<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ASSOCIATED NATURAL GAS CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.05 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
045744 10 9
- --------------------------------------------------------------------------------
(CUSIP Number)
Robert W. Reed
Corporate Secretary
Panhandle Eastern Corporation
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
(713) 627-5400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 9, 1994
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(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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/.
<PAGE> 2
CUSIP NO. 045744 10 9 13D Page 2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Panhandle Eastern Corporation IRS No. 74-2150460
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not applicable. See Item 3.
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
4,489,231(1)
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
3,007,948(2)
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
None
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,489,231(1)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.4%(3)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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(1) Includes 1,481,231 shares with respect to which the Reporting Person has
irrevocable Proxies with respect to voting on matters concerning the
Merger Agreement described elsewhere in this Statement, and 3,007,948
shares issuable upon exercise of an Option granted to the Reporting
Person by the Issuer in connection with the Merger Agreement described
elsewhere in this Statement. The Option is not currently exercisable, and
will become exercisable only on the occurrence of certain events. The
Proxies described above would terminate if the Option became exercisable.
See Item 6 of this Statement.
(2) Consists solely of shares issuable upon exercise of the Option described
in Note 1.
(3) With respect to the portion of this percentage represented by the shares
subject to the Option as described above, assumes issuance in full of
such shares.
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CUSIP No. 045744 10 9 13D Page 3
STATEMENT ON SCHEDULE 13D
Item 1. Security and Issuer.
This Statement on Schedule 13D ("Statement") relates to shares of
common stock, $.05 par value per share (the "Common Stock"), of Associated
Natural Gas Corporation, a Delaware corporation (the "Issuer"), that may be
deemed to be beneficially owned by Panhandle Eastern Corporation, a Delaware
Corporation ("PEC") as a result of its acquisition of an option (the "Option")
to purchase up to 3,007,948 shares of Common Stock pursuant to the terms of a
Stock Option Agreement ("Stock Option Agreement") dated as of October 9, 1994
and entered into with the Issuer in connection with and in consideration of the
execution and delivery by PEC and Merger Sub (as defined below) of an Agreement
and Plan of Merger (the "Merger Agreement") dated as of October 9, 1994, among
PEC, Panhandle Acquisition Two, Inc., a Delaware corporation and a wholly-owned
subsidiary of PEC ("Merger Sub"), and the Issuer, providing for the merger of
Merger Sub with and into the Issuer (the "Merger"). The execution of the Stock
Option Agreement was a condition to PEC's and Merger Sub's execution of the
Merger Agreement. See Item 6 for a more complete description of the Merger
Agreement and the Stock Option Agreement.
PEC also may be deemed to beneficially own an aggregate of 1,481,283
shares of Common Stock that are subject to irrevocable proxies (the "Proxies")
that were granted to PEC by certain of the directors and executive officers of
the Issuer (the "Affiliates") in connection with, and as consideration for, the
execution and delivery by PEC and Merger Sub of the Merger Agreement. Under
the Proxies, each Affiliate has appointed PEC as his proxy to vote any shares
of Common Stock owned by such Affiliate (whether owned on the date of such
Proxy or thereafter acquired) in favor of the Merger and adoption of the Merger
Agreement, and against any business combination proposal or other matter that
may interfere with or be inconsistent with the Merger or the Merger Agreement,
at any meeting of stockholders of the Issuer (or consent in lieu thereof) and
any adjournment or adjournments thereof. See Item 6 for a more complete
description of the Proxies.
PEC disclaims beneficial ownership of the shares of Common Stock
subject to the Option and the Proxies. To the extent that any information is
provided herein with respect to the Issuer, such information is provided to the
knowledge of PEC. The address of the Issuer's principal executive offices is
370 Seventeenth Street, Suite 900, Denver, Colorado 80202.
Item 2. Identity and Background.
(a)-(c) This Statement is filed by PEC, whose principal business
address is 5400 Westheimer Court, P.O. Box 1642, Houston, Texas, 77251-1642.
PEC is a provider of natural gas transportation and related services.
Information with respect to the executive officers and directors of PEC is set
forth on Schedule 1 hereto, which is incorporated herein by reference.
(d)-(e) During the past five years, none of PEC or its directors or
executive officers has (a) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or (b) been 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
<PAGE> 4
CUSIP No. 045744 10 9 13D Page 4
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violations with respect to such laws.
(f) PEC is a Delaware corporation and each of its directors and
executive officers is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
The Option and the Proxies were acquired in connection with and in
consideration for PEC's execution of the Merger Agreement. If the conditions
precedent to exercise of the Option are met and PEC exercises the Option, PEC
expects to use its working capital, bank debt or other debt financing or a
combination thereof to provide the funds necessary to pay the exercise price of
the Option. However, PEC retains the right to determine at the time of such
exercise the source of funds for payment of the exercise price.
Item 4. Purpose of Transaction.
PEC acquired the Option and the Proxies in connection with the
execution of the Merger Agreement. Consummation of the Merger is subject to
the satisfaction of certain conditions, including adoption of the Merger
Agreement by the stockholders of the Issuer and approval of the issuance of the
PEC Common Stock (as defined below) in the Merger by the stockholders of PEC.
If the Merger is consummated, Merger Sub will be merged with and into the
Issuer, as a result of which the Issuer will become a wholly- owned subsidiary
of PEC. At the effective time of the Merger, each issued and outstanding share
of the Common Stock will be converted into the right to receive a number of
shares of common stock, $1.00 par value per share, of PEC ("PEC Common Stock")
based on an exchange ratio calculated based on the average daily closing price
of the PEC Common Stock during the fifteen trading days ending on the third
trading day prior to the Issuer's stockholders meeting with respect to the
Merger Agreement. In no event will the exchange ratio be less than 1.5725
shares of PEC Common Stock per share of Common Stock or greater than 1.8750
shares of PEC Common Stock per share of Common Stock.
The Option and the Proxies are intended to increase the likelihood
that the Merger will be consummated according to its terms, and to discourage
competing offers or attempts to acquire or gain control of the Issuer.
Additionally, the Option is intended to compensate PEC in the event the Merger
Agreement is terminated under certain circumstances.
The conditions precedent to exercise of the Option have not been met.
If the conditions to exercise of the Option are satisfied, PEC may exercise the
Option in full or in part, dispose of all or a portion of the Option, or,
subject to the terms of the Confidentiality Agreement described in Item 6,
acquire shares of Common Stock other than pursuant to the Option. Upon any
such acquisition of Common Stock, PEC may hold such shares as an investment,
dispose of any or all of such shares, or, subject to the terms of the
Confidentiality Agreement described in Item 6, seek to influence control of the
Issuer. The Option may give PEC the opportunity to profit from a successful
competing offer.
<PAGE> 5
CUSIP No. 045744 10 9 13D Page 5
Pursuant to the Proxies, at any meeting or other action of the
stockholders of the Issuer at which adoption of the Merger Agreement is
proposed, PEC intends to vote the shares subject to the Proxies in favor of the
Merger and adoption of the Merger Agreement. In addition, unless the Merger
Agreement is terminated in accordance with its terms, PEC may, in its
discretion, vote the shares subject to the Proxies against any business
combination proposal or other matter that may interfere with or be inconsistent
with the Merger or the Merger Agreement.
If the Merger is consummated, the Common Stock will be deregistered
under the Securities Exchange Act of 1934, as amended, and cease to be listed
on the New York Stock Exchange. Upon consummation of the Merger, the board of
directors of the surviving corporation will, pursuant to the Merger Agreement,
consist of the directors of Merger Sub (all of whom will have been elected by
PEC).
Other than as described above, PEC has no plans or proposals which
relate to, or may result in, any of the matters listed in Items 4(a) through
4(j) of Schedule 13D (although PEC reserves the right to develop such plans or
proposals).
The descriptions herein of the Merger Agreement, the Stock Option
Agreement and the Proxies are qualified in their entirety by reference to such
agreements, copies of which are filed herewith as Exhibits (a), (b) and (c),
respectively.
Item 5. Interest in Securities of the Issuer.
(a) According to the Issuer, there were 15,115,320 shares of Common
Stock outstanding as of October 9, 1994. Except as stated otherwise, all
calculations in this Statement assume such number of outstanding shares.
PEC currently does not own any shares of Common Stock. However,
because of its ownership of the Option, PEC may be deemed to beneficially own
3,007,948 shares of Common Stock, representing 16.6% of the shares of Common
Stock that would be outstanding assuming exercise of the Option in full and
issuance of the shares subject to the Option.
By virtue of the Proxies, PEC also may be deemed to beneficially own
the 1,481,283 shares of Common Stock subject to such Proxies, representing 9.8%
of the currently outstanding shares of Common Stock. The Proxies would
terminate, and PEC would cease to have any voting power with respect to the
shares subject thereto, upon any termination of the Merger Agreement, including
any event pursuant to which the Option becomes exercisable.
None of the directors or executive officers of PEC own any shares of
Common Stock.
(b) PEC does not have voting or dispositive power with respect to the
shares of Common Stock subject to the Option. However, if the conditions
precedent to exercise of the Option are satisfied and the Option is exercised
in full, PEC would have sole voting and dispositive power with respect to the
3,007,948 shares of Common Stock subject to the Option, which would constitute
<PAGE> 6
CUSIP No. 045744 10 9 13D Page 6
16.6% of the outstanding shares of Common Stock that would be outstanding
following the issuance of the shares subject to the Option.
Pursuant to the Proxies, PEC has the sole power to vote the 1,481,283
shares of Common Stock subject to the Proxies (representing 9.8% of the
outstanding shares of Common Stock) in favor of the Merger and adoption of the
Merger Agreement, and against any business combination proposal or other matter
that may interfere with or be inconsistent with the Merger or the Merger
Agreement, at any meeting of stockholders of the Issuer (or consent in lieu
thereof) and any adjournment or adjournments thereof. PEC has no power to vote
the shares subject to the Proxies with respect to any other matters. PEC has
no dispositive power with respect to any of the Shares subject to the Proxies.
The Proxies would terminate, and PEC would cease to have any voting power with
respect to the shares subject thereto, upon any termination of the Merger
Agreement, including any event pursuant to which the Option becomes
exercisable.
None of the directors or executive officers of PEC has or shares any
voting or dispositive control over any shares of Common Stock.
(c) Neither PEC nor any of its directors or executive officers has
engaged in any transactions involving shares of Common Stock during the 60 days
prior to the date of this Statement.
(d) Item 5(d) is not applicable to this Statement.
(e) Item 5(e) is not applicable to this Statement.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Merger Agreement
The Merger Agreement provides for the Merger of Merger Sub with and
into the Issuer, as a result of which the Issuer will become a wholly-owned
subsidiary of PEC. At the effective time of the Merger, if consummated, each
issued and outstanding share of Common Stock will be converted into the right
to receive a number of shares of PEC Common Stock based on an exchange ratio
calculated based on the average daily closing price of the PEC Common Stock
during the fifteen trading days ending on the third trading day prior to the
Issuer's stockholders meeting with respect to the Merger Agreement. In no
event will the exchange ratio be less than 1.5725 shares of PEC Common Stock
per share of Common Stock or greater than 1.8750 shares of PEC Common Stock per
share of Common Stock. Consummation of the Merger is subject to certain
conditions, including the expiration or termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the adoption of the
Merger Agreement by the stockholders of the Issuer and approval by the
stockholders of PEC of the issuance of the PEC Common Stock pursuant to the
Merger. The Merger Agreement also provides for the assumption by PEC of the
Issuer's outstanding stock options, so that such options would become options
to purchase PEC Common Stock, with an appropriate adjustment to the exercise
prices thereof. Pursuant to the Merger
<PAGE> 7
CUSIP No. 045744 10 9 13D Page 7
Agreement, if the Merger Agreement is terminated for certain specified reasons,
the Issuer has agreed to pay to PEC $20,000,000. The description herein of the
Merger Agreement is qualified in its entirety by reference to the Merger
Agreement, a copy of which is filed herewith as Exhibit (a) and is incorporated
herein by reference.
Stock Option Agreement
The Stock Option Agreement was entered into in connection with, and as
consideration for, PEC's and Merger Sub's execution of the Merger Agreement.
Under the Stock Option Agreement, the Issuer has granted to PEC an irrevocable
option to purchase up to 3,007,948 shares of Common Stock (the "Option Shares")
for the Exercise Price (as defined below), which Option shall be exercisable in
whole or in part at any time and from time to time after the occurrence of a
Trigger Event (as defined below) and prior to the Expiration Date (as defined
below).
"Exercise Price" means $39.00 per share; provided, however, if as of
the Exercise Date the Closing Price (as defined below) is more than $3.50 in
excess of the Exercise Price, then the Exercise Price shall be increased to an
amount equal to the Closing Price less $3.50. As used herein, the term
"Expiration Date" means the earlier to occur of (i) the Effective Time (as
defined in the Merger Agreement); or (ii) 5:00 p.m., Houston time, on the date
which is 90 days following the occurrence of a Trigger Event. The term
"Closing Price" as of any date means the average of the closing prices (or, if
the Common Stock should not trade on any trading day, the average of the bid
and asked prices therefor on such day), regular way, per share of the Common
Stock as reported on the New York Stock Exchange Composite Tape during the five
consecutive trading days ending on (and including) the trading day immediately
prior to such date (or, if the Common Stock is not then traded on the New York
Stock Exchange, on such other exchange or quotation system on which the Common
Stock is then traded).
A "Trigger Event" occurs if the Merger Agreement is terminated in
accordance with its terms:
(a) by PEC after a wilful breach by the Issuer, if the Issuer shall
have had contacts or entered into negotiations after the date of the
Merger Agreement regarding a Competing Transaction, and within twelve
months of the termination of the Merger Agreement the Issuer
consummates a business combination or enters into a definitive
agreement providing for a Business Combination (as defined in the
Merger Agreement) with any person with whom such contacts had been
made;
(b) by either PEC or the Issuer if the Merger Agreement fails to
receive the requisite vote for approval and adoption by the
stockholders of the Issuer at the Issuer's stockholders meeting called
with respect to the Merger Agreement, and at the time of such
stockholders meeting there shall exist a Competing Transaction;
(c) by PEC if the Board of Directors of the Issuer withdraws,
modifies or changes its recommendation of the Merger Agreement or the
Merger in a manner adverse to PEC (or resolves to do so) and, at such
time, there exists a Competing Transaction;
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CUSIP No. 045744 10 9 13D Page 8
(d) by PEC, if the Board of Directors of the Issuer shall recommend
any Competing Transaction to the Issuer's stockholders (or resolves to
do so);
(e) by PEC, if a tender or exchange offer for 20% or more of the
capital stock of the Issuer is commenced, and the Issuer's Board of
Directors does not recommend that its stockholders not tender their
shares into such tender offer or exchange offer; or
(f) by the Issuer, if the Board of Directors of the Issuer (i) fails
to recommend (or withdraws its recommendation of) approval and
adoption by its stockholders of the Merger and the Merger Agreement
and there exists a Competing Transaction, or (ii) recommends a
Competing Transaction, in each case upon a determination in good
faith, after consultation with and based on the advice of independent
legal counsel, that such action is necessary for such Board to comply
with its fiduciary duties under applicable law.
"Competing Transaction" means any of the following (other than the transactions
contemplated by the Merger Agreement) involving the Issuer or any of its
subsidiaries: (i) any merger, consolidation, share exchange, business
combination or similar transaction; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of 20% or more of the assets of the
Issuer and its subsidiaries, taken as a whole, (iii) any tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock of
the Issuer or the filing of a registration statement under the Securities Act
in connection therewith; (iv) any person having acquired beneficial ownership
of, or any group (as such term is defined under Section 13(d) of the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder)
having been formed which beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the outstanding shares of capital stock
of the Issuer; or (v) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
Under the Stock Option Agreement, PEC also has certain rights to cause
the Issuer to register for sale under the Securities Act of 1933 the Option
Shares, and certain rights to include such shares in any registration effected
by the Issuer with respect to the Common Stock. The registration provisions of
the Stock Option Agreement may be exercised at any time after a closing under
the Option, and, subject to certain limitations, entitle PEC to three "demand"
registrations and an unlimited number of "piggyback" registrations. The Stock
Option Agreement provides that expenses incurred in connection with any
registration thereunder will be borne by the Issuer, other than underwriting
discounts and commissions and fees and expenses of PEC's counsel.
The description herein of the Stock Option Agreement is qualified in
its entirety by reference to the Stock Option Agreement, a copy of which is
filed herewith as Exhibit (b) and is incorporated herein by reference.
Irrevocable Proxies
In consideration for PEC's and Merger Sub's execution of the Merger
Agreement, each of the Affiliates executed a Proxy appointing PEC as his proxy
to vote any shares of Common Stock
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CUSIP No. 045744 10 9 13D Page 9
owned by such Affiliate (whether owned on the date of such Proxy or thereafter
acquired) in favor of the Merger and adoption of the Merger Agreement, and
against any business combination proposal or other matter that may interfere
with or be inconsistent with the Merger or the Merger Agreement (including any
Competing Transaction as defined above), at any meeting of stockholders of the
Issuer (or consent in lieu thereof) and any adjournment or adjournments
thereof. The Proxies are not revocable, and provide that the shares of Common
Stock subject to the Proxy may not be transferred unless notice is given of the
Proxy to the transferee, and the transferee agrees that the shares transferred
will remain subject to the Proxy. The Proxies will terminate automatically on
the earliest to occur of (i) the effective time of the Merger, (ii) termination
of the Merger Agreement pursuant its terms, and (iii) June 30, 1995.
The description herein of the Proxies is qualified in its entirety by
reference to the form of Proxy filed herewith as Exhibit (c), which is
incorporated herein by reference.
Confidentiality Agreement
In connection with preliminary discussions between the Issuer and PEC,
on September 8, 1994, PEC and the Issuer entered into a Confidentiality
Agreement (the "Confidentiality Agreement") with respect to certain
confidential information obtained by the parties in connection with negotiation
of the Merger Agreement. The Confidentiality Agreement contains a standstill
provision pursuant to which neither party (or, subject to certain limitations,
their respective affiliates, officers, directors, employees or agents) will,
without the prior written consent of the other party, for a period of two years
following the date of the Confidentiality Agreement (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
any voting securities or direct or indirect rights or options to acquire any
voting securities of the other party, (ii) make, or in any way participate,
directly or indirectly, in any "solicitation" of any "proxy" to vote (as such
terms are used in the proxy rules under the Securities and Exchange Commission)
or seek to advise or influence any person or entity with respect to the voting
of any voting securities of the other party, (iii) form, join or in any way
participate, directly or indirectly, in a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, with respect to
any voting securities of the other party, or (iv) otherwise act, alone or in
concert with others, directly or indirectly, to seek control of the management,
board of directors, or policies of the other party.
The description herein of the Confidentiality Agreement is
qualified in its entirety by reference to the Confidentiality Agreement, a copy
of which is filed herewith as Exhibit (d) and is incorporated herein by
reference.
Other
Other than the Merger Agreement, the Stock Option Agreement, the
Proxies and the Confidentiality Agreement, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of the Issuer, including but not limited to transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profit or loss,
or the giving or withholding of proxies.
<PAGE> 10
CUSIP No. 045744 10 9 13D Page 10
Item 7. Material to be Filed as Exhibits
(99.1) Agreement and Plan of Merger dated as of October 9, 1994.
(99.2) Stock Option Agreement dated as of October 9, 1994.
(99.3) Form of Irrevocable Proxy, as executed by Donald H. Anderson,
Michael J. Quigley, Harold R. Logan, Erik B. Carslon, David A.
Peters, Michael Cockrell, Bradley C. Karp, Keith A. Knipp,
Cortlandt S. Dietler, John A. Redding, Wayne T. Biddle, and
Frederick R. Mayer.
(99.4) Confidentiality Agreement dated as of September 8, 1994.
<PAGE> 11
CUSIP No. 045744 10 9 13D Page 11
Signatures.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: October 10, 1994.
PANHANDLE EASTERN CORPORATION
By: /s/ Carl B. King
Name: Carl B. King
Title: Senior Vice President and
General Counsel
<PAGE> 12
CUSIP No. 045744 10 9 13D Page 12
SCHEDULE 1
INFORMATION CONCERNING THE EXECUTIVE OFFICERS AND DIRECTORS
OF PANHANDLE EASTERN CORPORATION
Unless otherwise indicated, the business address of each of the
individuals and corporations listed below is 5400 Westheimer Ct., Houston,
Texas 77056.
<TABLE>
<CAPTION>
Principal Employment,
Name Position Employer and Business Address
- ---- -------- -----------------------------
<S> <C> <C>
Paul M. Anderson Director President, PEC
Milton Carroll Director Chairman and CEO
Instrument Products, Inc.
7114 Bellfort
Houston, TX 77087
Robert Cizik Director Chairman and CEO
Cooper Industries, Inc.
P.O. Box 4446
Houston, TX 77210
Charles W. Duncan Director Private Investor
Texas Commerce Tower- 61st Fl.
600 Travis
Houston, TX 77002-3007
Harry E. Ekblom Director Vice Chairman
A. T. Hudson & Co., Inc.
555 Kinderkamack Road
Oradell, New Jersey 07649
William T. Esrey Director Chairman and CEO
Sprint Corporation
P.O. Box 11315
Kansas City, MO 64112
Ann Maynard Gray Director President
Diversified Publishing Group
Capital Cities/ABC, Inc.
77 W. 66th Street
New York, New York 10023
Dennis R. Hendrix Director Chairman and CEO, PEC
</TABLE>
<PAGE> 13
CUSIP No. 045744 10 9 13D Page 13
<TABLE>
<S> <C> <C>
Harold S. Hook Director Chairman and CEO
American General Corporation
P.O. Box 3247
Houston, TX 77253
Leo E. Linbeck, Jr. Director Chairman and CEO
Linbeck Construction Corporation
P.O. Box 22500
Houston, TX 77227
George L. Mazanec Director Vice Chairman, PEC
Ralph S. O'Connor Director Chairman and CEO
Ralph S. O'Connor & Associates
1001 Fannin- Suite 622
Houston, TX 77002
H. D. Church Exec. Officer Senior Vice President,
Texas Eastern Transmission
Corporation, and member of
Executive Committee, PEC
Paul F. Ferguson, Jr. Exec. Officer Vice President-Finance and
Accounting, and Treasure, PEC
F. J. Fowler Exec. Officer President, Texas Eastern
Transmission Corporation, and
member of Executive Committee,
PEC
James W. Hart Exec. Officer Vice President, PEC
J. B. Hipple Exec. Officer Senior Vice President and
Chief Financial Officer, PEC
Carl B. King Exec. Officer Senior Vice President and
General Counsel, PEC
V. P. Ludwig Exec. Officer Vice President, PEC
Sandra P. Meyer Exec. Officer Controller, PEC
R. A. Perkins Exec. Officer President, 1 Source Corporation,
and member of Executive Committee,
PEC
</TABLE>
<PAGE> 14
CUSIP No. 045744 10 9 13D Page 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
(99.1) Agreement and Plan of Merger dated as of
October 9, 1994.
