AGREEMENT AND PLAN OF MERGER
Among
CENTRICA PLC,
WINDSOR ACQUISITION CORPORATION
and
NEWPOWER HOLDINGS, INC.
Dated as of February 22, 2002
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 22, 2002
(this "Agreement"), among Centrica plc, a public limited company organized under
the laws of England and Wales ("Parent"), Windsor Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
NewPower Holdings, Inc., a Delaware corporation (the "Company"; together with
Purchaser, the "Constituent Corporations").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS the respective Boards of Directors of Parent,
Purchaser and the Company have determined that the acquisition of the Company by
Parent upon the terms and subject to the conditions of this Agreement would be
advantageous and beneficial to their respective corporations and that such
transaction is consistent with and in furtherance of such entities' respective
long-term business strategies;
WHEREAS in furtherance thereof, it is proposed that Purchaser
will make a tender offer (as such offer may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the outstanding
shares of the Company's common stock, par value U.S. $0.01 per share (the
"Company Common Stock"), for U.S. $1.05, subject to adjustment as set forth in
Section 1.1(d), per share of Company Common Stock (such amount, or any other
amount per share offered pursuant to the Offer in accordance with the terms of
this Agreement, being hereinafter referred to as the "Per Share Amount"), net to
the seller in cash, in accordance with the terms and subject to the conditions
provided herein and in the Offer Documents (as defined in Section 1.1(b));
WHEREAS the respective Boards of Directors of Parent,
Purchaser and the Company have approved and declared advisable this Agreement,
the Offer and the merger (the "Merger") of Purchaser with and into the Company
(after such time, the "Surviving Corporation") following the consummation of the
Offer, upon the terms and subject to the conditions hereof, whereby pursuant to
the Offer each issued and outstanding share of Company Common Stock properly
tendered and not withdrawn will be purchased by Purchaser at a price per share
equal to the Per Share Amount, net to the seller in cash, and subsequent to the
Offer, each issued and outstanding share of Company Common Stock not owned,
directly or indirectly, by the Company, Parent or any of their respective
Subsidiaries (as defined in Section 3.1(b)), excluding shares of Company Common
Stock held by persons who object to the Merger and comply with all the
provisions of Delaware law concerning the right of holders of shares of Company
Common Stock to dissent from the Merger and require appraisal of their shares of
Company Common Stock (each such person, a "Dissenting Stockholder"), will be
converted into the right to receive the Per Share Amount;
WHEREAS the Company, Enron Corp. ("Enron") and certain
affiliates of Enron and the Company have entered into the Enron Master
Termination Agreement, dated as of the date hereof and attached hereto as
Exhibit A (the "Enron Master Termination Agreement"), providing, among other
things, and subject to the approval of the Enron Master Termination Agreement by
the U.S. Bankruptcy Court for the Southern District of New York (the
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
Section 1.1 The Offer............................................................. 2
ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger.......................................... 5
Section 2.2 Closing............................................................... 5
Section 2.3 Effects of the Merger................................................. 5
Section 2.4 Certificate of Incorporation and By-Laws.............................. 5
Section 2.5 Directors............................................................. 6
Section 2.6 Officers.............................................................. 6
Section 2.7 Board of Directors; Committees........................................ 6
ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Conversion of Capital Stock........................................... 7
Section 3.2 Exchange of Certificates.............................................. 8
Section 3.3 No Further Ownership Rights in Company Common Stock................... 8
Section 3.4 Closing of Company Transfer Books..................................... 9
Section 3.5 Withholding........................................................... 9
Section 3.6 Lost, Stolen or Destroyed Certificates................................ 9
Section 3.7 Further Assurances.................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization.......................................................... 10
Section 4.2 Capitalization........................................................ 10
Section 4.3 Authority............................................................. 11
Section 4.4 Consents and Approvals; No Violations................................. 12
Section 4.5 No Regulation as Public Utility....................................... 13
Section 4.6 SEC Reports and Financial Statements.................................. 13
Section 4.7 Disclosure Documents.................................................. 14
Section 4.8 Litigation............................................................ 15
Section 4.9 No Material Adverse Change; Material Agreements....................... 15
Section 4.10 Taxes................................................................. 15
Section 4.11 Benefit Plans; Labor Matters; Employment-Related Agreements........... 17
Section 4.12 Opinion of Financial Advisor.......................................... 19
Section 4.13 Board Approval; Certain Antitakeover Provisions Not Applicable........ 19
Section 4.14 Intellectual Property................................................. 20
Section 4.15 Vote Required......................................................... 21
Section 4.16 Brokers............................................................... 21
Section 4.17 Environmental Matters................................................. 21
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Section 4.18 Tangible Property; Real Property and Leases........................... 22
Section 4.19 Contracts............................................................. 23
Section 4.20 PECO.................................................................. 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Section 5.1 Organization.......................................................... 24
