EXHIBIT 2
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CONNECTICUT ENERGY CORPORATION,
ENERGY EAST CORPORATION
AND
MERGER CO.,
dated as of April 23, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ 1
Section 1.2 Effects of the Merger..................................... 1
Section 1.3 Effective Time of the Merger.............................. 2
Section 1.4 Directors................................................. 2
Section 1.5 Officers.................................................. 2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock..................... 2
Section 2.2 Exchange of Certificates.................................. 6
ARTICLE III
THE CLOSING
Section 3.1 Closing................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification............................ 9
Section 4.2 Subsidiaries.............................................. 9
Section 4.3 Capitalization............................................ 10
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance................................................ 10
Section 4.5 Reports and Financial Statements.......................... 12
Section 4.6 Absence of Certain Changes or Events...................... 13
Section 4.7 Litigation................................................ 13
Section 4.8 Registration Statement and Proxy Statement................ 13
Section 4.9 Tax Matters............................................... 13
Section 4.10 Employee Matters; ERISA................................... 15
Section 4.11 Environmental Protection.................................. 19
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Section 4.12 Regulation as a Utility................................... 21
Section 4.13 Vote Required............................................. 21
Section 4.14 Opinion of Financial Advisor.............................. 21
Section 4.15 Ownership of Parent Common Stock.......................... 21
Section 4.16 Takeover Laws; Rights Plans............................... 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification............................ 22
Section 5.2 Subsidiaries.............................................. 22
Section 5.3 Capitalization............................................ 23
Section 5.4 Authority; Non-Contravention; Statutory Approvals;
Compliance................................................ 23
Section 5.5 Reports and Financial Statements.......................... 25
Section 5.6 Absence of Certain Changes or Events...................... 25
Section 5.7 Litigation................................................ 25
Section 5.8 Registration Statement and Proxy Statement................ 25
Section 5.9 Regulation as a Utility................................... 26
Section 5.10 Ownership of the Company Common Stock..................... 26
Section 5.11 Environmental Protection.................................. 26
Section 5.12 Operations of Nuclear Power Plant......................... 27
Section 5.13 Code Section 368(a)....................................... 27
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Parties.................................. 27
Section 6.2 Covenant of the Company; Alternative Proposals............ 31
Section 6.3 Covenant of Parent; Employment Agreements................. 32
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information..................................... 32
Section 7.2 Proxy Statement and Registration Statement................ 33
Section 7.3 Regulatory Matters........................................ 34
Section 7.4 Shareholder Approval...................................... 34
Section 7.5 Directors'and Officers'Indemnification.................... 34
Section 7.6 Disclosure Schedules...................................... 36
Section 7.7 Public Announcements...................................... 36
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Section 7.8 Rule 145 Affiliates....................................... 36
Section 7.9 Certain Employee Agreements............................... 36
Section 7.10 Employee Benefit Plans.................................... 37
Section 7.11 Company Stock Plans....................................... 38
Section 7.12 Expenses.................................................. 38
Section 7.13 Further Assurances........................................ 38
Section 7.14 Corporate Offices......................................... 38
Section 7.15 Community Involvement..................................... 38
Section 7.16 Advisory Board............................................ 39
Section 7.17 Tax-Free Status........................................... 39
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................... 39
Section 8.2 Conditions to Obligation of Parent to Effect the Merger... 40
Section 8.3 Conditions to Obligation of the Company to Effect the
Merger.................................................... 41
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................... 42
Section 9.2 Effect of Termination..................................... 44
Section 9.3 Termination Fee; Expenses................................. 44
Section 9.4 Amendment................................................. 45
Section 9.5 Waiver.................................................... 45
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties.... 45
Section 10.2 Brokers................................................... 45
Section 10.3 Notices................................................... 46
Section 10.4 Miscellaneous............................................. 47
Section 10.5 Interpretation............................................ 47
Section 10.6 Counterparts; Effect...................................... 47
Section 10.7 Parties in Interest....................................... 47
Section 10.8 Waiver of Jury Trial and Certain Damages.................. 47
Section 10.9 Enforcement............................................... 47
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AGREEMENT AND PLAN OF MERGER, dated as of April 23, 1999 (this
"Agreement"), by and among Connecticut Energy Corporation, a Connecticut
corporation (the "Company"), Energy East Corporation, a New York corporation
("Parent"), and Merger Co., a Connecticut corporation and a wholly owned
subsidiary of Parent ("Merger Sub").
WHEREAS, the Company and Parent have determined to engage in a
business combination transaction on the terms stated herein;
WHEREAS, the Boards of Directors of the Company and Parent
have approved and deemed it advisable and in the best interests of their
respective shareholders to consummate the transactions contemplated herein under
which the businesses of the Company and Parent would be combined by means of the
merger of the Company with and into Merger Sub; and
WHEREAS, it is intended that the Merger (as defined below)
shall constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the
conditions of this Agreement:
At the Effective Time (as defined in Section 1.3), the Company
shall be merged with and into Merger Sub (the "Merger") in accordance with the
laws of the State of Connecticut. Merger Sub shall be the surviving corporation
in the Merger and shall continue its corporate existence under the laws of the
State of Connecticut. The effects and the consequences of the Merger shall be as
set forth in Section 1.2. Throughout this Agreement, the term "Merger Sub" shall
refer to Merger Sub prior to the Merger and the term "Surviving Corporation"
shall refer to Merger Sub in its capacity as the surviving corporation in the
Merger.
SECTION 1.2 EFFECTS OF THE MERGER. At the Effective Time, (i)
the certificate of incorporation of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
certificate of incorporation, except that the name of the Surviving Corporation
shall be "Connecticut Energy Corporation," and (ii) the by-laws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the by-laws of
the Surviving Corporation until thereafter amended as provided by law, the
certificate of incorporation of the Surviving Corporation and such by-laws.
Subject to the foregoing, the additional effects of the Merger
shall be as provided in Section 33-820 of the Connecticut Business Corporation
Act (the "CBCA").
SECTION 1.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date
(as defined in Section 3.1), with respect to the Merger, a certificate of merger
complying with Section 33-819 of the CBCA (the "Certificate of Merger") shall be
delivered to the Secretary of the State of Connecticut for filing. The Merger
shall become effective upon the filing of the Certificate of Merger, or at such
later date and time as may be set forth in the Certificate of Merger (the
"Effective Time").
SECTION 1.4 DIRECTORS. The directors of Merger Sub
immediately prior to the Effective Time and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be the
directors of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the certificate of incorporation and by-laws
of the Surviving Corporation, or as otherwise provided by the CBCA. In addition,
in accordance with the by-laws of Parent, the Board of Directors of Parent shall
increase by one the number of directors on the Board of Directors of Parent and
shall thereupon elect as a director a director of the Company designated by the
Company and reasonably acceptable to Parent (which director shall not be an
employee of the Surviving Corporation).
SECTION 1.5 OFFICERS. Commencing at the Effective Time, and
continuing until his successor is duly elected or appointed and qualified in the
manner provided in the by-laws of the Surviving Corporation, ▇▇. ▇▇▇▇▇▇ shall be
the President, Chief Executive Officer and Chairman of the Board of Directors of
the Surviving Corporation and shall hold officer positions in other subsidiary
corporations of Parent as specified in his Employment Agreement (as defined in
Section 6.3 hereof). Except for the President, Chief Executive Officer and
Chairman of the Board of Directors of Merger Sub, the officers of Merger Sub
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the certificate of incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by the CBCA.
ARTICLE II
TREATMENT OF SHARES
SECTION 2.1 EFFECT OF THE MERGER ON CAPITAL STOCK. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company or Merger Sub:
(a) Shares of Merger Sub Stock. Each share of common stock,
par value $1.00 per share, of Merger Sub (the "Merger Sub Common Stock") that is
issued and outstanding immediately prior to the Effective Time shall remain
outstanding unchanged by reason of the Merger as one fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
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(b) Cancellation of Certain Company Common Stock. Each share
of common stock, par value $1.00 per share, of the Company, including each
attached right (a "Company Right") issued pursuant to the Rights Agreement,
dated July 28, 1998 (the "Company Rights Agreement"), between the Company and
BankBoston, N.A. (the "Company Common Stock"), that is owned by the Company as
treasury stock and all shares of Company Common Stock that are owned by Parent
shall be canceled and shall cease to exist, and no stock of Parent or other
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the
provisions of this Section 2.1, each share of Company Common Stock, other than
Dissenting Shares (as defined in Section 2.1(n)) and shares canceled pursuant to
Section 2.1(b), issued and outstanding immediately prior to the Effective Time
(other than shares held as treasury shares by the Company) shall by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive (i) $42 in cash (the "Cash Consideration")
or (ii) a number of validly issued, fully paid and nonassessable shares of
Parent Common Stock equal to the Exchange Ratio (as defined below) (the "Stock
Consideration") or (iii) the right to receive a combination of cash and shares
of Parent Common Stock determined in accordance with this Section (the "Mixed
Consideration"). The "Exchange Ratio" shall be equal to the Cash Consideration
divided by either (i) the Parent Share Price (as defined below) if the Parent
Share Price is equal to or less than $29.40 and equal to or more than $23.10,
(ii) $29.40 if the Parent Share Price is greater than $29.40, in which case the
Exchange Ratio shall equal 1.43, or (iii) $23.10 if the Parent Share Price is
less than $23.10, in which case the Exchange Ratio shall equal 1.82. The "Parent
Share Price" shall be equal to the average of the closing prices of the shares
of Parent Common Stock on the New York Stock Exchange ("NYSE") Composite
Transactions Reporting System, as reported in The Wall Street Journal, for the
20 trading days immediately preceding the second trading day prior to the
Effective Time.
(d) Cash Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Effective Time shall be entitled to elect to receive cash for all or any
part of such holder's shares of Company Common Stock (a "Cash Election").
Notwithstanding the foregoing and subject to Section 2.1(l), the aggregate
number of shares of Company Common Stock that may be converted into the right to
receive cash in the Merger (the "Cash Election Number") will be 50% of the total
number of shares of Company Common Stock issued and outstanding as of the close
of business on the third trading day prior to the Effective Time. Cash Elections
shall be made on a form designed for that purpose (a "Form of Election"). A
holder of record of shares of Company Common Stock who holds such shares as
nominee, trustee or in another representative capacity (a "Representative") may
submit multiple Forms of Election, provided that such Representative certifies
that each such Form of Election covers all the shares of Company Common Stock
held by such Representative for a particular beneficial owner.
(e) Cash Election Shares. If the aggregate number of shares
of Company Common Stock covered by Cash Elections (the "Cash Election Shares")
exceeds the Cash Election Number, each Cash Election Share shall be converted
into (i) the right to receive an amount in cash, without interest, equal to the
product of (a) the Cash Consideration and (b) a
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fraction (the "Cash Fraction"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of shares of Parent Common Stock equal to the
product of (a) the Exchange Ratio and (b) a fraction equal to one minus the Cash
Fraction.
(f) Stock Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Effective Time shall be entitled to elect to receive shares of Parent
Common Stock for all or any part of such holder's shares of Company Common Stock
(a "Stock Election"). Notwithstanding the foregoing and subject to Section
2.1(l), the aggregate number of shares of Company Common Stock that may be
converted into the right to receive shares of Parent Common Stock in the Merger
(the "Stock Election Number") shall be 50% of the total number of shares of
Company Common Stock issued and outstanding as of the close of business on the
third trading day prior to the Effective Time. Stock Elections shall be made on
a Form of Election. A Representative may submit multiple Forms of Election,
provided that such Representative certifies that each such Form of Election
covers all the shares of Company Common Stock held by such Representative for a
particular beneficial owner.
(g) Stock Election Shares. If the aggregate number of shares
of Company Common Stock covered by Stock Elections (the "Stock Election Shares")
exceeds the Stock Election Number, each Stock Election Share shall be converted
into (i) the right to receive a number of shares of Parent Common Stock, equal
to the product of (a) the Exchange Ratio and (b) a fraction (the "Stock
Fraction"), the numerator of which shall be the Stock Election Number and the
denominator of which shall be the total number of Stock Election Shares, and
(ii) an amount in cash, without interest, equal to the product of (a) the Cash
Consideration and (b) a fraction equal to one minus the Stock Fraction.
(h) Mixed Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Effective Time shall be entitled to elect to receive shares of Parent
Common Stock for part of such holder's shares of Company Common Stock and cash
for the remaining part of such holder's shares of Company Common Stock (the
"Mixed Election" and, collectively with Stock Election and Cash Election, the
"Election"). Mixed Elections shall be made on a Form of Election. A
Representative may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the shares
of Company Common Stock held by such Representative for a particular beneficial
owner. With respect to each holder of Company Common Stock who makes a Mixed
Election, the shares of Company Common Stock such holder elects to be converted
into the right to receive Cash Consideration shall be treated as Cash Election
Shares for purposes of the provisions contained in Sections 2.1(d), (e) and (l),
and the shares such holder elects to be converted into the right to receive
shares of Parent Common Stock shall be treated as Stock Election Shares for
purposes of the provisions contained in Sections 2.1(f), (g) and (l).
