Exhibit 10
AGREEMENT AND PLAN OF MERGER
by and among
CMP GROUP, INC.,
ENERGY EAST CORPORATION
and
EE MERGER CORP.
dated as of June 14, 1999
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ 1
Section 1.2 Effects of the Merger..................................... 1
Section 1.3 Effective Time of the Merger.............................. 1
Section 1.4 Directors................................................. 2
Section 1.5 Officers.................................................. 2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock..................... 2
Section 2.2 Exchange of Certificates.................................. 3
Section 2.3 Treatment of Stock Options; Withholding Rights............ 4
ARTICLE III
THE CLOSING
Section 3.1 Closing................................................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPAN
Section 4.1 Organization and Qualification............................ 5
Section 4.2 Subsidiaries.............................................. 6
Section 4.3 Capitalization............................................ 6
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance............................................... 7
Section 4.5 Reports and Financial Statements.......................... 8
Section 4.6 Absence of Certain Changes or Events...................... 9
Section 4.7 Litigation................................................ 9
Section 4.8 Proxy Statement........................................... 9
Section 4.9 Tax Matters............................................... 10
Section 4.10 Employee Matters; ERISA................................... 11
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Section 4.11 Environmental Protection.................................. 15
Section 4.12 Regulation as a Utility................................... 17
Section 4.13 Vote Required............................................. 17
Section 4.14 Opinion of Financial Advisor.............................. 17
Section 4.15 Ownership of Parent Common Stock.......................... 17
Section 4.16 Takeover Laws; Rights Plans............................... 17
Section 4.17 Year 2000................................................. 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification............................ 18
Section 5.2 Subsidiaries.............................................. 18
Section 5.3 Capitalization............................................ 18
Section 5.4 Authority; Non-Contravention; Statutory Approvals......... 19
Section 5.5 Proxy Statement........................................... 20
Section 5.6 Availability of Funds..................................... 20
Section 5.7 Vote Required............................................. 20
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by the Company Pending the Merger..... 20
Section 6.2 Alternative Proposals..................................... 24
Section 6.3 Cooperation, Notification ................................ 25
Section 6.4 Third Party Consents ..................................... 25
Section 6.5 No Breach, Etc. .......................................... 25
Section 6.6 Access to Information..................................... 26
Section 6.7 Proxy Statement........................................... 26
Section 6.8 Regulatory Matters........................................ 26
Section 6.9 Shareholder Approval...................................... 27
Section 6.10 Directors' and Officers' Indemnification.................. 27
Section 6.11 Disclosure Schedules...................................... 28
Section 6.12 Public Announcements...................................... 29
Section 6.13 Certain Employee Agreements............................... 29
Section 6.14 Employee Benefit Plans.................................... 29
Section 6.15 Expenses.................................................. 30
Section 6.16 Further Assurances........................................ 30
Section 6.17 Corporate Offices......................................... 30
Section 6.18 Parent Directors.......................................... 30
Section 6.19 Employment Contracts...................................... 31
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Section 6.20 Advisory Board............................................ 31
Section 6.21 Community Involvement..................................... 31
Section 6.22 Transition Steering Team.................................. 31
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger................................................... 31
Section 7.2 Conditions to Obligation of Parent to Effect the Merger... 32
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger................................................... 33
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination............................................... 34
Section 8.2 Effect of Termination..................................... 35
Section 8.3 Termination Fee; Expenses................................. 35
Section 8.4 Amendment................................................. 36
Section 8.5 Waiver.................................................... 36
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival; Effect of Representations and Warranties.... 37
Section 9.2 Brokers................................................... 37
Section 9.3 Notices................................................... 37
Section 9.4 Miscellaneous............................................. 38
Section 9.5 Interpretation............................................ 38
Section 9.6 Counterparts; Effect...................................... 39
Section 9.7 Parties in Interest....................................... 39
Section 9.8 Waiver of Jury Trial and Certain Damages.................. 39
Section 9.9 Enforcement............................................... 39
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AGREEMENT AND PLAN OF MERGER, dated as of June 14, 1999 (this
"Agreement"), by and among CMP Group, Inc., a Maine corporation (the "Company"),
Energy East Corporation, a New York corporation ("Parent"), and EE Merger Corp.,
a Maine corporation and a wholly owned subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in a
business combination transaction on the terms stated herein; and
WHEREAS, the Boards of Directors of the Company and Parent have
approved and deemed it advisable and in the best interests of their respective
shareholders to consummate the transactions contemplated herein under which the
businesses of the Company and Parent would be combined by means of the merger of
Merger Sub with and into the Company;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.3)
Merger Sub shall be merged with and into the Company (the "Merger") in
accordance with the laws of the State of Maine. The Company shall be the
surviving corporation in the Merger and shall continue its corporate existence
under the laws of the State of Maine. The effects and the consequences of the
Merger shall be as set forth in Section 1.2. Throughout this Agreement, the term
"Merger Sub" shall refer to Merger Sub prior to the Merger and the term
"Surviving Corporation" shall refer to the Company in its capacity as the
surviving corporation in the Merger.
Section 1.2 Effects of the Merger. At the Effective Time, (i) the
articles of incorporation of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter amended as provided by law and such articles of
incorporation, except that the name of the Surviving Corporation shall be "CMP
Group, Inc." and (ii) the by-laws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter amended as provided by law, the articles of incorporation or by-laws
of the Surviving Corporation. Subject to the foregoing, the additional effects
of the Merger shall be as provided in Section 905 of the Maine Business
Corporation Act, as amended (the "MBCA").
Section 1.3 Effective Time of the Merger. On the Closing Date (as
defined in Section 3.1), with respect to the Merger, articles of merger
complying with Section 903 of the MBCA (the "Articles of Merger") shall be
delivered to the Secretary of the State of Maine for filing. The Merger shall
become effective upon the filing of the Articles of Merger (the "Effective
Time").
Section 1.4 Directors. The directors of Merger Sub immediately
prior to the Effective Time and Messrs. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
shall be the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the articles of incorporation
and by-laws of the Surviving Corporation, or as otherwise provided by the MBCA.
Section 1.5 Officers. Except for the Chief Executive Officer of the
Company, who shall become the Chairman of the Board, President and Chief
Executive Officer of the Surviving Corporation, the officers of Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the articles of incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by the MBCA.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company or Merger Sub:
(a) Shares of Merger Sub Stock. Each share of common stock, par
value $.01 per share, of Merger Sub (the "Merger Sub Common Stock") that is
issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
(b) Cancellation of Certain Company Common Stock. Each share of
common stock, par value $5.00 per share, of the Company (the "Company Common
Stock"), that is owned by the Company as treasury stock and all shares of
Company Common Stock that are owned by any subsidiary of the Company, Parent,
Merger Sub or any other subsidiary of Parent shall be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Each share of Company
Common Stock, other than Dissenting Shares (as defined in Section 2.1(d)) and
shares cancelled pursuant to Section 2.1(b), issued and outstanding immediately
prior to the Effective Time shall by virtue of the Merger and without any action
on the part of the holder thereof be converted into the right to receive an
amount in cash, without interest, equal to $29.50 (the "Merger Consideration").
At the Effective Time, all such shares of Company Common Stock shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
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(d) Dissenting Shares. Each outstanding share of Company Common
Stock the holder of which has perfected his right to dissent under applicable
law and has not effectively withdrawn or lost such right as of the Effective
Time (the "Dissenting Shares") shall not be converted into or represent a right
to receive the Merger Consideration, and the holder thereof shall be entitled
only to such rights as are granted by applicable law; provided, however, that
any Dissenting Share held by a person at the Effective Time who shall, after the
Effective Time, withdraw the demand for payment for shares or lose the right to
payment for shares, in either case pursuant to the MBCA, shall be deemed to be
converted into, as of the Effective Time, the right to receive the Merger
Consideration. The Company or the Surviving Corporation shall give Parent prompt
notice upon receipt by the Company or the Surviving Corporation, respectively,
of any such written demands for payment of the fair value of such shares of
Company Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable law. Any payments made in respect of Dissenting
Shares shall be made by the Surviving Corporation.
Section 2.2 Exchange of Certificates. (a) Deposit with Paying
Agent. Prior to the Effective Time, Parent and the Company shall appoint a
mutually acceptable bank or trust to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of certificates
representing shares of Company Common Stock. Parent will enter into a customary
paying agent agreement acceptable to both Parent and the Company with the Paying
Agent. As soon as practicable after the Effective Time, Parent shall deposit or
cause to be deposited with the Paying Agent in trust for the benefit of the
Company's stockholders cash representing the aggregate Merger Consideration to
which Company stockholders who have properly completed, signed and submitted
letters of transmittal shall be entitled pursuant to Section 2.1(c); and from
time to time cash representing the aggregate Merger Consideration to which
Company stockholders who later submit letters of transmittal shall be entitled
pursuant to Section 2.1(c) (such amounts being hereinafter referred to as the
"Exchange Fund"). The Paying Agent shall invest the Exchange Fund as Parent
directs. Any net profit resulting from, or interest or income produced by, such
investments shall be payable to Parent. The Exchange Fund shall not be used for
any other purpose except as provided in this Agreement.