(99.2) Stock Option Agreement dated as of
October 9, 1994.
(99.3) Form of Irrevocable Proxy, as executed by Donald H. Anderson,
Michael J. Quigley, Harold R. Logan, Erik B. Carslon,
David A. Peters, Michael Cockrell, Bradley C. Karp,
Keith A. Knipp, Cortlandt S. Dietler, John A. Redding,
Wayne T. Biddle and Frederick R. Mayer.
(99.4) Confidentiality Agreement dated as of September 8, 1994.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PANHANDLE EASTERN CORPORATION
AND
PANHANDLE ACQUISITION TWO, INC.
AND
ASSOCIATED NATURAL GAS CORPORATION
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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SECTION 1.02. Closing; Closing Date; Effective Time. . . . . . . . . . . . . . . 2
-------------------------------------
SECTION 1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
SECTION 1.04. Certificate of Incorporation; Bylaws . . . . . . . . . . . . . . . 3
------------------------------------
SECTION 1.05. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 3
----------------------
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration; Conversion and Cancellation of
----------------------------------------------------
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----------
SECTION 2.02. Exchange and Surrender of Certificates . . . . . . . . . . . . . . 5
--------------------------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ANGC
SECTION 3.01. Organization and Qualification; Subsidiaries . . . . . . . . . . . 7
--------------------------------------------
SECTION 3.02. Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
SECTION 3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------------
SECTION 3.04. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------
SECTION 3.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . 10
------------------------------------------
SECTION 3.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------
SECTION 3.07. Reports; Financial Statements . . . . . . . . . . . . . . . . . . . 11
-----------------------------
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . 12
------------------------------------
SECTION 3.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------
SECTION 3.10. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . 13
-------------------------------------
SECTION 3.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-----
SECTION 3.12. Tax Matters; Pooling . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
SECTION 3.13. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
SECTION 3.14. Certain Business Practices . . . . . . . . . . . . . . . . . . . . 19
--------------------------
SECTION 3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------
SECTION 3.16. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------
SECTION 3.17. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 3.18. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
----------
SECTION 3.19. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
SECTION 3.20. Certain Contracts and Restrictions. . . . . . . . . . . . . . . . . 22
-----------------------------------
SECTION 3.21. Easements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------
SECTION 3.22. Public Utility Holding Company Act, Etc. . . . . . . . . . . . . . 23
----------------------------------------
SECTION 3.23. Futures Trading and Fixed Price Exposure. . . . . . . . . . . . . 23
----------------------------------------
SECTION 3.24. Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . 24
---------------------
SECTION 3.25. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . 24
----------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PEC
SECTION 4.01. Organization and Qualification . . . . . . . . . . . . . . . . . . 24
------------------------------
SECTION 4.02. Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------
SECTION 4.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------
SECTION 4.04. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
---------
SECTION 4.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . 26
------------------------------------------
SECTION 4.06. Permits; Compliance . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
SECTION 4.07. Reports; Financial Statements . . . . . . . . . . . . . . . . . . . 27
-----------------------------
SECTION 4.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . 29
------------------------------------
SECTION 4.09. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------
SECTION 4.10. Tax Matters; Pooling . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------
SECTION 4.11. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------
SECTION 4.12. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------------
SECTION 4.13. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-------
SECTION 4.14. Information Supplied. . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------
SECTION 4.15. Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . 30
-------------------------------------
SECTION 4.16. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
------
SECTION 4.17. Certain Business Practices . . . . . . . . . . . . . . . . . . . . 31
--------------------------
SECTION 4.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------
SECTION 4.19. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------
SECTION 4.20. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------
SECTION 4.21. Public Utility Holding Company Act, Etc. . . . . . . . . . . . . . 33
----------------------------------------
SECTION 4.22. Futures Trading. . . . . . . . . . . . . . . . . . . . . . . . . 33
---------------
SECTION 4.23. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . 33
----------------------------
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of ANGC . . . . . . . . . . . . . . . . . . . 34
-----------------------------
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 5.02. Negative Covenants of ANGC . . . . . . . . . . . . . . . . . . . . 34
--------------------------
SECTION 5.03. Affirmative and Negative Covenants of PEC . . . . . . . . . . . . . 38
-----------------------------------------
SECTION 5.04. Access and Information . . . . . . . . . . . . . . . . . . . . . . 40
----------------------
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . 41
------------------------
SECTION 6.02. Registration Statement; Proxy Statements . . . . . . . . . . . . . 41
----------------------------------------
SECTION 6.03. Appropriate Action; Consents; Filings . . . . . . . . . . . . . . . 44
-------------------------------------
SECTION 6.04. Affiliates; Pooling; Tax Treatment . . . . . . . . . . . . . . . . 46
----------------------------------
SECTION 6.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 46
--------------------
SECTION 6.06. NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
------------
SECTION 6.07. Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . 46
---------------
SECTION 6.08 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 47
----------------------
SECTION 6.09 Convertible Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 48
----------------
SECTION 6.10 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
----------
SECTION 6.11 Indemnification and Insurance. . . . . . . . . . . . . . . . . . . 49
-----------------------------
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This Agreement . . . 49
------------------------------------------------------------
SECTION 7.02. Additional Conditions to Obligations of the PEC Companies . . . . . 50
---------------------------------------------------------
SECTION 7.03. Additional Conditions to Obligations of ANGC . . . . . . . . . . . 51
--------------------------------------------
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
-----------
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 55
---------------------
SECTION 8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
---------
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
------
SECTION 8.05. Fees, Expenses and Other Payments . . . . . . . . . . . . . . . . . 55
---------------------------------
ARTICLE IX
</TABLE>
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<TABLE>
<S> <C> <C>
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and Agreements . . . . 57
-----------------------------------------------------------
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-------
SECTION 9.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 59
-------------------
SECTION 9.04. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------
SECTION 9.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------
SECTION 9.06. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 61
----------------
SECTION 9.07. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
----------
SECTION 9.08. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 61
-------------------
SECTION 9.09. Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 61
--------------------
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . 61
------------------------------------------------------
SECTION 9.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
-------------
SECTION 9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
------------
</TABLE>
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<PAGE> 6
Exhibits
--------
Exhibit A
Exhibit B
-v-
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 9, 1994 (this
"Agreement"), is by and among Panhandle Eastern Corporation, a Delaware
corporation ("PEC"), Panhandle Acquisition Two, Inc., a Delaware corporation
and wholly owned subsidiary of PEC ("Merger Sub"), and Associated Natural Gas
Corporation, a Delaware corporation ("ANGC"). PEC and Merger Sub are sometimes
referred to herein as the "PEC Companies."
WHEREAS, Merger Sub, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware ("Delaware Law"), will merge with and into ANGC (the "Merger"), and
pursuant thereto, the issued and outstanding shares of common stock, $.05 per
share, of ANGC ("ANGC Common Stock") not owned directly or indirectly by ANGC
or the PEC Companies or their respective subsidiaries will be converted into
the right to receive shares of common stock, $1.00 par value, of PEC and an
equal number of PEC Preferred Stock Purchase Rights, as defined in Section 9.03
hereof (such common stock of PEC, together (except as the context otherwise
requires) with such PEC Preferred Stock Purchase rights, being referred to
herein as the "PEC Common Stock"), as set forth herein;
WHEREAS, the Board of Directors of ANGC, after actively soliciting and
considering business combination proposals and indications of interest from
other persons, has determined that the Merger is consistent with and in
furtherance of the long-term business strategy of ANGC and is fair to, and in
the best interests of, ANGC and its stockholders and has approved and adopted
this Agreement and the transactions contemplated hereby, and recommended
adoption of this Agreement by the stockholders of ANGC;
WHEREAS, as a condition to the willingness of PEC and Merger Sub to
enter into this Agreement, PEC has required that ANGC agree, and in order to
induce PEC and Merger Sub to enter into this Agreement, ANGC has agreed, to
grant to PEC an option with respect to certain shares of ANGC Common Stock
pursuant to that certain Stock Option Agreement between PEC and ANGC of even
date herewith (the "PEC Option Agreement");
WHEREAS, the Board of Directors of PEC has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of PEC
and is fair to, and in the best interests of, PEC and its stockholders and has
approved and adopted this Agreement and the transactions contemplated hereby,
and recommended approval by the stockholders of PEC of the issuance of PEC
Common Stock in connection with this Agreement;
WHEREAS, the Board of Directors of Merger Sub has approved and adopted
this Agreement and PEC, as the sole stockholder of Merger Sub, will adopt this
Agreement promptly after the execution hereof by the parties hereto;
<PAGE> 8
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) of
the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for financial accounting purposes;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Delaware Law, at
the Effective Time (as defined in Section 1.02 of this Agreement), Merger Sub
shall be merged with and into ANGC. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and ANGC shall continue as the
surviving corporation of the Merger (the "Surviving Corporation"). Certain
terms used in this Agreement are defined in Section 9.03 hereof.
SECTION 1.02. Closing; Closing Date; Effective Time. Unless this
Agreement shall have been terminated pursuant to Section 8.01, and subject to
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the consummation of the Merger and the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas as soon as practicable
(but in any event within two business days) after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII, or at such
other date, time and place as PEC and ANGC may agree; provided, that the
conditions set forth in Article VII shall have been satisfied or waived at or
prior to such time. The date on which the Closing takes place is referred to
herein as the "Closing Date". As promptly as practicable on the Closing Date,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware, in
such form as required by, and executed in accordance with the relevant
provisions of, Delaware Law (the date and time of such filing, or such later
date or time agreed upon by PEC and ANGC and set forth therein, being the
"Effective Time"). For all Tax purposes, the Closing shall be effective at the
end of the day on the Closing Date.
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law.
-2-
<PAGE> 9
SECTION 1.04. Certificate of Incorporation; Bylaws. At the
Effective Time, the certificate of incorporation of ANGC, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation and thereafter shall continue to be
its certificate of incorporation until amended as provided therein and pursuant
to Delaware Law. The bylaws of ANGC, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation and thereafter
shall continue to be its bylaws until amended as provided therein and pursuant
to Delaware Law.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the charter and bylaws of
the Surviving Corporation, and the officers of Merger Sub immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, each to
hold office in accordance with the bylaws of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the PEC Companies, ANGC or their respective stockholders:
(a) Subject to the other provisions of this Article II,
each share of ANGC Common Stock issued and outstanding immediately
prior to the Effective Time (excluding any ANGC Common Stock described
in Section 2.01(b) of this Agreement) shall be converted into the
right to receive a number of shares of PEC Common Stock calculated by
dividing (x) $ 39.00 by (y) the Average Daily Price of the PEC Common
Stock, with the result rounded down to the nearest ten thousandth (as
adjusted pursuant to the following proviso, the "Exchange Ratio");
provided, however that if the Average Daily Price of the PEC Common
Stock is less than $20.80, the Exchange Ratio shall be 1.8750, and if
the Average Daily Price of the PEC Common Stock is greater than
$24.80, the Exchange Ratio shall be 1.5725. As used herein, the
"Average Daily Price of the PEC Common Stock" means the average of the
closing prices (or, if the PEC Common Stock should not trade on any
trading day, the average of the bid and asked prices therefor on such
day), regular way, per share of PEC Common Stock as reported on the
New York Stock Exchange Composite Tape during the fifteen consecutive
trading days ending on (but excluding) the third trading day prior to
the ANGC Stockholders Meeting. Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time the
outstanding shares of PEC Common Stock or ANGC Common Stock shall have
been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
-3-
<PAGE> 10
recapitalization, split, combination or exchange of shares, the
Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) Notwithstanding any provision of this Agreement to
the contrary, each share of ANGC Common Stock held in the treasury of
ANGC and each share of ANGC Common Stock owned by PEC or any direct or
indirect wholly owned subsidiary of PEC or of ANGC immediately prior
to the Effective Time shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) All shares of ANGC Common Stock shall cease to be
outstanding and shall automatically be cancelled and retired, and each
certificate previously evidencing ANGC Common Stock outstanding
immediately prior to the Effective Time (other than ANGC Common Stock
described in Section 2.01(b) of this Agreement) ("Converted Shares")
shall thereafter represent the right to receive, subject to Section
2.02(e) of this Agreement, that number of shares of PEC Common Stock
determined pursuant to the Exchange Ratio and, if applicable, cash
pursuant to Section 2.02(e) of this Agreement (the "Merger
Consideration"). The holders of certificates previously evidencing
Converted Shares shall cease to have any rights with respect to such
Converted Shares except as otherwise provided herein or by law. Such
certificates previously evidencing Converted Shares shall be exchanged
for certificates evidencing whole shares of PEC Common Stock upon the
surrender of such Certificates in accordance with the provisions of
Section 2.02 of this Agreement, without interest. No fractional
shares of PEC Common Stock shall be issued in connection with the
Merger and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.02(e) of this Agreement.
(d) Each share of common stock, par value $1.00 per
share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par
value $.05 per share, of the Surviving Corporation.
SECTION 2.02. Exchange and Surrender of Certificates.
(a) As soon as practicable after the Effective Time, each
holder of a certificate previously evidencing Converted Shares shall
be entitled, upon surrender thereof to PEC or its transfer agent (as
specified in the letter of transmittal described in Section 2.02 (c)),
to receive in exchange therefor a certificate or certificates
representing the number of whole shares of PEC Common Stock into which
the Converted Shares so surrendered shall have been converted as
aforesaid, in such denominations and registered in such names as such
holder may request. Each holder of Converted Shares who would
otherwise be entitled to a fraction of a share of PEC Common Stock
-4-
<PAGE> 11
shall, upon surrender of the certificates representing such shares
held by such holder as aforesaid, be paid an amount in cash in
accordance with the provisions of Section 2.02 (e). Until so
surrendered and exchanged, each certificate previously evidencing
Converted Shares shall represent solely the right to receive PEC
Common Stock and cash in lieu of fractional shares. Unless and until
any such certificates shall be so surrendered and exchanged, no
dividends or other distributions payable to the holders of record of
PEC Common Stock as of any time on or after the Effective Time shall
be paid to the holders of such certificates previously evidencing
Converted Shares; provided, however, that, upon any such surrender and
exchange of such certificates, there shall be paid to the record
holders of the certificates issued and exchanged therefor (i) the
amount, without interest thereon, of dividends and other
distributions, if any, with a record date on or after the Effective
Time theretofore paid with respect to such whole shares of PEC Common
Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, if any, with a record date on or
after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares
of PEC Common Stock. Notwithstanding the foregoing, no party hereto
(or PEC's transfer agent) shall be liable to any former holder of
Converted Shares for any cash, PEC Common Stock or dividends or
distributions thereon delivered to a public official pursuant to
applicable abandoned property, escheat or similar law.
(b) All shares of PEC Common Stock issued upon the
surrender for exchange of certificates previously representing
Converted Shares in accordance with the terms hereof (including any
cash paid pursuant to Section 2.02 (e)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Converted
Shares. At and after the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the ANGC Common Stock that was outstanding immediately
prior to the Effective Time. If, after the Effective Time,
certificates which previously evidenced Converted Shares are presented
to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Article II.
(c) As promptly as practicable after the Effective
Time, PEC will send or cause to be sent to each record holder of ANGC
Common Stock at the Effective Time a letter of transmittal and other
appropriate materials for use in surrendering certificates as
contemplated hereby.
(d) If any certificate for shares of PEC Common Stock is
to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the certificate so surrendered
shall be properly endorsed, with signatures guaranteed, and otherwise
in proper form for transfer and that the person requesting such
exchange shall have paid
-5-
<PAGE> 12
to PEC or its transfer agent any transfer or other taxes required by
reason of the issuance of a certificate for shares of PEC Common Stock
in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of PEC or
its transfer agent that such tax has been paid or is not payable.
(e) No certificates or scrip evidencing fractional shares
of PEC Common Stock shall be issued upon the surrender for exchange of
certificates, and such fractional share interests will not entitle the
owner thereof to any rights of a stockholder of PEC. In lieu of any
such fractional shares, each holder of a certificate previously
evidencing Converted Shares, upon surrender of such certificate for
exchange pursuant to this Article II, shall be paid an amount in cash
(without interest), rounded to the nearest cent, determined by
multiplying (a) the per share closing price as reported on the New
York Stock Exchange Composite Tape of PEC Common Stock on the date of
the Effective Time (or, if shares of PEC Common Stock do not trade on
the New York Stock Exchange (the "NYSE") on such date, the first date
of trading of PEC Common Stock on the NYSE after the Effective Time)
by (b) the fractional interest to which such holder would otherwise be
entitled (after taking into account all Converted Shares held of
record by such holder at the Effective Time).
(f) PEC shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
former holder of Converted Shares such amounts as PEC (or any
affiliate thereof) is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld
by PEC, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the former holder of the
Converted Shares in respect of which such deduction and withholding
was made by PEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ANGC
ANGC hereby represents and warrants to the PEC Companies that:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each
of ANGC and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted and is
duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by it or the ownership or leasing of
its properties makes such qualification necessary, other than where the failure
to be so duly qualified and in good standing would not have an ANGC Material
Adverse Effect. The term "ANGC Material
-6-
<PAGE> 13
Adverse Effect" as used in this Agreement shall mean any change or effect that,
individually or when taken together with all other such changes or effects,
would be materially adverse to the financial condition, results of operations
or current or future business of ANGC and its subsidiaries, taken as a whole.
Schedule 3.01 of the disclosure schedule delivered to PEC by ANGC on the date
hereof (the "ANGC Disclosure Schedule") sets forth, as of the date of this
Agreement, a true and complete list of all ANGC's directly or indirectly owned
subsidiaries, together with (A) the jurisdiction of incorporation or
organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock or other equity interests owned by ANGC or another
subsidiary of ANGC, and (B) an indication of whether each such subsidiary is a
"Significant Subsidiary" as defined in Section 9.03(g) of this Agreement.
Neither ANGC nor any of its subsidiaries owns an equity interest in any other
partnership or joint venture arrangement or other business entity that is
material to the financial condition, results of operations or current or future
business of ANGC and its subsidiaries, taken as a whole.
SECTION 3.02. Charter and Bylaws. ANGC has heretofore furnished to
PEC complete and correct copies of the charter and the bylaws or the equivalent
organizational documents, in each case as amended or restated, of ANGC and each
of its subsidiaries. Neither ANGC nor any of its subsidiaries is in violation
of any of the provisions of its charter or any material provision of its bylaws
(or equivalent organizational documents).
SECTION 3.03. Capitalization.
(a) The authorized capital stock of ANGC consists of (i)
40,000,000 shares of ANGC Common Stock, of which as of the date of
this Agreement (1) 15,115,320 shares were issued and outstanding
(including 101,225 shares of restricted stock granted pursuant to the
Option Plans, as defined below), (2) no shares were held in treasury
by ANGC, (3) 865,343 shares were reserved for future issuance
pursuant to outstanding stock options ("Stock Options" and, together
with restricted stock granted pursuant to the Option Plans, the "Stock
Awards") granted pursuant to the ANGC Equity Incentive Plan or the
ANGC 1989 Non-qualified Stock Option Plan for Directors (collectively,
the "Option Plans" and individually, an "Option Plan"), (4) 240,964
shares were reserved for issuance upon conversion of ANGC's 9%
Convertible Senior Subordinated Notes, and (5) 3,007,948 shares were
reserved for issuance pursuant to the PEC Option Agreement; and (ii)
200,000 shares of preferred stock, par value $1.00 per share ("ANGC
Preferred Stock"), of which no shares are issued and outstanding.
Except as described in this Section 3.03 or in Schedule 3.03(a) of the
ANGC Disclosure Schedule, as of the date of this Agreement, no shares
of capital stock of ANGC are reserved for any purpose. Each of the
outstanding shares of capital stock of, or other equity interests in,
each of ANGC and its subsidiaries is duly authorized, validly issued,
and, in the case of shares of capital stock, fully paid and
nonassessable, and has not been issued in violation of (nor are any of
the authorized shares of capital stock of, or other equity interests
in, such entities subject to) any preemptive or similar rights
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<PAGE> 14
created by statute, the charter or bylaws (or the equivalent
organizational documents) of ANGC or any of its subsidiaries, or any
agreement to which ANGC or any of its subsidiaries is a party or
bound, and such outstanding shares or other equity interests owned by
ANGC or a subsidiary of ANGC are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations on ANGC's
or such subsidiaries' voting rights, charges or other encumbrances of
any nature whatsoever.
(b) Except as set forth in Section 3.03(a) above or in
Schedule 3.03(b)(i) to the ANGC Disclosure Schedule, there are no
options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which ANGC
or any of its subsidiaries is a party relating to the issued or
unissued capital stock of ANGC or any of its subsidiaries or
obligating ANGC or any of its subsidiaries to grant, issue or sell any
shares of the capital stock of ANGC or any of its subsidiaries, by
sale, lease, license or otherwise. Except as set forth in Schedule
3.03(b)(ii) to the ANGC Disclosure Schedule, there are no obligations,
contingent or otherwise, of ANGC or any of its subsidiaries to (i)
repurchase, redeem or otherwise acquire any shares of ANGC Common
Stock or other capital stock of ANGC, or the capital stock or other
equity interests of any subsidiary of ANGC; or (ii) (other than
advances to subsidiaries in the ordinary course of business) provide
material funds to, or make any material investment in (in the form of
a loan, capital contribution or otherwise), or provide any guarantee
with respect to the obligations of, any subsidiary of ANGC or any
other person. Except as described in Schedule 3.03(b)(iii) to the
ANGC Disclosure Schedule, neither ANGC nor any of its subsidiaries (x)
directly or indirectly owns, (y) has agreed to purchase or otherwise
acquire or (z) holds any interest convertible into or exchangeable or
exercisable for, 5% or more of the capital stock of any corporation,
partnership, joint venture or other business association or entity
(other than the subsidiaries of ANGC set forth in Schedule 3.01 of the
ANGC Disclosure Schedule). Except as set forth in Schedule
3.03(b)(iv) of the ANGC Disclosure Schedule and except for any
agreements, arrangements or commitments between ANGC and its
subsidiaries or between such subsidiaries, there are no agreements,
arrangements or commitments of any character (contingent or otherwise)
pursuant to which any person is or may be entitled to receive any
payment based on the revenues or earnings, or calculated in accordance
therewith, of ANGC or any of its subsidiaries. There are no voting
trusts, proxies or other agreements or understandings to which ANGC or
any of its subsidiaries is a party or by which ANGC or any of its
subsidiaries is bound with respect to the voting of any shares of
capital stock of ANGC or any of its subsidiaries.
(c) ANGC has delivered to PEC complete and correct copies
of (i) each of the Option Plans and the forms of Stock Awards issued
pursuant to each such Option Plan, including all amendments thereto
and (ii) all Stock Awards which are not in the respective forms
thereof provided under clause (i) above. Schedule 3.03(c) to the
ANGC Disclosure Schedule sets forth a complete and correct list of all
outstanding
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<PAGE> 15
Stock Awards, including any not granted pursuant to the Option Plans,
setting forth as of the date hereof (i) the number and type of Stock
Awards outstanding, specifying the Option Plan under which such Stock
Awards were issued, (ii) the exercise price of each outstanding Stock
Option, (iii) the number of Stock Options exercisable, and (iv)
assuming no amendment or waiver of the terms thereof, the number of
Stock Options which will become exercisable, and the number of shares
of restricted stock with respect to which the restrictions will lapse,
on account of the Merger or any other transaction contemplated hereby.
SECTION 3.04. Authority. ANGC has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (subject to,
with respect to the Merger, the adoption of this Agreement by the stockholders
of ANGC as described in Section 3.16 hereof). The execution and delivery of
this Agreement by ANGC and the consummation by ANGC of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of ANGC are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(subject to, with respect to the Merger, the adoption of this Agreement by the
stockholders of ANGC as described in Section 3.16 hereof). This Agreement has
been duly executed and delivered by ANGC and, assuming the due authorization,
execution and delivery thereof by the PEC Companies, constitutes the legal,
valid and binding obligation of ANGC.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by ANGC
does not, and the consummation of the transactions contemplated hereby
will not (i) conflict with or violate the charter or bylaws, or the
equivalent organizational documents, in each case as amended or
restated, of ANGC or any of its subsidiaries, (ii) conflict with or
violate any federal, state, foreign or local law, statute, ordinance,
rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to ANGC or any of its subsidiaries or by which any of their
respective properties is bound or subject or (iii) except as
described in Schedule 3.05 to the ANGC Disclosure Schedule, result in
any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
or require payment under, or result in the creation of a lien or
encumbrance on any of the properties or assets of ANGC or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which ANGC or any of its subsidiaries is a
party or by or to which ANGC or any of its subsidiaries or any of
their respective properties is bound or subject, except for any such
conflicts or violations described in clause (ii) or breaches,
defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or liens or encumbrances
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<PAGE> 16
described in clause (iii) that would not have an ANGC Material Adverse
Effect. The Board of Directors of ANGC has taken all actions
necessary under Delaware Law, including approving the transactions
contemplated by this Agreement and taking appropriate actions under
Section 203 of Delaware Law, to ensure that the restrictions on
business combinations set forth in Section 203 of Delaware Law do not,
and will not, apply with respect to or as a result of the transactions
contemplated by this Agreement.
(b) The execution and delivery of this Agreement by ANGC
does not, and consummation of the transactions contemplated hereby
will not, require ANGC to obtain any consent, license, permit,
approval, waiver, authorization or order of, or to make any filing
with or notification to, any governmental or regulatory authority,
domestic or foreign (collectively, "Governmental Entities"), except
(i) for applicable requirements, if any, of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), state securities or blue
sky laws ("Blue Sky Laws"), and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the filing
and recordation of appropriate merger documents as required by
Delaware Law, and (ii) where the failure to obtain such consents,
licenses, permits, approvals, waivers, authorizations or orders, or to
make such filings or notifications, would not, either individually or
in the aggregate, prevent ANGC from performing its obligations under
this Agreement and would not have an ANGC Material Adverse Effect.
SECTION 3.06. Permits; Compliance. Each of ANGC and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "ANGC
Permits"), and there is no action, proceeding or investigation pending or, to
the knowledge of ANGC, threatened regarding suspension or cancellation of any
of the ANGC Permits, except where the failure to possess, or the suspension or
cancellation of, such ANGC Permits would not have an ANGC Material Adverse
Effect. Neither ANGC nor any of its subsidiaries is in conflict with, or in
default or violation of (a) any Law applicable to ANGC or any of its
subsidiaries or by or to which any of their respective properties is bound or
subject or (b) any of the ANGC Permits, except for any such conflicts, defaults
or violations which would not have an ANGC Material Adverse Effect. During the
period commencing on September 30, 1993 and ending on the date hereof, neither
ANGC nor any of its subsidiaries has received from any Governmental Entity any
written notification with respect to possible conflicts, defaults or violations
of Laws, except for written notices relating to possible conflicts, defaults or
violations that would not have an ANGC Material Adverse Effect.
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<PAGE> 17
SECTION 3.07. Reports; Financial Statements.
(a) Since September 30, 1991, ANGC and its subsidiaries
have filed (i) all forms, reports, statements and other documents
required to be filed with (A) the Securities and Exchange Commission
(the "SEC") including, without limitation, (1) all Annual Reports on
Form 10-K, (2) all Quarterly Reports on Form 10-Q, (3) all proxy
statements relating to meetings of stockholders (whether annual or
special), (4) all Current Reports on Form 8-K and (5) all other
reports, schedules, registration statements or other documents
(collectively referred to as the "ANGC SEC Reports") and (B) any
applicable state securities authorities and (ii) all forms, reports,
statements and other documents required to be filed with any other
applicable federal or state regulatory authorities, except where the
failure to file any such forms, reports, statements or other documents
would not have an ANGC Material Adverse Effect (all such forms,
reports, statements and other documents in clauses (i) and (ii) of
this Section 3.07(a) being referred to herein, collectively, as the
"ANGC Reports"). The ANGC Reports, including all ANGC Reports filed
after the date of this Agreement and prior to the Effective Time, (i)
were or will be prepared in all material respects in accordance with
the requirements of applicable Law (including, with respect to ANGC
SEC Reports, the Securities Act and the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to
such ANGC SEC Reports) and (ii) did not at the time they were filed,
or will not at the time they are filed, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in ANGC
SEC Reports filed prior to the Effective Time (i) have been or will be
prepared in accordance with the published rules and regulations of the
SEC and generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except (A) to the
extent required by changes in generally accepted accounting principles
and (B) with respect to ANGC SEC Reports filed prior to the date of
this Agreement, as may be indicated in the notes thereto) and (ii)
fairly present or will fairly present the consolidated financial
position of ANGC and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for
the periods indicated (including reasonable estimates of normal and
recurring year-end adjustments), except that (x) any unaudited interim
financial statements were or will be subject to normal and recurring
year-end adjustments and (y) any pro forma financial statements
contained in such consolidated financial statements are not
necessarily indicative of the consolidated financial position of ANGC
and its subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods
indicated.
SECTION 3.08. Absence of Certain Changes or Events. Except as
disclosed in ANGC SEC Reports filed prior to the date of this Agreement or as
contemplated by this
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<PAGE> 18
Agreement or as set forth in Schedule 3.08 of the ANGC Disclosure Schedule,
since June 30, 1994 ANGC and its subsidiaries have conducted their respective
businesses only in the ordinary course and in a manner consistent with past
practice and there has not been: (i) any material damage, destruction or loss
(whether or not covered by insurance) with respect to any material assets of
ANGC or any of its subsidiaries; (ii) any material change by ANGC or its
subsidiaries in their accounting methods, principles or practices; (iii) except
for dividends by a subsidiary of ANGC to ANGC or another subsidiary of ANGC,
any declaration, setting aside or payment of any dividends or distributions in
respect of shares of ANGC Common Stock (other than regular quarterly dividends
in an amount not exceeding $.03 per share) or the shares of stock of, or other
equity interests in, any subsidiary of ANGC, or any redemption, purchase or
other acquisition by ANGC or any of its subsidiaries of any of ANGC's
securities or any of the securities of any subsidiary of ANGC; (iv) any
increase in the benefits under, or the establishment or amendment of, any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any increase in the
compensation payable or to become payable to directors, officers or employees
of ANGC or its subsidiaries, except for (A) increase in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice or (B) the granting of stock options pursuant to the Option
Plans in the ordinary course of business to employees of ANGC or its
subsidiaries who are not directors or executive officers of ANGC; (v) any
revaluation by ANGC or any of its subsidiaries of any of their assets,
including the writing down of the value of inventory or the writing down or off
of notes or accounts receivable, other than in the ordinary course of business
and consistent with past practices; (vi) any entry by ANGC or any of its
subsidiaries into any commitment or transaction material to ANGC and its
subsidiaries, taken as a whole (other than this Agreement and the transactions
contemplated hereby); (vii) any material increase in indebtedness for borrowed
money; or (viii) an ANGC Material Adverse Effect.
SECTION 3.09. Absence of Litigation. Except as disclosed in the
ANGC SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 3.09 of the ANGC Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of ANGC, investigation
of any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of ANGC, threatened against
ANGC or any of its subsidiaries or any properties or rights of ANGC or any of
its subsidiaries (except for claims, actions, suits, litigation, proceedings,
arbitrations or investigations which would not have an ANGC Material Adverse
Effect), and neither ANGC nor any of its subsidiaries is subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of ANGC, continuing investigation
by, any Governmental Entity, or any judgment, order, writ, injunction, decree
or award of any Government Entity or arbitrator, including, without limitation,
cease-and-desist or other orders, except for matters which would not have an
ANGC Material Adverse Effect.
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<PAGE> 19
SECTION 3.10. Employee Benefit Plans; Labor Matters.
(a) Schedule 3.10(a) to the ANGC Disclosure Schedule sets
forth each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), maintained or contributed to by ANGC
or any of its subsidiaries, or with respect to which ANGC or any of
its subsidiaries could incur liability under Section 4069, 4212(c) or
4204 of ERISA (the "Benefit Plans"). ANGC has made available to PEC a
true and correct copy of (i) the most recent annual report (Form 5500)
filed with the Internal Revenue Service (the "IRS"), (ii) such Benefit
Plan, (iii) each trust agreement relating to such Benefit Plan, (iv)
the most recent summary plan description for each Benefit Plan for
which a summary plan description is required, (v) the most recent
actuarial report or valuation relating to a Benefit Plan subject to
Title IV of ERISA and (vi) the most recent determination letter, if
any, issued by the IRS with respect to any Benefit Plan qualified
under Section 401 of the Code.
(b) With respect to the Benefit Plans, no event has
occurred and, to the knowledge of ANGC, there exists no condition or
set of circumstances, in connection with which ANGC or any of its
subsidiaries could be subject to any liability under the terms of such
Benefit Plans, ERISA, the Code or any other applicable Law which would
have an ANGC Material Adverse Effect. Except as otherwise set forth
on Schedule 3.10(b) of the ANGC Disclosure Schedule,
(i) As to any Benefit Plan intended to be
qualified under Section 401 of the Code, such Benefit
Plan satisfies the requirements of such Section and
there has been no termination or partial termination
of such Benefit Plan within the meaning of Section
411(d)(3) of the Code;
(ii) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the
knowledge of ANGC, threatened against, or with
respect to, any of the Benefit Plans or their assets;
(iii) All contributions required to be made to the
Benefit Plans pursuant to their terms and provisions
have been made timely;
(iv) As to any Benefit Plan subject to Title IV of
ERISA, there has been no event or condition which
presents the material risk of plan termination, no
accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, no notice
of intent to terminate the Benefit Plan has been
given under Section 4041 of ERISA, no proceeding has
been
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<PAGE> 20
instituted under Section 4042 of ERISA to terminate
the Plan, and no liability to the Pension Benefit
Guaranty Corporation has been incurred; and
(v) In connection with the consummation of the
transactions contemplated by this Agreement, no
payments have or will be made under the Benefit Plans
or any of the programs, agreements, policies or other
arrangements described in Section 3.10(d) of this
Agreement which, in the aggregate, would result in
imposition of the sanctions imposed under Sections
280G and 4999 of the Code.
(c) Neither ANGC nor any of its subsidiaries is a party
to any collective bargaining or other labor union contracts. No
collective bargaining agreement is being negotiated by ANGC or any of
its subsidiaries. There is no pending or threatened labor dispute,
strike or work stoppage against ANGC or any of its subsidiaries which
may interfere with the respective business activities of ANGC or any
of its subsidiaries. To the knowledge of ANGC, none of ANGC, any of
its subsidiaries or any of their respective representatives or
employees has committed any unfair labor practices in connection with
the operation of the respective businesses of ANGC or its
subsidiaries, and there is no pending or threatened charge or
complaint against ANGC or any of its subsidiaries by the National
Labor Relations Board or any comparable state agency.
(d) Neither ANGC nor any of its subsidiaries is a party
to or is bound by any severance agreements, programs or policies.
Schedule 3.10(d) of the ANGC Disclosure Schedule sets forth, and ANGC
has provided to PEC true and correct copies of, (i) all employment
agreements with officers of ANGC or its subsidiaries; (ii) all
agreements with consultants of ANGC or its subsidiaries obligating
ANGC or any subsidiary to make annual cash payments in an amount
exceeding $100,000; (iii) all non-competition agreements with ANGC
or a subsidiary executed by officers of ANGC; and (iv) all plans,
programs, agreements and other arrangements of ANGC or its
subsidiaries with or relating to its employees.
(e) Except as provided in Schedule 3.10(e) of the ANGC
Disclosure Schedule, (x) no Benefit Plan provides retiree medical or
retiree life insurance benefits to any person and (y) neither ANGC nor
any of its subsidiaries is contractually or otherwise obligated
(whether or not in writing) to provide any person with life insurance
or medical benefits upon retirement or termination of employment,
other than as required by the provisions of Sections 601 through 608
of ERISA and Section 4980B of the Code.
(f) Except as provided in Schedule 3.10(f) of the ANGC
Disclosure Schedule, neither ANGC nor any of its subsidiaries
contribute to or has an obligation
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<PAGE> 21
to contribute to, and has not within six years prior to the date of
this Agreement contributed to or had an obligation to contribute to, a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(g) ANGC has not amended, or taken any other actions
(other than the acceleration of vesting or waiving of performance
criteria permitted pursuant to the Benefit Plans upon a change in
control of ANGC and not inconsistent with accounting for the Merger as
a Pooling Transaction) with respect to any of the Benefit Plans or any
of the plans, programs, agreements, policies or other arrangements
described in Section 3.10(d) of this Agreement since September 30,
1993.
SECTION 3.11. Taxes.
(a) Except for such matters as would not have an ANGC
Material Adverse Effect, and except as set forth on Schedule 3.11(a)
to the ANGC Disclosure Schedule, (i) all returns and reports ("Tax
Returns") of or with respect to any Tax which is required to be filed
on or before the Closing Date by or with respect to ANGC or any its
subsidiaries have been or will be duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items
required to be included in each such Tax Return have been or will be
so included and all information provided in each such Tax Return is
true, correct and complete, (iii) all Taxes which have become or will
become due with respect to the period covered by each such Tax Return
have been or will be timely paid in full, (iv) all withholding Tax
requirements imposed on or with respect to ANGC or any of its
subsidiaries have been or will be satisfied in full in all respects,
and (v) no penalty, interest or other charge is or will become due
with respect to the late filing of any such Tax Return or late payment
of any such Tax.
(b) All Tax Returns of or with respect to ANGC or any of
its subsidiaries with unexpired or extended statutes of limitations
which have been audited by the applicable governmental authority are
set forth in Schedule 3.11(b) to the ANGC Disclosure Schedule.
(c) Except as set forth on Schedule 3.11(c) to the ANGC
Disclosure Schedule, there is not in force any extension of time with
respect to the due date for the filing of any Tax Return of or with
respect to ANGC or any its subsidiaries or any waiver or agreement for
any extension of time for the assessment or payment of any Tax of or
with respect to ANGC or any of its Subsidiaries.
(d) There is no claim against ANGC or any of its
subsidiaries for any Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax
Return of or with respect to ANGC or any of its subsidiaries other
than those disclosed (and to which are attached true and complete
copies of all audit or
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<PAGE> 22
similar reports) on Schedule 3.11(d) to the ANGC Disclosure Schedule
or which would not have an ANGC Material Adverse Effect.
(e) The total amounts set up as liabilities for current
and deferred Taxes in the financial statements referred to in Section
3.07 of this Agreement are sufficient to cover in all material
respects the payment of all Taxes, whether or not assessed or
disputed, which are, or are hereafter found to be, or to have been,
due by or with respect to ANGC and any of its subsidiaries up to and
through the periods covered thereby.
(f) ANGC has previously delivered to PEC true and
complete copies of each written Tax allocation or sharing agreement
and a true and complete description of each unwritten Tax allocation
or sharing arrangement affecting ANGC or any of its subsidiaries.
(g) Except for statutory liens for current Taxes not yet
due, no material liens for Taxes exist upon the assets of any of ANGC
or its subsidiaries.
(h) Neither ANGC nor any of its subsidiaries will be
required to include any amount in income for any taxable period
beginning after September 30, 1993 as a result of a change in
accounting method for any taxable period ending on or before September
30, 1993 or pursuant to any agreement with any Tax authority with
respect to any such taxable period.
(i) Except as set forth on Schedule 3.11(i) to the ANGC
Disclosure Schedule, none of the property of ANGC or any of its
subsidiaries is held in an arrangement for which partnership Tax
Returns are being filed, and neither ANGC nor any of its subsidiaries
owns any interest in any controlled foreign corporation (as defined in
section 957 of the Code), passive foreign investment company (as
defined in section 1296 of the Code) or other entity the income of
which is required to be included in the income of ANGC or such
subsidiary.
(j) Except as set forth on Schedule 3.11(j) to the ANGC
Disclosure Schedule, none of the property of ANGC or any of its
subsidiaries is subject to a safe- harbor lease (pursuant to section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of section
168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of section 168(g)(5) of the Code).
(k) Except as set forth on Schedule 3.11(k) to the ANGC
Disclosure Schedule, none of the transactions contemplated by this
Agreement will result in any
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<PAGE> 23
Tax liability or the recognition of any item of income or gain to ANGC
or any of its subsidiaries.
(l) Neither ANGC nor any of its subsidiaries has made an
election under section 341(f) of the Code.
SECTION 3.12. Tax Matters; Pooling.
(a) Neither ANGC nor, to the knowledge of ANGC, any of
its affiliates has taken or agreed to take any action that would
prevent the Merger from (a) constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code or (b) being
treated for financial accounting purposes as a "pooling of interests"
in accordance with generally accepted accounting principles and the
rules, regulations and interpretations of the SEC (a "Pooling
Transaction").
(b) There is no plan or intention by any stockholder of
ANGC who owns five percent or more of ANGC Common Stock, and to the
best knowledge of ANGC there is no plan or intention on the part of
any of the remaining stockholders of ANGC Common Stock, to sell,
exchange or otherwise dispose of a number of shares of PEC Common
Stock to be received in the Merger that would reduce the ANGC
stockholders' ownership of PEC Common Stock to a number of shares
having a value, as of the Effective Time, of less than 50 percent of
the value of all of the ANGC Common Stock (including shares of ANGC
Common Stock exchanged for cash in lieu of fractional shares of PEC
Common Stock) outstanding immediately prior to the Effective Time.
(c) Following the Merger, ANGC will hold at least 90
percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets held immediately
prior to the Merger. For purposes of this representation, amounts
used by ANGC to pay Merger expenses and all redemptions and
distributions (except for regular, normal dividends) made by ANGC will
be included as assets of ANGC immediately prior to the Merger.
(d) ANGC and the holders of ANGC Common Stock will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(e) There is no intercorporate indebtedness existing
between ANGC and PEC or between ANGC and Merger Sub that was issued,
acquired, or will be settled at a discount.
(f) ANGC is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
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(g) ANGC is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of
the Code.
(h) The total amount of cash to be received by
stockholders of ANGC Common Stock in lieu of fractional shares of PEC
Common Stock will not exceed one percent of the total fair market
value of the PEC Common Stock (as of the Effective Time) to be issued
in the Merger.
SECTION 3.13. Affiliates. Schedule 3.13 to the ANGC Disclosure
Schedule identifies all persons who, to the knowledge of ANGC, may be deemed to
be affiliates of ANGC under Rule 145 of the Securities Act, including, without
limitation, all directors and executive officers of ANGC. Concurrently with
the execution and delivery of this Agreement, ANGC has delivered to PEC an
executed letter agreement, substantially in the form of Exhibit A hereto, from
certain of such persons identified on Schedule 3.13 to the ANGC Disclosure
Schedule and will use its reasonable best efforts to deliver to PEC within ten
days after the date of this Agreement an executed letter agreement,
substantially in the form of Exhibit A hereto, from each of the other persons
identified on Schedule 3.13.
SECTION 3.14. Certain Business Practices. None of ANGC, any of
its subsidiaries or any directors, officers, agents or employees of ANGC or any
of its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iii) made any other unlawful payment.
SECTION 3.15 Environmental Matters. Except for matters disclosed
in Schedule 3.15 of the ANGC Disclosure Letter and except for matters that
would not result, individually or in the aggregate with all other such matters,
in liability to ANGC or any of its subsidiaries in excess of $3,000,000, (i)
the properties, operations and activities of ANGC and its subsidiaries are in
compliance with all applicable Environmental Laws; (ii) ANGC and its
subsidiaries and the properties and operations of ANGC and its subsidiaries are
not subject to any existing, pending or, to the knowledge of ANGC, threatened
action, suit, investigation, inquiry or proceeding by or before any
governmental authority under any Environmental Law; (iii) all notices, permits,
licenses, or similar authorizations, if any, required to be obtained or filed
by ANGC or any of its subsidiaries under any Environmental Law in connection
with any aspect of the business of ANGC or its subsidiaries, including without
limitation those relating to the treatment, storage, disposal or release of a
hazardous substance, have been duly obtained or filed and will remain valid and
in effect after the Merger, and ANGC and its subsidiaries are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations; (iv) ANGC and its subsidiaries have satisfied and are
currently in compliance with all financial responsibility requirements
applicable to their operations and
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imposed by any governmental authority under any Environmental Law, and ANGC and
its subsidiaries have not received any notice of noncompliance with any such
financial responsibility requirements; (v) to ANGC's knowledge, there are no
physical or environmental conditions existing on any property of ANGC or its
subsidiaries or resulting from ANGC's or such subsidiaries' operations or
activities, past or present, at any location, that would give rise to any
on-site or off-site remedial obligations imposed on ANGC or any of its
subsidiaries under any Environmental Laws; (vi) to ANGC's knowledge, since the
effective date of the relevant requirements of applicable Environmental Laws
and to the extent required by such applicable Environmental Laws, all hazardous
substances generated by ANGC and its subsidiaries have been transported only by
carriers authorized under Environmental Laws to transport such substances and
wastes, and disposed of only at treatment, storage, and disposal facilities
authorized under Environmental Laws to treat, store or dispose of such
substances and wastes; (vii) there has been no exposure of any person or
property to hazardous substances or any pollutant or contaminant, nor has there
been any release of hazardous substances, or any pollutant or contaminant into
the environment by ANGC or its subsidiaries or in connection with their
properties or operations that could reasonably be expected to give rise to any
claim against ANGC or any of its subsidiaries for damages or compensation; and
(viii) ANGC and its subsidiaries have made available to PEC all non-privileged
internal and external environmental audits and studies and all non-privileged
correspondence on substantial environmental matters in the possession of ANGC
or its subsidiaries relating to any of the current or former properties or
operations of ANGC and its subsidiaries.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, or orders of
any Governmental Entity pertaining to health or the environment currently in
effect in any and all jurisdictions in which the party in question and its
subsidiaries own property or conduct business, including without limitation,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Hazardous & Solid Waste Amendments Act
of 1984, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, the Hazardous Materials Transportation Act, as amended, the Oil
Pollution Act of 1990 ("OPA"), any state laws implementing the foregoing
federal laws, and any state laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of pits
and impoundments, and all other environmental conservation or protection laws.