(i) Form of Election. To be effective, a Form of Election
must be properly completed, signed and submitted to Parent's transfer agent and
registrar, as paying agent (the
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"Paying Agent"), and accompanied by the certificates representing the shares of
Company Common Stock ("Company Certificates") as to which the election is being
made (or by an appropriate guarantee of delivery of such Company Certificate
signed by a firm that is a member of any registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agent's Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program). Parent shall have the discretion, which it may
delegate in whole or in part to the Paying Agent, to determine whether Forms of
Election have been properly completed, signed and submitted or revoked and to
disregard immaterial defects in Forms of Election. The decision of Parent (or
the Paying Agent) in such matters shall be conclusive and binding. Neither
Parent nor the Paying Agent shall be under any obligation to notify any person
of any defect in a Form of Election submitted to the Paying Agent. The Paying
Agent shall also make all computations contemplated by this Section 2.1, and all
such computations shall be conclusive and binding on the holders of shares of
Company Common Stock.
(j) Deemed Non-Election. For the purposes hereof, a holder of
shares of Company Common Stock who does not submit a Form of Election that is
received by the Paying Agent prior to the Election Deadline (as defined in
Section 2.1(k)) (the "No Election Shares") shall be deemed not to have made a
Cash Election, Stock Election or Mixed Election. If Parent or the Paying Agent
shall determine that any purported Election was not properly made, the shares
subject to such improperly made Election shall be treated as No Election Shares.
No Election Shares may be treated by the Company as Cash Election Shares or
Stock Election Shares.
(k) Election Deadline. Parent and the Company shall each use
its best efforts to cause copies of the Form of Election to be mailed to the
record holders of the Company Shares not less than thirty days prior to the
Effective Time and to make the Form of Election available to all persons who
become record holders of Company Shares subsequent to the date of such mailing
and no later than the close of business on the seventh business day prior to the
Effective Time. A Form of Election must be received by the Paying Agent by 5:00
p.m., New York City time, on the second day after the Effective Time (the
"Election Deadline") in order to be effective. All elections may be revoked
until the Election Deadline in writing by the record holders submitting Forms of
Election.
(l) Adjustment Per Tax Opinion. Notwithstanding anything in
this Article II to the contrary (other than the last sentence of Section
2.1(m)), the number of shares of Company Common Stock to be converted into the
right to receive the Stock Consideration in the Merger shall be not less than
that number which would cause the ratio of (i) the closing price per share of
Parent Common Stock on the Closing Date times the aggregate number of shares of
Parent Common Stock to be issued as Stock Consideration pursuant to Section
2.1(c), to (ii) the sum of (v) the amount set forth in the preceding clause (i)
plus (w) the aggregate Cash Consideration to be issued pursuant to Section
2.1(c) plus (x) the number of Dissenting Shares times the per share Cash
Consideration plus (y) any other amounts paid by the Company (or any affiliate
thereof) to, or on behalf of, any Company shareholder in connection with the
sale, redemption or other
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disposition of any Company stock in connection with the Merger for purposes of
Treasury Regulation Sections 1.368-1(e) and 1.368-1T(e) plus (z) any
extraordinary dividend distributed by the Company prior to and in connection
with the Merger for purposes of Treasury Regulation Sections 1.368-1(e) and
1.368-1T(e), to be 45%. To the extent the application of this Section 2.1(l)
results in the number of shares of Company Common Stock to be converted into the
right to receive the Stock Consideration in the Merger being increased, the
number of such shares to be converted into the right to receive the Cash
Consideration will be decreased.
(m) Anti-Dilution Provisions. In the event Parent (i) changes
(or establishes a record date for changing) the number of shares of Parent
Common Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, stock combination, recapitalization,
reclassification, reorganization or similar transaction with respect to the
outstanding Parent Common Stock or (ii) pays or makes an extraordinary dividend
or distribution in respect of Parent Common Stock (other than a distribution
referred to in clause (i) of this sentence) and, in either case, the record date
therefor shall be prior to the Effective Time, the Merger Consideration (as
defined in Section 2.2(b)) shall be proportionately adjusted. Regular quarterly
cash dividends and increases thereon shall not be considered extraordinary for
purposes of the preceding sentence. If, between the date hereof and the
Effective Time, Parent shall merge or consolidate with or into any other
corporation (a "Business Combination") and the terms thereof shall provide that
Parent Common Stock shall be converted into or exchanged for the shares of any
other corporation or entity, then provision shall be made so that shareholders
of the Company who would be entitled to receive shares of Parent Common Stock
pursuant to this Agreement shall be entitled to receive, in lieu of each share
of Parent Common Stock issuable to such shareholders as provided herein, the
same kind and amount of securities or assets as shall be distributable upon such
Business Combination with respect to one share of Parent Common Stock and the
parties hereto shall agree on an appropriate restructuring of the transactions
contemplated herein.
(n) Dissenting Shares. Each outstanding share of Company
Common Stock the holder of which has perfected his right to dissent under
applicable law and has not effectively withdrawn or lost such right as of the
Effective Time (the "Dissenting Shares") shall not be converted into or
represent a right to receive the Merger Consideration, and the holder thereof
shall be entitled only to such rights as are granted by applicable law;
provided, however, that any Dissenting Share held by a person at the Effective
Time who shall, after the Effective Time, withdraw the demand for payment for
shares or lose the right to payment for shares, in either case pursuant to the
Business Corporation Law of the State of Connecticut, shall be deemed to be
converted into, as of the Effective Time, the right to receive cash pursuant to
Section 2.1(c) in the same manner as if such shares were Cash Election Shares.
The Company shall give Parent prompt notice upon receipt by the Company of any
such written demands for payment of the fair value of such shares of Company
Common Stock and of withdrawals of such notice and any other instruments
provided pursuant to applicable law. Any payments made in respect of Dissenting
Shares shall be made by the Surviving Corporation.
SECTION 2.2 EXCHANGE OF CERTIFICATES. (a) Deposit with
Exchange Agent. As soon as practicable after the Effective Time, the Surviving
Corporation shall deposit with a bank
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or trust company mutually agreeable to Parent and the Company (the "Exchange
Agent"), pursuant to an agreement in form and substance reasonably acceptable to
Parent and the Company an amount of cash and certificates representing shares of
Parent Common Stock required to effect the conversion of Company Common Stock
into Parent Common Stock and cash in accordance with Section 2.1(c).
(b) Exchange and Payment Procedures. As soon as practicable
after the Effective Time, Parent shall cause the Paying Agent to mail to each
holder of record as of the Effective Time of a Certificate or Certificates that
have been converted pursuant to Section 2.1: (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Paying Agent) and (ii) instructions for effecting the surrender of the
Certificates and receiving the Merger Consideration (as defined below) to which
such holder shall be entitled therefor pursuant to Section 2.1. Upon surrender
of a Certificate to the Paying Agent for cancellation, together with a duly
executed letter of transmittal and such other documents as the Paying Agent may
require, the holder of such Certificate shall be entitled to receive in exchange
therefor (i) a certificate representing that number of shares of Parent Common
Stock (the "Parent Shares") into which the shares of Company Common Stock
previously represented by such Certificate are converted in accordance with
Section 2.1(c), (ii) the cash to which such holder is entitled in accordance
with Section 2.1(c), and (iii) the cash in lieu of fractional Parent Shares to
which such holder has the right to receive pursuant to Section 2.2(d) (the
shares of Parent Common Stock and cash described in clauses (i), (ii) and (iii)
above being referred to collectively as the "Merger Consideration"). In the
event the Merger Consideration is to be delivered to any person who is not the
person in whose name the Certificate surrendered in exchange therefor is
registered in the transfer records of Company, the Merger Consideration may be
delivered to a transferee if the Certificate is presented to the Paying Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence satisfactory to the Paying Agent that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section 2.2,
each Certificate (other than a certificate representing shares of Company Common
Stock to be canceled in accordance with Section 2.1(b)) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration contemplated by this Section 2.2. No interest
will be paid or will accrue on any cash payable to holders of Certificates
pursuant to provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Shares with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the Parent
Shares represented thereby and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(d) until the holder of
record of such Certificate shall surrender such Certificate. Subject to the
effect of unclaimed property, escheat and other applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole Parent Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(d) and the amount of dividends or
other distributions with a record date after the
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Effective Time theretofore paid with respect to such whole Parent Shares 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 surrender
and a payment date subsequent to surrender payable with respect to such whole
Parent Shares.
(d) No Fractional Securities. In lieu of any such fractional
securities, each holder of Company Common Stock who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to this Article II will be paid an amount in
cash (without interest) equal to such holder's proportionate interest in the net
proceeds from the sale or sales in the open market by the Exchange Agent, on
behalf of all such holders, of the aggregate fractional shares of Parent Common
Stock issued pursuant to this Article II. As soon as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (i) the number
of full shares of Parent Common Stock delivered to the Exchange Agent by Parent
over (ii) the aggregate number of full shares of Parent Common Stock to be
distributed to holders of Company Common Stock (such excess being herein called
the "Excess Parent Common Shares"). The Exchange Agent, as agent for the former
holders of Company Common Stock, shall sell the Excess Parent Common Shares at
the prevailing prices on the New York Stock Exchange (the "NYSE"). The sales of
the Excess Parent Common Shares by the Exchange Agent shall be executed on the
NYSE through one or more member firms of the NYSE and shall be executed in round
lots to the extent practicable. Parent shall pay all commissions, transfer taxes
and other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, incurred in connection with such sale of
Excess Parent Common Shares. Until the net proceeds of such sale have been
distributed to the former holders of Company Common Stock, the Exchange Agent
will hold such proceeds in trust for such former holders. As soon as practicable
after the determination of the amount of cash to be paid to former holders of
Company Common Stock in lieu of any fractional interests, the Exchange Agent
shall make available in accordance with this Agreement such amounts to such
former holders.
(e) Closing of Transfer Books. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for certificates representing the appropriate number of Parent
Shares and the appropriate amount of cash as provided in Section 2.1 and in this
Section 2.2.
(f) Termination of Exchange Agent. Any certificates
representing Parent Shares deposited with the Exchange Agent pursuant to Section
2.2(a) and not exchanged within six months after the Effective Time pursuant to
this Section 2.2 shall be returned by the Exchange Agent to Parent, which shall
thereafter act as Exchange Agent. All funds held by the Exchange Agent for
payment to the holders of unsurrendered Certificates and unclaimed at the end of
one year from the Effective Time shall be returned to the Surviving Corporation,
after which time any holder of unsurrendered Certificates shall look as a
general creditor only to Parent for payment of such funds to which such holder
may be due, subject to applicable law.
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(g) Escheat. The Company shall not be liable to any person
for such shares or funds delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
SECTION 3.1 CLOSING. The closing of the Merger (the
"Closing") shall take place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, at
10:00 a.m., New York City time, on the second business day immediately following
the date on which the last of the conditions set forth in Article VIII hereof is
fulfilled or waived (other than conditions that by their nature are required to
be performed on the Closing Date, but subject to satisfaction of such
conditions), or at such other time and date and place as the Company and Parent
shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Except as set
forth in Section 4.1 of the Company Disclosure Schedule (as defined in Section
7.6(ii)), the Company and each of its subsidiaries (as defined below) is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, has all requisite
corporate power and authority, and has been duly authorized by all necessary
approvals and orders, to own, lease and operate its assets and properties to the
extent owned, leased and operated and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its assets and properties makes such qualification necessary, other
than in such jurisdictions where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
material adverse effect on the business, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole or on
the consummation of this Agreement (any such material adverse effect being
hereafter referred to as a "Company Material Adverse Effect"). As used in this
Agreement, the term "subsidiary" of a person shall mean any corporation or other
entity (including partnerships and other business associations) of which a
majority of the outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or similar members
of the governing body of such corporation or entity shall at the time be held,
directly or indirectly, by such person.
SECTION 4.2 SUBSIDIARIES. Section 4.2 of the Company
Disclosure Schedule sets forth a description as of the date hereof, of all
material and certain other subsidiaries and joint ventures of the Company,
including the name of each such entity, the state or jurisdiction of its
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incorporation or organization, the Company's interest therein and a brief
description of the principal line or lines of business conducted by each such
entity. Except as set forth in Section 4.2 of the Company Disclosure Schedule,
none of the Company's subsidiaries is a "public utility company," a "holding
company," a "subsidiary company" or an "affiliate" of any public utility company
within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"). Except
as set forth in Section 4.2 of the Company Disclosure Schedule, all of the
issued and outstanding shares of capital stock owned by the Company of each
Company subsidiary are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned, directly or indirectly, by the Company free
and clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of its
capital stock or obligating it to grant, extend or enter into any such agreement
or commitment, except for any of the foregoing that could not reasonably be
expected to have a Company Material Adverse Effect. As used in this Agreement,
the term "joint venture" of a person shall mean any corporation or other entity
(including partnerships and other business associations) that is not a
subsidiary of such person, in which such person or one or more of its
subsidiaries owns an equity interest, other than equity interests held for
passive investment purposes which are less than 10% of any class of the
outstanding voting securities or equity of any such entity.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of
the Company consists of 30,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share, of the Company ("Company
Preferred Stock"). As of the close of business on March 31, 1999, there were
issued and outstanding 10,373,528 shares of Company Common Stock and no shares
of Company Preferred Stock. All of the issued and outstanding shares of the
capital stock of the Company are validly issued, fully paid, nonassessable and
free of preemptive rights. Except as set forth in Section 4.3 of the Company
Disclosure Schedule, as of the date hereof, and except for the Company Rights
Agreement, there are no outstanding subscriptions, options, calls, contracts,
voting trusts, proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, obligating the
Company or any of the subsidiaries of the Company to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
the Company, or obligating the Company to grant, extend or enter into any such
agreement or commitment.
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE. (a) Authority. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to obtaining the
Company Shareholders' Approval (as defined in Section 4.13) and the Company
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company subject to
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obtaining the applicable Company Shareholders' Approval. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other signatories hereto,
constitutes the valid and binding obligations of the Company enforceable against
it in accordance with their terms.
(b) Non-Contravention. Except as set forth in Section 4.4(b)
of the Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company do not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or lapse of time or both)
under, or result in the termination or modification of, or accelerate the
performance required by, or result in a right of termination, cancellation, or
acceleration of any obligation or the loss of a benefit under, or result in the
creation of any lien, security interest, charge or encumbrance ("Liens") upon
any of the properties or assets of the Company or any of its subsidiaries or any
of its joint ventures (any such violation, conflict, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, a
"Violation" with respect to the Company (such term when used in Article V having
a correlative meaning with respect to Parent)) pursuant to any provisions of (i)
the articles of organization, by-laws or similar governing documents of the
Company, any of its subsidiaries or any of its joint ventures, (ii) subject to
obtaining the Company Required Statutory Approvals and the receipt of the
Company Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority (as defined in Section 4.4(c)) applicable to the Company, any of its
subsidiaries or any of its joint ventures, or any of their respective properties
or assets or (iii) subject to obtaining the third-party consents or other
approvals set forth in Section 4.4(b) of the Company Disclosure Schedule (the
"Company Required Consents") any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company, any of its
subsidiaries or any of its joint ventures is a party or by which it or any of
its properties or assets may be bound or affected, excluding from the foregoing
clauses (i), (ii) and (iii) such Violations as would not have, in the aggregate,
a Company Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section
4.4(c) of the Company Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
court, federal, state, local or foreign governmental or regulatory body
(including a stock exchange or other self-regulatory body) or authority (each, a
"Governmental Authority") is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, the failure to obtain, make or give which would have, in
the aggregate, a Company Material Adverse Effect (the "Company Required
Statutory Approvals"), it being understood that references in this Agreement to
"obtaining" such Company Required Statutory Approvals shall mean making such
declarations, filings or registrations, giving such notices, obtaining such
authorizations, consents or approvals and having such waiting periods expire as
are necessary to avoid a violation of law.
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(d) Compliance. Except as set forth in Section 4.4(d) or
Section 4.11 of the Company Disclosure Schedule, or as disclosed in the Company
SEC Reports (as defined in Section 4.5) filed prior to the date hereof, neither
the Company, nor any of its subsidiaries nor any of its joint ventures is in
violation of, is under investigation with respect to any violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable Environmental Law, as defined in Section 4.11(f)(ii)) of any
Governmental Authority except for violations that, in the aggregate, do not have
and are not reasonably likely to have a Material Adverse Effect. Except as set
forth in Section 4.4(d) of the Company Disclosure Schedule or in Section 4.11 of
the Company Disclosure Schedule, the Company and its subsidiaries and joint
ventures have all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their respective
businesses as currently conducted in all respects, except those which the
failure to obtain would, in the aggregate, not have a Company Material Adverse
Effect. Except as set forth in Section 4.4(d) of the Company Disclosure
Schedule, the Company and each of its subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (i) its articles of organization
or by-laws or (ii) any material contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which it is bound or to which any of its
property is subject, except for breaches, violations or defaults that, in the
aggregate, do not have and are not reasonably likely to have, a Company Material
Adverse Effect.
(e) Except as set forth in Section 4.4(e) of the Company
Disclosure Schedule, there is no "non-competition" or other similar contract,
commitment, agreement or understanding that restricts the ability of the Company
or any of its affiliates to conduct business in any geographic area or that
would reasonably be likely to restrict the Surviving Corporation or any of its
affiliates to conduct business in any geographic area.
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS. The filings
required to be made by the Company and its subsidiaries since January 1, 1995
under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the 1935 Act
and applicable state public utility laws and regulations have been filed with
the Securities and Exchange Commission (the "SEC"), the Federal Energy
Regulatory Commission (the "FERC") or the appropriate state public utilities
commission, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective dates, in
all material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder. The Company has made available
to Parent a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by the Company with the SEC since
January 1, 1995 (as such documents have since the time of their filing been
amended, the "Company SEC Reports"). As of their respective dates, the Company
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements
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of the Company included in the Company SEC Reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended.
True, accurate and complete copies of the articles of organization and by-laws
of the Company, as in effect on the date hereof, have been made available to
Parent.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as set
forth in Section 4.6 of the Company Disclosure Schedule, from December 31, 1998
the Company and each of its subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice, and there has not
been, and no fact or condition exists which would have or, insofar as reasonably
can be foreseen, could have, a Company Material Adverse Effect.
SECTION 4.7 LITIGATION. Except as disclosed in the Company
SEC Reports filed prior to the date hereof or as set forth in Section 4.7,
Section 4.9 or Section 4.11 of the Company Disclosure Schedule, (i) there are no
claims, suits, actions or proceedings, pending or threatened, nor are there any
investigations or reviews pending or threatened against, relating to or
affecting the Company or any of its subsidiaries, and (ii) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to the Company or any of its subsidiaries, except for any of the
foregoing under clauses (i) and (ii) that individually or in the aggregate would
not reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None
of the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC in connection with the issuance of shares of
Parent Common Stock in the Merger (the "Registration Statement") will, at the
time the Registration Statement 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
not misleading and (ii) the proxy statement, in definitive form (the "Proxy
Statement"), relating to the Company Special Meeting (as defined below) shall
not, at the dates mailed to shareholders and at the time of the Company Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Proxy Statement, insofar as they
relate to the Company or any of its subsidiaries, shall comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
SECTION 4.9 TAX MATTERS. "Taxes," as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees, levies
or other assessments, including, without limitation, all net income, gross
income, sales and use, ad valorem, transfer, gains,
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profits, excise, franchise, real and personal property, gross receipts, capital
stock, production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes. "Tax Return,"
as used in this Agreement, means a report, return or other written information
required to be supplied to a governmental entity with respect to Taxes.
Except as disclosed in Section 4.9 of the Company Disclosure
Schedule:
(a) Filing of Timely Tax Returns. The Company and each of its
subsidiaries have duly filed (or there has been filed on its behalf) within the
time prescribed by law all material Tax Returns (including withholding Tax
Returns) required to be filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, complete and correct.
(b) Payment of Taxes. The Company and each of its
subsidiaries have, within the time and in the manner prescribed by law, paid all
material Taxes (including withholding Taxes) that are currently due and payable
except for those contested in good faith and for which adequate reserves have
been taken.
(c) Tax Reserves. All material Taxes payable by the Company
and its subsidiaries for all taxable periods and portions thereof through the
date of the most recent financial statements contained in the Company Financial
Statements filed prior to the date of this Agreement are properly reflected in
such financial statements in accordance with GAAP, and the unpaid Taxes of the
Company and its subsidiaries do not exceed the amount shown therefor on such
financial statements adjusted for the passage of time through the Effective Time
in accordance with past custom and practice of the Company and its subsidiaries
in filing their Tax Returns.
(d) Extensions of Time for Filing Tax Returns. Neither the
Company nor any of its subsidiaries have requested any extension of time within
which to file any material Tax Return, which Tax Return has not since been
filed.
(e) Waivers of Statute of Limitations. Neither the Company
nor any of its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with respect to
any material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all material Taxes has expired for all
applicable material Tax Returns of the Company and each of its subsidiaries, or
those material Tax Returns have been examined by the appropriate taxing
authorities for all periods through the date hereof, and no deficiency for any
material Taxes has been proposed, asserted or assessed against the Company or
any of its subsidiaries that has not been resolved and paid in full.
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(g) Audit, Administrative and Court Proceedings. No material
claims, audits, disputes, controversies, examinations, investigations or other
proceedings are presently pending with regard to any Taxes or Tax Returns of the
Company or any of its subsidiaries.
(h) Tax Rulings. Neither the Company nor any of its
subsidiaries has received a Tax Ruling (as defined below) or entered into a
Closing Agreement (as defined below) with any taxing authority that would have a
continuing adverse effect after the Closing Date. "Tax Ruling," as used in this
Agreement, shall mean a written ruling of a taxing authority relating to Taxes.
"Closing Agreement," as used in this Agreement, shall mean a written and legally
binding agreement with a taxing authority relating to Taxes.
(i) Availability of Tax Returns. The Company has provided or
made available to Parent complete and accurate copies of (i) all Tax Returns,
and any amendments thereto, filed by the Company or any of its subsidiaries
since 1994, (ii) all audit reports received from any taxing authority relating
to any Tax Return filed by the Company or any of its subsidiaries and (iii) any
Closing Agreements entered into by the Company or any of its subsidiaries with
any taxing authority.
(j) Tax Sharing Agreements. Neither the Company nor any of
its subsidiaries is a party to any agreement, understanding or arrangement
relating to allocating or sharing of Taxes.
(k) Liability for Others. Neither the Company nor any of its
subsidiaries has any liability for any material Taxes of any person other than
the Company and its subsidiaries (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a transferee
or successor, (iii) by contract or (iv) otherwise.
(l) Code Section 897. To the best knowledge of the Company
after due inquiry, no foreign person owns or has owned beneficially more than
five percent of the total fair market value of Company Common Stock during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) Code Section 368(a). The Company has no knowledge of any
fact, nor has the Company taken any action that would, or would be reasonably
likely to, adversely affect the qualification of the Merger as a reorganization
described in Section 368(a) of the Code.
(n) Code Section 355(e). Neither the Company nor any of its
subsidiaries has constituted a "distributing corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
past 24 month period or (y) in a distribution which could otherwise constitute
part of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
SECTION 4.10 EMPLOYEE MATTERS; ERISA. Except as set forth in
the appropriate subsection of Section 4.10 of the Company Disclosure Schedule:
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(a) For purposes of this Section 4.10, the following terms
have the definitions set forth below:
(i) "Controlled Group Liability" means any and all
liabilities (a) under Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (b) under the minimum funding requirements of
Section 302 of ERISA or Section 412 of the Code, (c) under Section 4971 of the
Code, and (d) as a result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code,
other than such liabilities that arise solely out of, or relate solely to, the
Employee Benefit Plans.
(ii) "ERISA Affiliate" means, with respect to any entity,
trade or business, any other entity, trade or business that is a member of a
group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
(iii) An "Employee Benefit Plan" means any material employee
benefit plan, program, policy, practice, or other arrangement providing benefits
to any current or former employee, officer or director of the Company or any of
its subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by the Company or any of its subsidiaries or to which the Company or
any of its subsidiaries contributes or is obligated to contribute, whether or
not written, including without limitation any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA, any employee pension benefit plan
within the meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any material bonus, incentive, deferred compensation, vacation,
stock purchase, stock option, severance, employment, change of control or fringe
benefit plan, program or agreement.
(iv) A "Plan" means any Employee Benefit Plan other than a
Multiemployer Plan.
(v) A "Multiemployer Plan" means any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA.
(vi) "Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as those terms are defined in Part I of Subtitle E of Title
IV of ERISA.
(b) Section 4.10(b) of the Company Disclosure Schedule
includes a complete list of all material Employee Benefit Plans.
(c) With respect to each Plan, the Company has delivered to
Parent a true, correct and complete copy of: (i) each writing constituting a
part of such Plan, including without limitation all material plan documents,
trust agreements, and insurance contracts and other funding vehicles; (ii) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(iii) the current summary plan description and any material modifications
thereto, if required to be furnished under ERISA; (iv) the most recent annual
financial report, if
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any; (v) the most recent actuarial report, if any; and (vi) the most recent
determination letter from the Internal Revenue Service (the "IRS"), if any.
Except as specifically provided in the foregoing documents delivered to Parent,
there are no amendments to any Plan that have been adopted or approved nor has
the Company or any of its subsidiaries undertaken to make any such amendments or
to adopt or approve any new Plan.
(d) Section 4.10(b) of the Company Disclosure Schedule
identifies each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"). The IRS has issued a
favorable determination letter with respect to each Qualified Plan and the
related trust that has not been revoked, and except as would not have a Company
Material Adverse Effect, there are no existing circumstances nor any events that
have occurred that could adversely affect the qualified status of any Qualified
Plan or the related trust. Section 4.10(b) of the Company Disclosure Schedule
identifies each Plan which is intended to meet the requirements of Code Section
501(c)(9) (a "VEBA"), and except as would not have a Company Material Adverse
Effect, each such VEBA meets such requirements and provides no disqualified
benefits (as such term is defined in Code Section 4976(b)).
(e) All material contributions required to be made to any
Plan by applicable law or regulation or by any Plan document or other
contractual undertaking, and all material premiums due or payable with respect
to insurance policies funding any Plan, for any period through the date hereof
have been timely made or paid in full or, to the extent not required to be made
or paid on or before the date hereof, have been fully reflected on the Company
Financial Statements. Each Employee Benefit Plan that is an employee welfare
benefit plan under Section 3(1) of ERISA (i) is funded through an insurance
company contract and is not a "welfare benefit fund" within the meaning of
Section 419 of the Code, (ii) is, or is funded through, a VEBA identified as
such in Section 4.10(b) of the Company Disclosure Schedule, or (iii) is
unfunded.
(f) Except as would not have a Company Material Adverse
Effect, with respect to each Employee Benefit Plan, the Company and its
subsidiaries have complied, and are now in compliance, with all provisions of
ERISA, the Code and all laws and regulations applicable to such Employee Benefit
Plans and each Employee Benefit Plan has been administered in all material
respects in accordance with its terms. There is not now, nor do any
circumstances exist that could reasonably be expected to give rise to, any
requirement for the posting of security with respect to a Plan or the imposition
of any lien on the assets of the Company or any of its subsidiaries under ERISA
or the Code. To the knowledge of the Company, no non-exempt prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code) has
occurred with respect to any Plan.
(g) With respect to each Plan that is subject to Title IV of
ERISA, the minimum funding requirements of Section 302 of ERISA or Section 412
of the Code, or Section 4971 of the Code: (i) there does not exist any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived; (ii) the fair market value of the
assets of each such Plan that is a defined benefit plan equals or exceeds the
actuarial present value of all accrued benefits under such Plan (whether or not
vested), based upon the actuarial assumptions set forth in the most recent
actuarial report for such Plan; (iii) no
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reportable event within the meaning of Section 4043(c) of ERISA for which the
30-day notice requirement has not been waived has occurred since December 31,
1993; (iv) all material premiums to the Pension Benefit Guaranty Corporation
("PBGC") have been timely paid in full; (v) no material liability (other than
for premiums to the PBGC and for the payment of benefits in the ordinary course)
under Title IV of ERISA has been or could reasonably be expected to be incurred
by the Company or any of its subsidiaries; and (vi) to the knowledge of the
Company, the PBGC has not instituted proceedings to terminate any such Plan and
no condition exists that presents a material risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such Plan.
(h) No Employee Benefit Plan is a Multiemployer Plan or a
plan that has two or more contributing sponsors at least two of which are not
under common control, within the meaning of Section 4063 of ERISA (a "Multiple
Employer Plan"). None of the Company and its subsidiaries nor any of their
respective ERISA Affiliates has, at any time during the last six years,
contributed to or been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan. None of the Company and its subsidiaries nor any ERISA
Affiliates has incurred any Withdrawal Liability that has not been satisfied in
full.
(i) There does not now exist, nor do any circumstances exist
that could reasonably be expected to result in, any Controlled Group Liability
that would have a Company Material Adverse Effect following the Closing. Without
limiting the generality of the foregoing, neither the Company nor any of its
subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in Section 4069 or Section 4204 or 4212 of ERISA since
December 31, 1992.
(j) Except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA, the Company and its
subsidiaries have no material liability for life, health, medical or other
welfare benefits to former employees or beneficiaries or dependents of former
employees.
(k) Neither the execution and delivery of this Agreement nor
the consummation of any of the transactions contemplated hereby will (either
alone or in conjunction with any other event) result in, cause the accelerated
funding, vesting or delivery of, or increase the amount or value of, any
material payment or benefit to any employee, officer or director of the Company
or any of its subsidiaries.
(l) No labor organization or group of employees of the
Company or any of its subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened to be brought or filed, with the National
Labor Relations Board or any other labor relations tribunal or authority. There
are no organizing activities, strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances, or other material labor disputes
pending or, to the knowledge of the Company, threatened against or involving the
Company or any of its subsidiaries. Each of the
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Company and its subsidiaries is in compliance in all material respects with all
applicable laws and collective bargaining agreements respecting employment and
employment practices, terms and conditions of employment, wages and hours and
occupational safety and health.
(m) There are no pending or, to the knowledge of the Company,
threatened claims (other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or instituted, and there is no
set of circumstances which may reasonably give rise to a claim or lawsuit,
against the Plans, any fiduciaries thereof with respect to their duties to the
Plans or the assets of any of the trusts under any of the Plans which could
reasonably be expected to result in a Company Material Adverse Effect.
(n) The Company, its subsidiaries and each member of their
respective business enterprise has complied with the Worker Adjustment and
Retraining Notification Act.
SECTION 4.11 ENVIRONMENTAL PROTECTION. Except as set forth in
Section 4.11 of the Company Disclosure Schedule or in the Company SEC Reports
filed prior to the date hereof:
(a) Compliance. The Company and each of its subsidiaries are
in compliance with all applicable Environmental Laws (as defined in Section
4.11(f)(ii)); and neither the Company nor any of its subsidiaries has received
any communication from any Governmental Authority or any written communication
from any other person that alleges that the Company or any of its subsidiaries
is not in compliance with applicable Environmental Laws, except where the
failure to be in such compliance would not in the aggregate have a Company
Material Adverse Effect.
(b) Environmental Permits. The Company and each of its
subsidiaries has obtained or has applied for all environmental, health and
safety permits and governmental authorizations (collectively, the "Environmental
Permits") necessary for the construction of its facilities or the conduct of its
operations, and all such Environmental Permits are in good standing or, where
applicable, a renewal application has been timely filed and is pending agency
approval, and the Company and its subsidiaries are in compliance with all terms
and conditions of the Environmental Permits, and the Company reasonably believes
that any transfer, renewal or reapplication for any Environmental Permit
required as a result of the Merger can be accomplished in the ordinary course of
business, except where the failure to obtain or to be in such compliance would
not, in the aggregate, have a Company Material Adverse Effect.
(c) Environmental Claims. There is no Environmental Claim (as
defined in Section 4.11(f)(i)) pending (i) against the Company or any of its
subsidiaries or joint ventures, or (ii) against any real or personal property or
operations that the Company or any of its subsidiaries owns, leases or manages,
in whole or in part that, if adversely determined, would have, in the aggregate,
a Company Material Adverse Effect.
(d) Releases. Except for Releases of Hazardous Materials the
liability for which would not have, in the aggregate, a Company Material Adverse
Effect, there have been no Releases (as defined in Section 4.11(f)(iv)) of any
Hazardous Material (as defined in Section 4.11(f)(iii)) that would be reasonably
likely to (A) form the basis of any Environmental Claim
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against the Company or any of its subsidiaries, or (B) to the knowledge of the
Company, cause, damage or diminution of value to any of the operations or real
properties owned, leased or managed, in whole or in part, by Company or any of
its subsidiaries.
(e) Predecessors. The Company has no knowledge of any
Environmental Claim pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the basis of any Environmental
Claim, in each case against any person or entity (including, without limitation,
any predecessor of the Company or any of its subsidiaries) whose liability the
Company or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law or against any real or personal property
which the Company or any of its subsidiaries formerly owned, leased or managed,
in whole or in part, except for Releases of Hazardous Materials the liability
for which would not have, in the aggregate, a Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand
letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation by any
person or entity (including any Governmental Authority)
alleging potential liability (including, without limitation,
potential responsibility for or liability for enforcement
costs, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs,
natural-resources damages, property damages, personal
injuries, fines or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened
Release into the environment, of any Hazardous Materials at
any location, whether or not owned, operated, leased or
managed by the Company, Parent or any of their respective
subsidiaries or joint ventures; or (B) circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law; or (C) any and all claims by any third
party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the
presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all federal, state, local
laws, rules, ordinances and regulations relating to pollution,
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata)
or protection of human health as it relates to the environment
including, without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(iii) "Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam
insulation, coal tar residue, and transformers or other
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equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs") in regulated
concentrations; and (b) any chemicals, materials or substances
which are now defined as or included in the definition of
"hazardous substances", "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants,"
"hazardous constituents" or words of similar import, under any
Environmental Law; and (c) any other chemical, material,
substance or waste, exposure to which is now prohibited,
limited or regulated under any Environmental Law in a
jurisdiction in which the Parent, the Company or any of their
subsidiaries or joint ventures operates or has stored, treated
or disposed of Hazardous Materials.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, surface water,
groundwater or property.
SECTION 4.12 REGULATION AS A UTILITY. Except as set forth in
Section 4.12 of the Company Disclosure Schedule, neither the Company nor any
"associate company," "subsidiary company" or "affiliate" (as such terms are
defined in the ▇▇▇▇ ▇▇▇) of the Company is subject to regulation as (i) a
"holding company," a "public-utility company," a "subsidiary company" or an
"affiliate" of a "holding company," within the meaning of Sections 2(a)(7),
2(a)(5), 2(a)(8) and 2(a)(11), respectively, of the 1935 Act, (ii) a "public
utility" under the Power Act, (iii) a "natural-gas company" under the Natural
Gas Act, or (iv) a public utility or public service company (or similar
designation) by any state in the United States other than Connecticut or by any
foreign country.
SECTION 4.13 VOTE REQUIRED. The approval of the Merger by
two-thirds of the votes entitled to be cast by all holders of Company Common
Stock (the "Company Shareholders' Approval") is the only vote of the holders of
any class or series of the capital stock of the Company or any of its
subsidiaries required to approve this Agreement, the Merger and the other
transactions contemplated hereby.
SECTION 4.14 OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, to the effect that,
as of April 22, 1999, the Merger Consideration is fair from a financial point of
view to the holders of Company Common Stock.
SECTION 4.15 OWNERSHIP OF PARENT COMMON STOCK. Except as set
forth in Section 4.15 of the Company Disclosure Schedule, the Company does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of Parent Common Stock or Parent Preferred Stock.
SECTION 4.16 TAKEOVER LAWS; RIGHTS PLANS. (i) The Company has
taken all action required to be taken by it in order to exempt this Agreement
and the transactions contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the requirements of any
"moratorium," "control share," "fair price" or other anti-
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takeover laws and regulations (collectively, "Takeover Laws") of the State of
Connecticut, including Sections 33-841 and 33-844 of the CBCA.
(ii) The Company has (1) duly entered into an appropriate
amendment to the Company Rights Agreement which amendment has been provided to
Parent and (2) taken all other action necessary or appropriate so that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby (including the Merger) do not and will not result in the
ability of any person to exercise any Rights under the Company Rights Agreement
or enable or require the Company Rights to separate from the shares of Company
Common Stock to which they are attached or to be triggered or become
exercisable, and the Company Rights Agreement will expire immediately prior to
the Effective Time, and the Company Rights Agreement, as so amended, has not
been further amended or modified except in accordance herewith. Copies of such
amendments to the Company Rights Agreement have been previously provided to
Parent.
(iii) No "Distribution Date" or "Triggering Event" (as such
terms are defined in the Company Rights Plan) has occurred.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
SECTION 5.1 ORGANIZATION AND QUALIFICATION. Except as set
forth in Section 5.1 of the Parent Disclosure Schedule (as defined in Section
7.6(i)), Parent and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite corporate power and authority,
and has been duly authorized by all necessary approvals and orders, to own,
lease and operate its assets and properties to the extent owned, leased and
operated and to carry on its business as it is now being conducted and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its assets and properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken together
with all other such failures, have a material adverse effect on the business,
properties, financial condition or results of operations of Parent and its
subsidiaries taken as a whole or on the consummation of this Agreement (any such
material adverse effect being hereafter referred to as a "Parent Material
Adverse Effect").
SECTION 5.2 SUBSIDIARIES. Section 5.2 of the Parent
Disclosure Schedule sets forth a description as of the date hereof of all
material subsidiaries and joint ventures of Parent, including the name of each
such entity, the state or jurisdiction of its incorporation or organization,
Parent's interest therein, and a brief description of the principal line or
lines of business conducted by each such entity. As of the date hereof, Parent
is an exempt holding company under the 1935 Act, and, except as set forth in
Section 5.2 of the Parent Disclosure Schedule, none of the subsidiaries of
Parent is a "public utility company" within the meaning of
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Section 2(a)(5) of the 1935 Act. Except as set forth in Section 5.2 of the
Parent Disclosure Schedule, all of the issued and outstanding shares of capital
stock of each Parent subsidiary are validly issued, fully paid, nonassessable
and free of preemptive rights, and are owned directly or indirectly by Parent
free and clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such Parent subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
its capital stock or obligating it to grant, extend or enter into any such
agreement or commitment; except for any of the foregoing that could not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 5.3 CAPITALIZATION (a) Except as set forth in Section
5.3 of the Parent Disclosure Schedule the authorized capital stock of Parent
consists of 200,000,000 shares of Parent Common Stock and 10,000,000 shares of
preferred stock, par value $0.01 per share, of Parent ("Parent Preferred
Stock"). As of the close of business on April 23, 1999, there were issued and
outstanding 117,127,142 shares of Parent Common Stock and no shares of Parent
Preferred Stock. All of the issued and outstanding shares of the capital stock
of Parent are, and will be, validly issued, fully paid, nonassessable and free
of preemptive rights. Except as set forth in Section 5.3 of the Parent
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating Parent or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Parent, or obligating Parent to grant, extend or
enter into any such agreement or commitment.
(b) The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $1.00 per share ("Merger Sub Common
Stock"). As of the close of business on April 22, 1999, there were issued and
outstanding 1,000 shares of Merger Sub Common Stock, all of which were owned by
Parent.