(b) Exchange and Payment Procedures. As soon as practicable after
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record, as of the Effective Time, of a certificate representing shares of
Company Common Stock (a "Certificate") that has been converted pursuant to
Section 2.1: (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 actual delivery of the Certificates to the Paying Agent) and (ii)
instructions for effecting the surrender of the Certificates and receiving the
Merger Consideration to which such holder shall be entitled therefor pursuant to
Section 2.1(c). Upon surrender of a Certificate to the Paying Agent for
cancellation, together with a duly executed letter of transmittal and such other
documents as the Paying Agent may require, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration. In the
event the Merger Consideration is to be delivered to any person who is not the
person in whose name the Certificate surrendered in exchange therefor is
registered in the transfer records of the Company, the Merger Consideration may
be delivered to a transferee if the Certificate is presented to the Paying
Agent, accompanied by all documents
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required to evidence and effect such transfer and by evidence satisfactory to
the Paying Agent that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate (other than a
certificate representing (i) shares of Company Common Stock to be cancelled in
accordance with Section 2.1(b) or (ii) Dissenting Shares) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration. No interest will be paid or will accrue on
any cash payable to holders of Certificates pursuant to provisions of this
Article II. In the event any Certificate has been lost, stolen or destroyed, the
Paying Agent shall issue in exchange for such lost, stolen or destroyed
Certificate upon the making of an affidavit of that fact by the holder thereof
the Merger Consideration payable with respect thereto pursuant to Section
2.1(c), provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent or the Paying
Agent with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(c) Closing of Transfer Books. From and after the Effective Time,
the stock transfer books of the Company shall be closed and no registration of
any transfer of any capital stock of the Company shall thereafter be made in the
records of the Company. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be cancelled and exchanged for the
Merger Consideration.
(d) Termination of Exchange Fund. All funds held by the Paying
Agent for payment to the holders of unsurrendered Certificates and unclaimed at
the end of six months from the Effective Time shall be returned to Parent, after
which time any holder of unsurrendered Certificates shall look as a general
creditor only to the Surviving Corporation for payment of such funds to which
such holder may be due, subject to applicable law.
(e) Escheat. The Company shall not be liable to any person for such
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Section 2.3 Treatment of Stock Options; Withholding Rights. (a)
Treatment of Stock Options. Prior to the Effective Time, the Board of Directors
of the Company (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and take all other actions necessary (including
obtaining the consent of holders) to provide for the cancellation, effective at
the Effective Time, of all the outstanding stock options (the "Options")
outstanding immediately prior to the Effective Time heretofore granted under any
stock option or similar plan of the Company or under any agreement, without any
payment therefor except as otherwise provided in this Section 2.3. As of the
Effective Time, all Options (whether vested or unvested) which are listed in
Section 2.3 of the Company Disclosure Schedule (as defined in Section 6.11(ii))
shall be cancelled (and to the extent formerly so exercisable shall no longer be
exercisable) and shall entitle each holder thereof, in cancellation and
settlement therefor, to a payment, if any, in cash by the Company (less any
applicable withholding taxes), promptly following the Effective Time, equal to
the product of (i) the total number of shares of the Company Common Stock
subject to
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such Option (whether vested or unvested) and (ii) the excess, if any,
of $29.50 over the exercise price per share of the Company Common Stock subject
to such Option.
(b) Withholding Rights. Each of the Surviving Corporation, the
Company and Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of the Company Common Stock such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code") and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign Tax law. To the extent
that amounts are so withheld by the Surviving Corporation, the Company or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction and withholding was made
by the Surviving Corporation, the Company or Parent, as the case may be.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, at 10:00
a.m., New York City time, on the second business day immediately following the
date on which the last of the conditions set forth in Article VII hereof is
fulfilled or waived (other than conditions that by their nature are required to
be performed on the Closing Date, but subject to satisfaction of such
conditions), or at such other time and date and place as the Company and Parent
shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
Section 4.1 Organization and Qualification. Except as set
forth in Section 4.1 of the Company Disclosure Schedule, the Company and each of
its subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent currently owned, leased and
operated 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, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken together
with all other such failures, have a material adverse effect on the business,
properties, condition (financial or otherwise) or results of operations of the
Company and its subsidiaries taken as a whole or on the consummation of this
Agreement (any such material adverse effect being hereafter referred to as
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a "Company Material Adverse Effect"). As used in this Agreement, the term
"subsidiary" of a person shall mean any corporation or other entity (including
partnerships and other business associations) of which a majority of the
outstanding capital stock or other voting securities having voting power under
ordinary circumstances to elect directors or similar members of the governing
body of such corporation or entity shall at the time be held, directly or
indirectly, by such person.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure
Schedule sets forth a description as of the date hereof, of all subsidiaries and
joint ventures of the Company, including the name of each such entity, the state
or jurisdiction of its incorporation or organization, the Company's interest
therein and a brief description of the principal line or lines of business
conducted by each such entity. Except as set forth in Section 4.2 of the Company
Disclosure Schedule, all of the issued and outstanding shares of capital stock
owned by the Company of each Company subsidiary are validly issued, fully paid,
nonassessable and free of preemptive rights, and 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, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating it to grant, extend
or enter into any such agreement or commitment, except for any of the foregoing
that could not reasonably be expected to have a Company Material Adverse Effect.
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) that is not a subsidiary of such person, in which such person or
one or more of its subsidiaries owns an equity interest, other than equity
interests held for passive investment purposes which are less than 10% of any
class of the outstanding voting securities or equity of any such entity.
Section 4.3 Capitalization. The authorized capital stock of the
Company consists of 80,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $100.00 per share, of the Company ("Company
Preferred Stock"). As of the close of business on June 14, 1999, there were
issued and outstanding 32,442,552 shares of Company Common Stock and no shares
of Company Preferred Stock. 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 4.3 of the Company
Disclosure Schedule, as of the date hereof 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 the Company or any of the subsidiaries
of the Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of the Company, or obligating the
Company to grant, extend or enter into any such agreement or commitment.
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Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance. (a) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to obtaining the Company
Shareholders' Approval (as defined in Section 4.13) and the Company Required
Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. 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 applicable Company Shareholders' Approval. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the other signatories
hereto, constitutes the valid and binding obligation of the Company enforceable
against it in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or other similar
laws affecting the enforcement of creditors' rights generally, and except that
the availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceedings may be
brought.
(b) Non-Contravention. Except as set forth in Section 4.4(b) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by the
Company does 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 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 benefit under, or result in the creation of
any lien, security interest, charge or encumbrance ("Liens") upon any of the
properties or assets of the Company or any of its subsidiaries or any of its
joint ventures (any such violation, conflict, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, a
"Violation" with respect to the Company (such term when used in Article V having
a correlative meaning with respect to Parent)) pursuant to any provisions (i) of
the articles of incorporation, by-laws or similar governing documents of the
Company, any of its subsidiaries or any of its joint ventures; (ii) subject to
obtaining the Company Required Statutory Approvals and the receipt of the
Company Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority (as defined in Section 4.4(c)) applicable to the Company, any of its
subsidiaries or any of its 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 4.4(b) of the Company Disclosure Schedule (the
"Company Required Consents"), any 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, any of its
subsidiaries or any of its joint ventures is 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 as would not have, in the aggregate, a
Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 4.4(c) of
the Company Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of, any court, federal, state,
local or foreign governmental or regulatory body
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(including a stock exchange or other self-regulatory body) or authority (each,
a "Governmental Authority") is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, the failure to obtain, make or give which 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 4.4(d) or Section
4.11 of the Company Disclosure Schedule or as disclosed in the Company SEC
Reports (as defined in Section 4.5) filed prior to the date hereof, neither the
Company, nor any of its subsidiaries nor any of its joint ventures, is in
violation of, is under investigation with respect to any violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable Environmental Law, as defined in Section 4.11(f)(ii)) of any
Governmental Authority except for violations that, in the aggregate, do not have
and are not reasonably likely to have a Company Material Adverse Effect. Except
as set forth in Section 4.4(d) of the Company Disclosure Schedule or in Section
4.11 of the Company Disclosure Schedule, the Company and its subsidiaries and
joint ventures have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their respective
businesses as currently conducted in all respects, except those which the
failure to obtain would, in the aggregate, not have a Company Material Adverse
Effect. Except as set forth in Section 4.4(d) of the Company Disclosure
Schedule, the Company and each of its subsidiaries are not in breach or
violation of or in default in the 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, could result in a default under, (i) its articles of incorporation
or by-laws or (ii) any material contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which it is bound or to which any of its
property is subject, except for Violations that, in the aggregate, do not have,
and to the knowledge of the Company are not reasonably likely to have, a Company
Material Adverse Effect.
(e) Non-Competition. Except as set forth in Section 4.4(e) of the
Company Disclosure Schedule, there is no "non-competition" or other similar
contract, commitment, agreement or understanding that restricts the ability of
the Company or any of its affiliates to conduct business in any geographic area
or that would reasonably be likely to restrict the Surviving Corporation or any
of its affiliates to conduct business in any geographic area.
