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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 15, 1999
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Providence Energy Corporation
(Exact name of registrant as specified in its charter)
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Rhode Island 1-10032 05-0389170
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
100 Weybosset Street 02903
Providence, Rhode Island (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (401) 272-9191
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Item 5. Other Events
On November 15, 1999, Providence Energy Corporation, a Rhode Island
corporation ("Providence Energy"), Southern Union Company, a Delaware
corporation ("Southern Union"), and GUS Acquisition Corporation, a Rhode
Island corporation and a wholly owned subsidiary of Southern Union ("Newco"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"),
providing for, among other things, the merger (the "Merger") of Newco with
and into Providence Energy. A copy of the Merger Agreement is attached
hereto as Exhibit 2 to this Form 8-K and is incorporated herein by reference.
In connection with the execution of the Merger Agreement, Providence
Energy entered into Amendment No. 1, dated as of November 15, 1999 (the
"Rights Amendment"), to the Common Stock Rights Agreement, dated as of July
23, 1998 (the "Rights Agreement"), between Providence Energy and The Bank of
New York, as rights agent (the "Rights Agent"), providing, among other
things, that (i) neither Southern Union nor any of its Affiliates shall
become an Acquiring Person, as defined in the Rights Agreement, as a result
of the execution of the Merger Agreement or the consummation of the
transactions contemplated thereby and (ii) a Distribution Date, as defined in
the Rights Agreement, shall not be deemed to have occurred solely as a result
of the approval, execution, delivery or performance of the Merger Agreement
or the consummation of the transactions contemplated thereby. A copy of the
Rights Amendment is attached hereto as Exhibit 10 to this Form 8-K and is
incorporated herein by reference.
A copy of Providence Energy's and Southern Union's joint press release
dated November 15, 1999 is attached hereto as Exhibit 99 to this Form
8-K and is incorporated herein by reference.
Item 7. Financial Statement and Exhibits.
(c) Exhibits.
2 Agreement and Plan of Merger among Southern Union Company, GUS
Acquisition Corporation and Providence Energy Corporation, dated as of
November 15, 1999.
10 Amendment No. 1, dated as of November 15, 1999, to Common
Stock Rights Agreement, dated as of July 23, 1998, between Providence
Energy Corporation and The Bank of New York, Rights Agent.
99 Joint Press Release of Providence Energy and Southern Union,
dated November 15, 1999.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Providence Energy Corporation
Dated: November 15, 1999 By: /s/ James H. Dodge
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Name: James H. Dodge
Title: Chairman, President and
Chief Executive Officer
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description
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2 Agreement and Plan of Merger, among Southern Union Company,
GUS Acquisition Corporation and Providence Energy
Corporation, dated as of November 15, 1999.
10 Amendment No. 1, dated as of November 15, 1999, to Common
Stock Rights Agreement, dated as of July 23, 1998, between
Providence Energy Corporation and The Bank of New York,
Rights Agent.
99 Joint Press Release of Providence Energy and Southern Union,
dated November 15, 1999.
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Exhibit 2
<PAGE>
AGREEMENT AND PLAN OF MERGER
among
SOUTHERN UNION COMPANY,
GUS ACQUISITION CORPORATION
and
PROVIDENCE ENERGY CORPORATION
Dated as of November 15, 1999
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms . . . . . . . . . . . . 1
Section 1.2 Other Defined Terms . . . . . . . . . . . . . 8
ARTICLE II THE MERGER; OTHER TRANSACTIONS
Section 2.1 The Merger . . . . . . . . . . . . . . . . . 9
Section 2.2 Effective Time of the Merger . . . . . . . . 9
Section 2.3 Closing . . . . . . . . . . . . . . . . . . . 9
Section 2.4 Articles of Incorporation; Bylaws . . . . . 10
Section 2.5 Directors and Officers . . . . . . . . . . 10
Section 2.6 Other Transactions . . . . . . . . . . . . 10
Section 2.7 Certificate of Incorporation; Bylaws . . . 10
Section 2.8 Directors and Officers . . . . . . . . . . 10
ARTICLE III CONVERSION OF SHARES
Section 3.1 Effect of the Merger . . . . . . . . . . . 11
Section 3.2 Exchange of PVY Common Stock
Certificates . . . . . . . . . . . . . . 11
Section 3.3 PVY Options; PVY Performance Shares . . . . 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SUG
Section 4.1 Organization, Existence and
Qualification . . . . . . . . . . . . . 14
Section 4.2 Authority Relative to this Agreement
and Binding Effect . . . . . . . . . . . 14
Section 4.3 Governmental Approvals . . . . . . . . . . 15
Section 4.4 Public Utility Holding Company
Status; Regulation as a
Public Utility . . . . . . . . . . . . . 15
Section 4.5 Legal Proceedings; Orders . . . . . . . . . 15
Section 4.6 Brokers . . . . . . . . . . . . . . . . . . 16
Section 4.7 Disclaimer of Representations and
Warranties . . . . . . . . . . . . . . . 16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PVY
Section 5.1 Organization, Existence and
Qualification . . . . . . . . . . . . . . 16
Section 5.2 Capitalization . . . . . . . . . . . . . . 17
Section 5.3 Subsidiaries; Investments . . . . . . . . . 17
Section 5.4 Authority Relative to this Agreement
and Binding Effect . . . . . . . . . . . 17
Section 5.5 Governmental Approvals . . . . . . . . . . 18
Section 5.6 Public Utility Holding Company Status;
Regulation as a Public Utility . . . . . 18
<PAGE>
Section 5.7 Compliance with Legal Requirements;
Governmental Authorizations . . . . . . . 18
Section 5.8 Legal Proceedings; Orders . . . . . . . . . 19
Section 5.9 SEC Documents . . . . . . . . . . . . . . . 19
Section 5.10 Taxes . . . . . . . . . . . . . . . . . . . 19
Section 5.11 Intellectual Property . . . . . . . . . . . 20
Section 5.12 Title to Assets . . . . . . . . . . . . . . 20
Section 5.13 Indebtedness . . . . . . . . . . . . . . . 20
Section 5.14 Machinery and Equipment . . . . . . . . . . 20
Section 5.15 Contracts . . . . . . . . . . . . . . . . . 21
Section 5.16 Insurance . . . . . . . . . . . . . . . . . 21
Section 5.17 Employees . . . . . . . . . . . . . . . . . 21
Section 5.18 Employee Benefit Plans . . . . . . . . . . 22
Section 5.19 Environmental Matters . . . . . . . . . . . 24
Section 5.20 No Material Adverse Change . . . . . . . . 25
Section 5.21 Brokers . . . . . . . . . . . . . . . . . . 25
Section 5.22 PVY Stock Rights Agreement . . . . . . . . 25
Section 5.23 Regulatory Proceedings . . . . . . . . . . 25
Section 5.24 Vote Required . . . . . . . . . . . . . . . 26
Section 5.25 Opinion of Financial Advisor . . . . . . . 26
Section 5.26 Disclaimer of Representations and
Warranties . . . . . . . . . . . . . . . 26
ARTICLE VI COVENANTS
Section 6.1 Covenants of PVY . . . . . . . . . . . . . 26
Section 6.2 Covenants of SUG . . . . . . . . . . . . . 35
Section 6.3 Additional Agreements . . . . . . . . . . . 39
ARTICLE VII CONDITIONS
Section 7.1 Conditions to SUG's Obligation to
Effect the Merger . . . . . . . . . . . . 41
Section 7.2 Conditions to PVY's Obligations to
Effect the Mergers . . . . . . . . . . . 42
ARTICLE VIII TERMINATION
Section 8.1 Termination Rights . . . . . . . . . . . . 43
Section 8.2 Effect of Termination . . . . . . . . . . . 44
Section 8.3 Termination Fee; Expenses . . . . . . . . . 44
ARTICLE IX INDEMNIFICATION; REMEDIES
Section 9.1 Directors' and Officer's
Indemnification . . . . . . . . . . . . . 45
Section 9.2 Representations and Warranties . . . . . . 45
ARTICLE X GENERAL PROVISIONS
Section 10.1 Expenses . . . . . . . . . . . . . . . . . 46
Section 10.2 Notices . . . . . . . . . . . . . . . . . . 46
Section 10.3 Assignment . . . . . . . . . . . . . . . . 47
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Section 10.4 Successor Bound . . . . . . . . . . . . . . 47
Section 10.5 Governing Law; Forum; Consent to
Jurisdiction . . . . . . . . . . . . . . 47
Section 10.6 Waiver of Trial By Jury . . . . . . . . . . 47
Section 10.7 Cooperation; Further Documents . . . . . . 48
Section 10.8 Construction of Agreement . . . . . . . . . 48
Section 10.9 Publicity; Organizational and
Operational Announcements . . . . . . . . 48
Section 10.10 Waiver . . . . . . . . . . . . . . . . . . 49
Section 10.11 Parties in Interest . . . . . . . . . . . . 49
Section 10.12 Specific Performance . . . . . . . . . . . 49
Section 10.13 Section and Paragraph Headings . . . . . . 49
Section 10.14 Amendment . . . . . . . . . . . . . . . . . 49
Section 10.15 Entire Agreement . . . . . . . . . . . . . 49
Section 10.16 Counterparts . . . . . . . . . . . . . . . 49
Schedules:
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PVY Disclosure Schedule
SUG Disclosure Schedule
Schedule 6.1(n)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
as of the 15th day of November, 1999, among SOUTHERN UNION COMPANY, a
Delaware corporation ("SUG"), GUS ACQUISITION CORPORATION, a Rhode Island
corporation and a wholly-owned subsidiary of SUG ("Newco"), and
PROVIDENCE ENERGY CORPORATION, a Rhode Island corporation ("PVY").
RECITALS
WHEREAS, the Board of Directors of each of SUG, Newco and PVY
has approved and deems it advisable and in the best interests of their
respective shareholders to consummate the merger of Newco with and into
PVY upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, the Board of Directors of
each of SUG, Newco and PVY has approved this Agreement and the merger
(the "Merger") of Newco with and into PVY, with PVY being the surviving
corporation in the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be
legally bound hereby, SUG, Newco and PVY hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. For purposes of this
Agreement, the following terms have the meanings specified or referred to
in this Article I (such definitions to be equally applicable to both the
singular and plural forms of the terms defined):
"Acquired Companies"--PVY and its Subsidiaries, collectively,
and each, an "Acquired Company."
"Affiliate"--with respect to any Person, any other Person that
directly, or through one or more intermediaries, controls or is
controlled by or is under common control with such first Person. As used
in this definition, "control" (including with correlative meanings,
"controlled by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Applicable Contract"--any Contract (a) under which any
Acquired Company has any rights, (b) under which any Acquired Company has
any obligation or liability, or (c) by which any Acquired Company or any
of the assets owned or used by it is bound.
"CERCLA"--the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Closing Date"--the date on which the Closing actually takes
place.
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"Contract"--any agreement, contract, document, instrument,
obligation, promise or undertaking (whether written or oral) that is
legally binding.
"DGCL"--the Delaware General Corporation Law.
"Encumbrance"--any charge, adverse claim, lien, mortgage,
pledge, security interest or other encumbrance.
"Environment"--soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams, ponds,
drainage basins, and wetlands), groundwaters, drinking water supply,
stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental Law"--any applicable Legal Requirement that
requires or relates to:
(a) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have significant
impact on the Environment;
(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the
Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are
generated;
(d) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances; or
(e) making responsible parties pay private parties, or groups
of them, for damages done to their health by reason of Releases of
Hazardous Materials or to the Environment, or permitting
self-appointed representatives of the public interest to recover
for injuries done to public assets or for damages to natural
resources.
"ERISA"--the Employee Retirement Income Security Act of 1974,
as amended, or any successor law, and regulations and rules issued
pursuant to that act or any successor law.
"Exchange Act"--the Securities Exchange Act of 1934, as
amended, or any successor law, and regulations and rules issued by the
SEC pursuant to that act or any successor law.
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"Facilities"--any real property, leaseholds, or other
interests currently or formerly owned or operated by any Acquired Company
and any buildings, plants, structures, or equipment (including motor
vehicles, tank cars, and rolling stock) currently or formerly owned or
operated by any Acquired Company.
"FERC"--the Federal Energy Regulatory Commission or any
successor agency.
"Final Order"--an action by the relevant Governmental Body
that has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
"GAAP"--generally accepted United States accounting
principles, applied on a consistent basis.
"Governmental Authorization"--any approval, consent, license,
franchise, certificate of public convenience and necessity, permit,
waiver or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district
or other jurisdiction of any nature;
(b) federal, state, county, local, municipal or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official or entity and any court or other tribunal); or
(d) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including
any withdrawal or other use of groundwater) of Hazardous Materials in,
on, under, about, or from the Facilities or any part thereof into the
Environment, any other act, business, operation, or thing that
unreasonably increases the danger, or risk of danger, or poses an
unreasonable risk of harm to persons or property on or off the Facilities
in any material respect.
"Hazardous Materials"--any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to
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be, hazardous, radioactive, or toxic or a pollutant or a contaminant
under or pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"HSR Act"--the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and rules issued
by the U.S. Department of Justice or the Federal Trade Commission
pursuant to that act or any successor law.
"IRC"--the Internal Revenue Code of 1986, as amended.
"IRS"--the Internal Revenue Service or any successor agency.
"Knowledge"--an individual will be deemed to have "Knowledge"
of a particular fact or other matter if such individual is actually aware
of such fact or other matter. A Person (other than an individual) will
be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director or officer of such Person or any
material Subsidiary of it or other employee listed in Section 1.1 of the
PVY Disclosure Schedule has actual knowledge of such fact or other
matter.
"Legal Requirement"--any federal, state, county, local,
municipal, foreign, international, multinational, or other administrative
order, constitution, law, ordinance, principle of common law, regulation,
rule, tariff, franchise agreement, statute or treaty.
"Material Contract"--a Contract involving a total commitment
by or to any party thereto of at least $125,000 on an annual basis or at
least $500,000 on its remaining term which cannot be terminated on less
than sixty (60) days' notice, without penalty or additional cost to the
Acquired Company as the terminating party.
"Order"--any award, decision, decree, injunction, judgment,
order, writ, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other Governmental Body
or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business"
only if:
(a) such action and authorization therefor is consistent
with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person; and
(b) such action is not required by law to be authorized
by the board of directors (or similar authority) of such Person or
of such Person's parent company (if any).
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"Organizational Documents"--(a) the articles or certificate of
incorporation or organization and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the certificate of
formation and the members, operating or similar agreement of a limited
liability company; (e) any charter or similar document adopted or filed
in connection with the creation, formation or organization of a Person;
and (f) any amendment to any of the foregoing.
"PBGC"--the Pension Benefit Guaranty Corporation.
"Person"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, organized group of persons, entity of any
other type, or Governmental Body.
"Proceeding"--any action, arbitration, hearing, litigation or
suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
"ProvGas Preferred Stock"--the 8.70% redeemable cumulative
preferred stock, par value $100.00 per share, of ProvGas.
"PUHCA"--the Public Utility Holding Company Act of 1935, as
amended, or any successor law, and regulations and rules issued by the
SEC pursuant to that act or any successor law.
"PVY Audited Financials"--the PVY Balance Sheet, the audited
consolidated statement of income of the Acquired Companies for the year
ended September 30, 1999, the audited consolidated statement of cash
flows of the Acquired Companies for the year ended September 30, 1999,
the consolidated statements of capitalization of the Acquired Companies
at September 30, 1999, the consolidated statements of changes in common
stockholders' investment of the Acquired Companies for the year ended
September 30, 1999 (in each case, including the notes thereto),
collectively.
"PVY Balance Sheet"--the audited consolidated balance sheet of
the Acquired Companies at September 30, 1999 (including the notes
thereto), provided by PVY to SUG as part of the PVY Financial Statements.
"PVY Benefit Plans"--all employee retirement, welfare, stock
option, stock ownership, deferred compensation, bonus or other benefit
plans, agreements, practices, policies, programs, or arrangements, that
are applicable to any employee, director or consultant of the Acquired
Companies or maintained by or contributed to by any of the Acquired
Companies.
"PVY Common Stock"--the common stock, par value $1.00 per
share, of PVY.
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"PVY Disclosure Schedule"--the disclosure schedule delivered
by PVY to SUG concurrently with the execution and delivery of this
Agreement.
