Exhibit 1
AGREEMENT AND PLAN OF MERGER
By and Among
EL PASO ENERGY CORPORATION,
EL PASO ENERGY ACQUISITION CO.
and
CRYSTAL GAS STORAGE, INC.
October 15, 1999
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER............................................................1
SECTION 1.1. The Merger..............................................1
SECTION 1.2. Effective Time..........................................2
SECTION 1.3. Effects of the Merger...................................2
SECTION 1.4. Certificate of Incorporation and By-laws................2
SECTION 1.5. Directors...............................................2
SECTION 1.6. Officers................................................2
SECTION 1.7. Effect on Capital Stock.................................2
(a) Capital Stock of Sub......................................2
(b) Cancellation of Treasury Stock and Parent Owned Stock.....2
(c) Conversion of Shares......................................3
(d) Conversion of Senior Preferred Stock......................3
(e) Shares of Dissenting Stockholders.........................3
ARTICLE II
EXCHANGE PROCEDURE....................................................3
SECTION 2.1. Exchange of Certificates................................3
(a) Paying Agent..............................................3
(b) Parent to Provide Funds...................................4
(c) Exchange Procedure........................................4
(d) No Further Ownership Rights in Shares.....................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................5
SECTION 3.1. Representations and Warranties of the Company...........5
(a) Organization, Standing and Power..........................5
(b) Subsidiaries..............................................5
(c) Capital Structure.........................................6
(d) Authority; Non-contravention..............................6
(e) SEC Documents.............................................7
(f) Information Supplied......................................8
(g) Absence of Certain Changes or Events......................8
(h) State Takeover Statutes; Absence of
Supermajority Provision.................................8
(i) Brokers...................................................9
(j) Litigation................................................9
(k) Employee Benefit Matters..................................9
(l) Taxes....................................................11
(m) No Excess Parachute Payments.............................13
(n) Environmental Matters....................................13
(o) Compliance with Laws.....................................13
(p) Material Contracts and Agreements........................13
(q) Title to Properties......................................14
(r) Intellectual Property....................................14
(s) Labor Matters............................................15
(t) Undisclosed Liabilities..................................15
(u) Pipeline Imbalances......................................15
(v) Year 2000................................................15
(w) Opinion of Financial Advisor.............................15
(x) Board Recommendation.....................................15
SECTION 3.2. Representations and Warranties of Parent and Sub.......16
(a) Organization; Standing and Power.........................16
(b) Authority; Non-contravention.............................16
(c) Information Supplied.....................................17
(d) Brokers..................................................17
(e) Litigation...............................................17
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS............................17
SECTION 4.1. Conduct of Business of the Company.....................17
(a) Ordinary Course..........................................17
(b) Changes in Employment Arrangements.......................19
(c) Severance................................................20
(d) Other Actions............................................20
(e) Internal Restructuring and Hattiesburg Owner
Trust Matters..........................................20
(f) Base Gas.................................................20
ARTICLE V
ADDITIONAL AGREEMENTS................................................21
SECTION 5.1. Stockholder Approval; Preparation of
Proxy Statement......................................21
SECTION 5.2. Access to Information..................................21
SECTION 5.3. Reasonable Efforts; Notification.......................23
SECTION 5.4. Employee Benefit Matters...............................25
SECTION 5.5. Indemnification........................................25
SECTION 5.6. Fees and Expenses......................................27
SECTION 5.7. Public Announcements...................................27
SECTION 5.8. Internal Restructuring.................................27
SECTION 5.9. Redemption of Senior Preferred Stock...................27
ARTICLE VI
CONDITIONS PRECEDENT.................................................28
SECTION 6.1. Conditions to Each Party's Obligation to
Effect the Merger....................................28
(a) Stockholder Approval.....................................28
(b) Other Approvals..........................................28
(c) No Injunctions or Restraints.............................28
SECTION 6.2. Conditions to Obligations of Parent and Sub............28
SECTION 6.3. Condition to Obligations of the Company................29
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER....................................29
SECTION 7.1. Termination............................................29
SECTION 7.2. Procedure for Termination, Amendment,
Extension or Waiver..................................30
SECTION 7.3. Effect of Termination..................................30
SECTION 7.4. Amendment..............................................30
SECTION 7.5. Extension; Waiver......................................30
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS.............................31
SECTION 8.1. Takeover Defenses of the Company and Standstill
Agreements...........................................31
SECTION 8.2. No Solicitation........................................31
SECTION 8.3. Fee and Expense Reimbursements.........................34
ARTICLE IX
GENERAL PROVISIONS...................................................34
SECTION 9.1. Nonsurvival of Representations and Warranties..........34
SECTION 9.2. Notices................................................34
SECTION 9.3. Definitions............................................36
SECTION 9.4. Interpretation.........................................37
SECTION 9.5. Counterparts...........................................37
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries.........37
SECTION 9.7. Governing Law..........................................37
SECTION 9.8. Assignment.............................................37
SECTION 9.9. Enforcement of the Agreement...........................37
SECTION 9.10. Performance by Sub....................................38
SECTION 9.11. Severability..........................................38
Schedule I -- Company Disclosure Document............................S-1
Exhibit A -- Internal Restructuring Description.....................A-1
LIST OF DEFINED TERMS
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Acquisition Agreement 33
Acquisition Transaction 32
affiliate 36
Agreement 1
Applicable Period 31
CERCLA 36
Certificates 4
Certificates of Merger 2
Code 9
Company 1
Company Benefit Plan 10
Company Charter 7
Company Financial Advisor 15
Company HSR Documents 24
Company NOLs 12
Company Permits 13
Company Stockholder Approval 9
Confidentiality and Standstill Agreements 31
conversion 20
DGCL 1
Dissenting Stockholders 1
Effective Time of the Merger 2
environmental laws 36
ERISA 9
Exchange Act 7
Fairness Opinion 15
Gas Storage Expansion Project 17
Governmental Entity 7
HSR Act 7
include, includes or including 37
Indemnified Parties 26
Internal Restructuring 20
IRS 11
knowledge 36
LBCL 1
Liens 5
material adverse change or material adverse 36
effect
Merger 1
Merger Consideration 3
Notice of Superior Proposal 32
Parent 1
Parent Benefit Plan 25
Parent HSR Documents 24
Paying Agent 3
person 36
Proxy Statement 7
Replacement Plan 25
SEC 7
SEC Documents 7
Securities Act 7
Senior Preferred Stock 6
Severance Agreements 10
Share or Shares 1
Shareholders Agreement 1
Sub 1
subsidiary 37
superior proposal 33
Surviving Corporation 1
takeover proposal 31
Tax or Taxes 12
Tax Return 13
AGREEMENT AND PLAN OF MERGER dated as of October 15, 1999,
among EL PASO ENERGY CORPORATION, a Delaware corporation
("Parent"), EL PASO ENERGY ACQUISITION CO., a Delaware
corporation ("Sub") and a wholly owned subsidiary of Parent, and
CRYSTAL GAS STORAGE, INC., a Louisiana corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions of this Agreement and Plan of Merger
(this "Agreement");
WHEREAS, in order to effectuate such acquisition of the Company,
the respective Boards of Directors of Parent, Sub and the Company have
approved the merger of the Company with and into Sub (the "Merger"), upon
the terms and subject to the conditions of this Agreement, whereby each
issued and outstanding share of common stock, $.01 par value, of the
Company (singularly "Share" and plurally "Shares") not owned directly or
indirectly by Parent or the Company, except (unless the Merger is approved
by eighty percent or more of the Company's total voting power, in which
event there will be no dissenters rights) Shares held by persons who object
to the Merger and comply with all the provisions of Louisiana law
concerning the right of holders of Shares to dissent from the Merger and
require appraisal of their Shares ("Dissenting Stockholders"), will be
converted into the right to receive $57 per Share;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement certain stockholders of the Company have executed and
delivered a Shareholders Agreement pursuant to which they have entered into
certain agreements with Parent and Sub regarding the Shares beneficially
owned by them (the "Shareholders Agreement"); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions hereof and in accordance with the Delaware General Corporation
Law (the "DGCL") and the Louisiana Business Corporation Law (the "LBCL"),
the Company shall be merged with and into Sub at the Effective Time of the
Merger. Following the Merger, the separate corporate existence of the
Company shall cease and Sub shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of the Company in accordance with the DGCL and the
LBCL.
SECTION 1.2. Effective Time. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the
parties shall file certificates of merger or other appropriate documents
(in any such case, the "Certificates of Merger") executed in accordance
with the relevant provisions of the DGCL and the LBCL. The Merger shall
become effective at such time as the Certificates of Merger are duly filed
with the Delaware and Louisiana Secretaries of State, which the parties
agree will be done simultaneously, or simultaneously at such other time as
Sub and the Company shall agree should be specified in the Certificates of
Merger (the time the Merger becomes effective being the "Effective Time of
the Merger").
SECTION 1.3. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL and in Louisiana Revised
Statute 12:115, which constitutes a provision of the LBCL.
SECTION 1.4. Certificate of Incorporation and Bylaws.
---------------------------------------
(a) The Certificate of Incorporation of Sub, as in effect at the
Effective Time of the Merger, shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law; provided that such Certificate of
Incorporation shall be amended hereby as of the Effective Time of the
Merger to change the name of Sub to Crystal Gas Storage, Inc.
(b) The By-laws of Sub as in effect at the Effective Time of the
Merger shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
SECTION 1.5. Directors. The directors of Sub at the Effective
Time of the Merger shall be the directors of the Surviving Corporation and
shall hold office until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the
case may be.
SECTION 1.6. Officers. The officers of Sub at the Effective Time
of the Merger shall be the officers of the Surviving Corporation and shall
hold office until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
SECTION 1.7. Effect on Capital Stock. As of the Effective Time of
the Merger, by virtue of the Merger and without any action on the part of
the holder of any Shares:
(a) Capital Stock of Sub. Each issued and outstanding share of
the capital stock of Sub shall be converted into and become one fully
paid and nonassessable share of common stock, par value $1.00 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. All
Shares that are owned directly or indirectly by the Company as
treasury stock or by any wholly owned subsidiary of the Company and
any Shares owned by Parent, Sub or any other wholly owned subsidiary
of Parent shall be canceled, and no consideration shall be delivered
in exchange therefor.
(c) Conversion of Shares. Subject to Section 1.7(d), each issued
and outstanding Share (other than Shares to be canceled in accordance
with Section 1.7(b)) shall be converted into the right to receive from
the Surviving Corporation in cash, without interest, $57 per Share
(the "Merger Consideration").
(d) Conversion of Senior Preferred Stock. To the extent that any
shares of Senior Preferred Stock are issued and outstanding at the
Effective Time of the Merger, each such share shall be converted into
one share of senior preferred stock of the Surviving Corporation
having terms identical to the terms of the Senior Preferred Stock and
having no alteration or change in the powers, preferences or rights
given to the holders of shares of such senior preferred stock of the
Surviving Corporation from those of the holders of shares of Senior
Preferred Stock.
(e) Shares of Dissenting Stockholders. Notwithstanding anything
in this Agreement to the contrary (unless the Merger is approved by
eighty percent or more of the Company's total voting power, in which
event there will be no dissenters rights), any issued and outstanding
Shares held by a Dissenting Stockholder shall not be converted as
described in Section 1.7(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the laws of the State of Louisiana; provided,
however, that Shares outstanding immediately prior to the Effective
Time of the Merger and held by a Dissenting Stockholder who shall,
after the Effective Time of the Merger, withdraw his demand for
appraisal or lose his right of appraisal, in either case pursuant to
the LBCL, shall be deemed to be converted, as of the Effective Time of
the Merger, into the right to receive the Merger Consideration. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal of Shares received by the Company and (ii) the opportunity
to direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of
Parent, voluntarily make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
ARTICLE II
EXCHANGE PROCEDURE
SECTION 2.1. Exchange of Certificates.
------------------------
(a) Paying Agent. Prior to the Effective Time of the Merger,
Parent shall select a bank or trust company to act as paying agent (the
"Paying Agent") for the payment of the Merger Consideration upon surrender
of certificates representing Shares.
(b) Parent to Provide Funds. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide the
Paying Agent on a timely basis funds necessary to pay for the Shares
pursuant to Section 1.7.
(c) Exchange Procedure. Promptly after the Effective Time of the
Merger, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time of
the Merger represented outstanding Shares (the "Certificates"), other than
the Company, Parent and any subsidiary of the Company or Parent, (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Paying Agent and which shall be in a
form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 1.7(c), and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or will accrue on the
cash payable upon the surrender of any Certificate. If payment is to be
made to a person other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of payment that such
Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.1, each Certificate
shall be deemed at any time after the Effective Time of the Merger to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 1.7(c).
Notwithstanding the foregoing, neither the Paying Agent nor any party shall
be liable to a former stockholder of the Company for any cash or interest
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. If any Certificates shall not have been
surrendered prior to seven years after the Effective Time of the Merger (or
immediately prior to such earlier date on which any payment pursuant to
this Section 2.1 would otherwise escheat to or become the property of any
governmental body or agency) the payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interest of any
person previously entitled thereto. Any funds made available to the Paying
Agent that remain unclaimed by holders of Certificates for six months after
the Effective Time of the Merger shall be delivered to the Surviving
Corporation upon demand and any holder of Certificates who has not
theretofore complied with this Section 2.1(c) shall thereafter look only to
Parent for payment of their claim for Merger Consideration.
(d) No Further Ownership Rights in Shares. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article II
shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates, and
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares that were outstanding
immediately prior to the Effective Time of the Merger. If, after the
Effective Time of the Merger, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, Parent and Sub as
follows, subject to any exceptions specified in the Company Disclosure
Document in the form attached hereto as Schedule I to the extent such
exceptions reference a specific Section of this Article III:
(a) Organization, Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana and has the requisite corporate power and
authority to carry on its business as now being conducted. The Company is
duly qualified to do business and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, other than in such
jurisdictions where the failure to be so qualified to do business or in
good standing (individually or in the aggregate) would not have, or be
reasonably likely to have, a material adverse effect on the Company.
(b) Subsidiaries. The Company's subsidiaries are corporations,
limited liability companies or general partnerships that are duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization and have the requisite corporate
power and authority (or comparable power and authority in the case of
limited liability companies or general partnerships) to carry on their
respective businesses as they are now being conducted and to own, operate
and lease the assets they now own, operate or hold under lease. The
Company's subsidiaries are duly qualified to do business and are in good
standing in each jurisdiction in which the nature of their respective
businesses or the ownership or leasing of their respective properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified or in good standing would not have, or be
reasonably likely to have, a material adverse effect on the Company. All
the outstanding shares of capital stock of the Company's subsidiaries that
are corporations, and all the ownership interests of the Company in its
other subsidiaries, have been duly authorized and validly issued and are,
except in the case of any subsidiary that is a general partnership, fully
paid and non-assessable and were not issued in violation of any preemptive
rights or other preferential rights of subscription or purchase of any
person. All such stock and ownership interests are owned of record and
beneficially by the Company or by a wholly owned subsidiary of the Company,
free and clear of all liens, pledges, security interests, charges, claims
and other encumbrances of any kind or nature ("Liens"). Except for the
capital stock of, or ownership interests in, its subsidiaries, the Company
does not own, directly or indirectly, any capital stock, equity interest or
other ownership interest in any corporation, partnership, association,
joint venture, limited liability company or other entity.
(c) Capital Structure. The authorized capital stock of the
Company consists of 20,000,000 shares of common stock, $.01 par value, and
51,200,773 shares of preferred stock, $.01 par value, of which 21,488,353
shares have been designated $.06 Senior Convertible Voting Preferred Stock
(Non-Cumulative) and 27,717,570 of which have been designated Series A
Preferred Stock. At the close of business on June 30, 1999, (i) 2,668,122
Shares were issued and outstanding, (ii) 192,875 Shares were reserved for
issuance pursuant to options granted under the Company's Employee Stock
Option Plan, (iii) no Shares were reserved for issuance pursuant to options
not yet granted under the Company's Employee Stock Option Plan, (iv)
7,360,753 shares of $.06 Senior Convertible Voting Preferred Stock ("Senior
Preferred Stock") were issued and outstanding, (v) 16,562 Shares were
reserved for issuance upon conversion of such outstanding shares of Senior
Preferred Stock and (vi) no shares of Series A Preferred Stock were issued
or outstanding. Except as set forth above, no shares of capital stock or
other equity or voting securities of the Company are reserved for issuance
or outstanding. All outstanding shares of capital stock of the Company are,
and all such Shares issuable upon the exercise of stock options or
conversion of Senior Preferred Stock will be when issued thereunder,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. No capital stock has been issued by the Company since June 30,
1999, other than Shares issued pursuant to options outstanding on or prior
to such date in accordance with their terms at such date. Except for
options described above and Senior Preferred Stock described above, there
are no outstanding or authorized securities, options, warrants, calls,
rights, commitments, preemptive rights, agreements, arrangements or
undertakings of any kind to which the Company or any of its subsidiaries is
a party, or by which any of them is bound, obligating the Company or any of
its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or other equity or voting
securities of, or other ownership interests in, the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(d) Authority; Non-contravention. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
Company Stockholder Approval, to consummate the transactions contemplated
hereby and to take such actions, if any, as shall have been taken with
respect to the matters referred to in Section 3.1(h). The execution and
delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
Company Stockholder Approval. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. The execution and
delivery of this Agreement by the Company do not, and the consummation of
the transactions contemplated hereby and compliance with the provisions
hereof will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result
in the creation of any lien, security interest, charge or encumbrance upon
any of the properties or assets of the Company or any of its subsidiaries
under, any provision of (i) the Amended and Restated Articles of
Incorporation, as amended (the "Company Charter"), or By-laws of the
Company or any provision of the comparable organizational documents of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its subsidiaries
or their respective properties or assets or (iii) subject to governmental
filings and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to the Company or any of its subsidiaries or
their respective properties or assets, other than, in the case of clause
(ii), any such conflicts, violations, defaults, rights or liens, security
interests, charges or encumbrances that individually or in the aggregate
would not have, or be reasonably likely to have, a material adverse effect
on the Company and would not, or be reasonably likely to, materially impair
the ability of the Company to perform its obligations hereunder or prevent
the consummation of any of the transactions contemplated hereby. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including local
authorities (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (i) the filing
of a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the Securities and Exchange Commission (the
"SEC") of (A) a proxy statement relating to the Company Stockholder
Approval (such proxy statement as amended or supplemented from time to
time, the "Proxy Statement") and (B) such reports under Section 13(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
may be filed in connection with this Agreement and the transactions
contemplated hereby, and (iii) the filing of the Certificates of Merger
with the Delaware and Louisiana Secretaries of State with respect to the
Merger as provided in the DGCL and the LBCL and appropriate documents with
the relevant authorities of other jurisdictions in which the Company is
qualified to do business and such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not have, or be reasonably likely to
have, a material adverse effect on the Company.
(e) SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since January
1, 1998 (such documents, together with all exhibits and schedules thereto
and documents incorporated by reference therein, collectively referred to
herein as the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements
of the Company included in the SEC Documents comply in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and other adjustments
described therein).
(f) Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in
the Proxy Statement will, at the date the Proxy Statement is first mailed
to the Company's stockholders and at the time of the Company's stockholders
meeting convened for the purpose of obtaining the Company Stockholder
Approval, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement, as it relates to the Company
Stockholders Meeting, will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for inclusion or
incorporation by reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in
the SEC Documents, since December 31, 1998, the Company has conducted its
business only in the ordinary course consistent with past practice, and
there has not been (i) any event or circumstance that has had or been
reasonably likely to have a material adverse effect with respect to the
Company; (ii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to any of the Company's
capital stock; (iii) (A) any granting by the Company or any of its
subsidiaries to any executive officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course
of business consistent with prior practice or as was required under
employment agreements in effect as of December 31, 1998, (B) any granting
by the Company or any of its subsidiaries to any such executive officer of
any increase in severance or termination pay, except as was required under
employment, severance or termination agreements in effect as of December
31, 1998, or (C) except in accordance with past practice as to executive
officers, any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such executive
officer; (iv) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a material
adverse effect on the Company; (v) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a
change in generally accepted accounting principles; or (vi) any event
which, if it had taken place following the execution of this Agreement,
would not have been permitted by Section 4.1.
(h) State Takeover Statutes; Absence of Supermajority Provision.
The Company has taken all action to assure that no state takeover statute
or similar statute or regulation, shall apply to the Merger or, the
Shareholders Agreement, or any of the other transactions contemplated
hereby or by the Shareholders Agreement. Except for the approval of the
Merger by the holders of two-thirds of the voting power of Shares and
Senior Preferred Stock, present at the meeting of stockholders held for
such purpose, voting together as a class pursuant to which each Share is
entitled to one vote and each share of Senior Preferred Stock is entitled
to .001 votes per share (unless the shares of Senior Preferred Stock have
been called for redemption prior to such meeting and the provisions of
Louisiana Revised Statute 12:75 shall have been satisfied so that such
shares shall not be entitled to vote at such meeting) ("Company Stockholder
Approval"), no other stockholder action on the part of the Company is
required for approval of the Merger and the transactions contemplated
hereby.
(i) Brokers. Except for Xxxxxxx, Xxxxx & Co., which has rendered
the Fairness Opinion referred to in Section 3.1(u) and whose fees are to be
paid by the Company, no broker, investment banker or other person is
entitled to receive from the Company or any of its subsidiaries any
investment banking, brokerage or finder's fees in connection with this
Agreement or the transactions contemplated hereby, including any fee for
any opinion rendered by any investment banker. The engagement letter
between the Company and Xxxxxxx, Sachs & Co. provided to Parent on or prior
to the date of this Agreement constitutes the entire understanding of the
Company and Xxxxxxx, Xxxxx & Co. with respect to the matters referred to
therein, and has not been amended or modified, nor will it be amended or
modified prior to the Effective Time of the Merger.
(j) Litigation. Except as disclosed in the SEC Documents, there
is no suit, action, proceeding or investigation pending or, to the best of
the Company's knowledge, threatened against or affecting the Company or any
of its subsidiaries that has had or could reasonably be expected to have a
material adverse effect on the Company or prevent, hinder or materially
delay the ability of the Company to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries which has had,
or which, insofar as reasonably can be foreseen, in the future could have,
any such effect.
(k) Employee Benefit Matters. As used in this Section 3.1(k), the
term "Employer" shall mean the Company as defined in the preamble of this
Agreement and any member of a controlled group or affiliated service group,
as defined in sections 414(b), (c), (m) and (o) of the Internal Revenue
Code of 1986, as amended ("Code"), of which the Company is a member.
(i) With respect to each employee welfare benefit plan, employee
pension benefit plan and employee benefit plan as defined in sections
3(1), 3(2), and 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which have been or are sponsored by,
participated in, or contributed to by the Employer at any time during
the three-year period ending on the date of this Agreement, or with
respect to which the Employer may have any liability, and except for
any matter that would not individually or in the aggregate have, or be
reasonably likely to have, a material adverse effect on the Company,
to the extent applicable: (A) the plan is in substantial compliance
with the Code and ERISA, including all reporting and disclosure
requirements of Part 1 of Subtitle B of Title I of ERISA; (B) the
appropriate Form 5500 has been timely filed for each year of its
existence; (C) there has been no transaction described in section 406
or section 407 of ERISA or section 4975 of the Code unless exempt
under section 408 of ERISA or section 4975 of the Code, as applicable;
(D) the bonding requirements of section 412 of ERISA have been
satisfied; (E) there is no issue pending nor any issue resolved
adversely to the Employer which may subject the Company to the payment
of a penalty, interest, tax or other amount, (F) the plan can be
unilaterally terminated or amended on no more than 90 days notice; (G)
all contributions or other amounts payable by the Employer as of the
Effective Time of the Merger with respect to the plan have either been
paid or accrued in the Employer's most recent financial statements
included in the SEC Documents and (H) no notice has been received or
given by the Employer of an increase or proposed increase in the cost
of any such plan or any other employee benefit agreement or
arrangement, including deferred compensation plans, incentive plans,
bonus plans or arrangements, stock option plans, stock purchase plans,
golden parachute agreements, severance pay plans or agreements,
dependent care plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other similar plans,
agreements and arrangements that are currently in effect or were
maintained within three years of the date hereof, or have been
approved before this date but are not yet effective, for the benefit
of directors, officers or employees, or former directors, officers or
employees (or their beneficiaries) of the Employer (each, a "Company
Benefit Plan"). There are no pending or, to the Company's knowledge,
threatened or anticipated claims (other than routine claims for
benefits), actions, arbitrations, investigations or suits by, on
behalf of or against any Company Benefit Plan or their related trusts.
The Company has made available to Parent true and correct copies of
all of the Company Benefit Plans.
(ii) Neither the Company nor any entity (whether or not
incorporated) that was at any time during the six years before the
date of this Agreement treated as a single employer together with the
Company under section 414 of the Code has ever maintained, had any
obligation to contribute to or incurred any liability with respect to
a pension plan that is or was subject to the provisions of Title IV of
ERISA or section 412 of the Code. Neither the Company nor any entity
(whether or not incorporated) that was at any time during the six
years before the date of this Agreement treated as a single employer
together with the Company under section 414 of the Code has ever
maintained, had an obligation to contribute to, or incurred any
liability with respect to a multiemployer pension plan as defined in
section 3(37) of ERISA. During the last six years, the Company has not
maintained, had an obligation to contribute to or incurred any
liability with respect to a voluntary employees beneficiary
association that is or was intended to satisfy the requirements of
section 501(c)(9) of the Code. No plan, arrangement or agreement will
cause the Employer to have liability for severance pay as a result of
the Merger, except as otherwise set forth in the Amended and Restated
Executive Compensation and Severance Agreements between the Company
and each of the persons named in the Company Disclosure Document and
the Severance Plan described therein, covering employees who are not
parties to Amended and Restated Executive Compensation and Severance
Agreements (collectively the "Severance Agreements"). The Employer
does not provide employee benefits, including without limitation,
death, post-retirement medical or health coverage (whether or not
insured) or contribute to or maintain any employee benefit plan which
provides for benefit coverage following termination of employment
except (A) as is required by section 4980B(f) of the Code or other
applicable statute, (B) death benefits or retirement benefits under
any employee pension benefit plan as defined in section 3(2) of ERISA,
(C) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), nor has it made any representations,
agreements, covenants or commitments to provide that coverage, or (D)
deferred compensation benefits which have been accrued as liabilities
on the books of the Employer and disclosed on its financial statements
included in the SEC Documents. All group health plans maintained by
the Employer have been operated in material compliance with section
4980B(f) of the Code.
(iii) All Company Benefit Plans that are intended to qualify
under section 401(a) of the Code have been submitted to and approved
as qualifying under section 401(a) of the Code by the Internal Revenue
Service ("IRS") or the applicable remedial amendment period will not
have ended prior to the Effective Time of the Merger.
(iv) Except as expressly provided in this Agreement or the
Severance Agreements and except pursuant to certain options under the
Company's Employee Stock Option Plan as described in section 3.1(c),
the transactions contemplated by this Agreement will not accelerate
the time of payment or vesting, or increase the amount, of
compensation or benefits due any director, officer or employee or
former director, officer or employee (including any beneficiary) of
the Employer.
(v) With respect to any entity (whether or not incorporated) that
is both treated as a single employer together with the Company under
section 414 of the Code and located outside of the United States, any
benefit plans maintained by it for the benefit of its directors,
officers, employees or former employees (or any of their
beneficiaries) are in compliance with applicable laws pertaining to
such plans in the jurisdiction of such entity, except where such
failure to be in compliance would not, either individually or in the
aggregate, have, or be reasonably likely to have, a material adverse
effect on the Company.
(l) Taxes. (i) Each of the Company and each of its subsidiaries,
and any consolidated, combined, unitary or aggregate group for Tax
purposes of which the Company or any of its subsidiaries is or has
been a member, has timely filed (taking into account any extensions)
all Tax Returns required to be filed by it on or before the Effective
Time of the Merger and has timely paid or deposited (or the Company
has paid or deposited on its behalf) all Taxes and estimated Taxes
which are required to be paid or deposited before the Effective Time
of the Merger. Each of the Tax Returns filed by the Company or any of
its subsidiaries is accurate and complete in all material respects.
The Company has delivered or made available to Parent accurate and
complete copies of all Tax Returns of the Company and its subsidiaries
that have been requested by Parent. The Company shall give Parent an
opportunity to review and comment upon any Tax Returns of the Company
and its subsidiaries to be filed after the date of this Agreement. No
extension or waiver of the limitation period applicable to any of the
Tax Returns of the Company or its subsidiaries has been granted, and
no such extension or waiver has been requested from any of the Company
or its subsidiaries. The most recent consolidated financial statements
of the Company contained in the filed SEC Documents reflect an
adequate reserve for all Taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the
date of such financial statement.
(ii) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries,
no requests for waivers of the time to assess any such Taxes have been
granted or are pending, and there are no tax liens upon any assets of
the Company or any of its subsidiaries (except for liens for ad
valorem Taxes not yet delinquent and other Taxes not yet due and
payable) and no claim has been made by any authority in a jurisdiction
where any of the Company and its subsidiaries does not file Tax
Returns that it is or may be subject to taxation in that jurisdiction.
There are no current examinations of any Tax Return of the Company or
any of its subsidiaries being conducted and there are no settlements
of any prior examinations which could reasonably be expected to
materially adversely affect any taxable period for which the statute
of limitations has not run.
(iii) None of the Company or its subsidiaries is, or has been, a
party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar contract.
(iv) For federal income Tax purposes, the net operating losses of
the Company and its subsidiaries as reflected on the federal income
Tax Returns of the Company and its subsidiaries (the "Company NOLs")
exceed the gain the Company and the subsidiaries will recognize as a
result of the Internal Restructuring, the Merger, and any other
transactions contemplated by this Agreement. The Company NOLs are not
subject to any limitations (e.g., under Section 382 of the Code,
Section 384 of the Code, or the consolidated return regulations).
(v) The limited liability company subsidiaries of the Company
resulting from the Internal Restructuring are, or will be at the
Effective Time of the Merger, treated as disregarded entities for
federal income Tax purposes and the assets of such subsidiaries are,
or will be at the Effective Time of the Merger, treated as owned
directly by the Company for federal income Tax purposes.
