of their respective Boards of Directors, at any
time before or after approval of the matters and transactions contemplated
hereby by the stockholders of Parent and/or the Company and prior to the
Effective Time, but after such approvals, no such amendment shall be made
which, by law or in accordance with the rules of any relevant stock
exchange, requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 8.4 Extension; Waiver. At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for such party's
benefit contained herein. Any agreement to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by a
duly authorized officer of the party to be bound thereby. The failure of
any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE IX
Section 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties, covenants and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 8.1, as the case may be,
except that (a) the agreements set forth in Sections 6.9, 6.10, 6.11,
6.13(c) and 6.15 and such other agreements to be performed in whole or in
part after the Effective Time shall survive the Effective Time, and (b) the
agreements set forth in Sections 6.7, 6.8(b), 8.2 and 8.3 and this Article
IX shall survive termination indefinitely.
Section 9.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.
Section 9.3 Notices. All notices or other communications under this
Agreement shall be in writing and shall be deemed given (a) on the date of
delivery, if delivered in person or by telecopy or facsimile (upon
confirmation of receipt), (b) on the first business day following the date
of dispatch, if delivered by a recognized next-day courier service, or (c)
on the seventh business day following the date of mailing, if delivered by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
The Coastal Corporation
Coastal Tower
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile no.: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
If to Parent:
El Paso Energy Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx Xx., Esq.
Facsimile No.: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Xxxxxx xx Xxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section.
Section 9.4 Certain Definitions; Interpretation. (a) For purposes of
this Agreement, the following terms shall have the following meanings:
(i) "Company Material Adverse Effect" means any changes in
or effects that in the aggregate together with all other changes and
effects (x) are materially adverse to the business, assets, liabilities,
results of operations or condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, or (y) will prevent the Company's
consummating the transactions contemplated hereby or materially delay the
Company's ability to consummate the transactions contemplated hereby,
provided that, in determining whether a Company Material Adverse Effect has
occurred, changes or effects relating to the natural gas pipeline industry
and/or the oil and gas exploration and production industry and/or any other
industry in which the Company or its Subsidiaries are engaged generally or
to United States or global economic conditions or financial markets in
general shall not be considered.
(ii) "Parent Material Adverse Effect" means any changes in
or effects that in the aggregate together with all other changes and
effects (x) are materially adverse to the business, assets, liabilities,
results of operations or condition (financial or otherwise) of Parent and
its Subsidiaries taken as a whole or (y) will prevent Parent's or Merger
Sub's consummating the transactions contemplated hereby or materially delay
Parent's or Merger Sub's ability to consummate the transactions
contemplated hereby, provided that, in determining whether a Parent
Material Adverse Effect has occurred, changes or effects relating to the
natural gas pipeline industry and/or the oil and gas exploration and
production industry and/or any other industry in which Parent or its
Subsidiaries are engaged generally or to United States or global economic
conditions or financial markets in general shall not be considered.
(iii) "affiliate" of a Person means (for all purposes other
than Section 6.12 in which Section "affiliate" shall have the meaning
designated therein) a Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned Person.
(iv) "control" (including the terms "controlled by" and
"under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(v) "knowledge" of any party shall mean the actual knowledge
of the executive officers of that party.
(vi) "Person" and "person" means an individual, corporation,
partnership, limited liability company, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(vii) "Subsidiary" of a Person means any corporation or
other legal entity of which such Person (either alone or through or
together with any other Subsidiary or Subsidiaries) is the general partner
or managing entity or of which 50% or more of the capital stock or other
equity interests the holders of which are generally entitled to vote for
the election of the board of directors or others performing similar
functions of such corporation or other legal entity is directly or
indirectly owned or controlled by such Person (either alone or through or
together with any other Subsidiary or Subsidiaries).
(viii) "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including
taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and including any
liability for the Taxes of any Person under Treas. Reg. ss. 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(b) When a reference is made in this Agreement to Articles,
Sections, Disclosure Letters or Exhibits, such reference is to an Article
or a Section of, or an Exhibit to, this Agreement, unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be
understood to be followed by the words "without limitation."
Section 9.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon a determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the maximum extent possible.
Section 9.7 Assignment; Binding Effect; No Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of Parent
and the Company. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in
this Agreement to the contrary, except for Articles I and II and Sections
6.9 (Insurance; Indemnity) and 6.11(Governance Matters), nothing in this
Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 9.8 ENFORCEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE
DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR
WERE OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT, SUBJECT TO THE NEXT
SENTENCE HEREOF, THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE
SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED
STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY
OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. EACH OF THE
PARTIES HERETO (I) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION
OF ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY DELAWARE STATE
COURT IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (II) AGREES THAT IT SHALL NOT
ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER
REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (III) AGREES THAT IT SHALL NOT
BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT
SITTING IN THE STATE OF DELAWARE OR A DELAWARE STATE COURT.
Section 9.9 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed
by all of the parties hereto.
Section 9.10 Entire Agreement. This Agreement, the Confidentiality
Agreement and the Stock Option Agreements constitute the entire agreement
between the parties hereto and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the day and year first written above.
EL PASO ENERGY CORPORATION
By:
-----------------------------
Name:
Title:
EL PASO MERGER COMPANY
By:
-----------------------------
Name:
Title:
THE COASTAL CORPORATION
By:
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Name:
Title:
