<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Fall River Gas Company
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(Name of Issuer)
Common Stock, par value $0.83 1/3 per share
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(Title of Class of Securities)
306279 10 0
---------------------------
(CUSIP Number)
DENNIS K. MORGAN, ESQ.
Senior Vice President - Legal and Secretary
Southern Union Company
504 Lavaca Street, Eighth Floor
Austin, Texas 78701
(512) 477-5852
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 4, 1999
-------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this
Schedule 13D, and is filing this schedule because of Sections
240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
blank.
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<PAGE>
SCHEDULE 13D
CUSIP NO. 306279 10 0
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Southern Union Company
IRS Identification No. 75-0571592
2 CHECK THE APPROPRIATE SPACE IF A MEMBER OF A GROUP
(a)
-----
(b)
-----
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO, WC (See Item 3)
5 CHECK SPACE IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
-----
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 573,140* *The Reporting Person dis-
claims beneficial ownership -
EACH See Item 5
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH 10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
573,140
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
-----
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.8%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement") relates to the
common stock, par value $0.83 1/3 per share (the "FAL Common
Stock"), of Fall River Gas Company, a Massachusetts corporation
("FAL"), covered by a certain voting agreement dated October 4,
1999 between Southern Union Company, a Delaware corporation
("SUG"), and certain holders of FAL Common Stock (the "Voting
Agreement"). The Voting Agreement, which is further described in
Item 4 herein, was entered into in connection with, and as a
condition for SUG to enter into, an Agreement of Merger, dated as
of October 4, 1999, between SUG and FAL (the "Merger Agreement").
The Merger Agreement provides for, among other things, the merger
of FAL with and into SUG, as further described in Items 3 and 4
herein.
The address of FAL's principal executive offices is 155 North
Main Street, Fall River, Massachusetts 02720.
Item 2. Identity and Background.
(a), (b), (c) and (f):
Name of Reporting Person: Southern Union Company.
State of incorporation of Reporting Person: Delaware
Principal business of Reporting Person: SUG's principal line of
business is the distribution of natural gas in Texas, Missouri
and Florida as a public utility, through Southern Union Gas,
Missouri Gas Energy and Atlantic Utilities (doing business as
South Florida Natural Gas), each of which is a division of SUG.
Address of principal business of Reporting Person: 504 Lavaca
Street, Eighth Floor, Austin, Texas 78701.
The names, business addresses, principal occupations and citizen-
ship of the directors and executive officers of SUG are set forth
in Exhibit A hereto and are incorporated herein by reference.
(d) During the last five years, neither SUG nor, to the best
knowledge of SUG, any of its directors and executive officers,
has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors).
(e) During the last five years, neither SUG nor, to the best
knowledge of SUG, any of its directors and executive officers,
has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
No separate consideration was paid by SUG in connection with the
Voting Agreement. However, the shares of FAL Common Stock
subject to the Voting Agreement are covered by the Merger
Agreement. If the merger of FAL with and into SUG, with SUG
being the surviving corporation (the "Merger") is consummated,
the consideration to be received from SUG by the holders of the
FAL Common Stock will be determined as follows:
(a) Each issued and outstanding share of FAL Common Stock
(other than Dissenting Shares (as defined in the Merger Agree-
ment)) will be converted into the right of each holder thereof to
receive (i) that number of fully paid and nonassessable shares of
common stock of SUG (the "Stock Consideration") equal to $23.50
divided by the Exchange Ratio rounded to the nearest hundred-
thousandth or (ii) upon a valid Cash Election as provided in
paragraph (b) below, $23.50 in cash (the "Cash Consideration"),
subject to the limitations set forth in paragraphs (b), (c), and
(e) below. In the case of the consideration to be received by
the holders of FAL Common Stock in the aggregate, "Merger Con-
sideration" shall mean the Cash Consideration together with the
Stock Consideration. In the case of the consideration to be
received by an individual holder of FAL Common Stock, "Merger
Consideration" shall mean the Cash Consideration and/or the Stock
Consideration to be received by such holder, as the case may be.
"Exchange Ratio" shall mean the Average Trading Price (as defined
in the Merger Agreement) of common stock of SUG as of the Closing
Date (as defined in the Merger Agreement).
