CONFORMED COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
CONSOLIDATED EDISON, INC.,
NORTHEAST UTILITIES,
CONSOLIDATED EDISON, INC.,
originally incorporated as
CWB HOLDINGS, INC.
and
N ACQUISITION LLC
Dated as of October 13, 1999
Amended and Restated as of January 11, 2000
TABLE OF CONTENTS
Page
ARTICLE I The Mergers
SECTION 1.01. The Mergers
SECTION 1.02. Closing
SECTION 1.03. Effective Time of the Mergers
SECTION 1.04. Effects
SECTION 1.05. Certificate of Incorporation and By-laws of the Company
SECTION 1.06. Trust Agreement
SECTION 1.07. Directors, Trustees and Officers
SECTION 1.08. Post-Merger Operations
SECTION 1.09. Transfer of Company Common Stock
ARTICLE II Effect of the Mergers; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock
SECTION 2.02. NU Shareholder Elections
SECTION 2.03. Allocation and Proration of Cash and Company Common Stock
SECTION 2.04. Exchange of Certificates
SECTION 2.05. Adjustments for Sale of Certain NU Nuclear Facilities
SECTION 2.06. Certain Adjustments
ARTICLE III Representations and Warranties
SECTION 3.01. Representations and Warranties of NU
SECTION 3.02. Representations and Warranties of CEI
ARTICLE IV Certain Covenants of NU
SECTION 4.01. Conduct of Business by NU
SECTION 4.02. No Solicitation
ARTICLE V Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Joint Proxy Statement;
Shareholders Meetings
SECTION 5.02. Letters of NU's Accountants
SECTION 5.03. Letters of CEI's Accountants
SECTION 5.04. Access to Information; Confidentiality; Advice of Changes
SECTION 5.05. Regulatory Matters; Reasonable Best Efforts
SECTION 5.06. Stock Options
SECTION 5.07. Employee Agreements; Workforce Matters and Employee Benefit
Plans
SECTION 5.08. Indemnification, Exculpation and Insurance
SECTION 5.09. Fees and Expenses
SECTION 5.10. Public Announcements
SECTION 5.11. Affiliates
SECTION 5.12. NYSE Listing.
SECTION 5.13. Shareholder Litigation
SECTION 5.14. Taxes
SECTION 5.15. Standstill Agreements; Confidentiality Agreements
SECTION 5.16. Rights Agreement
ARTICLE VI Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Mergers
SECTION 6.02. Conditions to Obligations of CEI
SECTION 6.03. Conditions to Obligations of NU
ARTICLE VII Termination, Amendment and Waiver
SECTION 7.01. Termination
SECTION 7.02. Effect of Termination
SECTION 7.03. Amendment
SECTION 7.04. Extension; Waiver
SECTION 7.05. Procedure for Termination, Amendment, Extension or Waiver
ARTICLE VIII General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties
SECTION 8.02. Notices
SECTION 8.03. Definitions
SECTION 8.04. Interpretation
SECTION 8.05. Counterparts
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries
SECTION 8.07. Governing Law
SECTION 8.08. Assignment
SECTION 8.09. Enforcement
SECTION 8.10. Severability
SECTION 8.11. Trustee and Shareholder Liability
Exhibit A Form of Certificate of Incorporation of the Company as of the
Effective Time
Exhibit B Form of By-laws of the Company as of the Effective Time
Exhibit C Trust Agreement Amendments
Exhibit D-1 Form of NU Affiliate Letter
Exhibit D-2 Form of CEI Affiliate Letter
Exhibit E Form of CEI Tax Representations
Exhibit F Form of NU Tax Representations
Exhibit G Form of the Company Tax Representations
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of
October 13, 1999, as amended and restated as of January 11, 2000 (this
"Agreement"), among CONSOLIDATED EDISON, INC., a New York corporation
("CEI"), NORTHEAST UTILITIES, a Massachusetts business trust ("NU"),
CONSOLIDATED EDISON, INC., originally incorporated as CWB HOLDINGS, INC., a
Delaware corporation (the "Company") and a wholly owned subsidiary (as
defined in Section 8.03) of CEI, and N ACQUISITION LLC, a Massachusetts
limited liability company ("Merger LLC"), 99% of which is owned by the
Company and 1% of which is owned by X HOLDING LLC, a Massachusetts limited
liability company ("LLC Holding Sub"), 99% of which is owned by the Company
and 1% of which is owned by Merger LLC.
WHEREAS CEI, NU, the Company and Merger LLC entered into an Agreement and
Plan of Merger dated as of October 13, 1999 (the "Original Merger
Agreement"), and they now desire to amend and restate the Original Merger
Agreement (it being understood that all references herein to this "Agreement"
refer to the Original Merger Agreement as amended and restated hereby and
that all references herein to the "date hereof" or the "date of this
Agreement" refer to October 13, 1999);
WHEREAS the Board of Trustees of NU, the respective Boards of
Directors of CEI and the Company and the members of Merger LLC have approved
the business combination provided for in this Agreement, whereby (i) CEI will
merge with and into the Company (the "CEI Merger") and each share of common
stock, par value $.10 per share, of CEI (the "CEI Common Stock") shall be
converted into the right to receive one share of common stock, par value $.10
per share, of the Company (the "Company Common Stock") and (ii) Merger LLC
will merge with and into NU (the "NU Merger", and together with the CEI
Merger, the "Mergers") and each common share of beneficial interest, par
value $5.00 per share, of NU (the "NU Common Shares"), shall be converted
into, at the option of the holder thereof, either (x) the right to receive
Company Common Stock or (y) the right to receive cash, in each case subject
to the terms and conditions set forth in this Agreement, as a result of which
the holders of the CEI Common Stock and NU Common Shares will together own
all of the outstanding shares of Company Common Stock and the Company will,
in turn, own all of the outstanding NU Common Shares;
WHEREAS the Board of Directors of CEI has determined that the CEI
Merger and the other transactions contemplated hereby are consistent with,
and in furtherance of, the best interest of CEI and its shareholders (the
"CEI Shareholders");
WHEREAS the Board of Trustees of NU has determined that the NU
Merger and the other transactions contemplated hereby are consistent with,
and in furtherance of, the best interest of NU and the holders of the NU
Common Shares (the "NU Shareholders");
WHEREAS CEI and the Company desire to set forth for purposes of
Section 902(a) of the New York Business Corporation Law (the "NYBCL") the
following information with respect to CEI and the Company as of the date of
this Agreement: (i) the name of CEI is as set forth in the recitals to this
Agreement, the name of the Company is CWB Holdings, Inc. and each of CEI and
the Company was formed under such name, (ii) the name of the Company
following the CEI Merger shall be as set forth in Section 1.08(a), (iii) the
designation and number of outstanding shares of each class and series of
capital stock of CEI, and the voting rights thereof with respect to the CEI
Merger, are set forth in Section 3.02(c) and Section 3.02(m), and the
designation and number of outstanding shares of capital stock of CEI is
subject to change in accordance with the terms of CEI's Restated Certificate
of Incorporation and the NYBCL and (iv) the Company has designated and has
outstanding 1,000 shares of its common stock, par value $.01, of which the
holders thereof have unanimously approved the CEI Merger by written consent,
and the designation and number of outstanding shares of capital stock of the
Company is subject to change in accordance with the terms of the Company's
Certificate of Incorporation, the terms of this Agreement (including the
exhibits attached hereto) and the Delaware General Corporation Law (the
"DGCL");
WHEREAS CEI and NU desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers and also
to prescribe various conditions to the Mergers;
WHEREAS, for Federal income tax purposes, it is intended that the
Mergers will constitute a transaction described in Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the CEI Merger
will constitute a transaction described in Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
ARTICLE I
The Mergers
SECTION 1.01. The Mergers. On the terms and subject to the conditions set
forth in this Agreement:
(a) At the CEI Effective Time (as defined in Section 1.03), CEI shall be
merged with and into the Company in accordance with the DGCL and the NYBCL.
The Company shall be the surviving entity in the CEI Merger and shall
continue its existence under the laws of the State of Delaware and shall
succeed to and assume all of the rights and obligations of the Company and
CEI in accordance with the relevant provisions of the DGCL and the NYBCL.
(b) At the NU Effective Time (as defined in Section 1.03), Merger LLC shall
be merged with and into NU in accordance with the Massachusetts General Law
(the "MGL"). NU shall be the surviving entity in the NU Merger and shall
continue its existence under the laws of the Commonwealth of Massachusetts
and shall succeed to and assume all of the rights and obligations of NU and
Merger LLC in accordance with the MGL. As a result of the NU Merger, the
entire equity interest of NU, which shall be represented by new certificates
issued at the NU Effective Time, shall be owned by the Company.
SECTION 1.02. Closing. The closing of the Mergers (the "Closing") will take
place at the offices of Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other location in The City of
New York as is agreed to by CEI and NU) at 10:00 a.m., local time, on a date
to be specified by CEI and NU (the "Closing Date"), which shall be no later
than the second business day after satisfaction or waiver of the conditions
set forth in Article VI, unless another time or date is agreed to by CEI and
NU. CEI and NU agree to coordinate the Closing Date with the mailing of the
Form of Election and the Election Time (each as defined in Section 2.02(b)).
SECTION 1.03. Effective Time of the Mergers. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, (i) with
respect to the CEI Merger, the parties hereto shall (A) deliver a certificate
of merger executed in accordance with, and containing such information as is
required by, Section 907(e)(2) of the NYBCL to the Department of State of the
State of New York (the "CEI New York Certificate of Merger") and (B) file a
certificate of merger executed in accordance with, and containing such
information as is required by Section 252(c) of the DGCL with the Secretary
of State of the State of Delaware (the "CEI Delaware Certificate of Merger",
and collectively with the CEI New York Certificate of Merger, the "CEI
Certificates of Merger"), and (C) make all other filings or recordings as may
be required under the NYBCL and the DGCL, and (ii) with respect to the NU
Merger, the parties hereto shall file a certificate of merger (the "NU
Certificate of Merger") with the Secretary of State of the Commonwealth of
Massachusetts and shall make all other filings or recordings required under
the MGL. The CEI Merger shall become effective at such time as (i) the CEI
New York Certificate of Merger is duly delivered to the Department of State
of the State of New York and (ii) the CEI Delaware Certificate of Merger is
filed with the Secretary of State of the State of Delaware, or at such
subsequent date or time, not to exceed 30 days after the date of filing of
the CEI New York Certificate of Merger or 90 days after the date of filing of
the CEI Delaware Certificate of Merger, as CEI shall specify in the CEI
Certificates of Merger (the time the CEI Merger becomes effective being
hereinafter referred to as the "CEI Effective Time"), and the NU Merger shall
become effective at such time as the NU Certificate of Merger is duly filed
with the Secretary of State of the Commonwealth of Massachusetts, or at such
subsequent date or time as CEI and NU shall agree and specify in the NU
Certificate of Merger (the time the NU Merger becomes effective being
hereinafter referred to as the "NU Effective Time"). The CEI Effective Time
shall be the same date and time as the NU Effective Time (such date and time
referred to herein as the "Effective Time").
SECTION 1.04. Effects. The CEI Merger shall have the effects set forth in
the DGCL and the NYBCL, including Section 259 of the DGCL and Section 906 of
the NYBCL, and the NU Merger shall have the effects set forth in the MGL,
including Section 62 of Chapter 156C of the MGL.
SECTION 1.05. Certificate of Incorporation and By-laws of the Company. The
parties shall take all appropriate action so that, at the Effective Time, (a)
the certificate of incorporation of the Company shall be in the form attached
as Exhibit A hereto and (b) the By-laws of the Company shall be in the form
attached as Exhibit B hereto. Each of CEI and NU shall take all actions
necessary to cause the Company and Merger LLC to take any actions necessary
in order to consummate the Mergers and the other transactions contemplated
hereby.
SECTION 1.06. Trust Agreement. The Declaration of Trust dated as of January
15, 1927, relating to NU (as amended through the date of this Agreement, the
"Trust Agreement") shall be amended, subject to the NU Shareholder Approval
(as defined in Section 3.01(o)), to include the amendments and modifications
contained in Exhibit C hereto (the "Trust Agreement Amendments"), and the
Trust Agreement as so amended shall be filed by the parties hereto with the
Secretary of State of the Commonwealth of Massachusetts. Upon receipt of the
NU Shareholder Approval and completion of such filing, the Trust Agreement as
so amended shall be the governing instrument of NU until thereafter changed
or amended as provided therein or by Applicable Law (as defined in Section
3.01(d)(ii)).
SECTION 1.07. Directors, Trustees and Officers. (a) The parties hereto
will take such action as may be necessary to cause the number of directors
comprising the entire Board of Directors of the Company at the Effective Time
to include four persons designated by NU and reasonably acceptable to CEI
(the "NU Designees"). The NU Designees shall be allocated as evenly as
practicable among the three classes of the Company's directors. All other
members of the Board of Directors of the Company shall be designated by CEI.
From and after the Effective Time, such persons designated by CEI and NU
shall be the directors of the Company until the earlier of their resignation
or removal or until, their respective successors are duly elected and
qualified, as the case may be.
(b) The officers of CEI shall, from and after the Effective Time, be the
officers of the Company until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be; provided, however, that, from and after the Effective Time, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ shall be President of the Company.
(c) The managers of Merger LLC at the Effective Time shall, from and after
the Effective Time, be the trustees of NU as the surviving entity in the NU
Merger until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Trust Agreement and the number of trustees of NU shall be fixed from
and after the Effective Time at a number equal to the number of managers of
Merger LLC at the Effective Time until such time as the Trust Agreement is
further amended in accordance with its terms.
SECTION 1.08. Post-Merger Operations. Following the Effective Time, the
Company shall conduct its operations in accordance with the following:
(a) Name. At the Effective Time, the Company's name shall be Consolidated
Edison, Inc.
(b) Service Company. From and after the Effective Time, the Company may
have one or more service companies (collectively, the "Service Company") to
provide shared services to the businesses of the Company and its prospective
subsidiaries.
(c) Corporate Offices. (i) The Company shall maintain (A) its corporate
headquarters in New York City, (B) the headquarters for the operations in the
New England States of the Service Company in the State of Connecticut and (C)
the headquarters for the Company's unregulated businesses in the State of
Connecticut, (ii) CEI's subsidiaries shall maintain offices for utility
operations in the State of New York, the State of New Jersey and the
Commonwealth of Pennsylvania, consistent with their current or contemplated
operations, and (iii) NU's subsidiaries shall maintain offices for utility
operations in New England in the State of Connecticut, the Commonwealth of
Massachusetts and the State of New Hampshire, consistent with their current
or contemplated operations.
(d) Charities. The parties agree that provision of charitable contributions
and community support in the respective service areas of their respective
subsidiaries serves a number of important goals. After the Effective Time,
the Company and its subsidiaries taken as a whole intend to continue to
provide charitable contributions and community support within the service
areas of each of their respective subsidiaries at levels substantially
comparable to the levels of charitable contributions and community support
provided, directly or indirectly, by CEI, NU and their respective
subsidiaries within their subsidiaries' respective service areas during the
two-year period immediately prior to the Effective Time.
SECTION 1.09. Transfer to NU of Company Common Stock. Upon receipt by NU of
the necessary approval under PUHCA (as defined in Section 3.01(b)), CEI
shall, so long as such approval is received prior to the Effective Time, sell
to NU at a price equal to the par value thereof 400 shares of the common
stock, par value $.01 per share, of the Company representing 40% of the
outstanding capital stock of the Company.
ARTICLE II
Effect of the Mergers; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. (a) At the CEI Effective Time, by
virtue of the CEI Merger and without any action on the part of the holder of
any shares of capital stock of the Company or CEI:
(i) Cancelation of Certain CEI Common Stock. Each share of CEI Common Stock
that is owned by CEI or the Company shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(ii) Conversion of CEI Common Stock. Subject to Section 2.01(a)(i), each
issued and outstanding share of CEI Common Stock and each share of CEI Common
Stock held by Consolidated Edison Company of New York, Inc. ("CECONY") shall
be converted into the right to receive one fully paid and nonassessable share
of Company Common Stock.
(iii) Cancelation of CEI Common Stock. As of the CEI Effective Time, all
shares of CEI Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any shares of CEI Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration (as defined in Section 2.01(c)) without interest.
(b) At the NU Effective Time, by virtue of the NU Merger and without any
action on the part of any holder of any equity interest in NU or Merger LLC:
(i) Cancellation of Certain NU Common Shares. Each NU Common Share together
with each associated right (each, a "NU Right") under the NU Rights Agreement
(as defined in Section 3.01(x)) that is owned by NU or the Company shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(ii) Conversion of NU Common Shares. Subject to (x) Sections 2.01(b)(i) and
2.04(e), (y) the allocation and proration provisions set forth in 2.03 and
(z) adjustment in accordance with Section 2.05(a), each issued and
outstanding NU Common Share together with each associated NU Right shall be
converted into the right to receive, at the election of the holder thereof,
one of the following:
(A) for each NU Common Share and associated NU Right with respect to which an
election to receive Company Common Stock ("Stock Consideration") has been
effectively made, and not revoked or lost, or deemed to have been made,
pursuant to Section 2.02 (a "Stock Election"), the right to receive a number
of shares of Company Common Stock equal to the Exchange Ratio. If the
Closing Date occurs on or prior to August 5, 2000 (the "Adjustment Date"),
the "Exchange Ratio" shall be equal to the quotient (rounded to the nearest
thousandth, or if there shall not be a nearest thousandth, the next higher
thousandth) of $25 (the "Base Numerator") divided by the Market Price (as
defined below) of CEI Common Stock (the "Denominator"); provided, however,
that if (I) the Market Price is less than $36, the Denominator shall be $36
and (II) the Market Price is greater than $46, the Denominator shall be $46.
If the Closing Date is after the Adjustment Date, the Exchange Ratio shall
be equal to the quotient (rounded to the nearest thousandth, or if there
shall not be a nearest thousandth, the next higher thousandth) of the
Adjusted Numerator (as defined below) divided by the Denominator. The
"Adjusted Numerator" shall be equal to the Base Numerator increased, for each
day after the Adjustment Date up to and including the day which is one day
prior to the Closing Date, by an amount equal to $0.0034 (the Base Numerator
and the Adjusted Numerator are herein collectively referred to as the
"Numerator"). The "Market Price" of CEI Common Stock means the average
(rounded to the nearest thousandth, or if there shall not be a nearest
thousandth, the next higher thousandth) of the volume weighted averages
(rounded to the nearest thousandth, or if there shall not be a nearest
thousandth, the next higher thousandth) of the trading prices of CEI Common
Stock on the NYSE (as defined in Section 2.04(e)(ii)), as reported by
Bloomberg Financial Markets (or such other source as the parties shall agree
in writing), for the 20 trading days randomly selected by lot by CEI and NU
together from the 40 consecutive trading days ending on the fifth trading
day immediately preceding the Closing Date (excluding the Closing Date).
(B) for each such NU Common Share and associated NU Right with respect to
which an election to receive cash consideration (the "Cash Consideration")
has been effectively made, and not revoked or lost, or deemed to have been
made, pursuant to Section 2.02 (a "Cash Election"), the right to receive
cash, in an amount equal to $25. If the Closing Date is after the Adjustment
Date, the Cash Consideration shall be increased, for each day after the
Adjustment Date up to and including the day which is one day prior to the
Closing Date, by an amount equal to $0.0034.
(iii) Cancellation of NU Common Shares. As of the NU Effective Time, all NU
Common Shares together with the associated NU Rights shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any NU Common Shares
and associated NU Rights shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration upon surrender of such
certificate in accordance with Section 2.04, without interest.
(iv) Conversion of Merger LLC Equity Interests. All of the equity interests
in Merger LLC issued and outstanding immediately prior to the NU Effective
Time (the only holders of which are the Company and LLC Holding Sub) shall
(A) with respect to such interests held by LLC Holding Sub, be automatically
canceled and retired and cease to exist and (B) with respect to such
interests held by the Company, be converted into 1,000 duly authorized and
issued and fully paid common shares of beneficial interest, par value $5.00
per share, of NU.
(c) The shares of Company Common Stock to be issued pursuant to Section
2.01(a)(ii) in the case of the CEI Shareholders, and the Stock Consideration
or the Cash Consideration to be issued and paid pursuant to Section
2.01(b)(ii) in the case of the NU Shareholders, in each case, shall be
referred to, as applicable, as the "Merger Consideration".
(d) At the Effective Time, by virtue of the Mergers and without any action
on the part of any holder of any capital stock of CEI or the Company or any
equity interest of NU, each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall be canceled, and no
consideration shall be delivered in exchange therefor.
SECTION 2.02. NU Shareholder Elections. (a) Each person who, on or prior
to the Election Date referred to in (b) below, is a record holder of NU
Common Shares and associated NU Rights shall be entitled, with respect to
all or any portion of such shares, to make a Stock Election or a Cash
Election on or prior to such Election Date, on the basis hereinafter set
forth.
(b) The Company, CEI and NU shall prepare and mail, at least 15 but no more
than 60 days prior to the Closing Date, a form of election (the "Form of
Election") to the record holders of NU Common Shares and associated NU Rights
as of a record date five business days prior to such mailing, which Form of
Election shall be used by each record holder of NU Common Shares and
associated NU Rights who wishes to elect to receive the Stock Consideration
or the Cash Consideration for any or all of the NU Common Shares and
associated NU Rights held by such holder. NU will use its reasonable best
efforts to make the Form of Election available to all persons who become
record holders of NU Common Shares and associated NU Rights during the period
between such record date and the Closing Date. Any such holder's election to
receive the Stock Consideration or Cash Consideration shall have been
properly made only if the Exchange and Paying Agent (as defined in Section
2.04(a)) shall have received at its designated office, by 5:00 p.m., New York
City time, on the fifth business day immediately preceding the Closing Date
or such other date as may be agreed to by CEI and NU (the "Election Time"), a
Form of Election properly completed and accompanied by the Certificates (as
defined in Section 2.04(b)) for the NU Common Shares and associated NU Rights
to which such Form of Election relates, duly endorsed in blank or otherwise
in form acceptable for transfer on the books of NU (or by an appropriate
guarantee of delivery), as set forth in such Form of Election.
(c) Any Form of Election may be revoked by the NU Shareholder who submitted
such Form of Election to the Exchange and Paying Agent only by written notice
received by the Exchange and Paying Agent prior to the Election Time. In
addition, all Forms of Election shall automatically be revoked if the
Exchange and Paying Agent is notified in writing by CEI that either of the
Mergers has been abandoned. If a Form of Election is effectively revoked,
the Certificate or Certificates (or guarantees of delivery, as appropriate)
for the NU Common Shares and associated NU Rights to which such Form of
Election relates shall be promptly returned to the NU Shareholder submitting
the same to the Exchange and Paying Agent. A revoked election cannot be
reinstated without valid resubmission, by the Election Time of a valid
Election Form, and a revocation will not constitute an election for any other
consideration. Once a Form of Election is effectively revoked by a NU
Shareholder, such NU Shareholder may make an effective election to receive
the Stock Consideration or the Cash Consideration only if such NU Shareholder
delivers a new Form of Election to the Exchange and Paying Agent at its
designated office, by the Election Time, together with all other documents
required by, and in compliance with the procedures set forth in or
contemplated by, Section 2.02(b). In the case of multiple Forms of Election
received by the Exchange Agent in respect of the same NU Common Shares and
associated NU Rights, the last dated (or, if not dated, the last
received) will govern.
(d) The good faith determination of the Company whether or not elections to
receive the Stock Consideration or Cash Consideration has been properly made
or revoked pursuant to this Section 2.02 with respect to NU Common Shares and
associated NU Rights and when elections and revocations were received by the
Exchange and Paying Agent shall be binding. If no Form of Election is
received with respect to NU Common Shares and associated NU Rights, or if the
Company determines that any election to receive the Stock Consideration or
Cash Consideration was not properly made with respect to NU Common Shares and
associated NU Rights, (i) in the event that Oversubscribed Consideration (as
defined in Section 2.03(a)) exists, an election for the Undersubscribed
Consideration (as defined in Section 2.03(a)) shall be deemed to have been
made with respect to such NU Common Shares and associated NU Rights and such
NU Common Shares and associated NU Rights shall be exchanged in the NU Merger
for the Undersubscribed Consideration pursuant to Section 2.01(b)(ii)(A) or
Section 2.01(b)(ii)(B), as the case may be, and (ii) in the event that no
Oversubscribed Consideration exists, an election for Cash Consideration shall
be deemed to have been made with respect to such Shares and such Shares shall
be exchanged in the NU Merger for Cash Consideration pursuant to Section
2.01(b)(ii)(B), until the point where such an exchange would make the Cash
Consideration an Oversubscribed Consideration, following which any such NU
Common Shares and associated NU Rights that have not been so exchanged for
Cash Consideration shall be exchanged for Stock Consideration in accordance
with Section 2.01(b)(ii)(A). With respect to any situation in which deemed
elections pursuant to the immediately preceding two sentences require
elections for both Cash Consideration and Stock Consideration to be deemed
made, the Company shall to the extent possible allocate such deemed elections
pro rata among such NU Common Shares and associated NU Rights.
(e) The Company shall make all computations as to the allocation and the
proration contemplated by Section 2.03 and any such computation shall be
conclusive and binding on the NU Shareholders. CEI and NU may mutually agree
to make such rules as are consistent with this Section 2.02 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
SECTION 2.03. Allocation and Proration of Cash and Company Common Stock.
(a) Notwithstanding anything in this Agreement to the contrary, the number
of NU Common Shares and associated NU Rights to be converted into the right
to receive (i) the Stock Consideration at the Effective Time (the "Maximum
Stock Election Number") shall not exceed 50% of the NU Outstanding Shares (as
defined below) and (ii) the Cash Consideration at the Effective Time (the
"Maximum Cash Election Number") shall not exceed 50% of the NU Outstanding
Shares. If the aggregate number of NU Common Shares and associated NU Rights
in respect of which elections have been made or deemed made pursuant to
Section 2.02 exceeds the Maximum Stock Election Number or the Maximum Cash
Election Number, as the case may be, the consideration for which such
elections have been made or deemed made shall be referred to herein as the
"Oversubscribed Consideration". In the event that an Oversubscribed
Consideration exists, the form of consideration that is not the
Oversubscribed Consideration shall be referred to herein as the
"Undersubscribed Consideration". "NU Outstanding Shares" shall mean the NU
Common Shares and associated NU Rights outstanding immediately prior to the
NU Effective Time minus NU Common Shares and associated NU Rights that will
be canceled pursuant to Section 2.01(b)(i).
(b) If the aggregate number of NU Common Shares and associated NU Rights in
respect of which Stock Elections have been made or deemed made, in each case
in accordance with Section 2.02 (the "Requested Stock Amount") exceeds the
Maximum Stock Election Number, each holder making or deemed to be making such
a Stock Election shall receive, with respect to each NU Common Share and
associated NU Right for which such a Stock Election has been made or deemed
made, (x) such number of shares of Company Common Stock (together with cash
in lieu of fractional shares determined pursuant to Section 2.04(e)) equal to
the product of (A) the Exchange Ratio and (B) the Stock Proration Factor (as
defined below) and (y) cash in an amount equal to the product of (A) one
minus the Stock Proration Factor and (B) the Cash Consideration. The "Stock
Proration Factor" shall be equal to a fraction (expressed as a decimal) the
numerator of which is the Maximum Stock Election Number and the denominator
of which is the Requested Stock Amount.
(c) If the aggregate number of NU Common Shares and associated NU Rights in
respect of which Cash Elections have been made or deemed made, in each case
in accordance with Section 2.02 (the "Requested Cash Amount"), exceeds the
Maximum Cash Election Number, each holder making or deemed to be making such
a Cash Election shall receive, with respect to each NU Common Share and
associated NU Right for which such a Cash Election has been made or deemed
made, (x) cash in an amount equal to the product of (A) the Cash
Consideration and (B) the Cash Proration Factor (as defined below) and (y)
such number of shares of Company Common Stock (together with cash in lieu of
fractional shares determined pursuant to Section 2.04(e)) equal to the
product of (A) one minus the Cash Proration Factor and (B) the Exchange
Ratio. The "Cash Proration Factor" shall be equal to a fraction (expressed
as a decimal) the numerator of which is the Maximum Cash Election Number and
the denominator of which is the Requested Cash Amount.
SECTION 2.04. Exchange of Certificates. (a) Exchange and Paying Agent.
Promptly following the Effective Time, the Company shall deposit with such
bank or trust company as may be designated by the Company (the "Exchange and
Paying Agent"), for the benefit of the NU Shareholders, for exchange in
accordance with this Article II, through the Exchange and Paying Agent,
certificates representing the shares of Company Common Stock and immediately
available funds in amounts and at the times necessary to pay the Merger
Consideration (such shares of Company Common Stock and funds, together with
any dividends or distributions with respect thereto with a record date after
the Effective Time, being hereinafter referred to as the "Exchange Fund") in
exchange for outstanding NU Common Shares together with the associated NU
Rights.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange and Paying Agent shall mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding NU Common Shares together with the
associated NU Rights (the "Certificates") whose shares were converted into
the right to receive the Merger Consideration pursuant to this Article II,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange and Paying Agent and shall
be in such form and have such other provisions as CEI and NU may reasonably
specify) and (ii) instructions for use in surrendering the Certificates in
exchange for the Merger Consideration. Appropriate adjustments to the
exchange procedures set forth in this Section 2.04(b) will be made to account
for NU Shareholders who have previously submitted Certificates pursuant to
Section 2.02(b). Upon surrender of a Certificate for cancelation to the
Exchange and Paying Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the
Exchange and Paying Agent, the holder of such Certificate shall be entitled
to receive and the Exchange and Paying Agent shall deliver, as the case may
be, in exchange therefor (i) a certificate representing that number of whole
shares of Company Common Stock (together with certain dividends or other
distributions in accordance with Section 2.04(c), cash in lieu of fractional
shares in accordance with Section 2.04(e) and any cash payable pursuant to
Section 2.03) that such holder has the right to receive or (ii) the amount of
cash that such holder is entitled to receive, in each case pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of NU Common
Shares and the associated NU Rights that is not registered in the transfer
records of NU, a certificate representing the proper number of shares of
Company Common Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance shall pay any transfer or other taxes
required by reason of the issuance of shares of Company Common Stock to a
person other than the registered holder of such Certificate or establish to
the satisfaction of the Company that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.04, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, which
the holder thereof has the right to receive in respect of such Certificate
pursuant to the provisions of this Article II, certain dividends or other
distributions in accordance with Section 2.04(c) and cash in lieu of any
fractional shares of Company Common Stock in accordance with Section 2.04(e).
No interest shall be paid or will accrue on the Merger Consideration or any
cash payable to holders of Certificates pursuant to the provisions of this
Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Company Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Company Common Stock issuable
hereunder in respect thereof and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.04(e), and all such
dividends, other distributions and cash in lieu of fractional shares of
Company Common Stock shall be paid by the Company to the Exchange and Paying
Agent and shall be included in the Exchange Fund, in each case until the
surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable escheat or similar laws, following surrender of any
such Certificate there shall be paid to the holder of the certificate
representing whole shares of Company Common Stock issued in exchange
therefor, without interest, (i) as soon as practicable after such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Company
Common Stock and the amount of any cash payable in lieu of a fractional share
of Company Common Stock to which such holder is entitled pursuant to Section
2.04(e) and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and with a payment date subsequent to such surrender payable
with respect to such whole shares of Company Common Stock.