SECTION 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE. (a) Authority. Parent has all requisite corporate power
and authority to enter into this Agreement and, subject to the applicable Parent
Required Statutory Approvals (as defined in Section 5.4(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
and the consummation by Parent of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly and validly executed and delivered by Parent and,
assuming the due authorization, execution and delivery by the other signatories
hereto, constitutes a valid and binding obligation of Parent enforceable against
it in accordance with its terms.
(b) Non-Contravention. Except as set forth in Section 5.4(b)
of the Parent Disclosure Schedule, the execution and delivery of this Agreement
by Parent do not, and the
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consummation of the transactions contemplated hereby will not, result in a
Violation pursuant to any provisions of (i) the articles of incorporation,
by-laws or similar governing documents of Parent or any of its subsidiaries or
any of its joint ventures, (ii) subject to obtaining the Parent Required
Statutory Approvals (as defined in Section 5.4(c)) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license
of any Governmental Authority applicable to Parent or any of its subsidiaries or
any of its joint ventures or any of their respective properties or assets or
(iii) subject to obtaining the third-party consents or other approvals set forth
in Section 5.4(b) of the Parent Disclosure Schedule (the "Parent Required
Consents"), any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries or any of
its joint ventures is a party or by which it or any of its properties or assets
may be bound or affected, excluding from the foregoing clauses (i), (ii) and
(iii) such Violations as would not have, in the aggregate, a Parent Material
Adverse Effect.
(c) Statutory Approvals. Except as described in Section
5.4(c) of the Parent Disclosure Schedule, no declaration, filing or registration
with, or notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or the consummation by Parent of the transactions contemplated hereby,
the failure to obtain, make or give which would have, in the aggregate, a Parent
Material Adverse Effect (the "Parent Required Statutory Approvals"), it being
understood that references in this Agreement to "obtaining" such Parent Required
Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents or
approvals; and having such waiting periods expire as are necessary to avoid a
violation of law.
(d) Compliance. Except as set forth in Section 5.4(d) or
Section 5.11 of the Parent Disclosure Schedule, or as disclosed in the Parent
SEC Reports (as defined in Section 5.5) filed prior to the date hereof, neither
Parent nor any of its subsidiaries nor any of its joint ventures is in violation
of, is under investigation with respect to any violation of, or has been given
notice or been charged with any violation of, any law, statute, or order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
Environmental Law) of any Governmental Authority, except for violations that, in
the aggregate, do not have and are not reasonably likely to have, a Parent
Material Adverse Effect. Except as set forth in Section 5.4(d) of the Parent
Disclosure Schedule or in Section 5.11 of the Parent Disclosure Schedule, Parent
and its subsidiaries and joint ventures have all permits, licenses, franchises
and other governmental authorizations, consents and approvals necessary to
conduct their respective businesses as currently conducted in all respects,
except those which the failure to obtain would, in the aggregate, not have a
Parent Material Adverse Effect. Except as set forth in Section 5.4(d) of the
Parent Disclosure Schedule, Parent and each of its subsidiaries are not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default under, (i) its articles of
organization or by-laws or (ii) any material contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound or to which any
of its property is
-24-
subject; except for breaches, violations or defaults that, in the aggregate, do
not have and are not reasonably likely to have, a Parent Material Adverse
Effect.
SECTION 5.5 REPORTS AND FINANCIAL STATEMENTS. The filings
required to be made by Parent and its subsidiaries since January 1, 1995 under
the Securities Act, the Exchange Act, the 1935 Act, the Federal Power Act, as
amended (the "Power Act"), and applicable state public utility laws and
regulations have been filed with the SEC, the FERC or the appropriate state
public utilities commission, as the case may be, including all forms,
statements, reports, agreements and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective dates, in
all material respects with all applicable requirements of the appropriate
statute and the rules and regulations thereunder. Parent has made available to
the Company a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by Parent or its predecessor with
the SEC since January 1, 1995 (as such documents have since the time of their
filing been amended, the "Parent SEC Reports"). As of their respective dates,
the Parent SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Parent included in the Parent SEC
Reports (collectively, the "Parent Financial Statements") have been prepared in
accordance with GAAP (except as may be indicated therein or in the notes thereto
and except with respect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present the consolidated financial position of Parent as of the
dates thereof and the consolidated results of its operations and cash flows for
the periods then ended. True, accurate and complete copies of the articles of
incorporation and by-laws of Parent as in effect on the date hereof, have been
made available to the Company.
SECTION 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Parent SEC Reports filed prior to the date hereof or as set
forth in Section 5.6 of the Parent Disclosure Schedule, since December 31, 1998,
Parent and each of its subsidiaries have as of the date hereof conducted their
businesses only in the ordinary course of business consistent with past practice
and there has not been, and no fact or condition exists which has had or could
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 5.7 LITIGATION. Except as disclosed in the Parent SEC
Reports filed prior to the date hereof or as set forth in Section 5.7 of the
Parent Disclosure Schedule (i) there are no claims, suits, actions or
proceedings, pending or threatened, nor are there any investigations or reviews
pending or threatened against, relating to or affecting Parent or any of its
subsidiaries, which would have a Parent Material Adverse Effect and (ii) there
are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator applicable to Parent or any of its subsidiaries, except for such that
would not reasonably be expected to have a Parent Material Adverse Effect.
SECTION 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT. (i)
None of the information supplied or to be supplied by or on behalf of Parent for
inclusion or incorporation by reference in the Registration Statement will, at
the time the Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state
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any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Proxy Statement shall not, at the
dates mailed to the Company shareholders and at the time of the Company Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement and the Proxy Statement, insofar as they
relate to Parent or any Parent subsidiary, shall comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
SECTION 5.9 REGULATION AS A UTILITY. Except as set forth in
Section 5.9 of the Parent Disclosure Schedule, neither Parent nor any
"subsidiary company" or "affiliate" (as such terms are defined in the ▇▇▇▇ ▇▇▇)
of Parent is subject to regulation as (i) a "holding company," a "public-utility
company," a "subsidiary company" or an "affiliate" of a "holding company,"
within the meaning of sections 2(a)(7), 2(a)(5), 2(a)(8) or 2(a)(11),
respectively, of the 1935 Act, (ii) a "public utility" under the Power Act,
(iii) a "natural-gas company" under the Natural Gas Act, or (iv) a public
utility or public service company (or similar designation) by any state in the
United States other than New York or by any foreign country.
SECTION 5.10 OWNERSHIP OF THE COMPANY COMMON STOCK. Except as
set forth in Section 5.10 of the Parent Disclosure Schedule, Parent does not
"beneficially own" (as such term is defined for purposes of Section 13(d) of the
Exchange Act) any shares of Company Common Stock.
SECTION 5.11 ENVIRONMENTAL PROTECTION. (a) Except as would
not, in the aggregate, reasonably be expected to result in a Parent Material
Adverse Effect, and except for matters disclosed in Section 5.12(a) of the
Parent Disclosure Schedule or in the Parent SEC Reports, (i) Parent and its
subsidiaries are in compliance with all applicable Environmental Laws and the
terms and conditions of all applicable Environmental Permits, and neither Parent
nor any of its subsidiaries has received any written notice from any person or
Governmental Authority that alleges that Parent or any of its subsidiaries is
not in material compliance with applicable Environmental Laws or the terms and
conditions of all such Environmental Permits, (ii) there are no Environmental
Claims pending or threatened (A) against Parent or any of its subsidiaries, (B)
against any person or entity whose liability for any Environmental Claim Parent
or any of its subsidiaries has or may have retained or assumed either
contractually or by operation of law or (C) against any real or personal
property or operations that Parent or any of its subsidiaries owns, leases or
manages, in whole or in part, and (iii) there has been no Release of Hazardous
Materials that would be reasonably likely to (A) form the basis of any
Environmental Claim against Parent or any of its subsidiaries or against any
person or entity whose liability for any Environmental Claim Parent or any of
its subsidiaries has or may have retained or assumed either contractually or by
operation of law or (B) cause damage or diminution of value to any of the
operations or real properties owned, leased or managed, in whole or in part, by
Parent or any of its subsidiaries.
(b) To the best knowledge of Parent, except as disclosed in
the Parent SEC Reports, there are no facts or circumstances that are likely to
require expenditures by Parent or any of its sub-
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sidiaries in order to comply with currently applicable Environmental Laws,
except for expenditures that are not reasonably expected to have a Parent
Material Adverse Effect.
SECTION 5.12 OPERATIONS OF NUCLEAR POWER PLANT. To the
knowledge of the Parent, the operation of the nuclear generation plant (the
"Nuclear Facility") currently partially owned by the Parent is being conducted
in substantial compliance with current laws and regulations governing nuclear
plant operations, except for such failures to comply as would not, individually
or in the aggregate, have a Parent Material Adverse Effect. To the best of the
Parent's knowledge and except as would not reasonably be expected to have a
Parent Material Adverse Effect, (i) the Nuclear Facility maintains and is in
substantial compliance with emergency evacuation plans as required by the laws
and regulations governing nuclear plant operations and (ii) as of the date of
this Agreement, the storage of spent nuclear fuel and the plans for the
decommissioning of the Nuclear Facility substantially conforms with the
requirements of applicable law.
SECTION 5.13 CODE SECTION 368(A). Parent has no knowledge of
any fact, nor has Parent taken any action that would, or would be reasonably
likely to, adversely affect the qualification of the Merger as a reorganization
described in Section 368(a) of the Code.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 COVENANTS OF THE PARTIES. After the date hereof
and prior to the Effective Time or earlier termination of this Agreement, Parent
and the Company each agree as follows, each as to itself and to each of its
subsidiaries, except as expressly contemplated or permitted in this Agreement,
or to the extent the other parties hereto shall otherwise consent in writing:
(a) Ordinary Course of Business. The Company shall, and shall
cause its subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use all commercially reasonable efforts to (i) preserve intact
their present business organizations and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings with
them, (ii) subject to prudent management of workforce needs and ongoing programs
currently in force, keep available the services of their present officers and
employees as a group, and (iii) maintain and keep material properties and assets
in as good repair and condition as at present, subject to ordinary wear and
tear, and maintain supplies and inventories in quantities consistent with past
practice.
(b) Dividends. The Company shall not, nor shall it permit any
of its subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any capital stock other than (A) dividends by a
wholly-owned subsidiary to the Company or another wholly-owned subsidiary, (B)
dividends by a less than wholly-owned subsidiary consistent with past practice,
(C) regular dividends on Company Common Stock with usual record and payment
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dates that do not exceed the current regular dividends on Company Common Stock;
provided that, in the event the Closing has not occurred by March 31, 2000 then
the Company may increase the rate of such dividends to $1.38 per annum; (ii)
split, combine or reclassify any capital stock or the capital stock of any
subsidiary or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of, or in substitution for, shares of capital stock or
the capital stock of any subsidiary; or (iii) redeem, repurchase or otherwise
acquire any shares of capital stock or the capital stock of any subsidiary other
than (A) redemptions, repurchases and other acquisitions of shares of capital
stock in connection with the administration of employee benefit and dividend
reinvestment plans as in effect on the date hereof in the ordinary course of the
operation of such plans consistent with past practice, or (B) intercompany
acquisitions of capital stock. Prior to the Closing Date, each of the parties
agrees to coordinate dividend policies so as not to adversely affect either
party's shareholders because of the timing of record, declaration or payment
dates.
(c) Issuance of Securities. Except as set forth in Section
6.1(c) of the Company Disclosure Schedule, the Company shall not, nor shall it
permit any of its subsidiaries to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the issuance,
delivery, sale, award, pledge, disposal or other encumbrance of, any shares of
their capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such shares
or convertible or exchangeable securities, other than pursuant to currently
outstanding stock options granted under Employee Benefit Plans, as provided in
the Company Rights Agreement.
(d) Charter Documents; Other Actions. Neither party shall,
nor shall any party permit any of its subsidiaries to, amend or propose to amend
its respective articles of organization, by-laws or regulations, or similar
organic documents or to take or fail to take any other action, which in any such
case would reasonably be expected to prevent or materially impede or interfere
with the Merger.
(e) Acquisitions. Except as disclosed in Section 6.1(e) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or business organization or division thereof, or
otherwise acquire or agree to acquire any material amount of assets other than
in the ordinary course of business.
(f) Capital Expenditures. Except as set forth in Section
6.1(f) of the Company Disclosure Schedule, the Company shall not, nor shall it
permit any of its subsidiaries to, make capital expenditures in excess of 110%
of the amount budgeted by the Company or its subsidiaries for capital
expenditures as set forth in Section 6.1(f) of the Company Disclosure Schedule.
(g) No Dispositions. Except as set forth in Section 6.1(g) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, sell,
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lease, license, encumber or otherwise dispose of, any of its respective assets,
other than encumbrances or dispositions in the ordinary course of business
consistent with past practice.
(h) Indebtedness. Except as set forth in Section 6.1(h) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation, the
issuance of debt securities or warrants or rights to acquire debt) or enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing other than (i) short-term indebtedness in the ordinary
course of business consistent with past practice; (ii) arrangements between the
Company and its subsidiaries or among its subsidiaries; or (iii) in connection
with the refunding of existing indebtedness at a lower cost of funds.