"PVY Material Adverse Effect"--a material adverse effect (i)
on the business, financial condition or results of operations of PVY and
its Subsidiaries, taken as a whole, or (ii) on the ability of PVY and its
Subsidiaries to consummate the Mergers in accordance with this Agreement.
"PVY PEIP"--the Providence Energy Corporation 1992 Performance
and Equity Incentive Plan.
"PVY Performance Share"--a phantom share awarded under and
subject to the terms of the PVY Performance Share Plan and having a value
equal to the fair market value of a share of PVY Common Stock.
"PVY Performance Share Plan"--the Providence Energy
Corporation Performance Share Plan.
"PVY Permitted Liens"--Encumbrances securing Taxes,
assessments, governmental charges or levies, or the claims of
materialmen, mechanics, carriers and like persons, all of which are not
yet due and payable or which are being contested in good faith;
Encumbrances (other than any Encumbrance imposed by ERISA) incurred on
deposits made in the Ordinary Course of Business in connection with
worker's compensation, unemployment insurance or other types of social
security; the Encumbrances created by and the Encumbrances permitted
under the Indenture dated as of January 1, 1922 between ProvGas and State
Street Bank and Trust Company (successor to Rhode Island Hospital Trust
Company), as Trustee, as amended or supplemented from time to time (the
"ProvGas Indenture"); in the case of leased real property, Encumbrances
(not attributable to an Acquired Company as lessee) affecting the
landlord's (and any underlying landlord's) interest in any leased real
property; Encumbrances in respect of judgments or awards with respect to
which PVY or one of its Subsidiaries shall in good faith currently be
prosecuting an appeal or other proceeding for review and with respect to
which PVY or such Subsidiary shall have secured a stay of execution
pending such appeal or such proceeding for review; provided that PVY or
such Subsidiary shall have set aside on its books adequate reserves with
respect thereto; and such other Encumbrances which are not, individually
or in the aggregate, reasonably likely to have a PVY Material Adverse
Effect.
"PVY Restricted Stock"--the shares of PVY Common Stock granted
under and subject to the terms of the PVY PEIP.
"Related Documents"--any Contract provided for in this
Agreement to be entered into by one or more of the parties hereto or
their respective Subsidiaries in connection with the Mergers.
"Release"--any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
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"Representative"--with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.
"RIBCA"--the Rhode Island Business Corporation Act.
"SEC"--the United States Securities and Exchange Commission or
any successor agency.
"Securities Act"--the Securities Act of 1933, as amended, or
any successor law, and regulations and rules issued by the SEC pursuant
to that act or any successor law.
"Subsidiary"--with respect to any Person (the "Owner"), any
Person of which securities or other interests having the power to elect a
majority of that other Person's board of directors or similar governing
body, or otherwise having the power to direct the business and policies
of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that
has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person,
"Subsidiary" means a Subsidiary of PVY.
"SUG Disclosure Schedule"--the disclosure schedule delivered
by SUG to PVY concurrently with the execution and delivery of this
Agreement.
"SUG Material Adverse Effect"--a material adverse effect (i)
on the business, financial condition or results of operations of SUG and
its Subsidiaries, taken as a whole, or (ii) on the ability of SUG and
Newco to consummate the Mergers in accordance with this Agreement.
"Related Documents"--any Contract provided for in this
Agreement to be entered into by one or more of the parties hereto or
their respective Subsidiaries in connection with the Mergers.
"Tax"--any tax (including any income tax, capital gains tax,
value-added tax, sales and use tax, transfer tax, franchise tax, payroll
tax, withholding tax or property tax), levy, assessment, tariff, duty
(including any customs duty), deficiency, franchise fee or payment,
payroll tax, utility tax, gross receipts tax or other fee or payment, and
any related charge or amount (including any fine, penalty, interest or
addition to tax), imposed, assessed or collected by or under the
authority of any Governmental Body or payable pursuant to any tax-sharing
agreement or any other Contract relating to the sharing or payment of any
such tax, levy, assessment, tariff, duty, deficiency or fee.
"Tax Return"--any return (including any information return),
report, statement, schedule, notice, form, or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
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<PAGE>
administration, implementation, or enforcement of or compliance with any
Legal Requirement relating to any Tax, including any amendment thereto.
"Threatened"--a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been
given (orally or in writing) or if any other event has occurred or any
other circumstance exists, that would lead a director or officer of a
comparable gas distribution company to conclude that such a claim,
Proceeding, dispute, action, or other matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
Section 1.2 Other Defined Terms. In addition to the terms
defined in Section 1.1, certain other terms are defined elsewhere in this
Agreement as indicated below and, whenever such terms are used in this
Agreement, they shall have their respective defined meanings.
Term Section
Acquired Company Option Plans 3.3
Agreement Introductory Paragraph
Attleboro 2.6
Attleboro Merger 2.6
Business Combination 6.1(h)(4)
Certificates 3.2(b)
Closing 2.3
Confidentiality Agreement 6.1(c)(1)
Effective Time 2.2
Employees 6.2(b)
Final Surviving Corporation 2.6
Indemnified Parties 9.1(a)
Initial Termination Date 8.1(i)
MBCL 2.6
Merger Recitals
Merger Consideration 3.1(a)
Mergers 2.6
Newco Introductory Paragraph
Owner 1.1
Paying Agent 3.2(a)
ProvGas 2.6
ProvGas Indenture 1.1
ProvGas Merger 2.6
Proxy Statement 6.3(a)
PVY Introductory Paragraph
PVY Commonly Controlled Entity 5.18(a)(4)
PVY Financial Statements 5.9
PVY Meeting 6.1(j)(1)
PVY Merger 2.6
PVY Options 3.3
PVY Rights 3.1(a)
PVY SEC Documents 5.9
PVY Shareholders' Approval 5.24
PVY Stock Rights Agreements 3.1(a)
SUG Introductory Paragraph
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Superior Proposal 6.1(h)(4)
Surviving Corporation 2.1
Third Party Beneficiary 10.11
WARN 6.2(c)
ARTICLE II
THE MERGER; OTHER TRANSACTIONS
Section 2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, Newco will be merged
with and into PVY in accordance with the laws of the State of Rhode
Island. As a result of the Merger, the separate corporate existence of
Newco shall cease and PVY will be the surviving corporation in the Merger
(the "Surviving Corporation") and will continue its corporate existence
under the laws of the State of Rhode Island. The Merger will have the
effect as provided in the applicable provisions of the RIBCA. Without
limiting the generality of the foregoing, upon the Merger, all the
property, rights, privileges, immunities, powers and franchises of Newco
and PVY will vest in the Surviving Corporation and all obligations,
duties, debts and liabilities of PVY and Newco will be the obligations,
duties, debts and liabilities of the Surviving Corporation.
Section 2.2 Effective Time of the Merger. On the Closing
Date, with respect to the Merger, a duly executed Articles of Merger
complying with the requirements of the RIBCA will be filed with the
Secretary of State of the State of Rhode Island. The Merger will become
effective upon the issuance of a certificate of merger by the Secretary
of State of the State of Rhode Island (the "Effective Time").
Section 2.3 Closing. Unless this Agreement has been
terminated and the transactions contemplated herein have been abandoned
pursuant to Article VIII hereof, the closing of the transactions
contemplated by this Agreement (the "Closing") will take place at 10:00
a.m., Eastern Time, on the Closing Date to be specified by the parties,
which shall be no later than the tenth business day after satisfaction
or, if permissible, waiver of all of the conditions set forth in Article
VII hereof (other than Sections 7.1(a), 7.1(b), 7.1(c), 7.1(f), 7.1(g),
7.2(a), 7.2(b), 7.2(c) and 7.2(e), which shall be satisfied or waived on
the Closing Date) at the offices of Hughes Hubbard & Reed LLP, New York,
counsel to SUG, unless another date or place is agreed to in writing by
the parties hereto.
Section 2.4 Articles of Incorporation; Bylaws. Pursuant to
the Merger, (i) the Articles of Incorporation of the Surviving
Corporation shall be amended and restated at and as of the Effective Time
to be identical to the Articles of Incorporation of Newco, as in effect
immediately prior to the Effective Time, until thereafter amended as
provided by law, except that Article 1 of the Articles of Incorporation
shall be changed so that the name of the Surviving Corporation shall be
Providence Energy Corporation and (ii) the Bylaws of the Surviving
Corporation shall be amended and restated at and as of the Effective Time
to be identical to the Bylaws of Newco, as in effect immediately prior to
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the Effective Time, until thereafter amended as provided by law, except
that the Bylaws shall be changed so that the name of the Surviving
Corporation shall be Providence Energy Corporation.
Section 2.5 Directors and Officers. The directors and
officers of PVY immediately prior to the Effective Time will be the
directors and officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the
Surviving Corporation.
Section 2.6 Other Transactions. Immediately after the
Effective Time, PVY shall adopt an agreement and plan of merger pursuant
to which North Attleboro Gas Company ("Attleboro"), a wholly-owned
subsidiary of PVY, shall merge with and into PVY on the Closing Date,
with PVY being the surviving corporation, by complying with the
requirements of the Massachusetts Business Corporation Law ("MBCL") and
the RIBCA (the "Attleboro Merger"). Immediately following the
consummation of the Attleboro Merger, PVY shall adopt an agreement and
plan of merger pursuant to which Providence Gas Company ("ProvGas"), a
wholly-owned Subsidiary of PVY, shall merge with and into PVY on the
Closing Date, with PVY being the surviving corporation, by complying with
the requirements of the RIBCA (the "ProvGas Merger"). Immediately
following the consummation of the ProvGas Merger, SUG shall adopt an
agreement and plan of merger pursuant to which PVY shall merge with and
into SUG on the Closing Date, with SUG being the surviving corporation
(the "Final Surviving Corporation"), by complying with the requirements
of the RIBCA and the DGCL (the "PVY Merger"). The Merger, the ProvGas
Merger, the Attleboro Merger and the PVY Merger shall hereinafter be
referred to collectively as the "Mergers."
Section 2.7 Certificate of Incorporation; Bylaws. Pursuant
to the PVY Merger, the Restated Certificate of Incorporation of SUG, as
in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Final Surviving Corporation until
thereafter amended as provided by law and (ii) the Bylaws of SUG as in
effect immediately prior to the Effective Time, shall be the Bylaws of
the Final Surviving Corporation until thereafter amended as provided by
law.
Section 2.8 Directors and Officers. The directors and
officers of SUG immediately prior to the Effective Time will be the
directors and officers of SUG after consummation of the PVY Merger, each
to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Final Surviving Corporation; provided that, immediately
after the consummation of the Merger, the Chief Executive Officer of PVY
immediately prior to the Effective Time will be elected or appointed as a
member of the Board of Directors of SUG.
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ARTICLE III
CONVERSION OF SHARES
Section 3.1 Effect of the Merger. As of the Effective
Time, by virtue of the Merger and without any action on the part of the
holders of any shares of PVY Common Stock and/or any shares of PVY
Restricted Stock, all of which shall become fully vested immediately
prior to the Effective Time:
(a) Each issued and outstanding share of PVY Common Stock
(which shall be deemed to include (i) each issued and outstanding share
of PVY Restricted Stock and (ii) each related associated stock purchase
right (collectively, the "PVY Rights") issued pursuant to the Stock
Rights Agreement, dated as of July 23, 1998 between PVY and The Bank of
New York, as Rights Agent (the "PVY Stock Rights Agreement"), which will
be terminated at the Effective Time (any reference in this Agreement to
PVY Common Stock will be deemed to include the associated PVY Rights and
all PVY Restricted Stock)), will be converted into the right of each
holder thereof to receive $42.50 in cash (the "Merger Consideration").
(b) Each holder of PVY Common Stock shall surrender all such
holder's certificates formerly representing ownership of PVY Common Stock
in the manner provided in Section 3.2. All such shares of PVY Common
Stock, when so converted, shall no longer be outstanding and shall be
canceled and automatically converted into the right to receive the Merger
Consideration therefor upon the surrender of such certificate in
accordance with Section 3.2. Any payment made pursuant to this Section
3.1 shall be made net of applicable withholding taxes to the extent such
withholding is required by law.
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of PVY Common Stock held in the treasury of PVY
immediately prior to the Effective Time shall be canceled and
extinguished without conversion thereof.
(d) Each share of common stock, par value $1.00 per share, of
Newco issued and outstanding immediately prior to the Effective Time
shall be converted into and become one share of common stock, par value
$1.00 per share, of the Surviving Corporation.
Section 3.2 Exchange of PVY Common Stock Certificates.
(a) SUG's registrar and transfer agent, or such other bank or
trust company which has a net capital of not less than $100,000,000, as
may be selected by SUG and be reasonably acceptable to PVY, will act as
paying agent ("Paying Agent") for the holders of PVY Common Stock in
connection with the Merger, pursuant to an agreement providing for the
matters set forth in this Section 3.2 and such other matters as may be
appropriate and the terms of which shall be reasonably satisfactory to
SUG and PVY, to receive the consideration to which holders of PVY Common
Stock become entitled pursuant to Section 3.1. Contemporaneous with the
Effective Time, SUG will deposit in trust with the Paying Agent, for the
benefit of holders of PVY Common Stock, the cash necessary to pay the
aggregate Merger Consideration as contemplated by Section 3.1(a) with
respect to each share of PVY Common Stock.
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(b) At the Effective Time of the Merger, SUG will irrevocably
instruct the Paying Agent to promptly, and in any event not later than
eight (8) business days following the Effective Time, mail (and to make
available for collection by hand) to each holder of record of a
certificate or certificates, which immediately prior to the Effective
Time represented outstanding shares of PVY Common Stock (the
"Certificates"), whose shares of PVY Common Stock were converted pursuant
to Section 3.1(a) into the right to receive the Merger Consideration (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 shall be in
such form and have such other provisions as SUG may reasonably specify)
and (ii) instructions (which shall provide that at the election of the
surrendering holder Certificates may be surrendered, and payment therefor
collected, by hand delivery) for use in effecting the surrender of the
Certificates in exchange for payment of 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 SUG, together with such
letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger
Consideration for each share of PVY Common Stock formerly represented by
such Certificate, to be mailed (or made available for collection by hand
if so elected by the surrendering holder) within eight (8) business days
of receipt thereof, and the Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper
form for transfer and that the Person requesting such payment shall have
paid any transfer and other Taxes required by reason of the payment of
the Merger Consideration to a Person other than the registered holder of
the Certificate surrendered or shall have established to the satisfaction
of SUG that such Tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.2, each Certificate (other
than Certificates representing PVY Common Stock held by SUG) shall be
deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration as contemplated by this Section 3.2.
(c) The Paying Agent shall invest the funds representing the
aggregate Merger Consideration, as directed by SUG, in (i) direct
obligations of the United States of America (ii) obligations for which
the full faith and credit of the United States of America is pledged to
provide for the payment of principal and interest or (iii) commercial
paper rated the highest quality by either Moody's Investors Service, Inc.
or Standard and Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc.; provided, however, that, notwithstanding anything to the
contrary in this Agreement, if the Paying Agent is not able or refuses to
so invest such funds, SUG may deposit such funds in trust with another
bank or trust company which has a net capital of not less than
$100,000,000, as may be selected by SUG and be reasonably acceptable to
PVY, so long as the Paying Agent is allowed to draw on such funds to the
extent required to pay the Merger Consideration. Any net earnings with
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respect to such funds shall be the property of and paid over to SUG as
and when requested by SUG.
(d) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, the Paying
Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Article III; provided, however, that
the Person to whom the Merger Consideration is paid shall, if required by
SUG, as a condition precedent to the payment thereof, give the Paying
Agent a bond in such sum as it may ordinarily require and indemnify SUG
in a manner satisfactory to it against any claim that may be made against
SUG with respect to the Certificate claimed to have been lost, stolen or
destroyed.
(e) After the Effective Time, the stock transfer books of PVY
shall be closed and there shall be no transfers on the stock transfer
books of the Surviving Corporation of shares of PVY Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to SUG, they shall be canceled
and exchanged for the Merger Consideration as provided in this Article
III.
(f) Any portion of the funds held by the Paying Agent that
remain undistributed to the former shareholders of PVY for eighteen (18)
months after the Effective Time shall be delivered by the Paying Agent,
which shall thereafter act as the Paying Agent, and any former
shareholders of PVY who have not complied with this Article III prior to
eighteen (18) months after the Effective Time shall thereafter look only
as a general creditor to SUG for payment of their claim for the Merger
Consideration.