Section 5.2 Authority............................................................. 24
Section 5.3 Consents and Approvals; No Violations................................. 25
Section 5.4 Disclosure Documents.................................................. 25
Section 5.5 Financing............................................................. 26
Section 5.6 Brokers............................................................... 26
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company.................................... 26
Section 6.2 Reasonable Efforts.................................................... 29
Section 6.3 Access to Information................................................. 30
Section 6.4 Company Stockholders Meeting.......................................... 30
Section 6.5 Company Stock Plan; Warrants.......................................... 31
Section 6.6 Company Benefit Plans................................................. 32
Section 6.7 No Solicitation....................................................... 32
Section 6.8 Fees and Expenses..................................................... 33
Section 6.9 Notification of Certain Matters....................................... 35
Section 6.10 Certain Agreements.................................................... 35
Section 6.11 Public Announcements.................................................. 35
Section 6.12 State Takeover Laws................................................... 35
Section 6.13 Indemnification....................................................... 36
Section 6.14 Additional Agreements................................................. 37
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation To Effect the Merger............ 38
ARTICLE VIII
TERMINATION
Section 8.1 Termination........................................................... 38
Section 8.2 Effect of Termination................................................. 40
Section 8.3 Trading Arrangements.................................................. 40
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and Warranties......................... 40
Section 9.2 Amendment............................................................. 40
Section 9.3 Extension; Waiver..................................................... 41
Section 9.4 Notices............................................................... 41
Section 9.5 Interpretation........................................................ 42
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Section 9.6 Counterparts.......................................................... 43
Section 9.7 Entire Agreement; No Third Party Beneficiaries........................ 43
Section 9.8 GOVERNING LAW......................................................... 43
Section 9.9 Specific Performance.................................................. 43
Section 9.10 Assignment............................................................ 43
Section 9.11 Validity.............................................................. 43
Section 9.12 Procedure for Termination, Amendment, Extension or Waiver............. 43
iii
"Bankruptcy Court"), for the mutual release of liabilities and the termination
of agreements between Enron and certain of its affiliates and the Company and
certain of its Subsidiaries and all obligations thereunder;
WHEREAS the Company and Enron and certain affiliates of Enron
and the Company have entered into the Enron Settlement Agreement, dated as of
the date hereof and attached hereto as Exhibit B (the "Enron Settlement
Agreement"), providing, among other things, and subject to the approval of the
Enron Settlement Agreement by the Bankruptcy Court, for the final settlement by
Enron and certain of its affiliates and the Company and certain of its
Subsidiaries of all obligations under all transactions between such parties and
their respective affiliates as described therein, and the release of all liens
on the assets of the Company and its Subsidiaries with respect thereto;
WHEREAS Parent, Purchaser, Enron and various affiliates of
Enron have entered into the Enron Tender Agreement, dated as of the date hereof
and attached hereto as Exhibit C (the "Enron Tender Agreement"), providing,
among other things, that, subject to the approval of the Enron Tender Agreement
by the Bankruptcy Court, each Enron party shall tender all shares of Company
Common Stock owned by such party, and shall cause its Subsidiaries to tender all
shares of Company Common Stock owned by such Subsidiaries pursuant to the Offer;
WHEREAS DLJ Merchant Banking Partners II, L.P., a Delaware
limited partnership and the other stockholders of the Company, named on the
signature pages thereto have entered into the DLJ Tender Agreement, dated as of
the date hereof and attached hereto as Exhibit D (the "DLJ Tender Agreement"),
providing, among other things, that the stockholders party thereto shall tender
all shares of Company Common Stock owned by them pursuant to the Offer; and
WHEREAS Parent, Purchaser and the Company desire to make
certain representations, warranties and agreements in connection with the Offer
and the Merger and also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and none of the events or
circumstances set forth in Annex A hereto (other than in clauses (i), (ii),
(iii) or (iv) of the first paragraph of Annex A titled "Certain Conditions of
the Offer", or paragraphs (h), (i), (j) or (l) thereof) shall have occurred or
be existing (unless waived), within five business days of the date hereof,
Purchaser will commence the Offer for all outstanding shares of Company Common
Stock. The Offer shall be subject only to the conditions set forth in Annex A
hereto; provided, that, Purchaser may waive any condition; provided, further,
that Purchaser shall not, without the prior consent of the Company (unless the
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Company takes any action permitted to be taken pursuant to the proviso of
Section 6.7(a)), (i) waive the Minimum Condition (as defined in Annex A), (ii)
reduce the number of shares of Company Common Stock subject to the Offer, (iii)
except as provided in Section 1.1(d), reduce the Per Share Amount, (iv) modify
or add to the conditions set forth in Annex A, (v) except as provided herein,
extend the Offer or (vi) change the form of consideration payable in the Offer.