(i) Compensation, Benefits. Except as set forth in Section
6.1(i) of the Company Disclosure Schedule or as may be required by applicable
law, or as expressly contemplated by this Agreement, the Company shall not, nor
shall it permit any of its subsidiaries to, (i) enter into, adopt or amend or
increase the amount or accelerate the payment or vesting of any benefit or
amount payable under any Employee Benefit Plan, or otherwise increase the
compensation or benefits of any director, officer or other employee of such
party or any of its subsidiaries, except for normal increases in compensation
and benefits in the ordinary course of business consistent with past practice
that, with respect to employees who are not officers, in the aggregate, do not
result in an increase in benefits or compensation expense to the Company or any
of its subsidiaries in excess of three percent per year, or (ii) enter into or
amend any employment, severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or arrangement
with any director or officer or other employee other than with respect to
employees who are not officers of the Company in the ordinary course of business
consistent with current industry practice.
(j) Act. Except as set forth in Section 6.1(j) of the Company
Disclosure Schedule, and except as required or contemplated by this Agreement,
the Company shall not, nor shall it permit any of its subsidiaries to, engage in
any activities which would cause a change in its status, or that of its
subsidiaries, under the 1935 Act.
(k) Accounting. Except as set forth in Section 6.1(k) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its subsidiaries to, make any changes in their accounting methods, except as
required by law, rule, regulation or GAAP.
(l) Tax-Free Status. No party shall, nor shall any party
permit any of its subsidiaries to, take any actions which would, or would be
reasonably likely to, adversely affect the status of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and each party
hereto shall use all reasonable efforts to achieve such result.
(m) Cooperation, Notification. Each party shall, and shall
cause its subsidiaries to, (i) confer on a regular and frequent basis with one
or more representatives of the other party to discuss, subject to applicable
law, material operational matters and the general status of its ongoing
operations; (ii) promptly notify the other party of any significant changes in
its
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business, properties, assets, condition (financial or other), results of
operations or prospects; (iii) advise the other party of any change or event
which has had or, insofar as reasonably can be foreseen, is reasonably likely to
result in, in the case of the Company, a Company Material Adverse Effect or, in
the case of Parent, a Parent Material Adverse Effect; and (iv) promptly provide
the other party with copies of all filings made by such party or any of its
subsidiaries with any state or federal court, administrative agency, commission
or other Governmental Authority in connection with this Agreement and the
transactions contemplated hereby.
(n) Third-Party Consents. The Company shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if requested by
Parent shall provide copies of all the Company Required Consents obtained by the
Company to Parent. Parent shall, and shall cause its subsidiaries to, use all
commercially reasonable efforts to obtain all Parent Required Consents. Parent
shall promptly notify the Company of any failure or prospective failure to
obtain any such consents and, if requested by the Company, shall provide copies
of all Parent Required Consents obtained by Parent to the Company.
(o) No Breach, Etc. No party shall, nor shall any party
permit any of its subsidiaries to, willfully take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in this
Agreement being untrue on and as of the Closing Date.
(p) Discharge of Liabilities. The Company shall not pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice (which includes the payment of final and
unappealable judgments) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the Company's reports filed with the SEC, or incurred in the ordinary course
of business consistent with past practice.
(q) Contracts. Except as set forth in Section 6.1(q) of the
Company Disclosure Schedule, the Company shall not, except in the ordinary
course of business consistent with past practice, modify, amend, terminate,
renew or fail to use reasonable business efforts to renew any material contract
or agreement to which the Company or any of its subsidiaries is a party or
waive, release or assign any material rights or claims.
(r) Insurance. The Company shall, and shall cause its
subsidiaries to, maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are customary for
companies engaged in the electric and gas utility industry.
(s) Permits. The Company shall, and shall cause its
subsidiaries to, use reasonable efforts to maintain in effect all existing
governmental permits pursuant to which the Company or any of its subsidiaries
operate.
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(t) Takeover Laws. Neither party shall take any action that
would cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law, and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect, including Sections 33-841 and 33-844 of the CBCA.
(u) No Rights Triggered. The Company shall ensure that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby and any other action or combination of actions, or any other
transactions contemplated hereby, do not and will not result, directly or
indirectly, in the grant of any rights to any person under any material
agreement (other than the employment agreements disclosed in Section 6.1(u) of
the Company Disclosure Schedule) to which it or any of its subsidiaries is a
party (including the Company Rights Agreement) or in the exercise of any rights
under the Company Rights Agreement or otherwise. In addition, the Company shall
not amend or waive any rights under the Company Rights Agreement or otherwise in
a manner that would materially and adversely affect either party's ability to
consummate the Merger or the economic benefits of the Merger to either party.
(v) Taxes. The Company shall not, and shall cause its
subsidiaries not to, (A) make or rescind any express or deemed material election
relating to Taxes, (B) settle or compromise any material claim, audit, dispute,
controversy, examination, investigation or other proceeding relating to Taxes,
(C) materially change any of its methods of reporting income or deductions for
federal income Tax purposes, except as may be required by applicable law, or (D)
file any material Tax Return other than in a manner consistent with past custom
and practice.
SECTION 6.2 COVENANT OF THE COMPANY; ALTERNATIVE PROPOSALS.
From and after the date hereof, the Company agrees (a) that it will not, its
subsidiaries will not, and it will not authorize or permit any of its or its
subsidiaries' officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its subsidiaries or any of the foregoing) to, directly
or indirectly, encourage, initiate or solicit (including by way of furnishing
information) or take any other action to facilitate knowingly any inquiries or
the making of any proposal or offer (including, without limitation, any proposal
or offer to its shareholders) which constitutes or may reasonably be expected to
lead to an Alternative Proposal (as defined below) from any person or engage in
any discussion or negotiations concerning, or provide any non-public information
or data to make or implement an Alternative Proposal; (b) that it will
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussions or negotiations with any
parties conducted heretofore with a view of formulating an Alternative Proposal;
and (c) that it will notify Parent orally and in writing of any such inquiry,
offer or proposals (including, without limitation, the terms and conditions of
any such proposal and the identity of the person making it), within 24 hours of
the receipt thereof, and that it shall keep Parent informed of the status and
details of any such inquiry, offer or proposal and shall give Parent 48 hours'
prior notice of any agreement to be entered into or of the fact that it proposes
to commence providing information to any person making such inquiry, offer or
proposal; provided however, that notwithstanding any other provision hereof, the
Company may (i) at any time prior to the time the Company shareholders shall
have voted to approve this Agreement engage in
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discussions or negotiations with a third party who (without any solicitation,
initiation, encouragement, discussion or negotiation, directly or indirectly, by
or with Company or its representatives after the date hereof) seeks to initiate
such discussions or negotiations and may furnish such third party information
concerning the Company and its business, properties and assets if, and only to
the extent that, (A)(x) the third party has first made an Alternative Proposal
that is financially superior to the Merger and has demonstrated that any
necessary financing has been obtained and (y) the Company Board of Directors
shall conclude in good faith, based upon the advice of outside counsel and such
other matters as the Company Board of Directors deems relevant, that failure to
do so would likely result in a breach of its fiduciary duties under applicable
law and (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, the Company (x)
provides prompt written notice to Parent to the effect that it intends to
furnish information to, or intends to enter into discussions or negotiations
with, such person or entity, (y) provides the Parent a reasonable opportunity to
respond to the Alternative Proposal and (z) receives from such person an
executed confidentiality agreement in reasonably customary form except that such
confidentiality agreement shall not prohibit such person from making an
unsolicited Alternative Proposal, and (ii) comply with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer and/or (iii)
accept an Alternative Proposal from a third party, provided the Company
terminates this Agreement pursuant to Section 9.1(e). "Alternative Proposal"
shall mean any merger, acquisition, consolidation, reorganization, share
exchange, tender offer, exchange offer or similar transaction involving the
Company or any of the Company's subsidiaries, or any proposal or offer to
acquire in any manner, directly or indirectly, a substantial equity interest in
or a substantial portion of the assets of the Company or any of the Company's
subsidiaries. Nothing herein shall prohibit a disposition permitted by Section
6.1(g) hereof.
SECTION 6.3 COVENANT OF PARENT; EMPLOYMENT AGREEMENTS. Parent
and ▇▇. ▇▇▇▇▇▇ have entered into an employment agreement, and Parent shall at
the Closing offer to enter into employment agreements on the terms set forth in
Exhibit 6.3 of the Company Disclosure Schedule with the persons identified
thereon.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 ACCESS TO INFORMATION. Upon reasonable notice and
during normal business hours, each party shall, and shall cause its subsidiaries
to, afford to the officers, directors, employees, accountants, counsel,
investment bankers, financial advisors and other representatives of the other
(collectively, "Representatives") reasonable access, throughout the period prior
to the Effective Time, to all of its properties, books, contracts, commitments
and records (including, but not limited to, Tax Returns) and, during such
period, each party shall, and shall cause its subsidiaries to, furnish promptly
to the other (i) access to each report, schedule and other document filed or
received by it or any of its subsidiaries pursuant to the requirements of
federal or state securities laws or filed with or sent to the SEC, the FERC, the
Department of Justice, the Federal Trade Commission or any other federal or
state regulatory agency or commission, and (ii) access to all information
concerning themselves, their subsidiaries, directors, officers and shareholders
and such other matters as may be reasonably requested by the other party in
connection with any filings, applications or approvals
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required or contemplated by this Agreement. Each party shall, and shall cause
its subsidiaries and Representatives to, hold in strict confidence all
Proprietary Information (as defined in the Confidentiality Agreement) concerning
the other parties furnished to it in connection with the transactions
contemplated by this Agreement in accordance with the Confidentiality Agreement,
dated as of April 14, 1999, between the Company and Parent, as it may be amended
from time to time (the "Confidentiality Agreement").
SECTION 7.2 PROXY STATEMENT AND REGISTRATION STATEMENT.
(a) Preparation and Filing. The parties will prepare and file
with the SEC as soon as reasonably practicable after the date hereof the
Registration Statement and the Proxy Statement (together, the
"Proxy/Registration Statement"). The parties hereto shall each use reasonable
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such filing. Each party hereto
shall also take such action as may be reasonably required to cause the shares of
Parent Common Stock issuable in connection with the Merger to be registered or
to obtain an exemption from registration under applicable state "blue sky" or
securities laws; provided, however, that no party shall be required to register
or qualify as a foreign corporation or to take other action which would subject
it to service of process in any jurisdiction where it will not be, following the
Merger, so subject. Each of the parties hereto shall furnish all information
concerning itself which is required or customary for inclusion in the
Proxy/Registration Statement. The parties shall use reasonable efforts to cause
the shares of Parent Common Stock issuable in the Merger to be approved for
listing on the NYSE upon official notice of issuance. The information provided
by any party hereto for use in the Proxy/Registration Statement shall be true
and correct in all material respects without omission of any material fact which
is required to make such information not false or misleading. No representation,
covenant or agreement is made by or on behalf of any party hereto with respect
to information supplied by any other party for inclusion in the Proxy
Statement/Registration Statement.
(b) Letter of the Company's Accountant. Following receipt by
PricewaterhouseCoopers LLP, the Company's independent auditor, of an appropriate
request from the Company pursuant to SAS No. 72, the Company shall use its best
efforts to cause to be delivered to Parent a letter of PricewaterhouseCoopers
LLP dated a date within two business days before the date of the
Proxy/Registration Statement, and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance for "cold
comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Proxy/Registration Statement.
(c) Letter of Parent's Accountant. Following receipt by
PricewaterhouseCoopers LLP, Parent's independent auditor, of an appropriate
request from Parent pursuant to SAS No. 72, Parent shall use best efforts to
cause to be delivered to the Company a letter of PricewaterhouseCoopers LLP,
dated a date within two business days before the date of the Proxy/Registration
Statement, and addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for "cold
comfort" letters
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delivered by independent public accountants in connection with registration
statements similar to the Proxy/Registration Statement.
SECTION 7.3 REGULATORY MATTERS. Each party hereto shall
cooperate and use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain no
later than the Initial Termination Date, as such date may be extended pursuant
to Section 9.1(b), all necessary permits, consents, approvals and authorizations
of all Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement, including, without limitation, the
Company Required Statutory Approvals and the Parent Required Statutory
Approvals.
SECTION 7.4 SHAREHOLDER APPROVAL.
(a) The Company Shareholders. Subject to the provisions of
Section 7.4(b), the Company shall, as soon as reasonably practicable after the
date hereof (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of its shareholders (the "Company Special Meeting") for the
purpose of securing the Company Shareholders' Approval, (ii) distribute to its
shareholders the Proxy Statement in accordance with applicable federal and state
law and with its articles of organization and by-laws, (iii) subject to the
fiduciary duties of its Board of Directors, recommend to its shareholders the
approval of this Agreement and the transactions contemplated hereby and (iv)
cooperate and consult with Parent with respect to each of the foregoing matters.
(b) Meeting Date. The Company Special Meeting for the purpose
of securing the Company Shareholders' Approval shall be held on such date as the
Company and Parent shall mutually determine.