For purposes of this Agreement, the terms "hazardous substance" and "release"
have the meanings specified in CERCLA, and the term "disposal" has the meaning
specified in RCRA; provided, however, that to the extent the laws of the state
in which the property is located establish a meaning for "hazardous substance,"
"release," or "disposal" that is broader than that specified in either CERCLA
or RCRA, such broader meaning shall apply.
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SECTION 3.16. Vote Required. The only vote of the holders of any
class or series of ANGC capital stock necessary to approve the Merger and adopt
this Agreement is the affirmative vote of the holders of a majority of the
outstanding shares of ANGC Common Stock.
SECTION 3.17. Brokers. Except as set forth in Schedule 3.17 to the
ANGC Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of ANGC. Prior to the date of this Agreement, ANGC has delivered to
PEC a complete and correct copy of all agreements referenced in Schedule 3.17
to the ANGC Disclosure Schedule pursuant to which such firm will be entitled to
any payment relating to the transactions contemplated by this Agreement.
SECTION 3.18. Insurance. ANGC and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured.
SECTION 3.19. Properties. Except for liens arising in the ordinary
course of business after the date hereof and properties and assets disposed of
in the ordinary course of business after the date of the most recent balance
sheet contained in the Form 10-Q referred to below, ANGC and its subsidiaries
have defensible title (or, with respect to pipelines, equipment, other
tangible personal property, easements, rights of way, servitudes, permits,
surface leases and other similar assets and rights used in connection with
ANGC's natural gas gathering, processing and storage operations (collectively,
"Pipeline Assets"), title to or interest in the applicable Pipeline Asset
sufficient to enable ANGC and its subsidiaries to conduct their business with
respect thereto without material interference as it is currently being
conducted or as described in the ANGC SEC Reports), free and clear of all
liens, the existence of which would have an ANGC Material Adverse Effect, to
all their material properties and assets, whether tangible or intangible, real,
personal or mixed, reflected in ANGC's most recent consolidated balance sheet
contained in ANGC's most recent ANGC SEC Report on Form 10-Q filed prior to the
date hereof as being owned by ANGC and its subsidiaries as of the date thereof
or purported to be owned on the date hereof. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on a
consolidated basis, held under leases by any of ANGC or its subsidiaries are
held under valid instruments enforceable by ANGC or its subsidiaries in
accordance with their respective terms. Substantially all of ANGC's and its
subsidiaries' equipment in regular use has been well maintained and is in good
and serviceable condition, reasonable wear and tear excepted.
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SECTION 3.20. Certain Contracts and Restrictions.
(a) Schedule 3.20(a) to the ANGC Disclosure Schedule lists,
as of the date of this Agreement, each agreement, contract or
commitment to which ANGC or any of its subsidiaries is a party or by
which ANGC or any of its subsidiaries is bound (i) involving
consideration during the previous twelve months in excess of
$4,000,000 (for on system agreements, contracts or commitments) or
$8,000,000 (for off system agreements, contracts or commitments), or
which is otherwise material to the financial condition, results of
operations or current or future business of ANGC and its subsidiaries,
taken as a whole, of a duration in excess of one month for the
receiving, storing, processing, purchasing, transporting, gathering,
exchanging or sale of Hydrocarbons (either for the account of ANGC or
a subsidiary thereof or on behalf of third parties), identifying
separately (with respect to sales, purchase, transportation, storage,
gathering and exchange agreements, contracts or commitments) which
agreements, contracts or commitments are firm or interruptible
delivery or transportation or (ii) which is a swap, exchange or
futures contract. As used in clause (i) in reference to any sales,
purchase, transportation, storage or exchange agreement, contract or
commitment, the term "interruptible" means that neither ANGC nor any
of its subsidiaries will be liable for any damages (including, without
limitation, consequential damages) if it elects to not purchase,
sell, transport or exchange hydrocarbons in connection with such
agreement, contract or commitment, and the term "firm" means that such
agreement, contract or commitment does not meet the foregoing
definition of "interruptible".
(b) Except as set forth on Schedule 3.20(b) to the ANGC
Disclosure Schedule, there is nothing in any contract, agreement or
commitment between ANGC or any of its subsidiaries and any third
party or in applicable Law or orders of Governmental Entities having
jurisdiction to which ANGC or any of its subsidiaries or any of the
assets or services thereof may be subject which following the
Effective Time (i) would preclude PEC from charging and collecting,
without the necessity for approvals of any Governmental Entity and
without refund obligation, market based rates for receiving, storing,
processing, purchasing, transporting, gathering, exchanging or selling
Hydrocarbons; (ii) would preclude PEC from releasing or brokering on
a permanent or temporary basis its capacity or contract rights in
third party Hydrocarbon facilities; (iii) would preclude PEC from
constructing additions to, modifications of, or interconnections with
third parties of its transportation, storage, processing or gathering
facilities; or (iv) may require PEC to make refunds of amounts
collected for sales or services.
(c) The term "Hydrocarbons" means crude oil, natural gas,
natural gas liquids and other hydrocarbons produced from crude oil or
natural gas.
SECTION 3.21. Easements. The business of ANGC and its subsidiaries
has been operated in a manner which does not violate the material terms of any
easements, rights of
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way, permits, servitudes, licenses, leasehold estates and similar rights
relating to real property used by ANGC and its subsidiaries in such business
(collectively, "Easements") material to such business. All material Easements
are valid and enforceable and grant the rights purported to be granted thereby
and all rights necessary thereunder for the current operation of such business.
There are no spacial gaps in the Easements which would materially impair the
conduct of such business, and no material part of the Pipeline Assets is
located on property which is not owned in fee by ANGC or a subsidiary or
subject to an Easement in favor of ANGC or a subsidiary.
SECTION 3.22. Public Utility Holding Company Act, Etc. None of
ANGC or any of its subsidiaries is a "public utility company" or a "holding
company" or a "subsidiary company" of a "holding company", or an affiliate of a
"holding company" or a "subsidiary company" of a "holding company", in each
case within the meaning of the Public Utility Holding Company Act of 1935, as
amended, and none of ANGC or any of its subsidiaries is a utility under federal
or any state law.
SECTION 3.23. Futures Trading and Fixed Price Exposure. None of
ANGC or any of its subsidiaries engages in any natural gas or other futures or
options trading or is a party to any price swaps, hedges, futures or similar
instruments, except for transactions and agreements entered into primarily to
hedge contracts for the purchase or sale of Hydrocarbons to which ANGC or one
of its subsidiaries is a party. Schedule 3.23(i) to the ANGC Disclosure
Schedule sets forth a true and correct statement of the position, as of the
date hereof, of ANGC and its subsidiaries with respect to obligations under
Fixed Price Contracts (including, with respect to each Fixed Price Contract,
location of delivery and variations in the obligation to take or deliver) and
related Hydrocarbon price swaps, hedges, futures or similar instruments to
which ANGC or any of its subsidiaries is a party. As used herein, "Fixed Price
Contracts" means any contracts, commitments or agreements for the purchase or
sale of Hydrocarbons (i) having, as of October 6, 1994, a remaining term of two
months or more, wherein the purchase or sales price thereunder throughout all
or part of the life of such contract, commitment or agreement is a fixed amount
or an amount that is otherwise reasonably determinable as of the date hereof
pursuant to the terms of such contract, commitment or agreement, or (ii) which
ANGC or any subsidiary thereof has hedged with futures contracts or otherwise;
provided, that the term Fixed Price Contracts will not include any contract,
commitment or agreement wherein the purchase or sales price thereunder
throughout all of the life of the contract, commitment or agreement is based on
a market responsive reference price for a Hydrocarbon.
SECTION 3.24. Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of ANGC and no statement by ANGC or other information contained in the ANGC
Disclosure Schedule or any document incorporated therein by reference or
delivered by ANGC to PEC since the date of the Confidentiality Agreement, as
of the date of such representation, warranty, statement or
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document, contains or contained any untrue statement of material fact, or, at
the date thereof, omits or omitted to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which such statements are or were made, not misleading.
SECTION 3.25. Opinion of Financial Advisor. ANGC has received the
opinion of Dillon, Read & Co. Inc. to the effect that, as of the date of
delivery of such opinion, the Merger Consideration to be received by the
holders of ANGC Common Stock in the Merger is fair, from a financial point of
view, to such holders. ANGC will promptly deliver to PEC a true and complete
written copy of such opinion.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PEC
The PEC Companies hereby represent and warrant to ANGC that:
SECTION 4.01. Organization and Qualification. Each of the PEC
Companies is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing would not have a PEC Material Adverse Effect.
The term "PEC Material Adverse Effect" as used in this Agreement shall mean any
change or effect that, individually or when taken together with all such other
changes or effects, would be materially adverse to the financial condition,
results of operations or current or future business of PEC and its
subsidiaries, taken as a whole.
SECTION 4.02. Charter and Bylaws. PEC has heretofore furnished to
ANGC a complete and correct copy of the charter and bylaws, as amended or
restated, of each of the PEC Companies. None of the PEC Companies is in
violation of any of the provisions of its charter or any material provision of
its bylaws.
SECTION 4.03. Capitalization.
(a) The authorized capital stock of PEC consists of (i)
300,000,000 shares of PEC Common Stock, of which (x) as of October 6,
1994, 120,704,441 shares were issued and outstanding, (y) as of
October 6, 1994, no shares were held in treasury by PEC and (z) as of
September 30, 1994, 2,084,393 shares were reserved for future issuance
pursuant to outstanding stock options and conditional stock units;
and (ii)
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3,000,000 shares of preferred stock, par value $1.00 per share ("PEC
Preferred Stock"), of which no shares are issued and outstanding, and,
as of the date hereof, 1,000,000 shares of Participating Preferred
Stock were reserved for issuance pursuant to PEC Preferred Stock
Purchase Rights. Except as described in this Section 4.03 or in
Schedule 4.03(a) of the PEC Disclosure Schedule, as of the date of
this Agreement, no shares of capital stock of PEC are reserved for any
purpose. The outstanding shares of capital stock of PEC are duly
authorized, validly issued, fully paid and nonassessable, and have
not been issued in violation of (nor are any of the authorized shares
of capital stock of PEC subject to) any preemptive or similar rights
created by statute, the charter or bylaws of PEC, or any agreement to
which PEC is a party or bound.
(b) Except as set forth in Section 4.03(a) above or in
Schedule 4.03(b)(i) to the PEC Disclosure Schedule, there are no
options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which PEC
is a party relating to the issued or unissued capital stock of PEC or
obligating PEC to grant, issue or sell any shares of the capital
stock of PEC, by sale, lease, license or otherwise. Except as set
forth in Schedule 4.03(b)(ii) to the PEC Disclosure Schedule, there
are no obligations, contingent or otherwise, of PEC or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of
PEC Common Stock or other capital stock of PEC. There are no voting
trusts, proxies or other agreements or understandings to which PEC is
a party or by which PEC is bound with respect to the voting of any
shares of capital stock of PEC.
(c) The authorized capital stock of Merger Sub consists
of 1,000 shares of common stock, par value $1.00 per share ("Merger
Sub Common Stock"). As of the date of this Agreement, 1,000 shares
of Merger Sub Common Stock were issued and outstanding and held by
PEC, all of which are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
Merger Sub's charter or bylaws or any agreement to which Merger Sub is
a party or is bound.
(d) The shares of PEC Common Stock to be issued pursuant
to the Merger (i) will be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by
statute, PEC's charter or bylaws or any agreement to which PEC is a
party or is bound and (ii) will, when issued, be registered under the
Securities Act and the Exchange Act and registered or exempt from
registration under applicable Blue Sky Laws and listed on the NYSE.
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SECTION 4.04. Authority. Each of the PEC Companies has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby (subject to, with respect to the issuance of the PEC Common
Stock in the Merger, the approval thereof by the holders of the PEC Common
Stock as described in Section 4.12) . The execution and delivery of this
Agreement by each of the PEC Companies and the consummation by each of the PEC
Companies of the transactions contemplated hereby have been duly authorized by
all necessary corporate action and no other corporate proceedings on the part
of any of the PEC Companies are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (subject to, with respect to
the issuance of the PEC Common Stock in the Merger, the approval thereof by the
holders of the PEC Common Stock as described in Section 4.12). This Agreement
has been duly executed and delivered by each of the PEC Companies and, assuming
the due authorization, execution and delivery thereof by ANGC, constitutes the
legal, valid and binding obligation of each of the PEC Companies.
SECTION 4.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each
of the PEC Companies does not, and the consummation of the
transactions contemplated hereby will not (i) conflict with or violate
the charter or bylaws, or the equivalent organizational documents, in
each case as amended or restated, of PEC or any of PEC's subsidiaries,
(ii) conflict with or violate any Laws applicable to PEC or any of
PEC's subsidiaries or by which any of their properties is bound or
subject, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation
of a lien or encumbrance on any of the properties or assets of PEC or
any of PEC's subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which PEC or any of PEC's
subsidiaries is a party or by or to which PEC or any of PEC's
subsidiaries or any of their respective properties is bound or
subject, except for any such conflicts or violations described in
clause (ii) or breaches, defaults, events, rights of termination,
amendment, acceleration or cancellation or liens or encumbrances
described in clause (iii) that would not have a PEC Material Adverse
Effect.
(b) The execution and delivery of this Agreement by each
of the PEC Companies does not, and the consummation of the
transactions contemplated hereby will not, require any of the PEC
Companies to obtain any consent, license, permit, approval, waiver,
authorization or order of, or to make any filing with or notification
to, any Governmental Entities, except (i) for applicable requirements,
if any, of the Securities Act, the Exchange Act, Blue Sky Laws and the
HSR Act and the filing and recordation of appropriate merger documents
as required by Delaware Law , and
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(ii) where the failure to obtain such consents, licenses, permits,
approvals, waivers, authorizations or orders, or to make such filings
or notifications, would not, either individually or in the aggregate,
prevent any of the PEC Companies from performing its obligations under
this Agreement and would not have a PEC Material Adverse Effect.
SECTION 4.06. Permits; Compliance. As of the date of this
Agreement, each of PEC and its subsidiaries is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted (collectively, the "PEC Permits"), and there is no action, proceeding
or investigation pending or, to the knowledge of PEC, threatened regarding
suspension or cancellation of any of the PEC Permits, except where the failure
to possess, or the suspension or cancellation of, such PEC Permits would not
have a PEC Material Adverse Effect. Neither PEC nor any of its subsidiaries is
in conflict with, or in default or violation of (a) any Law applicable to PEC
or any of its subsidiaries or by or to which any of their respective properties
is bound or subject or (b) any of the PEC Permits, except for any such
conflicts, defaults or violations described in the PEC SEC Reports filed prior
to the date hereof or which would not have a PEC Material Adverse Effect.
During the period commencing on December 31, 1993 and ending on the date
hereof, neither PEC nor any of its subsidiaries has received from any
Governmental Entity any written notification with respect to possible
conflicts, defaults or violations of Laws, except for written notices relating
to possible conflicts, defaults or violations described in the PEC SEC Reports
filed prior to the date hereof or that would not have a PEC Material Adverse
Effect.
SECTION 4.07. Reports; Financial Statements.
(a) Since December 31, 1991, PEC and its subsidiaries
have filed (i) all forms, reports, statements and other documents
required to be filed with (A) the SEC, including, without limitation,
(1) all Annual Reports on Form 10-K, (2) all Quarterly Reports on Form
10-Q, (3) all proxy statements relating to meetings of stockholders
(whether annual or special), (4) all Current Reports on Form 8-K and
(5) all other reports, schedules, registration statements or other
documents (collectively, the "PEC SEC Reports") and (B) any applicable
state securities authorities and (ii) all forms, reports, statements
and other documents required to be filed with any other applicable
federal or state regulatory authorities, except where the failure to
file any such forms, reports, statements or other documents would not
have a PEC Material Adverse Effect (all such forms, reports,
statements and other documents in clauses (i) and (ii) of this Section
4.07(a) being referred to herein, collectively, as the "PEC Reports").
The PEC Reports, including all PEC Reports filed after the date of
this Agreement and prior to the Effective Time (x) were or will be
prepared in all material respects in accordance with the requirements
of applicable Law (including, with respect to the PEC SEC
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Reports, the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
PEC SEC Reports) and (y) did not at the time they were filed, or will
not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the
PEC SEC Reports filed prior to the Effective Time (i) have been or
will be prepared in accordance with the published rules and
regulations of the SEC and generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except
(A) to the extent required by changes in generally accepted accounting
principles and (B) with respect to PEC SEC Reports filed prior to the
date of this Agreement, as may be indicated in the notes thereto) and
(ii) fairly present or will fairly present the consolidated financial
position of PEC and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows for
the periods indicated (including reasonable estimates of normal and
recurring year-end adjustments), except that (x) any unaudited interim
financial statements were or will be subject to normal and recurring
year-end adjustments and (y) any pro forma financial information
contained in such consolidated financial statements is not necessarily
indicative of the consolidated financial position of PEC and its
subsidiaries as of the respective dates thereof and the consolidated
results of operations and cash flows for the periods indicated.
SECTION 4.08. Absence of Certain Changes or Events. Except as
disclosed in the PEC SEC Reports filed prior to the date of this Agreement or
as contemplated by this Agreement or as set forth in Schedule 4.08 to the PEC
Disclosure Schedule, since June 30, 1994, each of PEC and its subsidiaries
have conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice, and there has not been: (i) any material
damage, destruction or loss (whether or not covered by insurance) with respect
to any material assets of PEC or any of its subsidiaries; (ii) any material
change by PEC or its subsidiaries in their accounting methods, principles or
practices; (iii) except for dividends by a subsidiary of PEC to PEC or another
subsidiary of PEC, any declaration, setting aside or payment of any dividends
or distributions in respect of shares of PEC Common Stock (other than regular
quarterly dividends in an amount not exceeding $.21 per share) or the shares of
stock of, or other equity interests in, any subsidiary of PEC, or any
redemption, purchase or other acquisition by PEC or any of PEC's subsidiaries
of any of PEC's securities or any of the securities of any subsidiary of PEC;
or (iv) a PEC Material Adverse Effect.
SECTION 4.09. Absence of Litigation. Except as disclosed in the
PEC SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 4.09 to the PEC Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the
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knowledge of PEC, investigation of any kind, at law or in equity (including
actions or proceedings seeking injunctive relief), pending or, to the knowledge
or PEC, threatened against PEC or any of its subsidiaries or any properties or
rights of PEC or any of its subsidiaries (except for claims, actions, suits,
litigation, proceedings, arbitrations or investigations which would not have a
PEC Material Adverse Effect) and neither PEC nor any of its subsidiaries is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of PEC, continuing
investigation by, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease-and desist or other orders, except for
matters which would not have a PEC Material Adverse Effect.
SECTION 4.10. Tax Matters; Pooling. None of the PEC Companies nor,
to the knowledge of PEC, any of their affiliates has taken or agreed to take
any action that would prevent the Merger (a) from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code or
(b) from being treated as a Pooling Transaction for financial accounting
purposes.
SECTION 4.11. Affiliates. Schedule 4.11 to the PEC Disclosure
Schedule identifies all persons who, to the knowledge of PEC, may be deemed to
be affiliates of PEC under Rule 1-02 of Regulation S-X of the SEC, including,
without limitation, all directors and executive officers of PEC. Concurrently
with the execution and delivery of this Agreement, PEC has delivered to ANGC an
executed letter agreement, substantially in the form of Exhibit B hereto, from
each such person so identified on Schedule 4.11 to the PEC Disclosure Schedule.
SECTION 4.12. Vote Required. The only vote of the holders of any
class or series of PEC capital stock necessary to approve the issuance of the
PEC Common Stock in the Merger is, pursuant to the Rule 312 of the NYSE, the
affirmative vote of the holders of a majority of the outstanding shares of PEC
Common Stock voted on the proposal to so issue the PEC Common Stock; provided
that the total vote cast on such proposal represents over 50% in interest of
the outstanding PEC Common Stock. No vote of the holders or any class or
series of PEC capital stock is required to approve the Merger and adopt this
Agreement. PEC, as the sole stockholder of Merger Sub, will promptly vote to
approve the Merger and adopt this Agreement.
SECTION 4.13. Brokers. Except as set forth on Schedule 4.13 to the
PEC Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the PEC Companies.
SECTION 4.14. Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of the PEC Companies and no
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statement by the PEC Companies or other information contained in the PEC
Disclosure Schedule or any document incorporated therein by reference or
delivered by PEC to ANGC since the date of the Confidentiality Agreement, as of
the date of such representation, warranty, statement or document, contains or
contained any untrue statement of material fact, or, at the date thereof, omits
or omitted to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such statements
are or were made, not misleading.
SECTION 4.15. Employee Benefit Plans; Labor Matters. With respect
to each employee benefit plan, program, arrangement and contract (including,
without limitation, any "employee benefit plan", as defined in Section 3(3) of
ERISA), maintained or contributed to by PEC or any of its subsidiaries, or with
respect to which PEC or any of its subsidiaries could incur liability under
Section 4069, 4212(c) or 4204 of ERISA (the "PEC Benefit Plans"), no event has
occurred and, to the knowledge of PEC, there currently exists no condition or
set of circumstances, in connection with which PEC or any of its subsidiaries
could be subject to any liability under the terms of the PEC Benefit Plans,
ERISA, the Code or any other applicable Law which would have a PEC Material
Adverse Effect. There is no pending or threatened labor dispute, strike or
work stoppage against PEC or any of its subsidiaries which would have a PEC
Material Adverse Effect.