Notwithstanding the foregoing, if the Exchange Ratio as calcu-
lated pursuant to the preceding sentence and without regard to
this sentence (i) is less than the Minimum Value, then the
Exchange Ratio will be equal to the "Minimum Value," or (ii) is
greater than the "Maximum Value," then the Exchange Ratio will be
equal to the "Maximum Value."
"Minimum Value" will be $16.875 and "Maximum Value" will be
$19.6875.
(b) Subject to the immediately following sentence and to para-
graphs (c) and (e) below, each record holder of shares of FAL
Common Stock immediately prior to the Effective Time (as defined
in the Merger Agreement) shall be entitled to elect to receive
cash for all or any part of such shares of FAL Common Stock (a
"Cash Election"). Notwithstanding the foregoing, the aggregate
number of shares of FAL Common Stock that may be converted into
the right to receive cash consideration shall not exceed the Cash
Election Number.
To the extent not covered by a properly given Cash Election, all
shares of FAL Common Stock issued and outstanding immediately
prior to the Effective Time shall, except as provided in para-
graph (g) below, be converted solely into shares of common stock
of SUG.
"Cash Election Number" shall equal, subject to reduction pursuant
to paragraph (e) below, the amount by which (i) 50% of the number
of shares of FAL Common Stock outstanding immediately prior to
the Effective Time, exceeds (ii) the sum of (a) the number of
shares of FAL Common Stock to be exchanged for cash in lieu of
fractional shares pursuant to paragraph (g) below, and (b) the
number of Dissenting Shares.
(c) If the aggregate number of shares of FAL Common Stock
covered by Cash Elections (the "Cash Election Shares") exceeds
the Cash Election Number, each Cash Election Share shall be
converted into (i) the right to receive an amount in cash, with-
out interest, equal to the product of (a) $23.50 and (b) a
fraction (the "Cash Fraction"), the numerator of which shall be
the Cash Election Number and the denominator of which shall be
the total number of Cash Election Shares, and (ii) a number of
shares of common stock of SUG equal to the product of (a) $23.50
divided by the Exchange Ratio and (b) a fraction equal to one
minus the Cash Fraction.
(d) SUG will make all computations to give effect to paragraphs
(a), (b), (c), (e) and (g).
(e) If, after having made the calculation under paragraph (b),
the value of the common stock of SUG (excluding fractional shares
to be paid in cash) to be issued in the Merger, valued at the
lesser of the Average Trading Price as of the Closing Date and
the closing price of common stock of SUG on the last trading day
before the Closing Date (or, if determined to be more appropriate
to ensure the status of the Merger as a reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code, the trading
price as of the time of the Closing (as defined in the Merger
Agreement)), as reported on the New York Stock Exchange ("NYSE"),
is less than 50% of the total consideration to be paid in
exchange for the shares of FAL Common Stock (including, without
limitation, the amount of cash to be paid in lieu of fractional
shares and treating any Dissenting Shares as having been ex-
changed for the Cash Consideration) (the "Total Consideration"),
then the Cash Election Number shall be reduced to the extent
necessary so that the value of the common stock of SUG to be
issued in the Merger (as determined above) is 50% of the Total
Consideration.
(f) Each holder of FAL Common Stock shall surrender all such
holder's certificates formerly representing ownership of FAL
Common Stock in the manner provided in Section 3.2 of the Merger
Agreement. All such shares of FAL Common Stock, when so con-
verted, shall no longer be outstanding and shall be canceled and
automatically converted into the right to receive the Merger Con-
sideration (and cash in lieu of fractional shares) therefor upon
the surrender of such certificate in accordance with Section 3.2
of the Merger Agreement. Any payment made pursuant to paragraphs
(a) through (g) of Section 3.1 of the Merger Agreement shall be
made net of applicable withholding taxes to the extent such with-
holding is required by law.
(g) No fractional share of common stock of SUG shall be issued
in connection with the Merger. Each holder of shares of FAL
Common Stock shall be entitled to receive in lieu of any frac-
tional share of common stock of SUG to which such holder other-
wise would have been entitled pursuant to paragraphs (a) through
(g) of Section 3.1 of the Merger Agreement (after taking into
account all shares of FAL Common Stock then held of record by
such holder) a cash payment in an amount equal to the product of
(i) the fractional interest of a share of common stock of SUG to
which such holder otherwise would have been entitled and (ii) the
closing price of a share of common stock of SUG on the NYSE on
the trading day immediately prior to the Effective Time. Payment
of such amounts shall be made by SUG.