(d) No Further Ownership Rights in CEI Common Stock or NU Common
Shares. All certificates which immediately prior to the Effective Time
represented outstanding shares of CEI Common Stock shall thereafter represent
a like number of shares of Company Common Stock and, notwithstanding anything
noted thereon, no holder thereof shall have any rights pertaining to shares
of CEI Common Stock, subject, however, to CEI's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by CEI on such shares and
which remain unpaid at the Effective Time, and all shares of Company Common
Stock issued upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any cash paid pursuant to this
Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the NU Common Shares and the
associated NU Rights theretofore represented by such Certificates, subject,
however, to NU's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have
been declared or made by NU on such shares and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on
the stock transfer books of CEI or NU of the shares of CEI Common Stock or
the NU Common Shares and the associated NU Rights, respectively, that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Company, CEI, NU or the Exchange and
Paying Agent for any reason, they shall be canceled and exchanged as provided
in this Article II, except as otherwise provided by Applicable Law.
(e) No Fractional Shares. (1) No certificates or scrip representing
fractional shares of Company Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution of the Company
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to
any rights of a shareholder of the Company.
(ii) As promptly as practicable following the Effective Time, the
Exchange and Paying Agent shall determine the excess of (A) the number of
shares of Company Common Stock delivered to the Exchange and Paying Agent by
the Company pursuant to Section 2.04(a) over (B) the aggregate number of
whole shares of Company Common Stock to be distributed to former NU
Shareholders pursuant to this Article II (such excess being herein called the
"Excess Shares"). Following the Effective Time, the Exchange and Paying
Agent shall, on behalf of former NU Shareholders, sell the Excess Shares at
then-prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all
in the manner provided in Section 2.04(e)(iii).
(iii) The sale of the Excess Shares by the Exchange and Paying
Agent shall be executed on the NYSE through one or more member firms thereof
and shall be executed in round lots to the extent practicable. The Exchange
and Paying Agent shall use reasonable best efforts to complete the sale of
the Excess Shares as promptly following the Effective Time as, in the
Exchange and Paying Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing market
conditions. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates formerly representing NU Common
Shares and the associated NU Rights the Exchange and Paying Agent shall hold
such proceeds in trust for such holders (the "Common Shares Trust"). The
Company shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
and Paying Agent incurred in connection with such sale of the Excess Shares.
The Exchange and Paying Agent shall determine the portion of the Common
Shares Trust to which each former NU Shareholder is entitled, if any, by
multiplying the amount of the aggregate net proceeds composing the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such former NU Shareholder is entitled and
the denominator of which is the aggregate amount of fractional share
interests to which all former NU Shareholders are entitled.
(iv) Notwithstanding the provisions of Section 2.04(e)(ii) and
(iii), the Company may elect at its option, exercised prior to the Effective
Time, in lieu of the issuance and sale of Excess Shares and the making of the
payments hereinabove contemplated, to pay each former NU Shareholder an
amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such former NU Shareholder would otherwise
be entitled by (B) the closing price for a share of CEI Common Stock as
reported on the NYSE Composite Transaction Tape (as reported by Bloomberg
Financial Markets, or, if not reported thereby, any other authoritative
source) on the business day immediately prior to the Closing Date, and, in
such case, all references herein to the cash proceeds of the sale of the
Excess Shares and similar references shall be deemed to mean and refer to the
payments calculated as set forth in this Section 2.04(e)(iv).
(v) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Certificates formerly representing
NU Common Shares and the associated NU Rights with respect to any fractional
share interests, the Exchange and Paying Agent shall make available such
amounts to such holders of Certificates formerly representing NU Common
Shares and the associated NU Rights subject to and in accordance with the
terms of Section 2.04(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to the Company, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to the Company for payment of
their claim for Merger Consideration, any dividends or distributions with
respect to Company Common Stock, and any cash in lieu of fractional shares of
Company Common Stock.
(g) No Liability. None of CEI, NU, the Company, Merger LLC or the
Exchange and Paying Agent shall be liable to any person in respect of any
shares of Company Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Company Common Stock or any
cash from the Exchange Fund, in each case delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If
any Certificate shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration, any dividends or distributions payable to the holder of such
Certificate or any cash payable to the holder of such Certificate formerly
representing NU Common Shares and the associated NU Rights pursuant to this
Article II, would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.01(d)), any such Merger
Consideration, dividends or distributions in respect of such Certificate or
such cash shall, to the extent permitted by Applicable Law, become the
property of the Company, free and clear of all claims or interest of any
person previously entitled thereto.
(h) Investment of Exchange Fund and Common Shares Trust. The
Exchange and Paying Agent shall invest any cash included in the Exchange Fund
and Common Shares Trust, as directed by the Company, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
the Company.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Company, the posting by such person of a bond in such reason-
able amount as the Company may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange and Paying
Agent shall issue in exchange for such lost, stolen or destroyed Certificate,
the Merger Consideration and, if applicable, any unpaid dividends and
distributions on shares of Company Common Stock deliverable in respect
thereof and any cash in lieu of fractional shares, in each case pursuant to
this Agreement.
(j) Withholding Rights. The Company shall be entitled to deduct
and withhold from the consideration otherwise payable to any CEI Shareholder
or any NU Shareholder, as the case may be, pursuant to this Agreement such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Code, or under any provision of state, local
or foreign tax law. To the extent that amounts are so withheld and paid over
to the appropriate taxing authority, the Company will be treated as though it
withheld an appropriate amount of the type of consideration otherwise payable
pursuant to this Agreement to any CEI Shareholder or any NU Shareholder, as
the case may be, and if such consideration is not cash, sold such considera-
tion for an amount of cash equal to the fair market value of such
consideration at the time of such deemed sale, and paid such cash
consideration or proceeds to the appropriate taxing authority.
SECTION 2.05. Adjustments for Sale of Certain NU Nuclear
Facilities. (a) Certain Adjustments to the Stock Consideration and the Cash
Consideration. If after the date of this Agreement and on or prior to the
Closing Date, (i) the relevant NU Subsidiaries have entered into one or more
legally binding agreements providing for the sale to one or more third
parties which are not Affiliates of NU of both Millstone Station 2 and
Millstone Station 3, which agreements need not include any interest therein
owned by Public Service Company of New Hampshire ("PSNH"), in accordance, in
all material respects, with applicable legislation and the rules, regulations
and policies of DPUC (existing as of, or established after, the date of this
Agreement) for approval of such agreements (the "NU Nuclear Facilities Sales
Agreements") and (ii) the Utility Operations and Management Unit ("UOMA") of
DPUC (as defined in Section 3.01(d)(iii)) has submitted a formal written
recommendation to DPUC for approval of the NU Nuclear Facilities Sales
Agreement, or the DPUC shall have issued a Final Order (as defined in Section
6.02(e)) approving such NU Nuclear Facilities Sales Agreements, then (A) in
the case of each NU Common Share and associated NU Right with respect to
which a Stock Election has been effectively made, and not revoked or lost, or
deemed to have been made, pursuant to Section 2.02, the Numerator shall be
increased by an amount equal to $1.00 and (B) in the case of each NU Common
Share and associated NU Right with respect to which a Cash Election has been
effectively made, and not revoked or lost, or deemed to have been made,
pursuant to Section 2.02, the Cash Consideration shall be increased by an
amount equal to $1.00.
(b) Certain Contingent Value Rights. If the relevant NU
Subsidiaries have not entered into the NU Nuclear Facilities Sales Agreements
on or prior to the Closing Date, and the Closing Date occurs on or prior to
December 31, 2000, each NU Shareholder shall receive (in addition to the
Stock Consideration or Cash Consideration otherwise received by such NU
Shareholder in the NU Merger) for each NU Common Share and associated NU
Right, one non-transferable contingent value right issued by the Company
(each, a "CVR") entitling the holder thereof to payment of $1.00 in cash if,
on or prior to December 31, 2000, (i) the relevant NU Subsidiaries have
entered into the NU Nuclear Facilities Sales Agreements and (ii) UOMA has
submitted a formal written recommendation to DPUC for approval of such NU
Nuclear Facilities Sales Agreements or the DPUC shall have issued a Final
Order approving such NU Nuclear Facilities Sales Agreements. If any CVRs are
issued and as of 11:59 p.m. Eastern Standard Time on December 31, 2000 (i)
the relevant NU Subsidiaries have not entered into the NU Nuclear Facilities
Sales Agreements or (ii) UOMA has not submitted a formal written
recommendation to DPUC for approval of such NU Nuclear Facilities Sales
Agreements and the DPUC shall not have issued a Final Order approving such NU
Nuclear Facilities Sales Agreements, then the CVRs shall expire. In the
event that the Company is required to issue any CVRs, CEI and NU shall
negotiate in good faith the other terms and conditions of such CVRs.
SECTION 2.06. Certain Adjustments. If after the date hereof and
on or prior to the Closing Date, the outstanding shares of CEI Common Stock
(and CEI Common Stock held by CECONY) shall be changed into a different
number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in stock
or other securities is declared thereon with a record date within such
period, or any similar event shall occur, the Merger Consideration will be
adjusted accordingly to provide to the holders of CEI Common Stock (including
CECONY) and NU Common Shares and the associated NU Rights, respectively, the
same economic effect as contemplated by this Agreement prior to such
reclassification, recapitalization, split-up, combination, exchange or
dividend or similar event.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of NU. Except as set
forth on the Disclosure Schedule delivered by NU to CEI prior to the
execution of this Agreement (the "NU Disclosure Schedule") and making
reference to the particular subsection of this Agreement to which exception
is being taken, NU represents and warrants to CEI as follows:
(a) Organization, Standing and Corporate Power. NU is a voluntary
association duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, each subsidiary of NU (each a "NU
Subsidiary") is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
is organized and each of NU and the NU Subsidiaries has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted, except, as to the NU Subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good
standing would not have, individually or in the aggregate, a Material Adverse
Effect (as defined in Section 8.03) on NU. The respective articles of
incorporation and by-laws or other organizational documents of each NU
Subsidiary, in each case as amended through the date of this Agreement, do
not contain any provision limiting or otherwise restricting the ability of NU
to control each such NU Subsidiary.
(b) Subsidiaries. Section 3.01(b) of the NU Disclosure Schedule
sets forth, as of the date of this Agreement, a complete list of (i) the NU
Subsidiaries and specifies each of NU's Subsidiaries that is a "public-
utility company", a "holding company", a "subsidiary company", an "affiliate"
of any public-utility company, an "exempt wholesale generator" or a "foreign
utility company" within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8),
2(a)(11), 32(a)(1) or 33(a)(3) of the Public Utility Holding Company Act of
1935, as amended ("PUHCA"), respectively, or a "public utility" within the
meaning of Section 201(e) of the Federal Power Act (the "Power Act") and
(ii) all other entities in which NU has an aggregate equity investment in
excess of $5 million.
(c) Capital Structure. NU is authorized to issue up to
225,000,000 NU Common Shares and no shares with a preference as to dividends
or in liquidation or otherwise over the NU Common Shares have been authorized
or issued. At the close of business on October 12, 1999, 137,237,564 NU
Common Shares were issued and outstanding, including 3,746 NU Common Shares
were held by NU in its treasury. During the period from October 12, 1999
through the date of this Agreement, NU has not issued any NU Common Shares or
placed any NU Common Shares in its treasury (except, in each case, as
required by the NU Stock Plans (as defined below)). As of the date of this
Agreement, (i) other than pursuant to the NU Stock Plans (as defined below)
and the NU Rights Plan, no securities of NU convertible into or exchangeable
or exercisable for shares of equity interest of NU were outstanding;
(ii) other than pursuant to the NU Stock Plans and the NU Rights Plan, no
warrants, calls, options or other rights to acquire from NU or any NU
Subsidiary, and no obligation of NU or any NU Subsidiary to issue, any shares
of equity interest of NU were outstanding; and (iii) no bonds, debentures,
notes or other indebtedness of NU or any NU Subsidiary having the right to
vote on matters presented to shareholders of NU or such NU Subsidiary (or
convertible into securities of NU or any NU Subsidiary having the right to
vote on matters presented to shareholders of NU or such NU Subsidiary)("NU
Voting Debt") were outstanding. Section 3.01(c) of the NU Disclosure
Schedule sets forth a list and description of each plan or program of NU or
any NU Subsidiary pursuant to which securities or options to purchase
securities of NU or any NU Subsidiary may be issued or delivered
(collectively, the "NU Stock Plans"). Section 3.01(c) of the NU Disclosure
Schedule sets forth a complete and correct list, as of the date of this
Agreement, of the number of NU Common Shares subject to employee stock
options to purchase or receive NU Common Shares and the exercise prices
thereof and a list of NU Common Shares reserved for issuance relating to
other rights to purchase or receive NU Common Shares granted under the NU
Stock Plans (collectively with such employee stock options, the "NU Stock
Options"). All the outstanding shares of equity interest of NU and all the
outstanding shares of capital stock of, or other equity interests in, each of
the NU Subsidiaries have been validly issued and are fully paid and
nonassessable and (except for any series of preferred stock of any NU
Subsidiary held by public shareholders) all the outstanding shares of capital
stock of, or other equity interests in, each of the NU Subsidiaries are, as
of the date of this Agreement, owned directly or indirectly by NU, free and
clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and free
of any other restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interests)
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 NU Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of its equity interest or
obligating it to grant, extend or enter into any such agreement or
commitment.
(d) Authority; Noncontravention; Statutory Approvals.
(i) Authority. NU has all requisite power and authority to enter into this
Agreement and, subject to the NU Shareholder Approval (as defined in
Section 3.01(o)) and the applicable NU Statutory Approvals (as defined in
Section 3.01(d)(iii)), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by NU and the
consummation by NU of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of NU, subject, in
the case of the NU Merger and the Trust Agreement Amendments, to the NU
Shareholder Approval. This Agreement has been duly executed and delivered by
NU and, assuming the due authorization, execution and delivery by each of the
other parties hereto, constitutes the legal, valid and binding obligation of
NU, enforceable against NU in accordance with its terms.
(ii) Noncontravention. The execution and delivery of this Agreement by
NU do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or constitute a breach or
default (with or without notice or lapse of time, or both) under, or result
in the termination of, or give rise to a right of termination, cancelation,
modification or acceleration of, any obligation or loss of a benefit under,
or result in the creation of any Lien upon any of the properties or assets of
NU or any NU Subsidiary under (any such conflict, violation, breach, default,
termination, right of termination, modification, cancelation or acceleration,
loss or creation is referred to herein as a "Violation" with respect to NU
and such term when used in Section 3.02 has a correlative meaning with
respect to CEI), (A) subject to obtaining the NU Shareholder Approval, the
Trust Agreement, (B) the certificate of incorporation or by-laws or similar
governing documents of any NU Subsidiary (other than any such Violation that,
individually or in the aggregate, would not have a Material Adverse Effect on
NU), (C) any loan or credit agreement, note, bond, mortgage, indenture,
standstill agreement, lease, deed of trust or other agreement, instrument,
permit, concession, franchise, license or similar authorization or any other
material agreement applicable to NU or any NU Subsidiary or their respective
properties or assets (other than any such Violation that, individually or in
the aggregate, would not have a Material Adverse Effect on NU) or (D) subject
to obtaining the NU Statutory Approvals and the receipt of the NU Shareholder
Approval, any statute, law, ordinance, rule or regulation (collectively,
"Applicable Law") or any judgment, decree, order, injunction, writ, permit or
license of any Governmental Entity (as defined in Section 3.01(d)(iii))
applicable to NU or any of the NU Subsidiaries or any of their respective
properties or assets (other than immaterial consents, approvals, orders,
authorizations, actions, registrations, declarations or filings, including
with respect to communications systems, zoning, name change, occupancy and
similar routine regulatory approvals).
(iii) Statutory Approvals. No consent, approval, order, permit or
authorization of, action by or in respect of, or registration, declaration or
filing with, or notice to, (other than immaterial consents, approvals,
permits, orders, authorizations, actions, registrations, declarations or
filings, including with respect to communications systems, zoning, name
change, occupancy and similar routine regulatory approvals) any Federal,
state, local or foreign government, any court, administrative, regulatory
(including a stock exchange) or other governmental agency, commission or
authority or any non-governmental self-regulatory agency, commission or
authority (a "Governmental Entity") is required by or with respect to NU or
any NU Subsidiary in connection with the execution and delivery of this
Agreement by NU or the consummation by NU of the transactions contemplated by
this Agreement, except for: (A) compliance with and the filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (B) the filing with, and to the extent required, the declaration of
effectiveness by, the Securities and Exchange Commission (the "SEC") of (1) a
proxy statement relating to the NU Shareholders Meeting (as defined in
Section 5.01(b)) (such proxy statement, together with the proxy statement
relating to the CEI Shareholders Meeting (as defined in Section 5.01(c)), in
each case as amended or supplemented from time to time, the "Joint Proxy
Statement"), (2) the registration statement on Form S-4 prepared in
connection with the issuance of Company Common Stock in the Mergers (the
"Form S-4") and (3) such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (C)(1) the filing of the CEI Delaware
Certificate of Merger with the Secretary of State of the State of Delaware
and the filing of the CEI New York Certificate of Merger to the Department of
State of the State of New York, and the filing of the NU Certificate of
Merger with the Secretary of State of the Commonwealth of Massachusetts and
appropriate documents with the relevant authorities of other states in which
NU and any of the NU Subsidiaries are qualified to do business and such
filings with Governmental Entities to satisfy the applicable requirements of
state or provincial securities or "blue sky" laws and (2) the filing of the
Trust Agreement Amendments with the Secretary of State of the Commonwealth of
Massachusetts; (D) such filings with and approvals of the NYSE to permit the
shares of Company Common Stock that are to be issued pursuant to Article II
to be listed on the NYSE; (E) the registration, consents, approvals and
notices required under PUHCA; (F) notice to, and the consent and approval of,
the Federal Energy Regulatory Commission ("FERC") under the Power Act; (G) to
the extent required, notice to, and the consent and approval of, the Nuclear
Regulatory Commission (the "NRC") under the Atomic Energy Act of 1954, as
amended (the "Atomic Energy Act"); (H) to the extent required, notice to and
the approval of (1) the Connecticut Department of Public Utility Control
("DPUC"), (2) the Maine Public Utilities Commission ("MPUC"), (3) the
Massachusetts Department of Telecommunications and Energy ("MDTE") and the
Massachusetts Department of Revenue (the "MDR"), (4) the New Hampshire Public
Utilities Commission ("NHPUC"), (5) the New Jersey Board of Public Utilities
("NJBPU"), (6) the New York State Public Service Commission ("NYPSC"),
(7) the Pennsylvania Public Utility Commission ("PPUC"), (8) Vermont Public
Services Board ("VPSB", and collectively with DPUC, MPUC, MDTE, MDR, NHPUC,
NJBPU, NYPSC, PPUC, the "Applicable PUCs"); (I) to the extent required,
notice to and the consent and approval of the Governmental Entities listed on
Section 3.01(d)(iii)(I) of the NU Disclosure Schedule; and (J) the filing of
the certificate of incorporation of the Company in the form attached hereto
as Exhibit A with the Secretary of State of the State of Delaware (the
preceding clauses (A) through (J) collectively, whether or not legally
required to be obtained, the "NU Statutory Approvals").
(e) Reports and Financial Statements. The filings (other than
immaterial filings) required to be made by NU and the NU Subsidiaries under
the Securities Act of 1933, as amended (the "Securities Act"), the Exchange
Act, PUHCA, the Power Act, the Atomic Energy Act or applicable state public
utility laws and regulations have been filed with the SEC, FERC, the NRC or
the appropriate state public utilities commission, as the case may be,
including all forms, statements, reports, tariffs, contracts, agreements
(oral or written) and all documents, exhibits, amendments and supplements
appertaining thereto required to be filed with such commission. As of their
respective dates, the reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated therein)
required to be filed by NU or any NU Subsidiary with the SEC since January 1,
1997 (the "NU SEC Documents") complied in all material respects with the
requirements of the Securities Act, the Exchange Act or PUHCA, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such NU SEC Documents, and none of the NU SEC Documents when
filed contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of NU included in the NU SEC
Documents (the "NU Financial Statements") comply as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the
consolidated financial position of NU and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments).
(f) Assets and Properties. NU and the NU Subsidiaries have good
and sufficient title to all properties and assets reflected on the ▇▇▇▇▇▇▇-
dated balance sheet of NU and its consolidated subsidiaries included in the
NU Financial Statements or thereafter acquired (except as sold or otherwise
disposed of since the date of such balance sheet (A) with respect to any such
sale or disposition prior to the date of this Agreement or (B) with respect
to any such sale or disposition from and after the date of this Agreement, in
compliance with clause (e) of Section 4.01) in each case free and clear of
all Liens (other than Liens under any mortgage indenture of any NU Subsidiary
applicable to the assets of such NU Subsidiary), except where the failure to
have good title free and clear of all Liens to any such properties or assets
would not have, individually or in the aggregate, a Material Adverse Effect
on NU. The tangible assets of NU and the NU Subsidiaries are in an adequate
state of maintenance and repair (except for ordinary wear and tear), except
where their failure to be in such state of maintenance and repair would not
have, individually or in the aggregate, a Material Adverse Effect on NU.
(g) Franchises. NU and the NU Subsidiaries own or have sufficient
rights and consents to locate and use under existing franchises, permits,
easements, leases, and license agreements (the "NU Permits") all properties,
rights and assets necessary for the conduct of their business and operations
as currently conducted, except where the failure to own or have sufficient
rights to such properties, rights and assets would not have, individually or
in the aggregate, a Material Adverse Effect on NU. To the knowledge (as
defined in Section 8.03) of NU, no other private corporation has as of the
date of this Agreement commenced, or, without obtaining a certificate of
public convenience and necessity from the applicable state utility
commission, can commence, operations distributing electricity to the general
public along and across public streets and ways in any part of the
territories now served by NU or any NU Subsidiary.
(h) Information Supplied. None of the information supplied by or
on behalf of, or to be supplied by or on behalf of, NU specifically for
inclusion or incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed or becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading or (ii) the
Joint Proxy Statement will, at the date it is first mailed to the NU
Shareholders or at the time of the NU Shareholders 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 Form S-4 and the Joint Proxy Statement, insofar as they
relate to NU, will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act, respectively, and
the respective rules and regulations thereunder.
(i) Absence of Certain Changes or Events. Except as disclosed in
the NU SEC Documents filed pursuant to the Securities Act or the Exchange Act
and publicly available prior to the date of this Agreement (the "Previously
Filed NU SEC Documents"), since December 31, 1998, to the date of this
Agreement, (i) NU and each of the NU Subsidiaries have conducted their
respective businesses only in the ordinary course of business consistent with
past practice and (ii) there has not been, and no fact or condition exists
which, individually or in the aggregate, would have a Material Adverse Effect
on NU. Except as disclosed in the Previously Filed NU SEC Documents, from
December 31, 1998 through the date of this Agreement, there has not been
(i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any equity
interest of NU, (ii) any split, combination or reclassification of any equity
interest of NU or any issuance or the authorization of any issuance of any
equity interest of NU or NU Voting Debt or any other securities in respect
of, in lieu of or in substitution for any equity interest of NU, except for
issuances of NU Common Shares under the NU Stock Plans in accordance with
their present terms or upon exercise of outstanding NU Stock Options, or
(iii) except as may have been required by a change in GAAP, any change in
accounting methods, principles or practices by NU or any NU Subsidiary
materially affecting their respective assets, liabilities or business. As of
the date of this Agreement, none of (i) the Agreement and Plan of Merger (the
"Yankee Merger Agreement") dated as of June 14, 1999 among Yankee Energy
System, Inc. ("Yankee") and NU, (ii) the Purchase and Sale Agreement (the
"CL&P/NGC Sale Agreement") dated July 2, 1999 between The Connecticut Light
and Power Company ("CL&P") and Northeast Generation Company ("NGC"),
(iii) the Purchase and Sale Agreement (the "NRG Sale Agreement") dated
July 1, 1999, between CL&P and NRG, Inc. (the "NRG Sale Agreement") or
(iv) the Purchase and Sale Agreement (the "WMECO/NGC Sale Agreement") dated
July 2, 1999, between Western Massachusetts Electric Company ("WMECO") and
NGC has been amended, modified or supplemented.
(j) Compliance with Applicable Laws; Litigation. Except as
disclosed in the Previously Filed NU SEC Documents, NU and the NU
Subsidiaries are in compliance with the terms of the NU Permits and all
Applicable Laws, except where the failure so to comply would not have,
individually or in the aggregate, a Material Adverse Effect on NU. Except as
disclosed in the Previously Filed NU SEC Documents, no action, demand,
requirement or investigation by any Governmental Entity and no suit, action
or proceeding by any person, in each case with respect to NU or any NU
Subsidiary or any of their respective properties is pending or, to the
knowledge of NU, threatened, other than, in each case, those the outcome of
which, individually or in the aggregate, would not have a Material Adverse
Effect on NU. All utility rates charged by NU and the applicable NU
Subsidiaries have been and continue to be made pursuant to lawfully filed
tariffs and contracts. This provision shall not apply to environmental or to
health and safety matters, which are exclusively the subject of
Section 3.01(t).
(k) Absence of Changes in Benefit Plans. Since the date of the
most recent audited financial statements included in the Previously Filed NU
SEC Documents, there has not been any adoption or amendment in any material
respect by NU or any NU Subsidiary of any collective bargaining agreement or
any material bonus, pension, profit sharing, savings, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former trustee, director, officer or
employee of NU or any NU Subsidiary (collectively, the "NU Benefit Plans"),
or any material change in any actuarial or other assumption used to calculate
funding obligations with respect to any NU pension or post-retirement benefit
plans or arrangements, or any material change in the manner in which
contributions to any NU pension or post-retirement benefit plans or
arrangements are made or the basis on which such contributions are
determined.
(l) Employee Matters; ERISA. (i) Except for employment
agreements providing benefits (other than material severance benefits) but no
employment term other than at will, Section 3.01(l)(i) of the NU Disclosure
Schedule contains a true and complete list of each (A) written or material
oral deferred compensation, bonus or other incentive compensation, stock
purchase, stock option, restricted stock and other equity compensation or
ownership plan, program, agreement or arrangement; (B) written or material
oral severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
Section 3(l) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); (C) profit-sharing, stock bonus or other "pension" plan,
fund or program (within the meaning of Section 3(2) of ERISA); (D) written or
material oral employment, retention, consulting, termination or severance
agreement; and (E) other written or material oral employee benefit plan,
fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by NU or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with NU would be deemed a "single employer" within the meaning of
Section 4001(b) of ERISA, or to which NU or an ERISA Affiliate is party, for
the benefit of any employee or former employee of NU or any NU Subsidiary
(the foregoing plans, funds, programs, agreements and arrangements in this
Section 3.01(l)(i) being referred to collectively as the "NU Plans").
(ii) With respect to each NU Plan (except for NU Plans that are
"multiemployer plans" as that term is defined in Section 3(37) of
ERISA), NU has heretofore delivered or made available to CEI true and
complete copies of each of the following documents:
(A) a copy of each written NU Plan and any amendments thereto;
(B) a copy of the two most recent annual reports on Internal
Revenue Service Form 5500 and actuarial reports, if required under
ERISA, and the most recent report prepared with respect thereto in
accordance with Statement of Financial Accounting Standards Nos. 87
and 106;
(C) a copy of the most recent Summary Plan Description
(including supplements) required under ERISA with respect thereto;
(D) if the NU Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding
agreement and the latest financial statements thereof and all
related agreements; and
(E) the most recent determination letter or pending
determination letter received from the Internal Revenue Service
with respect to each NU Plan intended to qualify under Section 401
or 501(c)(9) of the Code.
(iii) No liability under Title IV or Section 302 of ERISA has been
incurred by NU or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a risk to NU or any ERISA
Affiliate of incurring any such liability, other than liability for
premiums due the Pension Benefit Guaranty Corporation ("PBGC") (which
premiums have been paid when due) in each case except where such
occurrence, individually or in the aggregate, would not have a Material
Adverse Effect on NU. No NU Plan has, to the knowledge of NU, engaged
in a "prohibited transaction" (as defined in Section 4975 of the Code or
Section 406 of ERISA) not exempted under or pursuant to Section 4975 of
the Code or Section 408 of ERISA, no NU Plan subject to Title IV of
ERISA (a "Title IV NU Plan") has been terminated by the PBGC or has been
the subject of a "reportable event" (as defined in Section 4043 of ERISA
and the regulations thereunder) for which the 30-day notice requirement
has not been waived and NU has not received any notice of intent by PBGC
to terminate any such Plan in each case except where such occurrence,
individually or in the aggregate, would not have a Material Adverse
Effect on NU. Schedule 3.01(l)(iii) of the NU Disclosure Schedule sets
forth, in respect of each of the last two completed plan years, (x) the
amount of contributions made by NU and its Affiliates to each Title IV
NU Plan and (y) the amount of insurance premiums required to be paid by
NU and its Affiliates to the PBGC.
(iv) With respect to each Title IV NU Plan, the present value of
accrued benefits under such Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared
by such Plan's actuary with respect to such Plan did not exceed, as of
its latest valuation date, the then current value of the assets of such
Plan allocable to such accrued benefits.
(v) No Title IV NU Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each Title IV NU Plan ended
prior to the date of this Agreement nor has there been any application
for waiver of the minimum funding standards imposed by Section 412 of
the Code. All contributions required to be made with respect to any NU
Plan on or prior to the Closing Date have been or will have been timely
made or are reflected on the balance sheet except where such failure to
make any such contributions, individually or in the aggregate, would not
have a Material Adverse Effect on NU.
(vi) No Title IV NU Plan is a "multiemployer plan", as defined in
Section 3(37) of ERISA, nor is any Title IV NU Plan a plan described in
Section 4063(a) of ERISA.
(vii) Each NU Plan has been operated and administered in accordance
with its terms and Applicable Law, including but not limited to ERISA
and the Code, the rules and regulations thereunder, except where such
noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on NU. Each NU Plan intended to be "qualified"
under Section 401(a) or 501(c)(9) of the Code is so qualified and its
trusts maintained thereunder are exempt from taxation under
Section 501(a) of the Code. To the knowledge of NU, there is no fact,
condition or set of circumstances existing that could adversely affect
such favorable determination. To NU's knowledge, there are no
investigations pending in respect of any NU Plan by any Governmental
Entity.
(viii) No NU Plan provides medical, surgical, hospitalization, death
or similar benefits (whether or not insured) for employees or former
employees (or their beneficiaries) of NU or any NU Subsidiary for
periods extending beyond their respective dates of retirement or other
termination of service, other than (A) coverage mandated by Applicable
Law, (B) death benefits under any "pension plan", or (C) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
(ix) To the knowledge of NU, no amounts payable under the NU Plans
will fail to be deductible for Federal income tax purposes by virtue of
either Section 280G or 162(m) of the Code.
(x) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event,
(A) entitle any current or former trustee, director, officer or employee
of NU or any ERISA Affiliate to severance pay, unemployment compensation
or any other payment, (B) accelerate the time of payment or vesting, or
increase the amount of compensation due any such trustee, director,
officer or employee or (C) require the immediate funding or financing of
any compensation or benefits. Schedule 3.01(l)(x) of the NU Disclosure
Schedule sets forth estimates prepared by NU of the amounts reasonably
expected to be paid to participants in any NU Plan (or by which any of
their benefits may be increased or accelerated) as a result of (A) the
execution of this Agreement, (B) the obtaining of the NU Shareholders
Approval, (C) consummation of the Mergers and (D) termination or
constructive termination of any trustee, director, officer or employee's
employment with NU or any NU Subsidiary. For purposes of the preceding
sentence, the determination of the amounts set forth in
Schedule 3.01(l)(x) is based upon each employee's current compensation,
outstanding awards and benefits accrued (as applicable) and on such
other factors as NU, taking into account Applicable Law, deems
reasonable and appropriate.
(xi) To the knowledge of NU, there are no pending, threatened or
anticipated claims by or on behalf of any NU Plan, by any employee or
beneficiary covered under any such NU Plan, or otherwise involving any
such NU Plan (other than routine claims for benefits) except to the
extent that such claims, individually or in the aggregate, would not
have a Material Adverse Effect on NU.
(m) Labor and Employee Relations. (i) Except as disclosed in the
Previously Filed NU SEC Documents, as of the date of this Agreement,
(A) except for the existing collective bargaining agreements with the unions
set forth on Section 3.01(m) of the NU Disclosure Schedule, in each case as
in effect on the date of this Agreement (copies of which have been delivered
to CEI), neither NU nor any of the NU Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any union or
labor organization and (B) to the knowledge of NU, there is no current union
representation question involving employees of NU or any of the NU
Subsidiaries, nor does NU have knowledge of any activity or proceeding of any
labor organization (or representative thereof) or employee group to organize
any such employees, except to the extent such, individually or in the
aggregate, would not have a Material Adverse Effect on NU.
(ii) Except as disclosed in the Previously Filed NU SEC Documents
or except to the extent such, individually or in the aggregate, would not
have a Material Adverse Effect on NU, (A) there is no unfair labor practice,
employment discrimination or other charge, claim, suit, action or proceeding
against NU or any of the NU Subsidiaries pending, or to the knowledge of NU,
threatened before any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator, (B) there is no strike,
lockout or material dispute, slowdown or work stoppage pending or, to the
knowledge of NU, threatened against or involving NU, and (C) there is no
proceeding, claim, suit, action or governmental investigation pending or, to
the knowledge of NU, threatened in respect of which any trustee, director,
officer, employee or agent of NU or any NU Subsidiary is or may be entitled
to claim indemnification from NU or any NU Subsidiary pursuant to the Trust
Agreement (in the case of NU) or their certificates of incorporation or
By-laws (in the case of the NU Subsidiaries) or as provided in the indem-
nification agreements listed in Section 3.01(m)(ii) of the NU Disclosure
Schedule or any other indemnification agreements.
(n) Taxes. (i) Except as to any items that would not,
individually or in the aggregate, have a Material Adverse Effect on NU:
(A) NU and each of the NU Subsidiaries has (I) filed all
Federal, state, local and foreign income and other tax returns or
reports (including declarations of estimated tax) required to be
filed by it, and all such returns are complete and accurate,
(II) paid all taxes of any nature whatsoever (together with any
related penalties and interest) (any of the foregoing being
referred to herein as a "Tax"), that are shown on such Tax returns
as due and payable on or before the date of this Agreement, and
(III) paid on behalf of itself or others all Taxes otherwise
required to be paid on or before the date of this Agreement.
(B) There are no claims or assessments pending against NU or
any of the NU Subsidiaries for any alleged deficiency in Tax, and,
to the knowledge of NU, there is not any threatened Tax claims or
assessments against NU or any of the NU Subsidiaries.
(C) NU and each of the NU Subsidiaries has established
adequate reserves for current Taxes and for any liability for
deferred Taxes in the NU Financial Statements in accordance with
GAAP.
(D) All Taxes required to be withheld, collected or deposited
by or with respect to NU and each of the NU Subsidiaries have been
timely withheld, collected or deposited, as the case may be, and,
to the extent required, have been paid to the relevant taxing
authority.
(E) There are no Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of NU or any NU
Subsidiary.
(F) The Federal income Tax returns of the consolidated group
for which NU is the common parent either have been examined and
settled with the Internal Revenue Service or closed by virtue of
the expiration of the applicable statute of limitations for all
years through 1993.
(G) None of NU or any NU Subsidiary shall be required to
include in a taxable period ending after the Effective Time an
amount of taxable income attributable to income that accrued in a
prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the
completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481
of the Code or comparable provisions of state, local or foreign Tax
law.
(H) Neither NU nor any NU Subsidiary has, within the five
preceding taxable years, deferred gain recognition for Federal
income tax purposes under Sections 1031 or 1033 of the Code.
(I) None of the property owned or used by NU or any NU
Subsidiary is subject to a lease other than a "true" lease for
Federal income tax purposes.
(J) NU has not made, within the five preceding taxable years,
a disclosure on a Tax return pursuant to Section 6662(d)(2)(B)(ii)
of the Code.
(K) Neither NU nor any NU Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution
of stock qualifying for tax-free treatment under Section 355 of the
Code (I) in the two years prior to the date of this Agreement or
(II) 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 Mergers.
(ii) Neither NU nor any NU Subsidiary has taken any action, or
failed to take any action, or has knowledge of any fact, agreement, plan
or other circumstance that is reasonably likely to prevent (A) the
Mergers from constituting a transaction described in Section 351 of the
Code or (B) the CEI Merger from constituting a transaction described in
Section 368(a) of the Code.
(o) Voting Requirements. The affirmative vote of two-thirds of
the NU Common Shares outstanding as of the date of the NU Shareholders
Meeting, voting as a single class (with each NU Common Share having one vote
per share), (x) to amend the Trust Agreement in order to effect the Trust
Agreement Amendments and (y) to approve this Agreement and the Merger at the
NU Shareholders Meeting (collectively, the "NU Shareholder Approval") are the
only votes of the holders of any equity interest of NU or any class or series
of capital stock of any NU Subsidiary necessary to approve this Agreement,
the Merger and the transactions contemplated hereby.
(p) State Anti-takeover Statutes. NU has taken or will take prior
to Closing all action necessary to approve the NU Merger such that the
approval (along with the NU Shareholder Approval) is sufficient to render the
provisions of Chapter 110C, 110D, 110E and 110F of the MGL inapplicable to
the NU Merger and the other transactions contemplated by this Agreement. To
the knowledge of NU, no other anti-takeover or similar statute or regulation
applies or purports to apply to the transactions contemplated by this
Agreement.
(q) Brokers. No broker, investment banker, financial advisor or
other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Incorporated ("▇▇▇▇▇▇
▇▇▇▇▇▇▇") and the ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Division of Societe Generale ("▇▇ ▇▇▇▇
▇▇▇▇▇▇"), the fees and expenses of which will be paid by NU, is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of NU. NU has made available to
CEI prior to the execution of this Agreement a copy of the engagement letter
of each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and, other than as set forth in
such engagement letter, has no understanding or agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
or ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ regarding any fees or expenses in connection with the
Mergers or the transactions contemplated by this Agreement.
(r) Opinion of Financial Advisor. NU has received the opinion of
each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, dated as of October 12, 1999, to
the effect that, as of such date, the Merger Consideration is fair from a
financial point of view to the NU Shareholders.
(s) Ownership of CEI Common Stock. As of the date of this
Agreement, neither NU nor, to its knowledge, any of its affiliates,
(i) beneficially owns (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
in each case, shares of capital stock of CEI or other securities convertible
into shares of capital stock of CEI, except for such shares as may be held by
trustees of pension, employee benefit, nuclear decommissioning, spent fuel or
similar trusts, the investment management of which is carried out by non-
affiliates under contract with affiliates of NU.
(t) Environmental Protection. (i) Except as set forth in the
Previously Filed NU SEC Documents:
(A) Compliance. NU and, to the knowledge of NU, each of the
NU Subsidiaries are, and have been, in compliance with all
applicable Environmental Laws (as defined in Section 3.01(t)(ii)),
except where the failure to so comply, individually or in the
aggregate, would not have a Material Adverse Effect on NU, and
neither NU nor, to the knowledge of NU, any NU Subsidiary has
received any communication (written or oral) reasonably grounded in
fact, from any person or Governmental Entity that alleges that NU
or any of the NU Subsidiaries is not in such compliance with
applicable Environmental Laws. Compliance with all applicable
Environmental Laws will not require NU or any NU Subsidiary to
incur costs, including the costs of pollution control equipment
that are known or anticipated to be required in the future, beyond
those currently budgeted for the three NU fiscal years beginning
with January 1, 1999, that, individually or in the aggregate, would
have a Material Adverse Effect on NU.
(B) Environmental Permits. (I) NU and each of the NU
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 their facilities or the conduct of their
operations, except where the failure to so obtain, individually or
in the aggregate, would not have a Material Adverse Effect on NU,
(II) all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is
pending agency approval, except where the failure of such
Environmental Permits to be in good standing or to have filed a
renewal application on a timely basis would not, individually or in
the aggregate, have a Material Adverse Effect on NU, (III) NU and,
to the knowledge of NU, the NU Subsidiaries are in material
compliance with all terms and conditions of the Environmental
Permits, except where failure to so comply, individually or in the
aggregate, would not have a Material Adverse Effect on NU and
(IV) neither NU nor, to the knowledge of NU, any of the NU
Subsidiaries has been advised by any Governmental Entity of any
potential change in the terms and conditions of the Environmental
Permits either prior to or upon their renewal, except for such
potential changes as would not, individually or in the aggregate,
have a Material Adverse Effect on NU.
(C) Environmental Claims. There are no Environmental Claims
(as defined in Section 3.01(t)(ii)) that would, individually or in
the aggregate, have a Material Adverse Effect on NU, pending or, to
the knowledge of NU, threatened, (1) against NU or any of the NU
Subsidiaries, (2) to the knowledge of NU, against any person or
entity whose liability for any Environmental Claim NU or any of the
NU Subsidiaries has or may have retained or assumed either
contractually or by operation of law, or (3) against any currently
owned, leased or managed, in whole or in part, real or personal
property or operations of NU or any of the NU Subsidiaries or, to
the knowledge of NU, against any formerly owned, leased or managed,
in whole or in part, real or personal property or operations of NU
or any of the NU Subsidiaries.
(D) Releases. There have been no Releases (as defined in
Section 3.01(t)(ii)) of any Hazardous Material (as defined in
Section 3.01(t)(ii)) that would be reasonably likely to form the
basis of any Environmental Claim against NU or, to the knowledge of
NU, any of the NU Subsidiaries, or against any person or entity
whose liability for any Environmental Claim NU or any of the NU
Subsidiaries has or may have retained or assumed either contractu-
ally or by operation of law, except for any Environmental Claim
which, individually or in the aggregate, would not have a Material
Adverse Effect on NU.
(E) Assumed and Retained Liabilities. Neither NU nor, to the
knowledge of NU, any of the NU Subsidiaries has retained or assumed
either contractually or by operation of law any liabilities or
obligations that would be reasonably likely to form the basis for
any Environmental Claim, which would, individually or in the
aggregate, have a Material Adverse Effect on NU.
(F) Predecessors. NU has no knowledge with respect to any
predecessor of NU or any of the NU Subsidiaries, of any
Environmental Claim that, individually or in the aggregate, would
have a Material Adverse Effect on NU.
(ii) Definitions. As used in this Agreement:
(A) "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 (written or oral) by any person or
entity (including any Governmental Entity), alleging potential
liability (including potential responsibility or liability for
enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (I) the presence or Release of,
or exposure to, any Hazardous Materials at any location, whether or
not owned, operated, leased or managed by NU or any of the NU
Subsidiaries or CEI or any of the CEI Subsidiaries; or
(II) circumstances forming the basis of any violation or alleged
violation of any Environmental Law or (III) 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, or exposure to, any Hazardous Materials.
(B) "Environmental Laws" means all federal, state and local
laws, rules, regulations, orders, decrees, judgments, binding
agreements or Environmental Permits issued, promulgated or entered
into by or with any Governmental Entity, relating to pollution, the
environment (including ambient air, surface water, groundwater,
land surface or subsurface strata) or protection of human health as
it relates to the environment, including laws and regulations
relating to noise levels, nuclear operations, Releases of, or
exposure to, Hazardous Materials, or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(C) "Hazardous Materials" means (I) any petroleum or
petroleum products, radioactive materials or wastes, spent nuclear
fuel, coal ash, coal combustion byproducts, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation
and polychlorinated biphenyls ("PCBs"); (II) any chemicals,
materials, substances or wastes which are defined as or included in
the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "source
material," "special nuclear material," "byproduct material," or
words of similar import under any Environmental Law and (III) any
other chemical, material, substance or waste that in relevant form
or concentration is prohibited, limited or regulated under any
Environmental Law.
(D) "Release" means any actual or threatened release, spill,
emission, leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or
fixture.
(u) Regulation as a Utility. Section 3.01(u) of the NU Disclosure
Schedule lists each NU Subsidiary that, as of the date of this Agreement, is
regulated as a public utility and each jurisdiction imposing such regulation.
Neither NU nor any "subsidiary company" or "affiliate" of NU is, as of the
date of this Agreement, subject to regulation as a public utility or public
service company (or similar designation) by any other state in the
United States or any foreign country. As used in this Section 3.01(u) and in
Section 3.02(s), the terms "subsidiary company" and "affiliate" shall have
the respective meanings ascribed to them in PUHCA.
(v) Operations of Nuclear Power Plants. The operations of the
nuclear generation stations (collectively, the "NU Nuclear Facilities")
currently or formerly owned, in whole or part, by NU or any of its affiliates
are and have been conducted in compliance with all Applicable Laws, including
Environmental Laws, except for such failures to comply as would not have,
individually or in the aggregate, a Material Adverse Effect on NU. Each of
the NU Nuclear Facilities maintains, and is in material compliance with,
emergency plans designed to respond to an unplanned Release therefrom of
radioactive materials and the NRC has determined that such plans are in
material compliance with its requirements. As of the date of this Agreement,
the plans for the current or future decommissioning of each of the NU Nuclear
Facilities and for the storage of spent nuclear fuel conform with the
requirements of Applicable Law and are funded consistent with Applicable Law.
(w) Insurance. NU and each of the NU Subsidiaries is, and has
been continuously since January 1, 1997, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary
in all material respects for companies conducting business as conducted by NU
and the NU Subsidiaries during such time period. Neither NU nor any NU
Subsidiaries has received any notice of cancelation or termination with
respect to any material insurance policy of NU or any NU Subsidiaries, except
to the extent any such cancelation or termination would not have,
individually or in the aggregate, a Material Adverse Effect on NU.
(x) NU Rights Agreement. NU and the Board of Trustees of NU have
taken all necessary action so that neither the execution and delivery of this
Agreement nor the consummation of the Mergers and the other transactions
contemplated hereby will (i) cause any NU Rights issued pursuant to the
Rights Agreement (the "NU Rights Agreement") dated as of February 23, 1999,
between NU and Northeast Utilities Service Company, as agent, to become
exercisable, or (ii) cause CEI, Merger LLC or any of their respective
"Affiliates" or "Associates" (as defined in the NU Rights Agreement) to be an
"Acquiring Person" (as defined in the NU Rights Agreement) or give rise to a
"Distribution Date", "Shares Acquisition Date" or "Section 11(a)(ii) Event"
(as such terms are defined in the NU Rights Agreement). NU has delivered to
CEI a complete and correct copy of the NU Rights Agreement as amended and
supplemented to the date of this Agreement.
SECTION 3.02. Representations and Warranties of CEI. Except as
set forth on the Disclosure Schedule delivered by CEI to NU prior to the
execution of this Agreement (the "CEI Disclosure Schedule") and making
reference to the particular subsection of this Agreement to which exception
is being taken, CEI represents and warrants to NU as follows:
(a) Organization, Standing and Corporate Power. Each of CEI and
its subsidiaries (each a "CEI Subsidiary") is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has the requisite corporate
or other power, as the case may be, and authority to carry on its business as
now being conducted, except, as to CEI Subsidiaries, for those jurisdictions
where the failure to be so organized, existing or in good standing would not
have, individually or in the aggregate, a Material Adverse Effect on CEI.
The respective articles of incorporation and by-laws or other organizational
documents of each CEI Subsidiary, in each case as amended through the date of
this Agreement, do not contain any provision limiting or otherwise
restricting the ability of CEI to control each such CEI Subsidiary.
(b) Subsidiaries. Section 3.02(b) of the CEI Disclosure Schedule
sets forth, as of the date of this Agreement, a complete list of (i) CEI
Subsidiaries and specifies each of the CEI Subsidiaries that is a "public-
utility company", a "holding company", a "subsidiary company", an "affiliate"
of any public-utility company, an "exempt wholesale generator" or a "foreign
utility company" within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8),
2(a)(11), 32(a)(1) or 33(a)(3) of PUHCA, respectively, or a "public utility"
within the meaning of Section 201(e) of the Power Act and (ii) and all other
entities in which CEI has an aggregate equity investment in excess of
$5 million.
(c) Capital Structure. The authorized capital stock of CEI
consists of 500,000,000 shares of CEI Common Stock and 6,000,000 shares of
preferred stock, par value $1.00 per share, of CEI ("CEI Authorized Preferred
Stock"), of which, as of the date of this Agreement, no shares have been
designated to constitute a particular series. At the close of business on
October 11, 1999, (i) 217,991,256 shares of CEI Common Stock were issued and
outstanding (excluding all shares of CEI Common Stock held by CECONY),
(ii) 323,738 shares of CEI Common Stock were held by CEI in its treasury and
(iii) 17,173,100 shares of CEI Common Stock were held by CECONY. During the
period from October 12, 1999 through the date of this Agreement, CEI has not
issued any shares of CEI Common Stock or placed any shares of CEI Common
Stock in its treasury (except, in each case, as required by CEI Stock Plans
(as defined below)). As of the date of this Agreement, (i) no shares of CEI
Common Stock were reserved for issuance pursuant to the CEI Dividend
Reinvestment and Cash Payment Plan, the CEI Discount Stock Purchase Plan,
CEI's 1996 Stock Option Plan and the CEI Restricted Stock Plan for Directors
(the "CEI Stock Plans"), (ii) no shares of CEI Authorized Preferred Stock had
been designated or issued or were held in CEI's treasury, (iii) other than
pursuant to the CEI Stock Plans, no securities of CEI convertible into or
exchangeable or exercisable for shares of capital stock of CEI were
outstanding, (iv) other than pursuant to the CEI Stock Plans, no warrants,
calls, options or other rights to acquire from CEI or any CEI Subsidiary, and
no obligation of CEI or any CEI Subsidiary to issue, any shares of capital
stock of CEI were outstanding, and (v) no bonds, debentures, notes or other
indebtedness of CEI or any CEI Subsidiary having the right to vote on matters
presented to shareholders of CEI or such CEI Subsidiary (or convertible into
securities of CEI or any CEI Subsidiary having the right to vote on matters
presented to shareholders of CEI or such CEI Subsidiary) ("CEI Voting Debt")
were outstanding. Section 3.02(c) of the CEI Disclosure Schedule sets forth
a complete and correct list, as of the date of this Agreement, of the number
of shares of CEI Common Stock subject to employee stock options to purchase
or receive CEI Common Stock and the exercise prices thereof and a list of
shares reserved for issuance relating to other rights to purchase or receive
CEI Common Stock granted under the CEI Stock Plans (collectively with such
employee stock options, the "CEI Stock Options"). All the outstanding shares
of capital stock of, or other equity interests in, CEI and each of the CEI
Subsidiaries have been validly issued and are fully paid and nonassessable
and (except for any series of preferred stock of any CEI Subsidiary held by
public shareholders) all the outstanding shares of capital stock of, or other
equity interests in, each of the CEI Subsidiaries are, as of the date of this
Agreement, owned directly or indirectly by CEI, free and clear of all Liens
and free of any other restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests) 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 CEI 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.
(d) Authority; Noncontravention; Statutory Approvals.
(i) Authority. CEI has all requisite power and authority to enter into this
Agreement and, subject to the CEI Shareholder Approval (as defined in
Section 3.02(m)) and the applicable CEI Statutory Approvals (as defined in
Section 3.02(d)(iii)), to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by CEI and the
consummation by CEI of the transactions contemplated by this Agreement have
been duly authorized by all necessary action on the part of CEI, subject to
the CEI Shareholder Approval. This Agreement has been duly executed and
delivered by CEI and, assuming the due authorization, execution and delivery
by each of the other parties hereto, constitutes the legal, valid and binding
obligation of CEI, enforceable against CEI in accordance with its terms.
(ii) Noncontravention. The execution and delivery of this
Agreement by CEI do not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any Violation under, (A) the
certificate of incorporation or by-laws of CEI, (B) the certificate of
incorporation or by-laws or similar governing documents of any CEI Subsidiary
(other than any such Violation that, individually or in the aggregate, would
not have a Material Adverse Effect on CEI), (C) any loan or credit agreement,
note, bond, mortgage, indenture, standstill agreement, lease, deed of trust
or other agreement, instrument, permit, concession, franchise, license or
similar authorization or any other material agreement applicable to CEI or
any CEI Subsidiary or their respective properties or assets (other than any
such Violation that, individually or in the aggregate, would not have a
Material Adverse Effect on CEI) or (D) subject to obtaining the CEI Statutory
Approvals, and the receipt of the CEI Shareholder Approval, any Applicable
Law or judgment, decree, order, injunction, writ, permit or license of any
Governmental Entity applicable to CEI or any of the CEI Subsidiaries or any
of their respective properties or assets (other than immaterial consents,
approvals, orders, authorizations, actions, registrations, declarations or
filings, including with respect to communications systems, zoning, name
change, occupancy and similar routine regulatory approvals).
(iii) Statutory Approvals. No consent, approval, order, permit or
authorization of, action by or in respect of, or registration, declaration or
filing with, or notice to, (other than immaterial consents, approvals,
permits, orders, authorizations, actions, registrations, declarations or
filings, including with respect to communications systems, zoning, name
change, occupancy and similar routine regulatory approvals) any Governmental
Entity is required by or with respect to CEI or any CEI Subsidiary in
connection with the execution and delivery of this Agreement by CEI or the
consummation by CEI of the transactions contemplated by this Agreement,
except for: (A) compliance with and the filings under the HSR Act; (B) the
filing with, and to the extent required, the declaration of effectiveness by,
the SEC of (1) the Joint Proxy Statement, (2) the Form S-4 and (3) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act, as
may be required in connection with this Agreement and the transactions
contemplated by this Agreement; (C)(1) the filing of the CEI Delaware
Certificate of Merger with the Secretary of State of the State of Delaware
and the filing of the CEI New York Certificate of Merger to the Department of
State of the State of New York, and the filing of the NU Certificate of
Merger with the Secretary of State of the Commonwealth of Massachusetts and
appropriate documents with the relevant authorities of other states in which
CEI and CEI Subsidiaries are qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state or
provincial securities or "blue sky" laws and (2) the filing of the Trust
Agreement Amendments with the Secretary of State of the Commonwealth of
Massachusetts; (D) such filings with and approvals of the NYSE to permit the
shares of Company Common Stock that are to be issued pursuant to Article II
to be listed on the NYSE; (E) the registration, consents, approvals and
notices required under PUHCA; (F) notice to, and the consent and approval of,
FERC under the Power Act; (G) to the extent required, notice to, and the
consent and approval of, the NRC under the Atomic Energy Act; (H) to the
extent required, notice to and the approval of the Applicable PUCs; (I) to
the extent required, notice to and the consent and approval of the
Governmental Entities listed on Section 3.01(d)(iii)(I) of the CEI Disclosure
Schedule; and (J) the filing of the certificate of incorporation of the
Company in the form attached hereto as Exhibit A with the Secretary of State
of the State of Delaware (the preceding clauses (A) through (J) collectively,
whether or not legally required to be obtained, the "CEI Statutory
Approvals").
(e) Reports and Financial Statements. The filings (other than
immaterial filings) required to be made by CEI and the CEI Subsidiaries under
the Securities Act, the Exchange Act, PUHCA, the Power Act, the Atomic Energy
Act or applicable state public utility laws and regulations have been filed
with the SEC, FERC, the NRC or the appropriate state public utilities
commission, as the case may be, including all forms, statements, reports,
tariffs, contracts, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto required to be filed with
such commission. As of their respective dates, the reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) required to be filed by CEI or any CEI
Subsidiary with the SEC since January 1, 1997 (the "CEI SEC Documents")
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such CEI SEC Documents, and none of
the CEI SEC Documents when filed contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of CEI included in the CEI SEC Documents (the "CEI Financial
Statements") comply as to form, as of their respective dates of filing with
the SEC, in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of CEI and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal recurring year-end audit adjustments).
(f) Assets and Properties. CEI and the CEI Subsidiaries have good
and sufficient title to all properties and assets reflected on the
consolidated balance sheet of CEI and its consolidated subsidiaries included
in the CEI Financial Statements or thereafter acquired (except as sold or
otherwise disposed of since the date of such balance sheet) in each case free
and clear of all Liens, except where the failure to have good title free and
clear of all Liens to any such properties or assets would not have,
individually or in the aggregate, a Material Adverse Effect on CEI. The
tangible assets of CEI and the CEI Subsidiaries are in an adequate state of
maintenance and repair (except for ordinary wear and tear), except where
their failure to be in such state of maintenance and repair would not have,
individually or in the aggregate, a Material Adverse Effect on CEI.
(g) Franchises. CEI and the CEI Subsidiaries own or have
sufficient rights and consents to locate and use under existing franchises,
permits, easements, leases, and license agreements (the "CEI Permits") all
properties, rights and assets necessary for the conduct of their business and
operations as currently conducted, except where the failure to own or have
sufficient rights to such properties, rights and assets would not have,
individually or in the aggregate, a Material Adverse Effect on CEI. To the
knowledge of CEI, no other private corporation has of the date of this
Agreement commenced or, without obtaining a certificate of public convenience
and necessity from the applicable state utility commission, can commence
operations distributing electricity to the general public along and across
public streets and ways in any part of the territories now served by CEI or
any CEI Subsidiary.
(h) Information Supplied. None of the information supplied by or
on behalf of, or to be supplied by or on behalf of, CEI specifically for
inclusion or incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed or becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading or (ii) the
Joint Proxy Statement will, at the date it is first mailed to the CEI
Shareholders or at the time of the CEI Shareholders 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 Form S-4 and the Joint Proxy Statement insofar as they
relate to CEI will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act, respectively, and
the respective rules and regulations thereunder.
(i) Absence of Certain Changes or Events. Except as disclosed in
the CEI SEC Documents filed pursuant to the Securities Act or the Exchange
Act and publicly available prior to the date of this Agreement (the
"Previously Filed CEI SEC Documents"), since December 31, 1998, to the date
of this Agreement, (i) CEI and each of the CEI Subsidiaries have conducted
their respective businesses only in the ordinary course of business
consistent with past practice and (ii) there has not been, and no fact or
condition exists which, individually or in the aggregate, would have a
Material Adverse Effect on CEI. Except as disclosed in the Previously Filed
CEI SEC Documents, from December 31, 1998 through the date of this Agreement,
there has not been (i) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any capital stock of CEI (other than regular quarterly cash
dividends), (ii) any split, combination or reclassification of any capital
stock of CEI or any issuance or the authorization of any issuance of any
capital stock of CEI or CEI Voting Debt or any other securities in respect
of, in lieu of or in substitution for any capital stock of CEI, except for
issuances of shares of CEI Common Stock under the CEI Stock Plans in
accordance with their present terms or upon exercise of outstanding CEI Stock
Options, or (iii) except as may have been required by a change in GAAP, any
change in accounting methods, principles or practices by CEI or any CEI
Subsidiary materially affecting their respective assets, liabilities or
business.
(j) Compliance with Applicable Laws; Litigation. Except as
disclosed in the Previously Filed CEI SEC Documents, CEI and the CEI
Subsidiaries are in compliance with the terms of the CEI Permits and all
Applicable Laws, except where the failure so to comply would not have,
individually or in the aggregate, a Material Adverse Effect on CEI. Except
as disclosed in the Previously Filed CEI SEC Documents, no action, demand,
requirement or investigation by any Governmental Entity and no suit, action
or proceeding by any person, in each case with respect to CEI or any CEI
Subsidiary or any of their respective properties is pending or, to the
knowledge of CEI, threatened, other than, in each case, those the outcome of
which, individually or in the aggregate, would not have a Material Adverse
Effect on CEI. All utility rates charged by CEI and the applicable CEI
Subsidiaries have been and continue to be made pursuant to lawfully filed
tariffs and contracts. This provision shall not apply to environmental or to
health and safety matters, which are exclusively the subject of
Section 3.02(r).
(k) Employee Matters; ERISA. Each pension, profit sharing,
savings, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding providing benefits to any current or former
trustee, director, officer or employee of CEI or any CEI Subsidiary
(collectively, the "CEI Benefit Plans") has been administered in accordance
with its terms, except for any failures so to administer that, individually
or in the aggregate, would not have a Material Adverse Effect on CEI. CEI,
the CEI Subsidiaries and all the CEI Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws and
the terms of all applicable collective bargaining agreements, except for any
failures to be in such compliance that, individually or in the aggregate,
would not have a Material Adverse Effect on CEI.
(l) Taxes. (i) Except as to any items that would not,
individually or in the aggregate, have a Material Adverse Effect on CEI:
(A) CEI and each of the CEI Subsidiaries has (I) filed all
Federal, state, local and foreign income and other Tax returns or
reports (including declarations of estimated tax) required to be
filed by it, and all such returns are complete and accurate,
(II) paid all Taxes of any nature whatsoever (together with any
related penalties and interest) that are shown on such Tax returns
as due and payable on or before the date of this Agreement, and
(III) paid on behalf of itself or others all Taxes otherwise
required to be paid on or before the date of this Agreement.
(B) There are no claims or assessments pending against CEI or
any of the CEI Subsidiaries for any alleged deficiency in Tax, and,
to the knowledge of CEI, there is not any threatened Tax claims or
assessments against CEI or any of the CEI Subsidiaries.
(C) CEI and each of the CEI Subsidiaries has established
adequate reserves for current Taxes and for any liability for
deferred Taxes in the CEI Financial Statements in accordance with
GAAP.
(D) All Taxes required to be withheld, collected or deposited
by or with respect to CEI and each of the CEI Subsidiaries have
been timely withheld, collected or deposited, as the case may be,
and, to the extent required, have been paid to the relevant taxing
authority.
(E) There are no Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of the CEI or any CEI
Subsidiary.
(F) The Federal income Tax returns of the consolidated group
for which CEI is the common parent either have been examined and
settled with the Internal Revenue Service or closed by virtue of
the expiration of the applicable statute of limitations for all
years through 1991.
(G) None of CEI or any CEI Subsidiary shall be required to
include in a taxable period ending after the Effective Time an
amount of taxable income attributable to income that accrued in a
prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the
completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481
of the Code or comparable provisions of state, local or foreign Tax
law.
(H) Neither CEI nor any CEI Subsidiary has, within the five
preceding taxable years, deferred gain recognition for Federal
income tax purposes under Sections 1031 or 1033 of the Code.
(I) None of the property owned or used by CEI or any CEI
Subsidiary is subject to a lease other than a "true" lease for
Federal income tax purposes.
(J) CEI has not made, within the five preceding taxable
years, a disclosure on a Tax return pursuant to
Section 6662(d)(2)(B)(ii) of the Code.
(K) Neither CEI nor any CEI Subsidiary has constituted either
a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution
of stock qualifying for tax-free treatment under Section 355 of the
Code (I) in the two years prior to the date of this Agreement or
(II) 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 Mergers.
(ii) Neither CEI nor any CEI Subsidiary has taken any action, or
failed to take any action, or has knowledge of any fact, agreement, plan
or other circumstance that is reasonably likely to prevent (A) the
Mergers from constituting a transaction described in Section 351 of the
Code or (B) the CEI Merger from constituting a transaction described in
Section 368(a) of the Code.
(m) Voting Requirements. The affirmative vote of a majority of
the shares of CEI Common Stock (excluding any shares of CEI Common Stock held
by CECONY) entitled to vote thereon outstanding as of the date of the CEI
Shareholders Meeting, voting as a single class (with each share of CEI Common
Stock having one vote per share), to adopt this Agreement (the "CEI
Shareholder Approval") is the only vote of the holders of any class or series
of capital stock of CEI or any CEI Subsidiary necessary to approve and adopt
this Agreement and the transactions contemplated hereby.
(n) State Anti-takeover Statutes. Assuming the accuracy of the
representation of NU set forth in Section 3.01(s), Section 912 of the NYBCL
is not applicable to the transactions contemplated by this Agreement. To the
knowledge of CEI, no other anti-takeover or similar statute or regulation
applies or purports to apply to the transactions contemplated by this
Agreement.
(o) Brokers. No broker, investment banker, financial advisor or
other person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, the fees and expenses of which
will be paid by CEI, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of CEI.
(p) Opinion of Financial Advisor. CEI has received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney, dated as of October 12, 1999, to the effect that, as of
such date, the Merger Consideration is fair from a financial point of view to
the CEI Shareholders.
(q) Ownership of NU Common Shares. As of the date of this
Agreement, neither CEI nor, to its knowledge, any of its affiliates,
(i) beneficially owns (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of,
in each case, shares of equity interest of NU or other securities convertible
into shares of equity interest of NU, except for such shares as may be held
by trustees of pension, employee benefit, nuclear decommissioning, spent fuel
or similar trusts, the investment management of which is carried out by non-
affiliates under contract with affiliates of CEI.
(r) Environmental Protection. Except as set forth in the
Previously Filed CEI SEC Documents:
(i) Compliance. CEI and, to the knowledge of CEI, each of the CEI
Subsidiaries are, and have been, in compliance with all applicable
Environmental Laws, except where the failure to so comply, individually
or in the aggregate, would not have a Material Adverse Effect on CEI,
and neither CEI nor any CEI Subsidiary has received any communication
(written or oral) reasonably grounded in fact, from any person or
Governmental Entity that alleges that CEI or any of the CEI Subsidiaries
is not in such compliance with applicable Environmental Laws.
Compliance with all applicable Environmental Laws will not require CEI
or, to the knowledge of CEI, any CEI Subsidiary to incur costs,
including the costs of pollution control equipment that are known or
anticipated to be required in the future, beyond those currently
budgeted for the three CEI fiscal years beginning with January 1, 1999,
that, individually or in the aggregate, would have a Material Adverse
Effect on CEI.
(ii) Environmental Permits. (A) CEI and each of the CEI
Subsidiaries has obtained or has applied for all Environmental Permits
necessary for the construction of their facilities or the conduct of
their operations, except where the failure to so obtain, individually or
in the aggregate, would not have a Material Adverse Effect on CEI,
(B) all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending
agency approval, except where the failure of such Environmental Permits
to be in good standing or to have filed a renewal application on a
timely basis would not, individually or in the aggregate, have a
Material Adverse Effect on CEI, (C) CEI and, to the knowledge of CEI,
the CEI Subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits, except where failure to so
comply, individually or in the aggregate, would not have a Material
Adverse Effect on CEI and (D) neither CEI nor, to the knowledge of CEI,
any of the CEI Subsidiaries has been advised by any Governmental Entity
of any potential change in the terms and conditions of the Environmental
Permits either prior to or upon their renewal, except for such potential
changes as would not, individually or in the aggregate, have a Material
Adverse Effect on CEI.
(iii) Environmental Claims. There are no Environmental Claims that
would, individually or in the aggregate, have a Material Adverse Effect
on CEI, pending or, to the knowledge of CEI, threatened, (A) against CEI
or any of the CEI Subsidiaries, (B) to the knowledge of the CEI, against
any person or entity whose liability for any Environmental Claim CEI or
any of the CEI Subsidiaries has or may have retained or assumed either
contractually or by operation of law, or (C) against any currently
owned, leased or managed, in whole or in part, real or personal property
or operations of CEI or any of the CEI Subsidiaries or, to the knowledge
of the CEI, against any formerly owned, leased or managed, in whole or
in part, real or personal property or operations of CEI or any of the
CEI Subsidiaries.
(iv) Releases. There have been no Releases of any Hazardous
Material that would be reasonably likely to form the basis of any
Environmental Claim against CEI or, to the knowledge of CEI, any of the
CEI Subsidiaries, or against any person or entity whose liability for
any Environmental Claim CEI or any of the CEI Subsidiaries has or may
have retained or assumed either contractually or by operation of law,
except for any Environmental Claim which, individually or in the
aggregate, would not have a Material Adverse Effect on CEI.
(v) Assumed and Retained Liabilities. Neither CEI nor, to the
knowledge of CEI, any of the CEI Subsidiaries has retained or assumed
either contractually or by operation of law any liabilities or
obligations that would be reasonably likely to form the basis for any
Environmental Claim, which would, individually or in the aggregate, have
a Material Adverse Effect on CEI.
(vi) Predecessors. CEI has no knowledge, with respect to any
predecessor of CEI or any of the CEI Subsidiaries, of any Environmental
Claim that, individually or in the aggregate, would have a Material
Adverse Effect on CEI.
(s) Regulation as a Utility. Section 3.02(s) of the CEI
Disclosure Schedule lists each CEI Subsidiary that, as of the date of this
Agreement, is regulated as a public utility and each jurisdiction imposing
such regulation. Neither CEI nor any "subsidiary company" or "affiliate" of
CEI is, as of the date of this Agreement, subject to regulation as a public
utility or public service company (or similar designation) by any other state
in the United States or any foreign country.
(t) Operations of Nuclear Power Plants. The operations of the
nuclear generation stations (collectively, the "CEI Nuclear Facilities")
currently or formerly owned by CEI or any of its affiliates are and have been
conducted in compliance with all Applicable Laws, including Environmental
Laws, except for such failures to comply as would not have, individually or
in the aggregate, a Material Adverse Effect on CEI. Each of the CEI Nuclear
Facilities maintains, and is in material compliance with, emergency plans
designed to respond to an unplanned Release therefrom of radioactive
materials and the NRC has determined that such plans are in material
compliance with its requirements. As of the date of this Agreement, the
plans for the current or future decommissioning of each of the CEI Nuclear
Facilities and for the storage of spent nuclear fuel conform with the
requirements of Applicable Law and are funded consistent with Applicable Law.
(u) Insurance. CEI and each of the CEI Subsidiaries is, and has
been continuously since January 1, 1997, insured with financially responsible
insurers in such amounts and against such risks and losses as are customary
in all material respects for companies conducting business as conducted by
CEI and the CEI Subsidiaries during such time period. Neither CEI nor any
CEI Subsidiaries has received any notice of cancelation or termination with
respect to any material insurance policy of CEI or any CEI Subsidiaries,
except to the extent any such cancelation or termination that would not have,
individually or in the aggregate, a Material Adverse Effect on CEI.
(v) Financing. CEI will have, or cause the Company to have,
available, at or prior to the Effective Time, sufficient cash in immediately
available funds to pay the Cash Consideration and to consummate the NU Merger
and the other transactions contemplated hereby.
ARTICLE IV
Certain Covenants of NU
SECTION 4.01. Conduct of Business by NU. Except as otherwise
expressly contemplated by this Agreement or as consented to in writing by
CEI, during the period from the date of this Agreement to the Effective Time,
NU shall, and shall cause the NU Subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and in
compliance in all material respects with all Applicable Laws and use all
reasonable best efforts to preserve intact their respective current business
organizations, preserve the goodwill and relationships with Governmental
Entities, customers, suppliers and others having business dealings with them
and, subject to prudent management of workforce needs and ongoing programs
currently in force, keep available the services of their respective present
officers and employees. Without limiting the generality of the foregoing,
except as set forth in Section 4.01 of the NU Disclosure Schedule (and making
reference, as appropriate, to the particular subsection of this Section 4.01
to which exception is being taken), or as consented to in writing by CEI,
during the period from the date of this Agreement to the Effective Time, NU
shall not, and shall not permit any of the NU Subsidiaries to:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any equity interest of NU or any NU
Subsidiary, other than (A) dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned NU
Subsidiary to its parent, (B) the dividend of $0.10 per share with
respect to the NU Common Shares to be paid on December 30, 1999 and
regular quarterly cash dividends with respect to the NU Common Shares of
(I) $0.10 per share for each quarter commencing on or after January 1,
2000 and ending on or prior to December 31, 2000 and (II) $0.15 per
share for each quarter commencing on or after January 1, 2001, and
(C) if the Effective Time does not occur between a record date and
payment date of a regular quarterly dividend, a special dividend in
respect of the NU Common Shares with respect to the quarter in which the
Effective Time occurs with a record date in such quarter and on or prior
to the date on which the Effective Time occurs, which does not exceed an
amount equal to the product of (I) a fraction the (x) numerator of which
is equal to the number of days between the last payment date of a
regular quarterly dividend and the record date of such special dividend
(excluding such last payment date but including the record date of such
special dividend) and (y) the denominator of which is equal to the
number of days between the last payment date of a regular quarterly
dividend and the same calendar day in the third month after the month in
which such last payment date occurred (excluding such last payment date
but including such same calendar day), multiplied by (II) (x) if the
record date for such special dividend is on or prior December 31, 2000,
$.10 per share or (y) if the record date for such special dividend is on
or after January 1, 2001, $.15 per share, (ii) split, combine or
reclassify any equity interest of NU or any NU Subsidiary or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for, any equity interest of NU or any NU Subsidiary,
or (iii) purchase, redeem or otherwise acquire any equity interest of NU
or any NU Subsidiary (other than (A) any preferred stock of any NU
Subsidiary purchased, redeemed or otherwise acquired pursuant to the
terms of the NU Settlement Agreements (as defined in Section 4.01(k)) or
pursuant to the terms of any restructuring legislation or order of the
SEC, DPUC, NHPUC or MDTE applicable to such NU Subsidiary, provided that
such purchase, redemption or other acquisition is funded solely out of
the proceeds of one or more asset sales (to the extent permitted by
Section 4.01(e)) or NU Securitizations (as defined in Section 4.01(e))
by such NU Subsidiary and on terms reasonably acceptable to CEI, (B) any
NU Common Shares repurchased solely for purpose of delivering such NU
Common Shares to the holders of the common stock, par value $5.00 per
share, of Yankee (the "Yankee Shareholders") pursuant to the Yankee
Merger Agreement in accordance with the terms thereof as in effect on
the date of this Agreement and (C) repurchases by any wholly owned NU
Subsidiary of its common shares or other common equity, in each case,
held by NU or any other wholly owned NU Subsidiary) or any rights,
warrants or options to acquire any equity interest of NU or any NU
Subsidiary;
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber
or subject to any Lien any equity interest of NU or any NU Subsidiary,
any NU Voting Debt or any rights, warrants or options to acquire, any
equity interest of NU or any NU Subsidiary, other than (i) the issuance
or delivery of NU Common Shares (A) upon the exercise of NU Stock
Options outstanding as of the date of this Agreement in accordance with
their present terms or, after consulting with CEI, granted after the
date of this Agreement or (B) after consulting with CEI, under the NU
Stock Plans, including pursuant to the terms of NU's Trustee
Compensation Program, or deferred pursuant to the terms of NU's Deferred
Compensation Plan for Trustees, in the case of each of the foregoing
clauses (A) and (B), in the ordinary course of business consistent with
past practice (so long as such additional amount of NU Common Shares
subject to NU Stock Options or issued under the NU Stock Plans does not
exceed 2 million NU Common Shares in the aggregate, unless CEI shall
consent in writing to any greater number, such consent not to be
unreasonably withheld), (ii) the issuance by any wholly owned NU
Subsidiary of its capital stock to its direct or indirect parent and
(iii) the issuance or delivery of NU Common Shares pursuant to the
Yankee Merger Agreement in accordance with the terms thereof as in
effect on the date of this Agreement;
(c) (i) in the case of NU, except for the Trust Agreement
Amendments, amend the Trust Agreement and, (ii) in the case of each NU
Subsidiary, amend its certificate of incorporation, by-laws or other
comparable governing documents in any way which, in the case of any such
amendment by any NU Subsidiary, would or would reasonably be expected to
prevent or materially impede or interfere with the Mergers;
(d) other than (x), in connection with the acquisition of Yankee
pursuant to the Yankee Merger Agreement in accordance with the terms
thereof as in effect on the date of this Agreement (y) the acquisition
by NGC of certain assets of CL&P and WMECO pursuant to the CL&P/NGC Sale
Agreement and the WMECO/NGC Sale Agreement, in each case, in accordance
with the terms thereof as in effect on the date of this Agreement or (z)
the acquisition of one or more persons or businesses for aggregate
consideration not in excess of $40 million in the aggregate, (i) acquire
or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any
business or any person, or (ii) alter (through merger, liquidation,
reorganization, restructuring or in any other fashion) the corporate
structure or ownership of NU or the NU Subsidiaries other than actions
solely to effect the transactions contemplated by the CL&P/NGC Sale
Agreement and the WMECO/NGC Sale Agreement;
(e) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets
(including by way of securitizations), other than (i) in the ordinary
course of business consistent with past practice, (ii) pursuant to the
NRG Sale Agreement, the CL&P/NGC Sale Agreement and the WMECO/NGC Sale
Agreement, in each case, as in effect on the date of this Agreement,
(iii) the sale of one or more of the NU Nuclear Facilities in accordance
with the terms of the divestiture plan to be filed with DPUC and
(iv) any securitization on terms generally acceptable to the asset-
backed securities market of tangible or intangible property rights
relating to the rate revenues or assets of any NU Subsidiary required or
permitted by any restructuring legislation or order of DPUC, NHPUC or
MDTE applicable to such NU Subsidiary (including any such legislation or
order relating to the NU Settlement Agreements) in connection with the
recovery of any capital expenditure or other investment (including any
contractual obligations) of such NU Subsidiary in any of its properties
or assets (a "NU Securitization");
(f) make capital expenditures through the Effective Time, in excess
of an annual amount of $50 million over the annual amount budgeted by NU
and the NU Subsidiaries for capital expenditures on the date of this
Agreement (as reflected on the capital expenditure budgets previously
provided by NU to CEI), other than as required by Applicable Law;
(g) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities of NU
or any NU Subsidiary or warrants or other rights to acquire any debt
securities of NU or any NU Subsidiary, guarantee any such securities,
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) guarantees or "keep well" agreements in favor of wholly owned NU
Subsidiaries in connection with the conduct of the business of such
wholly owned NU Subsidiaries, (ii) short-term indebtedness in the
ordinary course of business (such as the issuance of commercial paper or
the use of revolving credit facilities), (iii) in connection with the
refunding of existing indebtedness (A) at maturity or upon final
mandatory redemption (without the need for the occurrence of any special
event), (B) upon early repayment or redemption by NU or the relevant NU
Subsidiary in the ordinary course of business or (C) at a lower cost of
funds, (iv) any NU Securitization, (v) indebtedness not to exceed
$480 million in the aggregate at any time outstanding incurred, and the
proceeds of which are used, solely to consummate the acquisition of
Yankee in accordance with the terms of the Yankee Merger Agreement as in
effect on the date of this Agreement and (vi) indebtedness not to exceed
$480 million in the aggregate at any time outstanding incurred, and the
proceeds of which are utilized, solely to fund the long-term financing
of NGC;
(h)(i) except as may be required (x) pursuant to the terms as of
the date of this Agreement of existing NU Plans (including awards
thereunder) or agreements or (y) pursuant to any employee benefit plan,
or other contract, agreement, commitment, arrangement, plan, fund or
policy of Yankee or its subsidiaries that becomes an obligation by
operation of law of the NU Subsidiary into which Yankee merges in
accordance with the terms of the Yankee Merger Agreement as in effect on
the date of this Agreement, enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or amount
payable under, any NU Plan or any other employee benefit plan or other
contract, agreement, commitment, arrangement, plan, trust, fund or
policy maintained by, contributed to or entered into by NU or any of the
NU Subsidiaries (other than any adoption or amendment to, or change of,
any NU Plan that, individually or in the aggregate, does not and will
not result in any material increase in expense to NU and the NU
Subsidiaries taken as a whole); (ii) increase, or enter into any
contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to extend,
expand or enhance the engagement, employment or any related rights, of
any trustee, director, officer or employee of NU or any of the NU
Subsidiaries, except for normal promotion and compensation (including
incentive compensation) increases and hiring and discretionary award
grants in the ordinary course of business that, in the aggregate, do not
result in a material increase in benefits or compensation expense to NU
or any of the NU Subsidiaries; (iii) enter into or amend any employment,
severance, retention, consulting or special pay arrangement with respect
to the termination of employment or other similar contract, agreement or
arrangement with any trustee, director, officer or employee, other than
(A) with respect only to employees who are not trustees, directors or
officers, in the ordinary course of business consistent with past
practice, (B) any agreement with any newly-hired officer that provides
for the employment of such officer to be at the will of NU or the
applicable NU Subsidiary and does not provide for any severance or other
compensation to be paid to such officer upon the termination of his or
her employment and (C), with the consent of CEI (not to be unreasonably
withheld), any employment or severance agreement with any officer hired
to replace any departing officer to the extent that such employment or
severance agreement is on substantially the same terms as that of the
departing officer; (iv) fund, or otherwise contribute any cash or
property to, any trust created for the purpose of discharging any claim
for or paying any amount with respect to, or otherwise having the power
to discharge any claim for or pay any amount with respect to, benefits
under any NU Plan or any other employee benefit plan or other contract,
agreement, arrangement, plan, trust, fund or policy maintained by,
contributed to or entered into by NU or any of the NU Subsidiaries; or
(v) enter into any collective bargaining agreement or other labor union
agreement or amend in any material manner any such agreement to which NU
or any of the NU Subsidiaries is a party;
(i) except with respect to agreements or arrangements entered into
between NU and wholly owned NU Subsidiaries or between wholly owned NU
Subsidiaries, enter into any agreement or arrangement with any of its
affiliates on terms materially less favorable than could reasonably be
expected to have been obtained with an unaffiliated third party or on an
arm's length basis, unless such agreement or arrangement is required to
be carried out in accordance with PUHCA or an order from any
Governmental Entity having jurisdiction over NU or the relevant NU
Subsidiary, in which case such agreement or arrangement shall be on
terms which are in accordance with PUHCA or such order, as the case may
be;
(j) (i) change (A) its methods of accounting (other than immaterial
changes), except as required by Applicable Law or GAAP or (B) its fiscal
year or (ii) make any material Tax election or settle or compromise any
material Tax liability or refund claim;
(k) except in the ordinary course of business consistent with past
practice, modify, amend, terminate, renew or fail to use reasonable best
efforts to renew any contract or agreement to which NU or any NU
Subsidiary is a party, that is material to NU and the NU Subsidiaries
taken as a whole (including the Settlement Agreement dated as of
August 2, 1999 among NU and the additional parties named therein (the
"NH Settlement Agreement") and any material order from any Applicable
PUC approving any settlement agreement (collectively with the NH
Settlement Agreement, the "NU Settlement Agreements"), the Yankee Merger
Agreement, the NRG Sale Agreement, the CL&P/NGC Sale Agreement and the
WMECO/NGC Sale Agreement), or waive, release or assign any material
rights or claims therein; provided, however, that (A) NU may amend or
modify the NH Settlement Agreement but only if it consults with CEI
prior to consenting to any such amendment or modification and (B) any NU
Subsidiary that is a "public-utility company" within the meaning of
Section 2(a)(5) of PUHCA may modify, amend or terminate on terms
reasonably acceptable to CEI any contract or agreement providing for the
purchase of electric power by such NU Subsidiary from any generator of
electric power that is not a "public-utility company" within the meaning
of Section 2(a)(5) of PUHCA (a "Non-Utility Generator") and in
connection with any such modification, amendment or termination such NU
Subsidiary may make any payments to such Non-Utility Generator if such
payments are (i) required or permitted by the terms of any restructuring
legislation or order of DPUC, NHPUC or MDTE or NU Settlement Agreement
applicable to such NU Subsidiary, (ii) on terms and in amounts
reasonably acceptable to CEI and (iii) funded solely out of the proceeds
of one or more asset sales (to the extent permitted by Section 4.01(e))
or NU Securitizations by such NU Subsidiary;
(l) pay, discharge, settle, compromise or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) material to NU and the NU Subsidiaries taken as
whole, other than the payment, discharge, settlement, compromise 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 Previously Filed NU
SEC Documents, or incurred in the ordinary course of business consistent
with past practice; or
(m) subject to Applicable Law, (i) make, propose or agree to any
material changes in its or its utility subsidiaries' rates or the
services it or any of its utility subsidiaries provides or charges
(other than pass-through fuel rates or charges), standards of service or
accounting from those in effect as of the date of this Agreement,
without prior to proposing, agreeing to or making any such material
changes with respect thereto, discussing such changes with CEI and
obtaining CEI's written approval, which approval shall not be
unreasonably withheld or (ii) subject to the preceding clause (i), make
any filing (or amendment thereto), or effect any agreement, commitment,
arrangement or consent, whether written or oral, formal or informal,
with any Governmental Entity with respect to any matter set forth in
clause (i) without consulting with CEI prior thereto; or
(n) authorize, or commit or agree to take, any of the foregoing
actions.
SECTION 4.02. No Solicitation. (a) NU shall not, nor shall it
permit any of the NU Subsidiaries to, nor shall it authorize, permit or
direct any of its trustees, directors, officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative of NU or any of the NU Subsidiaries to, directly or indirectly
through another person, (i) solicit, initiate or encourage (including by way
of furnishing information), or take any other action designed to facilitate,
any inquiries or the making of any proposal which constitutes or which may be
reasonably expected to lead to any NU Takeover Proposal (as defined below) or
(ii) participate in any discussions or negotiations regarding any NU Takeover
Proposal; provided, however, that, at any time prior to the receipt of the NU
Shareholder Approval (the "NU Applicable Period"), NU may, (A) in response to
a NU Takeover Proposal (1) that was not solicited by it or which did not
otherwise result from a breach of this Section 4.02(a) and (2) with respect
to which the Board of Trustees of NU determines in its good faith judgment
after consultation with its outside counsel and financial advisors, (x) that
there is a reasonable possibility that such NU Takeover Proposal may
constitute a NU Superior Proposal (as defined in Section 4.02(b)) and
(y) that failing to take such action could reasonably be expected to be a
breach of its fiduciary duties to the NU Shareholders, and subject to
providing prior written notice of its decision to take such action to CEI
(the "NU Negotiation Notice") and compliance with Section 4.02(c), for a
period of twenty business days following delivery of the NU Negotiation
Notice (the "NU Negotiation Period"), request that the person making such NU
Takeover Proposal provide information with regard to itself and such NU
Takeover Proposal for purposes of permitting the Board of Trustees of NU to
determine whether such NU Takeover Proposal constitutes a NU Superior
Proposal and (B) to the extent that, at any time prior to expiration of the
NU Negotiation Period, the Board of Trustees of NU shall determine that such
NU Takeover Proposal constitutes a NU Superior Proposal and subject to
providing prior written notice of its decision to take such action to CEI and
compliance with Section 4.02(c), during the NU Negotiation Period (x) furnish
information with respect to NU and the NU Subsidiaries to any person making a
NU Superior Proposal pursuant to a customary confidentiality agreement
containing terms no less favorable to NU than those set forth in the
Confidentiality Agreement (the "Confidentiality Agreement") dated July 29,
1999 between CEI and NU (provided that such confidentiality agreement shall
not in any way restrict NU from complying with its disclosure obligations
under this Agreement, including with respect to such NU Superior Proposal)
and (y) participate in discussions or negotiations regarding such NU Superior
Proposal. NU shall be permitted to deliver only one NU Negotiation Notice
with respect to each person making a NU Superior Proposal, which notice shall
not be revised or supplemented. NU shall immediately cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any persons conducted heretofore by it or its
representatives. For purposes of this Agreement, "NU Takeover Proposal"
means any inquiry, proposal or offer from any person relating to any direct
or indirect acquisition or purchase of a business (a "NU Material Business")
that constitutes 15% or more of the net revenues, net income or the assets
(including equity securities) of NU and the NU Subsidiaries, taken as a
whole, or 15% or more of any class of equity securities of NU or any NU
Subsidiary owning, controlling or operating a NU Material Business, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of NU or
any such NU Subsidiary, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
NU or any such NU Subsidiary, other than the transactions contemplated by
this Agreement; provided, however, that no transaction permitted pursuant to
Section 4.01(e) shall be deemed a NU Takeover Proposal for any purpose.
(b) Except as expressly permitted by this Section 4.02,
(i) neither the Board of Trustees of NU nor any committee thereof shall
(A) withdraw or modify in a manner adverse to CEI, or propose publicly to
withdraw or modify in a manner adverse to CEI, the approval or recommendation
by such Board of Trustees or such committee of this Agreement or the NU
Merger, (B) approve or recommend, or propose publicly to approve or
recommend, any NU Takeover Proposal, or (C) cause or permit NU to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, a "NU Acquisition Agreement") related to any NU
Takeover Proposal and (ii) NU shall not enter into any NU Acquisition
Agreement with respect to any NU Takeover Proposal; provided, however, that
in order to comply with its fiduciary duties to the NU Shareholders the Board
of Trustees of NU may terminate this Agreement in accordance with the
following sentence and, following such termination and payment of the
Termination Fee (as defined in Section 5.09(b)), withdraw or modify its
approval or recommendation of this Agreement and the NU Merger. In the event
that during the NU Applicable Period the Board of Trustees of NU determines
in good faith (x) that a NU Takeover Proposal constitutes a NU Superior
Proposal and (y) after consultation with its outside legal counsel, that the
failure to terminate this Agreement and accept such NU Superior Proposal
could reasonably be expected to be a breach of its fiduciary duties to the NU
Shareholders, the Board of Trustees of NU may terminate this Agreement, but
only at a time that is during the NU Applicable Period and is after the fifth
business day following CEI's receipt of written notice advising CEI that the
Board of Trustees of NU is prepared to accept a NU Superior Proposal,
specifying the material terms and conditions of such NU Superior Proposal and
identifying the person making such NU Superior Proposal; provided that,
concurrently with such termination, the Board of Trustees of NU shall cause
NU to enter into a NU Acquisition Agreement with respect to such NU Superior
Proposal and shall cause NU to pay to CEI the Termination Fee and the fees
and expenses incurred by CEI in connection with the transactions contemplated
by this Agreement pursuant to Section 5.09(b) and 5.09(c), respectively. For
purposes of this Agreement, a "NU Superior Proposal" means any bona fide
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the NU Common Shares then
outstanding or all or substantially all the assets of NU which the Board of
Trustees of NU determines in its good faith judgment (based, in the case of
any determination made by the NU Board of Trustees for purposes of this
Section 4.02(b), on the written opinion, with only customary qualifications,
of an independent financial advisor of nationally recognized reputation that
the value of the consideration provided for in such proposal exceeds the
value of the consideration provided for in the NU Merger) to be
(x) reasonably capable of being completed, taking into account all legal,
financial (including the ability to obtain financing), regulatory and other
aspects of the proposal and the third party making such proposal, and
(y) more favorable to the NU Shareholders from a financial point of view than
the NU Merger and the other transactions contemplated by this Agreement
(taking into account any changes to the terms of this Agreement proposed by
CEI in response to such proposal or otherwise).
(c) In addition to the obligations of NU set forth in
paragraphs (a) and (b) of this Section 4.02, NU shall immediately advise CEI
orally and in writing of any request for information or of any NU Takeover
Proposal, the material terms and conditions of such request or NU Takeover
Proposal and the identity of the person making such request or NU Takeover
Proposal. NU shall keep CEI reasonably informed of the status and details
(including amendments or proposed amendments) of any such request or NU
Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit NU from
taking and disclosing to the NU Shareholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the NU Shareholders if, in the good faith judgment of the Board
of Trustees of NU, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under Applicable Law.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Joint Proxy
Statement; Shareholders Meetings. (a) As soon as practicable following the
date of this Agreement, CEI and NU shall prepare and file with the SEC the
Joint Proxy Statement and CEI, NU and the Company shall prepare and file with
the SEC the Form S-4, in which the Joint Proxy Statement will be included as
a prospectus. Each of CEI, NU and the Company shall use its reasonable best
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. NU will use all reasonable best
efforts to cause the Joint Proxy Statement to be mailed to the NU
Shareholders, and CEI will use all reasonable best efforts to cause the Joint
Proxy Statement to be mailed to the CEI Shareholders, in each case as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Each party hereto shall also take any action (other than
qualifying to do business in any jurisdiction in which such party is not
already so qualified) required to be taken under any applicable state or
provincial securities laws in connection with the issuance of Company Common
Stock in the Mergers and each party shall furnish all information concerning
itself and its shareholders as may be reasonably requested in connection with
any such action. No filing of, or amendment or supplement to, the Form S-4
or the Joint Proxy Statement will be made without the approval of all parties
hereto. Each party will advise the other parties, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Company Common Stock issuable in
connection with the Mergers for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement or the Form S-4
or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to NU or CEI, or any of their respective affiliates,
trustees, directors or officers, is discovered that should be set forth in an
amendment or supplement to any of the Form S-4 or the Joint Proxy Statement,
so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party that discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by Applicable Law, disseminated to the NU Shareholders and
the CEI Shareholders.
(b) NU shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of the NU
Shareholders (the "NU Shareholders Meeting"), for the purpose of obtaining
the NU Shareholder Approval and shall, through its Board of Trustees, subject
to the right of the Board of Trustees to terminate this Agreement in
accordance with Section 4.02(b) in order to comply with its fiduciary duties
to the NU Shareholders, recommend to the NU Shareholders the approval and
adoption of the Trust Agreement Amendments, this Agreement, the NU Merger and
the other transactions contemplated hereby. Without limiting the generality
of the foregoing but subject to its rights to terminate this Agreement
pursuant to Section 4.02(b), NU agrees that its obligations pursuant to the
first sentence of this Section 5.01(b) shall not be affected by the
commencement, public proposal, public disclosure or direct or indirect
communication to NU of any NU Takeover Proposal.
(c) CEI shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of the CEI
Shareholders (the "CEI Shareholders Meeting"), for the purpose of obtaining
the CEI Shareholder Approval and shall, through its Board of Directors,
recommend to the CEI Shareholders the approval and adoption of this
Agreement, the CEI Merger and the other transactions contemplated hereby.
(d) CEI and NU will use reasonable best efforts to hold the CEI
Shareholders Meeting and the NU Shareholders Meeting on the same date and as
soon as practicable after the date of this Agreement.
SECTION 5.02. Letters of NU's Accountants. NU shall use its
reasonable best efforts to cause to be delivered to CEI two letters from NU's
independent accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to CEI, in form and
substance reasonably satisfactory to CEI and customary in scope and substance
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
SECTION 5.03. Letters of CEI's Accountants. CEI shall use its
reasonable best efforts to cause to be delivered to NU two letters from CEI's
independent accountants, one dated a date within two business days before the
date on which the Form S-4 shall become effective and one dated a date within
two business days before the Closing Date, each addressed to NU, in form and
substance reasonably satisfactory to NU and customary in scope and substance
for comfort letters delivered by independent public accountants in connection
with registration statements similar to the Form S-4.