(g) Neither the Surviving Corporation nor SUG shall be liable
to any holder of PVY Common Stock for Merger Consideration delivered to a
public official pursuant to any applicable abandonment, escheat or
similar law. Any amounts remaining unclaimed by holders of any such
shares of PVY Common Stock five years after the Effective Time (or such
earlier date immediately prior to the time at which such amounts would
otherwise escheat to or become property of any Governmental Body) shall,
to the extent permitted by applicable law, become the property of SUG,
free and clear of any claims or interest of any such holders or their
successors, assigns or personal representatives previously entitled
thereto.
Section 3.3 PVY Options; PVY Performance Shares. (a) Each
outstanding option to purchase shares of PVY Common Stock or other
similar interest (collectively, the "PVY Options") granted under any
stock option plans or under any other plan or arrangement of any Acquired
Company (the "Acquired Company Option Plans"), together with the
applicable exercise prices, are disclosed in Section 3.3(a) of the PVY
Disclosure Schedule. Each PVY Option that is outstanding at the
Effective Time shall be deemed fully vested and shall be converted at the
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Effective Time into a right to receive in respect thereof a cash payment
in an amount equal to the product of (x) the amount by which (i) the
Merger Consideration exceeds (ii) the exercise price of such PVY Option
(if less than (i)) and (y) the number of shares of PVY Common Stock
subject thereto. Such cash payment (net of applicable withholding taxes)
shall be made on the Closing Date or as promptly thereafter as reasonably
practicable.
(b) Each outstanding award of PVY Performance Shares as
determined pursuant to the PVY Performance Share Plan, is disclosed in
Section 3.3(b) of the PVY Disclosure Schedule. Copies of the PVY
Performance Share Plan and the agreements entered into pursuant to the
PVY Performance Share Plan, which set forth the applicable performance
measures and target opportunities, have been provided to SUG prior to the
date of this Agreement. In accordance with the terms of the PVY
Performance Share Plan, the target opportunities for each outstanding
award of PVY Performance Shares outstanding at the Effective Time shall
be deemed fully earned for the entire "Performance Periods" (as such term
is defined in the PVY Performance Share Plan). Each PVY Performance
Share outstanding at the Effective Time shall be canceled and
automatically converted into a right to receive a cash payment in an
amount equal to the Merger Consideration. Any payment made pursuant to
this Section 3.3(b) shall be made net of applicable withholding taxes to
the extent such withholding is required by law, and shall be made on the
Closing Date or as promptly thereafter as reasonably practicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SUG
SUG, as to SUG and Newco, represents and warrants to PVY that:
Section 4.1 Organization, Existence and Qualification. SUG
is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware, with full corporate
power and authority, and has been duly authorized by all necessary
approvals and orders of the Florida, Missouri, Pennsylvania and Texas
regulatory authorities and the Federal Energy Regulatory Commission (the
"FERC"), to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, to perform
its obligations under all Contracts to which it is a party, and to
execute and deliver this Agreement. Newco is a corporation duly
incorporated, validly existing, and in good standing under the laws of
the State of Rhode Island, with full corporate power and authority, to
conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, to perform its
obligations under all Contracts to which it is a party, and to execute
and deliver this Agreement. Each of SUG and Newco is duly qualified to
do business as a foreign corporation and is in good standing under the
laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the business
conducted by it, requires such qualification as a foreign corporation
except for such failures to be so qualified or in good standing as are
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not, individually or in the aggregate, reasonably likely to have a SUG
Material Adverse Effect.
Section 4.2 Authority Relative to this Agreement and
Binding Effect. The execution, delivery and performance of this
Agreement and the Related Documents by each of SUG and Newco have been
duly authorized by all requisite corporate action. The execution,
delivery and performance of this Agreement and the Related Documents by
SUG and Newco will not result in a violation or breach of any term or
provision of, or constitute a default, or require a consent, approval or
notification, or accelerate the performance required under, the
Organizational Documents of SUG or Newco, as the case may be, any
indenture, mortgage, deed of trust, security agreement, loan agreement,
or other Contract to which SUG or Newco is a party or by which its assets
are bound, or violate any Order, with such exceptions as are not,
individually or in the aggregate, reasonably likely to have a SUG
Material Adverse Effect. This Agreement constitutes and the Related
Documents to be executed by SUG and Newco when executed and delivered
will constitute valid and legally binding obligations of SUG and Newco,
enforceable against SUG and Newco in accordance with their terms, except
as enforceability may be limited by (i) bankruptcy or similar laws from
time to time in effect affecting the enforcement of creditors' rights
generally or (ii) the availability of equitable remedies generally.
Section 4.3 Governmental Approvals. Except as set forth in
Section 4.3 of the SUG Disclosure Schedule and as required by the HSR
Act, as of the date of this Agreement, no approval or authorization of
any Governmental Body with respect to performance under this Agreement or
the Related Documents by SUG and Newco is required to be obtained by SUG
and Newco in connection with the execution and delivery by SUG and Newco
of this Agreement or the Related Documents or the consummation by SUG and
Newco of the transactions contemplated hereby or thereby, the failure to
obtain which are, individually or in the aggregate, reasonably likely to
have a SUG Material Adverse Effect.
Section 4.4 Public Utility Holding Company Status;
Regulation as a Public Utility. SUG is a "gas utility company" and a
"public utility company" (as such terms are defined in PUHCA). SUG
indirectly owns a minority interest in a "foreign utility company" (as
such term is defined in PUHCA) that is exempt from, and is deemed not to
be a public utility company for purposes of, PUHCA pursuant to Section 33
thereof with respect to which SUG has filed with the SEC a Form U-57
notification of foreign utility company status. Except as stated above
in this Section 4.4 and with respect to their relationship with SUG,
neither SUG nor any of its Subsidiaries is a "holding company," a
"subsidiary company," a "public utility company" or an "affiliate" of a
"public utility company," or a "holding company" within the meaning of
such terms in PUHCA. As of the date of this Agreement, SUG is subject to
regulation as a public utility or public service company (or similar
designation) in the states of Florida, Missouri, Texas and Pennsylvania.
Except as stated in the preceding sentence, as of the date of this
Agreement, neither SUG nor its "affiliates" (as such term is defined in
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PUHCA) are subject to regulation as a public utility or public service
company (or similar designation) in any other state.
Section 4.5 Legal Proceedings; Orders. Except as
specifically described in a report, schedule, registration statement or
definitive proxy statement filed by SUG with the SEC since September 1,
1999 and delivered to PVY prior to the date of this Agreement, as of the
date of this Agreement, there is no pending Proceeding that challenges,
or that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, the Mergers or any of the transactions
contemplated hereby.
Section 4.6 Brokers. Neither SUG nor Newco is a party to,
or in any way obligated under any Contract, and there are no outstanding
claims against SUG or Newco, for the payment of any broker's or finder's
fees in connection with the origin, negotiation, execution or performance
of this Agreement.
Section 4.7 Disclaimer of Representations and Warranties.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE
IV, SUG MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
AND SUG HEREBY DISCLAIMS ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER BY SUG, ANY SUBSIDIARY OF SUG, OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER
PERSON, WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO PVY OR ANY OF ITS
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER
PERSON, OF ANY DOCUMENTATION OR OTHER INFORMATION BY SUG, ANY SUBSIDIARY
OF SUG, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR REPRESENTATIVES, OR ANY OTHER PERSON, WITH RESPECT TO ANY OF THE
FOREGOING.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PVY
PVY, as to the Acquired Companies, represents and warrants to SUG
as follows:
Section 5.1 Organization, Existence and Qualification.
(a) Each Acquired Company is a corporation duly incorporated,
validly existing, and in good standing under the laws of its state of
incorporation, with full corporate power and authority and has been duly
authorized by all necessary approvals and orders of the Rhode Island,
Massachusetts and all other relevant state regulatory authorities and the
FERC to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform
all its obligations under Applicable Contracts. Section 5.1(a) of the PVY
Disclosure Schedule sets forth the name of each Acquired Company, the
state or jurisdiction of its incorporation or organization, and for each
state or jurisdiction where such Acquired Company is duly qualified as a
foreign corporation. Each Acquired Company is duly qualified to do
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business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the business
conducted by it, requires such qualification as a foreign corporation
except for such failures to be so qualified or in good standing as are
not, individually or in the aggregate, reasonably likely to have a PVY
Material Adverse Effect.
(b) PVY has delivered to SUG copies of the Organizational
Documents, as currently in effect, of each Acquired Company.
Section 5.2 Capitalization. The capital stock of PVY
consists of 20,000,000 shares of PVY Common Stock, of which 6,096,485
shares were issued and outstanding on October 31, 1999. Such shares
include 28,620 shares of PVY Restricted Stock. ProvGas is authorized to
issue 80,000 shares of ProvGas Preferred Stock, of which 32,000 shares
were issued and outstanding on October 31, 1999. The issued and
outstanding shares of PVY Common Stock and ProvGas Preferred Stock have
been validly issued and are fully paid and nonassessable. Except as
specifically described in the PVY SEC Documents delivered to SUG prior to
the date of this Agreement or as set forth in Section 3.3(a) of the PVY
Disclosure Schedule, no shares of PVY Common Stock or ProvGas Preferred
Stock are held, in treasury or otherwise, by PVY or any of its
Subsidiaries and there are no outstanding (i) securities convertible into
PVY Common Stock, ProvGas Preferred Stock or other capital stock of PVY
or any of its Subsidiaries, (ii) warrants or options to purchase PVY
Common Stock or other securities of PVY or any of its Subsidiaries or
(iii) other commitments to issue shares of PVY Common Stock, ProvGas
Preferred Stock or other securities of PVY or any of its Subsidiaries.
There are no voting trusts, proxies or other agreements, commitments or
understandings of any character to which PVY or any of its Subsidiaries
is a party or by which PVY or any of its Subsidiaries is bound with
respect to the voting of any shares of capital stock of PVY or with
respect to the registration of the offering, sale or delivery of any
shares of capital stock of PVY under the Securities Act or otherwise.
Section 5.3 Subsidiaries; Investments. Except as set forth
in Section 5.3 of the PVY Disclosure Schedule, PVY has no Subsidiaries or
investments in any Person (except for marketable securities disclosed to
SUG prior to the date of this Agreement) and, except for the issued and
outstanding ProvGas Preferred Stock, PVY is the registered owner and
holder of all of the issued and outstanding shares of capital stock of
its Subsidiaries and has good title to such shares. The outstanding
capital stock of each Subsidiary has been duly authorized, validly issued
and is fully paid and nonassessable. All such capital stock owned by any
Acquired Company is free and clear of any Encumbrance (except for any
Encumbrance disclosed in the PVY SEC Documents delivered to SUG prior to
the date of this Agreement, or created or incurred by this Agreement in
favor of SUG, or imposed by federal or state securities laws).
Section 5.4 Authority Relative to this Agreement and
Binding Effect. The execution, delivery and performance of this
Agreement and the Related Documents by PVY have been duly authorized by
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all requisite corporate action, except, as of the date of this Agreement,
for the PVY Shareholders' Approval. Except as set forth in Section 5.4
of the PVY Disclosure Schedule, the execution, delivery and performance
of this Agreement and the Related Documents by PVY will not require a
consent, approval or notification, will not result in a violation or
breach of any term or provision of, or constitute a default or accelerate
the performance required under, the Organizational Documents of any of
the Acquired Companies, any indenture, mortgage, deed of trust, security
agreement, loan agreement, or other Applicable Contract to which any of
the Acquired Companies is a party or by which its assets are bound, or
violate any Order, with such exceptions as are not, individually or in
the aggregate, reasonably likely to have a PVY Material Adverse Effect.
This Agreement constitutes and the Related Documents to be executed by
any of the Acquired Companies when executed and delivered will constitute
valid and legally binding obligations of such Acquired Company,
enforceable against such Acquired Company in accordance with their terms,
except as enforceability may be limited by (i) bankruptcy or similar laws
from time to time in effect affecting the enforcement of creditors'
rights generally or (ii) the availability of equitable remedies
generally.
Section 5.5 Governmental Approvals. Except as set forth in
Section 5.5 of the PVY Disclosure Schedule and as required by the HSR
Act, no approval or authorization of any Governmental Body with respect
to performance under this Agreement or the Related Documents by any
Acquired Company is required to be obtained by any Acquired Company in
connection with the execution and delivery by PVY of this Agreement or
the Related Documents or the consummation by the Acquired Companies of
the transactions contemplated hereby or thereby, the failure to obtain
which are, individually or in the aggregate, reasonably likely to have a
PVY Material Adverse Effect.
Section 5.6 Public Utility Holding Company Status;
Regulation as a Public Utility. PVY is a "holding company" (as such term
is defined in PUHCA) exempt from all provisions of PUHCA (except
Section 9(a)(2) thereof) pursuant to Section 3(a) of PUHCA, and has
received no adverse notice from the SEC with respect to the validity of
its exempt status. ProvGas and Attleboro are both "public utility
companies" (as such term is defined in PUHCA). Each of ProvGas and
Attleboro is a "subsidiary company" of PVY, and an "affiliate" of the
other and of PVY (as such terms are defined in PUHCA). Except as set
forth above in this Section 5.6 and with respect to their relationship to
PVY, ProvGas and Attleboro, none of the Acquired Companies is a "holding
company," a "subsidiary company," a "public utility company," or an
"affiliate" of a "public utility company" or a "holding company," as such
terms are defined in PUHCA. ProvGas is subject to regulation as a public
utility or public service company (or similar designation) in the state
of Rhode Island and Attleboro is subject to regulation as a public
utility or public service company (or similar designation) in the state
of Massachusetts. Except as stated in the preceding sentence, neither
PVY and nor its "affiliates" (as such term is defined in PUHCA) are
subject to regulation as a public utility or public service company (or
similar designation) in any other state.
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Section 5.7 Compliance with Legal Requirements;
Governmental Authorizations.
(a) Except as set forth in Section 5.7(a) of the PVY
Disclosure Schedule or as specifically described in the PVY SEC Documents
delivered to SUG prior to the date of this Agreement, and subject to
Section 5.19 of this Agreement, to the Knowledge of any Acquired Company,
no Acquired Company is in violation of any Legal Requirement that is
applicable to it, to the conduct or operation of its business, or to the
ownership or use of any of its assets, other than such violations, if
any, which are not, individually or in the aggregate, reasonably likely
to have a PVY Material Adverse Effect.
(b) The PVY SEC Documents delivered to SUG prior to the date
of this Agreement accurately describe all material regulation of each
Acquired Company that relates to the utility business of any Acquired
Company. Except as set forth on Section 5.7(a) of the PVY Disclosure
Schedule, each Acquired Company has and is in material compliance with
all material Governmental Authorizations necessary to conduct its
business and to own, operate and use all of its assets as currently
conducted.
Section 5.8 Legal Proceedings; Orders. Except as set forth
in Section 5.8 of the PVY Disclosure Schedule or as specifically
described in the PVY SEC Documents delivered to SUG prior to the date of
this Agreement, there is no pending Proceeding:
(1) that has been commenced by or against, or that otherwise
relates to, any Acquired Company that is reasonably likely to have
a PVY Material Adverse Effect; or
(2) as of the date of this Agreement, that challenges, or
that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, the Mergers or any of the
transactions contemplated hereby.
To the Knowledge of PVY, except as set forth in Section 5.8 of the PVY
Disclosure Schedule, as of the date of this Agreement, no such
Proceedings, audits or investigations have been Threatened that are,
individually or in the aggregate, reasonably likely to have a PVY
Material Adverse Effect. As of the date of this Agreement, none of the
Acquired Companies is subject to any Orders that are, individually or in
the aggregate, reasonably likely to have a PVY Material Adverse Effect.
Section 5.9 SEC Documents. PVY has made (and, with respect
to such documents filed after the date hereof through the Closing Date,
will make) available to SUG a true and complete copy of (i) each report,
schedule, registration statement (other than on Form S-8), and definitive
proxy statement filed by PVY or ProvGas with the SEC since September 30,
1998 through the Closing Date in substantially the form filed with the
SEC (the "PVY SEC Documents") and (ii) the PVY Audited Financials. As of
their respective dates, the PVY SEC Documents, including without
limitation any financial statements or schedules included therein,
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complied (or will comply), in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such PVY SEC
Documents, and did not (or will not) contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of PVY and ProvGas included in the PVY SEC Documents and the
PVY Audited Financials (collectively, the "PVY Financial Statements")
were (or will be) prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q) and fairly present (or
will fairly present) in all material respects the financial position of
PVY and its Subsidiaries, or ProvGas, as the case may be, as of the
respective dates thereof or the results of operations and cash flows for
the respective periods then ended, as the case may be, subject, in the
case of unaudited interim financial statements, to normal adjustments
which are not material in the aggregate.