The Merger is subject to the approval of FAL's stockholders,
receipt of certain required regulatory approvals and the satis-
faction or waiver of certain conditions as more fully described
in the Merger Agreement.
If the Merger is consummated, SUG currently anticipates that SUG
would obtain the cash portion of the consideration to be paid by
SUG to holders of FAL Common Stock, including the FAL Common
Stock covered by the Voting Agreement, from general corporate
funds and/or by borrowing from parties whose identity is not yet
known.
The above description of the Merger Agreement and the related
matters set forth in this Item 3 are summaries, and are qualified
in their entirety by reference to the complete text of the Merger
Agreement, which is filed as Exhibit C to this Statement and
incorporated by reference herein.
Item 4. Purpose of Transaction.
SUG entered into the Merger Agreement and the related Voting
Agreement with the intent of acquiring control of, and the entire
common equity interest in, FAL through the Merger.
Merger Agreement. FAL and SUG have entered into the Merger
- ----------------
Agreement pursuant to which they have agreed that FAL will
complete a merger with and into SUG, with SUG being the surviving
corporation in the Merger. The Merger Agreement provides that
each outstanding share of FAL Common Stock (except Dissenting
Shares (as defined in the Merger Agreement)) will be canceled in
the Merger and converted into the right to receive the Merger
Consideration.
Voting Agreement. In connection with the Merger Agreement and as
- ----------------
a condition for SUG to enter into the Merger Agreement, SUG
entered into a Voting Agreement with each of the following stock-
holders of FAL (each, a "Stockholder") with respect to the number
of shares of FAL Common Stock listed to the right of such Stock-
holder's name:
Stockholder Number of Shares
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The Jarabek Family Limited Partnership 295,710
Ronald J. Ferris 145,059
Bradford J. Faxon 40,306
Raymond H. Faxon 57,370
Cindy L.J. Audette 13,190
Gilbert C. Oliveira, Jr. 12,539
Thomas H. Bilodeau 9,006
The aggregate number of shares of FAL Common Stock covered by the
Voting Agreement is 573,140.
Pursuant to the Voting Agreement, the Stockholders agreed to vote
or cause to be voted the shares of FAL Common Stock covered by
the Voting Agreement in favor of the Merger, the adoption and
approval of the Merger Agreement and the approval of the transac-
tions contemplated by the Merger Agreement, and granted to SUG an
irrevocable proxy to exercise all rights and powers of such
Stockholders with respect to the shares of FAL Common Stock
covered by the Voting Agreement to vote, give approvals, and
receive or waive notices of meetings for the purpose of securing
the approval and adoption by the stockholders of FAL of the
Merger Agreement and the consummation of the transactions contem-
plated thereby and to prevent any action that would prevent or
hinder in any material respect such approval or consummation.
The Stockholders retain the right to vote the shares of FAL Com-
mon Stock covered by the Voting Agreement on all other matters
that may be brought before the stockholders of FAL, provided that
such vote is not inconsistent with the purpose of the Voting
Agreement. The Voting Agreement also generally provides that the
Stockholders may not, directly or indirectly, grant any proxies
or powers of attorney with respect to the shares of FAL Common
Stock subject to the Voting Agreement, or sell, transfer, pledge,
assign or otherwise dispose of any of the shares of FAL Common
Stock covered by the Voting Agreement unless the transferee
becomes subject to the provisions of the Voting Agreement.
The Voting Agreement terminates upon the consummation of the
Merger in accordance with and as defined in the Merger Agreement
or such other expiration or termination of the Merger Agreement
in accordance with its terms.
The Merger. The Board of Directors of FAL has approved the
- ----------
Merger Agreement. Pursuant to the Merger Agreement, FAL will be
required to obtain approval of the Merger by FAL's stockholders
at a meeting of stockholders convened for that purpose. The
Merger must be approved by the holders of two thirds of the
outstanding shares of FAL Common Stock entitled to vote. Each
share of FAL Common Stock is entitled to one vote per share.