SECTION 5.04. Access to Information; Confidentiality; Advice of
Changes. (a) NU shall, and shall cause each NU Subsidiary to, afford to CEI
and to its officers, employees, accountants, counsel, financial advisors and
other representatives, reasonable access during normal business hours during
the period prior to the Effective Time (to the extent that NU or any NU
Subsidiary is not prohibited under Applicable Law or any confidentiality
agreement entered into prior to the date of this Agreement from providing
access and to the extent that such access would not constitute a waiver of
the attorney client privilege (unless such privilege has previously been
waived)) to all its properties, books, contracts, commitments, personnel and
records and, during such period, each of CEI and NU shall, and shall cause
its subsidiaries to, (i) confer on a reasonably regular and frequent basis
with one or more representatives of the other party to discuss material
operational and regulatory matters and the general status of its ongoing
operations, including the investigation of environmental, health and safety
issues and, in the case of NU, with respect to the NH Settlement Agreement
and the sale of the NU Nuclear Facilities, (ii) reasonably promptly notify
the other party of its results of operations and (iii) furnish reasonably
promptly to the other party upon request any information concerning its
business, properties and personnel, in each case as the other party may
reasonably request. NU shall consult with CEI prior to proposing or making
any material amendment or modification to the NH Settlement Agreement and
with respect to all material matters relating to the sale of the NU Nuclear
Facilities, including consulting with CEI prior to filing any divestiture or
restructuring plan relating to such sale with any Applicable PUC or Federal
Governmental Entity. Each of NU and CEI shall, and shall cause its
subsidiaries to, furnish to the other reasonably promptly upon request a copy
of each report, schedule and other document filed or received by any of them
pursuant to the requirements of FERC, the SEC, Department of Justice, the
Federal Trade Commission, the NRC, any Applicable PUC, or any other Federal,
state or local regulatory agency or commission relating to the Mergers or the
other transactions contemplated hereby. Subject to obtaining customary
indemnities, each of NU and CEI shall promptly furnish to the other such
information as may be reasonably requested, including audited financial
statements and other financial information, and take such other action as may
be reasonably necessary and otherwise fully cooperate with each other in the
preparation of any registration statement under the Securities Act and other
documents necessary in connection with the issuance of securities or
financings (subject to Section 4.01 in the case of NU or any NU Subsidiary),
including in respect of the Mergers. Each party shall, and shall cause its
subsidiaries and representatives to, hold in strict confidence all documents
and information concerning the other furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement. No review pursuant to this Section 5.04 shall
have an effect for the purpose of determining the accuracy of any
representation or warranty given by any of the parties hereto to any of the
other parties hereto.
(b) NU and CEI shall promptly advise the other party orally and in
writing to the extent it has knowledge of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any
material respect, (ii) the failure by it to comply in any material respect
with or satisfy in any material respect any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement and (iii) any
change or event, individually or in the aggregate, having, or which would
have, a Material Adverse Effect on such party or on the truth of their
respective representations and warranties or the ability of the conditions
set forth in Article VI to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.05. Regulatory Matters; Reasonable Best Efforts.
(a) Regulatory Approvals. Each party hereto shall cooperate and promptly
prepare and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and shall use
reasonable best efforts to obtain all necessary permits, consents, approvals
and authorizations of all Governmental Entities necessary or advisable to
consummate and make effective the Mergers and the other transactions
contemplated by this Agreement, including the CEI Statutory Approvals and the
NU Statutory Approvals. To the extent that each of CEI (or any CEI
Subsidiary) and NU (or any NU Subsidiary) is required to make one or more
filings with any Governmental Entity in connection with the obtaining of any
such permit, consent, approval or authorization, including the CEI Statutory
Approvals and the NU Statutory Approvals, each of CEI and NU agree to offer
the other, to the extent permitted by Applicable Law, a reasonable
opportunity to review and comment upon each such filing prior to making any
such filing and to coordinate the submission of such filings to the relevant
Governmental Entity. In addition, CEI shall have the right to review and
approve in advance all characterizations of the information relating to CEI,
on the one hand, and NU shall have the right to review and approve in advance
all characterizations of the information relating to NU, on the other hand,
in either case, which appear in any filing made in connection with the
Mergers or the other transactions contemplated by this Agreement. CEI and NU
agree that they will consult with each other with respect to (x) the
obtaining of all such necessary permits, consents, approvals and
authorizations of Governmental Entities and (y) the applicability of the
Connecticut Transfer Act and the Industrial Site Recovery Act to the
transactions contemplated by this Agreement.
(b) Further Actions. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use reasonable
best efforts to execute such further documents and instruments and take such
further actions as may reasonably be requested by any other party in order to
consummate the Mergers in accordance with the terms hereof, including the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement, including seeking to have any
stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed.
(c) State Anti-Takeover Statutes. In connection with and without
limiting the generality of Section 5.05(b), NU and CEI shall (i) take all
action necessary to ensure that no state anti-takeover statute or similar
statute or regulation, the effect of which would be to impede the Mergers, is
or becomes applicable to the Mergers, this Agreement or any of the other
transactions contemplated by this Agreement and (ii) if any state anti-
takeover statute or similar statute or regulation, the effect of which would
be to impede the Mergers, is or becomes applicable to the Mergers, this
Agreement or any other transaction contemplated by this Agreement, take all
action necessary to ensure that the Mergers and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the
effect of such statute or regulation on the Mergers and the other
transactions contemplated by this Agreement.
(d) Sale and Operation of NU Nuclear Facilities. NU shall, and
shall cause the relevant NU Subsidiaries, to use reasonable best efforts to
sell and transfer, as promptly as practicable after the date of this
Agreement, their interests in each of the Millstone Stations 1, 2 and 3 and
the Vermont Yankee nuclear facilities (excluding, in each case, any interest
therein now owned by PSNH) and all associated liabilities and all operating
responsibilities to one or more third parties who are not Affiliates of NU.
During the period from the date of this Agreement to the sale and transfer of
the NU Nuclear Facilities in accordance with this Section 5.05(d), NU shall
cause the NU Subsidiaries to, and the NU Subsidiaries shall, operate the NU
Nuclear Facilities in material compliance with Applicable Law and good
industry practice.
SECTION 5.06. Stock Options. (a) Prior to the Effective Time,
the Board of Directors of CEI (or, if appropriate, any committee
administering the CEI Stock Plans) shall adopt such resolutions or take such
other actions as may be required to effect the following:
(i) adjust the terms of all outstanding CEI Stock Options under the
CEI Stock Plans, whether vested or unvested, as necessary to provide
that, at the Effective Time, each CEI Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted
into an option (a "Company Stock Option") to acquire, on the same terms
and conditions as were applicable under such CEI Stock Option, including
vesting, the same number of shares of Company Common Stock at the same
price per share of Company Common Stock;
(ii) ensure that the conversion pursuant to Section 2.01(a) of the
CEI Common Stock held by any director or officer of CEI and the
conversion pursuant to this Section 5.06(a) into Company Stock Options
of CEI Stock Options held by any director or officer of CEI will be
eligible for exemption under Rule 16b-3(e); and
(iii) make such other changes to the CEI Stock Plans as may be
appropriate to give effect to the CEI Merger.
(b) Prior to the Effective Time, the Board of Trustees of NU (or,
if appropriate, any committee administering the NU Stock Plans) shall adopt
such resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding NU Stock Options under the
NU Stock Plans, whether vested or unvested, as necessary to provide
that, at the Effective Time, each NU Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted
into a Company Stock Option to acquire, on the same terms and conditions
as were applicable under such NU Stock Option, including vesting, the
same number of shares of Company Common Stock (rounded down to the
nearest whole share) as the holder of such NU Stock Option would have
been entitled to receive pursuant to the NU Merger had such holder
exercised such NU Stock Option in full immediately prior to the
Effective Time, at a price per share of Company Common Stock (rounded up
to the nearest cent) equal to (A) the aggregate exercise price for the
shares of NU Common Shares otherwise purchasable pursuant to such NU
Stock Option divided by (B) the aggregate number of shares of Company
Common Stock deemed purchasable pursuant to such NU Stock Option;
(ii) ensure that the conversion pursuant to Section 2.01(b) of the
NU Common Shares held by any director or officer of NU and the
conversion pursuant to this Section 5.06(b) into Company Stock Options
of NU Stock Options held by any director or officer of NU will be
eligible for exemption under Rule 16b-3(e); and
(iii) make such other changes to the NU Stock Plans as CEI and NU
may agree are appropriate to give effect to the NU Merger.
(c) Prior to the Effective Time, the Board of Directors of the
Company shall, (i) with respect to each Company stock plan that will provide
Company Stock Options (each, a "Company Stock Plan"), amend such Company
Stock Plans as may be necessary to give effect to the CEI Merger and NU
Merger and the conversion of CEI Stock Options and NU Stock Options provided
herein, (ii) take such action as may be necessary to reserve for issuance
under the Company Stock Plans a sufficient number of shares of Company Common
Stock for delivery upon exercise of Company Stock Options resulting from the
conversion of CEI Stock Options and NU Stock Options, and (iii) adopt such
resolutions or take such other actions as may be required to ensure that each
of the conversion pursuant to Section 2.01(a) of the CEI Common Stock held by
any director or officer of CEI, the conversion pursuant to this Section 5.06
into Company Stock Options of CEI Stock Options held by any director or
officer of CEI, the conversion pursuant to Section 2.01(b) of the NU Common
Shares held by any director or officer of NU and the conversion pursuant to
this Section 5.06 into Company Stock Options of NU Stock Options held by any
director or officer of NU will be eligible for exemption under Rule 16b-3(e).
(d) As soon as practicable after the Effective Time, the Company
shall deliver to the holders of CEI Stock Options and NU Stock Options
(collectively, the "Stock Options") appropriate notices setting forth such
holders' rights pursuant to the respective CEI Stock Plans or NU Stock Plans,
as the case may be (collectively, the "Stock Plans"), and the agreements
evidencing the grants of such Stock Options, and that such Stock Options and
agreements shall be assumed by the Company and shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section 5.06 after giving effect to the Mergers).
(e) Except as otherwise contemplated by this Section 5.06 and
except to the extent required under the respective terms of the Stock
Options, all restrictions or limitations on transfer and vesting with respect
to Stock Options awarded under the Stock Plans, or any other plan, program or
arrangement of CEI, NU or any of their respective subsidiaries, to the extent
that such restrictions or limitations shall not have already lapsed, shall
remain in full force and effect with respect to such Stock Options after
giving effect to the Mergers and the assumption by the Company as set forth
above.
SECTION 5.07. Employee Agreements; Workforce Matters and Employee
Benefit Plans. (a) Certain Employee Agreements. Following the Effective
Time, the Company will (subject to this Section 5.07) cause its subsidiaries
to honor all obligations of the employer under any contracts, agreements,
collective bargaining agreements and commitments of CEI and NU and their
respective subsidiaries entered into prior to the date of this Agreement (or
as established or amended in accordance with or permitted by this Agreement),
which apply to any current or former employee, or current or former trustee,
director or officer of any of the parties hereto or any of their
subsidiaries; provided, however, that this undertaking is not intended to
prevent the Company (or any subsidiary of the Company after the Effective
Time succeeding to such obligations by operation of law) from enforcing such
contracts, agreements, collective bargaining agreements and commitments in
accordance with their terms, including any reserved right to amend, modify,
suspend, revoke or terminate any such contract, agreement, collective
bargaining agreement or commitment or portion thereof.
(b) Workforce Matters. Subject to obligations under Applicable
Law and applicable collective bargaining agreements, for a period of three
years following the Effective Time, (i) any reductions in the employee
workforce of the then ongoing operations of the Company and its subsidiaries
shall be made on a fair and equitable basis (as determined by the Company and
its subsidiaries), in light of the circumstances and the objectives to be
achieved, giving consideration to previous work history, job experience and
qualifications, without regard to whether employment prior to the Effective
Time was with CEI and the CEI Subsidiaries or NU and the NU Subsidiaries, and
any employees whose employment is terminated or jobs are eliminated by the
Company or any of its subsidiaries during such period shall be entitled to
participate on a fair and equitable basis (as determined by the Company and
its subsidiaries) in the job opportunity and employment placement programs
offered by the Company or any of its subsidiaries for which they are eligible
and (ii) employees shall be entitled to participate in all job training,
career development and educational programs of the Company and its
subsidiaries for which they are eligible, and shall be entitled to fair and
equitable consideration (as determined by the Company and its subsidiaries)
in connection with any job opportunities with the Company and its
subsidiaries, in each case without regard to whether employment prior to the
Effective Time was with CEI and the CEI Subsidiaries or NU and the NU
Subsidiaries.
(c) Service Credit. Subject to its obligations under Applicable
Law and applicable collective bargaining agreements, the Company and its
subsidiaries shall give credit under each of their respective employee
benefit plans, programs and arrangements to employees for all service prior
to the Effective Time with CEI or NU or their respective subsidiaries, as
applicable, or any predecessor employer (to the extent that such credit was
given by NU or CEI or any of their respective subsidiaries, as applicable)
for all purposes for which such service was taken into account or recognized
by CEI or NU or their respective subsidiaries, as the case may be, but not to
the extent crediting such service would result in duplication of benefits
(including for benefit accrual purposes under defined benefit pension plans).
(d) Continuation of Benefits. Subject to Applicable Law and
obligations under applicable collective bargaining agreements, the Company
shall maintain for a period of at least one year after the Closing Date,
without interruption, such employee compensation, welfare and benefit plans,
programs, policies and fringe benefits as will, in the aggregate, provide
benefits to all employees of CEI and NU and their respective subsidiaries who
were employees immediately prior to the Effective Time that are not less
favorable than those provided pursuant to such employee compensation, welfare
and benefits plans, programs, policies and fringe benefits of CEI and NU and
their respective subsidiaries, as in effect on the date of this Agreement.
(e) Preexisting Conditions, Exclusions and Waiting Periods;
Deductibles. Subject to Applicable Law and applicable collective bargaining
agreements, the Company and its subsidiaries shall (i) waive all limitations
as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to employees of CEI or NU
under any welfare plans, funds or programs (within the meaning of Section
3(1) of ERISA) currently maintained by the Company, or established to replace
any CEI or NU welfare plans, funds or programs, in which such CEI or NU
employees may be eligible to participate after the Closing Date, other than
limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Closing Date and
(ii) provide each CEI and NU employee with credit for any co-payments and
deductibles paid by such employee prior to the Closing Date for purposes of
satisfying any applicable deductible or out-of-pocket requirements under any
of the welfare plans, funds or programs that such employees are eligible to
participate in after the Closing Date.
SECTION 5.08. Indemnification, Exculpation and Insurance.
(a) Each of the Company and Merger LLC agrees that all rights to
indemnification and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time which rights are now existing in
favor of the current or former trustees, directors or officers of CEI and the
CEI Subsidiaries or NU and the NU Subsidiaries, as the case may be, as
provided in their respective certificates of incorporation or by-laws (or
comparable organizational documents) shall survive the Mergers and shall
continue in full force and effect in accordance with their terms (provided
that in any event all such rights shall continue for a period of at least six
years after the Effective Time). In addition, from and after the Effective
Time, trustees, directors and officers of CEI or NU or their respective
subsidiaries who become directors or officers of the Company will be entitled
to the indemnity rights and protections afforded to directors and officers of
the Company.
(b) For six years after the Effective Time, the Company shall
maintain in effect the trustees', directors' and officers' liability (and
fiduciary) insurance policies currently maintained by NU and CEI covering
acts or omissions occurring prior to the Effective Time with respect to those
persons who are currently covered by CEI's and NU's respective trustees',
directors' and officers' liability insurance policies on terms with respect
to such coverage and amount no less favorable than those of the relevant
policy in effect on the date of this Agreement. If such insurance coverage
cannot be obtained at all, the Company shall maintain the most advantageous
policies of trustees', directors' and officers' insurance obtainable.
(c) In the event the Company 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 provision shall be made so
that the successors and assigns of the Company shall assume the obligations
set forth in this Section 5.08.
(d) The provisions of Section 5.08(a) (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.
(e) The indemnified parties as a group may retain only one law
firm with respect to each related matter except to the extent such law firm
would have, under applicable standards of professional conduct then
prevailing under the laws of the applicable State, a conflict of interest in
representing any particular indemnified party.
SECTION 5.09. Fees and Expenses. (a) Except as provided in this
Section 5.09, all fees and expenses incurred in connection with the Mergers,
this Agreement and the transactions contemplated by this Agreement shall be
paid by the party incurring such fees or expenses, whether or not the Mergers
are consummated, except that each of CEI and NU shall bear and pay one-half
of the costs and expenses incurred in connection with (1) the filing,
printing and mailing of the Form S-4 and the Joint Proxy Statement (including
SEC filing fees), (2) the filings of the premerger notification and report
forms under the HSR Act (including filing fees) and (3) the filings required
under PUHCA. All stock transfer, real estate transfer, documentary, stamp,
recording and other similar taxes (including interest, penalties and
additions to any such Taxes) (the "Transfer Taxes") attributable to the
transactions contemplated by this Agreement shall be paid by the Company.
CEI and NU shall cooperate with the Company and with each other in the filing
of such returns, including supplying in a timely manner a complete list of
all real property interests held by CEI or NU and any information with
respect to such property that is reasonably necessary to complete any such
returns.
(b) In the event that (i) a NU Takeover Proposal shall have been
made known to NU or any of the NU Subsidiaries or has been made directly to
the NU Shareholders generally or any person shall have publicly announced an
intention (whether or not conditional and whether or not such NU Takeover
Proposal shall have been rejected or shall have been withdrawn or terminated
prior to the NU Shareholders Meeting or any termination of this Agreement) to
make a NU Takeover Proposal and thereafter this Agreement is terminated by
either CEI or NU pursuant to Section 7.01(b)(i) or by CEI pursuant to
Section 7.01(d), (ii) prior to or during the NU Shareholders Meeting (or any
subsequent meeting of the NU Shareholders at which it is proposed that the NU
Merger be approved), a NU Takeover Proposal shall have been made directly to
the NU Shareholders generally or any person shall have publicly announced an
intention (whether or not conditional and whether or not such NU Takeover
Proposal shall have been rejected or shall have been withdrawn or terminated
prior to the NU Shareholders Meeting or any termination of this Agreement) to
make a NU Takeover Proposal and thereafter this Agreement is terminated by
either CEI or NU pursuant to Section 7.01(b)(ii) or (iii) this Agreement is
terminated by NU pursuant to Section 7.01(f), then NU shall immediately pay
CEI a fee equal to $110 million (the "Termination Fee"), payable by wire
transfer of same day funds; provided, however, that no Termination Fee shall
be payable to CEI pursuant to clauses (i) or (ii) of this
paragraph (b) unless and until within 24 months of such termination NU or any
NU Subsidiary (x) enters into any NU Acquisition Agreement or (y) consummates
any NU Takeover Proposal (for the purposes of the foregoing proviso the terms
"NU Acquisition Agreement" and "NU Takeover Proposal" shall have the meanings
assigned to such terms in Section 4.02 except that the references to "15%" in
the definition of "NU Takeover Proposal" in Section 4.02(a) shall be deemed
to be references to "35%"), in which event the Termination Fee shall be
immediately payable upon the first to occur of such events set forth in the
preceding clauses (x) and (y).
(c) If this Agreement is terminated by CEI or NU pursuant to
Section 7.01(b)(ii), by NU pursuant to Section 7.01(f), by CEI pursuant to
Section 7.01(c) or by CEI pursuant to Section 7.01(d) or if NU is otherwise
obligated to pay the Termination Fee, NU shall immediately pay to CEI, by
wire transfer of same day funds, an expense reimbursement fee of $20 million
for fees and expenses incurred, or paid by or on behalf of, CEI in connection
with the Mergers or the transactions contemplated by this Agreement. The
payment of such expense reimbursement fee shall not affect the extent to
which, or the amount of, the Termination Fee which NU may separately be
required to pay to CEI pursuant to Section 5.09(b).
(d) If this Agreement is terminated by NU pursuant to
Section 7.01(b)(iii) or by NU pursuant to Section 7.01(e), CEI shall
immediately pay to NU, by wire transfer of same day funds, an expense
reimbursement fee of $20 million for fees and expenses incurred, or paid by
or on behalf of, NU in connection with the Mergers or the transactions
contemplated by this Agreement.
(e) NU acknowledges that the agreements contained in
Sections 5.09(b) and 5.09(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, CEI would
not enter into this Agreement; accordingly, if NU fails promptly to pay the
amount due pursuant to Section 5.09(b) and 5.09(c), and, in order to obtain
such payment, CEI commences a suit that results in a judgment against NU for
any of the amounts set forth in Section 5.09(b) or 5.09(c), as the case may
be, NU shall pay to CEI its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on such
amounts at the prime rate of The Chase Manhattan Bank in effect on the date
such payment was required to be made.
SECTION 5.10. Public Announcements. CEI and NU will consult with
each other before issuing, and provide each other the opportunity to review,
comment upon and concur with, any press release or other public statements
with respect to the transactions contemplated by this Agreement, including
the Mergers, and shall not issue any such press release or make any such
public statement prior to such consultation, except as any party may
determine is required by law. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.11. Affiliates. As soon as practicable after the date
of this Agreement, NU shall deliver to CEI, and CEI shall deliver to NU, a
letter identifying all persons who are, at the time this Agreement is
submitted for adoption by the respective shareholders of CEI and NU,
"affiliates" of CEI or NU, as the case may be, for purposes of Rule 145 under
the Securities Act. CEI and NU shall use their respective reasonable best
efforts to cause each such person to deliver to the Company as of the Closing
Date, a written agreement substantially in the form attached hereto as
Exhibit D-1 in the case of NU and Exhibit D-2 in the case of CEI.
SECTION 5.12. NYSE Listing. The Company shall use its reasonable
best efforts to cause the shares of the Company Common Stock to be issued in
the Mergers to be approved for listing on the NYSE, subject to official
notice of issuance, as promptly as practicable after the date of this
Agreement, and in any event prior to the Closing Date.
SECTION 5.13. Shareholder Litigation. NU shall afford CEI the
opportunity to participate in the defense of any shareholder litigation
against NU or any of its trustees or officers relating to the transactions
contemplated by this Agreement.
SECTION 5.14. Taxes. (a) Each of CEI and NU will, and will cause
each of their respective subsidiaries to, (i) timely file with the relevant
taxing authority all material Tax returns and reports required to be filed by
it, on a basis consistent with the elections, accounting methods, conventions
and principles of taxation used for the most recent taxable periods for which
Tax returns involving similar Tax items have been filed, and in a manner that
does not unreasonably accelerate deductions or defer income, (ii) timely pay
all Taxes due and payable, or establish proper reserves therefor in its books
and records in accordance with GAAP, (iii) make adequate provision on its
books and records, to the extent required in accordance with GAAP, for all
Taxes due and payable after the Effective Time, and (iv) promptly notify the
other of any action, suit, proceeding, claim or audit pending against or with
respect to it or any of its subsidiaries in respect of any material Taxes.
(b) Each of CEI and NU shall not, and shall not permit any of
their respective subsidiaries to, take any action, or fail to take any
action, that would, or could reasonably be expected to, prevent (i) the
Mergers from constituting a transaction described in Section 351 of the Code,
(ii) the CEI Merger from constituting a transaction described in
Section 368(a) of the Code or (iii) CEI or NU from obtaining the opinions of
counsel referred to in Sections 6.02(c) and 6.03(c).
SECTION 5.15. Standstill Agreements; Confidentiality Agreements.
During the period from the date of this Agreement through the Effective Time,
NU shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it or any of its respective
subsidiaries is a party, provided that NU may terminate, amend, modify or
waive any provision of, any confidentiality agreement relating solely to the
sale of the NU Subsidiaries' generation assets, including any NU Nuclear
Facilities, other than any standstill provisions contained in any such
confidentiality agreement. During such period, NU shall enforce, to the
fullest extent permitted under Applicable Law, the provisions of any such
agreement, including by seeking to obtain injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or of any state having
jurisdiction.
SECTION 5.16. Rights Agreement. NU shall take all action
requested in writing by CEI in order to render the NU Rights under the NU
Rights Agreement inapplicable to the Mergers and the other transactions
contemplated by the Agreement. Except as approved in writing by CEI, NU
shall not (i) amend the NU Rights Agreement, (ii) redeem the NU Rights or
(iii) take any action with respect to, or make any determination under, the
NU Rights Agreement. If any "Distribution Date", "Shares Acquisition Date"
or "Section 11(a)(ii) Event" (as each such term is defined in the NU Rights
Agreement) occurs under the Rights Agreement at any time during the period
from the date of this Agreement to the Effective Time, CEI and NU shall make
such adjustments as CEI and NU shall mutually agree so as to preserve the
economic benefits that CEI and NU each reasonably expected on the date of
this Agreement to receive as a result of the consummation of the Mergers and
the other transactions contemplated by the Agreement.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Mergers. The respective obligation of each party to effect the Mergers is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Shareholder Approvals. Each of the NU Shareholder Approval
and the CEI Shareholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No (i) temporary restraining
order or preliminary or permanent injunction or other order by any Federal or
state court preventing consummation of either of the Mergers or
(ii) applicable Federal or state law or regulation prohibiting either of the
Mergers or any of the other transactions contemplated by this Agreement
(collectively, "Restraints") shall be in effect.
(c) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(d) NYSE Listing. The shares of Company Common Stock issuable to
the NU Shareholders and the CEI Shareholders as contemplated by this
Agreement shall have been approved for listing on the NYSE, subject to
official notice of issuance.
SECTION 6.02. Conditions to Obligations of CEI. The obligation of
CEI to effect the CEI Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of NU set forth herein shall be true and correct both when made
and at and as of the Closing Date, as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be
so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) would not have,
individually or in the aggregate, a Material Adverse Effect on NU.
(b) Performance of Obligations of NU. NU shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date.
(c) Tax Opinions. CEI shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel to CEI, on the Closing Date, its opinion dated as of such date
or no more than two days prior thereto, to the effect that the CEI Merger
will be treated for Federal income tax purposes as a transaction described in
Section 368(a) of the Code. In rendering such opinion, counsel for CEI shall
be entitled to rely upon customary representations of the parties hereto,
substantially in the form of Exhibits E, F and G hereto.
(d) No Material Adverse Change. From and after the date of this
Agreement, no Material Adverse Change with respect to NU (including the
discovery of, any deterioration in, or any worsening of, any change, effect,
event, occurrence or state of facts existing or known as of the date of this
Agreement) shall have occurred.
(e) Statutory Approvals. The CEI Statutory Approvals and the NU
Statutory Approvals shall have been obtained at or prior to the Effective
Time, such approvals shall have become Final Orders (as defined below) and
neither such Final Orders nor any order, law or regulation of any
Governmental Entity shall impose terms or conditions that would have,
individually or in the aggregate, (A) a Material Adverse Effect on NU, (B) a
Material Adverse Effect on CEI or (C) a Material Adverse Effect on the
Company and its prospective subsidiaries taken as a whole. A "Final Order"
means action by the relevant Governmental Entity that 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
(or therein) 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.
(f) Closing Certificates. CEI shall have received a certificate
signed by an executive officer of NU, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set forth in
Section 6.02(a), Section 6.02(b), Section 6.02(d) and Section 6.02(g) have
been satisfied.
(g) No Trigger of NU Rights. No event shall have occurred that
has triggered, or would result in the triggering of, any right or entitlement
of NU Shareholders under the NU Rights Agreement, including a "Distribution
Date", a "Shares Acquisition Date" or a "Section 11(a)(ii) Event" (as such
terms are defined in the NU Rights Agreement) or a "flip-in" or "flip-over"
event as commonly described in such rights plans, and the NU Rights shall not
have become nonredeemable by the NU Board of Trustees.
SECTION 6.03. Conditions to Obligations of NU. The obligation of
NU to effect the NU Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of CEI set forth herein shall be true and correct both when made
and at and as of the Closing Date, as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be
so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) would not have,
individually or in the aggregate, a Material Adverse Effect on CEI.
(b) Performance of Obligations of CEI. CEI shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date.
(c) Tax Opinions. NU shall have received from LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to NU, on the Closing Date, its opinion
dated as of such date or no more than two days prior thereto, to the effect
that the Mergers will be treated for Federal income tax purposes as a
transaction described in Section 351 of the Code. In rendering such opinion,
counsel for NU shall be entitled to rely upon customary representations of
the parties hereto, substantially in the form of Exhibits E, F and G hereto.
(d) No Material Adverse Change. From and after the date of this
Agreement, no Material Adverse Change with respect to CEI (including the
discovery of, any deterioration in, or any worsening of, any change, effect,
event, occurrence or state of facts existing or known as of the date of this
Agreement) shall have occurred.
(e) Statutory Approvals. The CEI Statutory Approvals and the NU
Statutory Approvals shall have been obtained at or prior to the Effective
Time, such approvals shall have become Final Orders and neither such Final
Orders nor any order, law or regulation of any Governmental Entity shall
impose terms or conditions that would have, individually or in the aggregate,
(A) a Material Adverse Effect on CEI or (B) a Material Adverse Effect on the
Company and its prospective subsidiaries taken as a whole.
(f) Closing Certificates. NU shall have received a certificate
signed by an executive officer of CEI, dated the Closing Date, to the effect
that, to the best of such officer's knowledge, the conditions set forth in
Section 6.03(a), Section 6.03(b) and Section 6.03(d) have been satisfied.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or (other than pursuant
to clause (f) below) after the NU Shareholder Approval or the CEI Shareholder
Approval:
(a) by mutual written consent of CEI and NU;
(b) by either CEI or NU:
(i) if the Mergers shall not have been consummated by April 13,
2001 (the "Initial Termination Date"); provided, however, that the right
to terminate this Agreement pursuant to this Section 7.01(b)(i) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of the Mergers
to be consummated by such time; and provided, further, that if on the
Initial Termination Date the conditions to the respective obligations of
CEI and NU to effect the CEI Merger and the NU Merger set forth in
Sections 6.01(b) and 6.02(e) and Sections 6.01(b) and 6.03(e),
respectively, shall not have been fulfilled but all other conditions to
the respective obligations of CEI and NU to effect the CEI Merger and
the NU Merger shall have been fulfilled or shall be capable of being
fulfilled, then the Initial Termination Date shall be extended to
October 13, 2001;
(ii) if the NU Shareholder Approval shall not have been obtained at
a NU Shareholders Meeting duly convened therefor or at any adjournment
or postponement thereof;
(iii) if the CEI Shareholder Approval shall not have been obtained
at a CEI Shareholders Meeting duly convened therefor or at any
adjournment or postponement thereof; or
(iv) if any Restraint having any of the effects set forth in
Section 6.01(b) shall be in effect and shall have become final and
nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(iv) shall have used its
reasonable best efforts to prevent the entry of and to remove such
Restraint;
(c) by CEI, if NU shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement (other than Section 4.02), which
breach or failure to perform (A) would give rise to the failure of a
condition set forth in Section 6.02(a) or (b), and (B) is incapable of being
cured by NU or is not cured by NU within a reasonable period of time
following receipt of written notice from CEI of such breach or failure to
perform;
(d) by CEI, if NU or any of its trustees or officers breaches or
fails to perform in any material respect any of its covenants or agreements
contained in Section 4.02;
(e) by NU, if CEI shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in
Section 6.03(a) or (b), and (B) is incapable of being cured by CEI or is not
cured by CEI within a reasonable period of time following receipt of written
notice from NU of such breach or failure to perform; or
(f) by NU in accordance with Section 4.02(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (f) to
be deemed effective, NU shall have complied with all provisions of
Section 4.02, including the notice provisions therein, and with applicable
requirements, including the payment of the Termination Fee, of Section 5.09.
SECTION 7.02. Effect of Termination. In the event of termination
of this Agreement by either NU or CEI as provided in Section 7.01, this
Agreement shall forthwith become null and void and have no effect, without
any liability or obligation on the part of CEI or NU, other than the
provisions of Section 3.01(q), Section 3.02(o), the penultimate sentence of
Section 5.04(a), Section 5.09, this Section 7.02 and Article VIII, which
provisions shall survive such termination, and except to the extent that such
termination results from the willful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth in this
Agreement, in which case such termination shall not relieve any party of any
liability or damages resulting from its willful and material breach of this
Agreement (including any such case in which a Termination Fee or any expense
reimbursement fee is payable pursuant to Section 5.09), to the extent any
such liability or damage suffered by the party entitled to such payment
exceeds the amount of such payment (including, in the case of CEI, the amount
of the Termination Fee (to the extent payable) and any expense reimbursement
fee payable to CEI pursuant to Section 5.09).
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time before or after the NU Shareholder Approval or the CEI
Shareholder Approval; provided, however, that after any such approval, there
shall not be made any amendment that by law requires further approval by the
NU Shareholders or the CEI Shareholders 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.
