UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 14, 1998
SOUTHWEST GAS CORPORATION
(Exact name of registrant as specified in its charter)
California 1-7850 88-0085720
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
5241 Spring Mountain Road
Post Office Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 876-7237<PAGE>
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ITEM 5. OTHER EVENTS
On December 14, 1998, the Board of Directors of Southwest Gas Corporation
(Southwest), headquartered in Las Vegas, Nevada, and ONEOK, Inc.,
headquartered in Tulsa, Oklahoma, approved an agreement and plan of merger
which provides for the merger of Southwest into ONEOK. ONEOK has offered to
purchase all of the outstanding shares of Southwest common stock for cash of
$28.50 per share. The agreement and plan of merger are included herein.
ITEM 7. EXHIBITS
2 Agreement and Plan of Merger by and among ONEOK, Inc., Oasis Acquisition
Corporation, and Southwest Gas Corporation dated as of December 14, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHWEST GAS CORPORATION
Date: December 16, 1998 /s/ EDWARD A. JANOV
-----------------------------------
Edward A. Janov
Vice President/Controller and
Chief Accounting Officer
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Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and among
ONEOK, INC.,
OASIS ACQUISITION CORPORATION
and
SOUTHWEST GAS CORPORATION
dated as of
December 14, 1998
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TABLE OF CONTENTS
ARTICLE I
THE MERGERS
Page
Section 1.1 The Mergers. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time of the Mergers. . . . . . . . . . . . . . . 2
Section 1.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Certificate of Incorporation; By-laws. . . . . . . . . . . 2
Section 1.5 Directors and Officers . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Effect of the First Merger . . . . . . . . . . . . . . . . 3
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . 4
Section 2.3 Dissenter's Rights . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Company Option Plans . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Effect of the Second Merger. . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization and Qualification . . . . . . . . . . . . . . 6
Section 3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Authority; Non-Contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Reports and Financial Statements . . . . . . . . . . . . . 10
Section 3.6 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities. . . . . . . . . . . . . . . . . . 10
Section 3.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.8 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . 11
Section 3.9 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.10 Employee Matters; ERISA. . . . . . . . . . . . . . . . . . 14
Section 3.11 Environmental. . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.12 Regulation as a Utility. . . . . . . . . . . . . . . . . . 18
Section 3.13 Vote Required. . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.14 Opinion of Financial Advisor . . . . . . . . . . . . . . . 18
Section 3.15 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.17 Company Rights Agreement . . . . . . . . . . . . . . . . . 19
Section 3.18 Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.19 Hedging. . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 3.20 Regulatory Proceedings . . . . . . . . . . . . . . . . . . 19
Section 3.21 Title to Properties. . . . . . . . . . . . . . . . . . . . 19
Section 3.22 Condition of Assets. . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . 20
Section 4.2 Authority; Non-Contravention; Statutory Approvals;
Compliance . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.3 Information in Proxy Statement . . . . . . . . . . . . . . 21
Section 4.4 No Prior Activities. . . . . . . . . . . . . . . . . . . . 21
Section 4.5 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.6 1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.7 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 22
Section 4.8 Consulting, Employment and Assumption Agreements . . . . . 22
Section 4.9 Tax Opinion. . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 5.1 Conduct of Business of the Company . . . . . . . . . . . . 22
Section 5.2 No Shopping. . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access to Information. . . . . . . . . . . . . . . . . . . 28
Section 6.2 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . 28
Section 6.3 Regulatory Approvals and Other Matters . . . . . . . . . . 29
Section 6.4 Shareholder Approval . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Directors' and Officers' Indemnification . . . . . . . . . 30
Section 6.6 Disclosure Schedules . . . . . . . . . . . . . . . . . . . 31
Section 6.7 Public Announcements . . . . . . . . . . . . . . . . . . . 31
Section 6.8 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 31
Section 6.9 Company Stock and Incentive Plans. . . . . . . . . . . . . 33
Section 6.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.11 Advisory Board . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.12 Notification . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.13 Las Vegas Office . . . . . . . . . . . . . . . . . . . . . 34
Section 6.14 Additional Statutory Approvals . . . . . . . . . . . . . . 34
Section 6.15 Further Assurances . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.2 Conditions to Obligation of Parent to Effect the Mergers . 35
Section 7.3 Conditions to Obligation of the Company to Effect the
Mergers. . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . 39
Section 8.3 Termination Fee; Expenses. . . . . . . . . . . . . . . . . 39
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties, Covenants
and Agreements. . . . . . . . . . . . . . . . . . . . . . 39
Section 9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.3 Certain Definitions. . . . . . . . . . . . . . . . . . . . 42
Section 9.4 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.6 Counterparts; Effect . . . . . . . . . . . . . . . . . . . 42
Section 9.7 Parties in Interest. . . . . . . . . . . . . . . . . . . . 42
Section 9.8 Waiver of Jury Trial and Certain Damages . . . . . . . . . 43
Section 9.9 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.10 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.11 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.12 No Remedy in Certain Circumstances . . . . . . . . . . . . 43
Section 9.13 Further Assurances . . . . . . . . . . . . . . . . . . . . 44
Annex A Articles of Incorporation of the Company, as the surviving corporation
- ------- in the First Merger
Annex B By-laws of the Company, as the surviving corporation in the First
- ------- Merger
Disclosure Schedules:
- --------------------
Company Disclosure Schedule
Parent Disclosure Schedule
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GLOSSARY OF TERMS
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 31
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 10
Company Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 7
Company Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Company Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company Preference Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Company Required Statutory Approvals . . . . . . . . . . . . . . . . . . . . 9
Company Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Company Shareholders' Approval . . . . . . . . . . . . . . . . . . . . . . . 18
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DOJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Time of the First Merger . . . . . . . . . . . . . . . . . . . . . 2
Effective Time of the Second Merger . . . . . . . . . . . . . . . . . . . . . 2
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
First Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
First Merger Surviving Corporation Common Stock . . . . . . . . . . . . . . . 3
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Foreign Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Initial Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . 37
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Letter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merrill Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
MIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
OGCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 31
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . 21
Parent Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Parent Required Statutory Approvals . . . . . . . . . . . . . . . . . . . . . 21
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PCBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Power Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Second Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Southwest Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 14, 1998, by and
among ONEOK, Inc., an Oklahoma corporation ("Parent"), Oasis Acquisition
Corporation, a California corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and Southwest Gas Corporation, a California corporation (the
"Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each approved, and deem it advisable and in the best interests of
their respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, the respective Boards of Directors
of Parent, Merger Sub and the Company have approved this Agreement and the
merger of Merger Sub with and into the Company, with the Company being the
surviving corporation (the "First Merger"), and the merger of the Company, as
the surviving corporation in the First Merger, with and into Parent, with
Parent being the surviving corporation (the "Second Merger," and together with
the First Merger, the "Mergers");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 THE MERGERS. Upon the terms and subject to the
conditions of this Agreement:
(a) At the Effective Time of the First Merger (as defined in
Section 1.2), Merger Sub will be merged with and into the Company in
accordance with the laws of the State of California. The Company will be the
surviving corporation in the First Merger and will continue its corporate
existence under the laws of the State of California. The First Merger will
have the effect as provided in the applicable provisions of the California
General Corporation Law ("CGCL"). Without limiting the generality of the
foregoing, upon the First Merger, all the rights, privileges, immunities,
powers and franchises of the Company and Merger Sub will vest in the Company,
as the surviving corporation in the First Merger, and all obligations, duties,
debts and liabilities of the Company and Merger Sub shall be the obligations,
duties, debts and liabilities of the Company, as the surviving corporation in
the First Merger. Throughout this Agreement, the term the "Company" refers to
the Company prior to the First Merger or to the Company as the surviving
corporation in the First Merger, as the context requires.
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(b) At the Effective Time of the Second Merger (as defined in
Section 1.2), the Company, as the surviving corporation in the First Merger,
will be merged with and into Parent in accordance with the laws of the States
of Oklahoma and California. Parent will be the surviving corporation in the
Second Merger (the "Surviving Corporation") and will continue its corporate
existence under the laws of the State of Oklahoma. The Second Merger will
have the effect as provided in the applicable provisions of the Oklahoma
General Corporation Act ("OGCA") and the CGCL. Without limiting the
generality of the foregoing, upon the Second Merger, all the rights,
privileges, immunities, powers and franchises of the Company and Parent will
vest in the Surviving Corporation and all obligations, duties, debts and
liabilities of the Company and Parent will be the obligations, duties, debts
and liabilities of the Surviving Corporation.
Section 1.2 EFFECTIVE TIME OF THE MERGERS. On the Closing Date
(as defined in Section 1.3), with respect to the First Merger, this Agreement
and duly executed officers' certificates will be filed with the Secretary of
State of the State of California in accordance with the CGCL with respect to
the First Merger. The First Merger will become effective upon filing this
Agreement and the officers' certificates (the "Effective Time of the First
Merger"). On the Closing Date, with respect to the Second Merger, a
certificate of ownership and merger complying with the requirements of the
OGCA will be executed and filed with the Secretary of State of the State of
Oklahoma and this Agreement and a duly executed certificate of ownership
complying with the requirements of the CGCL will be filed with the Secretary
of State of the State of California. The Second Merger will become effective
upon filing the certificate of ownership and merger and this Agreement and the
certificate of ownership (the "Effective Time of the Second Merger").
Throughout this Agreement, "Effective Time" means the Effective Time of the
First Merger or the Effective Time of the Second Merger, together or as
applicable. The First Merger will occur immediately prior to the Second
Merger.
Section 1.3 Closing. Unless this Agreement has been terminated
and the transactions contemplated herein have been abandoned pursuant to
Article VIII hereof, the closing of the Mergers (the "Closing") will take
place at 10:00 a.m., Central time, on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction or waiver of all of the conditions set forth in Article VII
hereof, at the offices of Parent, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.4 Certificate of Incorporation; By-laws. Pursuant to
the Mergers, (a) (i) the Articles of Incorporation of the Company, as the
surviving corporation in the First Merger, shall read as set forth in Annex A
hereto, until thereafter amended as provided by law and such Articles of
Incorporation and (ii) the By-laws of the Company, as the surviving
corporation in the First Merger, shall read as set forth in Annex B hereto,
until thereafter amended as provided by law, the Articles of Incorporation of
the Company, as the surviving corporation in the First Merger, and such By-
laws and (b) (i) the Certificate of Incorporation of Parent, as in effect
immediately prior to the Effective Time of the Second Merger, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation and (ii) the
By-laws of Parent, as in effect immediately prior to the Effective Time of the
Second Merger, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-laws.
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Section 1.5 Directors and Officers.
(a) The directors and officers of Merger Sub immediately prior to
the Effective Time of the First Merger will be the directors and officers of
the Company, as the surviving corporation in the First Merger, each to hold
office in accordance with the Articles of Incorporation and By-laws of the
Company, as the surviving corporation in the First Merger.
(b) The directors and officers of Parent immediately prior to the
Effective Time of the Second Merger will be the directors and officers of the
Surviving Corporation, each to hold office in accordance with the Certificate
of Incorporation and By-laws of the Surviving Corporation; provided that,
after the Effective Time of the Second Merger, the Surviving Corporation will,
following the Effective Time of the Second Merger, elect to the Board of
Directors of the Surviving Corporation three individuals to be selected by
Parent from the Board of Directors of the Company immediately prior to the
Effective Time of the First Merger.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Effect of the First Merger. As of the Effective Time
of the First Merger, by virtue of the First Merger and without any action on
the part of the holders of any shares of common stock, par value $1.00 per
share, of the Company (referred to herein as "Shares" or "Company Common
Stock") or of common stock, no par value per share, of Merger Sub ("Merger Sub
Common Stock"):
(a) Each issued and outstanding share of Company Common Stock
(other than Dissenting Shares (as defined in Section 2.3) covered by Section
2.3) and each associated stock purchase right (the "Company Rights") issued
pursuant to the Rights Agreement, dated as of March 5, 1996, as amended,
between the Company and Harris Trust Company, as Rights Agent (the "Company
Rights Agreement"), which will be terminated at the Effective Time of the
First Merger (references herein to Company Common Stock or Shares will be
deemed to include the associated Company Rights), will be converted into the
right to receive $28.50 per share in cash, payable to the holder thereof,
without interest (the "Merger Consideration"), upon surrender of the
certificate formerly representing such share of Company Common Stock in the
manner provided in Section 2.2. All such shares of Company Common Stock, when
so converted, shall no longer be outstanding and shall be canceled and
automatically converted into the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section
2.2. Any payment made pursuant to this Section 2.1(a) shall be made net of
applicable withholding taxes to the extent such withholding is required by
law.
(b) Each issued and outstanding share of Merger Sub Common Stock
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $1.00 per share, of the Company, as the surviving
corporation in the First Merger ("First Merger Surviving Corporation Common
Stock").
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Section 2.2 Exchange of Certificates.
(a) Parent's registrar and transfer agent, or such other bank or
trust company as may be selected by Parent, will act as paying agent ("Paying
Agent") for the holders of Shares in connection with the First Merger,
pursuant to an agreement providing for the matters set forth in this Section
2.2 and such other matters as may be appropriate and the terms of which shall
be reasonably satisfactory to Parent and the Company, to receive the funds to
which holders of Shares become entitled pursuant to Section 2.1(a). Following
the Effective Time, Parent will deposit in trust with the Paying Agent for the
benefit of holders of Company Common Stock the funds necessary to pay the
aggregate Merger Consideration as contemplated by Section 2.1(a) with respect
to shares of Company Common Stock.
(b) At the Effective Time of the First Merger, Parent will instruct
the Paying Agent to promptly, and in any event not later than three business
days following the Effective Time of the First Merger, mail (and to make
available for collection by hand) to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time of the First
Merger represented outstanding shares of Company Common Stock (the
"Certificates"), whose Shares were converted pursuant to Section 2.1(a) into
the right to receive the Merger Consideration (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
to the Paying Agent and shall be in such form and have such other provisions
as Parent may reasonably specify) and (ii) instructions (which shall provide
that at the election of the surrendering holder Certificates may be
surrendered, and payment therefor collected, by hand delivery) for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each share of Company Common Stock formerly represented by
such Certificate, to be mailed (or made available for collection by hand if so
elected by the surrendering holder) within three business days of receipt
thereof, and the Certificate so surrendered shall forthwith be canceled. If
payment of the Merger Consideration is to be made to a Person other than the
Person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the Person
requesting such payment shall have paid any transfer and other taxes required
by reason of the payment of the Merger Consideration to a Person other than
the registered holder of the Certificate surrendered or shall have established
to the satisfaction of the Company, as the surviving corporation in the First
Merger, or the Surviving Corporation that such tax either has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate (other than Certificates representing Company Common Stock held by
Parent or Merger Sub, or any subsidiary of Parent or Merger Sub, or Dissenting
Shares) shall be deemed at any time after the Effective Time of the First
Merger to represent only the right to receive the Merger Consideration in cash
as contemplated by this Section 2.2.
(c) The Paying Agent shall invest the funds, as directed by Parent,
in (i) direct obligations of the United States of America, (ii) obligations
for which the full faith and credit of the United States of America is pledged
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to provide for the payment of principal and interest or (iii) commercial paper
rated the highest quality by either Moody's Investors Services, Inc. or
Standard & Poor's Corporation. Any net earnings with respect to such funds
shall be the property of and paid over to Parent as and when requested by
Parent; provided, however, that any such investment or any such payment of
earnings may not delay the receipt by holders of Certificates of the Merger
Consideration.
(d) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Article II, provided that the Person to whom the Merger Consideration is
paid shall, as a condition precedent to the payment thereof, give the Company
or the Surviving Corporation, as the case may be, a bond in such sum as it may
direct or otherwise indemnify the Company or the Surviving Corporation, as the
case may be, in a manner satisfactory to it against any claim that may be made
against the Company or the Surviving Corporation, as the case may be, with
respect to the Certificate claimed to have been lost, stolen or destroyed.
(e) After the Effective Time of the First Merger, the stock
transfer books of the Company shall be closed and there shall be no transfers
on the stock transfer books of the Company, as the surviving corporation in
the First Merger, or the Surviving Corporation of Shares that were outstanding
immediately prior to the Effective Time of the First Merger. If, after the
Effective Time of the First Merger, Certificates are presented to the Company,
as the surviving corporation in the First Merger, or the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
as provided in this Article II.
(f) Any portion of the funds held by the Paying Agent that remain
undistributed to the former shareholders of the Company for one year after the
Effective Time shall be delivered by the Paying Agent to the Surviving
Corporation, which shall thereafter act as the Paying Agent, and any former
shareholders of the Company who have not complied with this Article II prior
to one year after the Effective Time shall thereafter look only as a general
creditor to the Surviving Corporation for payment of their claim for the
Merger Consideration.
(g) The Surviving Corporation shall not be liable to any holder of
Company Common Stock for Merger Consideration delivered to a public official
pursuant to any applicable abandonment, escheat or similar law. Any amounts
remaining unclaimed by holders of any such shares six years after the
Effective Time (or such earlier date immediately prior to the time at which
such amounts would otherwise escheat to or become property of any Governmental
Authority) shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of any claims or
interests of any such holders or their successors, assigns or personal
representatives previously entitled thereto.
Section 2.3 Dissenter's Rights. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time of the First Merger and constituting "dissenting shares" (as
defined in Section 1300 of CGCL) ("Dissenting Shares"), shall not be converted
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into the right to receive the Merger Consideration, as provided in Section
2.1(a) hereof, unless and until such holder fails to perfect or effectively
withdraws or otherwise loses his right to appraisal and payment under the
CGCL. If, after the Effective Time of the First Merger, any such holder fails
to perfect or effectively withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as
of the Effective Time of the First Merger into the right to receive the Merger
Consideration to which such holder is entitled, without interest or dividends
thereon. The Company shall give Parent prompt notice of any demands received
by the Company for appraisal of Shares, and, prior to the Effective Time of
the First Merger, Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time of the First Merger, the Company shall not, except with the
prior written consent of Parent, make any payment with respect to or offer to
settle, any such demands.
Section 2.4 Company Option Plans.
(a) The Company shall take all actions necessary to provide that,
upon the Effective Time, each then outstanding option to purchase shares of
Company Common Stock or other similar interest (collectively, the "Company
Options"), granted under any of the Company's stock option plans or under any
other plan or arrangement (the "Company Option Plans"), whether or not then
exercisable or vested, all of which, together with the applicable exercise
prices, are disclosed in Section 3.10 of the Company Disclosure Schedule (or
as otherwise permitted from and after the date of this Agreement pursuant to
Section 5.1(c) or (i)), shall be adjusted such that, upon exercise of a
Company Option, the holder of such Company Option would be entitled to receive
only an amount in respect thereof equal to the product of (i) the excess, if
any, of the Merger Consideration over the per share exercise price thereof and
(ii) the number of shares of Company Common Stock subject thereto (such
payment to be net of applicable withholding taxes).
(b) The Company Option Plans will terminate as of the Effective
Time of the Second Merger in accordance with the terms thereof.
Section 2.5 Effect of the Second Merger. As of the Effective
Time of the Second Merger, by virtue of the Second Merger, each share of First
Merger Surviving Corporation Common Stock will automatically be canceled and
retired and will cease to exist, and no consideration will be delivered in
exchange therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 3.1 Organization and Qualification. Each of the Company
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders of the California Public Utilities Commission, the Arizona
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Corporations Commission, the Public Utilities Commission of Nevada and
the Federal Energy Regulatory Commission (the "FERC"), to own, lease and
operate its assets and 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 its business or the ownership or
leasing of its assets and properties makes such qualification necessary
("Foreign Qualifications") other than in such jurisdictions where the failure
to be so qualified and in good standing would not, when taken together with
all other such failures, reasonably be expected to have a material adverse
effect on the business, assets, properties (including intangible properties),
condition (financial or otherwise), results of operations, prospects,
liabilities or regulatory status of the Company and its subsidiaries taken as
a whole or on the consummation of this Agreement and the transactions
contemplated hereby (any such material adverse effect being hereinafter
referred to as a "Company Material Adverse Effect"). As used in this
Agreement, the term "subsidiary" of a Person (as defined in Section 9.3) shall
mean any corporation or other entity (including partnerships, limited
liability entities and other business associations and joint ventures) in
which such Person directly or indirectly owns at least a majority of the
outstanding voting securities, equity, partnership interests, membership
interests or the like. True, accurate and complete copies of the articles of
incorporation and by-laws of the Company, as in effect on the date hereof,
have been delivered to Parent.
Section 3.2 Subsidiaries. Section 3.2 of the Company Disclosure
Schedule (as defined in Section 6.6) sets forth the name of each subsidiary
and joint venture of the Company, the state or jurisdiction of its
incorporation or formation, the states of any Foreign Qualifications and the
Company's interest therein. None of such entities is a "public utility
company," a "holding company," a "subsidiary company" or an "affiliate" of any
public utility company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8)
or 2(a)(11), respectively, of the Public Utility Holding Company Act of 1935,
as amended (the "1935 Act"). Except as set forth in Section 3.2 of the
Company Disclosure Schedule, all of the issued and outstanding shares of
capital stock or other securities of, or interests in, each subsidiary or
joint venture of the Company are validly issued, fully paid, nonassessable and
free of preemptive rights, are owned directly or indirectly by the Company
free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever, and there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies
or other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating any such subsidiary to
issue, transfer or sell, or cause to be issued, transferred or sold, any
shares of its capital stock or other equity interest or securities convertible
into or exchangeable for such shares or equity interests or obligating it to
grant, extend or enter into any such agreement or commitment. As used in this
Agreement, the term "joint venture" of a Person shall mean any corporation or
other entity (including partnerships and other business associations and joint
ventures) in which such Person or one or more of its subsidiaries owns an
equity interest that is less than a majority of any class of the outstanding
voting securities or equity, other than equity interests held for passive
investment purposes that are less than 5% of any class of the outstanding
voting securities or equity of any such entity. Except as set forth in
Section 3.2 of the Company Disclosure Schedule, true, accurate and complete
copies of the articles of incorporation, by-laws or similar governing
documents of each subsidiary and joint venture of the Company, as in effect on
the date hereof, have been delivered to Parent.
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Section 3.3 Capitalization. The authorized capital stock of the
Company consists of 45,000,000 shares of Company Common Stock, 5,000,000
shares of preferred stock, no par value per share ("Company Preferred Stock"),
and 2,000,000 shares of preference stock, par value $20 per share ("Company
Preference Stock"). As of the close of business on December 11, 1998,
30,389,128 shares of Company Common Stock and no shares of Company Preferred
Stock or Company Preference Stock were issued and outstanding. All of the
issued and outstanding shares of the capital stock of the Company are validly
issued, fully paid, nonassessable and free of preemptive rights. Except as
set forth in Section 3.3 of the Company Disclosure Schedule, there are no
(a) outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement obligating the Company or
any of its subsidiaries to issue, transfer or sell, or cause to be issued,
transferred or sold, any shares of capital stock or other equity interest in,
the Company or any of its subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligating the Company or
any of its subsidiaries to grant, extend or enter into any such agreement or
commitment, (b) contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any capital stock of
the Company or any subsidiary of the Company or (c) voting trusts or similar
agreements to which the Company or any of its subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
subsidiaries.
Section 3.4 Authority; Non-Contravention; Statutory Approvals;
Compliance.
(a) Authority. The Company has all requisite power and authority
to enter into this Agreement, and, subject to the applicable Company
Shareholders' Approval (as defined in Section 3.13) and the Company Required
Statutory Approvals (as defined in subsection (c) of this Section 3.4), to
consummate the transactions contemplated hereby, including, without
limitation, the Mergers. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company,
subject to obtaining the Company Shareholders' Approval. This Agreement has
been duly and validly executed and delivered by the Company, and assuming the
due authorization, execution and delivery hereof by Parent and Merger Sub,
constitutes the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally and by general principles of equity.
(b) Non-Contravention. The execution and delivery of this
Agreement by the Company does not, and the consummation of the transactions
contemplated hereby, including, without limitation, the Mergers, will not,
violate or result in a breach of any provision of, or constitute a default
(with or without notice or lapse of time or both) under, or result in the
termination or modification of, or accelerate the performance required by, or
result in a right of termination, cancellation, or acceleration of any
obligation or the loss of a material benefit under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets (any such violation, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, a
"Violation") of the Company or any of its subsidiaries or joint ventures
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pursuant to any provisions of (i) the Articles of Incorporation, By-laws or
similar governing documents of the Company or any of its subsidiaries or joint
ventures, (ii) subject to obtaining the Company Required Statutory Approvals
and the receipt of the Company Shareholders' Approvals, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority (as hereinafter defined) applicable
to the Company or any of its subsidiaries or joint ventures or any of their
respective properties or assets or (iii) subject to obtaining the third-party
consents or other approvals set forth in Section 3.4(b) of the Company
Disclosure Schedule (the "Company Required Consents") and the Company Required
Statutory Approvals (as defined in clause (c) below), any easement or other
similar right to use or access real property, note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which the Company or
any of its subsidiaries or any joint venture of the Company is now a party or
by which it or any of its properties or assets may be bound or affected,
excluding from the foregoing clauses (ii) and (iii) such Violations that would
not, in the aggregate, reasonably be expected to have a Company Material
Adverse Effect.
(c) Statutory Approvals. Except as described in Section 3.4(c) of
the Company Disclosure Schedule, no declaration, filing or registration with,
or notice to or authorization, consent or approval of, any court, governmental
or regulatory body (including a stock exchange or other self-regulatory body)
or authority, federal, state, local or foreign (each, a "Governmental
Authority"), is required to be obtained, made or given by or on behalf of the
Company for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
including, without limitation, the Mergers, the failure of which to obtain,
make or give would have, in the aggregate, a Company Material Adverse Effect
(the "Company Required Statutory Approvals", it being understood that
references in this Agreement to "obtaining" such Company Required Statutory
Approvals shall mean making such declarations, filings or registrations;
giving such notices; obtaining such authorizations, consents or approvals; and
having such waiting periods expire as are necessary to avoid a violation of
law).
(d) Compliance. Except as set forth in Section 3.4(d) or
Section 3.7 of the Company Disclosure Schedule or as disclosed in the Company
SEC Reports (as defined in Section 3.5), neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any joint ventures of the
Company, is in violation of or, to the knowledge of the Company, is under
investigation with respect to, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgments (including, without limitation, applicable Environmental Laws, as
hereinafter defined) of any Governmental Authority, except for violations
that, in the aggregate, do not have, and, to the knowledge of the Company,
would not reasonably be expected to have, a Company Material Adverse Effect.
Except as set forth in Section 3.4(d) or Section 3.7 of the Company Disclosure
Schedule, the Company and its subsidiaries and any joint ventures have all
easements or other similar rights to use or access real property, permits,
licenses, franchises and other governmental authorizations, consents and
approvals necessary to conduct their businesses as currently conducted, except
those of which the failure to obtain would not, in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. Except as set forth in
Section 3.4(d) or Section 3.7 of the Company Disclosure Schedule, neither the
Company or any of its subsidiaries nor, to the knowledge of the Company, any
joint venture of the Company is in breach or violation of or in default in the
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performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party or both
(i) would result in a default by the Company or any subsidiary of the Company
or, to the knowledge of the Company, any joint venture of the Company under
its articles of incorporation, by-laws or other governing documents or
(ii) would reasonably be expected to result in a default by the Company or any
subsidiary of the Company or, to the knowledge of the Company, any joint
venture of the Company under any easement or other similar right to use or
access real property, contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval, permit, franchise or
other instrument to which it is a party or by which the Company or any
subsidiary or joint venture of the Company is bound or to which any of its
property is subject, except in the case of clause (ii) for possible
violations, breaches or defaults which individually or in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect.
Section 3.5 Reports and Financial Statements. Since January 1,
1995, the filings required to be made by the Company and its subsidiaries
under the Securities Act of 1933 (the "Securities Act"), the Securities
Exchange Act of 1934 (the "Exchange Act"), applicable state laws and
regulations regulating public utilities or the Federal Power Act (the "Power
Act") have been filed with the Securities and Exchange Commission (the "SEC"),
the California Public Utilities Commission, the Arizona Corporations
Commission, the Public Utilities Commission of Nevada or the FERC, as the case
may be, and complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. The Company
has made available to Parent a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by the
Company with the SEC since January 1, 1995 (as such documents have since the
time of their filing been amended, the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements
of the Company included in the Company SEC Reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except
as may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly present
the financial position of the Company and its subsidiaries as of the dates
thereof and the results of their operations and cash flows for the periods
then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring audit adjustments.
Section 3.6 Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities.
(a) Absence of Changes. Except as set forth in the Company SEC
Reports filed prior to the date of this Agreement or Section 3.6(a) of the
Company Disclosure Schedule, from December 31, 1997, through the date hereof,
(i) each of the Company and its subsidiaries has conducted its business only
in the ordinary course of business consistent with past practice, (ii) there
has not been, and no fact or condition exists which would have or, to the
knowledge of the Company, is reasonably expected to have, a Company Material
Adverse Effect and (iii) the Company and its subsidiaries have not taken
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action that if taken after the date hereof would constitute a violation of
Section 5.1 hereof.
(b) No Undisclosed Liabilities. Neither the Company nor any of its
subsidiaries has any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in a
consolidated corporate balance sheet, except liabilities, obligations or
contingencies that (i) are accrued or reserved against in the Company
Financial Statements or reflected in the notes thereto, (ii) were incurred in
the ordinary course of business, (iii) would not reasonably be expected, in
the aggregate, to have a Company Material Adverse Effect or (iv) are set forth
in Section 3.6(b) of the Company Disclosure Schedule.
Section 3.7 Litigation. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or as set forth in
Section 3.7 of the Company Disclosure Schedule, through the date hereof
(i) there is no claim, suit, action or proceeding pending, or, to the
knowledge of the Company, threatened, or, to the knowledge of the Company, any
investigation or review pending or threatened, relating to or affecting the
Company or any of its subsidiaries or joint ventures and (ii) there is no
judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator applicable
to the Company or any of its subsidiaries that, when taken together with any
of the matters described in clauses (i) or (ii), would reasonably be expected
to have a Company Material Adverse Effect. In addition, except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement or as set
forth in Section 3.7 of the Company Disclosure Schedule, there have not been
any developments since December 31, 1997, with respect to such disclosed
claims, suits, actions, proceedings, investigations or reviews, that, in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect.
Section 3.8 Proxy Statement. None of the information supplied or
to be supplied by or on behalf of the Company in the proxy statement, in
definitive form, relating to the Company Meeting (as defined in Section 6.4)
to be held in connection with the First Merger (the "Proxy Statement") will,
at the date mailed to the Company's shareholders, at any time the Proxy
Statement is amended or supplemented and at the time of the Company Meeting
(giving effect to any documents incorporated by reference therein), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder.
Section 3.9 Tax Matters. "Taxes," as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including all net income, gross income, sales
and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated, stamp, custom
duties, severance or withholding taxes or charges imposed by any governmental
entity, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes and any expenses incurred in connection with the
determination, settlement or litigation of any tax liability. "Tax Return,"
as used in this Agreement, means a report, return or other information
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required to be supplied to a governmental entity with respect to Taxes
including, where permitted or required, combined or consolidated returns for
any group of entities that include the Company or any of its subsidiaries.
(a) Filing of Timely Tax Returns. The Company and each of its
subsidiaries have filed all material Tax Returns required to be filed by each
of them under applicable law. All Tax Returns were in all material respects
(and, as to Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b) Payment of Taxes. The Company and each of its subsidiaries
have, in all material respects, within the time and in the manner prescribed
by law, paid (and until the Closing Date will pay within the time and in the
manner prescribed by law) all material Taxes that are currently due and
payable except for those contested in good faith and for which adequate
reserves have been taken.
(c) Tax Liens. There are no material Tax liens upon the assets of
the Company or any of its subsidiaries except liens for Taxes not yet due.
(d) Withholding Taxes. The Company and each of its subsidiaries
have complied (and until the Closing Date will comply) in all material
respects with the provisions of the Code relating to the payment and
withholding of Taxes, including, without limitation, the withholding and
reporting requirements under Code sub-paragraph 1441 through 1446, 3401 through
3509, and 6041 and 6049, as well as similar provisions under any other laws, and
have, in all material respects, within the time and in the manner prescribed by
law, withheld from employee wages and paid over to the proper governmental
authorities all material amounts required.
(e) Extensions of Time for Filing Tax Returns. Neither the Company
nor any of its subsidiaries has requested any extension of time within which
to file any Tax Return, which Tax Return has not since been filed.
(f) Waivers of Statute of Limitations. Neither the Company nor any
of its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect
to any Taxes or Tax Returns.
(g) Expiration of Statute of Limitations. Except as set forth in
Section 3.9(g) of the Company Disclosure Schedule, the statute of limitations
for the assessment of material Taxes has expired for all applicable Tax
Returns of the Company and each of its subsidiaries or those Tax Returns have
been examined by the appropriate taxing authorities for all periods through
the date hereof, and no deficiency for any material Taxes has been asserted or
assessed against the Company or any of its subsidiaries that has not been
resolved and paid in full.
(h) Audit, Administrative and Court Proceedings. Except as set
forth in Section 3.9(h) of the Company Disclosure Schedule, no audits or other
administrative proceedings or court proceedings are presently in process, and
no material issue raised by the Internal Revenue Service (the "IRS") or a
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state taxing authority in a written notice delivered to the Company remains
unsettled, with regard to any Taxes or Tax Returns of the Company or any of
its subsidiaries.
(i) Powers of Attorney. Except as set forth in Section 3.9(i) of
the Company Disclosure Schedule, no power of attorney currently in force has
been granted by the Company or any of its subsidiaries concerning any Tax
matter.
(j) Tax Rulings. Neither the Company nor any of its subsidiaries
has received a Tax Ruling (as defined below) or entered into a Closing
Agreement (as defined below) with any taxing authority that would reasonably
be expected to result in a Company Material Adverse Effect after the Closing
Date. "Tax Ruling," as used in this Agreement, shall mean a written ruling of
a taxing authority relating to Taxes. "Closing Agreement," as used in this
Agreement, shall mean a written and legally binding agreement with a taxing
authority relating to Taxes.
(k) Availability of Tax Returns. The Company and its subsidiaries
have made available to Parent complete and accurate copies of (i) all material
Tax Returns, and any amendments thereto, filed by the Company or any of its
subsidiaries since January 1, 1990, (ii) all material audit reports received
from any taxing authority relating to any Tax Return filed by the Company or
any of its subsidiaries since January 1, 1990 and (iii) any Closing Agreements
entered into by the Company or any of its subsidiaries with any taxing
authority since January 1, 1990.
(l) Tax Sharing Agreements. Except as disclosed in Section 3.9(l)
of the Company Disclosure Schedule, no agreements relating to allocating or
sharing of Taxes exist between or among the Company and any of its
subsidiaries.
(m) Code sub-paragraph 341(f). Neither the Company nor any of its
subsidiaries has filed (or will file prior to the Closing) a consent pursuant to
Code sub-paragraph 341(f) or has agreed to have Code sub-paragraph 341(f)(2)
apply to any disposition of a subsection (f) asset (as that term is defined in
Code sub-paragraph 341(f)(4)) owned by the Company or any of its subsidiaries.
(n) Code sub-paragraph 168. No material property of the Company or
any of its subsidiaries is property that the Company or any such subsidiary or
any party to this transaction is or will be required to treat as being owned by
another person pursuant to the provisions of Code sub-paragraph 168(f)(8)
(as in effect prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Code sub-paragraph 168.
(o) Code sub-paragraph 481 Adjustments. Except as set forth in
Section 3.9(o) of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries is required to include in income for any period ending after
the date of this Agreement any adjustment pursuant to Code sub-paragraph 481(a)
by reason of a voluntary change in accounting method initiated by the Company or
any of its subsidiaries, and to the best of the knowledge of the Company, the
Internal Revenue Service (the "IRS") has not proposed any such adjustment or
change in accounting method.
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(p) Code sub-paragraphs 6661 and 6662. To the knowledge of the
Company, all transactions that could give rise to a material understatement of
federal income tax (within the meaning of Code sub-paragraph 6661 or Code
sub-paragraph 6662) that would reasonably be expected to result in a Company
Material Adverse Effect have been adequately disclosed (or, with respect to Tax
Returns filed following the Closing will be adequately disclosed) on the Tax
Returns of the Company and its subsidiaries in accordance with Code
sub-paragraph 6661(b)(2)(B) or Code sub-paragraph 6662(d)(2)(B).
(q) Code sub-paragraph 280G. Except as set forth in Section 3.9(q)
of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to any agreement, contract, or arrangement that as a
direct consequence of the transactions contemplated by this Agreement will
result in the obligation for any "excess parachute payments" within the meaning
of Code sub-paragraph 280G.
(r) Code sub-paragraph 162(m). Except as set forth in Section 3.9(r)
of the Company Disclosure Schedule, the Company does not maintain any
compensation plan, program or arrangement the payment under which would not
reasonably be expected to be deductible as a result of the limitations of Code
sub-paragraph 162(m) and the Treasury Regulations issued thereunder.
(s) Liability for Others. Except as set forth in Section 3.9(s) of
the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries has any material liability for Taxes of any person other than the
Company and its subsidiaries under Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or foreign law) as a transferee or
successor, by contract or otherwise.
Section 3.10 Employee Matters; ERISA.
(a) Benefit Plans. Section 3.10(a) of the Company Disclosure
Schedule contains a true and complete list as of the date of this Agreement of
each employee benefit plan, program or arrangement sponsored, maintained or
contributed to by and covering employees, former employees, directors or
former directors of the Company (or any of its subsidiaries or any other
entity which would be treated under Section 414 of the Code as a single
employer with the Company) or any of their dependents or beneficiaries, or
providing benefits to such persons in respect of services provided to any such
entity, or with respect to which any such entity is treated as an employer
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, but not limited to, any employee benefit plans within
the meaning of Section 3(3) of ERISA, any management, employment, deferred
compensation, severance (including any payment, right or benefit resulting
from a change in control), bonus or other contract for personal services with
any current or former officer, director or employee, any consulting contract
with any person who prior to entering into such contract was a director or
officer of the Company or any of its subsidiaries or any plan, agreement,
arrangement or understanding similar to any of the foregoing (collectively,
the "Company Benefit Plans"). Except as set forth in Section 3.10(a) of the
Company Disclosure Schedule, none of the Company Benefit Plans is a
multiemployer plan within the meaning of ERISA.
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(b) Contributions. All contributions and other payments required
to have been made by the Company or any of its subsidiaries (including any
pre- or post-tax contributions or payments by employees or their dependents)
to any Company Benefit Plan (or to any person pursuant to the terms thereof)
on or prior to the date of this Agreement have been so made or the amount of
such payment or contribution obligation has been reflected in the Company
Financial Statements.
(c) Qualification; Compliance. Except as set forth in
Section 3.10(c) of the Company Disclosure Schedule, each of the Company
Benefit Plans that is intended to be "qualified" within the meaning of Code
sub-paragraph 401(a) has received a favorable determination letter from the IRS
and, to the knowledge of the Company, no circumstances exist that are reasonably
expected by the Company to result in the revocation of any such determination.
Except as set forth in Section 3.10(c) of the Company Disclosure Schedule, the
Company is in compliance in all material respects with, and each of the
Company Benefit Plans is or has been operated in compliance in all material
respects with, any applicable law, rule or regulation governing such plan,
including, without limitation, ERISA and the Code. For purposes of this
Section 3.10(c), the term "Company Benefit Plans" shall not include
multiemployer plans within the meaning of ERISA.