Pursuant to the Voting Agreement, the Stockholders have agreed to
vote the shares covered by the Voting Agreement (approximately
25.8% of the 2,220,086 shares of FAL Common Stock issued and
outstanding on October 4, 1999) in favor of the Merger.
The Merger Agreement provides, among other things, that SUG shall
be the surviving corporation in the Merger, that SUG's Restated
Certificate of Incorporation and bylaws as in effect immediately
prior to the Effective Time shall be the certificate of
incorporation and bylaws of the surviving corporation until
thereafter amended as provided by law, that the directors and
officers of SUG immediately prior to the Effective Time will be
the officers and directors of the surviving corporation and that
each director of FAL and its subsidiary will resign effective as
of the Closing Date. In addition, after consummation of the
Merger, the FAL Common Stock will be delisted from the American
Stock Exchange and will become eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934.
The above descriptions of the Merger Agreement and the Voting
Agreement and the related matters set forth in this Item 4 are
summaries, and are qualified in their entirety by reference to
the complete text of the Merger Agreement and the Voting Agree-
ment, which are filed as Exhibits C and D to this Statement and
incorporated by reference herein.
Item 5. Interest in Securities of the Issuer.
(a) and (b) The information set forth in Item 4 is hereby
incorporated herein by reference. 573,140 shares of FAL Common
Stock are covered by the Voting Agreement, representing 25.8% of
the 2,220,086 shares of FAL Common Stock issued and outstanding
on October 4, 1999. Pursuant to the Voting Agreement, the number
of shares of FAL Common Stock (i) with respect to which SUG has
sole voting power is 0; (ii) with respect to which SUG shares
voting power with the Stockholders is 573,140; (iii) with respect
to which SUG has sole dispositive power is 0; and (iv) with
respect to which SUG shares dispositive power is 0. SUG dis-
claims beneficial ownership of the shares of FAL Common Stock
covered by the Voting Agreement.
Based upon information provided to SUG by FAL, set forth on
Exhibit B is the following information concerning each Stock-
holder with whom SUG shares the power to vote the FAL Common
Stock covered by the Voting Agreement: (i) name; (ii) residence
or business address; and (iii) present principal occupation or
employment and the name, principal business and address of any
corporation or other organization in which such employment is
conducted.
During the last five years, based upon information provided to
SUG by FAL and to the best knowledge of SUG, no person named on
Exhibit B has been convicted in any criminal proceedings
(excluding traffic violations and similar misdemeanors).
During the last five years, based upon information provided to
SUG by FAL and to the best knowledge of SUG, no person named on
Exhibit B has been a party to any civil proceeding of a judicial
or administrative body of competent jurisdiction as the result of
which it, he or she was or is subject to any judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Based upon information provided to SUG by FAL, all of the persons
listed in Exhibit B are citizens of the United States of America.
(c) Except as set forth in Item 4, SUG has not engaged in any
transaction in FAL Common Stock during the past 60 days.
(d) To the best knowledge of SUG, no other person has the right
to receive or the power to direct the receipt of dividends from,
or the profits from the sale of, the shares of FAL Common Stock
covered by the Voting Agreement.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
The information set forth in Items 2, 4 and 5 is hereby incorpo-
rated herein by reference.
Item 7. Material To Be Filed as Exhibits.
Exhibit Title
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A Directors and Executive Officers of SUG
B Persons with whom the power to vote or direct
the vote of FAL Common Stock is shared
C Agreement of Merger, dated as of October 4,
1999, between SUG and FAL (incorporated by
reference to Exhibit 2 to SUG's Current Report
on Form 8-K, filed with the Securities and
Exchange Commission on October 8, 1999)
D Voting Agreement, made as of the 4th day of
October, 1999, by and between SUG and The
Jarabek Family Limited Partnership,
Ronald J. Ferris, Bradford J. Faxon,
Raymond H. Faxon, Cindy L.J. Audette,
Gilbert C. Oliveira, Jr. and
Thomas H. Bilodeau
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of
the person or entity set forth below, such person or entity
certifies that the information set forth in this Statement is
true, complete, and correct.