Section 4.5 Reports and Financial Statements. The filings required
to be made by the Company and its subsidiaries since January 1, 1995 under the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), the Federal Power Act,
as amended (the "Power Act") and applicable state public utility laws and
regulations have been filed with the Securities and Exchange Commission (the
"SEC"), the Federal Energy Regulatory Commission (the "FERC") or the appropriate
state public utilities commission, as the
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case may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates, in all material respects
with all applicable requirements of the appropriate statute and the rules and
regulations thereunder. The Company has delivered or 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 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 consolidated financial position of the
Company as of the dates thereof and the consolidated results of operations and
cash flows for the periods then ended. 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 made available to Parent.
Section 4.6 Absence of Certain Changes or Evetns. Except as set
forth in Section 4.6 of the Company Disclosure Schedule or disclosed in the
Company SEC Reports filed prior to the date hereof, the Company and each of its
subsidiaries have conducted their business only in the ordinary course of
business consistent with past practice, and there has not been, and no fact or
condition exists which could have, in the aggregate, a Company Material Adverse
Effect.
Section 4.7 Litigation. Except as set forth in Section 4.7 or
Section 4.11 of the Company Disclosure Schedule or disclosed in the Company SEC
Reports filed prior to the date hereof, (i) there are no claims, suits, actions
or proceedings, pending or to the knowledge of the Company threatened, nor are
there any investigations or reviews pending or threatened against, relating to
or affecting the Company or any of its subsidiaries, and (ii) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality, authority or any arbitrator
applicable to the Company or any of its subsidiaries, except for any of the
foregoing under clauses (i) and (ii) that in the aggregate could not reasonably
be expected to have a Company Material Adverse Effect.
Section 4.8 Proxy Statement. None of the information supplied or to
be supplied by or on behalf of the Company for inclusion or incorporation by
reference in the proxy statement, in definitive form (the "Proxy Statement"),
relating to the Company Special Meeting (as defined below) shall, at the date
mailed to shareholders and at the time of the Company Special 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 light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the Company or any of
its subsidiaries, shall comply as to form in all material respects with the
applicable provisions of the Securities Act and the Exchange Act and the rules
and regulations thereunder.
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Section 4.9 Tax Matters. "Taxes," as used in this Agreement, means
any federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including, without limitation, all net income, gross income,
sales and use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, 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 written information
required to be supplied to a governmental entity with respect to Taxes. Except
as set forth in the appropriate subsection of Section 4.9 of the Company
Disclosure Schedule:
(a) Filing of Timely Tax Returns. The Company and each of its
subsidiaries have duly filed (or there has been filed on its behalf) all
material Tax Returns required to be filed by each of them under applicable law.
All such Tax Returns were and are in all material respects true, complete and
correct and filed on a timely basis.
(b) Payment of Taxes. The Company and each of its subsidiaries
have, within the time and in the manner prescribed by law, paid all Taxes that
are currently due and payable except for those contested in good faith and for
which adequate reserves have been taken.
(c) Tax Reserves. All Taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the date of
the most recent financial statements contained in the Company Financial
Statements filed prior to the date of this Agreement are properly reflected in
such financial statements in accordance with GAAP, and the unpaid Taxes of the
Company and its subsidiaries as of the Effective Time are not reasonably
expected to exceed the amount shown therefor on such financial statements
adjusted for the passage of time through the Effective Time in accordance with
past custom and practice of the Company and its subsidiaries in filing their Tax
Returns.
(d) 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.
(e) 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.
(f) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all 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 Taxes has been proposed, asserted or
assessed against the Company or any of its subsidiaries that has not been
resolved and paid in full.
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(g) Audit, Administrative and Court Proceedings. No claims, audits,
disputes, controversies, examinations, investigations or other proceedings are
presently pending with regard to any Taxes or Tax Returns of the Company or any
of its subsidiaries.
(h) Tax Rulings. For any taxable years since and including 1990,
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 have a continuing 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.
(i) Availability of Tax Returns. The Company has provided or made
available to Parent complete and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by the Company or any of its subsidiaries for the tax
years after December 31, 1992, (ii) all audit reports received from any taxing
authority relating to any Tax Return filed by the Company or any of its
subsidiaries for any taxable year since and including 1990 and (iii) any Closing
Agreements entered into by the Company or any of its subsidiaries with any
taxing authority, relating to any Tax Return filed by the Company or any of its
subsidiaries for any taxable year since and including 1990.
(j) Tax Sharing Agreements. Neither the Company nor any of its
subsidiaries is a party to any agreement, understanding or arrangement relating
to allocating or sharing of Taxes.
(k) Liability for Others. Neither the Company nor any of its
subsidiaries has any liability for Taxes of any person other than the Company
and its subsidiaries (i) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii) as a transferee or
successor, (iii) by contract or (iv) otherwise.
(l) Code Section 897. To the best knowledge of the Company after
due inquiry, no foreign person owns or has owned, for purposes of Section 897 of
the Code, more than five percent of the total fair market value of Company
Common Stock during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code, and, at all times during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, Company Common Stock has been regularly traded in
an established securities market within the meaning of Treasury Regulation
Section 1.897-1(m).
(m) Code Section 355(e). Neither the Company nor any of its
subsidiaries has constituted a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (x) in the past 24-month period or (y) in a distribution
which could otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
Section 4.10 Employee Matters; ERISA. Except as set forth
in the appropriate subsection of Section 4.10 of the Company Disclosure
Schedule:
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(a) For purposes of this Section 4.10, the following terms have the
definitions set forth below:
(i) "Controlled Group Liability" means any and all liabilities (a)
under Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (b) under the minimum funding requirements of Section 302 of
ERISA or Section 412 of the Code, (c) under Section 4971 of the Code, and (d) as
a result of a failure to comply with the continuation coverage requirements of
Section 601 et seq. of ERISA and Section 4980B of the Code, other than such
liabilities that arise solely out of, or relate solely to, the Employee Benefit
Plans.
(ii) "ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
(iii) An "Employee Benefit Plan" means any material employee
benefit plan, program, policy, practice or other arrangement providing benefits
to any current or former employee, officer or director of the Company or any of
its subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by the Company or any of its subsidiaries or to which the Company or
any of its subsidiaries contributes or is obligated to contribute, whether or
not written, including without limitation any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, any employee pension benefit plan
within the meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any material bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control or fringe
benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
(vi) "Withdrawal Liability" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA.
(b) Section 4.10(b) of the Company Disclosure Schedule includes a
complete list of all material Employee Benefit Plans.
(c) With respect to each Plan, the Company has delivered to Parent
a true, correct and complete copy of: (i) each writing constituting a part of
such Plan, including without limitation all material plan documents, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any; (iii)
the current summary plan description and any material modifications thereto, if
required to be furnished under ERISA; (iv) the most recent annual financial
report, if
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any; (v) the most recent actuarial report, if any; and (vi) the most
recent determination letter from the Internal Revenue Service (the "IRS"), if
any. Except as specifically provided in the foregoing documents delivered to
Parent, there are no amendments to any Plan that have been adopted or approved
nor has the Company or any of its subsidiaries undertaken to make any such
amendments or to adopt or approve any new Plan except as required under
applicable law.
(d) Section 4.10(d) of the Company Disclosure Schedule identifies
each Plan that is intended to be a "qualified plan" within the meaning of
Section 401(a) of the Code ("Qualified Plans"). The IRS has issued a favorable
determination letter with respect to each Qualified Plan and the related trust
that has not been revoked, and to the knowledge of the Company there are no
existing circumstances nor any events that have occurred that could reasonably
be expected to adversely affect the qualified status of any Qualified Plan or
the related trust. No Plan is intended to meet the requirements of Code Section
501(c)(9).
(e) All material contributions required to be made to any Plan by
applicable law or regulation or by any Plan document or other contractual
undertaking, and all material premiums due or payable with respect to insurance
policies funding any Plan, for any period through the date hereof have been
timely made or paid in full or, to the extent not required to be made or paid on
or before the date hereof, have been fully reflected on the Company Financial
Statements. Each Employee Benefit Plan that is an employee welfare benefit plan
under Section 3(1) of ERISA (i) is funded through an insurance company contract
and is not a "welfare benefit fund" within the meaning of Section 419 of the
Code, or (ii) is unfunded.
(f) With respect to each Employee Benefit Plan, the Company and its
subsidiaries have complied (or, as disclosed to Parent prior to the date of this
Agreement, have corrected any noncompliance under applicable IRS self correction
programs), and are now in compliance in all material respects, with all
provisions of ERISA, the Code and all laws and regulations applicable to such
Employee Benefit Plans and each Employee Benefit Plan has been administered in
all material respects in accordance with its terms. There is not now, nor do any
circumstances exist that could reasonably be expected to give rise to, any
requirement for the posting of security with respect to a Plan or the imposition
of any lien on the assets of the Company or any of its subsidiaries under ERISA
or the Code. To the knowledge of the Company, no non-exempt prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any Plan.