(d) Liabilities. Except as set forth in Section 3.10(d) of the
Company Disclosure Schedule, with respect to the Company Benefit Plans,
individually and in the aggregate, no event has occurred, and, to the
knowledge of the Company, there exists no condition or set of circumstances
that could subject the Company or any of its subsidiaries to any liabilities
arising under the Code, ERISA or any other applicable law (including, without
limitation, any liability to any such plan or the Pension Benefit Guaranty
Corporation (the "PBGC")), or under any indemnity agreement to which the
Company is a party, excluding liability for benefit claims and funding
obligations payable in the ordinary course and liability for premiums due to
the PBGC, which liabilities, individually or in the aggregate, would
reasonably be expected to have a Company Material Effect.
(e) Welfare Plans. Except as set forth in Section 3.10(e) of the
Company Disclosure Schedule, none of the Company Benefit Plans that are
"Welfare Plans," within the meaning of Section 3(1) of ERISA, provides for any
retiree benefits, other than elective continuation required pursuant to
Code sub-paragraph 4980B or coverage that expires at the end of the calendar
month following termination of employment.
(f) Documents Made Available. With respect to each Company Benefit
Plan that is not a multiemployer plan within the meaning of ERISA, the Company
has made available to Parent a true and correct copy of (i) such plan and the
most recent summary plan description, (ii) the most recent annual report filed
with the IRS, (iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all amendments to each
such document), (iv) the most recent determination of the IRS with respect to
the qualified status of such plan and (v) the most recent actuarial report or
valuation. The Company shall make available to Parent as soon as practicable
a true and correct copy of each collective bargaining agreement in which the
Company or any of its direct or indirect subsidiaries is a party or under
which the Company has obligations.
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(g) Payments Resulting from Merger. Except as set forth in
Section 3.10(g) of the Company Disclosure Schedule, the consummation,
announcement or other action relating to the transactions contemplated by this
Agreement will not (either alone or upon the occurrence of any additional or
further acts or events) result in any (i) payment (whether of severance pay or
otherwise) becoming due from the Company or any of its subsidiaries to any
officer, employee, former employee, director or former director thereof or to
the trustee under any "rabbi trust" or similar arrangement, or (ii) benefit
under any Company Benefit Plan being established or being accelerated, vested
or payable.
(h) Funded Status of Plans. Except as set forth in Section 3.10(h)
of the Company Disclosure Schedule, the amount equal to the greatest of the
projected benefit obligations, the accumulated benefit obligations or
actuarial accrued liabilities under any Company Benefit Plan that is a "single
employer" plan within the meaning of Section 4001(a)(15) of ERISA did not, as
of the date of the most recent actuarial valuation for such plan, exceed the
then fair market value of the assets of such plan, based on the respective
actuarial assumptions and calculations set forth in such valuation, which
actuarial assumptions and calculations have been provided to Parent prior to
the date of this Agreement, and since the date of such most recent actuarial
valuation, there has been no material adverse change in the funding status of
such Company Benefit Plan.
(i) Certain Other Obligations. Except as set forth in
Section 3.10(i) of the Company Disclosure Schedule, the termination of, or
withdrawal from, any employee pension benefit plan within the meaning of
sub-paragraph 3(2) of ERISA (including any single employer, multiple employer or
multiemployer plan) or subject to Title IV of ERISA by the Company or any
corporation or other entity that is, or at any time was, a subsidiary of the
Company or would be treated under Section 414 of the Code as single employer
with the Company has not, and will not, subject the Company (or any subsidiary
of the Company) to any liability of or to any governmental authority,
corporation or other person or such employee pension plan that individually or
in the aggregate would have a Company Material Adverse Effect.
(j) Modification or Termination of Plans. Except as may be
required by applicable law, neither the Company nor any subsidiary of the
Company is subject to any legal, contractual, equitable or other obligation to
establish or contribute to as of any date any new Company Benefit Plan or
amend any existing Company Benefit Plan.
(k) Labor Agreements. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or as set forth in
Section 3.7 or Section 3.10(k) of the Company Disclosure Schedule:
(i) neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any union or
labor organization; (ii) to the knowledge of the Company, there is no current
union representation question involving employees of the Company or any of its
subsidiaries, nor does the Company or any of its subsidiaries know of any
activity or proceeding of any labor organization or employee group to organize
any such employees; (iii) there is no strike, dispute, slowdown, work stoppage
or lockout pending, or to the knowledge of the Company, threatened, against or
involving the Company or any of its subsidiaries that would reasonably be
expected to have a Company Material Adverse Effect; and (iv) the Company and
each of its subsidiaries are in compliance with all applicable laws respecting
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employment and employment practices, terms and conditions of employment,
wages, hours of work and occupational safety and health, except for non-
compliance which, in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.11 Environmental.
(a) Compliance. Each of the Company and its subsidiaries is in
compliance with all applicable Environmental Laws (as hereinafter defined),
except where the failure to be in compliance would not reasonably be expected
to have a Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any written communication from any person or
Governmental Authority that alleges that the Company or any of its
subsidiaries is not in compliance with applicable Environmental Laws, except
where the failure to be in compliance would not reasonably be expected to have
a Company Material Adverse Effect. To the knowledge of the Company, neither
the Company nor any of its subsidiaries has used any waste disposal site, or
otherwise disposed of, or transported, or arranged for the transportation of,
any Hazardous Materials to any location in violation of any Environmental Law
except where the effect of such violation would not reasonably be expected to
have a Company Material Adverse Effect.
(b) Environmental Permits. Except as set forth in Section 3.4(d)
of the Company Disclosure Schedule, each of the Company and its subsidiaries
has obtained or has applied for all environmental, health and safety permits
and authorizations (collectively, the "Environmental Permits") necessary for
the construction of their facilities or the conduct of their operations, and
all such permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and the
Company is in material compliance with all terms and conditions of the
Environmental Permits, in each case except where the failure to obtain or be
in compliance with such Environmental Permit or the requirement to make any
expenditure in connection with such Environmental Permit would not have a
Company Material Adverse Effect.
(c) Environmental Claims. To the knowledge of the Company, there
is no Environmental Claim (as hereinafter defined) pending (i) against the
Company or any of its subsidiaries or joint ventures, (ii) against any person
or entity whose liability for any Environmental Claim the Company or any of
its subsidiaries or joint ventures has retained or assumed either
contractually or by operation of law or (iii) against any real or personal
property or operations that the Company or any of its subsidiaries or joint
ventures owns, leases or manages, in whole or in part, which, in the case of
clauses (i), (ii) and (iii) would reasonably be expected to have, in the
aggregate, a Company Material Adverse Effect.
(d) Releases. Except as set forth in Section 3.7 of the Company
Disclosure Schedule, the Company has no knowledge of any Releases (as
hereinafter defined) of any Hazardous Material (as hereinafter defined) that
would reasonably be expected to form the basis of any Environmental Claims
against the Company or any subsidiaries or joint ventures of the Company, or
against any person or entity whose liability for any Environmental Claim the
Company or any subsidiaries or joint ventures of the Company has retained or
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assumed either contractually or by operation of law, except for Releases of
Hazardous Materials, the liability for which would not reasonably be expected
to have, in the aggregate, a Company Material Adverse Effect.
(e) Predecessors. The Company has no knowledge, with respect to
any predecessor of the Company or any subsidiary or joint venture of the
Company, of any Environmental Claim pending or threatened, or of any Release
of Hazardous Materials that would reasonably be expected to form the basis of
any Environmental Claim, that would reasonably be expected to have a Company
Material Adverse Effect.
(f) Disclosure. The Company has no knowledge of any material facts
that the Company reasonably believes would form the basis of a Company
Material Adverse Effect arising from (i) the cost of pollution control
equipment currently required or known to be required in the future or
(ii) current remediation costs or remediation costs known to be required in
the future.
(g) As used in this Agreement:
(i) "Environmental Claim" means any and all written
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any person or entity (including any
Governmental Authority) alleging potential liability (including, without
limitation, potential liability for enforcement, investigatory costs,
damages, contribution, indemnification, cost recovery, compensation,
injunctive relief, cleanup costs, governmental resource costs, removal
costs, remedial costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting
from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location operated, leased
or managed by the Company or any subsidiary or joint venture of the
Company or at any other location to which the Company or any subsidiary
or joint venture of the Company sent, Released, disposed of or
transported Hazardous Materials generated, treated, stored or disposed of
by the Company or any subsidiary or joint venture of the Company; or
(B) any violation of any Environmental Law; or (C) any and all claims by
any third party resulting from the presence or release of any Hazardous
Materials.
(ii) "Environmental Laws" means all federal, state, local
laws, rules and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs"); and (b) any chemicals, materials or
substances which are now defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
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"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words, of similar import, under any
Environmental Law; and (c) any other chemical, material, substance or
waste, exposure to which is now prohibited, limited or regulated under
Environmental Law in a jurisdiction in which the Company or any
subsidiary or joint venture of the Company operates.
(iv) "Releases" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the atmosphere, soil, surface water, groundwater or property.
Section 3.12 Regulation as a Utility. The Company is not subject
to the 1935 Act (other than the provisions of Section 9(a)(2) thereof). The
Company is regulated as a public utility in the States of Arizona, California
and Nevada and in no other state. Neither the Company nor any "subsidiary
company" or "affiliate" (as those terms are defined in the 1935 Act) of the
Company is subject to regulation as a public utility or public service company
(or similar designation) by any other state in the United States or any
foreign country.
Section 3.13 Vote Required. At the Company Meeting, the Company
will seek the approval of the First Merger by a majority of the outstanding
shares of Company Common Stock (the "Company Shareholders' Approval"), and no
other vote of the holders of any class or series of the capital stock of the
Company is required to approve this Agreement and the First Merger.
Section 3.14 Opinion of Financial Advisor. The Company has
received the opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), to the effect that, as of the date hereof, the Merger
Consideration to be received by holders of Company Common Stock pursuant to
the transactions contemplated by this Agreement is fair from a financial point
of view to such holders.
Section 3.15 Brokers. Except for Merrill Lynch, 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 the Company or any of its
subsidiaries, that is or will be payable by the Company or any of its
subsidiaries. The Company is solely responsible for the fees and expenses of
Merrill Lynch as and to the extent set forth in the engagement letter dated
October 5, 1998. The Company has previously delivered to Parent a complete
and correct copy of such engagement letter.
Section 3.16 Insurance. Each of the Company and its subsidiaries
is insured with financially responsible insurers in such amounts and against
such risks and losses as are customary in all material respects for companies
conducting the businesses conducted by the Company and its subsidiaries.
Neither the Company nor its subsidiaries have received any notice of
cancellation or termination with respect to any material insurance policy of
the Company or its subsidiaries. All material insurance policies of the
Company and each of its subsidiaries are valid and enforceable policies in all
material respects.
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Section 3.17 Company Rights Agreement. Prior hereto, the Company
has delivered to Parent and its designated counsel a true and complete copy of
the Company Rights Agreement. The consummation of the transactions
contemplated by this Agreement will not result in the triggering of any right
or entitlement of the holders of Company Common Stock or other Company
securities under the Company Rights Agreement or any similar agreement to
which the Company or any of its subsidiaries is a party.
Section 3.18 Year 2000. Section 3.18 of the Company Disclosure
Schedule accurately summarizes the current status of the Company's computer
applications and components, compliance plan, communications with suppliers
and vendors, contingency plans and estimated cost of remediation as they
relate to the Year 2000 issue. The Company has made available to Parent
copies of all correspondence between the Company and its third party suppliers
and vendors concerning their Year 2000 compliance.
Section 3.19 Hedging. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, none of the Company or 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 or hedge contracts for the purchase or sale of
hydrocarbons to which the Company or any of its subsidiaries is a party that
are in accordance with the general practices of other similarly situated
companies in the industry.
Section 3.20 Regulatory Proceedings. Other than purchase gas
adjustment provisions, none of the Company or its subsidiaries all or part of
whose rates or services are regulated by a Governmental Authority (a) has
rates that have been or are being collected subject to refund, pending final
resolution of any rate proceeding pending before a Governmental Authority or
on appeal to the courts, or (b) is a party to any rate proceeding before a
Governmental Authority that would reasonably be expected to result in orders
having a Company Material Adverse Effect.
Section 3.21 Title to Properties. Except as set forth in
Section 3.21 of the Company Disclosure Schedule, the Company and its
subsidiaries own, or have a right to use or a leasehold interest in all real
property used by them in the conduct of their respective businesses as such
businesses are now being conducted. Except as set forth in Section 3.21 of
the Company Disclosure Schedule, neither the Company's nor any subsidiaries'
ownership of or leasehold interest in any such property is subject to any
mortgage, pledge, lien, option, conditional sale agreement, encumbrance,
security interest, title exception, reversion or restriction or claim or
charge of any kind ("Liens"), except for such Liens as are not in the
aggregate reasonably expected to have a Company Material Adverse Effect.
Except as set forth in Section 3.21 of the Company Disclosure Schedule, all
personal property owned by the Company or any of its subsidiaries or used by
any of them in the conduct of their respective businesses is owned free and
clear of any Liens, except for such Liens as are not in the aggregate
reasonably expected to have a Company Material Adverse Effect. The assets of
the Company and its subsidiaries are sufficient to enable the Company and its
subsidiaries to carry on the business of the Company and its subsidiaries as
currently conducted without interference, except to the extent that such
interference would not reasonably be expected to have a Company Material
Adverse Effect.