October 14, 1999
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Date
SOUTHERN UNION COMPANY
By: /s/ Dennis K. Morgan
------------------------
Name: Dennis K. Morgan
Title: Senior Vice President Legal and Secretary
<PAGE>
Exhibit A
Directors and Executive Officers of Southern Union Company
----------------------------------------------------------
The names, principal business addresses and principal occupations
of each of the directors and executive officers of SUG are listed
below. Each director and executive officer is a citizen of the
United States.
Directors
- ---------
Name and Principal Business Address Principal Occupation
- ----------------------------------- --------------------
George L. Lindemann Chairman of the Board and
c/o Activated Communications Chief Executive Officer of
Limited Partnership SUG; President and a Direc-
767 Fifth Avenue, 50th Floor tor of Cellular Dynamics,
New York, NY 10153 Inc., the managing general
partner of Activated Commun-
ications Limited Partner-
ship, a private investment
business
Frank W. Denius Chairman Emeritus of SUG;
700 Lavaca Street, Suite 700 private practice of law in
Austin, Texas 78701 Austin, Texas
Aaron I. Fleischman Senior Partner, Fleischman
Fleischman and Walsh, L.L.P. and Walsh, L.L.P.,
1400 Sixteenth Street, N.W. Washington, D. C. (law firm)
Washington, DC 20036
Adam M. Lindemann Managing member of
c/o Activated Communications Lindemann capital Advisors,
Limited Partnership L.L.C.
767 Fifth Avenue, 50th Floor
New York, NY 10153
George Rountree, III Senior Partner, Rountree &
Rountree & Seagle, LLP Seagle, Wilmington, North
2419 Market Street Carolina (law firm)
Wilmington, North Carolina 28403
John E. Brennan Vice Chairman of the Board
c/o Activated Communications and Assistant Secretary of
Limited Partnership SUG; private investments
767 Fifth Avenue, 50th Floor
New York, NY 10153
Peter H. Kelley President and Chief
Southern Union Company Operating Officer of SUG,
504 Lavaca Street Chief Executive Officer of
Eighth Floor Southern Union Gas Company,
Austin, Texas 78701 a division of SUG, and Chief
Executive Officer of
Missouri Gas Energy, a divi-
sion of SUG
Kurt A. Gitter, M.D. Ophthalmic surgeon in
3525 Prytania Street, Suite 320 private practice, New
New Orleans, Louisiana 70115-3500 Orleans, Louisiana; Clinical
Professor of Ophthalmology
at Louisiana State Univer-
sity and Assistant Professor
of Ophthalmology at Tulane
University
Roger J. Pearson Of counsel to Neville,
Neville, Shaver, Hubbard & McLean Shaver, Hubbard & McLean,
Three Landmark Square Stamford, Connecticut (law
Stamford, Connecticut 06901 firm)
Dan K. Wassong President, Chief Executive
Del Laboratories, Inc. Officer and a director of
565 Broad Hollow Road Del Laboratories, Inc.
Farmingdale, New York 11735
Executive Officers Who are
Not Directors
- --------------------------
The principal business address of each executive officer named
below is the same as that of SUG.
Name Position(s) Held With SUG
- ---- -------------------------
Steven W. Cattron President of Missouri Gas
Energy, a division of SUG
Ronald J. Endres Executive Vice President and
Chief Financial Officer
David J. Kvapil Senior Vice President and
Corporate Controller
Dennis K. Morgan Senior Vice President Legal
and Secretary
David W. Stevens President of Southern Union
Gas, a division of SUG
<PAGE>
Exhibit B
Persons with Whom the Power to Vote or Direct the Vote of FAL
-------------------------------------------------------------
Common Stock is Shared
----------------------
The names, principal business addresses and principal occupations
of each of persons with whom the power to vote or direct the vote
of FAL Common Stock is shared pursuant to the Voting Agreement
are listed below.