SECTION 7.04. Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 7.03, waive compliance by
the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an
amendment of this Agreement pursuant to Section 7.03 or an extension or
waiver pursuant to Section 7.04 shall, in order to be effective, require, in
the case of NU, action by its Board of Trustees or the duly authorized
committee or designee of its Board of Trustees to the extent permitted by law
and the Trust Agreement and, in the case of CEI, action by its Board of
Directors or the duly authorized committee or designee of its Board of
Directors to the extent permitted by law and its certificate of
incorporation.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given (as of the time of delivery or, in the case of a telecopied
communication, of confirmation) if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) 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 CEI, to
Consolidated Edison, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.; and
▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
(b) if to NU, to
Northeast Utilities Service Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇; and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person, where "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with any person, any change, effect, event,
occurrence or state of facts (i) that is, or would reasonably be expected to
be, materially adverse to the business, assets, properties, condition
(financial or otherwise), results of operations or prospects of such person
and its subsidiaries taken as a whole or (ii) that prevents, or would
reasonably be expected to prevent, such person from performing any of its
material obligations under this Agreement or consummation of the transactions
contemplated hereby;
(c) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, business trust,
unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or
more of the equity interests of which) is owned directly or indirectly by
such first person; and
(e) "knowledge" of any person which is not an individual means the
actual knowledge of such person's executive officers.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms
of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto
and instruments incorporated therein. References to a person are also to its
permitted successors and assigns. Notwithstanding the amendment and
restatement of this Agreement, as between October 13, 1999 and January 11,
2000, the representations and warranties of NU and CEI set forth in
Sections 3.01 and 3.02, respectively, will be deemed for purposes of
Section 6.02(a) and Section 6.03(a), as applicable, and otherwise to have
been made as of October 13, 1999 and not as of January 11, 2000, and such
amendment and restatement will not otherwise affect the other requirements in
Sections 6.02(a) and Section 6.03(a).
SECTION 8.05. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each party and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third--Party Beneficiaries.
This Agreement (including the documents and instruments referred to herein)
and the Confidentiality Agreement (except for paragraph 9 thereof)
(i) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement (including paragraph 9 of the
Confidentiality Agreement) and (ii) except for the provisions of Article II
and Section 5.08, are not intended to confer upon any person other than the
parties any rights or remedies. NU hereby waives the restrictions applicable
to CEI pursuant to paragraph 9 of the Confidentiality Agreement relating to
the parties' standstill obligations for a time period to expire on the
earliest of (i) the Effective Time, (ii) if this Agreement is terminated by
CEI and the Termination Fee is required to be paid, payment of the
Termination Fee and (iii) if this Agreement is terminated by NU pursuant to
Section 7.01(b)(iii) or 7.01(e), upon such termination.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, except
to the extent that the laws of the State of Delaware govern the CEI Merger or
the laws of the Commonwealth of Massachusetts govern the NU Merger
regardless, in each case, of the laws that might otherwise govern under
applicable principles of conflict of laws.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other party. Any attempted
or purported assignment in violation of the preceding sentence shall be null
and void and of no effect whatsoever. Subject to the preceding two
sentences, this Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that irreparable
damage would occur and that the parties would not have any adequate remedy at
law 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 the Federal court
located in the Borough of Manhattan in The City of New York or if such court
does not have jurisdiction, in any Federal court having jurisdiction, or if
no Federal court has jurisdiction, in any state court having jurisdiction,
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 the Federal court located in the
Borough of Manhattan in The City of New York or if such court does not have
jurisdiction, in any Federal court having jurisdiction, or if no Federal
court has jurisdiction, in any state court having jurisdiction in the event
any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal court sitting in the Borough of
Manhattan in The City of New York or if such court does not have
jurisdiction, in any Federal court having jurisdiction, or if no Federal
court has jurisdiction, in any state court having jurisdiction.
SECTION 8.10. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties
as closely as possible to the fullest extent permitted by Applicable Law in
an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 8.11. Trustee and Shareholder Liability. No trustee or NU
Shareholder shall be held to any liability whatsoever for any obligation
under this Agreement, and this Agreement shall not be enforceable against any
such trustee or NU Shareholder in their or his or her individual capacities
or capacity. This Agreement shall be enforceable against the trustees of NU
only as such, and every person, firm, association, trust or corporation
having any claim or demand arising under this Agreement and relating to NU,
the NU Shareholders or trustees shall look solely to the trust estate of NU
for the payment or satisfaction thereof.
IN WITNESS WHEREOF, CEI, NU, the Company, and Merger LLC have
caused this Agreement to be signed by their respective officers (or, in the
case of Merger LLC, manager) thereunto duly authorized, all as of the date
first written above.
CONSOLIDATED EDISON, INC.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President & Chief
Financial Officer
NORTHEAST UTILITIES,
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
CONSOLIDATED EDISON, INC., formerly CWB Holdings,
Inc.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
N ACQUISITION LLC,
by Consolidated Edison, Inc.,
formerly CWB
Holdings, Inc.,
by
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
EXHIBIT A
to the Merger Agreement
Form of Certificate of Incorporation of the
Company as of the Effective Time
RESTATED CERTIFICATE OF INCORPORATION
OF
CONSOLIDATED EDISON, INC.
Consolidated Edison, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY AS FOLLOWS:
1. The name of the corporation is Consolidated Edison, Inc. and
the name under which the corporation was originally incorporated is CWB
Holdings, Inc. The original Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware on February 25, 1998.
2. This Restated Certificate of Incorporation, having been duly
adopted in accordance with Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware and by the unanimous written consent
of the stockholders of the Corporation, restates and integrates and further
amends the provisions of the Certificate of Incorporation as amended or
supplemented heretofore. As so restated and integrated and further amended,
the Restated Certificate of Incorporation (hereinafter, this "Certificate of
Incorporation") reads as follows:
ARTICLE FIRST
The name of the corporation is Consolidated Edison, Inc.
ARTICLE SECOND
The address of the registered office of the Corporation in the
State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of the registered agent of the Corporation at such
address is The Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOURTH
(a) The aggregate number of shares of stock that the Corporation
shall have authority to issue is 510,000,000 shares, consisting of
500,000,000 shares of Common Stock, par value $.10 per share (the "Common
Stock"), and 10,000,000 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock").
(b) The Board of Directors of the Corporation shall have the full
authority permitted by law, at any time and from time to time, to divide the
authorized and unissued shares of Preferred Stock into classes or series and,
with respect to each such class or series, to determine by resolution or
resolutions the number of shares constituting such class or series and the
designation of such class or series, the voting powers, if any, of the shares
of such class or series, and the preferences and relative, participating,
optional or other special rights, if any, and any qualifications, limitations
or restrictions thereof, of the shares of any such class or series of
Preferred Stock to the full extent now or hereafter permitted by the law of
the State of Delaware, except that holders of Preferred Stock will not be
entitled to more than one vote for each share of Preferred Stock held.
(c) The powers, preferences and relative, participating, optional
and other special rights of each class or series of Preferred Stock and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other classes or series at any time outstanding.
(d) Subject to applicable law and the rights, if any, of the
holders of any class or series of Preferred Stock or any class or series of
stock having a preference over or the right to participate with the Common
Stock with respect to the payment of dividends, dividends may be declared and
paid on the Common Stock at such times and in such amounts as the Board of
Directors of the Corporation in its discretion shall determine. Nothing in
this ARTICLE FOURTH shall limit the power of the Board of Directors to create
a class or series of Preferred Stock with dividends the rate of which is
calculated by reference to, and the payment of which is concurrent with,
dividends on shares of Common Stock.
(e) In the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, subject to the rights of the
holders of any class or series of the Preferred Stock, the net assets of the
Corporation available for distribution to stockholders of the Corporation
shall be distributed pro rata to the holders of the Common Stock in
accordance with their respective rights and interests. If the assets of the
Corporation are not sufficient to pay the amounts, if any, owing to holders
of shares of Preferred Stock in full, holders of all shares of Preferred
Stock will participate in the distribution of assets ratably in proportion to
the full amounts to which they are entitled or in such order or priority, if
any, as will have been fixed in the resolution or resolutions providing for
the issue of the class or series of Preferred Stock. Neither the merger or
consolidation of the Corporation into or with any other corporation, nor a
sale, transfer or lease of all or part of its assets, will be deemed a
liquidation, dissolution or winding up of the Corporation within the meaning
of this paragraph except to the extent specifically provided for herein.
Nothing in this ARTICLE FOURTH shall limit the power of the Board of
Directors to create a class or series of Preferred Stock for which the amount
to be distributed upon any liquidation, dissolution or winding up of the
Corporation is calculated by reference to, and the payment of which is
concurrent with, the amount to be distributed to the holders of shares of
Common Stock.
(f) Except as otherwise required by law, as otherwise provided
herein or as otherwise determined by the Board of Directors as to the shares
of any class or series of Preferred Stock prior to the issuance of any such
shares, the holders of Preferred Stock shall have no voting rights and shall
not be entitled to any notice of meetings of stockholders.
(g) Except as otherwise required by law and subject to the rights
of the holders of any class or series of Preferred Stock, with respect to all
matters upon which stockholders are entitled to vote or to which stockholders
are entitled to give consent, the holders of any outstanding shares of Common
Stock shall vote together as a class, and every holder of Common Stock shall
be entitled to cast thereon one vote in person or by proxy for each share of
Common Stock standing in such holder's name on the books of the Corporation;
provided, however, that, except as otherwise required by law, holders of
Common Stock, as such, shall not be entitled to vote on any amendment to this
Certificate of Incorporation (including any certificate of designations
relating to any class or series of Preferred Stock) that relates solely to
the terms of one or more outstanding class or series of Preferred Stock if
the holders of such affected class or series are entitled, either separately
or together with the holders of one or more other such class or series, to
vote thereon pursuant to this Certificate of Incorporation (including any
certificate of designations relating to any class or series of Preferred
Stock) or pursuant to applicable law. Subject to the rights of the holders
of any class or series of Preferred Stock, stockholders of the Corporation
shall not have any preemptive rights to subscribe for additional issues of
stock of the Corporation and no stockholder will be permitted to cumulate
votes at any election of directors.
ARTICLE FIFTH
(a) Except as otherwise fixed by or pursuant to the provisions of
ARTICLE FOURTH of this Certificate of Incorporation relating to the rights of
the holders of any class or series of Preferred Stock, and subject to the
right of the Board of Directors to increase or decrease the number of
directors pursuant to the provisions of this ARTICLE FIFTH, the Board of
Directors shall consist of __ directors (as so adjusted, the "entire Board of
Directors"). The Board of Directors may increase or decrease the number of
directors by resolution adopted by a majority of the entire Board of
Directors; provided, however, that no decrease in the number of directors so
made by the Board of Directors shall shorten the term of any incumbent
director. Except as otherwise provided by or pursuant to the provisions of
ARTICLE FOURTH of this Certificate of Incorporation with respect to any
directors elected by the holders of any class or series of Preferred Stock
pursuant to the terms of this Certificate of Incorporation, at each annual
meeting of the stockholders of the Corporation, the date of which shall be
fixed by or pursuant to the By-laws of the Corporation, directors shall be
elected and each director shall hold office until the next annual meeting of
stockholders and until his or her successor is duly elected and qualified, or
until his or her earlier death, incapacity, resignation or removal from
office in accordance with applicable law or pursuant to an order of a court
of competent jurisdiction. The election of directors need not be by written
ballot.
(b) Except as otherwise provided for or fixed by or pursuant to the
provisions of ARTICLE FOURTH of this Certificate of Incorporation relating to
the rights of the holders of any class or series of Preferred Stock, any
vacancy on the Board of Directors of the Corporation resulting from death,
incapacity, resignation, removal or other cause and any newly created
directorship resulting from any increase in the authorized number of
directors between annual meetings of stockholders shall be filled only by the
vote of a majority of the directors then in office, even though less than a
quorum, and any director so chosen shall hold office until the next annual
meeting of stockholders and until his or her successor is duly elected and
qualified or his or her earlier death, incapacity, resignation or removal
from office in accordance with applicable law or pursuant to an order of a
court of competent jurisdiction.
ARTICLE SIXTH
(a) Subject to the rights of the holders of any class or series of
Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders. Subject to the rights of the
holders of any class or series of Preferred Stock and except as expressly set
forth in the By-laws of the Corporation, special meetings of stockholders of
the Corporation may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
(b) Notwithstanding the foregoing, whenever the holders of any one
or more class or series of Preferred Stock issued by the Corporation, if any,
shall have the right, voting separately by class or series, as applicable, to
elect directors at an annual or special meeting of stockholders, the calling
of special meetings of the holders of such class or series shall be governed
by the terms of the applicable resolution or resolutions of the Board of
Directors adopted pursuant to ARTICLE FOURTH of this Certificate of
Incorporation.
ARTICLE SEVENTH
In furtherance and not in limitation of the powers conferred upon
it by law, the Board of Directors of the Corporation is expressly authorized
to adopt, repeal, alter or amend the By-laws of the Corporation by the vote
of a majority of the entire Board of Directors.
ARTICLE EIGHTH
Except to the extent elimination or limitation of liability is not
permitted by applicable law, no director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty in such capacity. Any repeal or
modification of this ARTICLE EIGHTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification with respect
to acts or omissions occurring prior to such repeal or modification.
ARTICLE NINTH
The holders of the capital stock of the Corporation shall not be
personally liable for the payment of the Corporation's debts, and the private
property of the holders of the capital stock of the Corporation shall not be
subject to the payment of debts of the Corporation to any extent whatsoever.
ARTICLE TENTH
The Corporation reserves the right to supplement, amend or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by the laws of the State of Delaware and this
Certificate of Incorporation, and all rights conferred on stockholders,
directors and officers herein, if any, are granted subject to this
reservation.
IN WITNESS WHEREOF, I, the [insert title] of the Corporation, have
executed this Restated Certificate of Incorporation as of the __ day of __, _,
and DO HEREBY CERTIFY under the penalties of perjury that the facts stated in
this Restated Certificate of Incorporation are true.
By
Name:
Title:
EXHIBIT B
to the Merger Agreement
Form of By-laws of the Company
as of the Effective Time
BY-LAWS
of
Consolidated Edison, Inc.,
Effective as of *
TABLE OF CONTENTS
Page
ARTICLE 1
Stockholders
SECTION 1.1. Place of Stockholders' Meetings
SECTION 1.2. Day and Time of Annual Meetings of Stockholders
SECTION 1.3. Purposes of Annual Meetings
SECTION 1.4. Special Meetings of Stockholders
SECTION 1.5. Notice of Meetings of Stockholders
SECTION 1.6. Quorum of Stockholders
SECTION 1.7. Chairman of the Board and Secretary of Meeting
SECTION 1.8 Voting by Stockholders
SECTION 1.9. Proxies
SECTION 1.10. Inspectors
SECTION 1.11. List of Stockholders
SECTION 1.12. Fixing of Record Date for Determination of Stockholders of
Record
ARTICLE 2
Directors
SECTION 2.1. Method of Election
SECTION 2.2. Resignations and Vacancies on Board
SECTION 2.3. Meetings of the Board
SECTION 2.4. Quorum and Action
SECTION 2.5. Presiding Officer and Secretary of Meeting
SECTION 2.6. Action by Consent without Meeting
SECTION 2.7. Committees
ARTICLE 3
Officers
SECTION 3.1. Officers, Titles, Elections, Terms
SECTION 3.2. Powers and Duties of the Executive and
Other Officers
ARTICLE 4
Indemnification
SECTION 4.1 Indemnification
SECTION 4.2. Insurance, Contracts and Funding
SECTION 4.3. Indemnification; Not Exclusive Right
SECTION 4.4. Advancement of Expenses
SECTION 4.5. Indemnification Procedures;Presumptions and Effect of
Certain Proceedings; Remedies;Definitions
SECTION 4.6. Indemnification of Employees and Agents
SECTION 4.7. Severability
ARTICLE 5
Capital Stock
SECTION 5.1. Stock Certificates
SECTION 5.2. Record Ownership
SECTION 5.3. Transfer of Record Ownership
SECTION 5.4. Transfer Agent; Registrar; Rules Respecting Certificates
ARTICLE 6
Securities held by the Corporation
SECTION 6.1. Voting
SECTION 6.2. General Authorization to Transfer
Securities Held by the Corporation
ARTICLE 7
Depositaries and Signatories
SECTION 7.1. Depositaries
SECTION 7.2. Signatories
ARTICLE 8
Seal
ARTICLE 9
Fiscal Year
ARTICLE 10
Amendment of By-Laws
ARTICLE 11
Offices and Agent
BY-LAWS
of
Consolidated Edison, Inc.
(a corporation organized under the laws of the
State of Delaware, the "Corporation")
(effective as of *)
1. STOCKHOLDERS.
1.1 Place of Stockholders' Meetings. All meetings of the stockholders
of the Corporation shall be held at such place or places, within or outside
the State of Delaware, as may be fixed by the Corporation's Board of
Directors (the "Board", and each member thereof a "Director") from time to
time or as shall be specified in the respective notices thereof.
1.2 Day and Time of Annual Meetings of Stockholders. An annual meeting
of stockholders shall be held at such place (within or outside the State of
Delaware), date and hour as shall be determined by the Board and designated
in the notice thereof. Any previously scheduled annual meeting of
stockholders may be postponed by action of the Board taken prior to the time
previously scheduled for such annual meeting of stockholders.
1.3 Purposes of Annual Meetings. (a) Subject to the rights of the
holders of any class or series of Preferred Stock of the Corporation, at each
annual meeting, the stockholders shall elect the Directors. At any such
annual meeting any business properly brought before the meeting may be
transacted.
(b) To be properly brought before an annual meeting, business must be
(i) specified in the notice of the meeting (or any supplement thereto) given
by or at the direction of the Board, (ii) otherwise properly brought before
the meeting by or at the direction of the Board or (iii) otherwise properly
brought before the meeting by a stockholder who is a holder of record at the
time of the giving of notice provided for in this Section 1.3(b), who is
entitled to vote at the meeting and who complies with the procedures set
forth in this Section 1.3(b). For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given written
notice thereof, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation (the "Secretary") at the
principal executive offices of the Corporation, not less than 90 days nor
more than 120 days prior to the anniversary date of the immediately preceding
annual meeting (provided, that the first such anniversary date occurring
after the effective date of these By-laws shall be deemed to be __). Any such
notice shall set forth as to each matter the stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to
be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, and, in the event that such business includes
a proposal to amend either the Restated Certificate of Incorporation of the
Corporation (the "Certificate") or these By-laws, the text of the proposed
amendment; (ii) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business; (iii) the class and number
of shares of the Corporation which are beneficially owned by the stockholder;
(iv) any material interest of the stockholder in such business; and (v) if
the stockholder intends to solicit proxies in support of such stockholder's
proposal, a representation to that effect. The foregoing notice requirements
shall be deemed satisfied by a stockholder if the stockholder has notified
the Corporation of his or her intention to present a proposal at an annual
meeting and such stockholder's proposal has been included in a proxy
statement that has been prepared by management of the Corporation to solicit
proxies for such annual meeting; provided, however, that if such stockholder
does not appear or send a qualified representative to present such proposal
at such annual meeting, the Corporation need not present such proposal for a
vote at such meeting, notwithstanding that proxies in respect of such vote
may have been received by the Corporation. No business shall be conducted at
an annual meeting of stockholders except in accordance with this
Section 1.3(b), and the presiding officer of any annual meeting of
stockholders may refuse to permit any business to be brought before an annual
meeting without compliance with the foregoing procedures or if the
stockholder solicits proxies in support of such stockholder's proposal
without such stockholder having made the representation required by
clause (v) of the second preceding sentence.
1.4 Special Meetings of Stockholders. (a) Except as otherwise
expressly required by the Certificate or by applicable law and subject to the
rights of the holders of any class or series of Preferred Stock of the
Corporation, special meetings of the stockholders or of any class or series
entitled to vote may be called for any purpose or purposes by a majority vote
of the entire Board of Directors, as defined in the Certificate (the "entire
Board"), or, subject to the procedures set forth in this Section 1.4(a), by
stockholders representing 25% or more of the voting power of all outstanding
shares of stock of the Corporation entitled to vote generally in the election
of Directors. At any such special meeting any business properly brought
before the meeting may be transacted. Upon request in writing sent by
registered mail to the Chairman of the Board by any stockholder or
stockholders entitled to call a special meeting of stockholders pursuant to
this Section 1.4(a), the Board shall determine a place (within or outside the
State of Delaware) and time for such meeting after the receipt and
determination of the validity of such request, and a record date for the
determination of stockholders entitled to vote at such meeting in the manner
set forth in Section 1.12 hereof. Following such receipt and determination,
the Secretary shall cause notice to be given to the stockholders entitled to
vote at such meeting, in the manner set forth in Section 1.5 hereof, that
such meeting will be held at the place and time so determined.
(b) To be properly brought before a special meeting, business must be
(i) specified in the notice of the meeting (or any supplement thereto) given
by or at the direction of the Board, (ii) otherwise properly brought before
the meeting by or at the direction of the Board or (iii) otherwise properly
brought before the meeting by a stockholder who is a holder of record at the
time of the giving of notice provided for in this Section 1.4(b), who is
entitled to vote at the meeting and who complies with the procedures set
forth in this Section 1.4(b). For business to be properly brought before a
special meeting by a stockholder, the stockholder must have given written
notice thereof, either by personal delivery or by United States mail, postage
prepaid, to the Secretary at the principal executive offices of the
Corporation, not earlier than the 90th day prior to such special meeting and
not later than the close of business on the later of the 60th day prior to
such special meeting or the tenth day following the day on which public
announcement of the date of the special meeting is first made. Any such
notice shall set forth as to each matter the stockholder proposes to bring
before the special meeting (i) a brief description of the business desired to
be brought before the special meeting and the reasons for conducting such
business at the special meeting, and, in the event that such business
includes a proposal to amend either the Certificate or these By-laws, the
text of the proposed amendment; (ii) the name and address, as they appear on
the Corporation's books, of the stockholder proposing such business;
(iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder; (iv) any material interest of the
stockholder in such business; and (v) if the stockholder intends to solicit
proxies in support of such stockholder's proposal, a representation to that
effect. The foregoing notice requirements shall be deemed satisfied by a
stockholder if the stockholder has notified the Corporation of his or her
intention to present a proposal at a special meeting and such stockholder's
proposal has been included in a proxy statement that has been prepared by
management of the Corporation to solicit proxies for such special meeting;
provided, however, that if such stockholder does not appear or send a
qualified representative to present such proposal at such special meeting,
the Corporation need not present such proposal for a vote at such meeting,
notwithstanding that proxies in respect of such vote may have been received
by the Corporation. No business shall be conducted at a special meeting of
stockholders except in accordance with this Section 1.4(b), and the presiding
officer of any special meeting of stockholders may refuse to permit any
business to be brought before a special meeting without compliance with the
foregoing procedures or if the stockholder solicits proxies in support of
such stockholder's proposal without such stockholder having made the
representation required by clause (v) of the second preceding sentence.
1.5 Notice of Meetings of Stockholders. Except as otherwise expressly
required or permitted by the Certificate or by applicable law, not less than
ten days nor more than 60 days before the date of every annual or special
stockholders' meeting the Secretary shall cause to be delivered to each
stockholder of record entitled to vote at such meeting notice stating the
place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Except as provided
in Section 1.6(d), or as otherwise expressly required by the Certificate or
by applicable law, notice of any adjourned meeting of stockholders need not
be given if the time and place thereof are announced at the meeting at which
the adjournment is taken. Any notice, if mailed, shall be deemed to be given
when deposited in the United States mail, postage prepaid, addressed to the
stockholder at the address for notices to such stockholder as it appears on
the books of the Corporation.
1.6 Quorum of Stockholders. (a) Unless otherwise expressly required by
the Certificate or by applicable law, at any meeting of the stockholders, the
presence in person or by proxy of stockholders entitled to cast a majority of
votes thereat shall constitute a quorum for the entire meeting,
notwithstanding the withdrawal of stockholders entitled to cast a sufficient
number of votes in person or by proxy to reduce the number of votes
represented at the meeting below a quorum. Shares of the Corporation's stock
belonging to the Corporation or to another corporation, if a majority of the
shares entitled to vote in an election of the directors of such other
corporation is held by the Corporation, shall neither be counted for the
purpose of determining the presence of a quorum nor entitled to vote at any
meeting of the stockholders; provided, however, that the foregoing shall not
limit the right of the Corporation to vote stock, including but not limited
to its own stock, held by it in a fiduciary capacity.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of those present in person or by proxy may adjourn the
meeting from time to time without notice other than announcement at the
meeting at which an adjournment is taken of the time and place of the
adjourned meeting. Whether or not a quorum is present, the officer presiding
thereat shall have power to adjourn the meeting from time to time. Notice of
any adjourned meeting other than announcement at the meeting at which an
adjournment is taken shall not be required to be given, except as provided in
Section 1.6(d) below and except where expressly required by applicable law.
(c) At any adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting
originally called, but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof unless a new record date is fixed by the Board.
(d) If an adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in the manner specified in Section 1.5
to each stockholder of record entitled to vote at the adjourned meeting.
1.7 Chairman of the Board and Secretary of Meeting. The Chairman of
the Board or, in his or her absence, another officer of the Corporation
designated by the Chairman of the Board, shall preside at meetings of the
stockholders. The Secretary shall act as secretary of the meeting, or in the
absence of the Secretary, an Assistant Secretary of the Corporation shall so
act, or if neither is present, then the presiding officer may appoint a
person to act as secretary of the meeting.
1.8 Voting by Stockholders. (a) Except as otherwise expressly required
by the Certificate or by applicable law, at every meeting of the stockholders
each stockholder of record shall be entitled to the number of votes specified
in the Certificate (or, with respect to any series of Preferred Stock, in the
applicable certificate of designations providing for the creation of such
series), in person or by proxy, for each share of stock standing in his or
her name on the books of the Corporation on the date fixed pursuant to the
provisions of Section 1.12 of these By-laws as the record date for the
determination of the stockholders who shall be entitled to receive notice of
and to vote at such meeting.
(b) When a quorum is present at any meeting of the stockholders, all
questions shall be decided by the vote of a majority in voting power of the
stockholders present in person or by proxy and entitled to vote at such
meeting, unless the question is one upon which by express provision of law,
the rules or regulations of any stock exchange or governmental or regulatory
body applicable to the Corporation, the Certificate or these By-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
(c) Except as required by applicable law, the vote at any meeting of
stockholders on any question need not be by ballot, unless so directed by the
presiding officer of the meeting.
1.9 Proxies. Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by his or her attorney-in-fact or
proxy.
1.10 Inspectors. (a) The election of Directors and any other vote by
ballot at any meeting of the stockholders shall be supervised by one or more
inspectors. Such inspectors may be appointed by the Chairman of the Board
before or at the meeting. If the Chairman of the Board shall not have so
appointed such inspectors or if one or more inspectors so appointed shall
refuse to serve or shall not be present, such appointment shall be made by
the officer presiding at the meeting. Each inspector, before entering upon
the discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
(b) The inspector or inspectors shall (i) ascertain the number of shares
of the Corporation outstanding and the voting power of each; (ii) determine
the shares represented at any meeting of stockholders and the validity of the
proxies and ballots; (iii) count all proxies and ballots; (iv) determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors; and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all proxies and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties
of the inspectors.
(c) If there are three or more inspectors, the act of a majority of the
inspectors shall govern. On request of the officer presiding at such
meeting, the inspectors shall make a report of any challenge, question or
matter determined by them and execute a certificate of any fact found by
them. Any report or certificate made by them shall be prima facie evidence
of the facts therein stated and of the vote as certified by them, and such
report or certificate shall be filed with the minutes of such meeting.
1.11 List of Stockholders. (a) At least ten days before every meeting
of stockholders, the officer who has charge of the stock ledger of the
Corporation shall cause to be prepared and made a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) Such list shall be open to examination by any stockholder for any
purpose germane to the meeting as required by applicable law.
(c) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
Section 1.11 or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
1.12 Fixing of Record Date for Determination of Stockholders of Record.
(a) The Board may fix, in advance, a date as the record date for the purpose
of determining the stockholders entitled to notice of, or to vote at, any
meeting of the stockholders or any adjournment thereof, which record date
shall not precede the date upon which the resolution fixing the record date
is adopted by the Board, and which record date shall not be more than 60 days
nor less than ten days before the date of a meeting of the stockholders. If
no record date is fixed by the Board, the record date for determining the
stockholders entitled to notice of or to vote at a stockholders' meeting
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
(b) The Board may fix, in advance, a date as the record date for the
purpose of determining the stockholders entitled to receive payment of any
dividend or other distribution or the allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of
stock, or in order to make a determination of the stockholders for the
purpose of any other lawful action, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the
Board, and which record date shall not be more than 60 calendar days prior to
such action. If no record date is fixed by the Board, the record date for
determining the stockholders for any such purpose shall be at the close of
business on the day on which the Board adopts the resolution relating
thereto.
2. DIRECTORS.
2.1 Method of Election. Directors need not be stockholders of the
Corporation or citizens of the United States of America.
Subject to the rights of the holders of any class or series of Preferred
Stock of the Corporation, nominations of persons for election as Directors
may be made by the Board or by any stockholder who is a stockholder of record
at the time of giving of the notice of nomination provided for in this
Section 2.1 and who is entitled to vote for the election of Directors. Any
stockholder of record entitled to vote for the election of Directors at a
meeting may nominate a person or persons for election as Directors only if
written notice of such stockholder's intent to make such nomination is given,
either by personal delivery or by United States mail, postage prepaid, to the
Secretary at the principal executive offices of the Corporation, not later
than (i) with respect to an election to be held at an annual meeting of
stockholders, not less than 90 nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting (provided, that
the first such anniversary date occurring after the effective date of these
By-laws shall be deemed to be *) and (ii) with respect to an election to be
held at a special meeting of stockholders for the election of Directors, not
earlier than the 90th day prior to such special meeting and not later than
the close of business on the later of the 60th day prior to such special
meeting or the tenth day following the day on which public announcement of
the date of the special meeting is first made and of the nominees to be
elected at such meeting. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (b) a representation that the stockholder
is a holder of record of stock of the Corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission
had each nominee been nominated, or intended to be nominated, by the Board;
(e) the consent of each nominee to serve as a Director if so elected; and
(f) if the stockholder intends to solicit proxies in support of such
stockholder's nominee(s), a representation to that effect. The presiding
officer of any meeting of stockholders to elect Directors and the Board may
refuse to acknowledge any attempted nomination of any person not made in
compliance with the foregoing procedure or if the stockholder solicits
proxies in support of such stockholder's nominee(s) without such stockholder
having made the representation required by clause (f) of the preceding
sentence. Only such persons who are nominated in accordance with the
procedures set forth in this Section 2.1 shall be eligible to serve as
Directors of the Corporation.
At each meeting of the stockholders for the election of Directors at
which a quorum is present, the persons receiving the greatest number of
votes, up to the number of Directors to be elected, shall be the Directors.
2.2 Resignations and Vacancies on Board. Any Director may resign from
office at any time by delivering a resignation to the Chairman of the Board
or the Secretary. The resignation will take effect at the time specified
therein, or, if no time is specified, at the time of its receipt by the
Corporation. The acceptance of a resignation shall not be necessary to make
it effective, unless expressly so provided in the resignation. Any vacancy
on the Board shall be filled as specified in the Certificate.
2.3 Meetings of the Board. (a) The Board may hold its meetings, both
regular and special, either within or outside the State of Delaware, at such
places as from time to time may be determined by the Board or as may be
designated in the respective notices or waivers of notice thereof.
(b) Regular meetings of the Board shall be held at such times and at
such places as from time to time shall be determined by the Board.
(c) The first meeting of each newly elected Board shall be held as soon
as practicable after the annual meeting of the stockholders and shall be for
the election of officers and the transaction of such other business as may
come before such meeting.
(d) Special meetings of the Board shall be held whenever called by
direction of the Chairman of the Board or at the request of Directors
constituting one-third of the number of Directors then in office.