Subject to the terms and conditions thereof, the Offer shall expire at midnight,
New York City time, on the date that is twenty business days after the date that
the Offer is commenced (the "Initial Expiration Date", and any expiration time
and date established pursuant to an authorized extension of the Offer, if any,
as so extended, the "Expiration Date"). Notwithstanding the foregoing, Purchaser
may (i) extend the Offer for not more than an additional ten business days each
time if at the Initial Expiration Date or any subsequent Expiration Date of the
Offer any of the conditions to Purchaser's obligation to purchase shares of
Company Common Stock are not satisfied, (ii) extend the Offer for any period
required by any order, decree or ruling of, or any rule, regulation,
interpretation or position of, any Governmental Entity (as defined in Section
4.4(a)) applicable to the Offer, or (iii) provide for a subsequent offering
period in accordance with Rule 14d-11 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Offer will be made by means of an offer to
purchase (the "Offer to Purchase") and related letter of transmittal containing
the terms set forth in this Agreement and the conditions set forth in Annex A
hereto. Upon the terms and subject to the satisfaction or waiver of the
conditions of the Offer as of the Initial Expiration Date or any subsequent
final Expiration Date, Parent will accept for payment and pay for all shares of
Company Common Stock duly tendered and not withdrawn promptly after such
Expiration Date. Parent shall cause Purchaser to accept tenders of shares of
Company Common Stock through the delivery of certificates representing Warrants
(as defined in Section 4.2.(a)) pursuant to such procedures as Parent or
Purchaser may specify in the Offer; provided, that such procedures permit each
tendering holder of Warrants to receive the same amount such holder would have
received had the holder exercised the Warrant for Shares prior to tender, less
$0.05 per Share. Subject to Section 6.7, the Company's Board of Directors shall
recommend acceptance of the Offer to its stockholders in a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
supplements thereto and including the exhibits thereto, the "Schedule 14D-9") to
be filed with the Securities and Exchange Commission (the "SEC") as soon as
practicable on the date the Offer is commenced. Each of the Company, Parent and
Purchaser will promptly correct any information provided by it for use in the
Schedule 14D-9 that becomes false or misleading in any material respect, and the
Company will take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to the holders of Company
Common Stock to whom the Offer was sent, in each case as and to the extent
required by applicable law.
(b) On the date of commencement of the Offer, Parent and
Purchaser will file, with the SEC, a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, the "Schedule TO") with
respect to the Offer. Parent agrees, as to the Schedule TO and the included
Offer to Purchase and related letter of transmittal (which, with the documents
included in the Schedule TO, pursuant to which the Offer shall be made and
together with any supplements thereto and including the exhibits thereto,
constitute the "Offer Documents") and the Company agrees, as to the Schedule
14D-9, that such documents shall, in all material respects, comply with the
requirements of the Exchange Act and the rules and regulations thereunder and
other applicable laws. Parent and Purchaser will disseminate the Offer to
Purchase, the related letter of transmittal and other Offer Documents (other
than the
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Schedule TO) to holders of Company Common Stock and holders of Warrants. Each of
Parent, Purchaser and the Company will promptly correct any information provided
by it for use in the Offer Documents or Schedule 14D-9, as the case may be, that
becomes false or misleading in any material respect, and each of Parent and
Purchaser will take all steps necessary to cause the Schedule TO as so corrected
to be filed with the SEC, and the other Offer Documents or Schedule 14D-9, as
the case may be, as so corrected to be disseminated to holders of shares of
Company Common Stock and holders of Warrants, in each case as and to the extent
required by applicable law. The Company and its counsel, as to the Offer
Documents, and Purchaser and its counsel, as to the Schedule 14D-9, shall be
given an opportunity to review and comment on such documents prior to their
being filed with the SEC and to review any comments received from the SEC with
respect to such documents, and Purchaser and the Company agree to give
reasonable consideration to the comments of the Company and its counsel and
Purchaser and its counsel, respectively. The Company and its counsel and
Purchaser and its counsel will provide Purchaser and its counsel, on the one
hand, and the Company and its counsel, on the other hand, with a reasonable
opportunity to participate in all communications with the SEC and its staff,
including any meetings and telephone conferences relating to the Schedule 14D-9,
the Offer, the Offer Documents, the Merger or this Agreement.