Name and Principal Business Address Principal Occupation
- ----------------------------------- --------------------
The Jarabek Family Limited Private investments
Partnership
c/o Barbara N. Jarabek, General
Partner
103 South Washington Drive
Sarasota, Florida
Ronald J. Ferris President of Venus de Milo,
75 GAR Highway Inc., Interstate Motel
Swansea, Massachusetts Corp. and Ferris Realty
Bradford J. Faxon President and Chairman of
c/o Fall River Gas Company the Board of Directors of
155 North Main Street FAL
Fall River, Massachusetts 02722
Raymond H. Faxon Financial Consultant; Vice
c/o Fall River Gas Company Chairman of the Board of
155 North Main Street FAL
Fall River, Massachusetts 02722
Cindy L.J. Audette Family investment manage-
503 Highland Avenue ment services
Fall River, Massachusetts 02720
Gilbert C. Oliveira, Jr. Vice President,
c/o Gilbert C. Oliveira Gilbert C. Oliveira Insur-
Insurance Agency ance Agency, and President,
1320 North Main Street G. Curt Oliveira Insurance
Fall River, Massachusetts 02720 Agency
Thomas H. Bilodeau Vice President - Finance,
c/o Medical & Environmental Medical & Environmental
Coolers, Inc. Coolers, Inc.
1648 Jupiter Cove Drive #312
Jupiter, Florida 33469
<PAGE>
Exhibit D
VOTING AGREEMENT
VOTING AGREEMENT, dated this 4th day of October, 1999, by and
between SOUTHERN UNION COMPANY, a Delaware corporation ("SUG"),
and The Jarabek Family Limited Partnership, Ronald J. Ferris,
Bradford J. Faxon, Raymond H. Faxon, Cindy L.J. Audette,
Gilbert C. Oliveira, Jr. and Thomas H. Bilodeau (each a "Stock-
holder" and collectively the "Stockholders").
RECITALS:
- --------
WHEREAS, the Stockholders currently beneficially own (as such
term is used under the Securities Exchange Act of 1934, as
amended, and the rules and regulations issued thereunder) the
shares of common stock, par value $.83 1/3 per share ("Shares"),
of Fall River Gas Company, a Massachusetts corporation ("FAL")
shown on Schedule A.
WHEREAS, as a condition of entering into the Agreement of Merger,
made as of the date hereof, by and between SUG and FAL (the
"Merger Agreement"), SUG has requested that the Stockholders
agree, and the Stockholders have agreed (i) to enter into a
voting agreement and (ii) to give SUG an irrevocable proxy,
coupled with an interest, to vote the Shares held by the Stock-
holders, in each case as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereby agree as follows:
1. Agreement to Vote Shares. Each Stockholder agrees during
------------------------
the term of this Agreement to vote, or cause to be voted, the
Shares shown opposite the Stockholder's name on Schedule A hereto
and any other Shares acquired after the date hereof, in person or
by proxy, in favor of the Merger, the adoption and approval of
the Merger Agreement and the approval of the transactions contem-
plated by the Merger Agreement at every meeting of the stock-
holders of FAL at which such matters are considered and at every
adjournment thereof.
2. Grant of Irrevocable Proxy. Each Stockholder hereby grants
--------------------------
to SUG an irrevocable proxy, which proxy is coupled with an
interest because of the consideration recited herein, to exer-
cise, at any time and from time to time, all rights and powers of
the Stockholder with respect to the Shares shown opposite the
Stockholder's name on Schedule A hereto to vote, give approvals,
and receive and waive notices of meetings for the purpose of
securing the approval and adoption by the stockholders of FAL of
the Merger Agreement and the consummation of the transactions
contemplated thereby and to prevent any action that would prevent
or hinder in any material respect such approval or consummation.
By giving this proxy each Stockholder hereby revokes any other
proxy granted by the Stockholder to vote any of the Shares in a
manner inconsistent with the foregoing grant. The power and
authority hereby conferred shall not be terminated by any act of
the Stockholder or by operation of law, by the dissolution of, by
lack of appropriate power or authority, or by the occurrence of
any other event or events and shall be binding upon all its
successors and assigns. If after the execution of this Agreement
the Stockholder shall dissolve, cease to have appropriate power
or authority, or if any other such event or events shall occur,
SUG is nevertheless authorized and directed to vote the Shares in
accordance with the terms of this Agreement as if such dissolu-
tion, lack of appropriate power or authority or other event or
events had not occurred and regardless of notice thereof.