Section 5.10 Taxes. Except as set forth in Section 5.10 of
the PVY Disclosure Schedule:
(a) The Acquired Companies have timely filed all United
States federal, state and local income Tax Returns required to be filed
by or with respect to them or requests for extensions to file such Tax
Returns have been timely filed, granted and have not expired, and the
Acquired Companies have timely paid and discharged all Taxes due in
connection with or with respect to the periods or transactions covered by
such Tax Returns and have paid all other Taxes as are due or made
adequate provision therefor in accordance with GAAP except where failures
to so file, pay or discharge are not, individually or in the aggregate,
reasonably likely to have a PVY Material Adverse Effect. There are no
pending audits or other examinations relating to any Tax matters. There
are no Tax liens on any assets of the Acquired Companies. As of the date
of this Agreement, none of the Acquired Companies has granted any waiver
of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. The accruals and reserves
(including deferred taxes) reflected in the PVY Balance Sheet are in all
material respects adequate to cover all material Taxes accruable through
the date thereof (including interest and penalties, if any, thereon and
Taxes being contested) in accordance with GAAP.
(b) None of the Acquired Companies is obligated under any
Applicable Contract with respect to industrial development bonds or other
obligations with respect to which the excludability from gross income of
the holder for federal or state income tax purposes could be affected by
the Merger or any of the transactions contemplated by this Agreement.
Section 5.11 Intellectual Property. Except as set forth in
Section 5.11 of the PVY Disclosure Schedule, no Acquired Company has any
Knowledge of (i) any infringement or claimed infringement by any Acquired
Company of any patent rights or copyrights of others or (ii) any
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infringement of the patent or patent license rights, trademarks or
copyrights owned by or under license to any Acquired Company, except for
any such infringements of the type described in clause (i) or (ii) that
are not, individually or in the aggregate, reasonably likely to have a
PVY Material Adverse Effect.
Section 5.12 Title to Assets. Except (i) as specifically
described in the PVY SEC Documents delivered to SUG prior to the date of
this Agreement, (ii) as set forth in Section 5.19 of this Agreement or
(iii) as set forth in Section 5.19 of the PVY Disclosure Schedule, none
of the Acquired Companies' assets are subject to any Encumbrance other
than PVY Permitted Liens.
Section 5.13 Indebtedness. All outstanding principal
amounts of indebtedness for borrowed money of the Acquired Companies as
of October 30, 1999 are set forth in Section 5.13 of the PVY Disclosure
Schedule.
Section 5.14 Machinery and Equipment. Except for normal
wear and tear, and with such other exceptions as are not, individually or
in the aggregate, reasonably likely to have a PVY Material Adverse
Effect, the machinery and equipment of the Acquired Companies necessary
for the conduct by the Acquired Companies of their respective businesses
as presently conducted are in operating condition and in a state of
reasonable maintenance and repair.
Section 5.15 Contracts. Set forth in Section 5.15(a) of the
PVY Disclosure Schedule is a list as the date hereof of all Applicable
Contracts which are Material Contracts. Except as described in Section
5.15(b) of the PVY Disclosure Schedule or as specifically described in
the PVY SEC Documents delivered to SUG prior to the date of this
Agreement, and with such exceptions as are not, individually or in the
aggregate, reasonably likely to have a PVY Material Adverse Effect, all
Applicable Contracts of the Acquired Companies are in full force and
effect and no Acquired Company nor, to the Knowledge of PVY, any other
party thereto is in default thereunder nor has any event occurred or is
any event occurring that with notice or the passage of time or otherwise,
is reasonably likely to give rise to an event of default thereunder by
any party thereto.
Section 5.16 Insurance. Section 5.16(a) of the PVY
Disclosure Schedule sets forth a list of all policies of insurance held
by the Acquired Companies as of the date of this Agreement. Except as
set forth in Section 5.16(b) of the PVY Disclosure Schedule, since
September 30, 1994, the assets and the business of the Acquired Companies
have been continuously insured with what PVY reasonably believes are
reputable insurers against all risks and in such amounts normally insured
against by companies of the same type and in the same line of business as
any of the Acquired Companies. As of the date of this Agreement, no
notice of cancellation, non-renewal or material increase in premiums has
been received by any of the Acquired Companies with respect to such
policies, and no Acquired Company has Knowledge of any fact or
circumstance that could reasonably be expected to form the basis for any
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cancellation, non-renewal or material increase in premiums, except for
such cancellations, non-renewals and increases which are not,
individually or in the aggregate, reasonably likely to have a PVY
Material Adverse Effect. None of the Acquired Companies is in default
with respect to any provision contained in any such policy or binder nor
has there been any failure to give notice or to present any claim
relating to the business or the assets of the Acquired Companies under
any such policy or binder in a timely fashion or in the manner or detail
required by the policy or binder, except for such defaults or failures
which are not, individually or in the aggregate, reasonably likely to
have a PVY Material Adverse Effect. As of the date of this Agreement,
there are no outstanding unpaid premiums (except premiums not yet due and
payable), and no notice of cancellation or renewal with respect to, or
disallowance of any claim under, any such policy or binder has been
received by the Acquired Companies as of the date hereof, except for such
non-payments of premiums, cancellations, renewals or disallowances which
are not, individually or in the aggregate, reasonably likely to have a
PVY Material Adverse Effect.
Section 5.17 Employees. PVY has made available to SUG prior
to the date hereof a list as of no more than thirty (30) days prior to
the date of this Agreement of all the then present officers and employees
of the Acquired Companies, indicating each employee's base salary or wage
rate and identifying those who are union employees and those who are
part-time employees. Except as set forth in Section 5.17(a) of the PVY
Disclosure Schedule, as of the date of this Agreement, no labor union or
other collective bargaining unit has been certified or recognized by any
of the Acquired Companies, and, to the Knowledge of the Acquired
Companies, as of the date of this Agreement, there are no elections,
organizing drives or material controversies pending or Threatened between
any of the Acquired Companies and any labor union or other collective
bargaining unit representing any of the Acquired Companies' employees.
There is no pending or, to the Knowledge of PVY, Threatened labor
practice complaint, arbitration, labor strike or other labor dispute
(excluding grievances) involving any of the Acquired Companies which are,
individually or in the aggregate, reasonably likely to have a PVY
Material Adverse Effect. Except for collective bargaining agreements
that have been provided to SUG prior to the date of this Agreement or as
set forth in Section 5.17(b) of the PVY Disclosure Schedule, as of the
date of this Agreement, none of the Acquired Companies is a party to any
employment agreement with any employee pertaining to any of the Acquired
Companies.
Section 5.18 Employee Benefit Plans.
(a) Except as would not, individually or in the aggregate,
result in a PVY Material Adverse Effect:
(1) Each of the PVY Benefit Plans has been operated and
administered in all respects in accordance with its governing
documents and applicable federal and state laws (including,
but not limited to, ERISA and the IRC).
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(2) As to any PVY Benefit Plan subject to Title IV of
ERISA, (i) there is no event or condition which presents the
risk of plan termination, (ii) no reportable event within the
meaning of Section 4043 of ERISA (for which the notice
requirements of Regulation Section 4043 promulgated by the
PBGC have not been waived) has occurred within the last six
years, (iii) no notice of intent to terminate the PVY Benefit
Plan has been given under Section 4041 of ERISA, (iv) no
proceeding has been instituted under Section 4042 of ERISA to
terminate the PVY Benefit Plan, (v) there has been no
termination or partial termination of the PVY Benefit Plan
within the meaning of Section 411(d)(3) of the IRC within the
last six years, (vi) no event described in Sections 4062 or
4063 of ERISA has occurred, and (vii) all PBGC premiums have
been timely paid and no liability to the PBGC has been
incurred, except for PBGC premiums not yet due.
(3) Each trust funding a PVY Benefit Plan, which trust
is intended to be exempt from federal income taxation pursuant
to Section 501(c)(9) of the IRC, satisfies the requirements of
such section and has received a favorable determination letter
from the IRS regarding such exempt status and has not, since
receipt of the most recent favorable determination letter,
been amended or operated in any way which would adversely
affect such exempt status.
(4) With respect to any PVY Benefit Plan or any other
"employee benefit plan" as defined in Section 3(3) of ERISA
which is established, sponsored, maintained or contributed to,
or with respect to any such plan which has been established,
sponsored, maintained or contributed to within six years prior
to the Closing Date, by the Acquired Companies or any
corporation, trade, business or entity under common control or
being a part of an affiliated service group with any of the
Acquired Companies, within the meaning of Section 414(b), (c)
or (m) of the IRC or Section 4001 of ERISA ("PVY Commonly
Controlled Entity"), (i) no withdrawal liability, within the
meaning of Section 4201 of ERISA, has been incurred, which
withdrawal liability has not been satisfied and no such
withdrawal liability is reasonably expected to be incurred,
(ii) no liability under Title IV of ERISA (including, but not
limited to, liability to the PBGC) has been incurred by the
Acquired Companies or any PVY Commonly Controlled Entity,
which liability has not been satisfied (other than for PBGC
premiums not yet due), (iii) no accumulated funding
deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the IRC has been
incurred for which any liability is outstanding, (iv) there
has been no failure to make any contribution (including
installments) to such plan required by Section 302 of ERISA
and Section 412 of the IRC which has resulted in a lien under
Section 302 of ERISA or Section 412 of the IRC and for which
any liability is currently outstanding, (v) no action,
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omission or transaction has occurred with respect to any such
plan or any other PVY Benefit Plan which could subject any of
the Acquired Companies, the plan or trust forming a part
thereof, or SUG to a civil liability or penalty under ERISA or
other applicable laws, or a Tax under the IRC, (vi) any such
plan which is a Group Health Plan has complied in all respects
with the provisions of Sections 601-608 of ERISA and Section
4980B of the IRC, (vii) there are no pending or Threatened
claims by or on behalf of any such plan or any other PVY
Benefit Plan, by any employees, former employees or plan
beneficiaries covered by such plan or otherwise by or on
behalf of any person involving any such plan (other than
routine non-contested claims for benefits) which could result
in a liability to the Acquired Companies taken as a whole and
(viii) neither the Acquired Companies nor any PVY Commonly
Controlled Entity has engaged in, or is a successor or parent
corporation to any entity or person that has engaged in, a
transaction described in Section 4069 of ERISA.
(5) There is no matter pending (other than qualification
determination applications and filings and other required
periodic filings) with respect to any of the PVY Benefit Plans
before the IRS, the Department of Labor, the PBGC or in or
before any other Governmental Body.
(b) Except as set forth in Section 5.18(b) of the PVY
Disclosure Schedule, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i)
increase the amount of benefits otherwise payable under any PVY Benefit
Plan, (ii) result in the acceleration of the time of eligibility to
participate in any PVY Benefit Plan, or any payment, exercisability,
funding or vesting of any benefit under any PVY Benefit Plan, (iii)
result in any payment becoming due to or with respect to any current or
former employee, director or consultant, or (iv) result in any payment
becoming due in the event of a termination of employment or service of
any employee, director or consultant.
(c) Except as set forth in Section 5.18(c) of the PVY
Disclosure Schedule, none of the Acquired Companies is a party to any
Contract nor has it established any policy or practice, which would
require it or SUG to make a payment or provide any other form of
compensation or benefit to any Person performing (or who within the past
twelve months performed) services for any of the Acquired Companies
during or upon termination of such services which would not be payable or
provided in the absence of the consummation of the transactions
contemplated by this Agreement.
(d) Section 5.18(d) of the PVY Disclosure Schedule contains a
true and complete list of each PVY Benefit Plan, all Acquired Company
Option Plans and any management, employment, deferred compensation,
severance (including any payment, right or benefit resulting from a
change in control), bonus, or other contract for personal services with
any current or former officer, director or employee, any consulting
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contract with any person who prior to entering such contract was a
director or officer of any Acquired Company or any plan, agreement,
arrangement or understanding similar to any of the foregoing. Except as
set forth in Section 5.18(d) of the PVY Disclosure Schedule, there are no
outstanding options to purchase capital stock or other securities of PVY
or any of its Subsidiaries. PVY has provided to SUG a complete and
correct copy of each PVY Benefit Plan (or written summary of any
unwritten PVY Benefit Plan), and with respect to each PVY Benefit Plan,
the current summary plan description, related trust agreements, related
insurance contracts, the latest IRS determination letter, the last three
annual reports on Form 5500 series (including all required schedules),
and the most recent actuarial report and annual financial statements.
(e) None of the Acquired Companies has contributed or been
obligated to contribute to any "multi-employer plan" within the meaning
of Section 3(37) of ERISA within the last six years. None of the
Acquired Companies has any outstanding liability with respect to any such
plan which, individually or in the aggregate with the events or
conditions described in Section 5.18(a), is reasonably likely to result
in a PVY Material Adverse Effect.
Section 5.19 Environmental Matters. Except as set forth in
Section 5.19 of the PVY Disclosure Schedule or as specifically described
in the PVY SEC Documents delivered to SUG prior to the date of this
Agreement, and with such other exceptions as are not, individually or in
the aggregate, reasonably likely to have a PVY Material Adverse Effect:
(a) To the Knowledge of any Acquired Company, no Facility
owned or operated by any Acquired Company is currently, or was at any
time, listed on the National Priorities List promulgated under CERCLA, or
on any comparable state list, and no Acquired Company has received any
written notification of potential or actual liability or a written
request for information from any Person under or relating to CERCLA or
any comparable Legal Requirement with respect to any Acquired Company or
the Facilities;
(b) To the Knowledge of any Acquired Company, each Acquired
Company and any Person for whose conduct any Acquired Company is
reasonably likely to be held responsible, is currently and at all times
has been, in material compliance with any Environmental Law. No Acquired
Company has received any Order, written notice, or other written
communication from (i) any Governmental Body or private citizen acting in
the public interest, or (ii) the current or prior owner or operator of
any Facilities, of any violation or failure to comply with any
Environmental Law, or of any obligation to undertake or bear the cost of
any environmental cleanup, or seeking information regarding prior
disposal at or with respect to potential liability regarding any property
or Facility at which Hazardous Materials generated by any Acquired
Company were transported for disposal;
(c) There are no pending or, to the Knowledge of any of the
Acquired Companies, Threatened claims arising under or pursuant to any
Environmental Law with respect to or affecting any of the Facilities or
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any other properties and assets (whether real, personal, or mixed) in
which any Acquired Company has or had a direct or indirect interest
(including by ownership or use); and
(d) PVY has delivered or made available to SUG true and
complete copies and results of any environmental site assessments,
studies, analyses, tests or monitoring possessed by any Acquired Company
of which any Acquired Company has Knowledge pertaining to Hazardous
Materials or Hazardous Activities in, on or under the Facilities, or
concerning compliance by any Acquired Company or any other Person for
whose conduct any Acquired Company is reasonably likely to be held
responsible, with Environmental Laws.
Section 5.20 No Material Adverse Change. Since the date of
the PVY Balance Sheet, except as specifically described in the PVY SEC
Documents delivered to SUG prior to the date of this Agreement, there has
not been any PVY Material Adverse Effect, and no events have occurred or
circumstances exist that are, individually or in the aggregate,
reasonably likely to have a PVY Material Adverse Effect, except that any
PVY Material Adverse Effect that results from or relates to (a) general
business or economic conditions, (b) conditions generally affecting the
industries in which the Acquired Companies compete or (c) the
announcement and consummation of the transactions contemplated by this
Agreement shall be disregarded.
Section 5.21 Brokers. Except as set forth in Section 5.21
of the PVY Disclosure Schedule, no Acquired Company is a party to, or in
any way obligated under any Applicable Contract, and there are no
outstanding claims against any Acquired Company, for the payment of any
broker's or finder's fees in connection with the origin, negotiation,
execution or performance of this Agreement.