(c) In connection with the Offer, the Company will cause
its Transfer Agent to furnish promptly to Purchaser a list, as of a recent date,
of the record holders of shares of Company Common Stock and the record holders
of Warrants and their addresses, as well as mailing labels containing the names
and addresses of all record holders of shares of Company Common Stock, and all
record holders of Warrants and lists of security positions of shares of Company
Common Stock held in stock depositories. The Company will furnish Purchaser with
such additional information (including, but not limited to, updated lists of
holders of shares of Company Common Stock and record holders of Warrants and
their addresses, mailing labels and lists of security positions) and such other
assistance as Parent or Purchaser or their agents may reasonably request in
communicating the Offer to the record and beneficial holders of shares of
Company Common Stock and the record and beneficial holders of Warrants.
(d) Subject to Section 1.1(f), the Per Share Amount shall
be adjusted on the first date that all conditions to the Offer, other than
clause (j) of Annex A, are satisfied (the "Determination Date") in accordance
with the formula set forth on Schedule 1.1. The Per Share Amount shall be so
adjusted no more than once.
(e) If the Per Share Amount shall be adjusted in
accordance with Section 1.1(d), Purchaser shall extend the Offer so that it
expires on the tenth business day after the Determination Date; provided, that,
in no event shall Purchaser be obligated to further extend the Offer if any
condition to the Offer that was satisfied on the Determination Date is not
satisfied at the Expiration Date.
(f) Notwithstanding the foregoing, (i) if the Per Share
Amount as adjusted is less than U.S. $0.80, the Company shall have a right to
give Parent and Purchaser irrevocable written notice on the Determination Date
terminating this Agreement and this Agreement shall terminate at 5:00 p.m. New
York City time on the business day after such notice unless Parent and Purchaser
agree in writing prior to such time that the Per Share Amount shall be U.S.
$0.80, notwithstanding the adjustment or (ii) if the Per Share Amount as
adjusted is more than U.S.
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$1.30, Parent and Purchaser shall have a right to give the Company irrevocable
written notice on the Determination Date terminating this Agreement and this
Agreement shall terminate at 5:00 p.m. New York City time on the business day
after such notice unless the Company shall agree in writing prior to such time
that the Per Share Amount shall be U.S. $1.30, notwithstanding the adjustment.
ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger.
(a) Upon the terms and subject to the conditions hereof,
and in accordance with the Delaware General Corporation Law (the "DGCL"),
Purchaser shall be merged with and into the Company at the Effective Time (as
defined in Section 2.1(b)), with the Company continuing as the Surviving
Corporation and succeeding to and assuming all the rights and obligations of
Purchaser in accordance with the DGCL.
(b) Upon the terms and subject to the conditions hereof,
a certificate of merger or other appropriate documents (the "Certificate of
Merger") will be duly prepared and executed by the Company and Purchaser and
thereafter delivered to the Delaware Secretary of State (the "Filing Office")
for filing as provided in the DGCL as soon as practicable on the Closing Date
(as defined in Section 2.2). The Merger will become effective upon the filing of
the Certificate of Merger with the Filing Office or at such other later date or
time as Purchaser and the Company shall agree and as specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
Section 2.2 Closing. Unless this Agreement is terminated and
the transactions contemplated herein abandoned pursuant to Section 8.1, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date to
be specified by the parties, which will be no later than the second business day
following the satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (the "Closing Date"), at the offices of Sidley Xxxxxx
Xxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another
date or place is agreed to by the parties hereto.
Section 2.3 Effects of the Merger. The Merger will have the
effects set forth in this Agreement and the DGCL. The title to any real estate
or any interest therein vested, by deed or otherwise, in the Company or
Purchaser shall not revert or in any way become impaired by reason of the
Merger.
Section 2.4 Certificate of Incorporation and By-Laws.