(vi) At the Effective Time of the Merger, no subsidiary of the
Company will be treated as a partnership for federal income Tax
purposes.
(vii) No person is required to withhold any amounts pursuant to
Section 1445 of the Code from any payments of Merger Consideration
made to holders of Shares pursuant to the Merger. The Company has
delivered or made available to Parent accurate and complete copies of
all audit reports and similar documents relating to Tax Returns of the
Company and its subsidiaries.
(viii) As used herein, "Tax" or "Taxes" shall mean all taxes of
any kind, including, without limitation, those on or measured by or
referred to as income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium, value added,
property or windfall profits taxes, customs, duties or similar fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
imposed by any Governmental Entity, domestic or foreign. As used
herein, "Tax Return" shall mean any return, report, statement or
information required to be filed with any Governmental Entity with
respect to Taxes.
(m) No Excess Parachute Payments. Any amount that could be
received (whether in cash or property or the vesting of property) as a
result of any of the transactions contemplated by this Agreement by any
employee, officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined by the IRS in
proposed Treasury Regulation section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or
Company Benefit Plan currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in section 280G(b)(1)
of the Code).
(n) Environmental Matters. Except as would not have, or be
reasonably likely to have, a material adverse effect on the Company, (i)
the business operations of the Company and its subsidiaries are being
conducted, and to the Company's knowledge have at all times been conducted,
in compliance with all limitations, restrictions, standards and
requirements established under environmental laws, (ii) no facts or
circumstances exist that impose on the Company or any of its subsidiaries
an obligation under environmental laws to conduct any removal, remediation,
or similar response action, or that would form the basis of any claim,
action, lawsuit, proceeding or investigation against, or any liability of,
the Company or any of its subsidiaries under any environmental law, (iii)
there is no obligation, undertaking or liability arising out of or relating
to environmental laws that the Company or any of its subsidiaries has
agreed to, assumed or retained, by contract or otherwise, or that has been
imposed on the Company or any of its subsidiaries by any writ, injunction,
decree, order or judgment, (iv) neither the Company nor any of its
subsidiaries has received any written request for information, or been
notified that it is a potentially responsible party, under CERCLA or any
similar state law, and (v) there are no lawsuits, claims, actions,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries that arise out of
or relate to environmental laws.
(o) Compliance with Laws. The Company and its subsidiaries hold
all required, necessary or applicable permits, licenses, variances,
exemptions, orders, franchises and approvals of all Governmental Entities,
except where the failure to so hold would not have, or be reasonably likely
to have, a material adverse effect on the Company (the "Company Permits").
The Company and its subsidiaries are in compliance with the terms of the
Company Permits except where the failure to so comply would not have, or be
reasonably likely to have, a material adverse effect on the Company.
Neither the Company nor any of its subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation, rule, permit or order
of any Federal, state or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or order
of any court or other Governmental Entity, applicable to the Company or any
of its subsidiaries or their respective business, assets or operations,
except for violations and failures to comply that have not had,
individually or in the aggregate, or could not individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
Company.
(p) Material Contracts and Agreements. All material contracts of
the Company or its subsidiaries have been included in the SEC Documents,
except for those contracts not required to be filed pursuant to the rules
and regulations of the SEC. Set forth on Section 3.1(p) of the Company
Disclosure Document is a complete and accurate listing of all hedging and
forward sale arrangements (i) to which the Company or any of its
subsidiaries is party or (ii) by which any of the Company's or any of its
subsidiaries' assets are bound.
(q) Title to Properties.
-------------------
(i) Each of the Company and each of its subsidiaries has good and
defensible title to, or valid leasehold interests in, all its material
assets and properties purported to be owned by it in the SEC
Documents, except for such assets and properties as are no longer used
or useful in the conduct of its businesses or as have been disposed of
in the ordinary course of business and except for defects in title,
easements, restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not materially
interfere with its ability to conduct its business as currently
conducted or as reasonably expected to be conducted. All such assets
and properties, other than assets and properties in which the Company
or any of the subsidiaries has leasehold interests, are free and clear
of all Liens, other than those set forth in the SEC Documents and
except for Liens, that, in the aggregate, do not and will not
materially interfere with the ability of the Company or any of its
subsidiaries to conduct business as currently conducted or as
reasonably expected to be conducted.
(ii) Except as would not have, or be reasonably likely to have, a
material adverse effect on the Company, each of the Company and each
of its subsidiaries has complied in all material respects with the
terms of all leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. Each of
the Company and each of its subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(r) Intellectual Property. The Company and its subsidiaries own,
or are licensed or otherwise have the right to use, all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service xxxx rights, copyrights, technology, know-how,
processes and other proprietary intellectual property rights and computer
programs which are material to the condition (financial or otherwise) or
conduct of the business and operations of the Company and its subsidiaries
taken as a whole. To the Company's knowledge, (i) the use of such patents,
patent rights, trademarks, trademark rights, service marks, service xxxx
rights, trade names, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs by the
Company and its subsidiaries does not infringe on the rights of any person,
subject to such claims and infringements as do not, in the aggregate, give
rise to any liability on the part of the Company and its subsidiaries which
has had or could have a material adverse effect on the Company, and (ii) no
person is, in any manner that has had or could have a material adverse
effect on the Company, infringing on any right of the Company or any of its
subsidiaries with respect to any such patents, patent rights, trademarks,
trademark rights, service marks, service xxxx rights, trade names,
copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs. No claims are pending
or, to the Company's knowledge, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the rights of
any person with regard to any patent, license, trademark, trade name,
service xxxx, copyright or other intellectual property right.
(s) Labor Matters. There are no collective bargaining agreements
or other labor union agreements or understandings to which the Company or
any of its U.S. subsidiaries is a party or by which any of them is bound,
nor is it or any of its subsidiaries the subject of any proceeding
asserting that it or any subsidiary has committed an unfair labor practice
or seeking to compel it to bargain with any labor organization as to wages
or conditions. To the Company's knowledge, during the five-year period
ending on the date of this Agreement, neither the Company nor any of its
subsidiaries has encountered any labor union organizing activity, or had
any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
(t) Undisclosed Liabilities. Except as set forth in the SEC
Documents, at the date of the most recent audited financial statements of
the Company included in the SEC Documents, neither the Company nor any of
its subsidiaries had, and since such date neither the Company nor any of
such subsidiaries has incurred (except in the ordinary course of business),
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), which, individually or in the aggregate, have had
or could reasonably be expected to have a material adverse effect on the
Company.
(u) Pipeline Imbalances. There are no physical natural gas
cumulative imbalances with respect to the Company's or any of its
subsidiaries' properties.
(v) Year 2000. The systems operated or used by the Company or any
of its Subsidiaries are capable of providing uninterrupted millennium
functionality on or after January 1, 2000 to share, record, process and
present data in substantially the same manner and with the same
functionality as such systems share, record, process and present such data
on or before December 31, 1999, except, in the aggregate as would not have,
or be reasonably likely to have, a material adverse effect on the Company.
(w) Opinion of Financial Advisor. The Company's financial
advisor, Xxxxxxx, Xxxxx & Co. (the "Company Financial Advisor"), has
delivered to the Board of Directors of the Company an oral opinion, to be
confirmed in writing (the "Fairness Opinion") to the effect that, as of the
date of this Agreement, the consideration to be received by the holders of
Shares in the Merger is fair to such holders from a financial point of
view. Subject to the prior review by the Company Financial Advisor, the
Fairness Opinion shall be included in the Proxy Statement.
(x) Board Recommendation. The Board of Directors of the Company,
at a meeting duly called and held, has by unanimous vote (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger and the transactions contemplated thereby, are fair to and in the
best interests of the stockholders of the Company, and (ii) resolved to
recommend to the holders of the Shares that they approve the Merger and the
transactions contemplated thereby.
SECTION 3.2. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to, and agree with, the Company as
follows:
(a) Organization; Standing and Power. Parent and Sub are
corporations duly organized, validly existing and in good standing under
laws of their states of incorporation and have the requisite corporate
power and authority to carry on their business as now being conducted.
Parent and Sub are duly qualified to do business and in good standing in
each jurisdiction in which the nature of their business or the ownership or
leasing of their properties makes such qualification necessary, other than
in such jurisdictions where the failure to be so qualified to do business
(individually or in the aggregate) would not have, or be reasonably likely
to have, a material adverse effect on Parent.
(b) Authority; Non-contravention. Parent and Sub have the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Sub and the consummation by Parent and Sub
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by Parent and Sub and constitutes a
valid and binding obligation of Parent and Sub, enforceable against Parent
and Sub in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws or judicial decisions now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement by Parent and Sub do
not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of
a material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Parent or Sub or any of their subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of Sub or of Parent or any
comparable organizational documents of their subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to Parent or Sub or any of their subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation or arbitration award applicable
to Parent or Sub or any of their subsidiaries or their respective
properties or assets, other than, in the case of clause (ii), any such
conflicts, violations or defaults that individually or in the aggregate
would not materially impair the ability of Parent and Sub to perform their
respective obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent or Sub or any
of their subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Sub or the consummation by Parent and Sub of the
transactions contemplated hereby, except for (i) the filing by Parent of a
premerger notification and report form under the HSR Act, (ii) the filing
with the SEC of such reports under Section 13 of the Exchange Act as may
be required in connection with this Agreement and the transactions
contemplated hereby and (iii) filings in Delaware by Sub in connection with
the Merger.
(c) Information Supplied. None of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the
Proxy Statement will at the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the Company's stockholder meeting
at which Company Stockholder Approval is sought, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(d) Brokers. Except for Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, whose fees are to be paid by Parent, no broker, investment
banker or other person, is entitled to any broker's, finder's or other
similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent or
Sub, including any fee for any opinion rendered by any investment banker.
(e) Litigation. There is no suit, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against or
affecting Parent or any of its subsidiaries that could reasonably be
expected to prevent, hinder or materially delay the ability of Parent to
consummate the transactions contemplated by this Agreement, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against Parent or any of its subsidiaries having,
or which, insofar as reasonably can be foreseen, in the future could have,
any such effect.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business of the Company.