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Section 3.22 Condition of Assets. Except as set forth in
Section 3.22 of the Company Disclosure Schedule, to the knowledge of the
Company, the buildings, plant, structures and equipment of the Company and its
subsidiaries are in good working condition and repair and are suitable in all
material respects for the purposes for which they are now being used in the
conduct of the business of the Company and its subsidiaries, except to the
extent that such failure would not reasonably be expected to have a Company
Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, as of
the date hereof and as of the Closing Date, as follows:
Section 4.1 Organization and Qualification. Each of Parent and
Merger Sub and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has all requisite corporate power and authority, and has been authorized by
all necessary approvals and orders to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted.
Section 4.2 Authority; Non-Contravention; Statutory Approvals;
Compliance.
(a) Authority. Each of Parent and Merger Sub has all requisite
power and authority to enter into this Agreement and, subject to the
applicable Parent Required Statutory Approvals (as hereinafter defined), if
any, to consummate the transactions contemplated hereby, including, without
limitation, the Mergers. The execution and delivery of this Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Merger Sub. This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes the
valid and binding obligation of each of Parent and Merger Sub, enforceable
against them in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally and by general principles of equity.
(b) Non-Contravention. The execution and delivery of this
Agreement by each of Parent and Merger Sub do not, and the consummation of the
transactions contemplated hereby will not, violate, conflict with, or result
in a breach of any provision of, or constitute a default (with or without
notice or lapse of time or both) under, or result in any Violation by Parent
or Merger Sub pursuant to any provisions of (i) the Certificate of
Incorporation, By-laws or similar governing documents of Parent or Merger Sub,
(ii) subject to obtaining Parent Required Statutory Approvals, any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any Governmental Authority applicable to Parent or Merger
Sub, or any of their respective properties or assets, or (iii) subject to
obtaining the third-party consents or other approvals set forth in
Section 4.2(b) of Parent Disclosure Schedule (as defined in Section 6.6)
("Parent Required Consents"), any note, bond, mortgage, indenture, deed of
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trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or Merger Sub
is now a party or by which it or any of its properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and (iii) such
Violations that would not reasonably be expected to prevent or materially
impair or delay the consummation by Parent or Merger Sub of this Agreement and
the transactions contemplated hereby (any such material adverse effect being
hereinafter referred to as a "Parent Material Adverse Effect").
(c) Statutory Approvals. Except as described in Section 4.2(c) of
the Parent Disclosure Schedule, no declaration, filing or registration with,
or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or Merger Sub or the consummation by Parent or Merger Sub of the
transactions contemplated hereby, the failure of which to obtain, make or give
would have, in the aggregate, a Parent Material Adverse Effect (the "Parent
Required Statutory Approvals," it being understood that references in this
Agreement to "obtaining" such Parent Required Statutory Approvals shall mean
making such declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law).
Section 4.3 Information in Proxy Statement. None of the
information supplied in writing by or on behalf of Parent or Merger Sub
specifically for inclusion in the Proxy Statement will, at the date mailed to
the Company's shareholders, at any time the Proxy Statement is amended or
supplemented and at the time of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
Section 4.4 No Prior Activities. Except for obligations or
liabilities incurred in connection with its incorporation or organization or
the negotiation and consummation of this Agreement and the transactions
contemplated hereby (including any financing), Merger Sub has not incurred any
obligations or liabilities, and has not engaged in any business or activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any Person or entity.
Section 4.5 Brokers. Except for PaineWebber Incorporated, 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 Parent and
Merger Sub, that is or will be payable by the Company or any of its
subsidiaries. Parent and Merger Sub are solely responsible for the fees and
expenses of PaineWebber Incorporated.
Section 4.6 1935 Act. Neither Parent nor Merger Sub is a
"holding company," a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(7), 2(a)(8) or 2(a)(11),
respectively, of the 1935 Act.
Section 4.7 Legal Proceedings. There is (a) no claim, suit,
action or proceeding pending or, to the knowledge of Parent, threatened,
relating to or affecting Parent or any of its subsidiaries and (b) no
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judgment, decree, injunction or order of any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator applicable
to Parent or any of its subsidiaries that, when taken together with any of the
matters described in clauses (a) or (b), would reasonably be expected to have
a Parent Material Adverse Effect.
Section 4.8 Consulting, Employment and Assumption Agreements.
Parent has entered into a consulting agreement with Michael O. Maffie, an
employment agreement with George C. Biehl and assumption agreements with each
of Thomas R. Sheets, Edward S. Zub, James P. Kane and James F. Lowman, all
effective as of the Effective Time of the First Merger.
Section 4.9 Tax Opinion. Parent has been informed by Jones, Day,
Reavis & Pogue, special counsel to Parent, that such firm is willing to
deliver an opinion to the effect that neither the First Merger nor the Second
Merger will be a taxable transaction for federal income tax purposes to either
the Company or Parent.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGERS
Section 5.1 Conduct of Business of the Company. After the date
hereof and prior to the Effective Time of the First Merger or earlier
termination of this Agreement, the Company agrees, each as to itself and to
each of its subsidiaries, except as expressly contemplated or permitted in
this Agreement and except as expressly contemplated or permitted in
Section 5.1 of the Company Disclosure Schedule, or to the extent Parent
otherwise consents in writing (which consent as to matters described in
clause (m) shall not be unreasonably withheld):
(a) Ordinary Course of Business. The Company shall, and shall
cause its subsidiaries to, carry on its and their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable efforts to (i)
preserve intact its and their present business organizations and goodwill,
preserve the goodwill and relationships with customers, suppliers and others
having business dealings with them, (ii) subject to prudent management of
workforce needs and ongoing programs currently in force, keep available the
services of its and their present officers and employees as a group and (iii)
maintain and keep material properties and assets in as good repair and
condition as at present, subject to ordinary wear and tear, and maintain
supplies and inventories in quantities consistent with past practice.
(b) Dividends. The Company shall not, nor shall it permit any of
its subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its or their capital stock other than (A)
dividends by a wholly-owned subsidiary to the Company or another wholly-owned
subsidiary, (B) dividends by a less than wholly-owned subsidiary consistent
with past practice, (C) regular quarterly dividends on Company Common Stock
with usual record and payment dates that do not exceed the current rate of
$0.205 or (D) regular cumulative cash distributions on Southwest Gas
Capital I's 9.125% Trust Originated Preferred Securities (the "Preferred
Securities") not to exceed an annual rate of 9.125% of the liquidation amount
of $25 per Preferred Security; (ii) split, combine or reclassify any capital
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stock or the capital stock of any subsidiary or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of capital stock or the capital stock of any
subsidiary; or (iii) redeem, repurchase or otherwise acquire any shares of
capital stock or the capital stock of any subsidiary other than
(A) redemptions, repurchases and other acquisitions of shares of capital stock
in connection with the administration of employee benefit and dividend
reinvestment plans as in effect on the date hereof in the ordinary course of
the operation of such plans consistent with past practice or (B) intercompany
acquisitions of capital stock.
(c) Issuance of Securities. The Company shall not, nor shall it
permit any of its subsidiaries to, issue, agree to issue, deliver, sell,
award, pledge, dispose of or otherwise encumber or authorize or propose the
issuance, delivery, sale, award, pledge, disposal or other encumbrance of, any
shares of its or their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable securities, other than
as provided for in the Company Benefit Plans (including options to be granted
to directors of the Company pursuant to such Company Benefit Plans) and any
dividend reinvestment plans of the Company in effect as of the date hereof.
(d) Charter Documents. Except as contemplated herein, the Company
shall not, and shall not permit any of its subsidiaries to, amend or propose
to amend its or their respective articles of incorporation, by-laws or similar
governing documents.
(e) Acquisitions. Other than in the ordinary course of business
consistent with past practice and except for acquisitions by Northern Pipeline
Construction Co. not to exceed an aggregate principal amount of $15 million
annually, the Company shall not, nor shall it permit any of its subsidiaries
to, acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or business organization or division thereof, or
otherwise acquire or agree to acquire any material amount of assets.
(f) Capital Expenditures. Except as required by law, the Company
shall not, nor shall it permit any of its subsidiaries to, make capital
expenditures in excess of $5 million, other than in the ordinary course of
business (not to exceed $230 million annually).
(g) No Dispositions. The Company shall not, nor shall it permit
any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, any of its assets, other than encumbrances or dispositions in the
ordinary course of its business consistent with past practice.
(h) Indebtedness. The Company shall not, nor shall it permit any
of its subsidiaries to, incur or guarantee any indebtedness (including any
debt borrowed or guaranteed or otherwise assumed including, without
limitation, the issuance of debt securities or warrants or rights to acquire
debt) or enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing other than (i) short-term
indebtedness in the ordinary course of business consistent with past practice;
(ii) arrangements between the Company and its subsidiaries or among its
subsidiaries; (iii) long-term unsecured indebtedness ranking pari passu in
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right of payment with the Company's current long-term unsecured indebtedness
in an aggregate amount not to exceed $50 million annually and having
maturities of five years or less; (iv) indebtedness incurred in connection
with the renewal or replacement of existing credit support or liquidity
support facilities in a principal amount that does not exceed the principal
amount of indebtedness outstanding under existing credit support or liquidity
support facilities prior to such renewal or replacement; (v) long-term
indebtedness in a principal amount of up to $35 million evidencing the
Company's obligations under industrial development revenue bonds to be issued
by Clark County, Nevada; (vi) equipment financing by Northern Pipeline
Construction Co. in an aggregate principal amount not to exceed $15 million
annually; or (vii) in connection with the refunding of existing indebtedness
at a lower cost of funds.
(i) Compensation, Benefits. Except as (i) may be required by
applicable law, (ii) may be required to facilitate or obtain a determination
letter from the IRS that a plan is "qualified" within the meaning of Section
401(a) of the Code or (iii) specifically required by this Agreement, the
Company shall not, nor shall it permit any of its subsidiaries to, (A) enter
into, adopt or amend or increase the amount or accelerate the payment or
vesting of any benefit or amount payable under, any employee benefit plan, any
bonus plan or arrangement or other contract, agreement, commitment,
arrangement, plan or policy covering employees, former employees, directors or
former directors or their beneficiaries or providing benefits to such persons,
or increase, or enter into any contract, agreement, commitment or arrangement
to increase in any manner, the compensation or fringe benefits, or otherwise
to extend, expand or enhance the engagement, employment or any related rights
of, or take any other action or grant any benefit (including, without
limitation, any stock options or stock option plan) not required under the
terms of any existing employee benefit plan, any bonus plan or arrangement or
other contract, agreement, commitment, arrangement, plan or policy to or with
any director, officer or other employee of the Company or any of its
subsidiaries, except for normal increases or grants or actions in the ordinary
course of business consistent with past practice or (B) enter into or amend
any employment, severance or special pay arrangements with respect to the
employment or termination of employment of any director or officer or other
employee. This subsection (i) is not intended to restrict the Company from
granting promotions to officers or employees based upon job performance or
workplace requirements and is not meant to restrict the Company's ability to
make available to employees the plans, benefits and arrangements that have
customarily and consistent with past practices been available to officers and
employees in the context of such merit-based promotion. It is agreed,
however, that no new officers shall be added to unqualified plans maintained
by the Company. This subsection (i) is also not meant to restrict the Company
from dealing with matters of employee retention in specific areas of expertise
through the use of specialized employment and benefits plans designed for that
specific purpose; provided, however, that, in the aggregate, the result of the
use of such specialized employment or benefit plans shall not, in the
aggregate, result in an annual increase in compensation in excess of $1
million.
(j) 1935 Act. The Company shall not, nor shall it permit any of
its subsidiaries to, engage in any activities that would cause a change in its
status, or that of its subsidiaries, under the 1935 Act.
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(k) Accounting. The Company shall not, nor shall it permit any of
its subsidiaries to, make any changes in their accounting methods, except as
required by law, rule, regulation or GAAP.
(l) Affiliate Transactions. The Company shall not, nor shall it
permit any of its subsidiaries to, enter into any material agreement or
arrangement with any other person that, directly or indirectly, controls or is
under common control with or is controlled by the Company, or any of its
respective subsidiaries on terms to the Company or its subsidiaries materially
less favorable than could be reasonably expected to have been obtained with an
unaffiliated third party on an arm's-length basis.
(m) Rate Matters. The Company shall not, and shall cause its
subsidiaries not to, make any filing to change its or its subsidiaries'
utility rates on file with any Governmental Authority, or enter into any
agreement, arrangement or consent to do so, that would reasonably be expected
to have a Company Material Adverse Effect.
(n) Tax-Exempt Status. The Company shall not, nor shall it permit
any subsidiary to, take any action that would likely jeopardize the exclusion
from gross income, for purposes of federal income taxation, of the interest on
the outstanding revenue bonds issued for the benefit of the Company or any of
its subsidiaries, which qualify on the date hereof under Code sub-paragraph
142(a) as "exempt facility bonds" or as tax-exempt industrial development bonds
under Section 103(b)(4) of the Internal Revenue Code of 1954, as amended prior
to the Tax Reform Act of 1986.
(o) Discharge of Liabilities. The Company shall not pay, discharge
or satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice (which includes the payment of final and unappealable judgments)
or in accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of Company included in the Company SEC
Reports, or incurred in the ordinary course of business consistent with past
practice.
(p) Contracts. The Company shall not, except in the ordinary
course of business consistent with past practice or as otherwise permitted
hereunder or required in order to consummate the transactions contemplated
hereby, modify, amend, terminate, renew or fail to use reasonable business
efforts to renew any material contract or agreement (including, without
limitation, easements, licenses, permits or other rights) to which the Company
or any of its subsidiaries is a party or waive, release or assign any material
rights or claims.
(q) Insurance. The Company shall, and shall cause its subsidiaries
to, maintain with financially responsible insurance companies insurance in
such amounts and against such risks and losses as are customary for companies
engaged in the gas utility industry.
(r) Permits. The Company shall, and shall cause its subsidiaries
to, use reasonable efforts to maintain in effect or renew all existing
material governmental franchises or permits pursuant to which the Company or
its subsidiaries operate.
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(s) Tax Matters. The Company shall not, and shall not permit any
of its subsidiaries to, make or rescind any material express or deemed
election relating to Taxes, settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or change in any material respect any of its methods of
reporting income or deductions for income Tax purposes from those employed in
the preparation of its income Tax Return for the prior taxable year, except as
may be required by applicable law.
Section 5.2 No Shopping. (a) The Company shall not, and shall
not authorize or permit any of its officers, directors, agents, financial
advisers, attorneys, accountants or other representatives to, directly or
indirectly, solicit, initiate or encourage submission of proposals or offers
from any Person relating to, or that could reasonably be expected to lead to,
a Business Combination or participate in any negotiations or discussions
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other Person to do or seek a
Business Combination; provided, however, that, prior to the time at which the
Company Shareholders' Approval has been obtained, the Company may, in response
to an unsolicited written proposal from a third party with respect to a
Business Combination that the Company's Board of Directors determines, in its
good faith judgment, after consultation with and the receipt of the advice of
its financial advisor and outside counsel, is a Superior Proposal, (i) furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, only if the Company's Board of Directors
determines, in its good faith judgment after consultation with its financial
advisors and outside legal counsel, that failing to take such action would
create a reasonable possibility of a breach of the fiduciary duties of the
Company's Board of Directors under applicable law and (ii) take and disclose
to the Company's shareholders a position with respect to another Business
Combination proposal, or amend or withdraw such position, pursuant to Rules
14d-9 and 14e-2 under the Exchange Act. Prior to furnishing any non-public
information to, entering into negotiations with or accepting a Superior
Proposal from such third party, the Company will (x) provide prompt notice to
Parent to the effect that it is furnishing information to or entering into
discussions or negotiations with such third party and (y) receive from such
third party an executed confidentiality agreement in reasonably customary form
on terms not materially more favorable to such third party than the terms
contained in the Letter Agreement (as defined in Section 6.1). The Company
will immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiations with any
parties conducted heretofore by the Company or any of its representatives with
respect to any Business Combination.
(b) Except as expressly permitted by this Section 5.2(b), neither
the Company's Board of Directors nor any committee thereof may (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent or Merger Sub, the approval or recommendation by the Board of Directors
or such committee of the First Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, a Business Combination
or (iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to any
Business Combination. Notwithstanding the foregoing, prior to the time at
which the Company Shareholders' Approval has been obtained, in response to an
unsolicited Business Combination proposal from a third party, if the Company's
Board of Directors determines, in its good faith judgment, after consultation
with and the receipt of the advice of its financial advisor and outside
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counsel, that such proposal is a Superior Proposal and that failure to do any
of the actions set forth in clauses (i), (ii) or (iii) above would create a
reasonable possibility of a breach of the fiduciary duties of the Company's
Board of Directors under applicable law, the Company's Board of Directors may
(x) withdraw or modify its approval or recommendation of the First Merger or
this Agreement, approve or recommend a Business Combination or cause the
Company to enter into a Business Combination and (y) negotiate with a third
party with respect to such Business Combination proposal and, subject to the
Company having paid to Parent the fees described in Section 8.3(a) and having
entered into a definitive agreement with respect to such Business Combination
proposal, terminate this Agreement pursuant to Section 8.1(e)(iii); provided,
however, that prior to entering into a definitive agreement with respect to a
Business Combination proposal, the Company shall give Parent at least five
day's notice thereof, and shall cause its respective financial and legal
advisors to, negotiate with Parent to make such adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with the
transactions contemplated herein on such adjusted terms; provided, further,
that if the Company and Parent are unable to reach an agreement on such
adjustments within five days after such notice from the Company, the Company
may enter into such definitive agreement, subject to the provisions of
Article VIII.
(c) The Company shall notify Parent orally and in writing of any
such inquiries, offers or proposals (including, without limitation, the terms
and conditions of any such offer or proposal and the identity of the Person
making it), within 24 hours of the receipt thereof, shall use all reasonable
efforts to keep Parent informed of the status and details of any such inquiry,
offer or proposal and shall give Parent two day's advance notice of the first
delivery of non-public information to such Person. If any such inquiry, offer
or proposal is in writing, the Company shall promptly deliver to Parent a copy
of such inquiry, offer or proposal.
(d) For purposes of this Agreement, (i) "Business Combination"
means (other than the transactions contemplated by this Agreement) (A) a
merger, consolidation or other business combination, share exchange, sale of
shares of capital stock, tender offer or exchange offer or similar transaction
involving the Company or any of its subsidiaries, (B) acquisition in any
manner, directly or indirectly, of a material interest in any voting
securities of, or a material equity interest in a substantial portion of the
assets of, the Company or any of its subsidiaries, including any single or
multi-step transaction or series of related transactions that is structured to
permit a third party to acquire beneficial ownership of a majority or greater
equity interest in the Company, or (C) the acquisition in any manner, directly
or indirectly, of any material portion of the business or assets (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale) of the Company and (ii) "Superior Proposal"
means a proposed Business Combination involving at least 50% of the shares of
capital stock or a material portion of the assets of the Company that the
Company's Board of Directors determines, after consulting with the Company's
financial advisors and outside counsel is financially superior to the
transactions contemplated hereby and it appears that the party making the
proposal is reasonably likely to have the funds necessary to consummate the
Business Combination.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access to Information. Upon reasonable notice and
during normal business hours, the Company shall, and shall cause its
subsidiaries to, afford to the officers, directors, employees, accountants,
counsel, investment bankers, financial advisors and other representatives
(collectively, "Representatives") of Parent reasonable access, throughout the
period prior to the Effective Time of the First Merger, to all of its
properties, books, contracts, commitments and records (including, but not
limited to, Tax Returns) in a manner that will not disrupt the operations of
the Company or its relationship with its customers, suppliers or employees.
During such period, the Company shall, and shall cause its subsidiaries to,
furnish promptly to Parent (i) a copy of each report, schedule and other
document filed or received by it or any of its subsidiaries pursuant to the
requirements of federal or state securities laws or filed with or sent to the
SEC, the Department of Justice (the "DOJ") and the Federal Trade Commission
(the "FTC"), and any material reports, schedules or other documents filed with
or sent to the California Public Utilities Commission, the Arizona
Corporations Commission, the Public Utilities Commission of Nevada, the FERC
and any other federal or state regulatory agency or commission, and (ii) all
information concerning themselves, their subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably requested by Parent
in connection with any filings, applications or approvals required or
contemplated by this Agreement. Any such investigation by Parent will not
affect the representations or warranties contained in this Agreement. Parent
shall furnish promptly to the Company all information concerning it, its
subsidiaries, directors, officers and shareholders and such other matters as
may be reasonably requested by the Company in connection with any filings,
applications or approvals required or contemplated by this Agreement. Parent
shall from time to time at the request of the Company discuss its financing
arrangements for the Mergers with the Company and shall furnish promptly to
the Company such information concerning its financial condition, together with
the final drafts of its financing arrangements for the Mergers. Each party
shall, and shall cause its subsidiaries and Representatives to, hold in strict
confidence all Evaluation Material (as defined in the Letter Agreement)
concerning the other parties furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the Letter
Agreement, dated as of November 20, 1998, between the Company and Parent, as
it may be amended from time to time (the "Letter Agreement").
Section 6.2 Proxy Statement.
(a) Preparation and Filing. As soon as reasonably practicable
after the date hereof, the Company will prepare and file with the SEC the
Proxy Statement. Each of the parties hereto shall furnish all information
concerning itself that is required or customary for inclusion in the Proxy
Statement. The Company shall use its best efforts to solicit from
shareholders of the Company proxies in favor of the First Merger and shall
take all other action necessary or, in the reasonable opinion of Parent,
advisable to secure the Company Shareholders' Approval. No representation,
covenant or agreement is made by or on behalf of any party hereto with respect
to information supplied by any other party for inclusion in the Proxy
Statement. It shall be a condition to the mailing of the Proxy Statement to
the shareholders of the Company that the Company shall have received an
opinion of Merrill Lynch, dated the date of the Proxy Statement, to the effect
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that, as of the date thereof, the Merger Consideration to be received by
holders of Company Common Stock pursuant to the transactions contemplated by
this Agreement is fair from a financial point of view to such holders.
(b) Amendments and Supplements. The Company shall advise Parent,
promptly after it receives notice thereof, of any request by the SEC for
amendment or supplement of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information, and the
Company shall use all reasonable efforts to respond promptly to any comments
made by the SEC with respect to the Proxy Statement; provided, however, that
the Company shall not amend or supplement the Proxy Statement with respect to
information concerning Parent or Merger Sub or the description of this
Agreement and related agreements contained therein without the prior approval
of Parent.
Section 6.3 Regulatory Approvals and Other Matters.
(a) HSR Filings. Each party hereto shall file or cause to be filed
with the FTC and the DOJ any notifications required to be filed under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder with respect to the transactions
contemplated hereby. The parties will use all commercially reasonable efforts
to coordinate such filings and any responses thereto, to make such filings
promptly and to respond promptly to any requests for additional information
made by either of such agencies.
(b) Other Approvals. Each party hereto shall cooperate and use its
commercially reasonable efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to use all commercially reasonable efforts to
obtain all necessary permits, consents, approvals and authorizations of all
Governmental Authorities and all other Persons necessary or advisable to
consummate the transactions contemplated by this Agreement, including, without
limitation, the Company Required Statutory Approvals, the Parent Required
Statutory Approvals, the Company Required Consents and the Parent Required
Consents. Each party shall have the right to review and approve in advance
(such approval not to be unreasonably withheld) all Governmental Authority
filings or applications to be made by the other parties in connection with the
transactions contemplated by this Agreement. The Company and Parent will
consult with each other with respect to the obtaining of all such necessary
permits, consents, approvals and authorizations of Governmental Authorities.
(c) Financing. Parent shall use all commercially reasonable
efforts to obtain financing for the transactions contemplated by this
Agreement.
Section 6.4 Shareholder Approval.
(a) Company Meeting. Subject to the provisions of
Section 6.4(b), the Company shall, as soon as reasonably practicable after the
date hereof (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of its shareholders (the "Company Meeting") for the purpose
of securing the Company Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement in accordance with applicable federal and
state law and with its Articles of Incorporation and By-laws, (iii) subject to
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the fiduciary duties of its Board of Directors, recommend to its shareholders
the approval of this Agreement and the transactions contemplated hereby and
(iv) cooperate and consult with Parent with respect to each of the foregoing
matters.
(b) Meeting Date. The Company Meeting for the purpose of securing
the Company Shareholders' Approval, including any adjournments thereof, will
be held on such date or dates as the Company and Parent mutually determine.
Section 6.5 Directors' and Officers' Indemnification.
(a) Indemnification. Without limiting any existing rights of
indemnification or other agreements or policies, from and after the Effective
Time, the Surviving Corporation shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, an officer or director of Parent or the Company, respectively,
or any of their subsidiaries (each an "Indemnified Party" and collectively,
the "Indemnified Parties") against (i) all losses, expenses (including
reasonable attorneys' fees and expenses), claims, damages or liabilities or,
subject to the proviso of the next succeeding sentence, amounts paid in
settlement, arising out of actions or omissions occurring at or prior to the
Effective Time (and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director or officer of Parent or the Company
or any of their subsidiaries (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of
any such loss, expense, claim, damage or liability (whether or not arising
before the Effective Time), (x) the Surviving Corporation shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel will be reasonably satisfactory to Parent promptly after
statements therefor are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses reasonably incurred,
(y) the Surviving Corporation shall cooperate in the defense of any such
matter and (z) any determination required to be made with respect to whether
an Indemnified Party's conduct complies with the standards set forth under
Oklahoma or California law, as applicable, and the articles of incorporation,
by-laws or similar governing documents must be made by independent counsel
mutually acceptable to the Surviving Corporation and the Indemnified Party;
provided, however, that the Surviving Corporation will not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The Indemnified Parties as a group may retain only
one law firm with respect to each related matter except to the extent there
is, in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant issue between
positions of such Indemnified Party and any other Indemnified Party or
Indemnified Parties.
(b) Insurance. For a period of six years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect policies of
directors' and officers' liability insurance maintained by the Company and
Parent for the benefit of those persons who are covered by such policies as of
the Effective Time on terms no less favorable than the terms of such current
insurance coverage; provided, however, that the Surviving Corporation will not
be required to expend in any year an amount in excess of 200% of the annual
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aggregate premiums currently paid by Parent or the Company, as the case may
be, for such insurance; provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation will be
obligated to obtain a policy with the best coverage available, in the
reasonable judgment of the board of directors of Parent for a cost not
exceeding such amount.
(c) Successors. In the event the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provisions must be made so that the successors and assigns of the Surviving
Corporation will assume the obligations set forth in this Section 6.5.
(d) Survival of Indemnification. To the fullest extent permitted
by law, from and after the Effective Time, all rights to indemnification as of
the date hereof in favor of the employees, agents, directors and officers of
Parent or the Company and their subsidiaries with respect to their activities
as such prior to the Effective Time, as provided in their respective articles
of incorporation, by-laws or similar governing documents in effect on the date
hereof, or otherwise in effect on the date hereof, will survive the Mergers
and will continue in full force and effect for a period of not less than six
years from the Effective Time.