3. No Other Grant of Proxy. Each Stockholder will not,
-----------------------
directly or indirectly, grant any proxies or powers of attorney
with respect to the Shares shown opposite the Stockholder's name
on Schedule A hereto or acquired after the date hereof to any
person in connection with its vote, consent or other approval
sought, in favor of the Merger (as defined in the Merger Agree-
ment), the adoption and approval of the Merger Agreement and the
approval of the transactions contemplated by the Merger Agree-
ment, other than as set forth in Sections 1 and 2 hereof.
4. Transfers. Each Stockholder will not, nor will such Stock-
---------
holder permit any entity under such Stockholder's control to,
sell, transfer, pledge, assign or otherwise dispose of (including
by gift) (collectively, "Transfer"), or consent to any Transfer
of, any Shares or any interest therein or enter into any
contract, option or other agreement or arrangement (including any
profit sharing or other derivative arrangement) with respect to
the Transfer of, any Shares or any interest therein to any
person, unless prior to any such Transfer the transferee of such
Shares agrees to be subject to the provisions of this Agreement.
5. No Solicitation. Until the Merger is consummated or the
---------------
Merger Agreement is terminated in accordance with its terms, each
Stockholder shall not, nor shall it permit any investment banker,
attorney or other advisor or representative of such Stockholder
to, directly or indirectly through another person, solicit,
initiate, encourage or otherwise facilitate any takeover
proposal.
6. Representations and Warranties of the Stockholders. Each
--------------------------------------------------
Stockholder as to such Stockholder hereby represents and warrants
to, and covenants with, SUG as follows:
(a) The Stockholder beneficially owns with power to vote the
number of Shares shown opposite the Stockholder's name on
Schedule A free and clear of any and all claims, liens, charges,
encumbrances, covenants, conditions, restrictions, voting trust
arrangements, options and adverse claims or rights whatsoever,
except as granted hereby or as would have no adverse effect on
this Agreement and/or the proxy granted hereby. The Stockholder
does not own of record or beneficially any shares of capital
stock of FAL or other securities representing or convertible into
shares of capital stock of FAL except as set forth in the
preceding sentence, Shares purchased after the date hereof which
shall become subject to this Agreement and the proxy granted
hereby, and Shares which any of them may have the right to
purchase upon exercise of options or warrants;
(b) The Stockholder has the full right, power and authority to
enter into this Agreement and to grant an irrevocable proxy to
SUG with respect to the Shares; there are no options, warrants,
calls, commitments or agreements of any nature whatsoever
pursuant to which any person will have the right to purchase or
otherwise acquire the Shares owned by the Stockholder except as
would, if exercised, require such purchaser or acquiror to abide
by this Agreement and the proxy granted hereby with respect
thereto; except as provided in this Agreement, the Stockholder
has not granted or agreed to grant any proxy or entered into any
voting trust, vote pooling or other agreement with respect to the
right to vote or give consents or approval of any kind as to the
Shares which proxy, trust, pooling or other agreement remains in
effect as of the date hereof and is in conflict with this Agree-
ment or the proxy granted hereby;
(c) The Stockholder is not a party to, subject to or bound by
any agreement or judgment, order, writ, prohibition, injunction
or decree of any court or other governmental body that would
prevent the execution, delivery or performance of this Agreement
by the Stockholder or the exercise of proxy rights by SUG with
respect to the Shares;
(d) This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes a legal, valid and
binding obligation of the Stockholder, enforceable in accordance
with its terms, subject only to (i) the effect of bankruptcy,
insolvency, reorganization or moratorium laws or other laws
generally affecting the enforceability of creditors' rights and
(ii) general equitable principles which may limit the right to
obtain specific performance or other equitable remedies; and
(e) The Stockholder will take all commercially reasonable
action necessary in order that its representations and warranties
set forth in this Agreement shall remain true and correct.
7. Stockholders' Covenants. Each Stockholder shall not enter
-----------------------
into any voting trust agreement, give any proxy or other right to
vote the Shares or take any action that would limit the rights of
any holder of the Shares to exercise fully the right to vote such
Shares that would be in conflict with this Agreement or the proxy
granted hereby.