(e) Members of the Board or any Committee of the Board may participate
in a meeting of the Board or such Committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and by any
other means of remote communication permitted by applicable law, and such
participation shall constitute presence in person at such meeting.
(f) The Secretary shall give notice to each Director of any meeting of
the Board by mailing, faxing or otherwise electronically delivering the same
at least two days before the meeting or by personally delivering the same not
later than the day before the meeting. Such notice need not include a
statement of the business to be transacted at, or the purpose of, any such
meeting. Any and all business may be transacted at any meeting of the Board.
No notice of any adjourned meeting need be given. No notice to or waiver by
any Director shall be required with respect to any meeting at which the
Director is present except when such Director attends the meeting for the
express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting was not lawfully called or
convened.
2.4 Quorum and Action. Except as otherwise expressly required by
applicable law, the Certificate or these By-laws, at any meeting of the
Board, the presence of at least a majority of the entire Board shall
constitute a quorum for the transaction of business; but if there shall be
less than a quorum at any meeting of the Board, a majority of those present
may adjourn the meeting from time to time. Unless otherwise provided by
applicable law, the Certificate or these By-laws, the vote of a majority of
the Directors present at any meeting at which a quorum is present shall be
necessary for the approval and adoption of any resolution or the approval of
any act of the Board.
2.5 Presiding Officer and Secretary of Meeting. The Chairman of the
Board or, in the absence of the Chairman of the Board, a member of the Board
selected by the members present, shall preside at meetings of the Board. The
Secretary shall act as secretary of the meeting, but in the Secretary's
absence the presiding officer may appoint a secretary of the meeting.
2.6 Action by Consent without Meeting. Any action required or
permitted to be taken at any meeting of the Board or of any Committee thereof
may be taken without a meeting as permitted by applicable law.
2.7 Committees. The Board may, in accordance with and subject to
applicable law, from time to time establish committees of the Board to
exercise such powers and authorities of the Board, and to perform such other
functions, as the Board my from time to time determine. The Board may
designate one or more Directors as alternate members of any such Committee,
who may replace any absent or disqualified member or members at any meeting
of such Committee. In the absence or disqualification of a member of a
Committee, the member or members present at any meeting and not disqualified
from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another Director to act at the meeting in the place of
any such absent or disqualified member.
3. OFFICERS.
3.1 Officers, Titles, Elections, Terms. (a) The Board may from time to
time elect a Chairman of the Board, Vice Chairman of the Board, Chief
Executive Officer, President, one or more Executive Vice Presidents, one or
more Senior Vice Presidents, one or more Vice Presidents, a Chief Financial
Officer, a Controller, a Treasurer, a Secretary and a General Counsel, each
to serve at the pleasure of the Board or otherwise as shall be specified by
the Board at the time of such election and until their successors are elected
and qualified or until their earlier death, incapacity, retirement,
resignation or removal from office in accordance with these By-laws or
applicable law or pursuant to an order of a court of competent jurisdiction.
(b) The Board may elect or appoint at any time such other officers or
agents with such duties as it may deem necessary or desirable. Such other
officers or agents shall serve at the pleasure of the Board or otherwise as
shall be specified by the Board at the time of such election or appointment
and, in the case of such other officers, until their successors are elected
and qualified or until their earlier death, incapacity, retirement,
resignation or removal from office in accordance with these By-laws or
applicable law or pursuant to an order of a court of competent jurisdiction.
Each such officer or agent shall have such authority and shall perform such
duties as may be provided herein or as the Board may prescribe. The Board
may from time to time authorize any officer or agent to appoint and remove
any other such officer or agent and to prescribe such person's authority and
duties.
(c) Any two or more offices may be held simultaneously by the same
person, except as otherwise may be required by applicable law.
(d) Any vacancy in any office may be filled for the unexpired portion of
the term by the Board. Each officer elected or appointed during the year
shall hold office until the next annual meeting of the Board at which
officers are regularly elected or appointed and until his or her successor is
elected or appointed and qualified or until his or her earlier death,
incapacity, retirement, resignation or removal from office in accordance with
these By-laws or applicable law or pursuant to an order of a court of
competent jurisdiction.
(e) Any officer or agent elected or appointed by the Board may be
removed at any time by the affirmative vote of a majority of the entire
Board.
(f) Any officer may resign from office at any time. Such resignation
shall be made in writing and given to the Chief Executive Officer or the
Secretary. Any such resignation shall take effect at the time specified
therein, or, if no time is specified, at the time of its receipt by the
Corporation. The acceptance of a resignation shall not be necessary to make
it effective, unless expressly so provided in the resignation.
3.2 Powers and Duties of Officers. The officers of the Corporation
shall have such powers and duties as usually pertain to their respective
offices, except as otherwise directed by the Board or any designee thereof,
and shall also have such powers and duties as may from time to time be
conferred upon them by the Board or any such designee.
4. INDEMNIFICATION.
4.1 Indemnification. (a) The Corporation, to the fullest extent
permitted by applicable law, shall indemnify any person who was or is a
Director or officer of the Corporation and who was or is involved in any
manner (including, without limitation, as a party or a witness) or is
threatened to be made so involved in any threatened, pending or completed
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (including, without limitation, any action,
suit or proceeding by or in the right of the Corporation to procure a
judgment in its favor) (each, a "Proceeding"), by reason of the fact that
such person was or is a Director or officer of the Corporation or, while a
Director or officer of the Corporation, was or is serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any employee benefit plan) (a "Covered
Entity"), against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement and actually and reasonably incurred by such
person in connection with such Proceeding. Any such former or present
Director or officer of the Corporation finally determined to be entitled to
indemnification as provided in this Article 4 is hereinafter called an
"Indemnitee". Until such final determination is made, such former or present
Director or officer shall be a "Potential Indemnitee" for purposes of this
Article 4. Notwithstanding the foregoing provisions of this Section 4.1(a),
but subject to Section 4.5(c)(iv) hereof, the Corporation shall not indemnify
an Indemnitee with respect to any Proceeding commenced by such Indemnitee
unless the commencement of such Proceeding by such Indemnitee has been
approved by a majority vote of the Disinterested Directors (as defined in
Section 4.5(d)); provided, however, that such approval of a majority of the
Disinterested Directors shall not be required with respect to any Proceeding
commenced by such Indemnitee after a Change in Control (as defined in
Section 4.5(d)) has occurred.
(b) Neither the amendment or repeal of, nor the adoption of a provision
inconsistent with, any provision of this Article 4 (including, without
limitation, this Section 4.1(b)) shall adversely affect the rights of any
Director or officer under this Article 4 (i) with respect to any Proceeding
commenced or threatened prior to such amendment, repeal or adoption of an
inconsistent provision or (ii) after the occurrence of a Change in Control,
with respect to any Proceeding arising out of any action or omission
occurring prior to such amendment, repeal or adoption of an inconsistent
provision, in either case without the written consent of such Director or
officer.
4.2 Insurance, Contracts and Funding. The Corporation may purchase and
maintain insurance to protect itself and any Director, officer, employee or
agent of the Corporation or of any Covered Entity against any expenses,
judgments, fines and amounts paid in settlement as specified in
Section 4.1(a) or Section 4.6 of this Article 4 or incurred by any such
Director, officer, employee or agent in connection with any Proceeding
referred to in such Sections, to the fullest extent permitted by applicable
law. The Corporation may enter into contracts with any Director, officer,
employee or agent of the Corporation or of any Covered Entity in furtherance
of the provisions of this Article 4 and may create a trust fund, grant a
security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to
effect indemnification as provided in this Article 4.
4.3 Indemnification; Not Exclusive Right. The right of indemnification
provided in this Article 4 shall not be exclusive of any other rights to
which an Indemnitee or Potential Indemnitee may otherwise be entitled, and
the provisions of this Article 4 shall inure to the benefit of the heirs and
legal representatives of any Indemnitee or Potential Indemnitee under this
Article 4 and shall be applicable to Proceedings commenced or continuing
after the adoption of this Article 4, whether arising from acts or omissions
occurring before or after such adoption.
4.4 Advancement of Expenses. All reasonable expenses (including
attorneys' fees) incurred by or on behalf of any Potential Indemnitee in
connection with any Proceeding shall be advanced to such Potential Indemnitee
by the Corporation within 20 days after the receipt by the Corporation of a
statement or statements from such Potential Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall
reasonably evidence the expenses incurred by such Potential Indemnitee and,
if required by law at the time of such advance, shall include or be
accompanied by an undertaking by or on behalf of such Potential Indemnitee to
repay the amounts advanced if ultimately it should be determined that such
Potential Indemnitee is not entitled to be indemnified against such expenses
pursuant to this Article 4. Notwithstanding the foregoing provisions of this
Section 4.4, the Corporation shall not advance expenses to a Potential
Indemnitee with respect to any Proceeding commenced by such Potential
Indemnitee unless the commencement of such Proceeding by such Potential
Indemnitee has been approved by a majority vote of the Disinterested
Directors; provided, however, that such approval of a majority of the
Disinterested Directors shall not be required with respect to any Proceeding
commenced by such Potential Indemnitee after a Change in Control has
occurred.
4.5 Indemnification Procedures; Presumptions and Effect of Certain
Proceedings; Remedies; Definitions. In furtherance, but not in limitation,
of the foregoing provisions of this Article 4, the following procedures,
presumptions and remedies shall apply with respect to the right to
indemnification under this Article 4:
(a) Procedures for Determination of Entitlement to Indemnification.
(i) To obtain indemnification under this Article 4, a Potential Indemnitee
shall submit to the Secretary a written request, including such documentation
and information as is reasonably available to the Potential Indemnitee and
reasonably necessary to determine whether and to what extent the Potential
Indemnitee is entitled to indemnification (the "Supporting Documentation").
The determination of the Potential Indemnitee's entitlement to
indemnification shall be made not later than 60 days after the later of (A)
the receipt by the Corporation of the written request for indemnification
together with the Supporting Documentation and (B) the receipt by the
Corporation of written notice of final disposition of the Proceeding in
respect of which indemnification is sought. The Secretary shall, promptly
upon receipt of such a request for indemnification, advise the Board in
writing that the Potential Indemnitee has requested indemnification.
(ii) The Potential Indemnitee's entitlement to indemnification under
this Article 4 shall be determined in one of the following ways: (A) by a
majority vote of the Disinterested Directors, whether or not they constitute
a quorum of the Board; (B) by a committee of the Disinterested Directors
designated by a majority vote of the Disinterested Directors, whether or not
they constitute a quorum of the Board; (C) by a written opinion of
Independent Counsel (as defined in Section 4.5(d)) if (x) a Change in Control
shall have occurred and the Potential Indemnitee so requests or (y) there are
no Disinterested Directors or a majority of such Disinterested Directors so
directs; (D) by the stockholders of the Corporation; or (E) as provided in
Section 4.5(b) of this Article 4.
(iii) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 4.5(a)(ii), a
majority of the Disinterested Directors (or, if there are no Disinterested
Directors, the General Counsel of the Corporation or, if the General Counsel
is or was a party to the Proceeding in respect of which indemnification is
sought, the highest ranking officer of the Corporation who is not and was not
a party to such Proceeding) shall select the Independent Counsel, but only an
Independent Counsel to which the Potential Indemnitee does not reasonably
object; provided, however, that if a Change in Control shall have occurred,
the Potential Indemnitee shall select such Independent Counsel, but only an
Independent Counsel to which a majority of the Disinterested Directors does
not reasonably object.
(b) Presumptions and Effect of Certain Proceedings. Except as otherwise
expressly provided in this Article 4, if a Change in Control shall have
occurred, the Potential Indemnitee shall be presumed to be entitled to
indemnification under this Article 4 (with respect to actions or
omissions occurring prior to such Change in Control) upon submission of a
request for indemnification together with the Supporting Documentation in
accordance with Section 4.5(a)(i) of this Article 4, and thereafter the
Corporation shall have the burden of proof to overcome that presumption in
reaching a contrary determination. In any event, if the person or persons
empowered under Section 4.5(a) of this Article 4 to determine entitlement to
indemnification shall not have been appointed or shall not have made a
determination within 60 days after the later of (x) the receipt by the
Corporation of the written request for indemnification together with the
Supporting Documentation and (y) final disposition of the Proceeding in
respect of which indemnification is sought, the Potential Indemnitee shall be
deemed to be, and shall be, entitled to indemnification. The termination of
any Proceeding, or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the right of the Potential
Indemnitee to indemnification or create a presumption that the Potential
Indemnitee did not act in good faith and in a manner which the Potential
Indemnitee reasonably believed to be in or not opposed to the best interests
of the Corporation or, with respect to any criminal Proceeding, that the
Potential Indemnitee had reasonable cause to believe that his or her conduct
was unlawful.
(c) Remedies. (i) In the event that a determination is made pursuant to
Section 4.5(a) of this Article 4 that the Potential Indemnitee is not
entitled to indemnification under this Article 4, (A) the Potential
Indemnitee shall be entitled to seek an adjudication of his or her
entitlement to such indemnification either, at the Potential Indemnitee's
sole option, in (x) an appropriate court of the State of Delaware or any
other court of competent jurisdiction or (y) an arbitration to be conducted
by a single arbitrator pursuant to the rules of the American Arbitration
Association; (B) any such judicial proceeding or arbitration shall be de novo
and the Potential Indemnitee shall not be prejudiced by reason of such
adverse determination; and (C) if a Change in Control shall have occurred, in
any such judicial proceeding or arbitration, the Corporation shall have the
burden of proving that the Potential Indemnitee is not entitled to
indemnification under this Article 4 (with respect to actions or omissions
occurring prior to such Change in Control).
(ii) If a determination shall have been made or deemed to have been
made, pursuant to Section 4.5(a) or (b) of this Article 4, that the Potential
Indemnitee is entitled to indemnification, the Corporation shall be obligated
to pay the amounts constituting such indemnification within five days after
such determination has been made or deemed to have been made and shall be
conclusively bound by such determination unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the request
for indemnification or in the Supporting Documentation or (B) such
indemnification is prohibited by applicable law. In the event that payment
of indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Section 4.5(a) or (b) of this Article 4, the Indemnitee shall be
entitled to seek judicial enforcement of the Corporation's obligation to pay
to the Indemnitee such indemnification. Notwithstanding the foregoing, the
Corporation may bring an action, in an appropriate court in the State of
Delaware or any other court of competent jurisdiction, contesting the right
of the Indemnitee to receive indemnification hereunder due to the occurrence
of an event described in clause (A) or (B) of this subsection (each, a
"Disqualifying Event"); provided, however, that in any such action the
Corporation shall have the burden of proving the occurrence of such
Disqualifying Event.
(iii) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4.5(c) that the
procedures and presumptions of this Article 4 are not valid, binding and
enforceable and shall stipulate in any such court or before any such
arbitrator that the Corporation is bound by all the provisions of this
Article 4.
(iv) In the event that the Indemnitee or Potential Indemnitee, pursuant
to this Section 4.5(c), seeks a judicial adjudication of or an award in
arbitration to enforce his or her rights under, or to recover damages for
breach of, this Article 4, such person shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any
expenses actually and reasonably incurred by such person in connection with
such judicial adjudication or arbitration if such person prevails in such
judicial adjudication or arbitration. If it shall be determined in such
judicial adjudication or arbitration that such person is entitled to receive
part but not all of the indemnification or advancement of expenses sought,
the expenses incurred by such person in connection with such judicial
adjudication or arbitration shall be prorated accordingly.
(d) Definitions. For purposes of this Article 4:
(i) "Change in Control" means a change in control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) (or
any successor provision) of Schedule 14A of Regulation 14A (or any amendment
or successor provision thereto) promulgated under the Securities Exchange Act
of 1934, as amended (the "Act"), whether or not the Corporation is then
subject to such reporting requirement; provided that, without limitation,
such a change in control shall be deemed to have occurred if (A) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Corporation representing 15% or more of the
voting power of all outstanding shares of stock of the Corporation entitled
to vote generally in an election of Directors without the prior approval of
at least two-thirds of the members of the Board in office immediately prior
to such acquisition; (B) the Corporation is a party to any merger,
consolidation or share exchange (or other comparable transaction) in which
the Corporation is not the continuing or surviving corporation or pursuant to
which shares of the Corporation's Common Stock would be converted into cash,
securities or other property, other than a merger or share exchange in which
the holders of the Corporation's Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; (C) there is a sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Corporation,
or liquidation or dissolution of the Corporation; (D) the Corporation is a
party to a merger, consolidation, sale of assets or other reorganization, or
a proxy contest, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a
majority of the Board thereafter; or (E) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board
(including for this purpose any new Director whose election or nomination for
election by the stockholders was approved by a vote of at least two-thirds of
the Directors then still in office who were Directors at the beginning of
such period) cease for any reason to constitute at least a majority of the
Board.
(ii) "Disinterested Director" means a Director who is not and was not a
party to the Proceeding in respect of which indemnification is sought by the
Indemnitee or Potential Indemnitee.
(iii) "Independent Counsel" means a law firm or a member of a law firm
that neither presently is, nor in the past five years has been, retained to
represent: (a) the Corporation or the Indemnitee or Potential Indemnitee in
any matter material to either such party or (b) any other party to the
Proceeding giving rise to a claim for indemnification under this Article 4.
Notwithstanding the foregoing, the term "Independent Counsel" shall not
include any person who, under applicable standards of professional conduct
then prevailing under the law of the State of Delaware, would have a conflict
of interest in representing either the Corporation or the Indemnitee or
Potential Indemnitee in an action to determine the Indemnitee's or Potential
Indemnitee's rights under this Article 4.
4.6 Indemnification of Employees and Agents. Notwithstanding any other
provision of this Article 4, the Corporation, to the fullest extent permitted
by applicable law, may indemnify any person other than a Director or officer
of the Corporation who is or was an employee or agent of the Corporation and
who is or was involved in any manner (including, without limitation, as a
party or a witness) or is threatened to be made so involved
in any threatened, pending or completed Proceeding, by reason of the fact
that such person was or is an employee or agent of the Corporation or was or
is serving at the request of the Corporation as a director, officer, employee
or agent of a Covered Entity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such Proceeding. The
Corporation may also advance expenses incurred by such employee or agent in
connection with any such Proceeding, consistent with the provisions of
applicable law. If made or advanced, such indemnification shall be made and
such reasonable expenses shall be advanced pursuant to procedures to be
established from time to time by the Board.
4.7 Severability. If any provision or provisions of this Article 4
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (i) the validity, legality and enforceability of the remaining
provisions of this Article 4 (including, without limitation, all portions of
any Section of this Article 4 containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby; and
(ii) to the fullest extent possible, the provisions of this Article 4
(including, without limitation, all portions of any Section of this Article 4
containing any such provision held to be invalid, illegal or unenforceable,
that are not themselves invalid, illegal or unenforceable) shall be
construed, to the fullest extent possible, so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable.
5. CAPITAL STOCK.
5.1 Stock Certificates. The shares of the Corporation shall be
represented by certificates, provided that the Board may provide by
resolution or resolutions that some or all of any or all classes or series of
stock shall be uncertificated shares. Each certificate shall be signed by,
or in the name of, the Corporation by the Chairman of the Board, the Vice
Chairman of the Board, the President or any Vice President, and by the
Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary.
5.2 Record Ownership. A record of the name of the person, firm or
corporation and address of such holder of each certificate, the number of
shares represented thereby and the date of issue thereof shall be made on the
Corporation's books. The Corporation shall be entitled to treat the holder
of record of any share of stock as the holder in fact thereof, and
accordingly shall not be bound to recognize any equitable or other claim to
or interest in any share on the part of any person, whether or not it shall
have express or other notice thereof, except as required by applicable law.
5.3 Transfer of Record Ownership. Transfers of stock shall be made on
the books of the Corporation only by direction of the person named in the
certificate or such person's attorney, lawfully constituted in writing, and
only upon the surrender of the certificate therefor and a written assignment
of the shares evidenced thereby. Whenever any transfer of stock shall be
made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and transferee request the
Corporation to do so.
5.4 Transfer Agent; Registrar; Rules Respecting Certificates. The
Corporation shall maintain one or more transfer offices or agencies (which
may include the Corporation) where stock of the Corporation shall be
transferable. The Corporation shall also maintain one or more registry
offices (which may include the Corporation) where such stock shall be
registered. The Board may make such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of stock
certificates in accordance with applicable law.
6. SECURITIES HELD BY THE CORPORATION.
6.1 Voting. Unless the Board shall otherwise order, any officer of the
Corporation shall have full power and authority, on behalf of the
Corporation, to attend, act and vote at any meeting of the stockholders of
any corporation in which the Corporation may hold stock and at such meeting
to exercise any or all rights and powers incident to the ownership of such
stock, and to execute on behalf of the Corporation a proxy or proxies
empowering another or others to act as aforesaid. The Board from time to
time may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the
Corporation. (a) Any officer of the Corporation is hereby authorized and
empowered to transfer, convert, endorse, sell, assign and deliver any and all
shares of stock, bonds, debentures, notes, subscription warrants, stock
purchase warrants, evidences of indebtedness, or other securities now or
hereafter standing in the name of or owned by the Corporation, and to make,
execute and deliver any and all written instruments of assignment and
transfer necessary or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of assignment and
transfer executed pursuant to and in accordance with the foregoing
Section 6.2(a), a certificate of the Secretary or any Assistant Secretary in
office at the date of such certificate setting forth the provisions hereof
and stating that they are in full force and effect and setting forth the
names of persons who are then officers of the corporation, all persons to
whom such instrument and annexed certificate shall thereafter come shall be
entitled, without further inquiry or investigation and regardless of the date
of such certificate, to assume and to act in reliance upon the assumption
that (i) the shares of stock or other securities named in such instrument
were theretofore duly and properly transferred, endorsed, sold, assigned, set
over and delivered by the Corporation, and (ii) with respect to such
securities, the authority of these provisions of these By-laws and of such
officers is still in full force and effect.
7. DEPOSITARIES AND SIGNATORIES.
7.1 Depositaries. The Chief Financial Officer, the Treasurer and such
other persons as may from time to time be designated by either such officer
are authorized to designate depositaries for the funds of the Corporation
deposited in its name or that of a division of the Corporation, or both, and
the signatories with respect thereto in each case, and from time to time, to
change such depositaries and signatories, with the same force and effect as
if each such depositary and the signatories with respect thereto and changes
therein had been specifically designated or authorized by the Board; and each
depositary so designated shall be entitled to rely upon the certificate of
the Secretary or any Assistant Secretary of the Corporation or of a division
of the Corporation setting forth the fact of such designation and of the
appointment of the officers of the Corporation or of the division or of both
or of other persons who are to be signatories with respect to the withdrawal
of funds deposited with such depositary, or from time to time the fact of any
change in any depositary or in the signatories with respect thereto.
7.2 Signatories. All notes, drafts, checks, acceptances, orders for
the payment of money and all other negotiable instruments obligating the
Corporation for the payment of money shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board or of any committee thereof or by the Chief Financial
Officer, the Treasurer or such other persons as may from time to time be
designated by either such officer.
8. SEAL.
The seal of the Corporation shall be in such form and shall have such
content as the Board shall from time to time determine.
9. FISCAL YEAR.
The fiscal year of the Corporation shall end on December 31 in each
year, or on such other date as the Board shall determine.
10. AMENDMENT OF BY-LAWS.
Except as otherwise provided in the Certificate, these By-laws, or any
of them, may from time to time be supplemented, amended or repealed, or new
By-laws may be adopted, by the Board at any regular or special meeting of the
Board, if such supplement, amendment, repeal or adoption is approved by a
majority of the entire Board.
11. OFFICES AND AGENT.
(a) Registered Office and Agent. The address of the registered office
of the Corporation in the State of Delaware shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of the registered agent is The
Corporation Trust Company. Such registered agent has a business office
identical with such registered office.
(b) Other Offices. The Corporation may also have offices at other
places, either within or outside the State of Delaware, as the Board of
Directors may from time to time determine or as the business of the
Corporation may require.
EXHIBIT C
TO THE MERGER AGREEMENT
Trust Agreement Amendments
The following amendments to the Trust Agreement (such term and each
other capitalized term used but not defined in this Exhibit C shall have the
meaning ascribed to such terms in the Merger Agreement, as amended and
restated, to which this Exhibit C is attached) have been approved by the
affirmative vote of two-thirds of the Trustees of Northeast Utilities ("NU")
and will become effective in accordance with Articles (39) and (40) of the
Trust Agreement when the Trust Agreement Amendments have been approved by the
affirmative vote of the holders of two-thirds of the NU Common Shares
outstanding as of the date of the NU Shareholders Meeting:
1. Article (2) of the Trust Agreement is amended in its entirety to
read:
"(2). The number of the Trustees hereunder for each ensuing year
shall be such as may be fixed at each annual meeting of the shareholders
by a vote of at least a majority of the number of shares then
outstanding hereunder of such class or classes as then have general
voting power, except that if at any annual meeting no such number shall
be so fixed then the number for the ensuing year shall be the same as
for the year preceding. Notwithstanding the foregoing sentence, if a
merger of the association has been approved pursuant to Article (11A)
hereof, the number of Trustees from and after the effective time of such
merger may be fixed by the agreement providing for such merger (in which
case such number shall not be required to be fixed for any ensuing year
at any annual meeting of the shareholders), including, without
limitation, pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement") dated as of October 13, 1999, as amended and
restated as of January 11, 2000, among Consolidated Edison, Inc., a New
York corporation, the association, Consolidated Edison, Inc., originally
incorporated as CWB Holdings, Inc., a Delaware corporation and N
Acquisition LLC, a Massachusetts limited liability company."
2. The following new Article (11A) is added to the Trust Agreement:
"(11A). The Trustees are authorized to take or cause to be taken
all actions which they deem necessary or appropriate to implement and to
effectuate a merger of the association with or into one or more domestic
limited liability companies in accordance with Chapter 182 (Voluntary
Associations and Certain Trusts) of the Massachusetts General Laws, if
the same has been authorized by the affirmative vote, at a meeting
(which meeting may have preceded the effectiveness of this Article 11A)
duly called for such purpose, of two-thirds of all shares previously
issued and outstanding as of the date of such meeting of such class or
classes as have general voting power, including, without limitation, the
series of transactions provided for in the Merger Agreement. Upon the
effectiveness of any such merger, the rights of the holders of each
class of shares of the association shall be governed by the terms of the
agreement effecting such merger, including the Merger Agreement in the
case of the series of transactions provided for therein."
EXHIBIT D-1
Consolidated Edison, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Form of NU Affiliate Letter
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger dated as
of October 13, 1999, as amended and restated as of January 11, 2000 (the
"Merger Agreement"), among Consolidated Edison, Inc., a New York corporation
("CEI"), Northeast Utilities, a Massachusetts business trust ("NU"),
Consolidated Edison, Inc., originally incorporated as CWB Holdings, Inc., a
Delaware corporation ("New CEI"), and N Acquisition LLC, a Massachusetts
limited liability company ("Merger LLC"). Capitalized terms used but not
defined in this letter have the meanings given such terms in the Merger
Agreement.
The undersigned, a holder of shares of NU Common Shares, is
entitled to receive in connection with the NU Merger shares of Company Common
Stock. The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of NU within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act, although nothing contained herein should be
construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Company Common
Stock received by the undersigned in exchange for any shares of NU Common
Shares pursuant to the NU Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned (i) understands that such exemptions are limited
and that the Company is not under any obligation to effect any such
registration and (ii) has obtained advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act.
The undersigned hereby represents to and covenants with CEI and the
Company that the undersigned will not sell, assign or transfer any of the
Company Common Stock received by the undersigned in exchange for shares of NU
Common Shares pursuant to the NU Merger except (i) pursuant to an effective
registration statement under the Securities Act or (ii) in a transaction
that, in the opinion of counsel reasonably satisfactory to the Company or as
described in a "no-action" or interpretive letter from the Staff of the SEC,
is not required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned
pursuant to Rule 145, of Company Common Stock received by the undersigned in
the NU Merger, the undersigned will supply the Company with evidence of
compliance with such Rule, in the form of a letter in the form of Annex I
hereto and the opinion of counsel or no-action letter referred to above. The
undersigned understands that the Company may instruct its transfer agent to
withhold the transfer of any Company Common Stock disposed of by the
undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Company Common Stock sold
as indicated in the letter.
The undersigned acknowledges and agrees that (i) the Company Common
Stock issued to the undersigned will all be in certificated form and
(ii) appropriate legends will be placed on certificates representing Company
Common Stock received by the undersigned in the NU Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to the Company from counsel reasonably satisfactory to the
Company to the effect that such legends are no longer required for purposes
of the Securities Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Company
Common Stock and (ii) the receipt by CEI and the Company of this letter is an
inducement to CEI's and the Company's consummation of the Mergers.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT D-1
Consolidated Edison, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
On , the undersigned sold the securities of
Consolidated Edison, Inc. ("the Company") described below in the space
provided for that purpose (the "Securities"). The Securities were received
by the undersigned in connection with the merger of MERGER LLC with and into
NU.
Based upon the most recent report or statement filed by CEI with
the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in Rule 144(e)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
Dated:
[Space to be provided for description of securities.]
EXHIBIT D-2
Consolidated Edison, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Form of CEI Affiliate Letter
Dear Sirs:
The undersigned refers to the Agreement and Plan of Merger dated as
of October 13, 1999, as amended and restated as of January 11, 2000 (the
"Merger Agreement"), among Consolidated Edison, Inc., a New York corporation
("CEI"), Northeast Utilities, a Massachusetts business trust ("NU"),
Consolidated Edison, Inc., originally incorporated as CWB Holdings, Inc., a
Delaware corporation ("New CEI"), and N Acquisition LLC, a Massachusetts
limited liability company ("Merger LLC"). Capitalized terms used but not
defined in this letter have the meanings given such terms in the Merger
Agreement.
The undersigned, a holder of shares of CEI Common Stock, is
entitled to receive in connection with the CEI Merger shares of Company
Common Stock. The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of CEI within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act, although nothing contained herein
should be construed as an admission of such fact.
If in fact the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the Company Common
Stock received by the undersigned in exchange for any shares of CEI Common
Stock pursuant to the CEI Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned (i) understands that such exemptions are limited
and that the Company is not under any obligation to effect any such
registration and (ii) has obtained advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act.
The undersigned hereby represents to and covenants with NU and the
Company that the undersigned will not sell, assign or transfer any of the
Company Common Stock received by the undersigned in exchange for shares of
CEI Common Stock pursuant to the CEI Merger except (i) pursuant to an
effective registration statement under the Securities Act or (ii) in a
transaction that, in the opinion of counsel reasonably satisfactory to the
Company or as described in a "no-action" or interpretive letter from the
Staff of the SEC, is not required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned
pursuant to Rule 145, of Company Common Stock received by the undersigned in
the CEI Merger, the undersigned will supply the Company with evidence of
compliance with such Rule, in the form of a letter in the form of Annex I
hereto and the opinion of counsel or no-action letter referred to above. The
undersigned understands that the Company may instruct its transfer agent to
withhold the transfer of any Company Common Stock disposed of by the
undersigned, but that upon receipt of such evidence of compliance the
transfer agent shall effectuate the transfer of the Company Common Stock sold
as indicated in the letter.
The undersigned acknowledges and agrees that (i) the Company Common
Stock issued to the undersigned will all be in certificated form and
(ii) appropriate legends will be placed on certificates representing Company
Common Stock received by the undersigned in the CEI Merger or held by a
transferee thereof, which legends will be removed by delivery of substitute
certificates upon receipt of an opinion in form and substance reasonably
satisfactory to the Company from counsel reasonably satisfactory to the
Company to the effect that such legends are no longer required for purposes
of the Securities Act.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the limitations
imposed upon the distribution, sale, transfer or other disposition of Company
Common Stock and (ii) the receipt by NU and the Company of this letter is an
inducement to NU's and the Company's consummation of the Mergers.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT D-2
Consolidated Edison, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
On , the undersigned sold the securities of
Consolidated Edison, Inc. (the "Company") described below in the space
provided for that purpose (the "Securities"). The Securities were received
by the undersigned in connection with the merger of CEI with and into the
Company.