(e) Benefit. The provisions of this Section 6.5 are intended to be
for the benefit of, and are enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 6.6 Disclosure Schedules. On the date hereof, the
Company has delivered to Parent a schedule (the "Company Disclosure
Schedule"), accompanied by a certificate signed by an executive officer of the
Company stating the Company Disclosure Schedule is being delivered pursuant to
this Section 6.6 and Parent has delivered to the Company a schedule (the
"Parent Disclosure Schedule"), accompanied by a certificate signed by an
executive officer of Parent stating the Parent Disclosure Schedule is being
delivered pursuant to this Section 6.6. The Company Disclosure Schedule and
the Parent Disclosure Schedule are collectively referred to herein as the
"Disclosure Schedules." The Disclosure Schedules constitute an integral part
of this Agreement and modify the respective representations, warranties,
covenants or agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements expressly refer
to the Disclosure Schedules. Anything to the contrary contained herein or in
the Disclosure Schedules notwithstanding, any and all statements,
representations, warranties or disclosures set forth in the Disclosure
Schedules will be deemed to have been made on and as of the date hereof.
Section 6.7 Public Announcements. Subject to each party's
disclosure obligations imposed by law, (a) the Company and Parent will
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby and (b) may not issue
any public announcement or statement with respect hereto without the consent
of the other party (which consent will not be unreasonably withheld).
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Section 6.8 Employee Benefit Plans. Except as may be required by
applicable law and except as provided in Section 2.4 with respect to Company
Option Plans and Section 6.9(c) with respect to the Company's Management
Incentive Plan (the "MIP"), each Company Benefit Plan in effect on the date
hereof (or as amended or established in accordance with or as permitted by
this Agreement) shall be maintained in effect with respect to the employees,
former employees, directors or former directors of the Company and any of its
subsidiaries who are covered by such plans or agreements immediately prior to
the Effective Time until Parent determines otherwise on or after the Effective
Time, and Parent shall assume as of the Effective Time each Company Benefit
Plan maintained by the Company immediately prior to the Effective Time and
perform such plan or agreement in the same manner and to the same extent that
the Company would be required to perform thereunder; provided, however, that
nothing herein contained, other than the provisions of Section 5.1(i), shall
limit any reserved right contained in any such Company Benefit Plan to amend,
modify, suspend, revoke or terminate any such plan or agreement; provided,
further, that Parent or its subsidiaries shall provide to each employee of the
Company and any of its subsidiaries (other than Northern Pipeline Construction
Co.) who was covered by Company Benefit Plans immediately prior to the
Effective Time (i) for a period of no less than one year following the
Effective Time, (A) benefits under employee benefit plans intended to qualify
under Section 401(a) of the Code (the "Qualified Plans") that are no less
favorable in the aggregate than those provided to the employee immediately
prior to the Effective Time under Company Benefit Plans that are Qualified
Plans, (B) benefits under employee benefit plans that are supplemental
retirement benefit and deferred compensation plans which are not Qualified
Plans that are no less favorable in the aggregate than those provided to the
employee immediately prior to the Effective Time under Company Benefit Plans
that are supplemental retirement benefit and deferred compensation plans which
are not Qualified Plans, and (C) employer-provided benefits under employee
benefit plans that are welfare plans that are no less favorable in the
aggregate than those provided to the employee immediately prior to the
Effective Time under Company Benefit Plans that are welfare plans, and (ii)
thereafter, (A) benefits under Qualified Plans that are no less favorable in
the aggregate than those provided from time to time for similarly situated
employees of Parent in Oklahoma under Parent's employee benefit plans that are
Qualified Plans, (B) benefits under employee benefit plans that are
supplemental retirement benefit and deferred compensation plans which are not
Qualified Plans that are no less favorable in the aggregate than those
provided from time to time for similarly situated employees of Parent in
Oklahoma under Parent's employee benefit plans that are supplemental
retirement benefit and deferred compensation plans which are not Qualified
Plans and (C) employer-provided benefits under employee benefit plans that are
welfare plans that are no less favorable in the aggregate than those provided
from time to time for similarly situated employees of Parent in Oklahoma under
Parent's employee benefit plans that are welfare plans. Without limiting the
foregoing, each participant in any Company Benefit Plan who is an employee of
the Company or any of its subsidiaries (other than Northern Pipeline
Construction Co.) shall receive credit for purposes of eligibility to
participate, vesting and eligibility to receive benefits (but specifically
excluding for benefit accrual purposes) under any replacement benefit plan of
Parent or any of its subsidiaries or affiliates in which such Person becomes a
participant for service credited for the corresponding purpose under any such
Company Benefit Plan; provided, however, that such crediting of service shall
not operate to cause any such plan or agreement to fail to comply with the
applicable provisions of the Code and ERISA. No provision contained in this
Section 6.8 shall be deemed to constitute an employment contract between
Parent or any of its subsidiaries and any individual, or a waiver of Parent's
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or any of its subsidiaries' right to discharge any employee at any time, with
or without cause. Notwithstanding the foregoing, Parent acknowledges that
participants in the Company's Supplemental Retirement Plan (the "SERP") shall
continue to accrue benefits after the Effective Time under terms at least as
favorable as the terms of the SERP in effect on the date of this Agreement,
taking into account service compensation earned while employed by Parent and
its subsidiaries after the Effective Time.
Section 6.9 Company Stock and Incentive Plans.
(a) 401(k) Plan. With respect to the Company's 401(k) Savings Plan
(the "401(k) Plan"), under which the delivery of Company Common Stock is
required upon payment of benefits, (i) Parent shall take such action as may be
necessary so that, after the Effective Time, the 401(k) Plan provides for the
issuance or purchase in the open market only of common stock, par value $0.01
per share, of Parent ("Parent Common Stock") rather than Company Common Stock,
and (ii) Parent shall take all corporate action necessary or appropriate to
(A) obtain shareholder approval with respect to such plan to the extent such
approval is required for purposes of the Code or other applicable law, or to
the extent Parent deems it desirable, (B) reserve for issuance under such plan
or otherwise provide a sufficient number of shares of Parent Common Stock for
delivery upon payment of benefits and (C) as soon as practicable after the
Effective Time, file registration statements on Form S-8 (or any successor or
other appropriate form) with respect to the shares of Parent Common Stock
subject to the 401(k) Plan to the extent such registration statement is
required under applicable law, and Parent shall use its best efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus contained therein or related thereto) for so
long as such benefits remain payable.
(b) Dividend Reinvestment Plan. The dividend reinvestment plan of
the Company shall terminate as of the Effective Time of the First Merger.
(c) Management Incentive Plan. The Company and Parent shall take
all actions to provide that the MIP shall terminate as of the Effective Time,
and participants in the MIP immediately prior to the Effective Time shall be
paid as soon as practicable after the Effective Time (i) a cash amount equal
to a prorated portion of the then current year's award opportunity earned on
the basis of performance measures applied to the period ending on the
Effective Time, with such proration to be based on the number of days that
have elapsed for the performance year up to and including the Effective Time,
(ii) a cash amount equal to any award earned under the MIP but unpaid as of
the Effective Time for performance years ended prior to the Effective Time and
(iii) a cash amount equal to 100% of the outstanding performance shares
awarded and held under the MIP at the Effective Time in an amount equal to the
Merger Consideration per outstanding performance share. Participants in the
MIP for the performance year in which the Effective Time occurs will
participate in the Parent's annual incentive plan, commencing as of the
Effective Time, based on the terms and conditions thereof, except that any
award opportunity will be earned on the basis of performance measures applied
to the portion of the Parent's fiscal year occurring after the Effective Time
and the amount of any such award opportunity earned shall be prorated based on
the number of days occurring in the Parent's fiscal year occurring after the
Effective Time.
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Section 6.10 Expenses. Subject to Section 8.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such expenses.
Section 6.11 Advisory Board. Following the Effective Time, the
Surviving Corporation shall establish an advisory board of directors
consisting of the current members of the Board of Directors of the Company,
other than Messrs. Maffie and Biehl, to advise the Surviving Corporation
regarding issues of importance to the communities in which the Southwest
Division operates, the employees of the Southwest Division and the Arizona
Corporations Commission, the California Public Utilities Commission and the
Public Utilities Commission of Nevada. The term "Southwest Division" means
the operations of the Surviving Corporation in the states of California,
Arizona and Nevada.
Section 6.12 Notification. The Company shall (a) advise Parent of
any change or event that has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect and (b)
promptly provide Parent with copies of all filings made by the Company or any
of its subsidiaries with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this Agreement
and the transactions contemplated hereby. Parent shall (x) advise Company of
any change or event that has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in a Parent Material Adverse Effect, and
(y) promptly provide the Company with copies of all filings made by Parent or
Merger Sub with any state or federal court, administrative agency, commission
or other Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
Section 6.13 Las Vegas Office. The Surviving Corporation will
establish the headquarters of the Southwest Division in Las Vegas, Nevada and
intends to maintain such headquarters in Las Vegas, Nevada.
Section 6.14 Additional Statutory Approvals. Parent agrees not to
(a) become involved in, without agreeing to be a party to, or (b) agree to be
a party to, in either case, any transaction that would make it necessary for
Parent or the Company to make any declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental Authority
in connection with the consummation by Parent, Merger Sub or the Company of
the transactions contemplated by this Agreement, other than those set forth in
Section 4.2(c) of the Parent Disclosure Schedule or Section 3.4(c) of the
Company Disclosure Schedule (each, an "Additional Statutory Approval").
Parent shall be in breach of this covenant and agreement only if either party
terminates this Agreement pursuant to Section 8.1(b) as a result of a
transaction contemplated by clause (a) above or the Company terminates this
Agreement pursuant to Section 8.1(c) as a result of a transaction contemplated
by clause (b) above.
Section 6.15 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its
commercially reasonable efforts, taking into account the circumstances and
giving due weight to the materiality of the matter involved or the action
required, to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
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regulations to consummate and make effective the Mergers and the transactions
contemplated by this Agreement.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Mergers. The respective obligations of each party to effect the Mergers is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.11 by the joint
action of the parties hereto:
(a) Shareholder Approval. The Company Shareholders' Approval shall
have been obtained.
(b) No Challenge. (i) No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
court preventing consummation of either of the Mergers shall have been issued
and be continuing in effect, (ii) there shall not be instituted or pending by
any Governmental Authority any action or proceeding before any governmental,
regulatory or administrative agency or commission of competent jurisdiction
seeking any injunction, order, decree, judgment or ruling having the effect
set forth in clause (i) above and (iii) the Mergers and the other transactions
contemplated hereby shall not have been prohibited under any applicable
federal or state law or regulation.
(c) Statutory Approvals. The Company Required Statutory Approvals
(which, for this purpose, shall not include easements, franchises or similar
rights), the Parent Required Statutory Approvals shall have been obtained at
or prior to the Effective Time of the First Merger, and such approvals shall
have become Final Orders (as defined below). A "Final Order" means action by
the relevant regulatory authority which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, with respect to which any waiting
period prescribed by law before the transactions contemplated hereby may be
consummated has expired, and as to which all conditions to the consummation of
such transactions prescribed by law, regulation or order have been satisfied,
and as to which all opportunities for rehearing, other than at the request of
the California Public Utilities Commission or the Arizona Corporations
Commission, are exhausted (whether or not any appeal is pending).
(d) Dissenter's Rights. Demands for payment of dissenters' rights
by shareholders of the Company with respect to the First Merger shall not
equal or exceed five percent of the outstanding shares of Company Common Stock
entitled to vote thereon.
Section 7.2 Conditions to Obligation of Parent to Effect the
Mergers. The obligation of Parent and Merger Sub to effect the Mergers is
further subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by Parent and Merger Sub in
writing pursuant to Section 9.11:
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(a) Performance of Obligations of the Company. The Company (or its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to be
performed by it at or prior to the Effective Time of the First Merger.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement are true and correct (i)
on and as of the date hereof and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the date hereof
or the Closing Date, which need only be true and correct as of such date or
time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without regard to any
materiality qualifications contained therein) that would not be reasonably
likely to result in a Company Material Adverse Effect.
(c) Closing Certificate. Parent and Merger Sub shall have received
a certificate signed by an executive officer of the Company, dated the Closing
Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 7.2(a) and Section 7.2(b) have been satisfied.
(d) Company Required Consents. The Company Required Consents
(including, for this purpose, all third party consents or other approvals,
whether or not set forth in Section 3.4(b) of the Company Disclosure
Schedule), the failure of which to obtain would have a Company Material
Adverse Effect, shall have been obtained.
(e) Trigger of Company Rights. No event that would result in the
triggering of any right or entitlement of Company shareholders under the
Company Rights Agreement, including a "flip-in" or "flip-over" or similar
event commonly described in such rights plans shall have occurred, that, in
the reasonable judgment of Parent, would have or would reasonably be expected
to result in a Company Material Adverse Effect or materially change the number
of outstanding equity securities of the Company, and the Company Rights shall
not have become nonredeemable by any action of the Company's Board of
Directors.
(f) Tax Opinion. Parent shall have received from its counsel an
opinion to the effect that neither the First Merger nor the Second Merger will
be a taxable transaction for federal income tax purposes to either the Company
or Parent; provided, however, that the failure of Jones, Day, Reavis & Pogue
or other counsel reasonably acceptable to Parent to deliver such an opinion
shall not be a condition to Parent's and Merger Sub's obligations to effect
the Merger unless the failure to deliver such opinion is the result of a
change in, or amendment to, the tax laws (or any regulations thereunder) of
the United States or any change in the official interpretation or application
of such tax laws or regulations, which change or amendment is announced or
becomes effective after the date of this Agreement.
(g) Regulatory Orders. The Final Orders of the California Public
Utilities Commission, the Arizona Corporations Commission, the Public
Utilities Commission of Nevada and the FERC (if required) with respect to the
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Mergers and the transactions contemplated by this Agreement shall not impose
terms or conditions (in addition to existing laws, rules or regulations),
which would have, or would reasonably be expected to have a material adverse
effect on the business, assets, properties (including intangible properties),
condition (financial or otherwise), results of operations, prospects or
liabilities of the Southwest Division.
(h) Additional Statutory Approvals. Any Additional Statutory
Approvals shall have been obtained at or prior to the Effective Time, and such
approvals shall become Final Orders.
Section 7.3 Conditions to Obligation of the Company to Effect the
Mergers. The obligation of the Company to effect the Mergers is further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.11:
(a) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub (or its appropriate subsidiaries) shall have performed
in all material respects its agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior to the
Effective Time of the First Merger.
(b) Representations and Warranties. The representations and
warranties of Parent and Merger Sub in Sections 4.1, 4.2, 4.6, 4.7 and 4.8 of
this Agreement are true and correct on and as of the date hereof and on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date, except in each case
for such failures of representations and warranties to be true that would not
be reasonably likely to result in a Parent Material Adverse Effect.
(c) Closing Certificate. The Company shall have received a
certificate signed by an executive officer of Parent, dated the Closing Date,
to the effect that, to the best of such officer's knowledge, the conditions
set forth in Section 7.3(a) and (b) have been satisfied.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and
the Mergers abandoned at any time prior to the Closing Date, whether before or
after approval by the shareholders of the Company contemplated by this
Agreement:
(a) by mutual written consent of the Boards of Directors of the
Company and Parent;
(b) by any party hereto, by written notice to the other parties, if
the Effective Time of the First Merger has not occurred on or before the first
anniversary of the date hereof (the "Initial Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 8.1(b)
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will not be available to any party that is in material breach of its
representations, warranties, covenants or agreements contained herein; and
provided, further, that if on the Initial Termination Date (i) the conditions
to the Closing set forth in Section 7.1(c) shall not have been fulfilled or
(ii) any Additional Statutory Approval of the type described in
Section 6.14(a) shall not have been obtained and such approval shall not have
become a Final Order, but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Initial Termination
Date will be extended to the date that is 18 months after the date hereof;
(c) by the Company, by written notice to Parent, at the earlier of
(i) 60 days after the time at which all other conditions to the Closing have
been fulfilled or (ii) the date that is 18 months after the date of this
Agreement, if any Additional Statutory Approval of the type described in
Section 6.14(b) shall not have been obtained and such approval shall not have
become a Final Order.
(d) by any party hereto, by written notice to the other parties, if
the Company Shareholders' Approval shall not have been obtained at a duly held
Company Meeting, including any adjournments thereof;
(e) by any party hereto, if any state or federal law, order, rule
or regulation is adopted or issued that has the effect, as supported by the
written opinion of outside counsel for such party, of prohibiting the First
Merger or the Second Merger, or by any party hereto if any court of competent
jurisdiction in the United States or any State shall have issued an order,
judgment or decree permanently restraining, enjoining or otherwise prohibiting
the First Merger or the Second Merger, and such order, judgment or decree
shall have become final and nonappealable;
(f) by the Company, by written notice to Parent, (i) if there exist
breaches of the representations and warranties of Parent made herein as of the
date hereof, which breaches, individually or in the aggregate, would or would
be reasonably likely to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within 30 days after receipt by Parent
of notice in writing from the Company, specifying the nature of such breaches
and requesting that they be remedied; (ii) if Parent (or its appropriate
subsidiaries) shall have failed to perform and comply with, in all material
respects, its agreements and covenants hereunder and such failure to perform
or comply shall not have been remedied within 30 days after receipt by Parent
of notice in writing from the Company, specifying the nature of such failure
and requesting that it be remedied; or (iii) in accordance with
Section 5.2(b); provided, however, that the termination described in this
clause (iii) shall not be effective unless and until the Company shall have
paid to Parent the fee described in Section 8.3(a) and the Company has entered
into a definitive agreement with respect to a Business Combination proposal;
(g) by Parent, by written notice to the Company, if (i) there exist
breaches of the representations and warranties of the Company made herein as
of the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a Company Material Adverse Effect, and
such breaches shall not have been remedied within 30 days after receipt by the
Company of notice in writing from Parent, specifying the nature of such
breaches and requesting that they be remedied; (ii) the Company (or its
appropriate subsidiaries) shall have failed to perform and comply with, in all
material respects, its agreements and covenants hereunder, and such failure to
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perform or comply shall not have been remedied within 30 days after receipt by
the Company of notice in writing from Parent, specifying the nature of such
failure and requesting that it be remedied; or (iii) the Board of Directors of
the Company or any committee thereof (A) withdraws or modifies, or proposes
publicly to withdraw or modify, in a manner adverse to Parent or Merger Sub,
the approval or recommendation by the Board of Directors or such committee of
the First Merger or this Agreement, (B) approves or recommends, or proposes
publicly to approve or recommend, a Business Combination, (C) causes the
Company to enter into a definitive agreement related to any Business
Combination or (D) resolves to take any of the actions specified in clause
(A), (B) or (C);
(h) by the Company, by written notice to Parent, at the earlier of
(i) 60 days after the time at which all other conditions to the Closing have
been fulfilled or (ii) the date that is 18 months after the date of this
Agreement, without any liability on the part of either Parent or Merger Sub or
their respective officers or directors, if, notwithstanding Parent's
compliance with its agreement contained in Section 6.3(c), Parent or Merger
Sub is unable to deliver the amount of cash to the Paying Agent required
pursuant to Section 2.2(a) as a direct result of the inability of Parent to
obtain financing for the transactions contemplated by this Agreement because
of the occurrence of significant disruptions in the financial and capital
markets that make it impracticable for a company having financial
characteristics similar to those of Parent as of the date of this Agreement to
finance a transaction of the size and nature of the transactions contemplated
by this Agreement; or
(i) by Parent, by written notice to the Company, if a third party,
including a group (as defined under the Exchange Act), acquires securities
representing greater than 50% of the voting power of the outstanding voting
securities of the Company.
Section 8.2 Effect of Termination. Subject to Section 9.1 and
the proviso of this Section 8.2, in the event of termination of this Agreement
by either the Company or Parent pursuant to Section 8.1, there will be no
liability on the part of either the Company or Parent or their respective
officers or directors hereunder, except that Sections 6.10, 6.14, 8.3, 9.8 and
9.9 and the agreement contained in the last sentence of Section 6.1 will
survive the termination; provided, however, that nothing herein shall relieve
any party from liability for any breach of this Agreement.
Section 8.3 Termination Fee; Expenses.
(a) Termination Fee. If this Agreement is terminated pursuant to
Section 8.1(f)(iii), Section 8.1(g)(iii) or Section 8.1(i), then the Company
shall pay to Parent promptly (but not later than five business days after
notice is received from Parent) an amount equal to $30 million in cash.
(b) Expenses. The parties agree that the agreements contained in
this Section 8.3 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty.
Notwithstanding anything to the contrary contained in this Section 8.3, if the
Company fails to promptly pay to Parent any fee due under this Section 8.3, in
addition to any amounts paid or payable pursuant to such Section, the Company,
as the defaulting party, shall pay the costs and expenses (including legal
fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime rate
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of Bank of America National Trust and Savings Association from the date such
fee was required to be paid.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties,
Covenants and Agreements. All representations, warranties, covenants and
agreements in this Agreement will not survive the Mergers, except the
covenants and agreements contained in this Section 9.1 and in Article II, the
last sentence of Section 6.1 and Sections 6.5, 6.8, 6.9, 6.11, 6.13, 9.8 and
9.9, each of which shall survive in accordance with its terms.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a) delivered
personally, (b) sent by overnight courier service (receipt confirmed in
writing), (c) delivered by facsimile transmission (with receipt confirmed) or
(d) five days after being mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Parent, to:
ONEOK, Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: John A. Gaberino, Jr.
Telephone: (918) 588-7000
Telecopy: (918) 588-7961
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601
Attention: Robert A. Yolles
Telephone: (312) 782-3939
Telecopy: (312) 782-8585
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and:
Gable & Gotwals
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: Donald A. Kihle
Telephone: (918) 585-8141
Telecopy: (918) 588-7873
If to Merger Sub, to:
Oasis Acquisition Corporation
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: Deborah B. Barnes
Telephone: (918) 588-7000
Telecopy: (918) 588-7961
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601
Attention: Robert A. Yolles
Telephone: (312) 782-3939
Telecopy: (312) 782-8585
and:
Gable & Gotwals
100 West Fifth Street
Tulsa, Oklahoma 74103
Attention: Donald A. Kihle
Telephone: (918) 585-8141
Telecopy: (918) 588-7873
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If to the Company, to:
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, Nevada 89102
Attention: George C. Biehl
Telephone: (702) 876-7237
Telecopy: (702) 364-8597
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
Attention: Frances E. Lossing
Telephone: (213) 430-6000
Telecopy: (213) 430-6407
Section 9.3 Certain Definitions. For purposes of this Agreement
(unless otherwise provided herein), the term:
(a) "affiliate" of a Person 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) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise; and
(c) "Person" means an individual, corporation, partnership, limited
liability company, association, trust or any unincorporated organization.
Section 9.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof other than the Letter Agreement; (b) may not be assigned
by operation of law or otherwise; and (c) shall be governed by and construed
in accordance with the laws of the State of Oklahoma applicable to contracts
executed in and to be fully performed in such State, without giving effect to
its conflicts of law, rules or principles.
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Section 9.5 Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words, "include," "includes," or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
Section 9.6 Counterparts; Effect. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
Section 9.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except for
(a) rights of Indemnified Parties as set forth in Section 6.5 and (b) as set
forth in Section 6.8, 6.9 and 6.11, nothing in this Agreement, express or
implied, is intended to confer upon any persons, any rights or remedies of any
nature whatsoever under or by reason of this Agreement.
Section 9.8 Waiver of Jury Trial and Certain Damages. Each party
to this Agreement waives, to the fullest extent permitted by applicable law,
(a) any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (b) without
limitation to Section 8.3, any right it may have to receive damages from any
other party based on any theory of liability for any special indirect,
consequential (including lost profits) or punitive damages.
Section 9.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 9.10 Amendment. This Agreement may be amended by the
parties hereto by written agreement executed and delivered by duly authorized
officers of the respective parties, at any time before or after the Company
Shareholders' Approval has been obtained the Company and prior to the
Effective Time of the First Merger, but after such shareholder approval, no
such amendment may (a) alter or change the rights or any of the proceedings of
the treatment of shares under Article II, or (b) alter or change any of the
terms and conditions of this Agreement if any of the alterations or changes,
alone or in the aggregate, would materially adversely affect the rights of
holders of Company capital stock, except for alterations or changes that could
otherwise be adopted by the Board of Directors of the Company, without the
further approval of such shareholders.
Section 9.11 Waiver. At any time prior to the Effective Time of
the First Merger, the parties hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
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contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein, to the
extent permitted by applicable law. Any agreement on the part of a party
hereto to any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights hereunder or otherwise
shall not constitute a waiver of such rights.
Section 9.12 No Remedy in Certain Circumstances. Each party
agrees that, should any court or other competent authority hold any provision
of this Agreement or part to be null, void or unenforceable, or order any
party to take any action inconsistent herewith or not to take an action
consistent herewith or required hereby, the validity, legality and
enforceability of the remaining provision and obligations contained or set
forth herein shall not in any way be affected or impaired thereby, unless the
foregoing inconsistent action or the failure to take an action constitutes a
material breach of this Agreement or makes this agreement impossible to
perform, in which case this Agreement shall be terminated pursuant to
Article VIII hereof. Except as otherwise contemplated by this Agreement, to
the extent that a party hereto took any action inconsistent herewith or failed
to take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall not incur
any liability or obligation unless such party breached its obligations under
Section 6.3(a) or (b) or did not in good faith seek to resist or object to the
imposition or entering of such order or judgment.
Section 9.13 Further Assurances. Each party will execute such
further documents and instruments and take such further actions as may
reasonably be requested by any other party in order to consummate the Mergers
in accordance with the terms hereof.
[signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
ONEOK, INC.
By: /s/ Larry W. Brummett
----------------------------------
Name: Larry W. Brummett
Title: Chairman and CEO
By: /s/ Deborah B. Barnes
----------------------------------
Name: Deborah B. Barnes
Title: Secretary
OASIS ACQUISITION CORPORATION
By: /s/ Larry W. Brummett
----------------------------------
Name: Larry W. Brummett
Title: Chairman and CEO
By: /s/ Deborah B. Barnes
----------------------------------
Name: Deborah B. Barnes
Title: Secretary
SOUTHWEST GAS CORPORATION
By: /s/ Michael O. Maffie
----------------------------------
Name: Michael O. Maffie
Title: President and CEO
By: /s/ George C. Biehl
----------------------------------
Name: George C. Biehl
Title: Secretary
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