----------------------------------
(a) Ordinary Course. During the period from the date of this
Agreement to the Effective Time of the Merger (except as otherwise
specifically contemplated by the terms of this Agreement), the Company
shall and shall cause its subsidiaries to carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as conducted at the date hereof (including the on-going
expansion project at the Company's Mississippi gas storage operations (the
"Gas Storage Expansion Project"), which is being undertaken in the ordinary
course of business) and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business organizations,
keep available the services of their current officers and employees and
preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them, in
each case consistent with past practice, to the end that their goodwill and
ongoing businesses shall be unimpaired to the fullest extent possible at
the Effective Time of the Merger. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this
Agreement, the Company shall not, and shall not permit any of its
subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect
wholly-owned subsidiary of the Company to the Company or a
wholly-owned subsidiary of the Company, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (C) other than in connection with
the Senior Preferred Stock Redemption, purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than, in the case of the Company, the issuance of Shares upon
the exercise of options or conversion of Senior Preferred Stock
outstanding on the date of this Agreement (as identified and described
in Section 3.1(c)) in accordance with their current terms);
(iii) amend the Company Charter, By-laws or other comparable
charter or organizational document;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets
of, or by any other manner, any business or any corporation,
partnership, association, joint venture, limited liability company or
other entity or division thereof or (B) any assets that would be
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except purchases of supplies and
inventory in the ordinary course of business consistent with past
practice;
(v) sell, lease, mortgage, pledge, xxxxx x Xxxx on or otherwise
encumber or dispose of any of its properties or assets, except (A)
sales of inventory in the ordinary course of business consistent with
past practice, (B) other transactions involving not in excess of
$500,000 in the aggregate and (C) the creation of Liens in connection
with working capital borrowings under revolving credit facilities
incurred in accordance with Section 4.1(a)(vi);
(vi) (A) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement with respect to any of the
foregoing, except for working capital borrowings under revolving
credit facilities that are (1) incurred in the ordinary course of
business, (2) on terms customary for facilities of this type and (3)
prepayable without premium or penalty; provided the Company notifies
Parent of the entering into of any such facilities and of any
drawdowns made thereunder; or (B) make any loans, advances or capital
contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned subsidiary of the
Company;
(vii) make or incur any new capital expenditure not included in
the Company's approved capital expenditure budget for 1999 set forth
as on Section 4.1(a)(vii) of the Company Disclosure Document or not in
conjunction with the Gas Storage Expansion Project as contemplated by
Section 4.1(a)(vii) of the Company Disclosure Document with respect to
1999, which, singly or in the aggregate with all other expenditures,
would exceed $500,000 or enter into any material agreements or
commitments with respect to capital expenditures without the prior
written consent of Parent (which consent shall not be unreasonably
withheld);
(viii) make any material election relating to Taxes or settle or
compromise any material Tax liability;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in the SEC
Documents or incurred in the ordinary course of business consistent
with past practice;
(x) release any party from or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(xi) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(xii) enter into any new collective bargaining agreement;
(xiii) change any material accounting principle used by it,
except as required by regulations promulgated by the SEC or the
Financial Accounting Standards Board;
(xiv) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements
or compromises in consultation and cooperation with Parent, and, with
respect to any such settlement, with the prior written consent of
Parent, such consent not to be unreasonably withheld;
(xv) enter into any forward sale or hedging arrangements with
respect to natural gas transportation or storage or any other
products; or
(xvi) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Changes in Employment Arrangements. Neither the Company nor
any of its subsidiaries shall adopt or amend (except as may be required by
law) any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund or other arrangement (including any Company
Benefit Plan) for the benefit of any employee, director or former director
or employee, increase the compensation or benefits of any officer of the
Company or any of its subsidiaries, or, except as provided in an existing
Company Benefit Plan or in the ordinary course of business consistent with
past practice, increase the compensation or benefits of any employee or
former employee or pay any benefit not required by any existing plan,
arrangement or agreement.
(c) Severance. Neither the Company nor any of its subsidiaries
shall grant any new or modified severance or termination arrangement or
increase or, except as required under the existing terms of a Company
Benefit Plan, accelerate any benefits payable under its severance or
termination pay policies in effect on the date hereof.
(d) Other Actions. The Company shall not, and shall not permit
any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in any of the representations and
warranties of the Company set forth in this Agreement becoming untrue.
(e) Internal Restructuring and Hattiesburg Owner Trust Matters.
Notwithstanding any provision of this Section 4.1 to the contrary, the
Company shall be permitted to take the actions necessary to achieve the
internal restructuring of its subsidiaries, to the extent described in
Exhibit A hereto (the "Internal Restructuring"), so that immediately prior
to the Effective Time of the Merger each and every subsidiary of the
Company, other than any subsidiary which is at present a general
partnership or limited liability company, shall have been converted into,
or otherwise become by merger or otherwise (collectively "conversion"), a
new single member limited liability company organized under the Delaware
Limited Liability Company Act. Further, if requested by Parent, the Company
shall use its reasonable efforts to own or acquire ownership of, or cause a
subsidiary to own or acquire ownership of, all Investor Certificates issued
under the Hattiesburg Owner Trust Agreement. If Parent makes such request,
Sub shall timely advance to the Company any funds necessary to effectuate
the acquisition of all Investor Certificates issued under the Hattiesburg
Owner Trust not owned by the Company or any subsidiary as of the date
hereof, which advance shall be evidenced by an unsecured promissory note of
the Company, in a form reasonably acceptable to the Company and Sub, which
shall be payable by the Company to Sub on the date six months from the date
of such advance and which shall bear simple interest at 8 1/2% per annum,
payable in arrears. The Company shall, upon the occasion of it and its
subsidiaries owning all such Investor Certificates, take all reasonable
efforts to terminate the trust created by the Hattiesburg Owner Trust
Agreement and the other agreements benefitting such trust, including that
certain Collateral Sharing and Security Agreement dated November 21, 1995,
that certain Guarantee dated November 21, 1995 and that certain Sales and
Servicing Agreement dated November 21, 1995, as amended by the First
Amendment thereto dated January 31, 1996.
(f) Base Gas. Subject to changes in fuel gas and gas used to
settle operational balancing accounts, the Company will maintain its
current base gas levels at its gas storage facilities, which levels the
Company believes are adequate to meet current contractual needs and to
avoid damage to the storage facilities.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement.
----------------------------------------------------
(a) The Company will, as soon as practicable following the
execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders for the purpose of approving and adopting this
Agreement and approving related matters. The Company will, through its
Board of Directors, recommend to its stockholders approval and adoption of
this Agreement, except to the extent that the Board of Directors of the
Company shall have withdrawn its approval or recommendation of this
Agreement or the Merger solely to the extent permitted by Section 8.2(b).
(b) The Company will, as soon as practicable following the
execution of this Agreement, prepare and file a preliminary Proxy Statement
with the SEC and will use its best efforts to respond to any comments of
the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or
for additional information and will supply Parent with copies of all
correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement or the Merger. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement,
the Company will promptly prepare and mail to its stockholders such an
amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably and timely
objects.
(c) The Company shall cooperate with Parent with respect to
setting a record date for any necessary vote of stockholders regarding the
Merger and will set such date as and when requested by Parent.
SECTION 5.2. Access to Information.
---------------------
(a) During the period from the date hereof to the Effective Time
of the Merger, except to the extent otherwise required by United States
regulatory considerations:
(i) The Company shall, and shall cause each of its subsidiaries,
officers, employees, counsel, financial advisors and other
representatives to, afford to Parent, and to Parent's accountants,
counsel, financial advisors and other representatives, reasonable
access to the Company's and its subsidiaries' respective properties,
books, contracts, commitments and records and, during such period, the
Company shall, and shall cause each of its subsidiaries, officers,
employees, counsel, financial advisors and other representatives to,
furnish promptly to Parent,
(A) a copy of each report, schedule, registration statement
and other document filed by the Company during such period
pursuant to the requirements of Federal or state securities laws
and
(B) all other information concerning its business,
properties, financial condition, operations and personnel as
Parent may from time to time reasonably request so as to afford
Parent a reasonable opportunity to make at its sole cost and
expense such review, examination and investigation of the Company
and its subsidiaries as Parent may reasonably desire to make. The
Company agrees to advise Parent of all material developments with
respect to the Company, its subsidiaries and their respective
assets and liabilities.
(ii) The Company agrees to request KPMG LLP to permit
PricewaterhouseCoopers LLP to review and examine the work papers of
KPMG LLP with respect to the Company and its subsidiaries, and the
officers of the Company will furnish to Parent such financial and
operating data and other information with respect to the business and
properties of the Company and its subsidiaries as Parent shall from
time to time reasonably request.
(iii) The Company shall promptly notify Parent of any notices
from or investigations by Governmental Entities that could materially
affect the Company's business or assets or the consummation of the
Merger. Parent will promptly notify the Company of any notices from or
investigations by Governmental Entities that could materially affect
Parent's consummation of the Merger.
(b) Except as required by law and without limiting in any way the
continued efficacy of the Confidentiality and Standstill Agreement referred
to in Section 8.1, each of the Company and Parent shall, and shall cause
its respective directors, officers, employees, accountants, counsel,
financial advisors and representatives and affiliates to, (i) hold in
confidence, unless compelled to disclose by judicial or administrative
process, or, in the opinion of its counsel, by other requirements of law,
all nonpublic information concerning the other party furnished in
connection with the transactions contemplated by this Agreement until such
time as such information becomes publicly available (otherwise than through
the wrongful act of such person), (ii) not release or disclose such
information to any other person, except in connection with this Agreement
to its auditors, attorneys, financial advisors, other consultants and
advisors, and (iii) not use such information for any competitive or other
purpose other than with respect to its consideration and evaluation of the
transactions contemplated by this Agreement. Any investigation by any party
of the assets and business of the other party and its subsidiaries shall
not affect any representations and warranties hereunder or either party's
right to terminate this Agreement as provided in Article VII.
(c) In the event of the termination of this Agreement, each party
promptly will deliver to the other party (and destroy all electronic data
reflecting the same) all documents, work papers and other material (and any
reproductions or extracts thereof and any notes or summaries thereto)
obtained by such party or on its behalf from such other party or its
subsidiaries as a result of this Agreement or in connection therewith so
obtained before or after the execution hereof.