Section 5.22 PVY Stock Rights Agreement. Prior to the date
of this Agreement, PVY has delivered to SUG a true and complete copy of
the PVY Stock Rights Agreement. The consummation of the transactions
contemplated by this Agreement will not result in the triggering of any
right or entitlement of the holders of the PVY Common Stock or other PVY
securities under the PVY Stock Rights Agreement. Neither PVY nor any of
its Subsidiaries is a party to any agreement similar to the PVY Stock
Rights Agreement.
Section 5.23 Regulatory Proceedings. Except as set forth in
Section 5.23 of the PVY Disclosure Schedule or in the PVY SEC Documents
delivered to SUG prior to the date of this Agreement, other than purchase
gas adjustment provisions, none of PVY or its Subsidiaries all or part of
whose rates or services are regulated by a Governmental Body (a) has
rates that have been or are being collected subject to refund, pending
final resolution of any rate proceeding pending before a Governmental
Body or on appeal to the courts, or (b) is a party to any rate proceeding
before a Governmental Body that are, individually or in the aggregate,
reasonably likely to result in any Orders having a PVY Material Adverse
Effect.
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Section 5.24 Vote Required. Other than the approval of the
Merger by the holders of a majority of the outstanding shares of PVY
Common Stock (the "PVY Shareholders' Approval"), no vote of the holders
of any class or series of the capital stock of any Acquired Company is
required to approve this Agreement and the Mergers. The consent of the
holders of 80% in aggregate principal amount of all First Mortgage Bonds
outstanding under the ProvGas Indenture to each of the amendments to the
ProvGas Indenture described on Schedule 6.1(n) hereto is the only consent
required to adopt such amendments.
Section 5.25 Opinion of Financial Advisor. The Board of
Directors of PVY has received the opinion of Salomon Smith Barney Inc.,
dated as of the date hereof, to the effect that, as of such date, the
Merger Consideration is fair from a financial point of view, to the
holders of PVY Common Stock. PVY will provide a copy of such opinion to
SUG.
Section 5.26 Disclaimer of Representations and Warranties.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE
V, PVY MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
AND PVY HEREBY DISCLAIMS ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER BY PVY, ANY SUBSIDIARY OF PVY, OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER
PERSON, WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO SUG OR ANY OF ITS
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR ANY OTHER
PERSON, OF ANY DOCUMENTATION OR OTHER INFORMATION BY PVY, ANY SUBSIDIARY
OF PVY, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR REPRESENTATIVES, OR ANY OTHER PERSON, WITH RESPECT TO ANY OF THE
FOREGOING.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of PVY. PVY agrees to observe and
perform the following covenants and agreements:
(a) Conduct of the Business Prior to the Closing Date. With
respect to the Acquired Companies, except (i) as contemplated in this
Agreement, (ii) as required by law or regulation, (iii) as set forth in
the PVY capital budget, a written copy of which has been provided to SUG
by letter dated November 15, 1999, which letter refers to this Agreement,
(iv) for any redemption of First Mortgage Bonds outstanding under the
ProvGas Indenture that is required to be made by the terms thereof on the
date of any such redemption (such redemption to be made in accordance
with the applicable mandatory redemption provisions of such Indenture),
(v) for any commercially reasonable action that PVY determines in good
faith, after consulting with SUG, should be taken by ProvGas in order to
satisfy the condition set forth in the second sentence of Section 7.1(e),
or (vi) as otherwise expressly consented to in writing by SUG, which
consent will not be unreasonably withheld or delayed, prior to the
Closing, PVY will cause each Acquired Company to:
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(1) Not make or permit any material change in the
general nature of its business;
(2) Maintain its Ordinary Course of Business in
accordance with prudent business judgment and consistent with
past practice and policy, and maintain consistent with its
Ordinary Course of Business its assets in good repair, order
and condition, reasonable wear and tear excepted, subject to
retirements in the Ordinary Course of Business;
(3) Use reasonable efforts to preserve the Acquired
Company as an ongoing business and maintain the goodwill
associated with the Acquired Company;
(4) Preserve all of the Acquired Companies' franchises,
tariffs, certificates of public convenience and necessity,
licenses, authorizations and other governmental rights and
permits;
(5) Not enter into any material transaction or Material
Contract other than in the Ordinary Course of Business;
(6) Not purchase, sell, lease, dispose of or otherwise
transfer or make any contract for the purchase, sale, lease,
disposition or transfer of, or subject to lien, any of the
assets of the Acquired Company other than in the Ordinary
Course of Business;
(7) Not hire any new employees except in the Ordinary
Course of Business (and in no event hire, for any calendar
month, a number of new employees greater than the average
monthly number of new employees hired by the Acquired Company
over the prior 12 calendar months);
(8) Not file any material applications, petitions,
motions, orders, briefs, settlement or agreements in any
material Proceeding before any Governmental Body which
involves any Acquired Company, and appeals related thereto
without, to the extent reasonably practicable, consulting SUG;
provided, however, that if such Proceeding is reasonably
likely to have a PVY Material Adverse Effect, PVY shall not
make any such filing without the consent of SUG, which consent
shall not be unreasonably withheld or delayed.
(9) Not engage in or modify, except in the Ordinary
Course of Business, any material intercompany transactions
involving any other Acquired Company;
(10) Not voluntarily change in any material respect or
terminate any insurance policies disclosed on Section 5.16(a)
of the PVY Disclosure Schedule that presently are in effect
unless equivalent coverage is obtained;
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(11) Except as disclosed or specifically contemplated in
this Agreement and except with respect to budgeted
expenditures known and specifically disclosed in writing to
SUG, subject to adjustments in the Ordinary Course of Business
and other deviations (which in the aggregate shall not exceed
5% on an annualized basis during the period from the date of
this Agreement until the Closing Date), not make any capital
expenditure or capital expenditure commitment;
(12) Not make any changes in financial policies or
practices, or strategic or operating policies or practices, in
each case which involve any Acquired Company;
(13) Comply in all material respects with all applicable
material Legal Requirements and permits, including without
limitation those relating to the filing of reports and the
payment of Taxes due to be paid prior to the Closing, other
than those contested in good faith;
(14) Not adopt, amend (other than amendments that reduce
the amounts payable by SUG or any of its Subsidiaries or
amendments required by law) or assume an obligation to
contribute to any PVY Benefit Plan or collective bargaining
agreement or enter into any employment, consulting, severance
or similar Contract with any Person (including without
limitation, contracts with management of any Acquired Company
or any of its Affiliates that might require payments be made
upon consummation of the transactions contemplated hereby) or
amend any such existing contracts to increase any amounts
payable thereunder or benefits provided thereunder;
(15) Except in the Ordinary Course of Business or as
required by the terms of any existing Contract, PVY Benefit
Plan or collective bargaining agreement, not grant any
increase or change in total compensation, benefits or pay any
bonus to any employee, director or consultant;
(16) Not grant or enter into or extend the term of any
Contract with respect to continued employment or service for
any employee, officer, director or consultant;
(17) Not make any loan or advance to any officer,
director, stockholder, employee or any other Person other than
in the Ordinary Course of Business;
(18) Not terminate any existing gas purchase, exchange or
transportation contract necessary to supply firm gas at all
city gate delivery points or enter into any new contract for
the supply, transportation, storage or exchange of gas with
respect to the Acquired Companies' regulated gas distribution
operations or renew or extend or negotiate any existing
contract providing for the same where such contract is not
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terminable within sixty (60) days without penalty other than
in the Ordinary Course of Business;
(19) Not amend any of its Organizational Documents; and
(20) Subject to Section 6.1(k), not issue or assume any
note, debenture or other evidence of indebtedness which by its
terms does not mature within two years from the date of
execution or issuance thereof, unless otherwise redeemable or
subject to prepayment at any time at the option of the
Acquired Company on not more than thirty (30) days' notice
without penalty for such redemption or prepayment.
(b) Customer Notifications. At any time and from time to
time reasonably requested by SUG prior to the Closing Date, each Acquired
Company will permit SUG at SUG's expense to insert preprinted single-page
customer education materials into billing documentation to be delivered
to customers affected by this Agreement; provided, however, that PVY has
reviewed in advance and consented to the content of such materials, which
consent shall not be unreasonably withheld or delayed. Other means of
notifying customers may be employed by either party, at the expense of
the initiating party, but in no event shall any notification be initiated
without the prior consent of the other party (which consent shall not be
unreasonably withheld or delayed).
(c) Access to the Acquired Companies' Offices, Properties and
Records; Updating Information.
(1) From and after the date hereof and until the Closing
Date, the Acquired Companies shall permit SUG and its
Representatives to have, on reasonable notice and at
reasonable times, reasonable access to such of the offices,
properties and employees of the Acquired Companies in a manner
that will not unreasonably disrupt the operations of the
Acquired Companies or their relationship with their customers,
suppliers or employees, and shall disclose, and make available
to SUG and its Representatives in a manner that will not
unreasonably disrupt the operations of the Acquired Companies
or their relationship with their customers, suppliers or
employees, all books, papers and records (other than
confidentiality agreements related to a possible sale of PVY
entered into prior to the date of this Agreement) to the
extent that they relate to the ownership, operation,
obligations and liabilities of or pertaining to the Acquired
Companies, their businesses, assets and liabilities. Without
limiting the application of the Confidentiality Agreement
dated October 6, 1999 between PVY and SUG (the
"Confidentiality Agreement"), all documents or information
furnished by the Acquired Companies hereunder shall be subject
to the Confidentiality Agreement.
(2) PVY will notify SUG as promptly as practicable of
any significant change in the Ordinary Course of Business or
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operation of any of the Acquired Companies and of any material
complaints, investigations or hearings (or communications
indicating that the same may be contemplated) by any
Governmental Body, or the institution or overt threat or
settlement of any material Proceeding involving or affecting
any of the Acquired Companies or the transactions contemplated
by this Agreement, and shall use reasonable efforts to keep
SUG fully informed of such events and permit SUG's
Representatives access to all materials prepared in connection
therewith, consistent with any applicable Legal Requirement or
Contract.
(3) As promptly as practicable after SUG's request, PVY
will furnish such financial and operating data and other
information pertaining to the Acquired Companies and their
businesses and assets as SUG may reasonably request; provided,
however, that nothing herein will obligate any of the Acquired
Companies to take actions that would unreasonably disrupt its
Ordinary Course of Business or violate the terms of any Legal
Requirement or Contract to which the Acquired Company is a
party or to which any of its assets is subject in providing
such information, or to incur any costs with respect to SUG's
external auditors (or the Acquired Companies' external
auditors in the event a report by such auditors is requested
by SUG) providing accounting services with respect to issuing
an auditor's report required by or for SUG.
(d) Governmental Approvals; Third Party Consents. PVY will
use its commercially reasonable best efforts at PVY's sole expense
(except as provided otherwise in the last sentence of Section 6.1(n)) to
obtain all necessary consents, approvals and waivers from any Person
required in connection with the transactions contemplated hereby under
any license, lease, permit or Contract applicable to the Acquired
Companies, including, without limitation, the Letters of Tax Good
Standing referred to in Section 7.1(i), the approvals of those
Governmental Bodies and the consents of those third parties listed in
Section 5.4 and Section 5.5 of the PVY Disclosure Schedule and as
required by the HSR Act.
(e) Dividends. PVY shall not, nor shall it permit any of its
Subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its or their capital stock other than
(A) dividends by a wholly-owned Subsidiary to PVY or another wholly-owned
Subsidiary, (B) dividends by a less than wholly-owned Subsidiary
consistent with past practice, (C) regular quarterly dividends on PVY
Common Stock with usual record and payment dates that do not exceed the
current rate of $1.08 per fiscal year, or (D) regular cumulative cash
distributions on the ProvGas Preferred Stock not to exceed an annual rate
of $8.70 per share; (ii) split, combine or reclassify any capital stock
or the capital stock of any Subsidiary or issue or authorize or propose
the issuance of any other securities in respect of, or in substitution
for, shares of capital stock or the capital stock of any Subsidiary; or
(iii) redeem, repurchase or otherwise acquire any shares of its capital
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stock or the capital stock of any Subsidiary other than (A) redemptions,
repurchases and other acquisitions of shares of capital stock in
connection with the administration of employee benefit and dividend
reinvestment and customer stock purchase plans as in effect on the date
hereof in the ordinary course of the operation of such plans consistent
with past practice, (B) intercompany acquisitions of capital stock, (C)
the redemption of the ProvGas Preferred Stock as contemplated herein or
(D) as set forth in Section 6.1(k) of this Agreement.
(f) Issuance of Securities. PVY shall not, nor shall it
permit any of its Subsidiaries to, issue, agree to issue, deliver, sell,
award, pledge, dispose of or otherwise encumber or authorize or propose
the issuance, delivery, sale, award, pledge, disposal or other
encumbrance of, any shares of its or their capital stock of any class or
any securities convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or convertible or
exchangeable securities, other than the issuance of shares of PVY Common
Stock pursuant to (i) outstanding grants or awards made prior to the date
of this Agreement under the PVY Benefit Plans and Acquired Company Option
Plans and (ii) any dividend reinvestment plan of PVY in effect as of the
date hereof.
(g) Accounting. PVY shall not, nor shall it permit any of
its Subsidiaries to, make any changes in their accounting methods,
principles or practices except as required by law, rule, regulation or
GAAP. Prior to the Closing, PVY shall comply with the then current
accounting rules for costs deferred for Y2K.
(h) No Shopping.
(1) PVY shall not, and shall not authorize or permit any
of its (or any of its Subsidiaries') officers, directors,
agents, financial advisors, attorneys, accountants or other
Representatives to, directly or indirectly, solicit, initiate
or encourage submission of proposals or offers from any Person
relating to, or that could reasonably be expected to lead to,
a Business Combination or participate in any negotiations or
substantive discussions regarding, or furnish to any other
Person any information with respect to, or otherwise cooperate
in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or
seek a Business Combination; provided, however, that, prior to
the PVY Shareholders' Approval, PVY may, in response to an
unsolicited written proposal from a third party with respect
to a Business Combination that PVY's Board of Directors
determines, in its good faith judgment, after consultation
with and the receipt of the advice of its financial advisor
and outside counsel with customary qualifications, is a
Superior Proposal, (i) furnish information to, and negotiate,
explore or otherwise engage in substantive discussions with
such third party, only if PVY's Board of Directors determines,
in its good faith judgment after consultation with its
financial advisors and outside legal counsel, that it is
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reasonably necessary in order to comply with its fiduciary
duties under applicable law and (ii) take and disclose to
PVY's shareholders a position with respect to another Business
Combination proposal, or amend or withdraw such position,
pursuant to Rule 14d-9 and 14e-2 under the Exchange Act, or
make such disclosure to PVY's shareholders which in the good
faith judgment of PVY's Board of Directors, based on the
advice of its outside counsel, is required by applicable law.
Prior to furnishing any non-public information to, entering
into negotiations with or accepting a Superior Proposal from
such third party, PVY will (i) provide written notice to SUG
to the effect that it is furnishing information to or entering
into discussions or negotiations with such third party and
(ii) receive from such third party an executed confidentiality
agreement containing substantially the same terms and
conditions as the Confidentiality Agreement. PVY will
immediately cease and cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussion
or negotiations with any parties conducted heretofore by PVY
or any of its representatives with respect to any Business
Combination.
(2) Except as expressly permitted by this Section
6.1(h), neither the PVY Board of Directors nor any committee
thereof may, (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to SUG, the approval
or recommendation by such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, a Business
Combination or (iii) cause PVY to enter into any letter of
intent, agreement in principle, acquisition agreement or other
similar agreement related to any Business Combination.
Notwithstanding the foregoing, prior to the time at which the
PVY Shareholders' Approval has been obtained, in response to
an unsolicited Business Combination proposal from a third
party, if PVY's Board of Directors determines, in its good
faith judgment, after consultation with and the receipt of the
advice of its financial advisor and outside counsel with
customary qualifications, that such proposal is a Superior
Proposal and that failure to do any of the actions set forth
in clauses (i), (ii) or (iii) above would create a reasonable
possibility of a breach of the fiduciary duties of PVY's Board
of Directors under applicable law, PVY's Board of Directors
may withdraw or modify its approval or recommendation of the
Merger or this Agreement, approve or recommend a Business
Combination or cause PVY to enter into a Business Combination
or an agreement related to a Business Combination and, subject
to PVY having paid to SUG the fees described in Section 8.3(a)
hereof and having entered into a definitive agreement with
respect to such Business Combination proposal, terminate this
Agreement; provided, however, that prior to entering into a
definitive agreement with respect to a Business Combination
proposal, PVY shall give SUG at least two (2) business days'
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notice thereof, and shall cause its Representatives to,
negotiate with SUG to make such adjustments in the terms and
conditions of this Agreement as would enable PVY to proceed
with the transactions contemplated herein on such adjusted
terms; provided, further, that if PVY and SUG are unable to
reach an agreement on such adjustments within two (2) business
days after such notice from PVY, PVY may enter into such
definitive agreement, subject to the provisions of Article
VIII.