Based upon the most recent report or statement filed by CEI with
the Securities and Exchange Commission, the Securities sold by the
undersigned were within the prescribed limitations set forth in Rule 144(e)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities
Act or in transactions directly with a "market maker" as that term is defined
in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of
the Securities to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
Dated:
[Space to be provided for description of securities.]
EXHIBIT E
[Letterhead of CEI]
[Date]
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to
Sections 6.02(c) and 6.03(c) of the Agreement and Plan of Merger dated as of
October 13, 1999, as amended and restated as of January 11, 2000 (the "Merger
Agreement"), among Consolidated Edison, Inc., a New York corporation ("CEI"),
Northeast Utilities, a Massachusetts business trust ("NU"), Consolidated
Edison, Inc., originally incorporated as CWB Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of CEI (the "Company") and N
Acquisition LLC, a Massachusetts limited liability company ("Merger LLC"),
99% of which is owned by the Company and 1% of which is owned by X Holding
LLC, a Massachusetts limited liability company, 99% of which is owned by the
Company and 1% of which is owned by N Acquisition LLC, and in connection with
the filing with the Securities and Exchange Commission (the "SEC") of the
registration statement on Form S-4 (the "Registration Statement"), which
includes the proxy statement/prospectus of CEI and NU, each as amended and
supplemented through the date hereof, the undersigned certifies and
represents on behalf of CEI and as to CEI, after due inquiry and
investigation, as follows (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The Mergers will be consummated in accordance with the Merger
Agreement and as described in the Registration Statement. The facts relating
to the Mergers as described in the Registration Statement and the documents
referenced in the Registration Statement are, insofar as such facts relate to
CEI, true, correct and complete in all material respects.
2. The formula set forth in the Merger Agreement pursuant to which
each issued and outstanding share of common stock, par value $.10 per share,
of CEI (the "CEI Common Stock") and each share of CEI Common Stock held by
Consolidated Edison Company of New York, Inc. will be converted into common
shares, par value $.01 per share, of the Company (the "Company Common Stock")
is the result of arm's length bargaining. The aggregate fair market value of
the Company Common Stock to be received by each holder of CEI Common Stock in
the CEI Merger will be approximately equal to the fair market value of CEI
Common Stock surrendered in exchange therefor.
3. (i) Except to the extent specifically contemplated under the
Merger Agreement, neither CEI nor any corporation related to CEI has acquired
or has any present plan or intention to acquire any CEI Common Stock in
contemplation of the Mergers, or otherwise as part of a plan of which the
Mergers are a part.
(ii) For purposes of this representation letter, a
corporation shall be treated as related to CEI if such corporation is related
to CEI within the meaning of Treasury Regulation Section 1.368-1(e)(3).
4. CEI has not made and does not have any present plan or
intention to make any distributions (other than dividends made in the
ordinary course of business) to holders of CEI Common Stock prior to, in
contemplation of, or otherwise in connection with, the Mergers.
5. Except to the extent specifically contemplated under the Merger
Agreement, the Company, CEI and holders of CEI Common Stock will each pay
their respective expenses, if any, incurred in connection with the CEI
Merger. Except to the extent specifically contemplated under the Merger
Agreement, CEI has not agreed to assume, nor will it directly or indirectly
assume, any expense or other liability, whether fixed or contingent, of any
holder of CEI Common Stock. Further, no liabilities of any of the holders of
CEI Common Stock will be assumed by the Company, nor will any of the CEI
Common Stock acquired by the Company in connection with the CEI Merger be
subject to any liabilities.
6. Any liabilities of CEI that will be assumed by the Company
pursuant to the Mergers, and any liabilities to which the assets of CEI that
will be transferred to the Company pursuant to the Mergers are subject, were
incurred in the ordinary course of business and are associated with the
assets of CEI.
7. At the CEI Effective Time, the value of the Company Common
Stock issued to the holders of CEI Common Stock in the CEI Merger will
represent at least 50% of the value of the total consideration issued to such
holders in the CEI Merger in exchange for their shares of CEI Common Stock.
8. CEI is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as
amended (the "Code"), Section 351(e)(1) of the Code or Treasury Regulation
Section 1.351-1(c)(1)(ii).
9. CEI will not take, and to the best knowledge of the management
of CEI there is no present plan or intention by any holders of CEI Common
Stock to take, any position on any Federal, state or local income or
franchise tax return, or to take any other tax reporting position, that is
inconsistent (i) with the treatment of the Mergers as a transaction described
in Section 351 of the Code or (ii) with the treatment of the CEI Merger as a
reorganization within the meaning of Section 368(a) of the Code, in each case
unless otherwise required by a "determination" (as defined in Section
1313(a)(1) of the Code) or by applicable state or local tax law (and then
only to the extent required by such applicable state or local tax law).
10. None of the compensation received by any stockholder-employee
of CEI in respect of periods ending at or prior to the CEI Effective Time
represents separate consideration for any of his or her CEI Common Stock.
None of the Company Common Stock that will be received by any stockholder-
employee of CEI in the CEI Merger represents separately bargained for
consideration which is allocable to any employment agreement or arrangement.
The compensation paid to any stockholder-employees will be for services
actually rendered and will be determined by bargaining at arm's-length.
11. There is no intercorporate indebtedness existing between the
Company and CEI.
12. CEI is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
13. No assets of CEI have been sold, transferred or otherwise
disposed of which would prevent the Company or the Company's "qualified
group" of corporations (as defined in Treasury Regulation Section 1.368-
1(d)(4)(ii)) from continuing the "historic business" of CEI or from using a
significant portion of the "historic business assets" of CEI in a business
following the Mergers (as such terms are defined in Treasury Regulation
Section 1.368-1(d)).
14. At the CEI Effective Time, the fair market value of the assets
of CEI transferred to the Company pursuant to the CEI Merger will exceed the
sum of its liabilities assumed by the Company pursuant to the CEI Merger,
plus the amount of liabilities, if any, to which such assets are subject.
15. To the best knowledge of the management of CEI, there is no
present plan or intention on the part of the holders of CEI Common Stock to
sell, exchange or otherwise dispose of, or to enter into any contract or
other arrangement with respect to, any interest in the shares of Company
Common Stock received in the CEI Merger in exchange for such CEI Common Stock
such that the former holders of CEI Common Stock and the former holders of NU
Common Shares, in the aggregate, would not own (i) Company Common Stock
having at least 80% of the total combined voting power of all classes of
Company stock entitled to vote and (ii) at least 80% of the total number of
shares of each other class of Company stock.
16. CEI will not retain any rights in the CEI assets transferred
to the Company pursuant to the CEI Merger.
17. None of the stock of any CEI Subsidiary being transferred in
the CEI Merger is Section 306 stock within the meaning of Section 306(c) of
the Code.
18. To the best knowledge of the management of CEI and taking into
account any issuance of additional shares of Company Common Stock, any
issuance of Company Common Stock for services, the exercise of any Company
stock rights, options, warrants or subscriptions, any public offerings of
Company stock, and the sale, exchange, transfer by gift or other disposition
of any Company Common Stock received by holders of CEI Common Stock in the
CEI Merger, the holders of CEI Common Stock and NU Common Shares will
collectively be in "control" of the Company immediately after the Mergers.
For purposes of this representation letter, "control" shall mean the
ownership of (i) stock possessing at least 80% of the total combined voting
power of all classes of Company stock entitled to vote and (ii) at least 80%
of the total number of shares of each other class of Company stock.
19. The Company Common Stock issued in the Mergers will constitute
all of the Company's outstanding stock immediately after the Mergers. Except
as specifically set forth in the Merger Agreement, the Company will not issue
any Company Common Stock in connection with the Mergers in consideration for
services rendered to or for the benefit of the Company or any of its
affiliates, or in consideration for the transfer of any property other than
NU Common Shares and the associated NU Rights or CEI assets.
20. The NU Merger, the CEI Merger and the simultaneous exchange of
NU Common Shares and CEI Common Stock for Company Common Stock and cash are
all part of a single integrated transaction and no one part of the
transaction will be carried out without the entire transaction being
consummated in its entirety. All exchanges will occur on approximately the
same date.
21. Except for the activities required to accomplish the actions
to effect the Mergers, prior to the Effective Time, Merger LLC will have no
material assets or liabilities and will carry on no business.
22. To the best knowledge of the management of CEI, no foreign
person owns or has owned beneficially more than 5% of the total fair market
value of the CEI Common Stock during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
23. To the best knowledge of the management of CEI, the Company
will remain in existence and hold the CEI assets transferred to it for use in
its trade or business.
24. Throughout the period of time that the Yankee Merger Agreement
was negotiated and at the time the Yankee Merger Agreement was signed,
neither NU nor CEI had any plan or intention to engage, directly or
indirectly, in the transactions contemplated by the Merger Agreement.
25. Discussion concerning the transactions contemplated by the
Merger Agreement did not occur prior to
[ ].
26. To the best knowledge of the management of CEI, there is no
plan or intention on the part of the Yankee Shareholders to utilize the NU
Merger to have the Company acquire for cash the NU Common Shares issued to
them in the acquisition of Yankee pursuant to the Yankee Merger Agreement.
27. The Company's obligation under the Merger Agreement to acquire
NU Common Shares for cash was not undertaken at the request of Yankee or any
Yankee Shareholder.
28. The signing of the Merger Agreement was not dependent upon the
Yankee Shareholders' approval of the acquisition of Yankee pursuant to the
Yankee Merger Agreement.
29. The consummation of the transactions contemplated by the
Merger Agreement are not dependent on the closing of the acquisition of
Yankee pursuant to the Yankee Merger Agreement.
30. The Company has no plan or intention of repurchasing for cash
the NU Common Shares that will be issued to the Yankee Shareholders in the
acquisition of Yankee pursuant to the Yankee Merger Agreement, except as
required by Article II of the Merger Agreement.
31. Any actual purchase by the Company of any NU Common Shares for
cash will not be made at the request of Yankee or NU.
32. The Mergers are being undertaken for purposes of enhancing the
business of CEI and for other good and valid business purposes of CEI.
33. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of CEI with respect to the Mergers.
34. The undersigned is authorized to make all the representations
set forth herein on behalf of CEI.
The undersigned acknowledges that (i) the opinions to be delivered
pursuant to Sections 6.02(c) and 6.03(c) of the Merger Agreement will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) such opinions will be subject to
certain limitations and qualifications including that they may not be relied
upon if any such representations or warranties are not accurate or if any of
such covenants or obligations are not satisfied in all material respects.
The undersigned acknowledges that such opinions will not address
any tax consequences of the Mergers or any action taken in connection
therewith except as expressly set forth in such opinions.
Very truly yours,
CONSOLIDATED EDISON, INC.,
by
Name:
Title:
EXHIBIT F
[Letterhead of NU]
[Date]
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
6.02(c) and 6.03(c) of the Agreement and Plan of Merger dated as of October
13, 1999, as amended and restated as of January 11, 2000 (the "Merger
Agreement"), among Consolidated Edison, Inc., a New York corporation ("CEI"),
Northeast Utilities, a Massachusetts business trust ("NU"), Consolidated
Edison, Inc., originally incorporated as CWB Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of CEI (the "Company") and N
Acquisition LLC, a Massachusetts limited liability company ("Merger LLC"),
99% of which is owned by the Company and 1% of which is owned by X Holding
LLC, a Massachusetts limited liability company, 99% of which is owned by the
Company and 1% of which is owned by N Acquisition LLC, and in connection with
the filing with the Securities and Exchange Commission (the "SEC") of the
registration statement on Form S-4 (the "Registration Statement"), which
includes the proxy statement/prospectus of CEI and NU, each as amended and
supplemented through the date hereof, the undersigned certifies and
represents on behalf of NU and Merger LLC and as to NU and Merger LLC, after
due inquiry and investigation, as follows (any capitalized term used but not
defined herein having the meaning given to such term in the Merger
Agreement):
1. The Mergers will be consummated in accordance with the Merger
Agreement and as described in the Registration Statement. The facts relating
to the Mergers as described in the Registration Statement and the documents
referenced in the Registration Statement are, insofar as such facts relate to
NU and Merger LLC, true, correct and complete in all material respects.
2. The formula set forth in the Merger Agreement pursuant to which
each issued and outstanding common share of beneficial interest, par value
$5.00 per share, of NU (the "NU Common Shares"), together with the associated
NU Rights, will be converted into common shares, par value $.01 per share, of
the Company (the "Company Common Stock") or cash is the result of arm's
length bargaining. The aggregate fair market value of the Company Common
Stock and/or cash to be received by each holder of NU Common Shares and
associated NU Rights, in the NU Merger will be approximately equal to the
fair market value of the NU Common Shares and associated NU Rights
surrendered in exchange therefor.
3. NU has not made and does not have any present plan or intention
to make any distributions to holders of NU Common Shares (other than
dividends in the ordinary course of business) prior to, in contemplation of,
or otherwise in connection with, the Mergers.
4. Except to the extent specifically contemplated under the Merger
Agreement, the Company, NU, Merger LLC and the holders of NU Common Shares
will each pay their respective expenses, if any, incurred in connection with
the NU Merger. Except to the extent specifically contemplated under the
Merger Agreement, NU has not agreed to assume, nor will it directly or
indirectly assume, any expense or other liability, whether fixed or
contingent, of any holder of NU Common Shares. Except with respect to
Transfer Taxes, NU has not entered into any arrangement pursuant to which the
Company has agreed to assume, directly or indirectly, any expense or other
liability, whether fixed or contingent, incurred or to be incurred by NU or
any holder of NU Common Shares in connection with or as part of the NU Merger
or any related transactions, nor will any of the NU Common Shares that is
acquired by the Company in connection with the NU Merger be subject to any
such liabilities.
5. NU is not an investment company as defined in Section 368(a)(2)(F)(iii)
and (iv) of the Internal Revenue Code of 1986, as amended (the "Code"),
Section 351(e)(1) of the Code or Treasury Regulation Section 1.351-
1(c)(1)(ii).
6. NU will not take, and, to the best knowledge of the management of
NU there is no present plan or intention of any holders of NU Common Shares
to take, any position on any Federal, state or local income or franchise tax
return, or take any other tax reporting position, that is inconsistent (i)
with the treatment of the Mergers as a transaction described in Section 351
of the Code or (ii) with the treatment of the CEI Merger as a reorganization
within the meaning of Section 368(a) of the Code, in each case unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of
the Code) or by applicable state or local tax law (and then only to the
extent required by such applicable state or local tax law).
7. None of the compensation received by any stockholder-employee of
NU in respect of periods ending at or prior to the NU Effective Time
represents separate consideration for any of his or her NU Common Shares or
associated NU Rights. None of the Company Common Stock that will be received
by any stockholder-employee of NU in the NU Merger represents separately
bargained for consideration which is allocable to any employment agreement or
arrangement. The compensation paid to any stockholder-employees will be for
services actually rendered and will be determined by bargaining at arm's-
length.
8. There is no intercorporate indebtedness existing between the Company and
NU.
9. NU is not under the jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code.
10. At the NU Effective Time, the fair market value of the assets of
NU will exceed the sum of its liabilities, plus the amount of liabilities, if
any, to which such assets are subject.
11. To the best knowledge of the management of NU, there is no
present plan or intention on the part of the holders of NU Common Shares to
sell, exchange or otherwise dispose of, or to enter into any contract or
other arrangement with respect to, any interest in the shares of Company
Common Stock received in the NU Merger in exchange for such NU Common Shares
and associated NU Rights such that the former holders of CEI Common Stock and
the former holders of NU Common Shares, in the aggregate, would not own (i)
Company Common Stock having at least 80% of the total combined voting power
of all classes of Company stock entitled to vote and (ii) at least 80% of the
total number of shares of each other class of Company stock.
12. None of the holders of NU Common Shares will retain any rights in
the NU Common Shares or associated NU Rights transferred to the Company
pursuant to the NU Merger.
13. The Company will not receive any accounts receivable in the NU
Merger.
14. To the best knowledge of the management of NU and taking into account
any issuance of additional shares of Company Common Stock, any issuance
of Company Common Stock for services, the exercise of any Company stock
rights, options, warrants or subscriptions, any public offerings of Company
stock, and the sale, exchange, transfer by gift or other disposition of any
Company Common Stock received by holders of NU Common Shares in the NU
Merger, the holders of NU Common Shares and CEI Common Stock will
collectively be in "control" of the Company immediately after the Mergers.
For purposes of this representation letter, "control" shall mean the
ownership of (i) stock possessing at least 80% of the total combined voting
power of all classes of Company stock entitled to vote and (ii) at least 80%
of the total number of shares of each other class of Company stock.
15. The Company Common Stock issued in the Mergers will constitute
all of the Company's outstanding stock immediately after the Mergers. Except
as specifically set forth in the Merger Agreement, the Company will not issue
any Company Common Stock in connection with the Mergers in consideration for
services rendered to or for the benefit of the Company or any of its
affiliates, or in consideration for the transfer of any property other than
NU Common Shares and the associated NU Rights or CEI assets.
16. The NU Merger, the CEI Merger and the simultaneous exchange of NU
Common Shares and CEI Common Stock for Company Common Stock and cash are all
part of a single integrated transaction and no one part of the transaction
will be carried out without the entire transaction being consummated in its
entirety. All exchanges will occur on approximately the same date.
17. Except for the activities required to accomplish the actions to
effect the Mergers, prior to the Effective Time, Merger LLC will have no
material assets or liabilities and will carry on no business.
18. To the best knowledge of the management of NU, no foreign person
owns or has owned beneficially more than 5% of the total fair market value of
the NU Common Shares during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
19. To the best knowledge of the management of NU, the Company will
remain in existence and hold the NU Common Shares transferred to it for use
in its trade or business.
20. Throughout the period of time that the Yankee Merger Agreement
was negotiated and at the time the Yankee Merger Agreement was signed,
neither NU nor CEI had any plan or intention to engage, directly or
indirectly, in the transactions contemplated by the Merger Agreement.
21. Discussion concerning the transactions contemplated by the Merger
Agreement did not occur prior to [ ].
22. To the best knowledge of the management of NU, there is no plan
or intention on the part of the Yankee Shareholders to utilize the NU Merger
to have the Company acquire for cash the NU Common Shares issued to them in
the acquisition of Yankee pursuant to the Yankee Merger Agreement.
23. The Company's obligation under the Merger Agreement to acquire NU
Common Shares for cash was not undertaken at the request of Yankee or any
Yankee Shareholder.
24. The signing of the Merger Agreement was not dependent upon the
Yankee Shareholders' approval of the acquisition of Yankee pursuant to the
Yankee Merger Agreement.
25. The consummation of the transactions contemplated by the Merger
Agreement are not dependent on the closing of the acquisition of Yankee
pursuant to the Yankee Merger Agreement.
26. The Company has no plan or intention of repurchasing for cash the
NU Common Shares that will be issued to the Yankee Shareholders in the
acquisition of Yankee pursuant to the Yankee Merger Agreement, except as
required by Article II of the Merger Agreement.
27. Any actual purchase by the Company of any NU Common Shares for
cash will not be made at the request of Yankee or NU.
28. Throughout the period of time that the Yankee Merger Agreement
was negotiated and at the time the Yankee Merger Agreement was signed, NU had
no plan or intention to engage, directly or indirectly, in any transactions
pursuant to which holders of NU Common Shares would exchange, either directly
or indirectly, such shares for (i) stock, or any other equity interest,
issued by any person other than NU or (ii) cash or other property provided by
any person.
29. The Mergers are being undertaken for purposes of enhancing the
business of NU and for other good and valid business purposes of NU.
30. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of NU and Merger LLC with respect to the Mergers.
31. The undersigned is authorized to make all the representations set
forth herein on behalf of NU and Merger LLC.
The undersigned acknowledges that (i) the opinions to be delivered
pursuant to Sections 6.02(c) and 6.03(c) of the Merger Agreement will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) such opinions will be subject to
certain limitations and qualifications including that they may not be relied
upon if any such representations or warranties are not accurate or if any
such covenants or obligations are not satisfied in all material respects.
The undersigned acknowledges that such opinions will not address any
tax consequences of the Mergers or any action taken in connection therewith
except as expressly set forth in such opinions.
Very truly yours,
NORTHEAST UTILITIES,
by
Name:
Title:
EXHIBIT G
[Letterhead of Consolidated Edison, Inc.]
[Date]
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with the opinions to be delivered pursuant to Sections
6.02(c) and 6.03(c) of the Agreement and Plan of Merger dated as of October
13, 1999, as amended and restated as of January 11, 2000 (the "Merger
Agreement"), among Consolidated Edison, Inc., a New York corporation ("CEI"),
Northeast Utilities, a Massachusetts business trust ("NU"), Consolidated
Edison, Inc., originally incorporated as CWB Holdings, Inc., a Delaware
corporation and a wholly owned subsidiary of CEI (the "Company") and N
Acquisition LLC, a Massachusetts limited liability company ("Merger LLC"),
99% of which is owned by the Company and 1% of which is owned by X Holding
LLC, a Massachusetts limited liability company, 99% of which is owned by the
Company and 1% of which is owned by N Acquisition LLC, and in connection with
the filing with the Securities and Exchange Commission (the "SEC") of the
registration statement on Form S-4 (the "Registration Statement"), which
includes the proxy statement/prospectus of CEI and NU, each as amended and
supplemented through the date hereof, the undersigned certifies and
represents on behalf of the Company and as to the Company, after due inquiry
and investigation, as follows (any capitalized term used but not defined
herein having the meaning given to such term in the Merger Agreement):
1. The Mergers will be consummated in accordance with the Merger
Agreement and as described in the Registration Statement. The facts relating
to the Mergers as described in the Registration Statement and the documents
referenced in the Registration Statement are, insofar as such facts relate to
the Company, true, correct and complete in all material respects.
2. The formulae set forth in the Merger Agreement pursuant to which
each issued and outstanding share of common stock, par value $.10 per share,
of CEI (the "CEI Common Stock") and each share of CEI Common Stock held by
Consolidated Edison Company of New York, Inc. will be converted into common
shares, par value $.01 per share, of the Company (the "Company Common Stock")
and each issued and outstanding common share of beneficial interest, par
value $5.00 per share, of NU (the "NU Common Shares"), together with the
associated NU Rights, will be converted into Company Common Stock or cash are
the result of arm's length bargaining. The aggregate fair market value of
the Company Common Stock to be received by holders of CEI Common Stock in the
CEI Merger will be approximately equal to the fair market value of the CEI
Common Stock surrendered in exchange therefor. The aggregate fair market
value of the Company Common Stock and/or cash to be received by holders of NU
Common Shares and associated NU Rights in the NU Merger will be approximately
equal to the fair market value of the NU Common Shares and associated NU
Rights surrendered in exchange therefor.
3. (i) The Company has no present plan or intention, following the
Mergers, to reacquire, or to cause any corporation that is related to the
Company to acquire, any Company Common Stock issued in the Mergers, except
for repurchases of Company Common Stock by the Company in connection with a
repurchase program meeting the requirements of Section 4.05(1)(b) of Revenue
Procedure 96-30. No corporation that is related to the Company has a plan or
intention to purchase any of the Company Common Stock issued in the Mergers.
(ii) For purposes of this representation letter, a corporation
shall be treated as related to the Company if such corporation is related to
the Company within the meaning of Treasury Regulation Section 1.368-1(e)(3).
4. The Company has not acquired, nor, except as a result of the CEI
Merger will it acquire, nor has it owned in the past five years, any CEI
Common Stock. The Company has not acquired, nor, except as a result of the
NU Merger will it acquire, nor has it owned in the past five years, any NU
Common Shares.
5. The Company has no present plan or intention to make any
distributions after the Mergers to holders of Company Common Stock (other
than dividends made in the ordinary course of business).
6. At the CEI Effective Time, the value of the Company Common Stock
to be issued to holders of CEI Common Stock in the CEI Merger will represent
at least 50% of the value of the total consideration to be issued to such
holders in the CEI Merger in exchange for their shares of CEI Common Stock.
Further, no liabilities of NU or any of the holders of NU Common Shares and
no liabilities of any of the holders of CEI Common Stock, whether fixed or
contingent, incurred or to be incurred, will be assumed by the Company, nor
will any of the NU Common Shares or CEI Common Stock acquired by the Company
in connection with the Mergers be subject to any such liabilities.
7. Except to the extent specifically contemplated under the Merger
Agreement, CEI, NU, Merger LLC, the Company and holders of CEI Common Stock
and NU Common Shares will each pay their respective expenses, if any,
incurred in connection with the Mergers. Except with respect to Transfer
Taxes, the Company has not paid, directly or indirectly, nor has it agreed to
assume any expense or other liability, whether fixed or contingent, incurred
or to be incurred by NU, any holder of NU Common Shares or any holder of CEI
Common Stock in connection with or as part of the Mergers or any related
transactions.
8. Following the CEI Merger, the Company or the Company's "qualified group"
of corporations (as defined in Treasury Regulation Section 1.368-1(d)(4)(ii))
will continue the "historic business" of CEI or use a significant portion of
CEI's "historic business assets" in a business (as such terms are defined in
Treasury Regulation Section 1.368-1(d)). Following the NU Merger, the
Company will cause NU to continue its historic business or to use a
significant portion of its historic business assets in a trade or business.
9. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code, Section 351(e)(1) of the Code
or Treasury Regulation Section 1.351-1(c)(1)(ii).
10. The Company will not take any position on any Federal, state or
local income or franchise tax return, or take any other tax reporting
position, that is inconsistent (i) with the treatment of the Mergers as a
transaction described in Section 351 of the Code or (ii) with the treatment
of the CEI Merger as a reorganization within the meaning of Section 368(a) of
the Code, in each case unless otherwise required by a "determination" (as
defined in Section 1313(a)(1) of the Code) or by applicable state or local
tax law (and then only to the extent required by such applicable state or
local tax law).
11. None of the compensation received by any stockholder-employee
of CEI in respect of periods ending at or prior to the CEI Effective Time
represents separate consideration for any of his or her CEI Common Stock.
None of the compensation received by any stockholder-employee of NU in
respect of periods ending at or prior to the NU Effective Time represents
separate consideration for any of his or her NU Common Shares or associated
NU Rights. None of the Company Common Stock that will be received by any
stockholder-employee of CEI or NU in the Mergers represents separately
bargained for consideration which is allocable to any employment agreement or
arrangement. The compensation paid to any stockholder-employees will be for
services actually rendered and will be determined by bargaining at arm's-
length.
12. There is no intercorporate indebtedness existing between (i)
the Company and CEI or (ii) the Company and NU.
13. The Company is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
14. To the best knowledge of the management of the Company and
taking into account any issuance of additional shares of Company Common
Stock, any issuance of Company Common Stock for services, the exercise of any
Company stock rights, options, warrants or subscriptions, any public
offerings of Company stock, and the sale, exchange, transfer by gift or other
disposition of any Company Common Stock received in the Mergers, the holders
of CEI Common Stock and NU Common Shares will collectively be in "control" of
the Company immediately after the Mergers. For purposes of this
representation letter, "control" shall mean the ownership of (i) stock
possessing at least 80% of the total combined voting power of all classes of
Company stock entitled to vote and (ii) at least 80% of the total number of
shares of each other class of Company stock.
15. The Company has no present plan or intention to, or to cause
any of its affiliates to, (i) liquidate the Company or NU, (ii) merge (other
than in connection with the CEI Merger), liquidate or consolidate the Company
or NU with or into any other entity (including, without limitation, any
affiliate), (iii) sell, transfer, distribute or otherwise dispose of the NU
Common Shares or associated NU Rights or interests in any of its material
affiliates or (iv) sell, transfer, distribute or otherwise dispose of any of
the material assets of CEI, NU or their affiliates acquired in the Mergers
(other than in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Code or Treasury Regulation Section 1.368-2(k)
that also qualify as transactions described in Section 351 of the Code).
16. The Company Common Stock issued in the Mergers will constitute
all of the Company's outstanding stock immediately after the Mergers. Except
as specifically set forth in the Merger Agreement, the Company will not issue
any Company Common Stock in connection with the Mergers in consideration for
services rendered to or for the benefit of the Company or any of its
affiliates, or in consideration for the transfer of any property other than
NU Common Shares and the associated NU Rights or CEI assets.
17. None of the holders of NU Common Shares will retain any rights
in the NU Common Shares or associated NU Rights transferred to the Company
pursuant to the NU Merger. CEI will not retain any rights in the CEI assets
transferred to the Company pursuant to the CEI Merger.
18. The NU Merger, the CEI Merger and the simultaneous exchange of
NU Common Shares and CEI Common Stock for Company Common Stock and cash are
all part of a single integrated transaction and no one part of the
transaction will be carried out without the entire transaction being
consummated in its entirety. All exchanges will occur on approximately the
same date.
19. Except for the activities required to accomplish the actions to
effect the Mergers, prior to the Effective Time, Merger LLC will have no
material assets or liabilities and will carry on no business.
20. To the best knowledge of the management of the Company, no
foreign person owns or has owned beneficially more than 5% of the total fair
market value of (i) the NU Common Shares or (ii) the CEI Common Stock, in
each case, during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
21. The Company will remain in existence and hold the NU Common
Shares and CEI assets transferred to it for use in its trade or business.
22. Throughout the period of time that the Yankee Merger Agreement
was negotiated and at the time the Yankee Merger Agreement was signed,
neither NU nor CEI had any plan or intention to engage, directly or
indirectly, in the transactions contemplated by the Merger Agreement.
23. Discussion concerning the transactions contemplated by the
Merger Agreement did not occur prior to [ ].
24. To the best knowledge of the management of the Company, there
is no plan or intention on the part of the Yankee Shareholders to utilize the
NU Merger to have the Company acquire for cash the NU Common Shares issued to
them in the acquisition of Yankee pursuant to the Yankee Merger Agreement.
25. The Company's obligation under the Merger Agreement to acquire
NU Common Shares for cash was not undertaken at the request of Yankee or any
Yankee Shareholder.
26. The signing of the Merger Agreement was not dependent upon the
Yankee Shareholders' approval of the acquisition of Yankee pursuant to the
Yankee Merger Agreement.
27. The consummation of the transactions contemplated by the Merger
Agreement are not dependent on the closing of the acquisition of Yankee
pursuant to the Yankee Merger Agreement.
28. The Company has no plan or intention of repurchasing for cash
the NU Common Shares that will be issued to the Yankee Shareholders in the
acquisition of Yankee pursuant to the Yankee Merger Agreement, except as
required by Article II of the Merger Agreement.
29. Any actual purchase by the Company of any NU Common Shares for
cash will not be made at the request of Yankee or NU.
30. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement represent the entire
understanding of the Company with respect to the Mergers.
31. The Mergers are being undertaken for purposes of enhancing the
business of the Company and for other good and valid business purposes of the
Company.
32. The Company is not a personal service corporation within the
meaning of Section 269A of the Code.
33. The undersigned is authorized to make all the representations
set forth herein on behalf of the Company.
The undersigned acknowledges that (i) the opinions to be delivered
pursuant to Sections 6.02(c) and 6.03(c) of the Merger Agreement will be
based on the accuracy of the representations set forth herein and on the
accuracy of the representations and warranties and the satisfaction of the
covenants and obligations contained in the Merger Agreement and the various
other documents related thereto, and (ii) such opinions will be subject to
certain limitations and qualifications including that they may not be relied
upon if any such representations or warranties are not accurate or if any
such covenants or obligations are not satisfied in all material respects.
The undersigned acknowledges that such opinions will not address any
tax consequences of the Mergers or any action taken in connection therewith
except as expressly set forth in such opinions.
Very truly yours,
CONSOLIDATED EDISON, INC., formerly CWB
Holdings, Inc.,
by
Name:
Title:
