LILCO STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 29, 1996 by and among THE
BROOKLYN UNION GAS COMPANY, a New York corporation ("BUG"), and LONG ISLAND
LIGHTING COMPANY, a New York corporation (the "COMPANY").
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) BUG, the Company and NYECO Corp., a New York corporation
("NYECO"), are entering into an Agreement and Plan of Exchange, dated as of the
date hereof (the "EXCHANGE AGREEMENT"), which provides, among other things, upon
the terms and subject to the conditions thereof, for the exchange of outstanding
shares of capital stock of each of BUG and the Company for newly issued shares
of capital stock of NYECO (the "BINDING SHARE EXCHANGE"), and (ii) the Company
and BUG are entering into a certain stock option agreement dated as of the date
hereof whereby BUG grants to the Company an option with respect to certain
shares of BUG's common stock on the terms and subject to the conditions set
forth therein (the "BUG STOCK OPTION AGREEMENT"); and
WHEREAS, as a condition to BUG's willingness to enter into the Exchange
Agreement, BUG has requested that the Company agree, and the Company has so
agreed, to grant to BUG an option with respect to certain shares of the
Company's common stock, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, to induce BUG to enter into the Exchange Agreement, and
in consideration of the mutual covenants and agreements set forth herein and in
the Exchange Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants BUG an
irrevocable option (the "COMPANY OPTION") to purchase up to 23,981,964
shares, subject to adjustment as provided in Section 11 (such shares
being referred to herein as the "COMPANY SHARES") of common stock, par
value $5.00 per share, of the Company (the "COMPANY COMMON STOCK")
(being 19.9% of the number of shares of Company Common Stock
outstanding on the date hereof) in the manner set forth below at a
price (the "EXERCISE PRICE") per Company Share of $19.725 (which is
equal to the Fair Market Value (as defined below) of a Company Share on
the date hereof) payable, at BUG's option, (a) in cash or (b) subject
to the Company's having obtained the approvals of any Governmental
Authority required for the Company to acquire the BUG Shares (as
defined below) from BUG, which approvals the Company shall use best
efforts to obtain, in shares of common stock, par value $.33 1/3 per
share, of BUG ("BUG SHARES") in either case in accordance with Section
4 hereof. Notwithstanding the foregoing, in no event shall the number
of Company Shares for which the Company Option is exercisable exceed
19.9% of the number of issued and outstanding shares of Company Common
Stock. As used herein, the "FAIR MARKET VALUE" of any share shall be
the average of the daily closing sales price for such share on the New
York Stock Exchange (the "NYSE") during the 10 NYSE trading days prior
to the fifth NYSE trading day preceding the date such Fair Market Value
is to be determined. Capitalized
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terms used herein but not defined herein shall have the meanings set
forth in the Exchange Agreement.
2. EXERCISE OF OPTION. The Company Option may be exercised by
BUG, in whole or in part, at any time or from time to time after the
Exchange Agreement becomes terminable by BUG under circumstances which
could entitle BUG to termination fees under either Section 9.3(a) of
the Exchange Agreement (provided that the events specified in Section
9.3(a)(ii)(x) of the Exchange Agreement shall have occurred, although
the events specified in Section 9.3(a)(ii)(y) thereof need not have
occurred) or Section 9.3(b) of the Exchange Agreement (regardless of
whether the Exchange Agreement is actually terminated or whether there
occurs a closing of any Business Combination involving a Target Party
or a closing by which a Target Party becomes a subsidiary), any such
event by which the Exchange Agreement becomes so terminable by BUG
being referred to herein as a "TRIGGER EVENT." The Company shall notify
BUG promptly in writing of the occurrence of any Trigger Event, it
being understood that the giving of such notice by the Company shall
not be a condition to the right of BUG to exercise the Company Option.
In the event BUG wishes to exercise the Company Option, BUG shall
deliver to the Company a written notice (an "EXERCISE NOTICE")
specifying the total number of Company Shares it wishes to purchase.