SECTION 4.16. Taxes. (a) There is no claim against PEC or any of
its subsidiaries for any Taxes, and no assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with respect to
PEC or any of its subsidiaries other than those disclosed on Schedule 4.16 to
the PEC Disclosure Schedule or which would not have a PEC Material Adverse
Effect.
(b) The total amounts set up as liabilities for current and deferred
Taxes in the financial statements referred to in Section 4.07 of this Agreement
are sufficient to cover in all material respects the payment of all Taxes,
whether or not assessed or disputed, which are, or are hereafter found to be,
or to have been, due by or with respect to PEC and any of its subsidiaries up
to and through the periods covered thereby.
SECTION 4.17. Certain Business Practices. None of PEC, any of its
subsidiaries or any directors, officers, agents or employees of PEC or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iii) made any other unlawful payment.
SECTION 4.18. Environmental Matters. Except for matters disclosed
in the PEC SEC Reports filed prior to the date hereof or disclosed in Schedule
4.18 of the PEC Disclosure
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Schedule, and except for matters that would not, individually or in the
aggregate, result in a PEC Material Adverse Effect, (i) the properties,
operations and activities of PEC and its subsidiaries are in compliance with
all applicable Environmental Laws; (ii) PEC and its subsidiaries and the
properties and operations of PEC and its subsidiaries are not subject to any
existing, pending or, to the knowledge of PEC, threatened action, suit,
investigation, inquiry or proceeding by or before any governmental authority
under any Environmental Law; (iii) all notices, permits, licenses, or similar
authorizations, if any, required to be obtained or filed by PEC or any of its
subsidiaries under any Environmental Law in connection with any aspect of the
business of PEC or its subsidiaries, including without limitation those
relating to the treatment, storage, disposal or release of a hazardous
substance, have been duly obtained or filed and will remain valid and in effect
after the Merger, and PEC and its subsidiaries are in compliance with the terms
and conditions of all such notices, permits, licenses and similar
authorizations; (iv) PEC and its subsidiaries have satisfied and are currently
in compliance with all financial responsibility requirements applicable to
their operations and imposed by any governmental authority under any
Environmental Law, and PEC and its subsidiaries have not received any notice of
noncompliance with any such financial responsibility requirements; (v) to PEC's
knowledge, there are no physical or environmental conditions existing on any
property of PEC or its subsidiaries or resulting from PEC's or such
subsidiaries' operations or activities, past or present, at any location, that
would give rise to any on-site or off-site remedial obligations imposed on PEC
or any of its subsidiaries under any Environmental Laws; (vi) to PEC's
knowledge, since the effective date of the relevant requirements of applicable
Environmental Laws and to the extent required by such applicable Environmental
Laws, all hazardous substances generated by PEC and its subsidiaries have been
transported only by carriers authorized under Environmental Laws to transport
such substances and wastes, and disposed of only at treatment, storage, and
disposal facilities authorized under Environmental Laws to treat, store or
dispose of such substances and wastes; (vii) there has been no exposure of any
person or property to hazardous substances or any pollutant or contaminant, nor
has there been any release of hazardous substances or any pollutant or
contaminant into the environment by PEC or its subsidiaries or in connection
with their properties or operations that could reasonably be expected to give
rise to any claim against PEC or any of its subsidiaries for damages or
compensation; and (viii) PEC and its subsidiaries have made available to ANGC
all non-privileged internal and external environmental audits and studies and
all non-privileged correspondence on substantial environmental matters in the
possession of PEC or its subsidiaries relating to any of the current or former
properties or operations of PEC and its subsidiaries.
SECTION 4.19. Insurance. PEC and each of its subsidiaries are
currently insured, and during each of the past five calendar years have been
insured, for reasonable amounts against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured.
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SECTION 4.20. Properties. Except for liens arising in the ordinary
course of business after the date hereof and properties and assets disposed of
in the ordinary course of business after the date of the most recent balance
sheet contained in the Form 10-Q referred to below, PEC and its subsidiaries
have defensible title (or, with respect to pipelines, equipment, other tangible
personal property, easements, rights of way, servitudes, permits, surface
leases and other similar assets and rights used in connection with PEC's
pipeline operations (collectively, "PEC Pipeline Assets"), title to or interest
in the applicable PEC Pipeline Asset sufficient to enable PEC and its
subsidiaries to conduct their business with respect thereto without material
interference as it is currently being conducted or as described in the PEC SEC
Reports), free and clear of all liens, the existence of which would have a PEC
Material Adverse Effect, to all their material properties and assets, whether
tangible or intangible, real, personal or mixed, reflected in PEC's most recent
consolidated balance sheet contained in PEC's most recent PEC SEC Report on
Form 10-Q filed prior to the date hereof as being owned by PEC and its
subsidiaries as of the date thereof or purported to be owned on the date
hereof. All buildings, and all fixtures, equipment and other property and
assets which are material to its business on a consolidated basis, held under
leases by any of PEC or its subsidiaries are held under valid instruments
enforceable by PEC or its subsidiaries in accordance with their respective
terms.
SECTION 4.21. Public Utility Holding Company Act, Etc. None of PEC
or any of its subsidiaries is a "public utility company" or a "holding company"
or a "subsidiary company" of a "holding company", or an affiliate of a "holding
company" or a "subsidiary company" of a "holding company", in each case within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.22. Futures Trading. Except as set forth on Schedule
4.22 to the PEC Disclosure Schedule, none of PEC or any of its subsidiaries
engages in any natural gas or other futures or options trading or is a party to
any price swaps, hedges, futures or similar instruments, except for
transactions and agreements entered into primarily to hedge contracts for the
purchase or sale of Hydrocarbons to which PEC or one of its subsidiaries is a
party.
SECTION 4.23. Opinion of Financial Advisor. PEC has received the
opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated to the effect
that, as of the date of delivery of such opinion, the Exchange Ratio is fair,
from a financial point of view, to the holders of PEC Common Stock. PEC will
promptly deliver to ANGC a true and complete written copy of such opinion.
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ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of ANGC. ANGC hereby covenants
and agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by PEC, ANGC will and
will cause its subsidiaries to:
(a) operate its business in all material respects in the
usual and ordinary course consistent with past practices;
(b) use all reasonable efforts to preserve substantially
intact its business organization, maintain its material rights and
franchises, retain the services of its respective officers and key
employees and maintain its relationships with its material customers
and suppliers;
(c) maintain and keep its material properties and assets
in as good repair and condition as at present, ordinary wear and tear
excepted, and maintain supplies and inventories in quantities
consistent with its customary business practice; and
(d) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
SECTION 5.02. Negative Covenants of ANGC. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by PEC,
from the date of this Agreement until the Effective Time, ANGC will not do, and
will not permit any of its subsidiaries to do, any of the foregoing:
(a) (i) increase the compensation payable to or to
become payable to any director or executive officer, except for
increases in salary or wages payable or to become payable in the
ordinary course of business and consistent with past practice; (ii)
grant any severance or termination pay (other than pursuant to the
normal severance policy of ANGC or its subsidiaries as in effect on
the date of this Agreement) to, or enter into or amend any employment
or severance agreement with, any director, officer or employee; (iii)
establish, adopt or enter into any employee benefit plan or
arrangement; or (iv) except as may be required by applicable law and
actions that are not inconsistent with the provisions of Section 6.08
of this Agreement, amend, or take any other actions (other than the
acceleration of vesting or waiving of performance criteria permitted
pursuant to the Benefit Plans upon a change in control of ANGC and
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not inconsistent with accounting for the Merger as a Pooling
Transaction) with respect to, any of the Benefit Plans or any of the
plans, programs, agreements, policies or other arrangements described
in Section 3.10(d) of this Agreement;
(b) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock,
except for dividends by a wholly owned subsidiary of ANGC to ANGC or
another wholly owned subsidiary of ANGC and except for regular
quarterly dividends with respect to ANGC Common Stock in an amount not
to exceed $.03 per share;
(c) (i) except as described in Schedule 3.03(b)(ii) of
the ANGC Disclosure Schedule, redeem, purchase or otherwise acquire
any shares of its or any of its subsidiaries' capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its or its subsidiaries' capital stock (other than any such
acquisition directly from any wholly owned subsidiary of ANGC in
exchange for capital contributions or loans to such subsidiary), or
any options, warrants or conversion or other rights to acquire any
shares of its or its subsidiaries' capital stock or any such
securities or obligations (except in connection with the exercise of
outstanding Stock Options in accordance with their terms); (ii) effect
any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its subsidiaries' capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its or its
subsidiaries' capital stock;
(d) (i) except as described in Schedule 3.03(b)(i) of
the ANGC Disclosure Schedule and except as contemplated by the PEC
Option Agreement, issue, deliver, award, grant or sell, or authorize
or propose the issuance, delivery, award, grant or sale (including the
grant of any security interests, liens, claims, pledges, limitations
in voting rights, charges or other encumbrances) of, any shares of any
class of its or its subsidiaries' capital stock (including shares held
in treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options
to acquire any such shares (except as permitted pursuant to Section
6.08 of this Agreement or for the issuance of shares upon the exercise
of outstanding Stock Options or the vesting of restricted stock in
accordance with the terms of outstanding Stock Awards); (ii) amend or
otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms more favorable to the
holders thereof; (iii) take any action to optionally accelerate the
exercisability of Stock Options;
(e) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any
assets of any other person (other than the purchase of assets from
suppliers or vendors in the ordinary
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course of business and consistent with past practice) in each case
which are material, individually or in the aggregate, to ANGC and its
subsidiaries, taken as a whole;
(f) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its material assets
or any material assets of any of its subsidiaries, except for
dispositions of inventories and of assets in the ordinary course of
business and consistent with past practice;
(g) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any Competing
Transaction (as defined below), or enter into discussions or negotiate
with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or
employees of ANGC or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative
retained by ANGC or any of ANGC's subsidiaries to take any such
action, and ANGC shall promptly notify PEC of all relevant terms of
any such inquiries and proposals received by ANGC or any of its
subsidiaries or by any such officer, director, investment banker,
financial advisor, attorney, accountant or other representative
relating to any of such matters and if such inquiry or proposal is in
writing, ANGC shall promptly deliver or cause to be delivered to PEC a
copy of such inquiry or proposal; provided, however, that nothing
contained in this subsection (g) shall prohibit the Board of Directors
of ANGC from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity in connection
with an unsolicited bona fide proposal in writing by such person or
entity to acquire ANGC pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to
acquire a substantial portion of the assets of ANGC or any of its
Significant Subsidiaries, if, and only to the extent that (A) the
Board of Directors of ANGC, after consultation with and based upon the
advice of independent legal counsel (who may be ANGC's regularly
engaged independent legal counsel), determines in good faith that such
action is necessary for such Board of Directors to comply with its
fiduciary duties to stockholders under applicable law and (B) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or entity ANGC (x) provides written
notice to PEC to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity
and (y) enters into with such person or entity a confidentiality
agreement in reasonably customary form on terms not more favorable to
such person or entity than the terms contained in that certain
Confidentiality Agreement dated as of September 8, 1994 between PEC
and ANGC (the "Confidentiality Agreement"); (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a Competing
Transaction; or (iii) failing to make or withdrawing or modifying its
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recommendation referred to in Section 6.02(a) if there exists a
Competing Transaction and the Board of Directors of ANGC, after
consultation with and based upon the advice of independent legal
counsel (who may be ANGC's regularly engaged independent legal
counsel), determines in good faith that such action is necessary for
such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law. For purposes of this Agreement,
"Competing Transaction" shall mean any of the following (other than
the transactions contemplated by this Agreement) involving ANGC or any
of its subsidiaries: (i) any merger, consolidation, share exchange,
business combination or similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of ANGC and its subsidiaries, taken as a whole,
(iii) any tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of ANGC or the filing of a
registration statement under the Securities Act in connection
therewith; (iv) any person having acquired beneficial ownership of,
or any group (as such term is defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder)
having been formed which beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the outstanding shares of
capital stock of ANGC; or (v) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing ;
(h) release any third party from its obligations, or
grant any consent, under any existing standstill provision relating to
a Competing Transaction or otherwise under any confidentiality or
other agreement, or fail to fully enforce any such agreement;
(i) adopt or propose to adopt any amendments to its
charter or bylaws, which would alter the terms of its capital stock
or would have an adverse impact on the consummation of the
transactions contemplated by this Agreement;
(j) (A) change any of its methods of accounting in effect
at June 30, 1994, or (B) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes (except where the amount of such
settlements or controversies, individually or in the aggregate, does
not exceed $500,000), or change any of its methods of reporting income
or deductions for federal income tax purposes from those employed in
the preparation of the federal income tax returns for the taxable year
ending September 30, 1993, except, in each case, as may be required by
Law or generally accepted accounting principles;
(k) incur any obligation for borrowed money or purchase
money indebtedness, whether or not evidenced by a note, bond,
debenture or similar instrument, except in the ordinary course of
business consistent with past practice and in no event in excess of
$5,000,000 in the aggregate, and except for borrowings under
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ANGC's working capital revolving credit facility of up to $40,000,000
for use for working capital needs;
(l) enter into any material arrangement, agreement or
contract with any third party (other than customers in the ordinary
course of business) which provides for an exclusive arrangement with
that third party or is substantially more restrictive on ANGC or
substantially less advantageous to ANGC than arrangements, agreements
or contracts existing on the date hereof;
(m) take (and will use reasonable efforts to prevent any
affiliate of ANGC from taking) any action that, in the judgment of
KPMG Peat Marwick would cause the Merger not to be treated as a
"pooling of interests" for financial accounting purposes; or
(n) agree in writing or otherwise to do any of the
foregoing.
SECTION 5.03. Affirmative and Negative Covenants of PEC.
(a) PEC hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this
Agreement or consented to in writing by ANGC, PEC will and will cause
its subsidiaries to:
(i) operate its business in all material respects
in the usual and ordinary course consistent with past
practices;
(ii) use all reasonable efforts to preserve
substantially intact its business organization, maintain its
material rights and franchises, retain the services of its
respective officers and key employees and maintain its
relationships with its material customers and suppliers;
(iii) maintain and keep its material properties and
assets in as good repair and condition as at present, ordinary
wear and tear excepted, and maintain supplies and inventories
in quantities consistent with its customary business practice;
and
(iv) use all reasonable efforts to keep in full
force and effect insurance and bonds comparable in amount and
scope of coverage to that currently maintained.
(b) Except as expressly contemplated by this Agreement or
otherwise consented to in writing by ANGC, from the date of this
Agreement until the Effective
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Time, PEC will not do, and will not permit any of its subsidiaries to
do, any of the following:
(i) knowingly take any action which would result
in a failure to maintain the trading of the PEC Common Stock
on the NYSE;
(ii) declare or pay any dividend on, or make any
other distribution in respect of, outstanding shares of
capital stock, except for dividends by a wholly owned
subsidiary of PEC to PEC or another wholly owned subsidiary of
PEC and except for regular quarterly dividends with respect to
PEC Common Stock in an amount not to exceed $.21 per share;
(iii) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person (other than
the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with past
practice), which, in each case, would materially delay or
prevent the consummation of the transactions contemplated by
this Agreement;
(iv) adopt or propose to adopt any amendments to
its charter or bylaws, which would have an adverse impact on
the consummation of the transactions contemplated by this
Agreement;
(v) take (and will use reasonable efforts to
prevent any affiliate of PEC from taking) any action that, in
the judgment of KPMG Peat Marwick, would cause the Merger not
to be treated as a "pooling of interests" for financial
accounting purposes; or
(vi) agree in writing or otherwise to do any of
the foregoing.
SECTION 5.04. Access and Information.
(a) ANGC shall, and shall cause its subsidiaries to (i)
afford to PEC and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives
(collectively, the "PEC Representatives") reasonable access at
reasonable times, upon reasonable prior notice, to the officers,
employees, agents, properties, offices and other facilities of ANGC
and its subsidiaries and to the books and records thereof and (ii)
furnish promptly to PEC and the PEC Representatives such information
concerning the business, properties, contracts, records and personnel
of ANGC and its
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subsidiaries (including, without limitation, financial, operating and
other data and information) as may be reasonably requested, from time
to time, by PEC.
(b) PEC shall, and shall cause its subsidiaries to (i)
afford to ANGC and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives
(collectively, the "ANGC Representatives") reasonable access at
reasonable times, upon reasonable prior notice, to the officers,
employees, accountants, agents, properties, offices and other
facilities of PEC and its subsidiaries and to the books and records
thereof and (ii) furnish promptly to ANGC and the ANGC Representatives
such information concerning the business, properties, contracts,
records and personnel of PEC and its subsidiaries (including, without
limitation, financial, operating and other data and information) as
may be reasonably requested, from time to time, by ANGC.
(c) Notwithstanding the foregoing provisions of this
Section 5.04, neither party shall be required to grant access or
furnish information to the other party to the extent that such access
or the furnishing of such information is prohibited by law. No
investigation by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are
herein contained and each such representation and warranty shall
survive such investigation.
(d) The information received pursuant to Section 5.04 (a)
and (b) shall be deemed to be "Confidential Information" for purposes
of the Confidentiality Agreement.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Meetings of Stockholders.
(a) ANGC shall, promptly after the date of this
Agreement, take all actions necessary in accordance with Delaware Law
and its charter and bylaws to convene a special meeting of ANGC's
stockholders to act on this Agreement (the "ANGC Stockholders
Meeting"), and ANGC shall consult with PEC in connection therewith.
ANGC shall use its best efforts to solicit from stockholders of ANGC
proxies in favor of the approval and adoption of this Agreement and to
secure the vote of stockholders required by Delaware Law and its
charter and bylaws to approve and adopt this Agreement, unless
otherwise necessary due to the applicable fiduciary duties of the
directors of ANGC, as determined by such directors in good faith after
consultation with and based upon the advice of independent legal
counsel (who may be ANGC's regularly engaged independent legal
counsel).
(b) PEC shall, promptly after the date of this Agreement,
take all actions necessary in accordance with Delaware Law and its
charter and bylaws to convene a special meeting of PEC's stockholders
to approve the issuance of the PEC Common Stock in connection with the
Merger pursuant to the requirements of Rule 312 of the NYSE (the "PEC
Stockholders Meeting"). PEC shall use its best efforts to solicit
from stockholders of PEC proxies in favor of the approval of such
issuance of PEC Common Stock and to secure the vote of stockholders
required by Rule 312 of the NYSE.
SECTION 6.02. Registration Statement; Proxy Statements.
(a) As promptly as practicable after the execution of this
Agreement, PEC shall prepare and file with the SEC a registration
statement on Form S-4 (such registration statement, together with any
amendments thereof or supplements thereto, being the "Registration
Statement"), containing a proxy statement/prospectus for stockholders
of ANGC (the "ANGC Proxy Statement/Prospectus") and a proxy statement
and form of proxy for stockholders of PEC ( together with any
amendments thereof or supplements thereto, in each case in the form or
forms mailed to PEC's stockholders, the "PEC Proxy Statement"), in
connection with the registration under the Securities Act of the offer
and sale of PEC Common Stock to be issued in the Merger and the other
transactions contemplated by this Agreement. As promptly as
practicable after the execution of this Agreement, ANGC shall prepare
and file with the SEC a proxy statement that will be the same as the
ANGC Proxy Statement/Prospectus, and
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a form of proxy, in connection with the vote of ANGC's stockholders
with respect to the Merger (such proxy statement and form of proxy,
together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to ANGC's stockholders, being the
"ANGC Proxy Statement"). Each of PEC and ANGC will use its best
efforts to cause the Registration Statement to be declared effective
as promptly as practicable, and shall take any action required to be
taken under any applicable federal or state securities laws in
connection with the issuance of shares of PEC Common Stock in the
Merger. Each of PEC and ANGC shall furnish to the other all
information concerning it and the holders of its capital stock as the
other may reasonably request in connection with such actions. As
promptly as practicable after the Registration Statement shall have
been declared effective, ANGC shall mail the ANGC Proxy Statement to
its stockholders entitled to notice of and to vote at the ANGC
Stockholders Meeting and PEC shall mail the PEC Proxy Statement to its
stockholders entitled to notice of and to vote at the PEC Stockholders
Meeting. The ANGC Proxy Statement shall include the recommendation of
ANGC's Board of Directors in favor of the Merger and adoption of this
Agreement, unless otherwise necessary due to the applicable fiduciary
duties of the directors of ANGC, as determined by such directors in
good faith after consultation with and based upon the advice of
independent legal counsel (who may be ANGC's regularly engaged
independent legal counsel). The PEC Proxy Statement shall include the
recommendation of PEC's Board of Directors in favor of approval of
the issuance of the PEC Common Stock in the Merger.
(b) The information supplied by ANGC for inclusion in the
Registration Statement shall not, at the time the Registration
Statement is declared effective, 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 not
misleading. The information supplied by ANGC for inclusion in (i) the
ANGC Proxy Statement to be sent to the stockholders of ANGC in
connection with the ANGC Stockholders Meeting shall not, at the date
the ANGC Proxy Statement (or any supplement thereto) is first mailed
to stockholders, at the time of the ANGC Stockholders Meeting or at
the Effective Time and (ii) the PEC Proxy Statement to be sent to the
stockholders of PEC in connection with the PEC Stockholders Meeting
shall not, at the date the PEC Proxy Statement (or any supplement
thereto) is first mailed to stockholders, at the time of the PEC
Stockholders Meeting or at the Effective Time, 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 Effective Time
any event or circumstance relating to ANGC or any of its affiliates,
or its or their respective officers or directors, should be discovered
by ANGC that should be set forth in an amendment to the Registration
Statement or a supplement to the ANGC Proxy Statement or the PEC Proxy
Statement, ANGC shall promptly inform PEC thereof in
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writing. All documents that ANGC is responsible for filing with the
SEC in connection with the transactions contemplated herein will
comply as to form in all material respects with the applicable
requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations
thereunder.
(c) The information supplied by PEC for inclusion in the
Registration Statement shall not, at the time the Registration
Statement is declared effective, 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 not
misleading. The information supplied by PEC for inclusion in (i) the
ANGC Proxy Statement to be sent to the stockholders of ANGC in
connection with the ANGC Stockholders Meeting shall not, at the date
the ANGC Proxy Statement (or any supplement thereto) is first mailed
to stockholders, at the time of the ANGC Stockholders Meeting or at
the Effective Time and (ii) the PEC Proxy Statement to be sent to the
stockholders of PEC in connection with the PEC Stockholders Meeting
shall not, at the date the PEC Proxy Statement (or any supplement
thereto) is first mailed to stockholders, at the time of the PEC
Stockholders Meeting or at the Effective Time, 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 Effective Time
any event or circumstance relating to PEC or any of its affiliates, or
to their respective officers or directors, should be discovered by PEC
that should be set forth in an amendment to the Registration Statement
or a supplement to the ANGC Proxy Statement or the PEC Proxy
Statement, PEC shall promptly inform ANGC thereof in writing. All
documents that PEC is responsible for filing with the SEC in
connection with the transactions contemplated hereby will comply as to
form in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder.