SECTION 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Indemnification. To the extent, if any, not provided by
an existing right of indemnification or other agreement or policy, from and
after the Effective Time, Parent and the Surviving Corporation shall, to the
fullest extent permitted by applicable law, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer, director or employee of the
Company or any of its subsidiaries (each an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses, expenses
(including reasonable attorney's fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next succeeding sentence, amounts
paid in settlement, arising out of actions or omissions occurring at or prior to
the Effective Time (and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director, officer or employee of the Company
or a subsidiary of the Company (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of any
such loss, expense, claim, damage or liability (whether or not arising before
the Effective Time), (i) Parent shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall
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be reasonably satisfactory to Parent, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, (ii) any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth in Section 33-756, 33-757 and 33-765 of
the CBCA, and the articles of organization or By-laws shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party;
provided, however, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
The Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel to
an Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between positions of such Indemnified Party
and any other Indemnified Party or Indemnified Parties.
(b) Insurance. For a period of six years after the Effective
Time, Parent shall (i) cause to be maintained in effect policies of directors'
and officers' liability insurance for the benefit of those persons who are
currently covered by such policies of the Company on terms no less favorable
than the terms of such current insurance coverage or (ii) provide tail coverage
for such persons which provides coverage for a period of six years for acts
prior to the Effective Time on terms no less favorable than the terms of such
current insurance coverage; provided, however, that Parent shall not be required
to expend in any year an amount in excess of 200% of the annual aggregate
premiums currently paid by the Company, for such insurance; and provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, Parent shall be obligated to obtain a policy with the best coverage
available, in the reasonable judgment of the Board of Directors of Parent, for a
cost not exceeding such amount.
(c) Successors. In the event Parent or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in either such case, proper provisions shall be made so
that the successors and assigns of Parent shall assume the obligations set forth
in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent
permitted by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of the Company, and its subsidiaries with respect to
their activities as such prior to the Effective Time, as provided in its
respective articles of organization and by-laws in effect on the date hereof, or
otherwise in effect on the date hereof, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time.
(e) Benefit. The provisions of this Section 7.5 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
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SECTION 7.6 DISCLOSURE SCHEDULES. On the date hereof, (i)
Parent has delivered to the Company a schedule (the "Parent Disclosure
Schedule"), accompanied by a certificate signed by the Senior Vice President and
General Counsel of Parent stating the Parent Disclosure Schedule is being
delivered pursuant to this Section 7.6(i), and (ii) the Company has delivered to
Parent a schedule (the "Company Disclosure Schedule"), accompanied by a
certificate signed by the Vice President, General Counsel and Secretary of the
Company stating the Company Disclosure Schedule is being delivered pursuant to
this Section 7.6(ii). The Company Disclosure Schedule and the Parent Disclosure
Schedule are collectively referred to herein as the "Disclosure Schedules." The
Disclosure Schedules constitute an integral part of this Agreement and modify
the respective representations, warranties, covenants or agreements of the
parties hereto contained herein to the extent that such representations,
warranties, covenants or agreements expressly refer to the Disclosure Schedules.
Anything to the contrary contained herein or in the Disclosure Schedules
notwithstanding, any and all statements, representations, warranties or
disclosures set forth in the Disclosure Schedules shall be deemed to have been
made on and as of the date hereof.
SECTION 7.7 PUBLIC ANNOUNCEMENTS. Subject to each party's
disclosure obligations imposed by law, the Company and Parent will cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement or any of
the transactions contemplated hereby and shall not issue any public announcement
or statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
SECTION 7.8 RULE 145 AFFILIATES. Within 30 days after the
date of this Agreement, the Company shall identify in a letter to Parent all
persons who are, and to such person's best knowledge who will be at the Closing
Date, "affiliates" of the Company, as such term is used in Rule 145 under the
Securities Act. The Company shall use all reasonable efforts to cause its
affiliates (including any person who may be deemed to have become an affiliate
after the date of the letter referred to in the prior sentence) to deliver to
Parent on or prior to the Closing Date a written agreement substantially in the
form attached as Exhibit 7.8 (each, an "Affiliate Agreement").
SECTION 7.9 CERTAIN EMPLOYEE AGREEMENTS. Subject to Section
7.10, Parent and the Surviving Corporation and its subsidiaries shall honor,
without modification, all contracts, agreements, collective bargaining
agreements and commitments of the parties prior to the date hereof which apply
to any current or former employee or current or former director of the parties
hereto; provided, however, that the foregoing shall not prevent Parent or the
Surviving Corporation from enforcing such contracts, agreements, collective
bargaining agreements and commitments in accordance with their terms, including,
without limitation, any reserved right to amend, modify, suspend, revoke or
terminate any such contract, agreement, collective bargaining agreement or
commitment. It is the present intention of Parent and the Company that following
the Effective Time, there will be no involuntary reductions in force at the
Surviving Corporation, but that Parent, the Surviving Corporation and their
respective subsidiaries will continue Parent's and the Company's present
strategy of achieving workforce reductions through attrition; however, if any
reductions in workforce in respect of employees of
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the Company become necessary, they shall be made on a fair and equitable basis,
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 the
Company or its subsidiaries or Parent or its subsidiaries, and any employees
whose employment is terminated or jobs are eliminated by Parent, the Surviving
Corporation or any of their respective subsidiaries during such period shall be
entitled to participate on a fair and equitable basis in the job opportunity and
employment placement programs offered by Parent, the Surviving Corporation or
any of their respective subsidiaries. Any workforce reductions carried out
following the Effective Time by Parent or the Surviving Corporation and their
respective subsidiaries shall be done in accordance with all applicable
collective bargaining agreements, and all laws and regulations governing the
employment relationship and termination thereof including, without limitation,
the Worker Adjustment and Retraining Notification Act and regulations
promulgated thereunder, and any comparable state or local law.
SECTION 7.10 EMPLOYEE BENEFIT PLANS
Each individual employed by the Company or any of its
subsidiaries immediately before the Effective Time who (i) remains employed by
Parent, the Surviving Corporation or any of their respective subsidiaries and
(ii) is not covered by a collective bargaining agreement (each such individual,
a "Nonunion Continuing Company Employee"), shall be provided with credit, for
all purposes other than benefit accrual under the employee benefit plans of
Parent and its Affiliates providing benefits after the Effective Time to
Nonunion Continuing Company Employees, for his or her years of service with the
Company and its subsidiaries before the Effective Time, to the same extent as
such Nonunion Continuing Company Employee was entitled, before the Effective
Time, to credit for such service under any similar Plans. In addition, and
without limiting the generality of the foregoing: (i) each Nonunion Continuing
Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all employee benefit plans sponsored by Parent and its
subsidiaries for the benefit of Nonunion Continuing Company Employees (such
Plans, collectively, the "New Plans") to the extent coverage under such New Plan
replaces coverage under a comparable Plan in which such Nonunion Continuing
Company Employee participated immediately before the Effective Time (such plans,
collectively, the "Old Plans"); and (ii) for purposes of each New Plan providing
medical, dental, pharmaceutical and/or vision benefits to any Nonunion
Continuing Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived for
such Nonunion Continuing Company Employee and his or her covered dependents, and
Parent shall cause any eligible expenses incurred by such Nonunion Continuing
Company Employee and his or her covered dependents during the portion of the
plan year of the Old Plan ending on the date such Nonunion Continuing Company
Employee's participation in the corresponding New Plan begins to be taken into
account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements applicable to such Nonunion
Continuing Company Employee and his or her covered dependents for the applicable
plan year as if such amounts had been paid in accordance with such New Plan;
provided, however, that to the extent permissible under applicable law, Parent
shall cause the Surviving Corporation to maintain the Old Plans in effect for
not less than two years following the Effective Time.
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SECTION 7.11 COMPANY STOCK PLANS. With respect to each Plan
that provides for benefits in the form of Company Common Stock ("Company Stock
Plans"), the Company and Parent shall take all corporate action necessary or
appropriate to (i) provide for the issuance or purchase in the open market of
Parent Common Stock rather than Company Common Stock, pursuant thereto, and
otherwise to amend such Company Stock Plans to reflect this Agreement and the
Merger, (ii) obtain shareholder approval with respect to such Company Stock
Plans to the extent such approval is required for purposes of the Code or other
applicable law, or to enable such Company Stock Plans to comply with Rule 16b-3
promulgated under the Exchange Act, (iii) reserve for issuance under such
Company Stock Plans or otherwise provide a sufficient number of shares of Parent
Common Stock for delivery upon payment of benefits, grant of awards or exercise
of options under such Company Stock Plans and (iv) as soon as practicable after
the Effective Time, file registration statements on Form S-8 or amendments on
such forms to the Form S-4 Registration Statement, as the case may be (or any
successor or other appropriate forms), with respect to the shares of Parent
Common Stock subject to such Company Stock Plans to the extent such registration
statement is required under applicable law, and Parent shall use its best
efforts to maintain the effectiveness of such registration statements (and
maintain the current status of the prospectuses contained therein) for so long
as such benefits and grants remain payable and such options remain outstanding.
With respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act, the
Company shall administer the Company Stock Plans, where applicable, in a manner
that complies with Rule 16b-3 promulgated under the Exchange Act.
SECTION 7.12 EXPENSES. Subject to Section 9.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing the Proxy/Registration
Statement, as well as the filing fee relating thereto, shall be shared equally
by the Company and Parent.
SECTION 7.13 FURTHER ASSURANCES. Each party will, and will
cause its subsidiaries to, execute such further documents and instruments and
take such further actions as may reasonably be requested by any other party in
order to consummate the Merger in accordance with the terms hereof.
SECTION 7.14 CORPORATE OFFICES. At and subsequent to the
Effective Time, the corporate headquarters of the Surviving Corporation shall be
located in Bridgeport, Connecticut. At and subsequent to the Effective Time, the
corporate headquarters of Energy East Enterprises, Inc., and Xenergy
Enterprises, Inc., shall be located in Connecticut.
SECTION 7.15 COMMUNITY INVOLVEMENT. After the Effective Time,
Parent will, or will cause the Surviving Corporation to make at least $500,000
per year in charitable contributions to the communities served by the Surviving
Corporation and otherwise maintain a substantial level of involvement in
community activities in the State of Connecticut that is similar to, or greater
than, the level of community development and related activities carried on by
the Company.
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SECTION 7.16 ADVISORY BOARD. At the Effective Time, there
shall be established an advisory board to the Surviving Corporation ("Advisory
Board"), which shall be comprised of the persons who were directors of the
Company immediately prior to the Effective Time. The Advisory Board shall meet
no less frequently than quarterly and shall provide advice to the board of
directors of the Surviving Corporation with respect to such issues as the board
of directors of the Surviving Corporation may from time to time request,
including but not limited to community relations, customer service, economic
development, employee development and relations and such other matters of
community interest as may be appropriate. The members of the Advisory Board, who
shall serve at the discretion of the Surviving Corporation, shall receive
remuneration for their services equivalent to the remuneration currently
provided to non-officer directors of the Southern Connecticut Gas Company, a
Connecticut corporation.
SECTION 7.17 TAX-FREE STATUS. No party shall, nor shall any
party permit any of its subsidiaries to, take any actions which would, or would
be reasonably likely to, adversely affect the status of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and each party
hereto shall use all reasonable efforts to achieve such result.
ARTICLE VIII
CONDITIONS
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of the following
conditions, except, to the extent permitted by applicable law, that such
conditions may be waived in writing pursuant to Section 9.5 by the joint action
of the parties hereto:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state court
preventing consummation of the Merger shall have been issued and be continuing
in effect, and the Merger and the other transactions contemplated hereby shall
not have been prohibited under any applicable federal or state law or
regulation.
(c) Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the Securities Act,
and no stop order suspending such effectiveness shall have been issued and
remain in effect.
(d) Listing of Shares. The shares of Parent Common Stock
issuable in the Merger pursuant to Article II shall have been approved for
listing on the NYSE upon official notice of issuance.
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(e) Statutory Approvals. The Company Required Statutory
Approvals and the Parent Required Statutory Approvals shall have been obtained
at or prior to the Effective Time, such approvals shall have become Final Orders
(as defined below) and such Final Orders shall not impose terms or conditions
which, in the aggregate, would have, or insofar as reasonably can be foreseen,
could have, a Company Material Adverse Effect or a Parent Material Adverse
Effect; provided, however, that a requirement that Parent become a registered
holding company pursuant to Section 5 of the 1935 Act as a result of the Merger
shall not constitute a term or condition which could have a "material adverse
effect" within the meaning of this Section 8.1(e) of the Agreement; provided
further that the inclusion of a condition or requirement of the Securities and
Exchange Commission's approval of the Merger under the 1935 Act that Parent
divest its ownership of New York State Electric & Gas Corporation, a New York
corporation and wholly owned subsidiary of Parent, shall constitute a term or
condition which could have a "material adverse effect" within the meaning of
this Section 8.1(e) of the Agreement. A "Final Order" means action by the
relevant regulatory authority which has not been reversed, stayed, enjoined, set
aside, annulled or suspended, with respect to which any waiting period
prescribed by law before the transactions contemplated hereby may be consummated
has expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
SECTION 8.2 CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE
MERGER. The obligation of Parent to effect the Merger shall be further subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by Parent in writing pursuant to Section
9.5:
(a) Performance of Obligations of the Company. The Company
(and its appropriate subsidiaries) shall have performed in all material respects
its agreements and covenants contained in Sections 6.1 and 6.2 and shall have
performed in all material respects its other agreements and covenants contained
in or contemplated by this Agreement to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
(i) on and as of the date hereof and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time other than the date hereof or the
Closing Date, which need only be true and correct as of such date or time)
except in each of cases (i) and (ii) for such failures of representations or
warranties to be true and correct (without regard to any materiality
qualifications contained therein) which, individually and in the aggregate,
would not be reasonably likely to result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a
certificate signed by the chief financial officer of the Company, dated the
Closing Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 8.2(a) and Section 8.2(b) have been satisfied.