(g) With respect to each Plan that is subject to Title IV of ERISA,
the minimum funding requirements of Section 302 of ERISA or Section 412 of the
Code, or Section 4971 of the Code: (i) there does not exist any accumulated
funding deficiency within the meaning of Section 412 of the Code or Section 302
of ERISA, whether or not waived; (ii) the fair market value of the assets of
each such Plan that is a defined benefit plan equals or exceeds the actuarial
present value of all accrued benefits under such Plan (whether or not vested),
based upon the actuarial assumptions set forth in the most recent actuarial
report for such Plan; (iii) no reportable event within the meaning of Section
4043(c) of ERISA for which the 30-day notice requirement has not been waived has
occurred since December 31, 1993; (iv) all material premiums to the Pension
Benefit Guaranty Corporation ("PBGC") have been timely paid in full; (v) no
material
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liability (other than for premiums to the PBGC and for the payment of
benefits in the ordinary course) under Title IV of ERISA has been or could
reasonably be expected to be incurred by the Company or any of its subsidiaries;
and (vi) the PBGC has not instituted proceedings to terminate any such Plan and
no condition exists that presents a material risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a plan that
has two or more contributing sponsors at least two of which are not under common
control, within the meaning of Section 4063 of ERISA (a "Multiple Employer
Plan"). None of the Company and its subsidiaries nor any of their respective
ERISA Affiliates has, at any time during the last six years, contributed to or
been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan. None of the Company and its subsidiaries nor any ERISA Affiliates has
incurred any Withdrawal Liability that has not been satisfied in full.
(i) There does not now exist, nor do any circumstances exist that
could reasonably be expected to result in, any Controlled Group Liability that
would be a material liability of the Surviving Corporation following the
Closing. Without limiting the generality of the foregoing, neither the Company
nor any of its subsidiaries, nor any of their respective ERISA Affiliates, has
engaged in any transaction described in Section 4069 or Section 4204 or 4212 of
ERISA.
(j) Except for health continuation coverage as required by Section
4980B of the Code or Part 6 of Title I of ERISA, the Company and its
subsidiaries have no material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents of former
employees. The Company and each of its subsidiaries has reserved the right to
amend, terminate or modify at any time all plans or arrangements providing for
retiree health or life insurance coverage.
(k) Neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby will (either alone
or in conjunction with any other event) result in, cause the accelerated
funding, vesting or delivery of, or increase the amount or value of, any
material payment or benefit to any employee, officer or director of the Company
or any of its subsidiaries. Without limiting the generality of the foregoing, no
amount paid or payable by the Company or any of its subsidiaries in connection
with the transactions contemplated hereby (either solely as a result thereof or
as a result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(l) No labor organization or group of employees of the Company or
any of its subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened to be brought or filed, with the National
Labor Relations Board or any other labor relations tribunal or authority. There
are no organizing activities, strikes, work stoppages, slowdowns, lockouts,
material arbitrations or
-14-
material grievances, or other material labor disputes pending or, to the
knowledge of the Company, threatened against or involving the Company or any of
its subsidiaries. Each of the Company and its subsidiaries is in compliance in
all material respects with all applicable laws and collective bargaining
agreements respecting employment and employment practices, terms and conditions
of employment, wages and hours and occupational safety and health.
(m) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted, and there is no
set of circumstances which may reasonably give rise to a claim or lawsuit,
against the Plans, any fiduciaries thereof with respect to their duties to the
Plans or the assets of any of the trusts under any of the Plans which could
reasonably be expected to result in any material liability of the Company or any
of its subsidiaries to the PBGC, the Department of Treasury, the Department of
Labor, any Multiemployer Plan, any Plan or any participant in a Plan.
(n) The Company, its subsidiaries and each member of their
respective business enterprise has complied with the Worker Adjustment and
Retraining Notification Act.
Section 4.11 Environmental Protection. Except as set forth
in Section 4.11 of the Company Disclosure Schedule or in the Company SEC
Reports filed prior to the date hereof:
(a) Compliance. The Company and each of its subsidiaries are in
compliance with all applicable Environmental Laws (as defined in Section
4.11(f)(ii)); and neither the Company nor any of its subsidiaries has received
any communication from any Governmental Authority or any written communication
from any other person 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 such compliance would not in the aggregate have a Company
Material Adverse Effect.
(b) Environmental Permits. The Company and each of its subsidiaries
has obtained or has applied for all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental Permits")
necessary for the construction of its facilities or the conduct of its
operations, and all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency
approval, and the Company and its subsidiaries are in compliance with all terms
and conditions of the Environmental Permits, and the Company reasonably believes
that any transfer, renewal or reapplication for any Environmental Permit
required as a result of the Merger can be accomplished in the ordinary course of
business, except where the failure to obtain or be in compliance with all such
Environmental Permits would not, in the aggregate, have a Company Material
Adverse Effect.
(c) Environmental Claims. There is no Environmental Claim (as
defined in Section 4.11(f)(i)) pending (i) against the Company or any of its
subsidiaries or joint ventures, or (ii) against any real or personal property or
operations that the Company or any of its subsidiaries owns, leases or manages,
in whole or in part that, if adversely determined, would have a Company Material
Adverse Effect.
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(d) Releases. Except for Releases of Hazardous Materials, the
liability for which would not have, in the aggregate, a Company Material Adverse
Effect, there have been no Releases (as defined in Section 4.11(f)(iv)) of any
Hazardous Material (as defined in Section 4.11(f)(iii)) that would be reasonably
likely to (A) form the basis of any Environmental Claim against the Company or
any of its subsidiaries, or (B) to the knowledge of the Company, cause damage or
diminution of value to any of the operations or real properties owned, leased or
managed, in whole or in part, by the Company or any of its subsidiaries.
(e) Predecessors. The Company has no knowledge of any Environmental
Claim pending or threatened, or of any Release of Hazardous Materials that would
be reasonably likely to form the basis of any Environmental Claim, in each case
against any person or entity (including, without limitation, any predecessor of
the Company or any of its subsidiaries) whose liability the Company or any of
its subsidiaries has or may have retained or assumed either contractually or by
operation of law or against any real or personal property which the Company or
any of its subsidiaries formerly owned, leased or managed, in whole or in part,
except for Releases of Hazardous Materials the liability for which would not
have, in the aggregate, a Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, 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 responsibility for or liability for
enforcement costs, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural-resources
damages, property damages, personal injuries, fines 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, whether or not owned, operated, leased or
managed by the Company or any of its subsidiaries or joint ventures;
or (B) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law; or (C) any and all claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the
presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state, local laws,
rules, ordinances and regulations relating to pollution, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection
of human health as it relates to the environment 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.
-16-
(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, coal tar
residue, and transformers or other equipment that contain dielectric
fluid containing polychlorinated biphenyls ("PCBs") in regulated
concentrations; and (B) any chemicals, materials or substances which
are now defined as or included in the definition of "hazardous
substances", "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "hazardous constituents" 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 any Environmental Law in a
jurisdiction in which the Company or any of its subsidiaries or
joint ventures operates or has stored, treated or disposed of
Hazardous Materials.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property.
Section 4.12 Regulation as a Utility. Except as set forth in
Section 4.12 of the Company Disclosure Schedule, neither the Company nor any
"associate company," "subsidiary company" or "affiliate" (as such terms are
defined in the ▇▇▇▇ ▇▇▇) of the Company is subject to regulation as (i) a
"holding company," a "public-utility company," a "subsidiary company" or an
"affiliate" of a "holding company," within the meaning of Sections 2(a)(5),
2(a)(7), 2(a)(8) and 2(a)(11), respectively, of the 1935 Act, (ii) a "public
utility" under the Power Act, (iii) a "natural-gas company" under the Natural
Gas Act, or (iv) a public utility or public service company (or similar
designation) by any state in the United States other than Maine or by any
foreign country.
Section 4.13 Vote Required. The approval of the Merger by the
affirmative vote of the holders of at least a majority of the outstanding shares
of Company Common Stock (the "Company Shareholders' Approval") is the only vote
of the holders of any class or series of the capital stock of Company or any of
its subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
Section 4.14 Opinion of Financial Advisor. The Company has received
the opinion of Warburg Dillon Read LLC, to the effect that, as of June 14, 1999,
the Merger Consideration is fair from a financial point of view to the holders
of Company Common Stock.
Section 4.15 Ownership of Parent Common Stock. Except as set forth
in Section 4.15 of the Company Disclosure Schedule, the Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of Parent Common Stock.
Section 4.16 Takeover Laws; Rights Plans. The Company has taken all
action required to be taken by it in order to exempt this Agreement and the
transactions contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover laws and
-17-
regulations (collectively, "Takeover Laws") of the State of Maine, including
Sections 910 and 611-A of the MBCA. The Company is not a party to a
shareholders' rights plan or other similar anti-takeover agreement or
arrangement.