SECTION 5.3. Reasonable Efforts; Notification.
--------------------------------
(a) Upon the terms and subject to the conditions set forth in
this Agreement, except to the extent otherwise required by United States
regulatory considerations and otherwise provided in this Section 5.3, each
of the parties agrees to use reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and
the making of all necessary registrations and filings (including filings
with Governmental Entities, if any) and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions
contemplated by this Agreement. In connection with and without limiting the
foregoing, each of the Company and Parent and its respective Board of
Directors shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable
to the Merger, (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, take all action necessary to
ensure that the Merger may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and (iii) cooperate with each
other in the arrangements for refinancing any indebtedness of, or obtaining
any necessary new financing for, the Company and the Surviving Corporation.
(b) The Company shall give prompt notice to Parent, and Parent or
Sub shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or
inaccurate in any respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations or warranties or
covenants or agreements of the parties or the conditions to the obligations
of the parties hereunder.
(c) (i) Each of the parties hereto (and, in the case of the
Company, its ultimate controlling person, as necessary) shall file a
premerger notification and report form under the HSR Act with respect to
the Merger as promptly as reasonably possible following execution and
delivery of this Agreement. Each of the parties (and, in the case of the
Company, its ultimate controlling person, as necessary) agrees to use
reasonable efforts to promptly respond to any request for additional
information pursuant to Section (e)(1) of the HSR Act.
(ii) Except as otherwise required by United States regulatory
considerations, the Company will furnish to Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, counsel to Parent and Sub, copies of all
correspondence, filings or communications (or memoranda setting forth
the substance thereof (collectively, "Company HSR Documents")) between
the Company, or any of its respective representatives, on the one
hand, and any Governmental Entity, or members of the staff of such
agency or authority, on the other hand, with respect to this Agreement
or the Merger; provided, however, that (x) with respect to documents
and other materials filed by or on behalf of the Company with the
Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for
review by Parent and Sub, copies will not be required to be provided
to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx and (y) with respect to
any Company HSR Documents (1) that contain any information which, in
the reasonable judgment of Fulbright & Xxxxxxxx L.L.P., should not be
furnished to Parent or Sub because of antitrust considerations or (2)
relating to a request for additional information pursuant to Section
(e)(1) of the HSR Act, the obligation of the Company to furnish any
such Company HSR Documents to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
shall be satisfied by the delivery of such Company HSR Documents on a
confidential basis to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
pursuant to a confidentiality agreement in form and substance
reasonably satisfactory to Parent. Except as otherwise required by
United States regulatory considerations, Parent and Sub will furnish
to Fulbright & Xxxxxxxx L.L.P., counsel to the Company, copies of all
correspondence, filings or communications (or memoranda setting forth
the substance thereof (collectively, "Parent HSR Documents")) between
Parent, Sub or any of their respective representatives, on the one
hand, and any Governmental Entity, or member of the staff of such
agency or authority, on the other hand, with respect to this Agreement
or the Merger; provided, however, that (x) with respect to documents
and other materials filed by or on behalf of Parent or Sub with the
Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for
review by the Company, copies will not be required to be provided to
Fulbright & Xxxxxxxx L.L.P. and (y) with respect to any Parent HSR
Documents (1) that contain information which, in the reasonable
judgment of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, should not be
furnished to the Company because of antitrust considerations or (2)
relating to a request for additional information pursuant to Section
(e)(1) of the HSR Act, the obligation of Parent and Sub to furnish any
such Parent HSR Documents to Fulbright & Xxxxxxxx L.L.P. shall be
satisfied by the delivery of such Parent HSR Documents on a
confidential basis to Fulbright & Xxxxxxxx L.L.P. pursuant to a
confidentiality agreement in form and substance reasonably
satisfactory to the Company.
(iii) At the election of Parent, the Company and Parent shall use
reasonable efforts to defend all litigation under the Federal or state
antitrust laws of the United States which if adversely determined
would, in the reasonable opinion of Parent (based on the advice of
outside counsel), be likely to result in the failure of the condition
set forth in Section 6.1(c) not being satisfied, and to appeal any
order, judgment or decree, which if not reversed, would result in the
failure of such condition. Notwithstanding the foregoing, nothing
contained in this Agreement shall be construed so as to require
Parent, Sub or the Company, or any of their respective subsidiaries or
affiliates, to sell, license, dispose of, or hold separate, or to
operate in any specified manner, any assets or businesses of Parent,
Sub, the Company or the Surviving Corporation (or to require Parent,
Sub, the Company or any of their respective subsidiaries or affiliates
to agree to any of the foregoing). The obligations of each party under
Section 5.3(a) to use reasonable efforts with respect to antitrust
matters shall be limited to compliance with the reporting provisions
of the HSR Act and with its obligations under this Section 5.3(c).
SECTION 5.4. Employee Benefit Matters.
------------------------
(a) Parent may cause any Company Benefit Plan, other than the
Severance Agreements, to be terminated or discontinued at or after the
Effective Time of the Merger, provided that, to the extent Parent or its
affiliates maintain a benefit plan of the same type for employees of Parent
or any of its affiliates ("Parent Benefit Plan"), Parent shall take all
actions necessary or appropriate to permit the Company employees
participating in such Company Benefit Plan to immediately thereafter
participate in such Parent Benefit Plan of the same type maintained by
Parent or any of its affiliates for their employees generally (a
"Replacement Plan"); provided, however, that if the Company Benefit Plan
that is so terminated or discontinued is a group health plan, then Parent
shall permit each Company employee participating in such group health plan
and his or her eligible dependents to be covered under a Replacement Plan
under the terms and conditions of the Replacement Plan as modified to the
extent necessary to (i) provide medical and dental benefits to each such
Company employee and such eligible dependents effective immediately upon
the cessation of coverage of such individuals under such group health plan,
(ii) credit to such Company employee, for the year during which such
coverage under such Replacement Plan begins, with any deductibles and
copayments already incurred during such year under such group health plan,
and (iii) waive any preexisting condition restrictions to the extent that
the preexisting condition restrictions were satisfied under such group
health plan. Parent, the Surviving Corporation, their affiliates, and the
Parent Benefit Plans (including, without limitation, the Replacement Plans)
shall recognize each Company employee's years of service and level of
seniority with the Company and its subsidiaries for purposes of terms of
employment and eligibility, vesting and benefit determination under the
Parent Benefit Plans (other than benefit accruals under any defined benefit
pension plan). Nothing in this Agreement shall be construed to require
Parent to provide any particular type or amount of benefits for any person
under any Parent Benefit Plan.
(b) At the Effective Time of the Merger, each outstanding option
to purchase Shares shall be canceled and the holder thereof shall be
entitled to receive at the Effective Time of the Merger from the Company in
consideration for such cancellation a cash payment of an amount equal to
(i) the excess, if any, of (A) the Merger Consideration over (B) the
exercise price per Share subject to such option, multiplied by (ii) the
number of Shares subject to such option. All amounts payable pursuant to
this Section 5.4(b) shall be subject to any required withholding of taxes.
Prior to the Effective Time of the Merger, the Board of Directors of the
Company will take any corporate action necessary with respect to
outstanding options to effectuate the provisions of this Section 5.4(b).
SECTION 5.5. Indemnification.
---------------
(a) The Company shall, and from and after the Effective Time of
the Merger, Parent and the Surviving Corporation shall, indemnify, defend
and hold harmless each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Effective Time of the Merger,
an officer or director of the Company or any of its Subsidiaries or an
employee of the Company or any of its Subsidiaries who acts as a fiduciary
under any Company Benefit Plans (but, with respect to such employees, only
to the extent (if any) indemnified by the Company as of the date hereof)
(the "Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees), liabilities or judgments or amounts
that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection
with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part
out of the fact that such person is or was a director, officer or such
employee of the Company or any subsidiary whether pertaining to any matter
existing or occurring at or prior to the Effective Time of the Merger and
whether asserted or claimed prior to, or at or after, the Effective Time of
the Merger (including arising out of or relating to the Merger, the
consummation of the transactions contemplated herein, and any action taken
in connection therewith). Any Indemnified Party wishing to claim
indemnification under this Section 5.5, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the
Company (or after the Effective Time of the Merger, Parent and the
Surviving Corporation), but the failure so to notify shall not relieve a
party from any liability that it may have under this Section 5.5, except to
the extent such failure materially prejudices such party. Parent or the
Surviving Corporation shall have the right to assume the defense thereof.
If Parent of the Surviving Corporation does not assume the defense, the
Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict between the positions of any
two or more Indemnified Parties. The Indemnified Party will cooperate in
the defense of any such matter. Parent shall not be liable for any
settlement effected without its prior written consent.
(b) Parent shall purchase and maintain in effect for the benefit
of the Indemnified Parties for a period of six years after the Effective
Time of the Merger, directors' and officers' liability insurance of at
least the same coverage and amounts containing terms and conditions that
are no less advantageous in any material respect to the Indemnified Parties
than that maintained by the Company and its Subsidiaries as of the date of
this Merger Agreement with respect to matters arising before the Effective
Time of the Merger, provided that Parent shall not be required to pay an
annual premium of such insurance in excess of three times the last annual
premium paid by the Company prior to the date hereof, but in such case
shall purchase as much coverage as possible for such amount.
(c) All rights to indemnification for acts or omissions occurring
prior to the Effective Time of the Merger now existing in favor of the
Indemnified Parties as provided in the charter documents or by-laws of the
Company or its subsidiaries and in any indemnification agreements to which
they are parties shall survive the Merger, and the Surviving Corporation
shall continue such indemnification rights for acts or omissions prior to
the Effective Time of the Merger in full force and effect in accordance
with their terms and Parent shall be financially responsible therefor.
(d) If the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any person, then and in each such case, proper provisions shall
be made, and Parent shall cause them to be so made, so that the successors
and assigns of the Surviving Corporation, which, in the reasonable good
faith opinion of the Surviving Corporation, shall be financially
responsible persons or entities, assume the obligations set forth in this
Section 5.5.
(e) The provisions of this Section 5.5 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each
Indemnified Party, his heirs and representatives.
SECTION 5.6. Fees and Expenses. Except as provided in Article
VIII, all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the Merger is
consummated.
SECTION 5.7. Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each other
before issuing any press release or otherwise making any public statements
with respect to the transactions contemplated by this Agreement and shall
not issue any such press release or make any such public statement prior to
such consultation, except that each party may respond to questions from
stockholders and Parent may respond to inquiries from financial analysts
and media representatives in a manner consistent with its past practice and
each party may make such disclosure as may be required by applicable law or
by obligations pursuant to any listing agreement with any national
securities exchange without prior consultation to the extent such
consultation is not reasonably practicable. The parties agree that the
initial press release or releases to be issued in connection with the
execution of this Agreement shall be mutually agreed upon prior to the
issuance thereof.
SECTION 5.8. Internal Restructuring. Parent, Sub and the Company
will each use their reasonable efforts to aid and permit the Company to
achieve the Internal Restructuring, and in such regards Parent and Sub
specifically agree that no representation, warranty, covenant or other
agreement herein contained shall be breached to the extent the Internal
Restructuring results in the acceleration of the payment of any
indebtedness of the Company or any subsidiary thereof listed on Section 5.8
of the Company Disclosure Document (whether on account of the Internal
Restructuring causing a default under any agreement or instrument relating
to such indebtedness or otherwise) and that Sub shall, as the Surviving
Corporation, be responsible for any such accelerated payment, including any
penalty, premium or "make-whole" payment associated therewith listed on
Section 5.8 of the Company Disclosure Document.
SECTION 5.9. Redemption of Senior Preferred Stock. Parent shall
no later than three business days prior to the date scheduled for the
meeting to be held in respect of the Company Stockholder Approval instruct
the Company to take all steps necessary to mail a notice of redemption of
the Senior Preferred Stock at such time as specified by Parent (including
at any time not later than the date one business day before the date
scheduled for such meeting). When so instructed by Parent, the Company
shall take all steps necessary to mail such notice of redemption in
accordance with the Company Charter and to satisfy the provisions of
Louisiana Revised Statute 12:75 regarding the deposit of funds necessary so
that the Senior Preferred Stock shall no longer have any voting rights and
shall no longer be outstanding. When Parent so instructs, Sub shall timely
advance to the Company any funds necessary to effectuate such deposit,
which advance shall be evidenced by an unsecured promissory note of the
Company, in a form reasonably acceptable to the Company and Sub, which
shall be payable by the Company to Sub on the date six months from the date
of such advance and which shall bear simple interest at 8 1/2% per annum,
payable quarterly in arrears.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6. 1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction prior to the Effective Time of the Merger of
the following conditions:
(a) Stockholder Approval. Company Stockholder Approval shall have
been obtained upon a vote at a duly held meeting of stockholders of
the Company or at any adjournment thereof.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity
necessary for the consummation of the transactions contemplated by
this Agreement shall have been filed, shall have occurred or shall
have been obtained.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall have used reasonable
efforts, subject to the limitations set forth in Section 5.3 hereof,
to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any injunction or other order that may
be entered.
SECTION 6.2. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to the
following conditions:
(a) that Company shall have performed in all material respects
all obligations to be performed by it under this Agreement prior to
the Effective Time of the Merger;
(b) each of the representations and warranties of the Company
contained in Section 3.1 and shall be true and correct in all material
respects (disregarding for these purposes any materiality
qualifications contained therein) when made and as of the Effective
Time of the Merger as if made on and as of such date (provided that
such representations and warranties which are by their express
provisions made as of a specific date need be true and correct only as
of such specific date);
(c) the Company's case under Chapter 11 of the Bankruptcy Code
shall have been closed under Section 350 of the Bankruptcy Code in a
manner satisfactory to Parent; and
(d) the Internal Restructuring shall have been completed, no
later than immediately prior to the Effective Time of the Merger, in
accordance with Exhibit A to the reasonable satisfaction of Parent and
Sub.
SECTION 6.3. Condition to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the conditions
that (a) Parent and Sub shall have performed in all material respects all
obligations to be performed by them under this Agreement prior to the
Effective Time of the Merger, and (b) each of the representations and
warranties of Parent and Sub contained in Section 3.2 shall be true and
correct in all material respects (disregarding for these purposes any
materiality qualifications contained therein) when made and as of the
Effective Time of the Merger as if made on and as of such date (provided
that such representations and warranties which are by their express
provisions made as of a specific date need be true and correct only as of
such specific date).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7. 1. Termination. This Agreement may be terminated at
any time prior to the Effective Time of the Merger, whether before or after
approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if Company Stockholder Approval shall not have been
obtained upon a vote at a duly held meeting of stockholders of
the Company or at any adjournment thereof;
(ii) if the Merger shall not have been consummated on or
before March 31, 2000, unless the failure to consummate the
Merger is the result of a material breach of this Agreement by
the party seeking to terminate this Agreement; provided, however,
that the passage of such period shall be tolled for any part
thereof during which any party shall be subject to a nonfinal
order, decree or ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger or the
calling or holding of a meeting of the stockholders of the
Company called to approve the Merger and the other matters
contemplated hereby; or
(iii) if any court of competent jurisdiction or any
governmental, administrative or regulatory authority, agency or
body shall have issued an order, decree or ruling or shall have
taken any other action permanently enjoining, restraining or
otherwise prohibiting the purchase of Shares pursuant to the
Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by the Company or Parent in accordance with the
provisions of Section 8.2;
(d) by Parent, if the Company breaches any of its
representations or warranties herein or falls to perform in any material
respect any of its covenants, agreements or obligations under this
Agreement which breach or failure (x) would give rise to the failure of a
condition set forth in Section 6.2(a) or 6.2(b) and (y) cannot be or has
not been cured within 30 days following receipt of written notice of such
breach; or
(e) by the Company, if Parent or Sub breaches any of its
representations or warranties herein or falls to perform in any material
respect any of its covenants, agreements or obligations under this
Agreement which breach or failure (x) would give rise to the failure of a
condition set forth in Section 6.3(a) or 6.3(b) and (y) cannot be or has
not been cured within 30 days following receipt of written notice of such
breach.
SECTION 7.2. Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.1, an
amendment of this Agreement pursuant to Section 7.4 or an extension or
waiver pursuant to Section 7.5 shall, in order to be effective, require in
the case of Parent, Sub or the Company, action by its Board of Directors or
the duly authorized designee of its Board of Directors.
SECTION 7.3. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided
in Section 7.1, this Agreement shall forthwith become void and have no
effect, without any further liability or obligation on the part of Parent,
Sub or the Company, or any director, officer, employee or stockholder
thereof, other than the confidentiality provisions of Sections 5.2(b) and
(c) and the provisions of Sections 3.1(i), 3.2(d), 5.6, 7.3, 8.2, 8.3,
the proviso of the last sentence of Section 8.1 and Article IX.
SECTION 7.4. Amendment. This Agreement may be amended by the
parties at any time before or after Company Stockholder Approval is
obtained; provided, however, that after such Approval, there shall be made
no amendment that by law requires further approval by such stockholders
without the further approval of such stockholders. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of
the parties.
SECTION 7.5. Extension; Waiver. At any time prior to the
Effective Time of the Merger, the parties may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations
or the other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
SECTION 8.1. Takeover Defenses of the Company and Standstill
Agreements. The Company shall take such action with respect to any
anti-takeover provisions in its charter or afforded it by statute to the
extent necessary to consummate the Merger on the terms set forth in this
Agreement. The Company hereby waives the provisions of the letter
agreements dated July 30, 1999, and July 30, 1999, between the Company and
Parent and the Company and El Paso Energy Marketing Company, respectively
(such letter agreements being herein referred to collectively as the
"Confidentiality and Standstill Agreements"), prohibiting the purchase of
Shares or acting to influence or control the Company, solely in connection
with the transactions contemplated hereby; provided, however, that upon
termination of this Agreement, such waiver shall no longer be effective.
SECTION 8.2. No Solicitation.
---------------
(a) The Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor, agent or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit or initiate the submission of any takeover
proposal, (ii) enter into any agreement (other than confidentiality and
standstill agreements in accordance with the immediately following proviso)
with respect to any takeover proposal, or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any takeover proposal; provided, however, in the
case of this clause (iii), that to the extent required by the fiduciary
obligations of the Board of Directors of the Company, determined in good
faith by the members thereof based on the advice of outside counsel, the
Company may at any point prior to Company Stockholder Approval (the
"Applicable Period"), and subject to the Company's providing written
notice to Parent of its decision to take such action and compliance with
Section 8.2(f), in response to an unsolicited request therefor received
other than in contravention of this Section 8.2(a), furnish information to
any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) pursuant to a confidentiality agreement on substantially the
same terms as provided in the Confidentiality and Standstill Agreements
referred to in Section 8.1 hereof and otherwise enter into discussions and
negotiations with such person or group as to any superior proposal such
person or group has made. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in the preceding sentence
by any officer, director or employee of the Company or any of its
subsidiaries or any investment banker, attorney or other advisor, agent or
representative of the Company, whether or not such person is purporting to
act on behalf of the Company or otherwise, shall be deemed to be a material
breach of this Agreement by the Company. For purposes of this Agreement,
"takeover proposal" means (i) any proposal, other than a proposal by Parent
or any of its affiliates, for a merger or other business combination
involving the Company, (ii) any proposal or offer, other than a proposal or
offer by Parent or any of its affiliates, to acquire from the Company or
any of its affiliates in any manner, directly or indirectly, an equity
interest in the Company or any subsidiary, any voting securities of the
Company or any subsidiary or a material amount of the assets of the Company
and its subsidiaries, taken as a whole, or (iii) any proposal or offer,
other than a proposal or offer by Parent or any of its affiliates, to
acquire from the stockholders of the Company by tender offer, exchange
offer or otherwise more than 20% of the outstanding Shares. Each of the
transactions referred to in clauses (i)-(iii) of the foregoing definition
of takeover proposal, other than the transactions contemplated by this
Agreement, is referred to herein as an "Acquisition Transaction".