8. Severability. If any term, provision, covenant or restric-
------------
tion of this Agreement is held by a court of competent jurisdic-
tion to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
9. Assignment. This Agreement shall not be assigned or dele-
----------
gated by any party hereto, except that SUG may transfer its
rights hereunder to any wholly-owned subsidiary of SUG, and
except that any assignment of any of the Shares by any Stock-
holder shall require that such Shares remain subject to this
Agreement and the proxy granted hereby. This Agreement shall be
binding upon and inure to the benefit of SUG and its successors
and assigns and shall be binding upon and inure to the benefit of
the Stockholders and their permitted successors and any permitted
assigns.
10. Specific Performance. The parties hereto acknowledge that
--------------------
damages would be an inadequate remedy for a breach of this
Agreement and that the obligations of the parties hereto shall be
specifically enforceable. In addition to any other legal or
equitable remedies to which SUG would be entitled, in the event
of a breach or a threatened breach of this Agreement by any
Stockholder, SUG shall have the right to obtain equitable relief,
including (but not limited to) an injunction or order of specific
performance of the terms hereof from a court of competent juris-
diction.
11. Amendments. This Agreement may not be modified, amended,
----------
altered or supplemented except upon the execution and delivery of
a written agreement executed by all of the parties hereto.
12. Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed
given if delivered personally, by cable, telegram or telex, or
mailed by a party hereto by registered or certified mail (return
receipt requested) or by a nationally recognized overnight mail
deliver service, to the other party at the following addresses
(or such other address for a party as shall be specified by like
notice):
if to SUG:
Southern Union Company
504 Lavaca Street, Suite 800
Austin, Texas 78701
Attention: Peter H. Kelley
President and Chief Operating Officer
Fax Number: (512) 477-3879
with a copy to:
Pennsylvania Enterprises, Inc.
One PEI Center
Wilkes-Barre, Pennsylvania 18711-0601
Attn: Thomas F. Karam
President and Chief Executive Officer
Fax Number: (570) 829-8900
and:
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Attn: Garett J. Albert, Esq.
Fax Number: (212) 422-4726
if to any Stockholder, to such Stockholder:
c/o Fall River Gas Company
155 North Main Street
Fall River, Massachusetts 02722
Fax Number: (508) 675-7811
with a copy to:
Rich, May, Bilodeau & Flaherty, P.C.
176 Federal Street
Boston, Massachusetts 02110
Attn: Eric J. Krathwohl, Esq.
Fax Number: (617) 556-3889
Any party may change its address for notice by notice so given.
13. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the Commonwealth of
Massachusetts regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws.
14. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
15. Term. This Agreement shall terminate, and the proxy granted
----
herein shall cease to be irrevocable, upon the consummation of
the Merger in accordance with and as defined in the Merger
Agreement or such other expiration or termination of the Merger
Agreement in accordance with its terms, and thereafter this
Agreement shall be of no further force or effect and there shall
be no liability on the part of any party with respect thereto
except nothing herein will relieve any party from liability for
any prior breach hereof.
<PAGE>
IN WITNESS WHEREOF, SUG has caused this Agreement to be duly
executed, and each Stockholder has duly executed this Agreement,
on the day and year first above written.
SOUTHERN UNION COMPANY
By: /s/ RONALD J. ENDRES
------------------------
Name: Ronald J. Endres
Title: Executive Vice President
THE JARABEK FAMILY LIMITED PARTNERSHIP
/s/ BARBARA H. JARABEK
--------------------------------------
Barbara N. Jarabek, General Partner
/s/ RONALD J. FERRIS
--------------------------------------
Ronald J. Ferris
/s/ BRADFORD J. FAXON
--------------------------------------
Bradford J. Faxon
/s/ RAYMOND H. FAXON
--------------------------------------
Raymond H. Faxon
/s/ CINDY L. J. AUDETTE
--------------------------------------
Cindy L.J. Audette
/s/ GILBERT C. OLIVEIRA, JR.
--------------------------------------
Gilbert C. Oliveira, Jr.
/s/ THOMAS H. BILODEAU
--------------------------------------
Thomas H. Bilodeau
<PAGE>
SCHEDULE A
Stockholder Number of Shares
- ----------- ----------------
The Jarabek Family Limited Partnership 295,710
Ronald J. Ferris 145,059
Bradford J. Faxon 40,306
Raymond H. Faxon 57,370
Cindy L.J. Audette 13,190
Gilbert C. Oliveira, Jr. 12,539
Thomas H. Bilodeau 9,006