(3) PVY shall notify SUG orally and in writing of any
such inquiries, offers or proposals (including the material
terms and conditions of any such offer or proposal and the
identity of the Person making it), within two business days of
the receipt thereof, shall use all reasonable efforts to keep
SUG informed of the status and revised material terms and
conditions of any such inquiry, offer or proposal and shall
give SUG one (1) day's advance notice of the first delivery of
non-public information to such Person. If any such inquiry,
offer or proposal is in writing, PVY shall promptly deliver to
SUG a copy of such inquiry, offer or proposal.
(4) For purposes of this Agreement, (i) "Business
Combination" means (other than the transactions contemplated
or permitted by this Agreement) (A) a merger, consolidation or
other business combination, share exchange, sale of a minimum
of 2% of the outstanding shares of capital stock, tender offer
or exchange offer or similar transaction involving PVY or any
of its Subsidiaries, (B) acquisition in any manner, directly
or indirectly, of a material interest in any capital stock of,
or a material equity interest in a substantial portion of the
assets of, PVY or any of its Subsidiaries, including any
single or multi-step transaction or series of related
transactions that is structured to permit a third party to
acquire beneficial ownership of a majority or greater equity
interest in PVY or any of its Subsidiaries, or (C) the
acquisition in any manner, directly or indirectly, of any
material portion of the business or assets (other than
inventory in the Ordinary Course of Business) of PVY or any of
its Subsidiaries and (ii) "Superior Proposal" means a proposed
Business Combination involving at least 50% of the shares of
capital stock or a material portion of the assets of PVY that
PVY's Board of Directors determines, after consulting with
PVY's financial advisors and outside counsel, is financially
superior to the transactions contemplated hereby and it
appears that the party making the proposal is reasonably
likely to have the funds necessary to consummate the Business
Combination.
(i) Solicitation of Proxies. Subject to Section 6.1(h), PVY
shall use its reasonable best efforts to solicit from its shareholders
proxies in favor of the Merger and shall take all other action necessary
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to secure the PVY Shareholders' Approval. PVY shall cause ProvGas and
Attleboro to approve the ProvGas Merger and the Attleboro Merger.
(j) PVY Shareholders' Approval.
(1) Subject to the provisions of Section 6.1(h) and
Section 6.1(j)(2), PVY shall, as soon as reasonably
practicable after the date hereof (i) take all steps necessary
to duly call, give notice of, convene and hold a meeting of
its shareholders (including all adjournments thereof, the "PVY
Meeting") for the purpose of securing the PVY Shareholders'
Approval, (ii) distribute to its shareholders the Proxy
Statement in accordance with applicable federal and state law
and with its Organizational Documents, (iii) subject to the
fiduciary duties of its Board of Directors, recommend to its
shareholders the approval of this Agreement and the
transactions contemplated hereby and (iv) cooperate and
consult with SUG with respect to each of the foregoing
matters.
(2) The PVY Meeting for the purpose of securing the PVY
Shareholders' Approval, including any adjournments thereof,
will be held on such date or dates as PVY and SUG mutually
determine.
(k) Financing Activities. PVY shall, and shall cause its
Subsidiaries to, cooperate, to the fullest extent commercially reasonable
and practicable, with SUG's requests with respect to refinancing by the
Acquired Companies of the current maturities of any of their
indebtedness, and any repurchase, redemption or prepayment by any of the
Acquired Companies of any of its indebtedness or preferred stock that may
be required because of the Mergers or that SUG may request that the
Acquired Companies effect, so as to permit SUG to have the maximum
opportunity to refinance, on or promptly after the Closing Date without
any penalty except as may be due pursuant to the terms of the Acquired
Companies' indebtedness and preferred stock as in effect on the date of
this Agreement, any of the Acquired Companies' indebtedness or preferred
stock outstanding on the Closing Date; provided, however, that, except as
provided in Section 6.1(m), no Acquired Company shall be required to
consummate prior to the Effective Time any such refinancing, repurchase,
redemption or repayment requested by SUG.
(l) PVY Disclosure Schedule. On the date hereof, PVY has
delivered to SUG the PVY Disclosure Schedule, accompanied by a
certificate signed by an executive officer of PVY stating the PVY
Disclosure Schedule is being delivered pursuant to this Section 6.1(l).
The PVY Disclosure Schedule constitutes an integral part of this
Agreement and modifies the representations, warranties, covenants or
agreements of PVY contained herein to the extent that such
representations, warranties, covenants or agreements expressly refer to
the PVY Disclosure Schedule; provided that (i) terms used in the PVY
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Disclosure Schedule, unless otherwise defined, shall have the meanings,
if any, ascribed to them in this Agreement, (ii) information provided in
one section of the PVY Disclosure Schedule shall suffice, without
repetition or cross-reference, as a disclosure of such information in any
other relevant section of the PVY Disclosure Schedule if the disclosure
in the first section is sufficient on its face without further inquiry to
reasonably inform SUG of the information required to be disclosed in such
other sections of the PVY Disclosure Schedule in order to avoid a breach
under the counterpart sections of this Agreement and (iii) the inclusion
of any item in the PVY Disclosure Schedule shall not establish any
threshold of materiality.
(m) Redemption of ProvGas Preferred Stock. PVY shall cause
ProvGas (i) to redeem 16,000 shares of ProvGas Preferred Stock on
February 15, 2000 pursuant to Section 4 of the Certificate of
Authorization for the ProvGas Preferred Stock, and (ii) to redeem the
remaining 16,000 shares of ProvGas Preferred Stock on March 1, 2000
pursuant to Section 4 of such Certificate of Authorization.
(n) Amendment of ProvGas Indenture. PVY shall cause ProvGas
to use its good faith commercially reasonable efforts to obtain prior to
the Effective Time the consent of holders of at least 80% in aggregate
principal amount of all First Mortgage Bonds outstanding under the
ProvGas Indenture to each of the amendments to the ProvGas Indenture
described on Schedule 6.1(n) hereto; provided, however, that PVY and its
Subsidiaries shall not be required to make any payment to any holder of
First Mortgage Bonds prior to the Effective Time, other than such
payments that are required to be made under the ProvGas Indenture, which
payments ProvGas shall make as required under the ProvGas Indenture. If
this Agreement is terminated and the Mergers do not occur, (i) within 30
days after the termination of this Agreement, PVY shall provide SUG with
a schedule showing the reasonable out-of-pocket fees and reasonable
out-of-pocket expenses, including fees and expenses of a solicitation
agent, an information agent, and legal fees and expenses, incurred by or
on behalf of PVY and ProvGas in connection with complying with the
covenant set forth in the preceding sentence (excluding payments made to
holders of the First Mortgage Bonds), (ii) within 30 days after the
termination of this Agreement, SUG shall provide PVY with a schedule
showing the reasonable out-of-pocket fees and reasonable out-of-pocket
expenses, including legal fees and expenses, incurred by or on behalf of
SUG in connection with the solicitation of consents described in the
preceding sentence (excluding payments made to holders of the First
Mortgage Bonds), (iii) if PVY's fees and expenses, as set forth on the
schedule provided by PVY pursuant hereto, exceed SUG's fees and expenses,
as set forth on the schedule provided by SUG pursuant hereto, SUG shall
pay PVY 50% of such excess within 60 days after the termination of this
Agreement, and (iv) if SUG's fees and expenses, as set forth on the
schedule provided by SUG pursuant hereto, exceed PVY's fees and expenses,
as set forth on the schedule provided by PVY pursuant hereto, PVY shall
pay SUG 50% of such excess within 60 days after the termination of this
Agreement; provided, however, that if this Agreement is terminated based
on the breach by any party of its obligations under this Agreement, such
breaching party shall bear its own such fees and expenses and shall pay
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the non-breaching party the fees and expenses, as set forth on the
applicable schedule provided in accordance with this section by the
non-breaching party, within 60 days after the termination of this
Agreement.
Section 6.2 Covenants of SUG. SUG agrees to observe and
perform the following covenants and agreements:
(a) Governmental Approvals; Third Party Consents. SUG will
use its commercially reasonable best efforts at SUG's sole expense to
obtain all necessary consents, approvals and waivers from any Person
required in connection with the transactions contemplated hereby under
any license, lease, permit, Contract or agreement applicable to SUG,
including, without limitation, the approvals of those Governmental Bodies
listed in Section 4.3 of the SUG Disclosure Schedule and as required by
the HSR Act.
(b) Employees; Benefits. With respect to the employees of
the Acquired Companies (excluding unionized employees) (the "Employees"),
except as otherwise specified herein, SUG agrees as follows:
(1) To assume and maintain for their term all employment
and change in control agreements of PVY in effect as of the
Effective Time;
(2) During the 24 months immediately following the
Closing Date, to maintain for the Employees who continue their
service with SUG or any Subsidiary of SUG base salary levels,
bonus opportunity levels and overall employee benefits (other
than the 1989 Stock Option Plan, the 1989 Non-Employee
Director Stock Option Plan, the Non-Employee Director Stock
Plan, the 1998 Performance Share Plan, the Restricted Stock
Incentive Plan and the Employee Stock Purchase Plan, all of
which shall be terminated as of the Closing Date) that are no
less favorable in the aggregate than those currently provided
to Employees generally, except for any changes made to comply
with applicable law or tax qualification nondiscrimination
rules; provided, however, that (i) during such 24-month
period, all PVY qualified and non-qualified defined benefit
pension plans shall be maintained without adverse amendment or
modification, except for any changes made to comply with
applicable law or, in the case of the PVY tax-qualified
defined benefit plan, tax qualification nondiscrimination
rules; and (ii), with respect to any severance from employment
occurring during such 24-month period, to provide severance
benefits to such Employees on a basis no less favorable than
would otherwise be provided to such Employees under the
applicable severance pay plans of PVY as in effect on the date
of this Agreement. After the 24 months immediately following
the Closing Date, SUG agrees to maintain during the next
24-month period, for Employees who continue their service with
SUG or any Subsidiary of SUG, base salary levels, bonus
opportunity and overall employee benefits that are appropriate
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for the market given SUG's financial circumstances, the
industry in which it operates, and regulatory considerations.
Nothing in this Agreement shall restrict, limit or interfere
with the ability (after the Closing Date) of SUG to terminate,
amend or replace any particular agreement, plan or program, or
terminate the employment of any person, provided that the
requirements of this Section 6.2(b)(2) are otherwise
satisfied.
(3) For purposes of eligibility, vesting and benefit
accrual under all benefit plans provided to the Employees
after the Closing Date, SUG will recognize the tenure of
employment, as recognized by the Acquired Companies as of the
Closing Date.
(4) All vacation time earned by the Employees prior to
the Closing Date must be taken by the end of the calendar year
in which the Closing Date occurs, except where the Employee is
requested by PVY or SUG to forego their vacation for
business-related reasons. For purposes of awarding vacation
time at the beginning of each calendar year following the
Closing Date, SUG will recognize the tenure of employment, as
recognized by the Acquired Company as of the Closing Date.
(5) SUG will permit each of the Employees to carry
forward all days of sick leave accrued prior to the Closing
Date.
(6) Effective immediately following the Closing Date,
each Employee who satisfies the eligibility criteria used by
SUG for similarly situated employees of SUG shall be eligible
for awards under SUG's Long-Term Incentive Stock Option Plan.
SUG represents that, as of the date of this Agreement, such
plan is the only plan in which SUG employees actively
participate which provides benefits in the form of SUG capital
stock, other than the SUG Employee Stock Purchase Plan or SUG
tax-qualified or supplemental retirement plans.
(7) For a five (5) year period from the Closing Date,
SUG agrees to provide retiree medical plan coverage which is
substantially comparable to the coverage under the PVY retiree
medical plan as of the date hereof, subject to SUG's right to
adjust copayment and cost sharing provisions (which may be
continued in the same proportions to the PVY-provided portions
of cost) to any former Employee (and his or her eligible
dependents) who is currently receiving such benefits
thereunder, or any active Employee (and his or her eligible
dependents) who would be eligible for such benefits if he or
she retired on the Closing Date (or who, within five (5) years
of the Closing Date, retires and is eligible to receive
benefits thereunder).
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(c) WARN. Neither SUG nor any Acquired Company shall, at any
time prior to 90 days after the Effective Time, effectuate a "plant
closing" or "mass layoff," as those terms are defined in the Worker
Adjustment and Retraining Notification Act of 1988, as amended ("WARN"),
affecting in whole or in part any site of employment, facility, operating
unit or employee without complying with the notice requirements and other
provisions of WARN.
(d) Directors. Immediately after the Effective Time on the
Closing Date, the Chief Executive Officer of PVY immediately prior to the
Effective Time shall be elected to the Board of Directors of SUG, and
thereafter nominated and recommended for reelection if necessary such
that such individual shall have a term of at least three years from the
Closing Date, and such individual shall hold office in accordance with
the Certificate of Incorporation and Bylaws of SUG; provided, however,
that if such individual is also an officer or employee of SUG, such
individual shall be required to resign as a director of SUG if he resigns
or is terminated as an officer or employee of SUG.
(e) Officers of PVY Division of SUG.
(1) From the Effective Time until the earlier of their
resignation or removal by the President of SUG,
(i) Mr. James Dodge shall serve as Chief Executive Officer and
President and (ii) James DeMetro shall serve as Executive Vice
President, Energy Services, in each case, of the PVY Division
of SUG and all other energy-related businesses of SUG
conducted in New England.
(2) From the Effective Time until the earlier of their
resignation or removal by SUG, the following individuals shall
serve the PVY Division of SUG in the following capacities:
Kenneth Hogan as Vice President, Chief Financial Officer and
Treasurer
Susann G. Mark as Vice President and General Counsel
James A. Grasso as Vice President, Public Government Affairs
Gerald A. Yurkevicz as Vice President, Business Development and
Marketing
Royalynne Hourihan as Vice President, Human Resources
Timothy S. Lyons as Vice President, Marketing and Regulatory Affairs
Robert W. Owens as Senior Vice President, Gas Distribution
Peter J. Gill as Vice President, Information Technology
James M. Stephens as President of Providence Energy Services
Paul E. O'Keefe as General Manager of Providence Energy Oil
George Mason as Vice President of Providence Energy Oil
The provisions of this Section 6.2(e) are subject to the
specific terms of the employment contracts referred to in
Section 6.2(b)(1), and the duties and responsibilities
attributable to the positions referred to in Section 6.2(e)
shall be as set forth in such contracts.
(f) Charitable Contributions. SUG will maintain PVY's
charitable contributions for at least the calendar year in which the
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Effective Time occurs and the next two calendar years thereafter at no
less than $175,000, which PVY represents is the current year budget for
the fiscal year ending September 30, 2000.
(g) Corporate Offices. For at least three years after the
Effective Time, SUG will operate the Acquired Companies' operations in
Rhode Island and Massachusetts as a separate division of SUG. For at
least three years after the Effective Time, SUG will maintain the
principal executive offices of the Acquired Companies in Rhode Island
and, for at least three years after the Effective Time, SUG will maintain
such Rhode Island offices as the principal executive offices for all of
SUG's energy-related businesses conducted in New England; provided,
however, that SUG will not be required to maintain such Rhode Island
offices as the principal executive offices for all of SUG's
energy-related businesses conducted in New England if Mr. James Dodge
ceases to be the Chief Executive Officer of the PVY Division of SUG.
(h) Collective Bargaining Agreements. At the Effective Time,
SUG agrees to assume all collective bargaining agreements covering
employees of any Acquired Company, and shall discharge when due any and
all liabilities of any Acquired Company under such collective bargaining
agreements relating to periods after the Effective Time.
(i) SUG Disclosure Schedule. On the date hereof, SUG has
delivered to PVY the SUG Disclosure Schedule, accompanied by a
certificate signed by an executive officer of SUG stating that the SUG
Disclosure Schedule is being delivered pursuant to this Section 6.2(i).
The SUG Disclosure Schedule constitutes an integral part of this
Agreement and modifies the representations, warranties, covenants or
agreements of SUG contained herein to the extent that such
representations, warranties, covenants or agreements expressly refer to
the SUG Disclosure Schedule; provided that (i) terms used in the SUG
Disclosure Schedule, unless otherwise defined, shall have the meanings,
if any, ascribed to them in this Agreement, (ii) information provided in
one section of the SUG Disclosure Schedule shall suffice, without
repetition or cross-reference, as a disclosure of such information in any
other relevant section of the SUG Disclosure Schedule if the disclosure
in the first section is sufficient on its face without further inquiry to
reasonably inform PVY of the information required to be disclosed in such
other sections of the SUG Disclosure Schedule in order to avoid a breach
under the counterpart sections of this Agreement and (iii) the inclusion
of any item in the SUG Disclosure Schedule shall not establish any
threshold of materiality.
Section 6.3 Additional Agreements.
(a) The Proxy Statement. (i) As soon as practicable after the
date hereof, PVY shall take such reasonable steps as are necessary for
the prompt preparation and filing with the SEC of a proxy statement
relating to the PVY Meeting (together with any amendments thereto or
supplements thereto, the "Proxy Statement"). Each of SUG and PVY shall
furnish all information concerning it, its officers and directors, and
the holders of its capital stock as the other may reasonably request in
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connection with the preparation and filing of the Proxy Statement. PVY
will use all commercially reasonable efforts to cause the Proxy Statement
to be cleared by the SEC as promptly as practicable after filing and as
promptly as practicable after such clearance, PVY shall mail the Proxy
Statement to its stockholders entitled to notice of and to vote at the
PVY Meeting. As promptly as practical after consultation between SUG and
PVY, PVY shall respond to any comments made by the SEC with respect to
the Proxy Statement.
(ii) The information supplied by PVY for inclusion or
incorporation by reference in the Proxy Statement shall not, at the date
of the mailing of the Proxy Statement (or any supplement thereto) and at
the time of the PVY Meeting, 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 the light of the
circumstances under which they were made, not misleading. If at any time
prior to PVY Meeting any event or circumstance relating to PVY or any of
its Subsidiaries, or its or their respective officers or directors,
should be discovered by PVY that should be set forth in a supplement to
the Proxy Statement, PVY shall promptly inform SUG. All documents that
PVY is responsible for filing with the SEC in connection with the
transactions contemplated herein shall comply as to form in all material
respects with the applicable requirements of the Securities Act and the
regulations thereunder and the Exchange Act and the regulations
thereunder.
(iii) The information supplied by SUG for inclusion or
incorporation by reference in the Proxy Statement shall not, at the date
of the mailing of the Proxy Statement (or any supplement thereto), at the
time of the PVY Meeting, 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 the light of the
circumstances under which they are made, not misleading. If at any time
prior to the PVY Meeting any event or circumstance relating to SUG or any
of its Subsidiaries, or to their respective officers or directors, should
be discovered by SUG that should be set forth in a supplement to the
Proxy Statement, SUG shall promptly inform PVY.
(iv) No representation, warranty, covenant or agreement
is made by or on behalf of PVY with respect to information supplied by
any other Person for inclusion in the Proxy Statement. No
representation, warranty, covenant or agreement is made by or on behalf
of SUG with respect to information supplied by any other Person for
inclusion in the Proxy Statement. No filing of, or amendment or
supplement to, the Proxy Statement shall be made by PVY without providing
SUG with the opportunity to review and comment thereon (except for any
ongoing SEC reporting required of PVY or ProvGas that will be
incorporated by reference). If at any time prior to the PVY Meeting any
information relating to any party hereto or any of their respective
officers, directors, shareholders or Subsidiaries, should be discovered
by any party hereto which should be set forth in an amendment or
supplement to the Proxy Statement so that the Proxy Statement would not
include any untrue statement of a material fact or omit to state any
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material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto
and an appropriate amendment or supplement describing such information
shall be promptly prepared, filed with the SEC and, to the extent
required by law, disseminated to the shareholders of PVY.
(b) Further Assurances. Each of SUG and PVY agrees, and PVY
agrees to cause its Subsidiaries, to take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the
Mergers in accordance with this Agreement as promptly as possible. If,
at any time after the Effective Time, any such further action is
necessary or desirable to carry out the purpose of this Agreement and to
vest SUG with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Acquired Companies, the
officers and directors of SUG will be fully authorized to take, and will
take, all such lawful and necessary action.
(c) Financial Statements to be Provided. Upon SUG's request,
PVY shall (i) provide to SUG audited and unaudited financial statements
required to be included in the proxy statements and the registration
statement contemplated by the Agreement of Merger, dated as of October 4,
1999, by and between SUG and Fall River Gas Company and (ii) cause its
independent accountants to deliver to SUG and Fall River Gas Company the
required consents in connection therewith.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to SUG's Obligation to Effect the
Merger. The obligations of SUG and Newco to effect the transactions
contemplated by this Agreement shall be subject to fulfillment at or
prior to the Closing of the following conditions:
(a) Representations and Warranties True as of the Closing
Date. PVY's representations and warranties in this Agreement shall have
been accurate in all respects as of the date of this Agreement and shall
be accurate in all respects as of the Closing Date as if made on the
Closing Date, except for such inaccuracies (without regard to any
materiality qualifications contained therein) which, individually and in
the aggregate, would not be reasonably likely to result in a PVY Material
Adverse Effect.
(b) Compliance with Agreements. The covenants, agreements
and conditions required by this Agreement to be performed and complied
with by any of the Acquired Companies shall have been performed and
complied with in all material respects prior to or at the Closing Date.
(c) Certificate. PVY shall execute and deliver to SUG a
certificate of an authorized officer of PVY, dated the Closing Date,
stating that the conditions specified in Sections 7.1(a) and 7.1(b) of
this Agreement have been satisfied.
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(d) Governmental Approvals. All approvals, consents,
opinions or rulings of all Governmental Bodies required in order to
consummate the transactions contemplated hereby shall have been obtained
by Final Order in such form as are not, and with no conditions that are,
individually or in the aggregate, reasonably likely to have a PVY
Material Adverse Effect or a material adverse effect on the business,
financial condition or results of operations of SUG, or which would
otherwise, in the reasonable determination of SUG, be unduly burdensome
to SUG in a manner that would be, individually or in the aggregate,
reasonably likely to have a PVY Material Adverse Effect or a material
adverse effect on the business, financial condition or results of
operations of SUG. The applicable waiting period under the HSR Act with
respect to the transactions contemplated hereby shall have expired or
have been terminated.
(e) Third Party Consents. Each of the consents required
under Section 5.4 of this Agreement shall have been obtained to the
reasonable satisfaction of SUG, other than any such consents which, if
not obtained, are not, individually or in the aggregate, reasonably
likely to result in a PVY Material Adverse Effect after the Closing. In
addition, the consent of the holders of at least 80% in aggregate
principal amount of all First Mortgage Bonds outstanding under the
ProvGas Indenture to each of the amendments to the ProvGas Indenture
described on Schedule 6.1(n) hereto shall have been obtained.
(f) Injunctions. On the Closing Date, there shall be no
Orders which operate to restrain, enjoin or otherwise prevent the
consummation of this Agreement or the Mergers.
(g) Resignations. Each director of each Acquired Company
shall, if requested by SUG, resign any position as a director of an
Acquired Company effective as of the Closing Date in accordance with such
Acquired Company's Organizational Documents and applicable provisions of
the RIBCA or MBCL, as the case may be; provided, however, that such
resignations shall not cause the termination of any such Person's
employment as an employee of an Acquired Company or reduce any such
employee's then current level of compensation.
(h) Shareholder Approvals. The PVY Shareholders' Approval
shall have been obtained, and all of the outstanding shares of the
ProvGas Preferred Stock shall have been redeemed in accordance with the
Organizational Documents of ProvGas.
(i) Tax Good Standing. Letters of Tax Good Standing shall
have been obtained for PVY and ProvGas from the Rhode Island Department
of Taxation.
(j) Conversion of Options. All directors who have options
outstanding under the 1989 Non-Employee Director Stock Option Plan shall
have consented to the conversion of such options into a right to receive
in respect thereof a cash payment on the basis set forth in Section 3.3.
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Section 7.2 Conditions to PVY's Obligations to Effect the
Mergers. The obligation of PVY to effect the transactions contemplated
by this Agreement shall be subject to fulfillment at or prior to the
Closing of the following conditions:
(a) Representations and Warranties True as of the Closing
Date. SUG's representations and warranties in this Agreement shall have
been accurate in all respects as of the date of this Agreement and shall
be accurate in all respects as of the Closing Date as if made on the
Closing Date, except for such inaccuracies (without regard to any
materiality qualifications contained herein) which, individually and in
the aggregate, would not be reasonably likely to result in a SUG Material
Adverse Effect.
(b) Compliance with Agreements. The covenants, agreements
and conditions required by this Agreement to be performed and complied
with by SUG shall have been performed and complied with in all material
respects prior to or at the Closing Date.
(c) Certificate. SUG shall execute and deliver to PVY a
certificate of an authorized officer of SUG, dated the Closing Date,
stating that the conditions specified in Sections 7.2(a) and 7.2(b) of
this Agreement have been satisfied.
(d) Governmental Approvals. All approvals, consents,
opinions or rulings of all Governmental Bodies required in order to
consummate the transactions contemplated hereby shall have been obtained
by Final Order. The applicable waiting period under the HSR Act with
respect to the transactions contemplated hereby shall have expired or
have been terminated.
(e) Injunctions. On the Closing Date, there shall be no
Orders which operate to restrain, enjoin or otherwise prevent the
consummation of this Agreement or the Mergers.
(f) Shareholder Approvals. The PVY Shareholders' Approval
shall have been obtained.
ARTICLE VIII
TERMINATION
Section 8.1 Termination Rights. This Agreement may be
terminated in its entirety at any time prior to the Closing:
(a) By the mutual written consent of SUG and PVY;
(b) By PVY, on the one hand, or SUG, on the other hand, in
writing if there shall be in effect a non-appealable order of a court of
competent jurisdiction prohibiting the consummation of the Mergers in
accordance with this Agreement;
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(c) By PVY, by written notice to SUG, if there is a breach of
any representation or warranty of SUG, which breach cannot be cured and
would cause the conditions set forth in Section 7.2(a) to be incapable of
being satisfied;
(d) By SUG, by written notice to PVY, if there is a breach of
any representation or warranty of PVY, which breach cannot be cured and
would cause the conditions set forth in Section 7.1(a) to be incapable of
being satisfied;
(e) By PVY, by written notice to SUG in accordance with
Section 6.1(h)(2); provided, however, that the termination described in
this clause (e) shall not be effective unless and until PVY shall have
paid SUG the fee described in Section 8.3(a) and PVY has substantially
contemporaneously entered into a definitive agreement with respect to the
proposed Business Combination;
(f) By PVY, by written notice to SUG, if the PVY
Shareholders' Approval is not obtained at the PVY Meeting upon the taking
of such vote including all adjournments, or by SUG, by written notice to
PVY, if the PVY Shareholders' Approval is not obtained at the PVY Meeting
upon the taking of such vote including all adjournments;
(g) By SUG, by written notice to PVY, if the Board of
Directors of PVY or any committee thereof (i) withdraws or modifies, or
proposes publicly to withdraw or modify, in a manner adverse to SUG, the
approval or recommendation by the Board of Directors or such committee of
the Merger or this Agreement, (ii) approves or recommends, or proposes
publicly to approve or recommend, a Business Combination, (iii) causes
PVY to enter into a definitive agreement related to any Business
Combination, (iv) resolves to take any of the actions specified in clause
(i), (ii) and (iii) above or (v) fails to cause ProvGas to redeem all of
the outstanding shares of ProvGas Preferred Stock as provided in Section
6.1(m);
(h) By SUG, by written notice to PVY, if a third party,
including a group (as defined under the Exchange Act), acquires
securities representing greater than 50% of the voting power of the
outstanding voting securities of PVY; or
(i) By either party in writing at any time after 5:00 p.m.,
Eastern Time on November 15, 2000 (the "Initial Termination Date"), if
the Closing has not occurred prior thereto; provided, however, that the
right to terminate this Agreement under this Section 8.1(i) will not be
available to any party that is in material breach of its representations,
warranties, covenants or agreements contained herein; and provided,
further, that if on the Initial Termination Date (i) the conditions to
closing set forth in Sections 7.1(d) and 7.2(d) shall not have been
fulfilled or (ii) any approval or authorization of any Governmental Body
required in connection with the consummation of the Mergers shall have
not been obtained and such approval or authorizations shall not have
become a Final Order, but all other conditions to Closing shall be
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fulfilled or shall be capable of being fulfilled, then the Initial
Termination Date will be extended to April 1, 2001.
Section 8.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 8.1, this Agreement shall be of no further
force and effect and there shall be no further liability hereunder on the
part of any party or its Affiliates, directors, officers, shareholders,
agents or other Representatives; provided, however, that (i) any fee
payable under Section 8.3(a) is paid to SUG and (ii) no such termination
shall relieve any party of liability for any claims, damages or losses
suffered by the other party as a result of the negligent or willful
failure of a party to perform any obligations required to be performed by
it hereunder on or prior to the date of termination. Notwithstanding
anything to the contrary contained herein, the provisions of Section 8.2,
Sections 10.1 through 10.6 and Sections 10.8 through 10.11 of this
Agreement shall survive any termination of this Agreement.
Section 8.3 Termination Fee; Expenses.
(a) Termination Fee. If this Agreement is terminated
pursuant to Section 8.1(e), 8.1(g) or 8.1(h), then PVY shall pay to SUG
promptly (but not later than five business days after notice is received
from PVY) an amount equal to $7.5 million in cash.
(b) Expenses. The parties agree that the agreements
contained in this Section 8.3 are an integral part of the transactions
contemplated by this Agreement and constitute liquidated damages and not
a penalty. Notwithstanding anything to the contrary contained in this
Section 8.3, if PVY fails to pay promptly to SUG the fee due under
Section 8.3(a), in addition to any amounts paid or payable pursuant to
Section 8.3(a), PVY shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee calculated using an annual
percentage rate of interest equal to the prime rate published in The Wall
Street Journal on the date (or preceding business day if such date is not
a business day) such fee was required to be paid, compounded on a daily
basis using a 360-day year.
ARTICLE IX
INDEMNIFICATION; REMEDIES
Section 9.1 Directors' and Officer's Indemnification.
(a) Indemnification and Insurance. For a period of six years
after the Effective Time, SUG will indemnify and hold harmless the
present and former officers and directors of PVY and its Subsidiaries
(the "Indemnified Parties") in respect of acts or omissions occurring
prior to the Effective Time to the extent provided under PVY's articles
of incorporation and bylaws in effect on the date hereof; provided,
however, that if any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of such claims
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shall continue until the final disposition of any and all such claims.
For six years after the Effective Time, SUG will use its reasonable best
efforts to provide officers' and directors' liability insurance in
respect of acts or omissions occurring prior to the Effective Time
covering each such person currently covered by PVY's officers' and
directors' liability insurance policy on terms with respect to coverage
and amount no less favorable than those of such policy in effect on the
date hereof; provided, however, that in satisfying its obligation under
this Section, if the annual premiums of such insurance coverage exceed
200% of the previous year's premiums, SUG will be obligated to obtain a
policy with the best coverage available, in the reasonable judgment of
the Board of Directors of SUG, for a cost not exceeding such amount.
(b) Successors. In the event SUG or any of its successors or
assigns (i) consolidates with or merges into any other Person and is not
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 either such case, proper provisions
must be made so that the successors and assigns of SUG will assume the
obligations set forth in this Section 9.1.
(c) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of any Acquired Company with respect to their
activities as such prior to the Effective Time, as provided in their
respective Organizational Documents in effect on the date hereof, or
otherwise in effect on the date hereof, will survive the Mergers and will
continue in full force and effect except for amendments to make changes
permitted by law that would enhance the rights of past or present
officers and directors to indemnification or advancement of expenses in
respect of acts or omissions occurring prior to the Effective Time. For a
period of not less than six years from the Effective Time (or, in the
case of matters occurring prior to the Effective Time which have not been
resolved prior to the sixth anniversary of the Effective Time, until such
matters are finally resolved).