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(d) No Company Material Adverse Effect. No Company Material
Adverse Effect shall have occurred, and there shall exist no fact or
circumstance other than facts and circumstances described in Section 8.2(d) of
the Company Disclosure Schedule or the Company SEC Reports filed prior to the
date hereof which is reasonably likely to have a Company Material Adverse
Effect.
(e) Company Required Consents. The Company Required Consents
the failure of which to obtain would have a Company Material Adverse Effect
shall have been obtained.
(f) Affiliate Agreements. Parent shall have received
Affiliate Agreements, duly executed by each "affiliate" of the Company,
substantially in the form of Exhibit 7.8, as provided in Section 7.8.
(g) Tax Opinion. Parent shall have received an opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ to the effect that the Merger will be treated as
a reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ may receive and rely upon
representations contained in certificates of Parent, the Company and others, in
each case in form and substance reasonably acceptable to such counsel.
(h) Termination of Operating Agreement. The Amended and
Restated Operating Agreement of Connectiv/CNE Energy Services, L.L.C., dated
September 1, 1997 shall have been terminated and shall be of no further force or
effect.
SECTION 8.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT
THE MERGER. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5.
(a) Performance of Obligations of Parent. Parent (and its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in Section 6.1 and shall have performed in
all material respects its other agreements and covenants contained in or
contemplated by this Agreement to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement shall be true and correct (i)
on and as of the date hereof and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time other than the date hereof or the
Closing Date, which need only be true and correct as of such date or time)
except in each of cases (i) and (ii) for such failures of representations or
warranties to be true and correct (without regard to any materiality
qualifications contained therein) which, individually and in the aggregate,
would not be reasonably likely to result in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a
certificate signed by the Senior Vice President and General Counsel of Parent,
dated the Closing Date, to the
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effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) No Parent Material Adverse Effect. No Parent Material
Adverse Effect shall have occurred, and there shall exist no fact or
circumstance other than facts and circumstances described in the Parent SEC
Reports filed prior to the date hereof which is reasonably likely to have a
Parent Material Adverse Effect.
(e) Parent Required Consents. The Parent Required Consents
the failure of which to obtain would have a Parent Material Adverse Effect shall
have been obtained.
(f) Tax Opinion. The Company shall have received an opinion
from LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. to the effect that the Merger will
be treated as a reorganization within the meaning of Section 368(a) of the Code.
In rendering such opinion, LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, may receive and
rely upon representations contained in certificates of Parent, the Company and
others, in each case in form and substance reasonably acceptable to such
counsel.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date, whether before or after approval by the
shareholders of the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of
the Company and Parent;
(b) by any party hereto, by written notice to the other
parties, if the Effective Time shall not have occurred on or before the date
which is twelve months from the date hereof (the "Initial Termination Date");
provided, however, that the right to terminate the Agreement under this Section
9.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted directly or
indirectly in, the failure of the Effective Time to occur on or before such
date; and provided, further, that if on the Initial Termination Date the
conditions to the Closing set forth in Section 8.1(e), shall not have been
fulfilled but all other conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then the Initial Termination Date shall be extended
to the eighteen-month anniversary of the date hereof;
(c) by any party hereto, by written notice to the other
parties, if the Company Shareholders' Approval shall not have been obtained at a
duly held Company Special Meeting, including any adjournments thereof by the
Initial Termination Date;
(d) by any party hereto, if any state or federal law, order,
rule or regulation is adopted or issued, which has the effect, as supported by
the written opinion of outside counsel
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for such party, of prohibiting the Merger, or by any party hereto if any court
of competent jurisdiction in the United States or any State shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Merger, and such order, judgment or decree shall have become
final and nonappealable;
(e) by the Company prior to the approval of this Agreement by
the shareholders of the Company, upon five days' prior notice to Parent, if the
Company is not in breach of this Agreement and, as a result of an Alternative
Proposal, the Board of Directors of the Company determines in good faith, that
(x) the Alternative Proposal is financially superior to the Merger and the third
party making the Alternative Proposal has demonstrated that any necessary
financing has been obtained and (y) based upon the advice of outside counsel and
such other matters as the Company Board of Directors deems relevant, after
considering applicable provisions of state law and after giving effect to all
concessions which may be offered by the other party pursuant to the proviso
below, that failure to do so would likely result in a breach of its fiduciary
duties under applicable law; provided, however, that prior to any such
termination, the Company shall, and shall cause its respective financial and
legal advisors to, negotiate with Parent to make such adjustments in the terms
and conditions of this Agreement as would enable the Company to proceed with the
transactions contemplated herein;
(f) by the Company, by written notice to Parent, if (i) there
exist breaches of the representations and warranties of Parent made herein as of
the date hereof which breaches, individually or in the aggregate, would or would
be reasonably likely to result in a Parent Material Adverse Effect, and such
breaches shall not have been remedied within 20 days after receipt by Parent of
notice in writing from the Company, specifying the nature of such breaches and
requesting that they be remedied, or (ii) Parent (or its appropriate
subsidiaries) shall have failed to perform and comply with, in all material
respects, its agreements and covenants hereunder, and such failure to perform or
comply shall not have been remedied within 20 days after receipt by Parent of
notice in writing from the Company, specifying the nature of such failure and
requesting that it be remedied; or
(g) by Parent, by written notice to the Company, if (i) there
exist material breaches of the representations and warranties of the Company
made herein as of the date hereof which breaches, individually or in the
aggregate, would or would be reasonably likely to result in a Company Material
Adverse Effect, and such breaches shall not have been remedied within 20 days
after receipt by the Company of notice in writing from Parent, specifying the
nature of such breaches and requesting that they be remedied, (ii) the Company
(or its appropriate subsidiaries) shall not have performed and complied with its
agreements and covenants contained in Sections 6.1(b) and 6.1(c) or shall have
failed to perform and comply with, in all material respects, its other
agreements and covenants hereunder, and such failure to perform or comply shall
not have been remedied within 20 days after receipt by the Company of notice in
writing from Parent, specifying the nature of such failure and requesting that
it be remedied; or (iii) the Board of Directors of the Company or any committee
thereof (A) shall withdraw or modify in any manner adverse to Parent its
approval or recommendation of this Agreement or the transactions contemplated
herein, (B) shall fail to reaffirm such approval or recommendation upon Parent's
request within two days of such request, (C) shall approve or recommend any
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acquisition of the Company or a material portion of its assets or any tender
offer for the shares of capital stock of the Company, in each case by a party
other than Parent or any of its affiliates or (D) shall resolve to take any of
the actions specified in clause (A), (B) or (C).
SECTION 9.2 EFFECT OF TERMINATION. Subject to Section
10.1(b), in the event of termination of this Agreement by either the Company or
Parent pursuant to Section 9.1, there shall be no liability on the part of
either the Company or Parent or their respective officers or directors
hereunder, except that Section 7.12, Section 9.3, the agreement contained in the
last sentence of Section 7.1, Section 10.8 and Section 10.9 shall survive the
termination.
SECTION 9.3 TERMINATION FEE; EXPENSES.
(a) Termination Fee upon Breach or Withdrawal of Approval. If
this Agreement is terminated at such time that this Agreement is terminable
pursuant to one (but not both) of (x) Section 9.1(f)(i) or (ii) or (y) Section
9.1(g)(i) or (ii), then: (i) the breaching party shall promptly (but not later
than five business days after receipt of notice from the non-breaching party)
pay to the non-breaching party in cash an amount equal to all documented
out-of-pocket expenses and fees incurred by the non-breaching party (including,
without limitation, fees and expenses payable to all legal, accounting,
financial, public relations and other professional advisors arising out of, in
connection with or related to the Merger or the transactions contemplated by
this Agreement) not in excess of $5 million ("Expenses"); provided, however,
that, if this Agreement is terminated by a party as a result of a willful breach
by the other party, the non-breaching party may pursue any remedies available to
it at law or in equity and shall, in addition to its out-of-pocket expenses
(which shall be paid as specified above and shall not be limited to $5 million),
be entitled to retain such additional amounts as such non-breaching party may be
entitled to receive at law or in equity.
(b) The Company shall pay Parent a fee of $17 million
("Termination Fee"), upon the termination of this Agreement by Parent or the
Company pursuant to Section 9.1(c) or by the Company pursuant to Section 9.1(e)
or by Parent pursuant to Section 9.1(g)(iii); provided, however, that in the
event of termination under either Section 9.1(c) or Section 9.1(g)(iii), no
payment of the Termination Fee or Expenses shall be required unless and until
within two years of such termination the Company enters into a definitive
agreement to consummate or consummates an Alternative Proposal, and, in the case
of a termination pursuant to Section 9.1(c), there shall have been made and not
withdrawn at the time of the Company Special Meeting an Alternative Proposal
and, in the case of a termination pursuant to Section 9.1(g)(iii), there shall
have been made and not withdrawn at the time of such termination an Alternative
Proposal.
(c) Liquidated Damages; Prompt Payment. The parties agree
that the agreements contained in this Section 9.3 are an integral part of the
transactions contemplated by the Agreement and constitute liquidated damages and
not a penalty. If one party fails to pay promptly to the other any fee or
expenses due hereunder, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the
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amount of any unpaid fee at the publicly announced prime rate of Chase Manhattan
Bank, N.A., from the date such fee was required to be paid.
SECTION 9.4 AMENDMENT. This Agreement may be amended by the
Boards of Directors of the parties hereto, at any time before or after approval
hereof by the shareholders of the Company and prior to the Effective Time, but
after such approvals, no such amendment shall (i) alter or change the amount or
kind of shares, rights or any of the proceedings of the treatment of shares
under Article II, or (ii) alter or change any of the terms and conditions of
this Agreement if any of the alterations or changes, alone or in the aggregate,
would materially adversely affect the rights of holders of Company capital
stock, except for alterations or changes that could otherwise be adopted by the
Board of Directors of the Company, without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 9.5 WAIVER. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
law. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 NON-SURVIVAL; EFFECT OF REPRESENTATIONS AND
WARRANTIES. (a) All representations, warranties and agreements in this Agreement
shall not survive the Merger, except as otherwise provided in this Agreement and
except for the agreements contained in this Section 10.1, in Articles I and II
and in Sections 7.5, 7.11, 10.7, 10.8 and 10.9.
(b) No party may assert a claim for breach of any
representation or warranty contained in this Agreement (whether by direct claim
or counterclaim) except in connection with the cancellation of this Agreement
pursuant to Section 9.1(f)(i) or Section 9.1(g)(i) (or pursuant to any other
subsection of Section 9.1, if the terminating party would have been entitled to
terminate this Agreement pursuant to Section 9.1(f)(i) or Section 9.1(g)(i)).
SECTION 10.2 BROKERS. The Company represents and warrants
that, except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated whose fees have been
disclosed to Parent prior to the date hereof, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. Parent represents
and warrants that, except for Chase Securities, Inc. whose fees have been
disclosed to the Company prior to the date hereof, no broker, finder or
investment banker is entitled to any
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brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent.
SECTION 10.3 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if (i) delivered
personally, (ii) sent by reputable overnight courier service, (iii) telecopied
(which is confirmed), or (iv) five days after being mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Company, to:
Connecticut Energy Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent, to:
Energy East Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.4 MISCELLANEOUS. This Agreement (including the
documents and instruments referred to herein) (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof other than the Employment Agreement and the Confidentiality
Agreement; (ii) shall not be assigned by operation of law or otherwise; and
(iii) shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed in and to be fully performed
in such State, without giving effect to its conflicts of law, rules or
principles and except to the extent the provisions of this Agreement (including
the documents or instruments referred to herein) are expressly governed by or
derive their authority from the CBCA.
SECTION 10.5 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 10.6 COUNTERPARTS; EFFECT. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
SECTION 10.7 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
for rights of Indemnified Parties as set forth in Section 7.5, nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.8 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. Each
party to this Agreement waives, to the fullest extent permitted by applicable
law, (i) any right it may have to a trial by jury in respect of any action, suit
or proceeding arising out of this Agreement and (ii) without limiting the effect
of Section 9.3, any right it may have, other than in the case of a willful
breach, to receive damages from any other party based on any theory of liability
for any special, indirect, consequential (including lost profits) or punitive
damages.
SECTION 10.9 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of New York or in New York state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the
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State of New York or any New York state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
sitting in the State of New York.
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IN WITNESS WHEREOF, the Company, Parent and Merger Co. have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CONNECTICUT ENERGY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, General Counsel and
Secretary
ENERGY EAST CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
General Counsel
MERGER CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary, Treasurer and Vice
President
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