Section 4.17 Year 2000. Except as set forth in Section 4.17 of the
Company Disclosure Schedule, the systems operated or used by the Company or any
of its subsidiaries are capable of providing or are being adapted to provide
uninterrupted millennium functionality on or after January 1, 2000 to share,
record, process and present data in substantially the same manner and with the
same functionality as such systems share, records, process and present such data
on or before December 31, 1999, except, in the aggregate, as could not have, or
reasonably be expected to have, a Company Material Adverse Effect. The costs of
the adaptations referred to in the prior sentence, in the aggregate, will not
have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set
forth in Section 5.1 of the Parent Disclosure Schedule (as defined in Section
6.11(i)), Parent and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders to own, lease
and operate its assets and properties to the extent currently owned, leased and
operated 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, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken together
with all other such failures, have a material adverse effect on Parent's ability
to consummate the transactions contemplated by this Agreement (any such material
adverse effect being hereafter referred to as a "Parent Material Adverse
Effect").
Section 5.2 Subsidiaries. As of the Closing Date, Parent will be
a "holding company" within the meaning of Section 2(a)(7) of the 1935 Act.
Except as set forth in Section 5.2 of the Parent Disclosure Schedule, as of the
date hereof none of the subsidiaries of Parent is a "public-utility company"
within the meaning of Section 2(a)(5) of the 1935 Act.
Section 5.3 Capitalization. (a) The authorized capital stock of
Parent consists of 300,000,000 shares of Parent Common Stock and 10,000,000
shares of preferred stock, par value $0.01 per share, of Parent ("Parent
Preferred Stock"). As of the close of business on June 10, 1999, there were
issued and outstanding 116,173,728 shares of Parent Common Stock and no shares
of Parent Preferred Stock.
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(b) The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $.01 per share ("Merger Sub Common Stock"). As
of the close of business on June 10, 1999, there were issued and outstanding
1,000 shares of Merger Sub Common Stock, all of which were owned by Parent.
Section 5.4 Authority; Non-Contravention; Statutory Approvals. (a)
Authority. Parent has all requisite corporate power and authority to enter into
this Agreement and, subject to the applicable Parent Required Statutory
Approvals (as defined in Section 5.4(c)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation by Parent of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly and validly executed and delivered by Parent and,
assuming the due authorization, execution and delivery by the other signatories
hereto, constitutes the valid and binding obligation of Parent enforceable
against it in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or other similar
laws affecting the enforcement of creditors' rights generally, and except that
the availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceeding maybe
brought.
(b) Non-Contravention. Except as set forth in Section 5.4(b) of the
Parent Disclosure Schedule, the execution and delivery of this Agreement by
Parent does not, and the consummation of the transactions contemplated hereby
will not, result in a Violation pursuant to any provisions (i) of the
certificate of incorporation, by-laws or similar governing documents of Parent
or any of its subsidiaries or any of its joint ventures, (ii) subject to
obtaining the Parent Required Statutory Approvals (as defined in Section 5.4(c))
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority applicable to
Parent or any of its subsidiaries or any of its 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 5.4(b) of the Parent Disclosure
Schedule (the "Parent Required Consents"), any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of its
subsidiaries or any of its joint ventures is 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 as would not have, in the aggregate, a
Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.4(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 the
consummation by Parent of the transactions contemplated hereby, the failure to
obtain, make or give which 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.
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Section 5.5 Proxy Statement. None of the information supplied or to
be supplied by or on behalf of Parent for inclusion or incorporation by
reference in the Proxy Statement shall, at the date mailed to the Company
shareholders and at the time of the Company Special 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 light of
the circumstances under which they are made, not misleading.
Section 5.6 Availability of Funds. Parent has sufficient funds
available to it or has received binding written commitments subject only to
customary terms and conditions from third parties to provide sufficient funds to
pay the Merger Consideration on the Closing Date and to enable Parent timely to
perform all of its obligations under this Agreement.
Section 5.7 Vote Required. Parent, as the sole stockholder of
Merger Sub, has approved the Merger, and such approval is the only vote of the
holders of any class or series of the capital stock of Parent or any of its
subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Businesses by the Company Pending the
Merger. After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, the Company agrees as follows, each as to itself
and to each of its subsidiaries, except as expressly contemplated or permitted
in this Agreement, or to the extent the other parties hereto shall otherwise
consent in writing:
(a) Ordinary Course of Business. Except as set forth in Section
6.1(a) of the Company Disclosure Schedule, the Company shall, and shall cause
its subsidiaries to, carry on 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 their present
business organizations and goodwill and 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 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 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,
including, without limitation, mandatory dividends on the currently outstanding
preferred stock of Central Maine Power Company ("CMP Sub"), or (C) regular
dividends on Company Common Stock with usual record and payment dates that do
not exceed the current regular dividends on
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Company Common Stock; (ii) split, combine or reclassify any capital stock or the
capital stock of any subsidiary or issue or authorize or propose the issuance of
any other securities in respect of, 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,
(B) intercompany acquisitions of capital stock or (C) to comply with the
mandatory redemption provisions of the Flexible Money Market Preferred Stock,
Series A, 7.999% of CMP Sub.
(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
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 pursuant to currently
outstanding options granted under Employee Benefit Plans.
(d) Charter Documents. The Company shall not, nor shall it permit
any of its non-wholly owned subsidiaries to, amend or propose to amend their
respective articles of incorporation, by-laws or regulations, or similar organic
documents. The Company shall not permit any of its wholly owned subsidiaries to
amend or propose to amend its respective articles of incorporation, by-laws or
regulations or similar organic documents in a manner which would reasonably be
expected to prevent or materially impede or interfere with the Merger or
interfere in any way with Parent's ability to exercise control over such
subsidiaries.
(e) Acquisitions. Except as disclosed in Section 6.1(e) of the
Company Disclosure Schedule, 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 other than
in the ordinary course of business.
(f) Capital Expenditures. Except as set forth in Section 6.1(f) of
the Company Disclosure Schedule, or except with respect to amounts which may be
required in connection with a major storm or other catastrophic event in order
for the Company to fulfill its public service obligations, the Company shall
not, nor shall it permit any of its subsidiaries to, make capital expenditures
in excess of 110% per year of the amount budgeted by the Company or its
subsidiaries for capital expenditures for the 1999 and 2000 fiscal years
respectively, which budgeted amounts have been provided to Parent.
(g) No Dispositions. Except as set forth in Section 6.1(g) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its subsidiaries to, sell,
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lease, license, encumber or otherwise dispose of, any of its respective assets,
other than encumbrances or dispositions in the ordinary course of business
consistent with past practice.
(h) Indebtedness. Except as set forth in Section 6.1(h) of the
Company Disclosure Schedule, 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) in connection with
the refunding at a lower cost of funds of existing indebtedness or (iv) in
connection with the refunding at a commercially reasonable rate of existing
indebtedness that has matured.
(i) Compensation, Benefits. Except as set forth in Section 6.1(i)
of the Company Disclosure Schedule, except as may be required by applicable law,
or as expressly contemplated by this Agreement, the Company shall not, nor shall
it permit any of its subsidiaries to, (i) 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 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
that is maintained by, contributed to or entered into by the Company or any of
its subsidiaries, (ii) increase, or enter into any contract, agreement,
commitment or arrangement to increase in any manner, or waive any conditions to
the vesting of payment of, 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 incentive compensation or stock options or stock option plan) not required
under the terms of any existing employee benefit plan, 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 in compensation with respect to employees who are not officers
of the Company in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company or any of its subsidiaries, or (iii) enter
into or amend any employment, severance or special pay arrangement with respect
to the termination of employment or other similar contract, agreement or
arrangement with any director or officer or other employee except with respect
to employees who are not officers of the Company in the ordinary course of
business consistent with current industry practice.
(j) Status under 1935 Act. Except as set forth in Section 6.1(j) of
the Company Disclosure Schedule, and except as required or contemplated by this
Agreement, the Company shall not, nor shall it permit any of its subsidiaries
to, engage in any activities which would cause a change in its status, or that
of its subsidiaries, under the 1935 Act.
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(k) Accounting. Except as set forth in Section 6.1(k) of the
Company Disclosure Schedule, 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) Discharge of Liabilities. Except as set forth in Schedule
6.1(l) of the Company Disclosure Schedule, 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 the Company included in the Company's reports filed with
the SEC, or incurred in the ordinary course of business consistent with past
practice; provided, however, that notwithstanding this Section 6.1(l), the
Company shall not be prohibited from amending any contracts with non-utility
generators if (i) the sole effect of such amendment is to reduce the net present
value of the payments under any such contract, applying the Company's internal
cost of capital, (ii) the term of any such contract is not extended and (iii)
the Company's obligation to make accelerated payments under any such contract is
financed pursuant to a contract with a third party which has a term equal to the
remaining term under any such contract.
(m) Contracts. The Company shall not, except in the ordinary course
of business consistent with past practice, modify, amend, terminate, renew any
material contract or agreement, other than employment contracts which shall be
governed by Section 6.1(i), to which the Company or any of its subsidiaries is a
party or waive, release or assign any material rights or claims; provided,
however, that notwithstanding this Section 6.1(m), the Company shall not be
prohibited from amending any contracts with non-utility generators if (i) the
sole effect of such amendment is to reduce the net present value of the payments
under any such contract, applying the Company's internal cost of capital, (ii)
the term of any such contract is not extended and (iii) the Company's obligation
to make accelerated payments under any such contract is financed pursuant to a
contract with a third party which has a term equal to the remaining term under
any such contract. The Company shall use its reasonable business efforts to
renew any material contract or agreement that expires after the date hereof,
subject to the written consent of Parent.
(n) Investment in NorthEast Optic Network, Inc. The Company shall,
and shall cause its subsidiaries to, take any action requested by Parent in
connection with any of the Company's or its subsidiaries' preemptive rights,
rights of first refusal, rights in connection with the issuance of shares,
rights in connection with certain material transactions or other similar rights
owned or held in connection with any investment in NorthEast Optic Network, Inc.
(o) 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 electric and gas utility industry.
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(p) Permits. The Company shall, and shall cause its subsidiaries
to, use reasonable efforts to maintain in effect all material existing
governmental permits pursuant to which the Company or any of its subsidiaries
operate.
(q) Takeover Laws. The Company shall not take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law, and shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect, including Sections 910 and 611-A of the MBCA.
(r) Taxes. Except as may be required by applicable law or as
provided in Section 6.1(r) of the Company Disclosure Schedule, the Company shall
not, and shall cause its subsidiaries not to, make or rescind any express or
deemed election relating to a material amount of Taxes, settle or compromise any
claim, audit, dispute, controversy, examination, investigation or other
proceeding relating to a material amount of Taxes, change any of its methods of
reporting a material amount of income or deductions for federal income Tax
purposes, or file any Tax Return other than in a manner consistent with past
custom and practice.
Section 6.2 Alternative Proposals. From and after the date hereof,
the Company agrees that it (i) will not, its subsidiaries will not, and it will
not authorize or permit any of its or its subsidiaries' officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
subsidiaries or any of the foregoing) to, directly or indirectly, encourage,
initiate or solicit (including by way of furnishing information) or take any
other action to facilitate knowingly any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
shareholders) which constitutes or may reasonably be expected to lead to an
Alternative Proposal (as defined below) from any person or engage in any
discussion or negotiations concerning, or provide any non-public information or
data to make or implement an Alternative Proposal; (ii) will immediately cease
and cause to be terminated any existing solicitation, initiation, encouragement,
activity, discussions or negotiations with any parties conducted heretofore with
a view of formulating an Alternative Proposal; and (iii) will notify Parent
orally and in writing of any such inquiry, offer or proposals (including,
without limitation, the terms and conditions of any such proposal and the
identity of the person making it), within 24 hours of the receipt thereof, and
that it shall keep Parent informed of the status and details of any such
inquiry, offer or proposal and shall give Parent 48 hours' prior notice of any
agreement to be entered into or of the fact that it proposes to commence
providing information to any person making such inquiry, offer or proposal;
provided however, that notwithstanding any other provision hereof, the Company
may (i) at any time prior to the time the Company shareholders shall have voted
to approve this Agreement engage in discussions or negotiations with a third
party who (without any solicitation, initiation, encouragement, discussion or
negotiation, directly or indirectly, by or with the Company or its
representatives after the date hereof) seeks to initiate such discussions or
negotiations and may furnish such third party information concerning the Company
and its business, properties and assets if, and only to the extent that, (A)(x)
the third party has first made an Alternative Proposal that is financially
superior to the terms of the Merger and has
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demonstrated that any necessary financing has been obtained or is, in the
reasonable judgment of the Board of Directors of the Company, obtainable and
(y) the Board of Directors of the Company shall conclude in good faith, based
upon the advice of outside counsel and such other matters as the Board of
Directors of the Company deems relevant, that failure to do so would likely
result in a breach of its fiduciary duties under applicable law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, the Company (x) provides not less than two business
days' written notice to Parent to the effect that it intends to furnish
information to, or intends to enter into discussions or negotiations with, such
person or entity, (y) provides the Parent a reasonable opportunity to respond to
the Alternative Proposal and (z) receives from such person an executed
confidentiality agreement in reasonably customary form except that such
confidentiality agreement shall not prohibit such person from making an
unsolicited Alternative Proposal, and (ii) comply with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer and/or (iii)
accept an Alternative Proposal from a third party, provided the Company
terminates this Agreement pursuant to Section 8.1(g). "Alternative Proposal"
shall mean any proposal or offer relating to any merger, acquisition,
consolidation, reorganization, share exchange, tender offer, exchange offer or
similar transaction involving the Company or any of the Company's subsidiaries,
or any acquisition in any manner of, directly or indirectly, a substantial
equity interest in or a substantial portion of the assets of the Company or any
of the Company's subsidiaries. Nothing herein shall prohibit a disposition
permitted by Section 6.1(g) hereof.
Section 6.3 Cooperation, Notification. Each party shall, and shall
cause its subsidiaries to, (i) confer on a regular and frequent basis with one
or more representatives of the other party to discuss, subject to applicable
law, material operational matters and the general status of its ongoing
operations; (ii) promptly notify the other party of any significant changes in
its business, properties, assets, condition (financial or other), results of
operations or prospects; (iii) advise the other party of any change or event
which has had or, insofar as reasonably can be foreseen, is reasonably likely to
result in a Company Material Adverse Effect; and (iv) promptly provide the other
party with copies of all filings made by such party 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.
Section 6.4 Third-Party Consents. The Company shall, and shall
cause its subsidiaries to, use all commercially reasonable efforts to obtain all
the Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if requested by
Parent, shall provide to Parent copies of all the Company Required Consents
obtained by the Company. Parent shall, and shall cause its subsidiaries to, use
all commercially reasonable efforts to obtain all Parent Required Consents.
Parent shall promptly notify the Company of any failure or prospective failure
to obtain any such consents and, if requested by the Company, shall provide
copies of all Parent Required Consents obtained by Parent to the Company.
Section 6.5 No Breach, Etc. No party shall, nor shall any party
permit any of its subsidiaries to, willfully take any action that would or is
reasonably likely to result in a
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material breach of any provision of this Agreement or in any of its
representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date.
Section 6.6 Access to Information. Upon reasonable notice and
during normal business hours, each party shall, and shall cause its subsidiaries
to, afford to the officers, directors, employees, accountants, counsel,
investment bankers, financial advisors and other representatives of the other
(collectively, "Representatives") reasonable access, throughout the period prior
to the Effective Time, to all of its properties, books, contracts, commitments
and records (including, but not limited to, Tax Returns) and, during such
period, each party shall, and shall cause its subsidiaries to, furnish promptly
to the other (i) access to 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 FERC, the
Department of Justice, the Federal Trade Commission or any other federal or
state regulatory agency or commission, and (ii) access to all information
concerning themselves, their subsidiaries, directors, officers and shareholders
and such other matters as may be reasonably requested by the other party in
connection with any filings, applications or approvals required or contemplated
by this Agreement. Each party shall, and shall cause its subsidiaries and
Representatives to, hold in strict confidence all Proprietary Information (as
defined in the Confidentiality Agreement) concerning the other parties furnished
to it in connection with the transactions contemplated by this Agreement in
accordance with the Confidentiality Agreement, dated as of March 5, 1999,
between the Company and Parent, as it may be amended from time to time (the
"Confidentiality Agreement").
Section 6.7 Proxy Statement. Preparation and Filing. As soon as
reasonably practicable after the date hereof the Company shall prepare the Proxy
Statement, file it with the SEC under the Exchange Act, and use all reasonable
efforts to have the Proxy Statement cleared by the SEC. Each of the parties
hereto shall furnish all information concerning itself which is required or
customary for inclusion in the Proxy Statement. 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.
Section 6.8 Regulatory Matters. Each party hereto shall cooperate
and use its best 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 necessary or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation, the Company
Required Statutory Approvals and the Parent Required Statutory Approvals.
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Section 6.9 Shareholder Approval.
(a) The Company Shareholders. Subject to the provisions of Section
6.9(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 Special 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 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 Special Meeting for the purpose of
securing the Company Shareholders' Approval shall be held on such date as the
Company and Parent shall mutually determine.
Section 6.10 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from and after
the Effective Time, Parent and the Surviving Corporation shall, to the fullest
extent permitted by applicable law and the articles or certificate of
incorporation or by-laws of the relevant entity, 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, director or
employee of the Company or any of its subsidiaries (each an "Indemnified Party"
and collectively, the "Indemnified Parties") against (i) all losses, expenses
(including reasonable attorney's 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, officer or employee of the Company
or a subsidiary of the Company (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), (i) Parent shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall 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, (ii) Parent and the Surviving
Corporation will cooperate in the defense of all such matters and (iii)any
determination required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under Maine law, and the relevant
articles or certificate of incorporation or by-laws shall be made by independent
counsel mutually acceptable to Parent and the Indemnified Party; provided,
however, that Parent shall 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
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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,
Parent shall cause to be maintained in effect policies of directors' and
officers' liability insurance, or, if available, an extended reporting period
under current policies of directors' and officers' liability insurance, for the
benefit of those persons who are currently covered by such policies of the
Company on terms no less favorable than the terms of such current insurance
coverage; provided, however, that Parent shall not be required to expend in any
year an amount in excess of 200% of the annual aggregate premiums currently paid
by the Company, for such insurance; and provided, further, that if the annual
premiums of such insurance coverage or extended reporting period coverage exceed
such amount, Parent shall be obligated to obtain a policy with the best coverage
or extended reporting period 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 Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
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 shall be made so
that the successors and assigns of Parent shall assume the obligations set forth
in this Section 6.10.
(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 the
Company, and its subsidiaries with respect to their activities as such prior to
the Effective Time, as provided in its respective articles of incorporation and
by-laws in effect on the date hereof, or otherwise in effect on the date hereof,
shall survive the Merger and shall 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 6.10 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
Section 6.11 Disclosure Schedules. On the date hereof, (i) Parent
has delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by the Executive Vice President and General
Counsel of Parent stating the Parent Disclosure Schedule is being delivered
pursuant to this Section 6.11(i) and (ii) the Company has delivered to Parent a
schedule (the "Company Disclosure Schedule"), accompanied by a certificate
signed by the Treasurer, Corporate Counsel and Secretary of the Company stating
the Company Disclosure Schedule is being delivered pursuant to this Section
6.11(ii). 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
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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 shall be deemed to have been made on and as of the date
hereof.
Section 6.12 Public Annoucements. Subject to each party's
disclosure obligations imposed by law, 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 shall not issue any public announcement
or statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 6.13 Certain Employee Agreements. Subject to Section 6.14,
Parent and the Surviving Corporation and its subsidiaries shall honor, without
modification, all contracts, agreements, collective bargaining agreements and
commitments of the parties prior to the date hereof which apply to any current
or former employee or current or former director of the parties hereto;
provided, however, that the foregoing shall not prevent Parent or the Surviving
Corporation from enforcing such contracts, agreements, collective bargaining
agreements and commitments in accordance with their terms, including, without
limitation, any reserved right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement or commitment.
Section 6.14 Employee Benefit Plans. Each individual employed by
the Company or any of its subsidiaries immediately before the Effective Time who
(i) remains employed by Parent, the Surviving Corporation or any of their
respective subsidiaries and (ii) is not covered by a collective bargaining
agreement (each such individual, a "Continuing Company Employee"), shall be
provided with credit, for all purposes other than benefit accrual under the
employee benefit plans of Parent and its Affiliates providing benefits after the
Effective Time to Continuing Company Employees, for his or her years of service
with the Company and its subsidiaries before the Effective Time, to the same
extent as such Continuing Company Employee was entitled, before the Effective
Time, to credit for such service under any similar Plans, except to the extent
such credit would result in a duplication of benefits. In addition, and without
limiting the generality of the foregoing, (i) each Company Employee shall be
immediately eligible to participate, without any waiting time, in any and all
employee benefit plans sponsored by Parent and its subsidiaries for the benefit
of Company Employees (such plans, collectively, the "New Plans") to the extent
coverage under such New Plan replaces coverage under a comparable Plan in which
such Surviving Company Employee participated immediately before the Effective
Time (such plans, collectively, the "Old Plans"); and (ii) for purposes of each
New Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Surviving Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived for
such employee and his or her covered dependents, and Parent shall cause any
eligible expenses incurred by such employee and his or her covered dependents
during the portion of the plan year of the Old Plan ending on the date such
employee's participation in the corresponding New Plan begins to be taken into
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account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such employee
and his or her covered dependents for the applicable plan year as if such
amounts had been paid in accordance with such New Plan.
Section 6.15 Expenses. Subject to Section 8.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing the Proxy Statement, as
well as the filing fee relating thereto, shall be shared equally by the Company
and Parent.
Section 6.16 Further Assurances. Each party will, and will cause
its subsidiaries to, execute such further documents and instruments and take
such further actions as may reasonably be requested by any other party in order
to satisfy the conditions set forth in Article VII and otherwise consummate the
Merger in accordance with the terms hereof. The parties expressly acknowledge
and agree that, although it is their current intention to effect a business
combination among themselves in the form contemplated by this Agreement, it may
be preferable to effectuate such a business combination by means of an
alternative structure in light of the conditions set forth in Section 7.1(c) or
7.2(f). Accordingly, if the only conditions to the parties' obligations to
consummate the Merger which are not satisfied or waived are receipt of any one
or more of the Company Required Statutory Approvals or Parent Required Statutory
Approvals and the adoption of an alternative structure (that otherwise
substantially preserves for Parent and the Company the economic benefits of the
Merger and does not require any additional filing with or authorization, consent
or approval from any Governmental Authority other than supplements or
amendments, to filings already made, to reflect such alternative structure)
would result in such conditions being satisfied or waived, then the parties
shall use their respective best efforts to effect a business combination among
themselves by means of a mutually agreed upon structure other than the Merger
that so preserves such benefits; provided that, prior to closing any such
restructured transaction, all material third party and Governmental Authority
declarations, filings, registrations, notices, authorizations, consents or
approvals necessary for the effectuation of such alternative business
combination shall have been obtained and all other conditions to the parties'
obligations to consummate the Merger, as applied to such alternative business
combination, shall have been satisfied or waived.
Section 6.17 Corporate Offices. At and subsequent to the
Effective Time, the corporate headquarters of CMP Sub shall be located in
Augusta, Maine. At and subsequent to the Effective Time, Parent shall open
and maintain an office in Portland, Maine appropriate to the responsibilities
of Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇.
Section 6.18 Parent Directors. In accordance with the by-laws of
Parent, at the Effective Time, the Board of Directors of Parent shall increase
by three the number of directors on the Board of Directors of Parent and shall
thereupon elect as directors of Parent, ▇▇. ▇▇▇▇▇▇▇▇ and two additional
directors of the Company to be mutually agreed upon by Parent and the Company.
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Section 6.19 Employment Contracts. Parent has entered into
employment contracts with ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇, and
Mr. F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in the forms attached hereto as Exhibits A, B, C and
D, respectively (the "Employment Agreements"), which will become effective
upon consummation of the Merger.
Section 6.20 Advisory Board. At the Effective Time, there shall be
established an advisory board to CMP Sub ("Advisory Board"), which shall be
comprised of the persons who were directors of CMP Sub prior to the Effective
Time. The Advisory Board shall meet no less frequently than quarterly and shall
provide advice to the board of directors of CMP Sub with respect to such issues
as the board of directors of CMP Sub may from time to time request, including
but not limited to community relations, customer service, economic development,
employee development and relations and such other matters of community interest
as may be appropriate. The members of the Advisory Board, who shall serve at the
discretion of CMP Sub, shall receive remuneration for their services equivalent
to the base remuneration currently provided to directors of the Company.
Section 6.21 Community Involvement. Subsequent to the Effective
Time, Parent will, or will cause the Surviving Corporation to make at least
$100,000 in the aggregate per year in charitable contributions to the
communities served by CMP Sub and otherwise maintain a substantial level of
involvement in community activities in the state of Maine that is similar to, or
greater than, the level of community development and related activities carried
on by the Company.
Section 6.22 Transition Steering Team. As soon as reasonably
practicable after the date hereof, Parent and the Company shall create a special
transition steering team, with representation from the senior management teams
of Parent and the Company, that will develop non-binding recommendations for
Parent concerning the future structure and operations of Company after the
Effective Time, subject to applicable law. The members of the transition
steering team shall be appointed by the Chief Executive Officers of Parent and
the Company. The functions of the transition steering team shall include the
development of recommendations regarding regulatory plans and proposals,
corporate organizational and management plans, workforce combination proposals,
and such other matters as directed by Parent.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
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 8.5 by the joint action
of the parties hereto:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained.
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(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of the Merger shall have been issued and be continuing in effect,
and the Merger 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
and the Parent Required Statutory Approvals shall have been obtained at or prior
to the Effective Time, and such approvals shall have become Final Orders. 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.
Section 7.2 Conditions to Obligation of Parent to Effect the
Merger. The obligation of Parent to effect the Merger shall be further subject
to the satisfaction, on the Closing Date, of the following conditions, except as
may be waived by Parent in writing pursuant to Section 8.5:
(a) Performance of Obligations of the Company. The Company (and its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in Article VI and shall have performed in all
material respects its other agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be 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) which, in the aggregate, would not be
reasonably likely to result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate
signed by the Treasurer, Corporate Counsel and Secretary 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) No Company Material Adverse Effect. No Company Material Adverse
Effect shall have occurred, and there shall exist no fact or circumstance which
is reasonably likely to have a Company Material Adverse Effect in each case,
other than as described in Section 4.6 of the Company Disclosure Schedule.
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(e) Company Required Consents. The Company Required Consents the
failure of which to obtain would have a Company Material Adverse Effect shall
have been obtained.
(f) Statutory Approvals. The Final Orders shall not impose terms or
conditions which, in the aggregate, would have, or insofar as reasonably can be
foreseen, could have, a Company Material Adverse Effect or a Parent Material
Adverse Effect. Parent acknowledges that it may be required to become a
registered holding company pursuant to Section 5 of the 1935 Act, and that the
requirement to become so registered shall not constitute a term or condition
that could have a Company Material Adverse Effect or Parent Material Adverse
Effect; provided however, that the inclusion of a condition or requirement of
the SEC's approval of the Merger under the 1935 Act that Parent divest its
ownership of New York State Electric & Gas Corporation, a New York corporation
and a wholly owned subsidiary of Parent, shall constitute a term or condition
which could have a "material adverse effect" within the meaning of this Section
7.2(f).
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be 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 8.5.
(a) Performance of Obligations of Parent. Parent (and its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in Article VI and shall have performed in all
material respects its other agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be 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) which, in the aggregate, would not be
reasonably likely to result in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a
certificate signed by the Executive Vice President and General Counsel 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 Section
7.3(b) have been satisfied.
(d) Parent Required Consents. The Parent Required Consents the
failure of which to obtain would have a Parent Material Adverse Effect shall
have been obtained.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after the Company
Shareholders' Approval:
(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 shall not have occurred on or before the day which is twelve
months from the date of this Agreement (the "Initial Termination Date");
provided, however, that the right to terminate the Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date; and provided,
further, that if on the Initial Termination Date the conditions to the Closing
set forth in Section 7.1(c), shall not have been fulfilled but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Initial Termination Date shall be extended to the eighteen
month anniversary of the date hereof;
(c) 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 Special Meeting, including any adjournments thereof;
(d) by any party hereto, if any state or federal law, order, rule
or regulation is adopted or issued, which has the effect, as supported by the
written opinion of outside counsel for such party, of prohibiting the 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 Merger, and such order,
judgment or decree shall have become final and nonappealable;
(e) by the Company, by written notice to Parent, if (i) there exist
breaches of the representations and warranties of Parent made herein as of the
date hereof which breaches, in the aggregate, would be reasonably likely to
result in a Parent Material Adverse Effect, and such breaches shall not have
been remedied within 20 days after receipt by Parent of notice in writing from
the Company, specifying the nature of such breaches and requesting that they be
remedied or (ii) 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 20 days after receipt by Parent of notice in writing from the Company,
specifying the nature of such failure and requesting that it be remedied;
(f) by Parent, by written notice to the Company, if (i) there exist
material breaches of the representations and warranties of the Company made
herein as of the date hereof which breaches, in the aggregate, would be
reasonably likely to result in a Company Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by
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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 not have performed and complied with
its agreements and covenants contained in Section 6.1(b) and (c) or shall have
failed to perform and comply with, in all material respects, its other
agreements and covenants hereunder, and such failure to perform or comply shall
not have been remedied within 20 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) shall withdraw or modify in any manner adverse to Parent its
approval or recommendation of this Agreement or the transactions contemplated
herein, (B) shall fail to reaffirm such approval or recommendation upon Parent's
request within two days of such request, (C) shall approve or recommend any
acquisition of the Company or a material portion of its assets or any tender
offer for the shares of capital stock of the Company, in each case by a party
other than Parent or any of its affiliates, or (D) shall resolve to take any of
the actions specified in clause (A), (B) or (C); or
(g) by the Company prior to the approval of this Agreement by the
shareholders of the Company, upon five days' prior notice to Parent, if the
Company is not in breach of this Agreement and, as a result of an Alternative
Proposal, the Board of Directors of the Company determines in good faith, that
(i) the Alternative Proposal is financially superior to the Merger and the third
party making the Alternative Proposal has demonstrated that any necessary
financing has been obtained or is, in the reasonable judgment of the Board of
Directors of the Company, obtainable and (ii) based upon the advice of outside
counsel and such other matters as the Company Board of Directors deems relevant,
including, as appropriate, applicable provisions of state law and after giving
effect to all concessions which may be offered by the other party pursuant to
the proviso below, that failure to do so would likely result in a breach of its
fiduciary duties under applicable law; provided, however, that prior to any such
termination, the Company shall, and shall cause its respective financial and
legal advisors to, negotiate with Parent to attempt to make such adjustments in
the terms and conditions of this Agreement as would enable the Company to
proceed with the transactions contemplated herein.
Section 8.2 Effect of Termination. Subject to Section 9.1(b), in
the event of termination of this Agreement by either the Company or Parent
pursuant to Section 8.1, there shall be no liability on the part of either the
Company or Parent or their respective officers or directors hereunder, except
that the agreement contained in the last sentence of Section 6.6; Section 6.15;
Section 8.3; Section 9.8; and Section 9.9 shall survive the termination.
Section 8.3 Termination Fee; Expenses.
(a) Termination Fee upon Breach or Withdrawal of Approval. If this
Agreement is terminated at such time that this Agreement is terminable pursuant
to one (but not both) of (x) Section 8.1(e)(i) or (ii) or (y) Section 8.1(f)(i)
or (ii), then (i) the breaching party shall promptly (but not later than five
business days after receipt of notice from the non-breaching party) pay to the
non-breaching party in cash an amount equal to all documented out-of-pocket
expenses and fees incurred by the non-breaching party (including, without
limitation, fees and expenses payable to all legal, accounting, financial,
public relations and other professional advisors arising
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out of, in connection with or related to the Merger or the transactions
contemplated by this Agreement) not in excess of $10 million ("Expenses");
provided, however, that, if this Agreement is terminated by a party as a result
of a willful breach by the other party, the non-breaching party may pursue any
remedies available to it at law or in equity and shall, in addition to its
out-of-pocket expenses (which shall be paid as specified above and shall not be
limited to $10 million, be entitled to retain such additional amounts as such
non-breaching party may be entitled to receive at law or in equity.
(b) The Company shall pay Parent a fee of $33.5 million
("Termination Fee") and Expenses, upon the termination of this Agreement by
Parent or the Company pursuant to Section 8.1(c) or by Parent pursuant to
Section 8.1(f)(iii) or by the Company pursuant to Section 8.1(g); provided,
however, that in the event of termination under either Section 8.1(c) or Section
8.1(f)(iii), no payment of the Termination Fee or Expenses shall be required
unless and until within two years of such termination the Company enters into a
definitive agreement to consummate or consummates an Alternative Proposal, and,
in the case of a termination pursuant to Section 8.1(c), there shall have been
made and not withdrawn at the time of the Company Special Meeting an Alternative
Proposal and, in the case of a termination pursuant to Section 8.1(f)(iii),
there shall have been made and not withdrawn at the time of such termination an
Alternative Proposal.
(c) Liquidated Damages; Prompt Payment. The parties agree that the
agreements contained in this Section 8.3 are an integral part of the
transactions contemplated by the Agreement and constitute liquidated damages and
not a penalty. If one party fails to pay promptly to the other any fee or
expenses due hereunder, the defaulting party shall pay the reasonable 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 of The Chase Manhattan Bank from the date such fee was
required to be paid.
Section 8.4 Amendment. This Agreement may be amended by the Boards
of Directors of the parties hereto, at any time before or after approval hereof
by the shareholders of the Company and prior to the Effective Time, but after
such approvals, no such amendment shall (i) alter or change the amount or nature
of the Merger Consideration under Article II or (ii) 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 Common 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. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
Section 8.5 Waiver. At any time prior to the Effective Time, 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 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
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agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival; Effect of Representation and
Warranties. (a) All representations, warranties and agreements in this Agreement
shall not survive the Merger, except as otherwise provided in this Agreement and
except for the agreements contained in this Section 9.1 and in Article II,
Section 6.10, Section 9.7, Section 9.8 and Section 9.9.
(b) No party may assert a claim for breach of any representation or
warranty contained in this Agreement (whether by direct claim or counterclaim)
except in connection with the cancellation of this Agreement pursuant to Section
8.1(e)(i) or Section 8.1(f)(i) (or pursuant to any other subsection of Section
8.1, if the terminating party would have been entitled to terminate this
Agreement pursuant to Section 8.1(e)(i) or Section 8.1(f)(i)).
Section 9.2 Brokers. The Company represents and warrants that,
except for Warburg Dillon Read LLC whose fees have been disclosed to Parent
prior to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of the Company. Parent represents and warrants that, except for
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. whose fees have been disclosed to the Company prior to the
date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
Section 9.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) delivered personally, (ii)
sent by reputable overnight courier service, (iii) delivered by facsimile
transmission (with receipt 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 the Company, to:
CMP Group, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Treasurer, Corporate Counsel and Secretary
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent, to:
Energy East Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and General Counsel
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.4 Miscellaneous. This Agreement (including the documents
and instruments referred to herein) (i) 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 Employment Agreements and the Confidentiality Agreement; (ii)
shall not be assigned by operation of law or otherwise; and (iii) shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts executed in and to be fully performed in such State,
without giving effect to its conflicts of law, rules or principles and except to
the extent the provisions of this Agreement (including the documents or
instruments referred to herein) are expressly governed by or derive their
authority from the MBCA.
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
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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." Whenever the word "person" is used in this
Agreement, it shall mean any individual, partnership, limited liability company,
joint venture, corporation, trust, association, unincorporated organization, or
governmental entity or any department or agency thereof.
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
rights of Indemnified Parties as set forth in Section 6.10, nothing in this
Agreement, express or implied, is intended to confer upon any other person 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, (i)
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of this Agreement and (ii) without limiting the effect of
Section 8.3, any right it may have, other than in the case of a willful breach,
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 shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, 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 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 or state court sitting in the State
of New York.
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CMP GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
ENERGY EAST CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Executive Vice President and
General Counsel
EE MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Secretary, Treasurer and
Vice President
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