Each closing of a purchase of Company Shares (a "CLOSING") shall occur
at a place, on a date and at a time designated by BUG in an Exercise
Notice delivered at least two business days prior to the date of the
Closing. The Company Option shall terminate upon the earlier of: (i)
the Effective Time; (ii) the termination of the Exchange Agreement
pursuant to Section 9.1 thereof (other than upon or during the
continuance of a Trigger Event); or (iii) 180 days following any
termination of the Exchange Agreement upon or during the continuance of
a Trigger Event (or if, at the expiration of such 180 day period the
Company Option cannot be exercised by reason of any applicable
judgment, decree, order, law or regulation, 10 business days after such
impediment to exercise shall have been removed or shall have become
final and not subject to appeal, but in no event under this clause
(iii) later than June 30, 1998). Notwithstanding the foregoing, the
Company Option may not be exercised if BUG is in material breach of any
of its material representations or warranties, or in material breach of
any of its covenants or agreements, contained in this Agreement or in
the Exchange Agreement. Upon the giving by BUG to the Company of the
Exercise Notice and the tender of the applicable aggregate Exercise
Price, BUG shall be deemed to be the holder of record of the Company
Shares issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Company Shares shall not then be actually delivered
to BUG.
3. CONDITIONS TO CLOSING. The obligation of the Company to
issue the Company Shares to BUG hereunder is subject to the conditions,
which (other than the conditions described in clauses (i), (iii) and
(iv) below) may be waived by the Company in its sole discretion, that
(i) all waiting periods, if any, under the HSR Act, applicable to the
issuance of the Company Shares hereunder shall have expired or have
been terminated; (ii) the Company Shares, and any BUG Shares which are
issued in payment of the Exercise Price, shall have been approved for
listing on the NYSE upon official
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notice of issuance; (iii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
federal, state or local administrative agency or commission or other
federal, state or local Governmental Authority, if any, required in
connection with the issuance of the Company Shares hereunder shall have
been obtained or made, as the case may be, including, without
limitation, if applicable, the approval of the SEC under Section 10 of
the 1935 Act of the acquisition of the Company Shares by BUG and, if
applicable, the acquisition by the Company of the BUG Shares
constituting the Exercise Price hereunder; and (iv) no preliminary or
permanent injunction or other order by any court of competent
jurisdiction prohibiting or otherwise restraining such issuance shall
be in effect.
4. CLOSING. At any Closing, (a) the Company will deliver to
BUG or its designee a single certificate in definitive form
representing the number of the Company Shares designated by BUG in its
Exercise Notice, such certificate to be registered in the name of BUG
and to bear the legend set forth in Section 12, and (b) BUG will
deliver to the Company the aggregate price for the Company Shares so
designated and being purchased by (i) wire transfer of immediately
available funds or certified check or bank check or (ii) subject to the
condition in Section 1(b), a certificate or certificates representing
the number of BUG Shares being issued by BUG in consideration thereof,
as the case may be. For the purposes of this Agreement, the number of
BUG Shares to be delivered to the Company shall be equal to the
quotient obtained by dividing (i) the product of (x) the number of
Company Shares with respect to which the Company Option is being
exercised and (y) the Exercise Price by (ii) the Fair Market Value of
the BUG Shares on the date immediately preceding the date the Exercise
Notice is delivered to the Company. The Company shall pay all expenses,
and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 4 in the name of
BUG or its designee.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to BUG that (a) except as set forth in
Section 5.1 of the LILCO Disclosure Schedule, the Company is a
corporation duly organized, validly existing and in active status under
the laws of the State of New York and has the corporate power and
authority to enter into this Agreement and, subject to obtaining the
applicable approval of shareholders of the Company for the repurchase
of Company Shares pursuant to Section 7(a) below under circumstances
where Section 513(e) of the NYBCL would be applicable (the "BUYBACK
APPROVALS") and subject to any regulatory approvals referred to herein
and to the provisions of Section 513(a) of the NYBCL, if applicable, to
carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or any of the transactions contemplated hereby
(other than any required Buyback Approvals), (c) such corporate action
(including the approval of the Board of Directors of the Company) is
intended to render inapplicable to this Agreement and the Exchange
Agreement and the transactions
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contemplated hereby and thereby, the provisions of the NYBCL referred
to in Section 5.15 of the Exchange Agreement, (d) this Agreement has
been duly executed and delivered by the Company, constitutes a valid
and binding obligation of the Company and, assuming this Agreement
constitutes a valid and binding obligation of BUG, is enforceable
against the Company in accordance with its terms, (e) the Company has
taken all necessary corporate action to authorize and reserve for
issuance and to permit it to issue, upon exercise of the Company
Option, and at all times from the date hereof through the expiration of
the Company Option will have reserved, 23,981,964 authorized and
unissued Company Shares, such amount being subject to adjustment as
provided in Section 11, all of which, upon their issuance and delivery
in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable, (f) upon delivery of the Company Shares
to BUG upon the exercise of the Company Option, BUG will acquire the
Company Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever, (g)
except as described in Section 5.4(b) of the Exchange Agreement, the
execution and delivery of this Agreement by the Company does not, and
the consummation by the Company 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 the termination 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 the creation of a lien, pledge, security
interest or other encumbrance on assets (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss or
creation, a "VIOLATION") of the Company or any of its subsidiaries,
pursuant to, (A) any provision of the certificate of incorporation or
by-laws of the Company, (B) any provisions of any loan or credit
agreement, note, mortgage, indenture, lease, Company benefit plan or
other agreement, obligation, instrument, permit, concession, franchise,
license or (C) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or its properties or
assets, which Violation, in the case of each of clauses (B) and (C),
could reasonably be expected to have a material adverse effect on the
Company and its subsidiaries taken as a whole, (h) except as described
in Section 5.4(c) of the Exchange Agreement or Section 1(b) or Section
3 hereof, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, (i) none of
the Company, any of its affiliates or anyone acting on its or their
behalf has issued, sold or offered any security of the Company to any
person under circumstances that would cause the issuance and sale of
the Company Shares, as contemplated by this Agreement, to be subject to
the registration requirements of the Securities Act as in effect on the
date hereof and, assuming the representations of BUG contained in
Section 6(h) are true and correct, the issuance, sale and delivery of
the Company Shares hereunder would be exempt from the registration and
prospectus delivery requirements of the Securities Act, as in effect on
the date hereof (and the Company shall not take any action which would
cause the issuance, sale and delivery of the Company Shares hereunder
not to be exempt from such requirements), and (j) any BUG Shares
acquired pursuant to this Agreement will be acquired for the Company's
own account, for investment purposes only and will not be acquired by
the Company
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with a view to the public distribution thereof in violation of any
applicable provision of the Securities Act.
6. REPRESENTATIONS AND WARRANTIES OF BUG. BUG represents and
warrants to the Company that (a) BUG is a corporation duly organized,
validly existing and in good standing under the laws of the State of
New York and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution
and delivery of this Agreement by BUG and the consummation by BUG of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of BUG and no other corporate
proceedings on the part of BUG are necessary to authorize this
Agreement or any of the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by BUG and constitutes a
valid and binding obligation of BUG, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, is
enforceable against BUG in accordance with its terms, (d) prior to any
delivery of BUG Shares in consideration of the purchase of Company
Shares pursuant hereto, BUG will have taken all necessary corporate
action to authorize for issuance and to permit it to issue such BUG
Shares, all of which, upon their issuance and delivery in accordance
with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, and to render inapplicable to the receipt by the
Company of the BUG Shares the provisions of the NYBCL referred to in
Section 4.15 of the Exchange Agreement, (e) upon any delivery of such
BUG Shares to the Company in consideration of the purchase of Company
Shares pursuant hereto, the Company will acquire the BUG Shares free
and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever, (f) except as described in Section
4.4(b) of the Exchange Agreement, the execution and delivery of this
Agreement by BUG does not, and the consummation by BUG of the
transactions contemplated hereby will not, violate, conflict with, or
result in the 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 BUG or any of its subsidiaries, pursuant to (A) any
provision of the certificate of incorporation or by-laws of BUG, (B)
any provisions of any loan or credit agreement, note, mortgage,
indenture, lease, BUG benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license or (C) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable
to BUG or its properties or assets, which Violation, in the case of
each of its clauses (B) and/or (C), would have a material adverse
effect on BUG and its subsidiaries taken as a whole, (g) except as
described in Section 4.4(c) of the Exchange Agreement or Section 1(b)
or Section 3 hereof, the execution and delivery of this Agreement by
BUG does not, and the consummation by BUG of the transactions
contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority and (h) any Company Shares acquired upon
exercise of the Company Option will be acquired for BUG's own account,
for investment purposes only and will not be, and the Company Option is
not being, acquired by BUG with a view to the public distribution
thereof in violation of any applicable provision of the Securities Act.
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7. CERTAIN REPURCHASES.
(a) BUG PUT. At the request of BUG by written notice at any
time during which the Company Option is exercisable pursuant to Section
2 (the "REPURCHASE PERIOD"), the Company (or any successor entity
thereof) shall repurchase from BUG all or any portion of the Company
Option, at the price set forth in subparagraph (i) below, or, at the
request of BUG by written notice at any time prior to December 31, 1997
(provided that such date shall be extended to June 30, 1998 under the
circumstances where the date after which either party may terminate the
Exchange Agreement pursuant to Section 9.1(b) of the Exchange Agreement
has been extended to June 30, 1998), the Company (or any successor
entity thereof) shall repurchase from BUG all or any portion of the
Company Shares purchased by BUG pursuant to the Company Option, at the
price set forth in subparagraph (ii) below:
(i) the difference between the "MARKET/OFFER PRICE"
for shares of Company Common Stock as of the date BUG gives
notice of its intent to exercise its rights under this Section
7 (defined as the higher of (A) the price per share offered as
of such date pursuant to any tender or exchange offer or other
offer with respect to a Business Combination which was made
prior to such date and not terminated or withdrawn as of such
date (the "OFFER PRICE") and (B) the Fair Market Value of
Company Common Stock as of such date (the "MARKET PRICE")) and
the Exercise Price, multiplied by the number of Company Shares
purchasable pursuant to the Company Option (or portion thereof
with respect to which BUG is exercising its rights under this
Section 7), but only if the Market/Offer Price is greater than
the Exercise Price;
(ii) the product of (x) the sum of (A) the Exercise
Price paid by BUG per Company Share acquired pursuant to the
Company Option and (B) the difference between the Market/Offer
Price and the Exercise Price, but only if the Market/Offer
Price is greater than the Exercise Price, and (y) the number
of Company Shares to be repurchased pursuant to this Section
7. For purposes of this clause (ii), the Offer Price shall be
the highest price per share offered pursuant to a tender or
exchange offer or other Business Combination offer during the
Repurchase Period prior to the delivery by BUG of a notice of
repurchase.
(b) REDELIVERY OF BUG SHARES. If BUG elected to purchase
Company Shares pursuant to the exercise of the Company Option by the
issuance and delivery of BUG Shares, then the Company shall, if so
requested by BUG, in fulfillment of its obligation pursuant to clause
(a) of Section 7(a)(ii)(x) (that is, with respect to the Exercise Price
only and without limitation to its obligation to pay additional
consideration under clause (b) of Section 7(a)(ii)(x)), redeliver the
certificate for such BUG Shares to BUG, free and clear of all liens,
claims, damages, charges and encumbrances of any kind or nature
whatsoever; provided, however, that if less than all of the Company
Shares purchased by BUG pursuant to the Company Option are to be
repurchased pursuant to this Section 7, then BUG shall issue to the
Company a new certificate representing those BUG Shares which are not
due to be redelivered to BUG pursuant to this Section 7 as
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they constituted payment of the Exercise Price for the Company Shares
not being repurchased.
(c) PAYMENT AND REDELIVERY OF COMPANY OPTION OR SHARES. In the
event BUG exercises its rights under this Section 7, the Company shall,
within 10 business days thereafter, pay the required amount to BUG in
immediately available funds and BUG shall surrender to the Company the
Company Option or the certificates evidencing the Company Shares
purchased by BUG pursuant thereto, and BUG shall warrant that it owns
the Company Option or such shares and that the Company Option or such
shares are then free and clear of all liens, claims, damages, charges
and encumbrances of any kind or nature whatsoever.
(d) BUG CALL. If BUG has elected to purchase Company Shares
pursuant to the exercise of the Company Option by the issuance and
delivery of BUG Shares, notwithstanding that BUG may no longer hold any
such Company Shares or that BUG elects not to exercise its other rights
under this Section 7, BUG may require, at any time or from time to time
prior to December 31, 1997 (provided that such date shall be extended
to June 30, 1998 under the circumstances where the date after which
either party may terminate the Exchange Agreement pursuant to Section
9.1(b) of the Exchange Agreement has been extended to June 30, 1998),
the Company to sell to BUG any such BUG Shares at the Fair Market Value
that had been attributed to such BUG Shares pursuant to Section 4 plus
interest at the rate of 6.5% per annum on such amount from the Closing
Date relating to the exchange of such BUG Shares pursuant to Section 4
to the closing date under this Section 7(d) less any dividends on such
BUG Shares paid during such period or declared and payable to
stockholders of record on a date during such period.
(e) REPURCHASE PRICE REDUCED AT BUG'S OPTION. In the event the
repurchase price specified in Section 7(a) would subject the purchase
of the Company Option or the Company Shares purchased by BUG pursuant
to the Company Option to a vote of the shareholders of the Company
pursuant to Section 513(e) of the NYBCL, then BUG may, at its election,
reduce the repurchase price to an amount which would permit such
repurchase without the necessity for such a shareholder vote.
8. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration Date,
neither party shall, directly or indirectly, by operation of law or
otherwise, sell, assign, pledge, or otherwise dispose of or transfer
any Restricted Shares beneficially owned by such party, other than (i)
pursuant to Section 7, or (ii) in accordance with Section 9(b) or
Section 10.
(b) PERMITTED SALES. Following the termination of the Exchange
Agreement, a party shall be permitted to sell any Restricted Shares
beneficially owned by it if such sale is made pursuant to a tender or
exchange offer that has been approved or recommended, or otherwise
determined to be fair to and in the best interests of the
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shareholders of the other party, by a majority of the members of the
Board of Directors of such other party which majority shall include a
majority of directors who were directors prior to the announcement of
such tender or exchange offer.
9. REGISTRATION RIGHTS. Following the termination of the
Exchange Agreement, each party hereto (a "DESIGNATED HOLDER") may by
written notice (the "REGISTRATION NOTICE") to the other party (the
"REGISTRANT") request the Registrant to register under the Securities
Act all or any part of the Restricted Shares beneficially owned by such
Designated Holder (the "REGISTRABLE SECURITIES") pursuant to a bona
fide firm commitment underwritten public offering in which the
Designated Holder and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably
practicable and shall use their best efforts to prevent any person
(including any Group (as used in Rule 13d-5 under the Exchange Act))
and its affiliates form purchasing through such offering Restricted
Shares representing more than 1% of the outstanding shares of common
stock of the Registrant on a fully diluted basis (a "PERMITTED
OFFERING"). The Registration Notice shall include a certificate
executed by the Designated Holder and its proposed managing
underwriter, which underwriter shall be an investment banking firm of
nationally recognized standing (the "MANAGER"), stating that (i) they
have a good faith intention to commence promptly a Permitted Offering
and (ii) the Manager in good faith believes that, based on the then
prevailing market conditions, it will be able to sell the Registrable
Securities at a per share price equal to at least 80% of the then Fair
Market Value of such shares. The Registrant (and/or any person
designated by the Registrant) shall thereupon have the option
exercisable by written notice delivered to the Designated Holder within
10 business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the Registrable
Securities proposed to be so sold for cash at a price (the "OPTION
PRICE") equal to the product of (i) the number of Registrable
Securities to be so purchased by the Registrant and (ii) the then Fair
Market Value of such shares. Any such purchase of Registrable
Securities by the Registrant (or its designee) hereunder shall take
place at a closing to be held at the principal executive offices of the
Registrant or at the offices of its counsel at any reasonable date and
time designated by the Registrant and/or such designee in such notice
within 20 business days after delivery of such notice. Any payment for
the shares to be purchased shall be made by delivery at the time of
such closing of the Option Price in immediately available funds.
If the Registrant does not elect to exercise its option
pursuant to this Section 10 with respect to all Registrable Securities,
it shall use its best efforts to effect, as promptly as practicable,
the registration under the Securities Act of the unpurchased
Registrable Securities proposed to be so sold; provided, however,, that
(i) neither party shall be entitled to more than an aggregate of two
effective registration statements hereunder and (ii) the Registrant
will not be required to file any such registration statement during any
period of time (not to exceed 40 days after such request in the case of
clause (A) below or 90 days in the case of clauses (B) and (C) below)
when (A) the Registrant is in possession of material non-public
information which it reasonably believes would be detrimental to be
disclosed at such time and, in the opinion of counsel to the
Registrant,
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such information would have to be disclosed if a registration statement
were filed at that time: (B) the Registrant is required under the
Securities Act to include audited financial statements for any period
in such registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) the
Registrant determines, in its reasonable judgment, that such
registration would interfere with any financing, acquisition or other
material transaction involving the Registrant or any of its affiliates.
The Registrant shall use its reasonable best efforts to cause any
Registrable Securities registered pursuant to this Section 10 to be
qualified for sale under the securities or Blue-Sky laws of such
jurisdictions as the Designated Holder may reasonably request and shall
continue such registration or qualification in effect in such
jurisdiction; provided, however, that the Registrant shall not be
required to qualify to do business in, or consent to general service of
process in, any jurisdiction by reason of this provision.
The registration rights set forth in this Section 10 are
subject to the condition that the Designated Holder shall provide the
Registrant with such information with respect to such holder's
Registrable Securities, the plans for the distribution thereof, and
such other information with respect to such holder as, in the
reasonable judgment of counsel for the Registrant, is necessary to
enable the Registrant to include in such registration statement all
material facts required to be disclosed with respect to a registration
thereunder.
A registration effected under this Section 10 shall be
effected at the Registrant's expense, except for underwriting discounts
and commissions and the fees and the expenses of counsel to the
Designated Holder, and the Registrant shall provide to the underwriters
such documentation (including certificates, opinions of counsel and
"comfort" letters from auditors as are customary in connection with
underwritten public offerings as such underwriters may reasonably
require. In connection with any such registration, the parties agree
(i) to indemnify each other and the underwriters in the customary
manner, (ii) to enter into an underwriting agreement in form and
substance customary for transactions of such type with the Manager and
the other underwriters participating in such offering and (iii) to take
all further actions which shall be reasonably necessary to effect such
registration and sale (including, if the Manager deems it necessary,
participating in road-show presentations).
The Registrant shall be entitled to include (at its expense)
additional shares of its common stock in a registration effected
pursuant to this Section 10 only if and to the extent the Manager
determines that such inclusion will not adversely affect the prospects
of success of such offering.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without
limitation to any restriction on the Company contained in this
Agreement or in the Exchange Agreement, in the event of any change in
Company Common Stock by reason of stock dividends, splitups, mergers
(other than the Binding Share Exchanges), recapitalizations,
combinations, exchange of shares or the like, the type and number of
shares or securities subject to the Company Option, and the purchase
price per share
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provided in Section 1, shall be adjusted appropriately to restore to
BUG its rights hereunder, including the right to purchase from the
Company (or its successors) shares of Company Common Stock representing
19.9% of the Outstanding Company Common Stock for the aggregate
Exercise Price calculated as of the date of this Agreement as provided
in Section 1.
11. RESTRICTIVE LEGENDS. Each certificate representing shares
of Company Common Stock issued to BUG hereunder, and BUG Shares, if
any, delivered to the Company at a Closing, shall include a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT, DATED AS OF DECEMBER 29, 1996, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER UPON REQUEST.
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed
by delivery of substitute certificates(s) without such reference if BUG
or the Company, as the case may be, shall have delivered to the other
party a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel, in form and substance
satisfactory to the other party, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions
of this Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in
its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other
legend as may be required by law. Certificates representing shares sold
in a registered public offering pursuant to Section 10 shall not be
required to bear the legend set forth in Section 12.
12. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY
BENEFICIARIES. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. Except as expressly provided for in this Agreement,
neither this Agreement nor the rights or the obligations of either
party hereto are assignable, except by operation of law, or with the
written consent of the other party. Nothing contained in this
Agreement, express or implied, is intended to confer upon any person
other than the parties hereto and their respective permitted assigns
any rights or remedies of any nature whatsoever by reason of this
Agreement. Any Restricted Shares sold by a party in compliance with the
provisions of Section 10 shall, upon consummation of such sale, be free
of the restrictions imposed with respect to such shares by this
Agreement, unless and until such party shall
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repurchase or otherwise become the beneficial owner of such shares, and
any transferee of such shares shall not be entitled to the registration
rights of such party.
13. SPECIFIC PERFORMANCE. The parties recognize and agree that
if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise
breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to other remedies, the other party shall
be entitled to an injunction restraining any violation or threatened
violation of the provisions of this Agreement. In the event that any
action should be brought in equity to enforce the provisions of the
Agreement, neither party will allege, and each party hereby waives the
defense, that there is adequate remedy at law.
14. ENTIRE AGREEMENT. This Agreement, the BUG Stock Option
Agreement, the Confidentiality Agreement and the Exchange Agreement
(including the exhibits and schedules thereto) constitute the entire
agreement among the parties with respect to the subject matter hereof
and thereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them
with respect to the subject matter hereof and thereof.
15. FURTHER ASSURANCES. Each party will execute and deliver
all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions
contemplated hereby.
16. VALIDITY. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall
remain in full force and effect. In the event any court or other
competent authority holds any provisions of this Agreement to be null,
void or unenforceable, the parties hereto shall negotiate in good faith
the execution and delivery of an amendment to this Agreement in order,
as nearly as possible, to effectuate, to the extent permitted by law,
the intent of the parties hereto with respect to such provision and the
economic effects thereof. If for any reason any such court or
regulatory agency determines that BUG is not permitted to acquire, or
the Company is not permitted to repurchase pursuant to Section 7, the
full number of shares of Company Common Stock provided in Section 1
hereof (as the same may be adjusted), it is the express intention of
the Company to allow BUG to acquire or to require the Company to
repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof. Each party agrees that, should
any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order
any party to take any action inconsistent herewith,or not take any
action required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any other
remedy, including but not limited to money damages, for breach hereof
or of any other provision of this Agreement or part hereof as the
result of such holding or order.
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17. NOTICES. All notices and other communication hereunder
shall be in writing and shall be deemed given if (i) delivered
personally, or (ii) sent by reputable overnight courier service, or
(iii) telecopied (which is confirmed), or (iv) 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):
A. If to BUG, to:
The Brooklyn Union Gas Company
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
B. If to the Company, to:
Long Island Lighting Company
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
18. GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be
governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely
within such State and without regard to its choice of law principles.
Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of New
York or any New York state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this
agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal court sitting in the State
of New York or a New York state court.
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19. INTERPRETATION. When a reference is made in this Agreement
to a Section such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The descriptive headings
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of
this Agreement.
20. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but both
of which, taken together, shall constitute one and the same instrument.
21. EXPENSES. Except as otherwise expressly provided herein or
in the Exchange Agreement, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall
be paid by the party incurring such expenses.
22. AMENDMENTS; WAIVER. This Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only
by an instrument in writing signed on behalf of each of the parties
hereto, or, in the case of a waiver, by an instrument signed on behalf
of the party waiving compliance.
23. EXTENSION OF TIME PERIODS. The time periods for exercise
of certain rights under Sections 2, 6 and 7 shall be extended: (i) to
the extent necessary to obtain all regulatory approvals for the
exercise of such rights, and for the expiration of all statutory
waiting periods; and (ii) to the extent necessary to avoid any
liability under Section 16(b) of the Exchange Act by reason of such
exercise.
24. REPLACEMENT OF COMPANY OPTION. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, the
Company will execute and deliver a new Agreement of like tenor and
date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
THE BROOKLYN UNION GAS COMPANY
By:/s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
LONG ISLAND LIGHTING COMPANY
By:/s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------
Name: Xx. Xxxxxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
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