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) ANGC and PEC shall each use, and shall cause each of
their respective subsidiaries to use, all reasonable efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause
to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by PEC or
ANGC or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including,
without limitation, the Merger, (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this
Agreement and the Merger required under (A) the Securities Act (in the
case of
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PEC) and the Exchange Act and the rules and regulations thereunder,
and any other applicable federal or state securities laws, (B) the HSR
Act and (C) any other applicable Law; provided that PEC and ANGC shall
cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the
nonfiling party and its advisors prior to filings and, if requested,
shall accept all reasonable additions, deletions or changes suggested
in connection therewith. ANGC and PEC shall furnish all information
required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law (including all
information required to be included in the ANGC Proxy Statement, the
PEC Proxy Statement or the Registration Statement) in connection with
the transactions contemplated by this Agreement. PEC and ANGC shall
request early termination of the waiting period with respect to the
Merger under the HSR Act.
(b) PEC and ANGC agree to cooperate with respect to,
and shall cause each of their respective subsidiaries to cooperate
with respect to, and agree to use all reasonable efforts vigorously to
contest and resist, any action, including legislative, administrative
or judicial action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") of any Governmental
Entity that is in effect and that restricts, prevents or prohibits the
consummation of the Merger or any other transactions contemplated by
this Agreement, including, without limitation, by vigorously pursuing
all available avenues of administrative and judicial appeal and all
available legislative action. Each of PEC and ANGC also agree to
take any and all actions, including, without limitation, the
disposition of assets or the withdrawal from doing business in
particular jurisdictions, required by regulatory authorities as a
condition to the granting of any approvals required in order to permit
the consummation of the Merger or as may be required to avoid, lift,
vacate or reverse any legislative or judicial action which would
otherwise cause any condition to Closing not to be satisfied;
provided, however, that in no event shall either party take, or be
required to take, any action that would or could reasonably be
expected to have a PEC Material Adverse Effect, and ANGC shall not be
required to take any action which would be consummated prior to the
Effective Time and which would or could reasonably be expected to have
an ANGC Material Adverse Effect .
(c) (i) Each of ANGC and PEC shall give (or shall cause
their respective subsidiaries to give) any notices to third parties,
and use, and cause their respective subsidiaries to use, all
reasonable efforts to obtain any third party consents (A) necessary,
proper or advisable to consummate the transactions contemplated by
this Agreement, (B) otherwise required under any contracts, licenses,
leases or other agreements in connection with the consummation of the
transactions contemplated hereby or (C) required to prevent an ANGC
Material Adverse Effect from occurring
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prior to the Effective Time or a PEC Material Adverse Effect from
occurring after the Effective Time.
(ii) In the event that any party shall fail to obtain any
third party consent described in subsection (c)(i) above, such party
shall use all reasonable efforts, and shall take any such actions
reasonably requested by the other parties, to limit the adverse effect
upon ANGC and PEC, their respective subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result
after the Effective Time, from the failure to obtain such consent.
(d) Each of PEC and ANGC shall promptly notify the other
of (w) any material change in its current or future business,
financial condition or results of operations, (x) any complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) of any Governmental Entities with respect to its
business or the transactions contemplated hereby, (y) the institution
or the threat of material litigation involving it or any of its
subsidiaries or (z) any event or condition that might reasonably be
expected to cause any of its representations, warranties, covenants or
agreements set forth herein not to be true and correct at the
Effective Time. As used in the preceding sentence, "material
litigation" means any case, arbitration or adversary proceeding or
other matter which would have been required to be disclosed on the
ANGC Disclosure Schedule pursuant to Section 3.09 or the PEC
Disclosure Schedule pursuant to Section 4.09, as the case may be, if
in existence on the date hereof, or in respect of which the legal fees
and other costs to ANGC or PEC (or their respective subsidiaries), as
the case may be, might reasonably be expected to exceed $250,000 over
the life of the matter.
SECTION 6.04. Affiliates; Pooling; Tax Treatment.
(a) ANGC shall use all reasonable efforts to obtain from
any person who may be deemed to have become an affiliate of ANGC after
the date of this Agreement and on or prior to the Effective Time a
written agreement substantially in the form of Exhibit A hereto as
soon as practicable after attaining such status.
(b) PEC shall use all reasonable efforts to obtain from
any person who may be deemed to have become an affiliate of PEC after
the date of this Agreement and on or prior to the Effective Time a
written agreement substantially in the form of Exhibit B hereto as
soon as practicable after obtaining such status.
(c) PEC shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale
by stockholders of ANGC who may be affiliates of ANGC or PEC pursuant
to Rule 145 under the Securities Act.
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(d) Each party hereto shall use all reasonable efforts to
cause the Merger to be treated for financial accounting purposes as a
Pooling Transaction, and shall not take, and shall use all reasonable
efforts to prevent any affiliate of such party from taking, any
actions which could prevent the Merger from being treated for
financial accounting purposes as a Pooling Transaction.
(e) Each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any affiliate of such party from taking,
any actions which could prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368(a) of the Code.
SECTION 6.05. Public Announcements. PEC and ANGC shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation. The
press release announcing the execution and delivery of this Agreement shall be
a joint press release of PEC and ANGC.
SECTION 6.06. NYSE Listing. PEC shall use all reasonable efforts
to cause the shares of PEC Common Stock to be issued in the Merger to be
approved for listing (subject to official notice of issuance) on the NYSE prior
to the Effective Time.
SECTION 6.07. Comfort Letters.
(a) ANGC shall use all reasonable efforts to cause KPMG
Peat Marwick to deliver a letter dated as of the date of the ANGC
Proxy Statement, and addressed to itself and PEC and their respective
Boards of Directors, in form and substance reasonably satisfactory to
PEC and customary in scope and substance for agreed upon procedures
letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the
Registration Statement and the ANGC Proxy Statement.
(b) PEC shall use all reasonable efforts to cause KPMG
Peat Marwick to deliver a letter dated as of the date of the PEC Proxy
Statement, and addressed to itself and ANGC and their respective
Boards of Directors, in form and substance reasonably satisfactory to
ANGC and customary in scope and substance for agreed upon procedures
letters delivered by independent public accounts in connection with
registration statements and proxy statements similar to the
Registration Statement and the PEC Proxy Statement.
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SECTION 6.08 Employee Benefit Plans.
(a) Option Plans. PEC and ANGC shall take such actions
not inconsistent with the Merger being accounted for financial
accounting purposes as a Pooling Transaction, including (with respect
to ANGC) the amendment of the Option Plans and Stock Options, to
permit PEC to assume, and PEC shall assume, effective at the Effective
Time, each Stock Option that remains unexercised in whole or in part
as of the Effective Time and substitute shares of PEC Common Stock for
the shares of ANGC Common Stock purchasable under each such assumed
option ("Assumed Option"), which assumption and substitution shall be
effected as follows:
(i) the Assumed Option shall not give the
optionee additional benefits which such optionee did not have
under the Stock Option before such assumption and shall be
assumed on the same terms and conditions as the Stock Option
being assumed, subject to Section 6.08(a)(ii) and (iii) below;
(ii) the number of shares of PEC Common Stock
purchasable under the Assumed Option shall be equal to the
number of shares of PEC Common Stock that the holder of the
Stock Option being assumed would have received (without regard
to any vesting schedule) upon consummation of the Merger had
such Stock Option been exercised in full immediately prior to
consummation of the Merger; and
(iii) the per share exercise price of such Assumed
Option shall be an amount equal to the per share exercise
price of the Stock Option being assumed divided by the
Exchange Ratio.
(b) Registration. PEC shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of PEC
Common Stock for delivery upon exercise of the Assumed Options, and,
as soon as practicable after the Effective Time, PEC shall file a
registration statement on Form S-8 (or other appropriate form) with
respect to the shares of PEC Common Stock subject to the Assumed
Options, and shall use its best efforts to maintain the effectiveness
of such registration statement for so long as any of the Assumed
Options remain outstanding.
(c) Certain Agreements. ANGC shall enter into
amendments, in form and substance acceptable to PEC, providing that
PEC Common Stock shall be substituted for securities issuable pursuant
to the terms of employment agreements entered into between Grand
Valley Gas Company and certain employees of Grand Valley Gas Company.
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(d) Benefit Plans. PEC shall keep the Benefit Plans (or
benefit plans providing reasonably comparable benefits), other than
the Option Plans, in effect for a period of at least 50 weeks after
the Effective Time. PEC shall assure that ANGC employees' benefits
under health plans, during such period from and after the Effective
Time, will not be subject to any exclusions for pre-existing
conditions otherwise covered by such health plans, and that credit
will be received for any deductibles or out-of-pocket amounts
previously paid with respect to the applicable plan year. Any
employee of ANGC whose employment is terminated by ANGC during such
period after the Effective Time shall be entitled to (i) a severance
benefit equal to two month's base salary plus the product of one-half
of a month's base salary multiplied by the number of such employee's
full or partial years of service with ANGC or any successor and (ii)
the continuance of such employee's health benefits for six months
after such termination on the same basis as immediately prior to such
termination.
SECTION 6.09 Convertible Debt. ANGC shall take such action as is
required pursuant to that certain Amendment, Restatement and Assumption of Note
Agreement dated as of July 1, 1994 relating to the $10,000,000 aggregate
principal amount of ANGC's 9% Convertible Senior Subordinated Notes due
December 15, 2004 in connection with, and as a result of, the Merger.
SECTION 6.10 Merger Sub. Prior to the Effective Time, Merger Sub
shall not conduct any business or make any investments other than as
specifically contemplated by this Agreement and will not have any assets (other
than a de minimis amount of cash paid to Merger Sub for the issuance of its
stock to PEC) or liabilities.
SECTION 6.11 Indemnification and Insurance. For a period of five
years after the Effective Time, (i) PEC shall not amend or otherwise modify
Article IX of the charter of ANGC or Article XII of the bylaws of ANGC (in each
case as in effect on the date hereof) in a manner that would adversely affect
the rights thereunder of any individuals who at any time prior to the Effective
Time were directors or officers of ANGC in respect of acts or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such amendment or
modification is required by law, (ii) PEC shall guarantee the performance by
ANGC of its obligations under Article IX of the charter of ANGC and Article XII
of the bylaws of ANGC to the extent of the excess, if any, of (A) the net worth
of ANGC as of the Effective Time over (B) the net worth of ANGC as of the date
of any claim under such provisions of the charter and bylaws of ANGC by a
person referred to in the foregoing clause (i), and (iii) PEC shall cause to be
maintained in effect the current policies of directors' and officers' liability
insurance maintained by ANGC (or substitute policies providing at least the
same coverage and limits and containing terms and conditions which are not
materially less advantageous) with respect to claims arising from facts or
events which occurred before the Effective Time; provided, however that in no
event shall PEC be required to expend more than 200% of the current annual
premiums paid by
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ANGC for such insurance. This Section 6.11 is intended to be for the benefit
of, and shall be enforceable by, the persons referred to in clause (i) of the
foregoing sentence, their heirs and personal representatives, and shall be
binding on PEC and its successors and assigns.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing Date of the following conditions, any or all of
which may be waived in writing by the parties hereto, in whole or in part, to
the extent permitted by applicable law:
(a) Effectiveness of the Registration Statement; Blue
Sky. The Registration Statement shall have been declared effective by
the SEC under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by
the SEC and no proceedings for that purpose shall have been initiated
by the SEC. PEC shall have received all Blue Sky permits and other
authorizations necessary to consummate the transactions contemplated
by this Agreement.
(b) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the
stockholders of ANGC, and the issuance of the PEC Common Stock in the
Merger shall have been approved by the requisite vote of the
stockholders of PEC.
(c) No Order. No Governmental Entity or federal or state
court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of
the Merger.
(d) HSR Act. The applicable waiting period under the HSR
Act with respect to the transactions contemplated by this Agreement
shall have expired or been terminated.
(e) Pooling of Interests. PEC and ANGC shall have been
advised in writing by KPMG Peat Marwick on the Closing Date that the
Merger should be treated for financial accounting purposes as a
Pooling Transaction.
SECTION 7.02. Additional Conditions to Obligations of the PEC
Companies. The obligations of the PEC Companies to effect the Merger and the
other transactions contemplated
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hereby are also subject to the satisfaction at or prior to the Closing Date of
the following conditions, any or all of which may be waived in writing by PEC,
in whole or in part, to the extent permitted by applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of ANGC contained in this Agreement
shall be true and correct as of the Closing Date as though made on and
as of the Closing Date (except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date). The PEC Companies shall have received a certificate of
the President and the Chief Financial Officer of ANGC, dated the
Closing Date, to such effect.
(b) Agreements and Covenants. ANGC shall have performed
or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Closing Date. The PEC Companies shall have received a certificate of
the President and the Chief Financial Officer of ANGC, dated the
Closing Date, to that effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or circumstance
in the current or future business, financial condition or results of
operations of ANGC or any of its subsidiaries having or reasonably
likely to have, individually or in the aggregate, a material adverse
effect on the financial condition, results of operations or current or
future business of ANGC and its subsidiaries, taken as a whole. The
PEC Companies shall have received a certificate of the President and
the Chief Financial Officer of ANGC, dated the Closing Date, to such
effect.
(d) Absence of Regulatory Conditions. There shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, by any
Governmental Entity in connection with the grant of a regulatory
approval necessary, in the reasonable business judgment of PEC, to the
continuing operation of the current or future business of ANGC, which
imposes any condition or restriction upon the PEC Companies or the
business or operations of ANGC which, in the reasonable business
judgment of PEC, would be materially burdensome in the context of the
transactions contemplated by this Agreement.
(e) Tax Opinion. Vinson & Elkins L.L.P. shall have
delivered to PEC its written opinion as of the date that the PEC Proxy
Statement is first mailed to PEC stockholders substantially to the
effect that (x) the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code, (y) PEC, Merger Sub and
ANGC will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, and (z) PEC, Merger Sub and ANGC will not
recognize any gain
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or loss for U.S. federal income tax purposes as a result of the
Merger, and such opinion shall not have been withdrawn or modified in
any material respect.
(f) Employment Agreements. The employees of ANGC set
forth in a letter from PEC to ANGC delivered on or prior to the date
of this Agreement shall have entered into employment agreements with
PEC or the Surviving Corporation, effective as of the Effective Time,
in form and substance reasonably acceptable to PEC.
SECTION 7.03. Additional Conditions to Obligations of ANGC. The
obligations of ANGC to effect the Merger and the other transactions
contemplated hereby are also subject to the satisfaction at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
writing by ANGC, in whole or in part, to the extent permitted by applicable
law:
(a) Representations and Warranties. Each of the
representations and warranties of the PEC Companies contained in this
Agreement shall be true and correct as of the Closing Date as though
made on and as of the Closing Date (except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall be true and
correct as of such earlier date). ANGC shall have received a
certificate of the President and the Chief Financial Officer of each
of the PEC Companies, dated the Closing Date, to such effect.
(b) Agreements and Covenants. The PEC Companies shall
have performed or complied with all agreements and covenants required
by this Agreement to be performed or complied with by them on or prior
to the Closing Date. ANGC shall have received a certificate of the
President and the Chief Financial Officer of each of the PEC
Companies, dated the Closing Date, to that effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or circumstance
in the current or future business, financial condition or results of
operations of PEC or any of its subsidiaries having or reasonably
likely to have, individually or in the aggregate, a material adverse
effect on the financial condition, results of operations or current
or future business of PEC and its subsidiaries, taken as a whole.
ANGC shall have received a certificate of the President and the Chief
Financial Officer of each of the PEC Companies, dated the Closing
Date, to such effect.
(d) Absence of Regulatory Conditions. There shall not be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, by any
Governmental Entity in connection with the grant of a regulatory
approval necessary, in the reasonable business judgment of ANGC, to
the continuing operation of the current or future business of PEC,
which imposes any condition or
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restriction upon PEC or the business or operations of PEC which, in
the reasonable business judgment of ANGC, would be materially
burdensome in the context of the transactions contemplated by this
Agreement.
(e) New York Stock Exchange Listing. The shares of PEC
Common Stock to be issued in the Merger shall have been approved for
listing (subject to official notice of issuance) on the NYSE.
(f) Tax Opinion. Holme Roberts & Owen LLC shall have
delivered to ANGC its written opinion as of the date that the ANGC
Proxy Statement is first mailed to ANGC stockholders substantially to
the effect that (x) the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code, (y) PEC, Merger Sub and
ANGC will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, and (z) no gain or loss for U.S. federal
income tax purposes will be recognized by the holders of ANGC Common
Stock upon receipt of shares of PEC Common Stock in the Merger, except
with respect to any cash received in lieu of a fractional share
interest in PEC Common Stock, and such opinion shall not have been
withdrawn or modified in any material respect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of ANGC:
(a) by mutual consent of PEC and ANGC;
(b) by PEC, upon a breach of any representation,
warranty, covenant or agreement on the part of ANGC set forth in this
Agreement, or if any representation or warranty of ANGC shall have
become untrue, in either case such that the conditions set forth in
Section 7.02(a) or Section 7.02(b) of this Agreement, as the case may
be, would be incapable of being satisfied by March 31, 1995 (or as
otherwise extended as described in Section 8.01(e)); provided, that in
any case, a wilful breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this Section 8.01(b);
(c) by ANGC, upon a breach of any representation,
warranty, covenant or agreement on the part of the PEC Companies set
forth in this Agreement, or if any
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representation or warranty of the PEC Companies shall have become
untrue, in either case such that the conditions set forth in Section
7.03(a) or Section 7.03(b) of this Agreement, as the case may be,
would be incapable of being satisfied by March 31, 1995 (or as
otherwise extended as described in Section 8.01(e)); provided, that in
any case, a wilful breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this Section 8.01(c);
(d) by either PEC or ANGC, if there shall be any Order
which is final and nonappealable preventing the consummation of the
Merger, except if the party relying on such Order to terminate this
Agreement has not complied with its obligations under Section 6.03(b)
of this Agreement;
(e) by either PEC or ANGC, if the Merger shall not have
been consummated before March 31, 1995; provided, however, that this
Agreement may be extended by written notice of either PEC or ANGC to a
date not later than June 30, 1995, if the Merger shall not have been
consummated as a direct result of ANGC or the PEC Companies having
failed by March 31, 1995 to receive all required regulatory approvals
or consents with respect to the Merger;
(f) by either PEC or ANGC, if this Agreement and the
Merger shall fail to receive the requisite vote for approval and
adoption by the stockholders of ANGC at the ANGC Stockholders Meeting
or if the issuance of the PEC Common Stock in connection with the
Merger shall fail to receive the requisite vote for approval by the
stockholders of PEC at the PEC Stockholders Meeting;
(h) by PEC, if (i) the Board of Directors of ANGC
withdraws, modifies or changes its recommendation of this Agreement or
the Merger in a manner adverse to PEC or shall have resolved to do any
of the foregoing; (ii) the Board of Directors of ANGC shall have
recommended to the stockholders of ANGC any Competing Transaction or
shall have resolved to do so; (iii) a tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of ANGC is
commenced, and the Board of Directors of ANGC does not recommend that
stockholders not tender their shares into such tender or exchange
offer or; (iv) any person (other than PEC or an affiliate thereof)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), shall have been formed which beneficially
owns, or has the right to acquire beneficial ownership of, 20% or more
of the then outstanding shares of capital stock of ANGC; or
(i) by ANGC, if the Board of Directors of ANGC (x) fails
to make or withdraws its recommendation referred to in Section 6.02(a)
if there exists at such time a Competing Transaction (as defined in
Section 5.02(g)), or (y) recommends to
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ANGC's stockholders approval or acceptance of a Competing Transaction,
in each case only if the Board of Directors of ANGC, after
consultation with and based upon the advice of independent legal
counsel (who may be ANGC's regularly engaged independent legal
counsel), determines in good faith that such action is necessary for
such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law.
The right of any party hereto to terminate this Agreement pursuant to
this Section 8.01 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution
of this Agreement.
SECTION 8.02. Effect of Termination. Except as provided in Section
8.05 or Section 9.01 of this Agreement, in the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void,
there shall be no liability on the part of the PEC Companies or ANGC to the
other and all rights and obligations of any party hereto shall cease, except
that nothing herein shall relieve any party of any liability for (i) any breach
of such party's covenants or agreements contained in this Agreement, or (ii)
any willful breach of such party's representations or warranties contained in
this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of ANGC, (i) no amendment,
which under applicable law may not be made without the approval of the
stockholders of ANGC, may be made without such approval, and (ii) no amendment,
which under the applicable rules of the NYSE, may not be made without the
approval of the stockholders of PEC, may be made without such approval. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (c) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. For purposes of
this Section 8.04, the PEC Companies as a group shall be deemed to be one
party.
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SECTION 8.05. Fees, Expenses and Other Payments.
(a) Except as provided in Section 8.05(c) of this Agreement,
all Expenses (as defined in paragraph (b) of this Section 8.05)
incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such Expenses; provided, however, that
the allocable share of the PEC Companies as a group and ANGC for all
Expenses related to printing, filing and mailing the Registration
Statement, the ANGC Proxy Statement and the PEC Proxy Statement and
all SEC and other regulatory filing fees incurred in connection with
the Registration Statement, the ANGC Proxy Statement and the PEC Proxy
Statement shall be one-half each; and provided further that PEC may,
at its option, pay any Expenses of ANGC, and PEC shall pay all SEC
filing fees.
(b) "Expenses" as used in this Agreement shall include
all out-of-pocket expenses (including, without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party
or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement,
the preparation, printing, filing and mailing of the Registration
Statement, the ANGC Proxy Statement and the PEC Proxy Statement, the
solicitation of stockholder approvals and all other matters related to
the consummation of the transactions contemplated hereby.
(c) ANGC agrees that if this Agreement is terminated
pursuant to:
(i) Section 8.01(b) and (x) such
termination is the result of a wilful breach
of any representation, warranty, covenant or
agreement of ANGC contained herein, (y) ANGC
shall have had contacts or entered into
negotiations relating to a Competing
Transaction, in any such case at any time
within the period commencing on the date of
this Agreement through the date of
termination of this Agreement, and (z) within
twelve months after the date of termination
of this Agreement, and with respect to any
person or group with whom the contacts or
negotiations referred to in clause (y) have
occurred, a Business Combination (as defined
in Section 8.05(e)) shall have occurred or
ANGC shall have entered into a definitive
agreement providing for a Business
Combination; or
(ii) Section 8.01(f) because this
Agreement and the Merger shall fail to
receive the requisite vote for approval and
adoption by the stockholders of ANGC at the
ANGC Stockholders Meeting and at the time of
such meeting there shall exist a Competing
Transaction; or
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(iii) Section 8.01(h)(i) and at the time
of the withdrawal, modification or change (or
resolution to do so) of its recommendation by
the Board of Directors of ANGC, there shall
exist a Competing Transaction; or
(iv) Sections 8.01(h)(ii) or (iii); or
(v) Section 8.01(i);
then ANGC shall pay to PEC an amount equal to $20,000,000, which
amount is inclusive of all of PEC's Expenses.