(b) Neither the Board of Directors of the Company nor any
committee thereof shall, except in connection with the termination of this
Agreement pursuant to Sections 7.1 (a), (b) or (e), (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by the Board of Directors of the Company or any
such committee of this Agreement or the Merger or take any action having
such effect or (ii) approve or recommend, or propose to approve or
recommend, any takeover proposal. Notwithstanding the foregoing, in the
event the Board of Directors of the Company receives (other than in
contravention of Section 8.2(a)) a takeover proposal that, in the exercise
of its fiduciary obligations (as determined in good faith by a majority of
the disinterested members thereof based on the advice of outside counsel),
it determines to be a superior proposal, the Board of Directors may, during
the Applicable Period only, withdraw or modify its approval or
recommendation of this Agreement or the Merger and may, during the
Applicable Period only and subject to compliance with the provisions of
this sentence terminate this Agreement, in each case at any time after
midnight on the third business day following Parent's receipt of written
notice (a "Notice of Superior Proposal") advising Parent that the Board of
Directors has received a takeover proposal which it has determined to be a
superior proposal and that the Board of Directors of the Company has
resolved to accept the superior proposal (subject to such termination),
specifying the material terms and conditions of such superior proposal,
identifying the person or group making such superior proposal and providing
Parent with a copy of all written materials submitted with respect to such
superior proposal, but only if Parent does not make, within three business
days of receipt of the Notice of Superior Proposal, a written offer that is
at least as favorable, in the good faith reasonable judgment of a majority
of the members of the Board of Directors of the Company (based on the
advice of a financial advisor of nationally recognized reputation), as the
superior proposal. The Company (x) will not enter into a binding agreement
for a superior proposal referred to in the previous sentence until at least
the first calendar day following the third business day after it has
provided the written notice to Parent required thereby, (y) will notify
Parent promptly if its intention to enter into a written agreement referred
to in such notice shall change at any time after giving such notification
and (z) will not terminate this Agreement or enter into a binding agreement
for a superior proposal referred to in the previous sentence if Parent has
within the period referred to in clause (x) of this sentence, made a
written offer that is at least as favorable, in the good faith reasonable
judgment of a majority of the members of the Board of Directors of the
Company (based on the advice of a financial advisor of nationally
recognized reputation), as the superior proposal. Any of the foregoing to
the contrary notwithstanding, the Company may engage in discussions with
any person or group that has made an unsolicited takeover proposal for the
purpose of determining whether such proposal is a superior proposal.
Nothing contained herein shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act.
(c) In the event that the Board of Directors of the Company
or any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Sub the approval or
recommendation by the Board of Directors of the Company or any such
committee of this Agreement or the Merger or take any action having such
effect, or (ii) approve or recommend, or propose to approve or recommend,
any takeover proposal, or (iii) fail to reaffirm its approval or
recommendation of this Agreement and the Merger within two days after a
request by Parent, Parent may terminate this Agreement.
(d) For purposes of this Agreement, a "superior proposal"
means any bona fide takeover proposal to acquire, directly or indirectly,
for consideration consisting of cash, securities or a combination thereof,
at least a majority of the Shares then outstanding or at least 50% of the
assets of the Company and its subsidiaries taken as a whole, and (x)
otherwise on terms which a majority of the members of the Board of
Directors of the Company determines in its good faith reasonable judgment
(based on the written advice of a financial advisor of nationally
recognized reputation, a copy of which shall be provided to Parent) to be
more favorable to the Company's stockholders than the Merger and that
financing thereof is reasonably likely to be available, and (y) which such
Board of Directors, after considering such matters as such Board of
Directors deems relevant (including the written opinion of outside
counsel), determines in good faith that, in the case of the Company,
furnishing information to the third party, participating in discussions or
negotiations with respect to the superior proposal or withdrawing or
modifying its recommendation or recommending a superior proposal, as
applicable, or terminating this Agreement, is required for the Board of
Directors of the Company to comply with its fiduciary duties to the Company
and its stockholders under applicable law.
(e) For purposes of this Agreement, "Acquisition Agreement"
means any letter of intent, agreement in principle, acquisition agreement
or similar agreement (other than a confidentiality agreement in connection
with a superior proposal which is entered into by the Company in accordance
with Section 8.2(a)).
(f) The Company promptly shall advise Parent orally and in
writing of any takeover proposal or any inquiry with respect to or that
could reasonably be expected to lead to any takeover proposal, the identity
of the person making any such takeover proposal or inquiry and the material
terms of any such takeover proposal or inquiry. The Company shall provide
Parent with copies of all written materials received in connection with any
such takeover proposal and shall keep Parent fully informed of the status
and material terms of any such takeover proposal or inquiry.
(g) The Company shall each immediately cease and cause to be
terminated all existing discussions and negotiations, if any, with any
other persons conducted heretofore with respect to any takeover proposal.
SECTION 8.3. Fee and Expense Reimbursements.
------------------------------
(a) The Company agrees to pay Parent a fee in immediately
available funds (in recognition of the fees and expenses incurred to date
by Parent in connection with the matters contemplated hereby) of $7,500,000
(i) promptly upon the termination of the Agreement in the event this
Agreement is terminated by Parent or the Company as permitted by Section
8.2 or (ii) if any Person shall have made a takeover proposal after the
date hereof or announced its intention to make a takeover proposal and
thereafter this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(b)(1) or 7.1(b)(ii), and within 18 months after the
termination of this Agreement any Acquisition Transaction involving the
Company shall have been consummated or an Acquisition Agreement with
respect to an Acquisition Transaction involving the Company shall have been
entered into, then such fee shall be paid upon the date the Acquisition
Agreement is entered into, or if no Acquisition Agreement is entered into,
then upon the date the Acquisition Transaction is consummated.
(b) In the event that (i) this Agreement is terminated by
Parent or the Company pursuant to Sections 7.1(b)(i) or (d) or (ii) if
Parent is entitled to a fee pursuant to Section 83(a), then in either case
the Company shall assume and pay, or reimburse Parent for, all reasonable
and docurnented fees and expenses incurred by Parent or Sub (including the
reasonable and documented fees and expenses of its counsel, accountants and
financial advisors) through the date of termination and which are
specifically related to the Merger, this Agreement and the matters
contemplated by this Agreement, but not to exceed $1,000,000 in the
aggregate (or $500,000 in the aggregate in the event a fee is paid pursuant
to Section 8.3(a)), promptly, but in no event later than five business days
after submission of a request for payment of the same.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Renresentations and Warranties.
None of the representations, warranties, covenants or agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time of the Merger. This Section 9.1 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time of the Merger.
SECTION 9.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or by facsimile or sent by overnight courier to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub, to
El Paso Energy Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: President
with a copy to
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0 Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
(b) if to the Company, to
Crystal Gas Storage, Inc.
000 Xxxxxxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxx X. Xxxxxxx, Xx.
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Attention: Xxxxxxx H, Still, Esq.
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "environmental laws" means, as applicable, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. xx.xx. 9601 et seq. ("CERCLA"), the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. ss. ss. 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., and the Oil
Pollution Act of 1990, 33 U.S.C. xx.xx. 2701 et seq., all rules and
regulations promulgated pursuant to any of the above statutes, and any
other foreign, federal, state or local law, statute, ordinance, rule or
regulation in effect as of the date of this Agreement, or any common law
cause of action, contractual obligation, or judicial or administrative
decision, order or decree (all as have been amended from time to time)
regulating, governing or relating to pollution, contamination and/or
protection of the environment or human health;
(c) "knowledge" means, with respect to any matter stated
herein to be "to the Company's knowledge," or similar language, the actual
knowledge of the Chairman of the Board, the Chief Executive Officer,
President, Chief Financial Officer any Vice President of the Company or any
person that has responsibility for managing a functional area of the
Company, and with respect to any matter stated herein to be "to Parent's
knowledge," or similar language, the actual knowledge of the Chairman of
the Board, the Chief Executive Officer, President, any Vice President,
Chief Financial Officer or General Counsel of Parent;
(d) "material adverse effect" or "material adverse change"
means, when used in connection with the Company, any change or effect (or
any development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, liabilities, condition (financial or otherwise),
financial performance or results of operations of the Company and its
subsidiaries, taken as a whole; provided, however, that no such change or
effect shall be deemed to have occurred to the extent such change or effect
arises from conditions generally affecting the oil and gas or electric
power generation industries or from the United States or global economies.
The term "material adverse effect" means, when used in respect of Parent or
Sub, any material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated by this Agreement;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization or other entity; and
(f) a "subsidiary" of any person means any corporation,
partnership, association, joint venture, limited liability company or other
entity in which such person owns over 50% of the stock or other equity
interests, the holders of which are generally entitled to vote for the
election of directors or other governing body of such other legal entity.
SECTION 9.4. Interpretation. When a reference is made in
this Agreement to a Section, Exhibit or Schedule, such reference shall be
to a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation".
SECTION 9.5. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement. No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein
and the schedules attached hereto) and the Confidentiality and Standstill
Agreements (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (b) except for the provisions
of Sections 5.4(b) and 5.5, are not intended to confer upon any person
other than the parties any rights or remedies hereunder.
SECTION 9.7. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof, except that matters pertaining to
the merger of the Company into Sub shall be governed by the DGCL and the
LBCL to the extent of their applicability to the Merger.
SECTION 9.8. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of
the parties without the prior written consent of the other parties, except
that Parent and/or Sub may assign all or any of their respective rights and
obligations hereunder to any affiliate, provided that no such assignment
shall relieve the assigning party of its obligations hereunder if such
assignee does not perforrn such obligations. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective successors and assigns.
SECTION 9.9. Enforcement of the Agreement. The parties agree
that irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof
in any district court of the United States located in the States of Texas
(Southern District only), Louisiana or Delaware or in any Delaware state
court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal
district court sitting in the Southern District of Texas or in Louisiana or
any Federal or state court sitting in the State of Delaware in the event
any dispute between the parties hereto arises out of this Agreement solely
in connection with such a suit between the parties, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement in any court other than such a
Federal or state court.
SECTION 9. 10. Performance by Sub. Parent hereby agrees to
cause Sub to comply with its obligations under this Agreement.
SECTION 9.11. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
EL PASO ENERGY CORPORATION
By /s/ H. Xxxxx Xxxxxx
-------------------------------------
Name: H. Xxxxx Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
EL PASO ENERGY ACQUISITION CO.
By /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: Executive Vice President
CRYSTAL GAS STORAGE, INC.
By /s/ X. X. Xxxxxxx, Xx.
-------------------------------------
Name: X. X. Xxxxxxx, Xx.
Title: President & CEO