Section 9.2 Representations and Warranties. Each and every
representation and warranty of either party shall expire at, and be
terminated and extinguished with, the Effective Time.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Expenses. Each of the parties will pay all
costs and expenses of its performance of and compliance with this
Agreement, except (i) as provided in the last sentence of Section 6.1(n)
or Section 8.3 and as expressly provided otherwise herein, (ii) PVY shall
pay all fees and expenses of counsel for PVY, (iii) SUG shall pay all
fees and expenses of counsel for SUG and Newco, (iv) SUG will pay all
real estate transfer taxes and real estate recording fees, if any,
including expenses of counsel associated with real estate title, transfer
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and recording issues in connection with the Mergers, and all filing and
application fees paid to Governmental Bodies in connection with the
Mergers and (v) PVY will pay all of the costs of printing and mailing the
Proxy Statement to the PVY stockholders.
Section 10.2 Notices. All notices, requests and other
communications hereunder shall be in writing and shall be deemed to have
been given upon receipt if either (a) personally delivered, (b) sent by
prepaid first class mail, and registered or certified and a return
receipt requested or (c) by facsimile telecopier with completed
transmission acknowledged:
if to SUG or to Newco, to:
Southern Union Company
504 Lavaca Street, Suite 800
Austin, Texas 78701
Attention: Peter H. Kelley
President and Chief Operating Officer
Telecopier: (512) 477-3879
with a copy to:
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Attention: Garett J. Albert
Telecopier: (212) 422-4726
if to PVY, to:
Providence Energy Corporation
100 Weybosset Street
Providence, Rhode Island 02903
Attention: James H. Dodge
Chairman, President and CEO
Telecopier: (401) 421-4887
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Peter J. Gordon
Telecopier: (212) 455-2502
or at such other address or number as shall be given in writing by a
party to the other parties.
Section 10.3 Assignment. This Agreement may not be assigned
by any party hereto without the prior written consent of the other
parties hereto. Any assignment in violation of the terms of this
Agreement shall be null and void ab initio.
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Section 10.4 Successor Bound. Subject to the provisions of
Section 10.3, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns.
Section 10.5 Governing Law; Forum; Consent to Jurisdiction.
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York except to the extent that the terms and
consummation of the Mergers are subject to the DGCL, the RIBCA or the
MBCL, in which case such laws shall govern. Each party to this Agreement
hereby irrevocably and unconditionally (i) consents to submit to the
exclusive jurisdiction of the federal courts of the Southern District of
New York in the county of New York and the borough of Manhattan for any
proceeding arising in connection with this Agreement (and each such party
agrees not to commence any such proceeding, except in such courts), (ii)
to the extent such party is not a resident of the State of New York,
agrees to appoint an agent in the State of New York as such party's agent
for acceptance of legal process in any such proceeding against such party
with the same legal force and validity as if served upon such party
personally within the State of New York, and to notify promptly each
other party hereto of the name and address of such agent, (iii) waives
any objection to the laying of venue of any such proceeding in the
federal courts of the Southern District of New York in the county of New
York and the borough of Manhattan, and (iv) waives, and agrees not to
plead or to make, any claim that any such proceeding brought in any
federal court of the Southern District of New York has been brought in an
improper or otherwise inconvenient forum.
Section 10.6 Waiver of Trial By Jury. EACH PARTY TO THIS
AGREEMENT HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
WHICH ANY SUCH PARTY MAY BE A PARTY ARISING OUT OF OR IN ANY WAY
PERTAINING TO (i) THIS AGREEMENT, (ii) THE MERGERS, (iii) THE
CONFIDENTIALITY AGREEMENT OR (iv) ANY RELATED DOCUMENTS. IT IS AGREED
AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES WHO ARE PARTIES TO THIS AGREEMENT. THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH PARTY HERETO,
AND EACH SUCH PARTY HEREBY REPRESENTS AND WARRANTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON TO INDUCE
THIS WAIVER OR TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. EACH PARTY TO THIS AGREEMENT FURTHER REPRESENTS AND WARRANTS
THAT EACH SUCH PARTY HAS BEEN REPRESENTED IN THE SIGNING OF THIS
AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF EACH SUCH PARTY'S OWN FREE WILL, AND THAT EACH SUCH PARTY HAS
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
Section 10.7 Cooperation; Further Documents.
(a) Each of the parties hereto agrees to use its reasonable
best efforts to take or cause to be taken all action, and to do or cause
to be done all things necessary, proper or advisable under applicable
laws, regulations or otherwise, to consummate and to make effective the
transactions contemplated by this Agreement, including, without
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limitation, the timely performance of all actions and things contemplated
by this Agreement to be taken or done by each of the parties hereto.
(b) Each party shall cooperate with the other party in such
other party's discharge of the obligations hereunder, which shall include
making reasonably available to the other party such of its books and
records as contain, and such of its personnel as have, relevant
information, with respect thereto.
Section 10.8 Construction of Agreement. The terms and
provisions of this Agreement represent the results of negotiations
between the parties and their Representatives, each of which has been
represented by counsel of its own choosing, and neither of which has
acted under duress or compulsion, whether legal, economic or otherwise.
Accordingly, the terms and provisions of this Agreement shall be
interpreted and construed in accordance with their usual and customary
meanings, and each of the parties hereto hereby waives the application in
connection with the interpretation and construction of this Agreement of
any rule of law to the effect that ambiguous or conflicting terms or
provisions contained in this Agreement shall be interpreted or construed
against the party whose attorney prepared the executed draft or any
earlier draft of this Agreement.
Section 10.9 Publicity; Organizational and Operational
Announcements. No party hereto shall issue, make or cause the
publication of any press release or other announcement with respect to
this Agreement or the transactions contemplated hereby, or otherwise make
any disclosures relating thereto, without the consent of the other
parties, such consent not to be unreasonably withheld or delayed;
provided, however, that such consent shall not be required where such
release or announcement is required by applicable law or the rules or
regulations of a securities exchange, in which event the party so
required to issue such release or announcement shall endeavor, wherever
possible, to furnish an advance copy of the proposed release to the other
parties.
Section 10.10 Waiver. Except as otherwise expressly provided
in this Agreement, neither the failure nor any delay on the part of any
party to exercise any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise or waiver
of any such right, power or privilege preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege
available to each party at law or in equity.
Section 10.11 Parties in Interest. This Agreement (including
the documents and instruments referred to herein) is not intended to
confer upon any Person, other than the parties hereto and their
successors and permitted assigns, any rights or remedies hereunder,
except that the parties hereto agree and acknowledge that the agreements
and covenants contained in Section 6.2(d) are intended for the direct and
irrevocable benefit of the director of PVY specified therein, and that
the agreements and covenants contained in Section 9.1 are intended for
the direct and irrevocable benefit of the Indemnified Parties described
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therein and their respective heirs or legal representatives (such
director or Indemnified Party, a "Third Party Beneficiary"), and that
each such Third Party Beneficiary, although not a party to this
Agreement, shall be and is a direct and irrevocable third party
beneficiary of such agreements and covenants and shall have the right to
enforce such agreements and covenants against SUG in all respects fully
and to the same extent as if such Third Party Beneficiary were a party
hereto.
Section 10.12 Specific Performance. The parties hereto agree
that irreparable damage would occur to a party 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 any party shall be entitled to an injunction or injunctions
to prevent breaches of this agreement by any other party and to enforce
specifically, to the fullest extent available, the terms and provisions
hereof, including each party's obligation to close, in any court of the
United States or any state having jurisdiction, this being in addition to
any other right or remedy to which any party is entitled at law or in
equity.
Section 10.13 Section and Paragraph Headings. The section
and paragraph headings in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 10.14 Amendment. This Agreement may be amended only
by an instrument in writing executed by the parties hereto.
Section 10.15 Entire Agreement. This Agreement, the
exhibits, annexes and schedules hereto and the documents specifically
referred to herein and the Confidentiality Agreement constitute the
entire agreement, understanding, representations and warranties of the
parties hereto with respect to the subject matter hereof and supersede
all prior agreements with respect thereto.
Section 10.16 Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
SOUTHERN UNION COMPANY
By: /s/Peter H. Kelley
--------------------------------------
Name: Peter H. Kelley
Title: President and Chief Operating Officer
GUS ACQUISITION CORPORATION
By: /s/Peter H. Kelley
--------------------------------------
Name: Peter H. Kelley
Title: President
PROVIDENCE ENERGY CORPORATION
By: /s/James H. Dodge
--------------------------------------
Name: James H. Dodge
Title: Chief Executive Officer
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Exhibit 10
AMENDMENT NO. 1 TO COMMON STOCK RIGHTS AGREEMENT
This Amendment No. 1 to Common Stock Rights Agreement (the
"Amendment") is entered into as of November 15, 1999 by and between
Providence Energy Corporation, a Rhode Island corporation (the "Company"),
and The Bank of New York, as rights agent (the "Rights Agent"), amending the
Common Stock Rights Agreement (the "Common Stock Rights Agreement"), dated as
of July 23, 1998 between the Company and the Rights Agent.
W I T N E S S E T H
WHEREAS, the Company and the Rights Agent entered into a Common
Stock Rights Agreement dated July 23, 1998;
WHEREAS, there does not exist as of the date hereof any Acquiring
Person (as defined in the Common Stock Rights Agreement); and
WHEREAS, the Company desires to amend the Common Stock Rights
Agreement in accordance with Section 27 thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth in the Common Stock Rights Agreement and this Amendment,
the parties hereby agree as follows:
Section 1. Defined Terms. Capitalized terms defined in the
Common Stock Rights Agreement and used herein shall have the meanings given
to them in the Common Stock Rights Agreement.
Section 2. Amendment to Section 1. Section 1(a) of the Common
Stock Rights Agreement is hereby amended to add the following sentence at the
end thereof:
"Notwithstanding anything in this Agreement to the contrary,
neither Southern Union Company ("SUG") nor any of its Affiliates shall become
an Acquiring Person as a result of the execution of the Agreement and Plan of
Merger between SUG, GUS Acquisition Corporation, a Rhode Island corporation
("Newco"), and the Company (as the same may be modified or amended from time
to time, the "Merger Agreement") or the consummation of the transactions
contemplated thereby, including the mergers contemplated by the Merger
Agreement."
Section 3. Amendment to Section 3. Section 3(a) of the Common
Stock Rights Agreement is hereby amended to add the following sentence at the
end thereof:
"Notwithstanding anything in this Agreement to the contrary, a
Distribution Date shall not be deemed to have occurred solely as the result
of the approval, execution, delivery or performance of the Merger Agreement
or the consummation of any of the Mergers."
<PAGE>
Section 4. Amendment to Section 7(a). Section 7(a) of the
Common Stock Rights Agreement is hereby amended by: (a) inserting the
following phrase in the first sentence immediately before the word "close":
"time that is the earliest of (i)" and (b) inserting the following in the
first sentence immediately after the date "2008": "or (ii) such time as duly
executed articles of merger are duly filed with the Secretary of State of the
State of Rhode Island pursuant to Section 2.2 of the Merger Agreement or at
such later effective time as is specified in such document."
Section 5. Amendment to Section 13. Section 13 of the Common
Stock Rights Agreement is hereby amended to add the following sentence at the
end thereof: "Notwithstanding the foregoing, the provisions of this Section
13 shall not apply to the execution and delivery of the Merger Agreement or
the consummation of the transactions contemplated thereby."
Section 6. Effectiveness. This Amendment shall be deemed
effective as of the date hereof. Except as specifically amended hereby, the
Common Stock Rights Agreement shall remain in full force and effect and shall
be otherwise unaffected hereby.
Section 7. Counterparts. This Amendment may be executed in any
number of counterparts, and each of such counterparts shall for all purposes
be deemed an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 8. Governing Law. This Amendment shall be deemed to be
a contract made under the laws of the State of Rhode Island and for all
purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts made and to be performed entirely within
such State.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of the date hereof.
PROVIDENCE ENERGY CORPORATION
By:/s/James H. Dodge
------------------------------
Name: James H. Dodge
Title: Chairman, President and
Chief Executive Officer
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<PAGE>
THE BANK OF NEW YORK
By:/s/John Siversten
----------------------------
Name: John Siversten
Title: Vice President
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Exhibit 99
PROVENERGY SOUTHERN UNION COMPANY
Providence, RI Austin, TX
James A. Grasso George Yankowski
401-272-5040 x2340 512-370-8305
PROVIDENCE ENERGY CORPORATION AND SOUTHERN UNION COMPANY
ANNOUNCE MERGER AGREEMENT
Rhode Island to be Southern Union's New England Hub
PROVIDENCE, RI (November 15, 1999) - Providence Energy Corporation
("ProvEnergy") [NYSE:PVY] and Southern Union Company ("Southern Union")
[NYSE:SUG] today announced that their boards of directors have unanimously
approved a definitive merger agreement. ProvEnergy will serve as Southern
Union's headquarters for its New England operations.
The agreement calls for Southern Union to merge with ProvEnergy in a
transaction valued at approximately $400 million, including assumption of
debt. This transaction follows the announcement of Southern Union's merger
agreement with Fall River Gas (ASE:FAL), which is currently in process.
Under the terms of the agreement, ProvEnergy shareholders will receive $42.50
per Providence Energy share in cash.
Providence Energy Chairman and CEO James H. Dodge stated, "The financial
strength of the combined companies will enhance our ability to meet the
rapidly changing needs of our customers while creating new and exciting
opportunities for the employees of ProvEnergy. Both companies share the same
goal: providing safe, reliable energy at competitive prices with an emphasis
on customer service."
"ProvEnergy's service territories will continue to be served by the same
skilled and dedicated people who know and understand local needs," Dodge
continued. "In addition, Southern Union shares our belief in the potential
of the unregulated oil, natural gas and electricity markets and provides real
support to expand our market reach with greater resources."
"The new company will be financially strong and strategically focused on the
delivery of Superior service to its customers, including competitive energy
suppliers," said Peter Kelley, Southern Union President and Chief Operating
Officer. "Employees will become part of a larger, more vibrant energy
delivery company. We are confident that this strategic combination will be
beneficial for customers, employees and shareholders."
Headquartered in Providence, Rhode Island, ProvEnergy is a distributor and
marketer of natural gas, heating oil, and petroleum products as well as a
marketer of electricity and energy services. ProvEnergy's goal is to provide
complete and competitive energy services to homes and businesses throughout
New England. ProvEnergy serves approximately 181,000 customers in Rhode
Island, Massachusetts and Connecticut. Its principal subsidiaries within its
<PAGE>
regulated operations include ProvGas and North Attleboro Gas and within its
retail non-regulated operations include ProvEnergy Services, ProvEnergy Fuels
and ProvEnergy Power.
Upon completion of the two mergers, Southern Union will serve 1.5 million gas
and electric customers in Rhode Island, Massachusetts, Pennsylvania, Texas,
Missouri and Florida.
Providence Energy will operate as an autonomous division of Southern Union
with the headquarters remaining in Rhode Island, and there will be no
material changes to the operations of ProvEnergy. Southern Union will honor
all of ProvEnergy's union contracts and, according to Kelley, no layoffs are
anticipated as a result of the transaction. Dodge will also become a member
of Southern Union's Board of Directors.
The transaction will require certain legal approvals including the approval
of the holders of a majority of outstanding Providence Energy shares, the
Rhode Island Division of Public Utilities and Carriers and the Massachusetts
Department of Telecommunications and Energy, as well as regulators in
Missouri, Pennsylvania and Florida, where Southern Union currently has
operations.
This release and other Company reports and statements issued or made from
time to time contain certain "forward looking statements" concerning
projected future financial performance, expected plans or future operations.
Providence Energy Corporation cautions that actual results and developments
may differ materially from such projections or expectations. Investors
should be aware of important factors that could cause actual results to
differ materially from the forward-looking projections or expectations.
These factors include, but are not limited to: weather conditions in the
Company's service territories; cost of gas; regulatory and court decisions;
the receipt of timely and adequate rate relief, the achievement of operating
efficiencies and the purchase and implementation of new technologies for
attaining such efficiencies; impact of relations with labor unions of
bargaining-unit employees; impact of any Year 2000 disruption; and the effect
of strategic initiatives on earnings and cash flow. Most of these factors
are difficult to accurately predict and are generally beyond the control of
the Company.
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