(d) Any payment required to be made pursuant to Section
8.05(c) of this Agreement shall be made as promptly as practicable but
not later than three business days after termination of this
Agreement, and shall be made by wire transfer of immediately available
funds to an account designated by PEC, except that any payment to be
made as the result of an event described in Section 8.05(c)(i) shall
be made as promptly as practicable but not later than three business
days after the occurrence of the Business Combination or the execution
of the definitive agreement providing for a Business Combination.
(e) For purposes of this Section 8.05, the term "Business
Combination" means (i) a merger, consolidation, share exchange,
business combination or similar transaction involving ANGC, (ii) a
sale, lease, exchange, transfer or other disposition of 20% or more of
the assets of ANGC and its subsidiaries, taken as a whole, in a single
transaction or a series of transactions, or (iii) the acquisition, by
a person (other than PEC or any affiliate thereof) or group (as such
term is defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) of beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of 20% or more of the ANGC Common
Stock whether by tender or exchange offer or otherwise.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 9.01(b) of this
Agreement, the representations, warranties and agreements of each
party hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any other
party hereto, any person controlling any such party or any of their
officers, directors, representatives or agents, whether prior to or
after the execution of this Agreement.
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(b) The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Article VIII, except that
the agreements set forth in Articles I and II and IX and Sections 6.08
and 6.11 shall survive the Effective Time and those set forth in
Sections 5.04 (d), 8.02 and 8.05 and Article IX hereof shall survive
termination. Nothing herein shall be construed to cause the
Confidentiality Agreement to terminate upon the termination of this
Agreement pursuant to Article VIII.
SECTION 9.02. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses ( or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to the
telecopier number specified below:
(a) If to any of the PEC Companies, to:
Panhandle Eastern Corporation
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
Attention: General Counsel
Telecopier No.: (713) 627-4691
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: Bruce R. Bilger
Telecopier No.: (713) 758-2346
(b) If to ANGC, to:
Associated Natural Gas Corporation
370 17th Street, Suite 900
Denver, Colorado 80202
Attention: General Counsel
Telecopier No.: (303) 595-0480
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with a copy to:
Holme Roberts & Owen LLC
1700 Lincoln
Suite 4100
Denver, Colorado 80203
Attention: Joseph W. Morrisey, Jr.
Telecopier No.: (303) 866-0200
SECTION 9.03. Certain Definitions. For the purposes of this
Agreement, the term:
(a) "affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
person;
(b) a person shall be deemed a "beneficial owner" of or
to have "beneficial ownership" of ANGC Common Stock or PEC Common
Stock, as the case may be, in accordance with the interpretation of
the term "beneficial ownership" as defined in Rule 13d-3 under the
Exchange Act, as in effect on the date hereof; provided that a person
shall be deemed to be the beneficial owner of, and to have beneficial
ownership of, ANGC Common Stock or PEC Common Stock, as the case may
be, that such person or any affiliate of such person has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise.
(c) "business day" means any day other than a day on
which banks in the State of New York are authorized or obligated to be
closed;
(d) "control" (including the terms "controlled,"
"controlled by" and "under common control with") means the possession,
directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a
person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "knowledge" or "known" shall mean, with respect to
any matter in question, if an executive officer of ANGC or PEC, as the
case may be, has actual knowledge of such matter;
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(f) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d) of the Exchange Act);
(g) "Significant Subsidiary" means any subsidiary of ANGC
or PEC, as the case may be, that would constitute a Significant
Subsidiary of such party within the meaning of Rule 1-02 of Regulation
S-X of the SEC;
(h) "subsidiary" or "subsidiaries" of ANGC, PEC, the
Surviving Corporation or any other person, means any corporation,
partnership, joint venture or other legal entity of which ANGC, PEC,
the Surviving Corporation or any such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity
interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity;
(i) "Tax" or "Taxes" shall mean any and all taxes,
charges, fees, levies, assessments, duties or other amounts payable to
any federal, state, local or foreign taxing authority or agency,
including, without limitation, (x) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, utility,
severance, excise, stamp, windfall profits, transfer and gains taxes,
(y) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (z) interest, penalties and additions to
tax imposed with respect thereto; and
(j) "PEC Preferred Stock Purchase Rights" shall mean
those preferred stock purchase rights issued or issuable pursuant to
that certain Rights Agreement, dated as of March 11, 1986, between PEC
and Continental Stock Transfer & Trust Company, as successor Rights
Agent to Texas Commerce Bank National Association, as successor to
First City National Bank of Houston.
SECTION 9.04. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Section references herein are, unless the
context otherwise requires, references to sections of this Agreement.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term
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or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 9.06. Entire Agreement. This Agreement (together with the
Exhibits, the ANGC Disclosure Schedule and the PEC Disclosure Schedule), the
Confidentiality Agreement and the PEC Option Agreement constitute the entire
agreement of the parties, and supersede all prior agreements and undertakings,
both written and oral, among the parties or between any of them, with respect
to the subject matter hereof. ANGC agrees that nothing contained in this
Agreement, the PEC Option Agreement, the proxies granted by certain officers
and directors of ANGC to PEC on or about the date hereof or the transactions
contemplated hereby or thereby shall be deemed to violate the Confidentiality
Agreement, and that such agreements and proxies have been entered into or
granted with the prior written consent of ANGC.
SECTION 9.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.08. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than as contemplated by Section 6.08 and
Section 6.11), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. Specific Performance. The parties hereby acknowledge
and agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
SECTION 9.10. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
to, and not exclusive of, any rights or remedies otherwise available.
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SECTION 9.11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of law.
SECTION 9.12. Counterparts. This Agreement may be executed in
multiple counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
PANHANDLE EASTERN CORPORATION
By: /s/ Paul M. Anderson
President
PANHANDLE ACQUISITION TWO, INC.
By: /s/ Paul M. Anderson
President
ASSOCIATED NATURAL GAS CORPORATION
By: /s/ Donald H. Anderson
President
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EXHIBIT A
ANGC AFFILIATE'S AGREEMENT
Panhandle Eastern Corporation
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be
an "affiliate" of Associated Natural Gas Corporation, a Delaware corporation
("ANGC"), as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Panhandle Eastern Corporation, a
Delaware corporation ("PEC"), Panhandle Acquisition Two, Inc., a Delaware
corporation and a wholly owned subsidiary of PEC ("Merger Sub"), and ANGC dated
as of October 9, 1994 (the "Merger Agreement"), providing for, among other
things, the merger of Merger Sub with and into ANGC (the "Merger"), I will be
entitled to receive shares of common stock, par value $1.00 per share, of PEC
("PEC Common Stock"), in exchange for shares of common stock, par value $.05
per share, of ANGC ("ANGC Common Stock") owned by me at the Effective Time (as
defined in the Merger Agreement) of the Merger as determined pursuant to the
Merger Agreement.
I further understand that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the SEC has issued certain
guidelines that should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, PEC's reliance on
this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, I hereby represent, warrant and agree that (i) I will not
make any sale, transfer or other disposition of ANGC Common Stock owned by me
during the period commencing 30 days before the Effective Time and ending at
the earlier of the Effective Time and the termination of the
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Merger Agreement, and (ii) I will not make any sale, transfer or other
disposition of PEC Common Stock owned by me after the Effective Time until such
time as financial statements that include at least 30 days of combined
operations of ANGC and PEC after the Merger shall have been publicly reported,
unless I shall have delivered to PEC prior to any such sale, transfer or other
disposition, a written opinion from KPMG Peat Marwick, independent public
accountants for PEC, or a written no-action letter from the accounting staff of
the SEC, in either case in form and substance reasonably satisfactory to PEC,
to the effect that such sale, transfer or other disposition will not cause the
Merger not to be treated as a "pooling of interests" for financial accounting
purposes in accordance with generally accepted accounting principles and the
rules, regulations and interpretations of the SEC and (iii) I will not make any
sale, transfer or other disposition of any shares of PEC Common Stock received
by me pursuant to the Merger in violation of the Securities Act or the Rules
and Regulations. I have been advised that the issuance of the shares of PEC
Common Stock pursuant to the Merger will have been registered with the SEC
under the Securities Act on a Registration Statement on Form S-4. However, I
have also been advised, and I agree, that since I may be deemed to be an
affiliate of ANGC at the time the Merger is submitted for a vote of the
stockholders of ANGC, the PEC Common Stock received by me pursuant to the
Merger can be sold by me only (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and
other limitations of Rule 145 promulgated by the SEC under the Securities Act,
or (iii) in reliance upon an exemption from registration that is available
under the Securities Act.
I also understand and agree that stop transfer instructions will be
given to PEC's transfer agent with respect to the PEC Common Stock to be
received by me pursuant to the Merger and that there will be placed on the
certificates representing such shares of PEC Common Stock, or any substitutions
therefor, a legend stating in substance as follows:
"These shares were issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. These shares
may only be transferred in accordance with the terms of such Rule and
an Affiliate's Agreement between the original holder of such shares
and Panhandle Eastern Corporation, a copy of which agreement is on
file at the principal offices of Panhandle Eastern Corporation."
It is understood and agreed that the legend set forth above shall be removed
upon surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if I shall have delivered to PEC an opinion of
counsel, in form and substance reasonably satisfactory to PEC, to the effect
that (i) the sale or disposition of the shares represented by the surrendered
certificates may be effected without registration of the offering, sale and
delivery of such shares under the Securities Act, and (ii) the shares to be so
transferred may be publicly offered, sold and delivered by the transferee
thereof without compliance with the registration provisions of the Securities
Act.
By its execution hereof, PEC agrees that it will, as long as I own any
PEC Common Stock to be received by me pursuant to the Merger which remains
subject to Rule 145 under the Securities Act, take all reasonable efforts to
make timely filings with the SEC of all reports
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required to be filed by it pursuant to the Securities Exchange Act of 1934, as
amended, and will promptly furnish upon written request of the undersigned a
written statement confirming that such reports have been so timely filed.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By: _____________________________
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 1994
Panhandle Eastern Corporation
By __________________________________
Name:
Title:
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<PAGE> 70
EXHIBIT B
PEC AFFILIATE'S AGREEMENT
Panhandle Eastern Corporation
5400 Westheimer Court
Houston, Texas 77251
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be
an "affiliate" of Panhandle Eastern Corporation, a Delaware corporation
("PEC"), as that term is defined in Rule 1-02 of Regulation S-X of the Rules
and Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC").
I understand that, pursuant to the terms and subject to the conditions
of that certain Agreement and Plan of Merger dated as of October 9, 1994 (the
"Merger Agreement") by and among PEC, Panhandle Acquisition Two, Inc., a
Delaware corporation and a wholly owned subsidiary of PEC ("Merger Sub"), and
Associated Natural Gas Corporation, a Delaware corporation ("ANGC"), Merger Sub
will be merged with and into ANGC (the "Merger") at the Effective Time ( as
defined in the Merger Agreement).
I further understand that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the SEC has issued certain
guidelines that should be followed to ensure the pooling of the entities.
In consideration of the agreements contained herein, PEC's reliance on
this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, I hereby represent, warrant and agree that (i) I will not
make any sale, transfer or other disposition of PEC Common Stock (as defined in
the Merger Agreement) owned by me during the period commencing 30 days before
the Effective Time and ending at the earlier of the Effective Time and the
termination of the Merger Agreement, and (ii) I will not make any sale,
transfer or other disposition of PEC Common Stock owned by me after the
Effective Time until such time as financial statements that include at least 30
days of combined operations of ANGC and PEC after the Merger shall have been
publicly reported, unless I shall have delivered to PEC prior to any such
sale, transfer or other disposition, a written opinion from KPMG Peat Marwick,
independent public accountants for PEC, or a written no-action letter from the
accounting staff of the SEC, in either case in form and substance reasonably
satisfactory to PEC, to the effect that such sale, transfer or other
disposition will not cause the Merger not to be treated as a
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"pooling of interests" for financial accounting purposes in accordance with
generally accepted accounting principles and the rules, regulations and
interpretations of the SEC.
Very truly yours,
By: ______________________________
Name:
Title:
Date:
Address:
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<PAGE> 1
EXHIBIT 99.2
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") dated as of October 9, 1994,
is by and between Panhandle Eastern Corporation, a Delaware corporation
("PEC"), and Associated Natural Gas Corporation, a Delaware corporation
("ANGC").
WHEREAS, on even date herewith, PEC, Panhandle Acquisition Two, Inc.,
a Delaware corporation and a wholly owned subsidiary of PEC ("Merger Sub"), and
ANGC propose to enter into that certain Agreement and Plan of Merger (the
"Merger Agreement") providing for, among other things, the merger of Merger
Sub with and into ANGC, with the result that ANGC will become a wholly-owned
subsidiary of PEC; and
WHEREAS, as a condition to the willingness of PEC and Merger Sub to
enter into the Merger Agreement, PEC has required that ANGC agree, and in order
to induce PEC and Merger Sub to enter into the Merger Agreement, ANGC has
agreed, to grant to PEC an option to purchase 3,007,948 shares of common
stock, $.05 par value, of ANGC ("ANGC Common Stock") upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Grant of Option. ANGC hereby grants to PEC an
irrevocable option (the "Option") to purchase up to 3,007,948 shares of ANGC
Common Stock (the "Option Shares") for the Exercise Price (as hereinafter
defined), which Option shall be exercisable in whole or in part at any time and
from time to time after the occurrence of a Trigger Event (as hereinafter
defined) and prior to the Expiration Date (as hereinafter defined). As used
herein, the term "Exercise Price" shall mean $39.00 per share; provided,
however, if as of the Exercise Date the Closing Price (as defined below) is
more than $3.50 in excess of the Exercise Price, then the Exercise Price shall
be increased to an amount equal to the Closing Price less $3.50. As used
herein, the term "Expiration Date" shall mean the earlier to occur of (i) the
Effective Time (as defined in the Merger Agreement); or (ii) 5:00 p.m.,
Houston time, on the date which is 90 days following the occurrence of a
Trigger Event. A "Trigger Event" shall occur for purposes of this Agreement
upon the occurrence of any event or circumstance which, pursuant to the terms
of Section 8.05(c) of the Merger Agreement, entitles PEC to the payment by ANGC
of the amount specified therein, as such section may be subsequently amended or
modified by the parties to the Merger Agreement. As used herein, the term
"Closing Price" as of any date means the average of the closing prices (or, if
ANGC Common Stock should not trade on any trading day, the average of the bid
and asked prices therefor on such day) , regular way, per share of ANGC Common
Stock as reported on the New York Stock Exchange Composite Tape during the
five consecutive trading days ending on (and including) the trading day
immediately prior to such date (or, if the ANGC Common Stock is not then traded
on the New York Stock Exchange, on such
1
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other exchange or quotation system on which ANGC Common Stock is then traded).
Section 2. Method of Exercise. The Option may be exercised in whole
or in part by the holder hereof giving written notice to ANGC (the "Exercise
Notice") specifying (i) that it is exercising the Option, (ii) the number of
Option Shares for which it is exercising the Option, and (iii) a place and
date for the closing of such exercise (the "Closing"); it being expressly
understood and agreed that unless otherwise agreed by the parties hereto, any
Closing shall occur not sooner than three (3) business days but not later than
ten (10) business days following the Exercise Date (as hereinafter defined);
provided, however, that the date of such Closing may be extended, if required,
to the next business day following the later to occur of (1) the date that any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") with respect to the purchase of the Option Shares
by the holder shall have expired or been earlier terminated and (2) the date
that all other necessary governmental approvals for the purchase of the Option
Shares by the holder shall have been obtained. As used herein, the term
"Exercise Date" shall mean the date on which the Exercise Notice is given by
the holder of the Option in accordance with the provisions of this Section 2.
Section 3. Deliveries at Closing. At any Closing (i) the holder of
the Option shall deliver to ANGC funds in the amount of the aggregate
Exercise Price with respect to the Option Shares for which the Option has been
exercised, which funds shall be payable, at the election of PEC, either by wire
transfer of immediately available funds, or by a certified or bank check or
checks, payable to the order of ANGC, and (ii) ANGC will deliver to such holder
a certificate or certificates representing the aggregate number of Option
Shares being purchased by the holder of the Option, in proper form for
transfer, which certificate or certificates may be legended as described in
Section 5 hereof.
Section 4. Representations and Warranties .
4.1 ANGC. ANGC hereby represents and warrants to PEC as follows:
ANGC has full power and authority to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby;
the execution and delivery of this Agreement by ANGC and the consummation by
ANGC of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of ANGC, and no other corporate
proceedings on the part of ANGC are necessary to authorize this Agreement or to
consummate such transactions; this Agreement has been duly and validly
executed and delivered by ANGC and, assuming the due authorization, execution
and delivery hereof by PEC, constitutes the legal, valid and binding obligation
of ANGC, enforceable against ANGC in accordance with its terms; the Option
Shares have been duly authorized and reserved for issuance by ANGC and, upon
issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable; neither the execution or delivery of
this Agreement nor the performance by ANGC of its obligations hereunder will
2
<PAGE> 3
(A) conflict with or result in a breach, default or violation of any
agreement, proxy, document, instrument, judgment, decree, order, governmental
permit, certificate, license, law, statute, rule or regulation to which ANGC is
a party or to which it is subject, (B) result in the creation of any lien,
charge, or other encumbrance on the Option Shares (except for the encumbrance
created by this Agreement) or (C) require ANGC to obtain the consent of any
private nongovernmental third party; except as contemplated by this Agreement,
no consent, action, approval or authorization of, or registration, declaration
or filing with, any governmental department, commission, agency or other
instrumentality or any other person is required to authorize, or is otherwise
required in connection with, ANGC's execution and delivery of this Agreement or
performance of the terms of this Agreement or the validity or enforceability of
this Agreement.
4.2 PEC. PEC hereby represents and warrants to ANGC as follows:
PEC has full power and authority to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby;
the execution and delivery of this Agreement by PEC and the consummation by PEC
of the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of PEC, and no other corporate proceedings on the
part of PEC are necessary to authorize this Agreement or to consummate such
transactions; this Agreement has been duly and validly executed and delivered
by PEC and, assuming the due authorization, execution and delivery hereof by
ANGC, constitutes the legal, valid and binding obligation of PEC, enforceable
against PEC in accordance with its terms; neither the execution or delivery of
this Agreement nor the performance by PEC of its obligations hereunder will (A)
conflict with or result in a breach, default or violation of any agreement,
proxy, document, instrument, judgment, decree, order, governmental permit,
certificate, license, law, statute, rule or regulation to which PEC is a party
or to which it is subject, or (B) require PEC to obtain the consent of any
private nongovernmental third party; except as contemplated by this
Agreement, no consent, action, approval or authorization of, or registration,
declaration or filing with, any governmental department, commission, agency or
other instrumentality or any other person is required to authorize, or is
otherwise required in connection with, PEC's execution and delivery of this
Agreement or performance of the terms of this Agreement or the validity or
enforceability of this Agreement (other than any required filing of a
Statement on Schedule 13D caused by the existence and terms of this Agreement).
Section 5. Certain Securities Laws Matters. Any Option Shares
acquired by PEC upon exercise of the Option will be acquired for its own
account and not with a view to the sale or distribution thereof within the
meaning of the Securities Act of 1933, as amended (the "1933 Act"). PEC has
received copies of, or its officers and directors have had an opportunity to
examine, all reports filed by ANGC pursuant to Sections 12, 13 or 14 of the
Exchange Act in the preceding twelve months and PEC's employees, officers and
directors have had an opportunity to ask questions concerning the Option Shares
and business and financial affairs of ANGC, and to receive answers concerning
the same, from representatives of ANGC. The officers and directors of PEC have
such knowledge and experience in
3
<PAGE> 4
business and financial matters as to be capable of utilizing the information
which is available to them to evaluate the merits and risks of an investment by
PEC in the Option Shares and PEC is able to bear the economic risks of any
investment in the Option Shares which PEC may acquire upon exercise of the
Option. PEC covenants and agrees that it will not sell, offer to sell or
solicit offers to buy any such securities in violation of the 1933 Act or the
blue sky or securities laws of any state and consents to the placing of the
following restrictive legend on any stock certificate(s) issued to PEC pursuant
to this Agreement:
The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or
the blue sky law of any state. Transfer or sale of such
shares shall not be made until (i) the issuer has been
furnished with an opinion of counsel for the registered owner
of these shares, reasonably satisfactory to counsel for the
issuer, that such transfer or sale will not violate the
Securities Act of 1933, as amended, or applicable securities
laws of any state or (ii) such transfer or sale shall have
been registered and qualified pursuant to the Securities Act
of 1933, as amended, and any applicable state securities laws.
PEC also hereby consents and agrees to the placing of stop transfer
instructions against any subsequent transfer(s) of the Option Shares.
Section 6. Registration Covenants. Upon the request of PEC at any
time and from time to time after any Closing hereunder, ANGC agrees (i) to
effect, as promptly as practicable, up to three registrations under the 1933
Act covering all or any part (as may be requested by PEC) of the Option Shares,
and to use its best efforts to qualify such Option Shares under any applicable
state securities laws and (ii) to include all or any part (as may be requested
by PEC) of the Option Shares in any registration statement for ANGC Common
Stock filed by ANGC under the 1933 Act in which such inclusion is permitted
under applicable rules and regulations, and to use its best efforts to keep
each such registrations described in clauses (i) and (ii) effective for a
period of not less than nine months. If the managing underwriter of a proposed
offering of securities by ANGC shall advise ANGC in writing that, in the
reasonable opinion of such managing underwriter, the distribution of the Option
Shares requested by PEC pursuant to clause (ii) above to be included in a
registration statement concurrently with securities being registered for sale
by ANGC would adversely affect the distribution of such securities by ANGC,
then ANGC shall either (x) include such Option Shares in the registration
statement, but PEC shall agree to delay the offering and sale for such period
of time as the managing underwriter may reasonably request (provided that PEC
may at any time withdraw its request to include Option Shares in such offering)
or (y) include such portion of the Option Shares in the registration statement
as the managing underwriter advises may be so included for sale simultaneously
with sales by ANGC. The registrations effected under this Section 6 shall be
effected at ANGC's expense except for underwriting commissions allocable to the
Option Shares and the fees and disbursements of PEC's counsel. ANGC shall
indemnify and hold
4
<PAGE> 5
harmless PEC, its affiliates and controlling persons and their respective
officers, directors, agents and representatives from and against any and all
losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses, investigation expenses, expenses
incurred with respect to any judgments and fees and disbursements of counsel
and accountants) arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement (and related
prospectuses) filed pursuant to this Section 6; provided, however, that ANGC
shall not be liable in any such case to PEC or any affiliate or controlling
person of PEC or any of their respective officers, directors, agents or
representatives to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or omission or alleged omission made in such
registration statement or prospectus in reliance upon, and in conformity with,
written information furnished to ANGC with respect to it specifically for use
in the preparation thereof by PEC, such affiliate, controlling person, officer,
director, agent or representative, as the case may be. ANGC shall use its best
efforts to cause the Option Shares to be approved for listing on the New York
Stock Exchange, subject to official notice of issuance, as promptly as
practicable following the date of this Agreement, and will provide prompt
notice to the New York Stock Exchange of the issuance of such shares.
Section 7. Additional Covenants.
7.1 Necessary Consents and Approvals. PEC and ANGC hereby covenant
and agree to prepare and file with the appropriate authorities any Notification
and Report Forms required pursuant to the provisions of the HSR Act, together
with any and all attachments and documents to be delivered in conjunction
therewith, and to prepare and file such documents as may be necessary to obtain
the consent or approval of or to give notice to any other governmental agency
required for the exercise of the Option and shall each cooperate fully with
such authorities in order to obtain any applicable approvals.
7.2 Additional Documents. PEC and ANGC hereby covenant and agree to
execute and deliver any additional documents necessary or desirable, in the
opinion of ANGC or PEC, as the case may be, to complete the sale and transfer
of all or any portion of the Option Shares with respect to which the Option is
exercised or the assignment of PEC's rights and obligations hereunder pursuant
to the terms hereof. ANGC will use it best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereunder.
Section 8. Miscellaneous.
8.1 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and
5
<PAGE> 6
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to either party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
8.2 Expenses. Except as otherwise provided herein, PEC, on the one
hand, and ANGC, on the other hand, shall each bear their respective expenses in
connection with the preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
8.3 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. This Agreement
is not assignable by ANGC. PEC may assign its rights hereunder as to all or
any part of the Option to any person or persons without the prior consent of
ANGC; provided, however, that no such assignment shall be made in violation of
Federal or state securities laws. Each such assignee shall have all the rights
and be subject to all of the obligations of PEC hereunder with respect to such
assigned portions hereof and this Agreement shall be binding upon such
assignee. Any such assignment shall be subject to the assignee making the
representations to and agreements with ANGC contained in Section 5 hereof.
Each of PEC and any assignee of PEC hereunder shall be deemed to be a holder
of the Option pursuant to the terms of this Agreement.
8.4 Waiver and Amendment. Any provision of this Agreement may be
waived in writing at any time by the party that is entitled to the benefits
thereof. This Agreement may not be amended or supplemented at any time, except
upon the execution and delivery of an instrument in writing signed on behalf of
each party hereto.
8.5 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that PEC will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
ANGC set forth herein. Therefore, it is agreed that, in addition to any other
remedies which may be available to any holder of the Option upon any such
violation, any holder of the Option shall have the right to enforce such
covenants and agreements by specific performance, injunctive relief or by an
other means available to such holder at law or in equity. ANGC agrees to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such injunction or other equitable relief. This
provision is without prejudice to any other rights that any holder of the
Option may have against ANGC for any failure to perform its obligations under
this Agreement.
6
<PAGE> 7
8.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by delivery in person, by
telecopy or by registered or certified mail, postage prepaid, return receipt
requested, to the respective parties as follows:
If to ANGC: Associated Natural Gas Corporation
370 17th Street, Suite 900
Denver, Colorado 80202
Attention: General Counsel
Telecopier No.: (303) 595-0480
If to PEC: Panhandle Eastern Corporation
5400 Westheimer Court
P.O. Box 1642
Houston, Texas 77251-1642
Attention: General Counsel
Telecopier No.: (713) 627-4691
or to such other address or telecopier number as any party may have furnished
to the other in writing in accordance herewith, except that notices of change
of address shall only be effective upon receipt. Notice given by telecopier
shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered
three days after the date the same is postmarked.
8.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
8.8 Entire Agreement. This Agreement and the Merger Agreement (a)
constitute the entire agreement, and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and (b) does not confer upon any person not a party
hereto (other than an assignee pursuant to the provisions hereof or as
contemplated by Section 6) any rights or remedies hereunder.
8.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
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<PAGE> 8
8.10 Headings. The section and subsection headings herein are for
convenience only and shall not affect the construction hereof.
8.11 Option Shares. The Option Shares subject to this Agreement are
shares of ANGC Common Stock as currently constituted. If after the date hereof
there is any stock dividend, split-up, recapitalization, combination, merger
(other than with PEC or any of its affiliates), exchange of shares, sale of
material assets or similar transaction or any other change in the corporate or
capital structure of ANGC (including, without limitation, the declaration or
payment of an extraordinary dividend or cash, securities or property), the
type and number of shares or securities or property to be received by the
holder upon exercise of the Option shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
such holder will receive upon exercise of the Option the number and class of
shares or other securities or property which it would have received in respect
of ANGC Common Stock if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable, and elected to the fullest
extent it would have been permitted to elect, to receive such securities, cash
or property. The provisions of this Agreement, including without limitation
Sections 1, 2, 6 and this subsection 8.11, shall apply with appropriate
adjustments to any securities for which the Option becomes exercisable pursuant
to this subsection 8.11.
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the date first above written.
ASSOCIATED NATURAL GAS CORPORATION
By: /s/ Donald H. Anderson
Name: Donald H. Anderson
Title: President
PANHANDLE EASTERN CORPORATION
By: /s/ Paul M. Anderson
Name: Paul M. Anderson
Title: President
<PAGE> 1
EXHIBIT 99.3
IRREVOCABLE PROXY
This irrevocable proxy (this "Proxy") is granted as of October 9,
1994.
WHEREAS, pursuant to an Agreement and Plan of Merger dated of even
date herewith (the "Merger Agreement") among Panhandle Eastern Corporation, a
Delaware corporation ("PEC"), Panhandle Acquisition Two, Inc., a Delaware
corporation and wholly-owned subsidiary of PEC ("Merger Sub"), and Associated
Natural Gas Corporation, a Delaware corporation ("ANGC"), providing for the
merger of Merger Sub with and into ANGC (as defined in the Merger Agreement,
the "Merger"), ANGC will become a wholly-owned subsidiary of PEC and the shares
of common stock, $.05 par value per share, of ANGC ("ANGC Common Stock") held
by the undersigned as of the Effective Time (as defined in the Merger
Agreement) of the Merger will be converted into the right to receive shares of
common stock, $1.00 par value, of PEC ("PEC Common Stock"); and
WHEREAS, to induce PEC and Merger Sub to enter the Merger Agreement
and at the request of PEC, the undersigned has agreed to appoint and
irrevocably grant a proxy to PEC with respect to all ANGC Common Stock
beneficially owned by the undersigned on the date hereof and all voting
securities of ANGC acquired from time to time by the undersigned after the date
hereof (such ANGC Common Stock and securities being referred to herein as the
"Covered Shares");
NOW THEREFORE, in consideration of the foregoing, the undersigned
hereby agrees as follows:
1. Grant of Proxy. The undersigned hereby revokes all prior
proxies with respect to the Covered Shares and appoints PEC, acting through any
of its designated officers, as the undersigned's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of the
undersigned, to vote (or, at its discretion, execute a written consent with
respect to) all the Covered Shares (i) in favor of the Merger and adoption of
the Merger Agreement, and (ii) against any business combination proposal or
other matter that may interfere or be inconsistent with the Merger or the
Merger Agreement (including, without limitation, a Competing Transaction, as
defined in the Merger Agreement), at any meeting of stockholders of ANGC (or
consent in lieu thereof) and any adjournment or adjournments thereof.
2. Representations and Warranties. The undersigned hereby
represents and warrants to PEC as follows: the undersigned has full power and
authority to grant this Proxy, and neither the execution or delivery of this
Proxy nor the performance of his obligations hereunder will (A) conflict with
or result in a breach, default or violation of any agreement, proxy, document,
instrument, judgment, decree, order, governmental permit, certificate, license,
law, statute, rule or regulation to which he is a party or to which he is
subject, (B) result in the creation of any lien, charge or other encumbrance on
any Covered Shares (except for any encumbrance created by this Proxy) or (C)
require him to obtain the consent of any private nongovernmental third party.
The undersigned further represents and warrants to PEC that (i)
<PAGE> 2
as of the date hereof, he is the sole record and beneficial owner of the number
of Covered Shares set forth opposite his name below, free and clear of any
lien, charge, proxy (other than this Proxy) or other encumbrance, and that such
Covered Shares constitute all of the voting securities of ANGC owned
beneficially or of record by the undersigned, and (ii) except as expressly
provided in this Proxy, no consent, action, approval or authorization of, or
registration, declaration or filing with, any governmental department,
commission, agency or other instrumentality or any other person or entity is
required to authorize, or is otherwise required in connection with, the
execution and delivery of this Proxy or his performance of the terms of this
Proxy or the validity or enforceability of this Proxy (other than any required
amendment to any Statement on Schedule 13D of the undersigned caused by the
existence and terms of this Proxy).
3. Proxy Irrevocable. The undersigned agrees and acknowledges
that, as a stockholder of ANGC, he will receive substantial consideration in
connection with the Merger, and that this Proxy is given in consideration of,
and as an inducement to, the execution of the Merger Agreement by PEC and PEC
Sub, and THAT THE PROXY GRANTED HEREBY IS AND SHALL BE DEEMED TO BE COUPLED
WITH AN INTEREST AND IS NOT REVOCABLE, and shall not be terminated (other than
in accordance with Section 5 hereof) by any act of the undersigned or by
operation of law, whether by the death or incapacity of the undersigned or by
the occurrence of any other event or events whatsoever. The undersigned
further agrees that he will not grant any proxy or proxies inconsistent with
this Proxy. If requested by PEC, the undersigned agrees that he will enter
into a voting agreement or similar arrangement with PEC or its designee
relating to the Covered Shares, which agreement or arrangement will commit the
undersigned to vote the Covered Shares as specified in Section 1 hereof and
will contain substantially similare representations, restrictions on transfer
or disposition and termination provisions as this Proxy.
4. Transferability of Covered Shares. The undersigned will not
sell or otherwise transfer or dispose of any of the Covered Shares unless the
following conditions are met:
(a) prior written notice of this Proxy is given to the transferee;
(b) the transferee agrees that the shares transferred will remain
subject to this Proxy and, in connection therewith, executes
and delivers to PEC a proxy covering such shares in form and
substance satisfactory to PEC, which proxy shall be in
substantially the form of this Proxy; and
(c) such transfer is made in compliance with the terms of the ANGC
Affiliate's Agreement executed by the undersigned on the date
hereof as required by the Merger Agreement.
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<PAGE> 3
5. Termination of Proxy. This Proxy shall terminate
automatically on the earliest to occur of (i) the Effective Time, (ii)
termination of the Merger Agreement pursuant to Section 8.01 thereof and (iii)
June 30, 1995.
6. Miscellaneous. The undersigned understands and agrees that
PEC is relying on this Proxy and may enforce its terms against the undersigned,
and that irreparable damage would occur in the event of breach of any provision
of the Proxy. The undersigned agrees that, in the event of any such breach,
PEC shall be entitled to specific performance of the terms hereof, in addition
to any other remedies that may be available at law or in equity. This Proxy
shall be governed by, and construed in accordance with, the laws of the State
of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law.
3
<PAGE> 4
IN WITNESS WHEREOF, the undersigned has executed this Proxy as of the
date first set forth above.
Number of Covered Shares: __________ ____________________________
Signature
____________________________
Printed Name
4
<PAGE> 1
EXHIBIT 99.4
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT (this "Agreement"), entered into and
made effective as of the 8th day of September, 1994, is by and between
Panhandle Eastern Corporation ("Panhandle") and Associated Natural Gas
Corporation ("ANGI").
W I T N E S S E T H:
WHEREAS, the parties hereto intend to enter into confidential
discussions and may enter into negotiations with regard to the acquisition or
combination of certain stock or assets of Panhandle and/or ANGI (the "Proposed
Transaction");
WHEREAS, it will be necessary for the parties or their Affiliates (as
defined in paragraph 12) to release certain confidential information to each
other for the sole purpose of enabling the parties to evaluate their interest
in entering into the Proposed Transaction; and
WHEREAS, the parties have entered into this Agreement in order to
assure the confidentiality of all such information and to prevent the
disclosure of same to third parties except as permitted herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein, and with the intent to be legally bound hereby, Panhandle and ANGI
agree as follows:
1. Confidential Information. The term "Confidential Information"
as used in this Agreement shall mean any and all information provided by either
party or its Affiliates to the other or ascertained through due diligence
investigation or discussions between employees or representatives of the
parties or their Affiliates; such Confidential Information shall include but
not be limited to, all marketing, technical, engineering, operational,
economic, financial or legal knowledge, information or data of any nature
whatsoever relating to the future, present or past business, operations, plans
or assets of either Panhandle or ANGI, including any Affiliates of either
party, which is disclosed (either directly or indirectly through their
representatives) by Panhandle or ANGI or their Affiliates to the other in
connection with the Proposed Transaction; provided, however that Confidential
Information shall not include the following:
(a) information which at the time of disclosure by a
party or its Affiliate (the "Disclosing Party") is in
the public domain, or information which later becomes
part of the public domain through no act or omission
of the recipient (the "Receiving Party");
(b) information which the Receiving Party can demonstrate
was legally in its possession prior to disclosure by
the Disclosing Party;
<PAGE> 2
(c) information received by the Receiving Party from a
third party who did not acquire such information on a
confidential basis either directly or indirectly from
the Disclosing Party.
The term "Confidential Information" shall also include the fact that this
Agreement has been entered into and that the parties are considering a Proposed
Transaction.
2. Disclosure and Use of Confidential Information. The parties
agree to keep confidential all Confidential Information, and shall not, without
the other party's prior written consent, disclose to any third party, firm,
corporation or entity such Confidential Information. The parties shall limit
the disclosure of the Confidential Information to only those officers,
employees and agents (including attorneys, accountants, investment bankers and
similar consultants) of the party or its Affiliates reasonably necessary to
evaluate the Proposed Transaction. To the extent that any such persons are not
employees of the party or its Affiliate, the party shall obtain a signed
writing evidencing the acceptance by such persons of the terms of this
Agreement. Each party shall use the Confidential Information only for the
purpose of its internal evaluation of the Proposed Transaction. Neither party
shall make any other use, in whole or in part, of any such Confidential
Information without the prior written consent of the other.
3. Required Disclosure. In the event that either Panhandle, ANGI
or any of their Affiliates (as the case may be) are requested or required by
questions, interrogatories, requests for information or documents, subpoena,
civil investigation, demand or similar process (1) to disclose any Confidential
information of the other or (2) to disclose the possibility of any Proposed
Transaction or the discussions pertaining thereto, it will provide prompt
notice of such potential disclosure so that an appropriate protective order may
be sought or a waiver of compliance with the provisions of this Agreement may
be granted. If, in the absence of a protective order or the receipt of a
waiver hereunder, Panhandle, ANGI or any of their Affiliates (as the case may
be) are nonetheless, in the written opinion of their respective counsel,
legally required to disclose Confidential Information of the other, then in
such event Panhandle, ANGI or the Affiliate (as the case may be) may disclose
such information without liability hereunder, provided that the other party has
been given a reasonable opportunity to review the text of such disclosure
before it is made.
4. Return of Documents. Upon termination of the confidential
discussions contemplated hereunder, Panhandle and ANGI shall destroy any and
all Confidential Information as well as any other information disclosed to it
by the other party, including all originals, copies, translations, or any other
form of said material.
5. Standstill. Without the prior written consent of the other
party, neither Panhandle nor ANGI, nor any of their Affiliates, nor any
officer, director, employee or agent (including attorneys, accountants,
investment bankers or similar consultants; provided that such agents shall not
be subject to the obligations of this Section to the extent they do not use
Confidential Information in an activity otherwise prohibited by this Section)
of
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<PAGE> 3
Panhandle or ANGI who receive or are provided access to Confidential
Information, shall, for a period of two years after the date of this Agreement
(i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by
purchase or otherwise, any voting securities or direct or indirect rights or
options to acquire any voting securities of the other party, (ii) make, or in
any way participate, directly or indirectly, in any "solicitation" of any
"proxy" to vote (as such terms are used in the proxy rules of the Securities
and Exchange Commission) or seek to advise or influence any person or entity
with respect to the voting of any voting securities of the other party, (iii)
form, join or in any way participate, directly or indirectly, in a "group"
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended with respect to any voting securities of the other party, or (iv)
otherwise act, alone or in concert with others, directly or indirectly, to seek
control of the management, board of directors, or policies of the other party.
6. Non-Solicitation of Employees/Customers. Absent a change in
control of either party, or without the prior written consent of the other
party, neither ANGI nor Panhandle, nor any of their Affiliates shall have any
discussions, correspondence, or other contact with any officer, director,
employee or security holder of the other party, except contacts in the ordinary
course of business unrelated to the Proposed Transaction, except as otherwise
provided herein. Any such consent granted by the other party is revocable at
any time. Absent a change in control of either party, for a period of two
years after the date of this Agreement, neither Panhandle nor ANGI, nor any of
their Affiliates, shall directly or indirectly solicit for employment any
person while he or she is employed by the other party in any executive level or
technical position, nor shall either party use any Confidential Information in
order to solicit or interfere with, or endeavor to entice away from the other
or its Affiliates any of their respective suppliers or customers.
7. Access to Confidential Information. It is understood that
neither party shall be obligated to disclose any information pursuant to this
Agreement. With respect to any information or documents that are disclosed, it
is agreed that either ANGI or Panhandle may elect at any time to terminate
further access to, and the other party's review of, the Confidential
Information. In such event, all documents previously provided by the
Disclosing Party shall be destroyed in the manner specified in Section 4 above.
8. Indemnity. In the event representatives of either party are
permitted by the Disclosing Party at any time to visit any of the business or
project sites of the Disclosing Party, the other party agrees to indemnify and
save the Disclosing Party harmless from and against any and all claims and
liabilities, including costs and expenses for loss, injury to or death of any
such person, and any loss, damage to or destruction of any property owned by
the Disclosing Party or its Affiliates (including claims or liabilities for
loss of use of any property) resulting directly or indirectly from the
negligence or misconduct of any of the other party's representatives during any
such visit.
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9. Survival of Obligations. The obligations and commitments
established by this Agreement shall remain in full force and effect for two
years from the date of this Agreement unless the parties have entered into an
agreement providing otherwise.
10. Nature of Information. Panhandle and ANGI each hereby accepts
the representations of the other party that the other party's Confidential
Information is of a special, unique, unusual, extraordinary, and intellectual
character, and may contain or be comprised of lists of suppliers, customer
lists and other information of competitive value. Panhandle and ANGI each
acknowledges that the other party's interests in such Confidential Information
may be irreparably injured by disclosure of such Confidential Information, and
agree not to use any of the Confidential Information to gain competitive
advantage over the other party or any of its Affiliates. Panhandle and ANGI
each acknowledges and agrees that money damages would not be a sufficient
remedy for any breach of this Agreement by it and that in addition to all other
remedies the other party shall be entitled to specific performance and
injunctive or other equitable relief as a remedy for any such breach and each
further agrees to waive any requirement for the securing or posting of any bond
in connection with such remedy.
11. Governing Law. The validity and interpretation of this
Agreement and the legal relations of the parties to it shall be governed by the
laws of the State of Delaware. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is unreasonable
because of its term or scope, or for any other reason, Panhandle and ANGI agree
that such court may reform such provision so that it is reasonable under the
circumstances and that such provision, as reformed, shall be enforceable.
12. Affiliate. The term "Affiliate" shall mean any corporation,
partnership, or other entity or association that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, Panhandle or ANGI (as the case may be).
13. No Other Agreement. It is expressly understood that this
Agreement is not and shall not be construed as any obligation or form of a
letter of intent or agreement to enter into the Proposed Transaction. The
approval and execution of any and all agreements with respect to the Proposed
Transaction shall be subject to each party's sole discretion and satisfaction,
which may be withheld for any reason. Neither party may rely on this Agreement
or the negotiations or the exchange of Confidential Information or other
documentation between the parties as a commitment to enter into binding
definitive agreements.
14. No Representations or Warrants. With respect to any
information, including but not limited to Confidential Information, which
either party furnishes or otherwise discloses to the other party for the
purpose of evaluating any Proposed Transaction, it is understood and agreed
that the party disclosing such information does not make any representations or
warranties, express or implied, as to the accuracy, completeness or fitness
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for a particular purpose thereof (except as otherwise specifically provided).
It is further understood and agreed that neither party nor their
representatives or Affiliates shall have any liability or responsibility to the
other party or to any other person or entity whatsoever on any basis (including
without limitation, in contract, tort, under federal or state securities laws,
or otherwise) resulting from the use of any information so furnished or
otherwise provided. To the extent that the Confidential Information contains
summaries, evaluations, analyses, conclusions, or other interpretive materials,
the receiving party agrees that it will not rely thereon and that independent
verification of the Confidential Information should be made by such party.
Only those specific representations and warranties made in a definitive
agreement that may be prepared to effect the Proposed Transaction, when, as and
if the same is executed, and subject to such limitations and restrictions as
may be specified in such definitive agreement, including, without limitation,
limitations on survival, shall have legal effect.
15. Modifications and Waiver. The provisions of this Agreement
may be modified or waived only by a separate writing signed by Panhandle and
ANGI expressly so modifying or waiving the same. No failure or delay by
Panhandle or ANGI in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any partial exercise thereof preclude
any other or further exercise thereof or of any other right, power or
privilege.
16. Affiliates Bound. Each of Panhandle or ANGI agrees to cause
its Affiliates, and any of its officers, directors, employees and agents who
receive or are provided access to Confidential Information, to be bound hereby
as if each were a party to this Agreement.
17. Severability. If any provision of this Agreement is declared
void, or otherwise unenforceable, such provision shall be deemed to have been
severed from this Agreement, which shall otherwise remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement on the day and year first herein above written.
ASSOCIATED NATURAL GAS CORPORATION
By: /s/ Donald H. Anderson
Name: Donald H. Anderson
Title: President
PANHANDLE EASTERN CORPORATION
By: /s/ Paul M. Anderson
Name: Paul M. Anderson
Title: President
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