(a) The Certificate of Incorporation of Purchaser, 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 applicable law and such Certificate of Incorporation; provided, however,
that, at the Effective Time, Article I of the Certificate of Incorporation of
the Surviving Corporation shall be amended to read as follows: "The name of the
corporation is "NewPower Holdings, Inc."
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(b) The By-Laws of Purchaser, as in effect immediately
prior to the Effective Time, will be the By-Laws of the Surviving Corporation
until amended in accordance therewith and with applicable law.
Section 2.5 Directors. The directors of Purchaser at the
Effective Time will be the directors of the Surviving Corporation, each to hold
office from the Effective Time in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly elected and qualified.
Section 2.6 Officers. The officers of Purchaser at the
Effective Time (which may include certain of the officers of the Company) will
be the officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation and until his or her successor is duly appointed
and qualified.
Section 2.7 Board of Directors; Committees. If requested by
Parent, the Company will, promptly following the purchase by Purchaser of shares
of Company Common Stock pursuant to the Offer, take all actions necessary to
cause persons designated by Parent to become directors of the Company so that
the total number of such persons equals that number of directors, rounded up to
the next whole number, which represents the product of (x) the total number of
directors on the board of directors of the Company multiplied by (y) the
percentage that the number of shares of Company Common Stock so accepted for
payment and paid for by Purchaser or Parent plus any shares of Company Common
Stock beneficially owned by Parent or its affiliates on the date of Parent's
request bears to the total amount of outstanding shares of Company Common Stock
at the time of such acceptance for payment. In furtherance thereof, the Company
will increase the size of the Board of Directors of the Company, or secure the
resignation of directors, or both, as is necessary to permit Parent's designees
to be elected to the Board of Directors of the Company, provided, however, that
prior to the Effective Time, the Board of Directors of the Company shall always
have at least three members (the "Independent Directors") who are neither
officers of Parent or Purchaser nor designees, shareholders or affiliates of
Parent or Purchaser. At such time, the Company, if so requested, will cause
persons designated by Purchaser to constitute the same percentage of each
committee of the Board of Directors of the Company, and each board of directors
of each Subsidiary of the Company and each committee of each such board (in each
case involving Subsidiaries of the Company to the extent of the Company's
ability to cause the election of such persons). The Company's obligations to
appoint designees to the Board of Directors of the Company shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to such Section and
Rule in order to fulfill its obligations under this Section 2.7 (provided that
Purchaser shall have provided to the Company on a timely basis and shall be
responsible for all information required to be included in the Schedule 14D-9
with respect to such designees) and shall include in the Schedule 14D-9 such
information as is required under such Section and Schedule.
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ARTICLE III
CONVERSION OF SECURITIES
Section 3.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of capital stock of the Company or of Purchaser:
(a) Each issued and outstanding share of capital stock of
Purchaser shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value U.S.$0.01 per share, of the
Surviving Corporation.
(b) All shares of Company Common Stock that are owned,
directly or indirectly, by the Company or any Subsidiary of the Company and any
shares of Company Common Stock owned, directly or indirectly, by Parent,
Purchaser or any other Subsidiary of Parent shall be cancelled and shall cease
to exist and no cash, shares of capital stock of Parent or Purchaser or other
consideration shall be delivered in exchange therefor. As used in this
Agreement, "Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which (i) such
party or any other subsidiary of such party is a general partner (excluding any
partnership, the general partnership interests of which held by such party or
any subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party, by any one or more of its subsidiaries, or by such party and one
or more of its subsidiaries. References to a wholly owned Subsidiary of an
entity include a Subsidiary all the common equity interests of which are owned
directly or through wholly owned Subsidiaries by such entity.
(c) Subject to Section 3.1(d), each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with Section 3.1(b)) shall be
converted into the right to receive from the Surviving Corporation in cash,
without interest, the Per Share Amount paid pursuant to the Offer (the "Merger
Consideration"). All such shares of Company Common Stock, when so converted,
shall no longer be outstanding and shall automatically be cancelled and each
holder of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company Common Stock held by a
Dissenting Stockholder shall not be converted as described in Section 3.1(c) but
shall become the right to receive such consideration as may be determined to be
due to such Dissenting Stockholder pursuant to the laws of the State of
Delaware. The Company shall give Parent (i) prompt notice of any written demands
for appraisal of shares of Company Common Stock received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer to
settle, any such demands.
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Section 3.2 Exchange of Certificates.
(a) Paying Agent. Parent shall authorize a commercial
bank (or other person) in the United States reasonably acceptable to the Company
to act as paying agent hereunder (the "Paying Agent") for the payment of the
Merger Consideration upon surrender of the Certificates.
(b) Parent to Provide Funds. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to promptly provide to
the Paying Agent, as required from time to time following the Effective Time,
all the funds necessary to pay for the shares of Company Common Stock pursuant
to Section 3.1.
(c) Exchange Procedures. As soon as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate, other than Parent, the Company and any Subsidiary of Parent or the
Company, (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 shall be in a form
and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Paying Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.1 (after giving effect to any required tax withholdings), and the Certificates
so surrendered shall forthwith be cancelled. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate. If payment is
to be made to a person other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of payment that such
Certificate shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Company
Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 3.1 (after giving effect to any required tax
withholdings). Notwithstanding the foregoing, neither the Paying Agent nor any
party shall be liable to a former stockholder of the Company for any cash or
interest delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. If any Certificates shall not have been
surrendered prior to two years after the Effective Time (or immediately prior to
such earlier date on which any payment pursuant to this Section 3.2 would
otherwise escheat to or become the property of any governmental body or agency),
the payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any person previously entitled thereto.
Section 3.3 No Further Ownership Rights in Company Common
Stock. All cash paid upon the surrender of Certificates in accordance with the
terms hereof shall be deemed
8
to have been paid in full satisfaction of all rights pertaining to the shares of
Company Common Stock theretofore represented by such Certificates.
Section 3.4 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
registration of transfers of shares of Company Common Stock shall thereafter be
made on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article III.
Section 3.5 Withholding. The Surviving Corporation or the
Paying Agent will be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or the Paying Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or the Paying Agent.
Section 3.6 Lost, Stolen or Destroyed Certificates. In the
event any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as the Board of
Directors of the Surviving Corporation may impose, the Surviving Corporation
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
herewith. When authorizing such issue of the Merger Consideration in exchange
therefor, the Board of Directors of the Surviving Corporation (or any authorized
officer thereof) may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to give the Surviving Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
Section 3.7 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
Section 4.1 Organization.
(a) Each of the Company and each of its Subsidiaries is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate or partnership power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing or in good standing or to
have such power and authority, individually or in the aggregate, has not had and
is not reasonably likely to have a Company material adverse effect (as such term
is used in this Agreement, as provided in Section 9.5) or the effect of
impairing the ability of the Company to perform its obligations under this
Agreement. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing, individually or in the
aggregate, has not had and is not reasonably likely to have a Company material
adverse effect or the effect of impairing the ability of the Company to perform
its obligations under this Agreement.
(b) The Company has heretofore made available to Parent a
complete and correct copy of the charter and By-Laws or comparable organization
documents, each as amended to date, of the Company and each of its Subsidiaries.
Such charters, By-Laws and comparable organizational documents are in full force
and effect. Neither the Company nor any Subsidiary of the Company is in
violation of any provision of its charter, By-Laws or comparable organizational
documents.
Section 4.2 Capitalization.
(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of (i) 500,000,000 shares of Company
Common Stock of which, as of February 1, 2002, 62,866,568 shares were issued and
outstanding and (ii) 50,000,000 shares of Preferred Stock, par value U.S. $0.01
per share, of which, as of the date hereof, none are issued or outstanding. As
of the date of this Agreement, 5,587 shares of Company Common Stock are owned by
the Company or its Subsidiaries. No shares of capital stock of the Company have
been acquired by the Company that are subject to any future payment obligation.
No shares of Common Stock are subject to issuance except, as of February 1, 2002
(i) the Company had subject to issuance 16,892,917 shares of Common Stock upon
exercise of options then outstanding under the Company's 2000 Stock Plan (the
"Company Stock Plan"), (ii) not more than 64,419,200 shares of Common Stock were
subject to issuance upon exercise of outstanding Class A warrants (the
"Warrants") issued by the Company and (iii) not more than 23,809 shares of
Common Stock were subject to issuance upon vesting of restricted stock under the
Company Stock Plan. Since February 1, 2002, the Company has not issued any
shares of its capital stock, except for the issuance of Company Common Stock
upon the exercise of options granted under
10
the Company Stock Plan which were outstanding on February 1, 2002, and has not
repurchased, redeemed or otherwise retired any shares of its capital stock and
has not agreed to issue any shares of its capital stock. All the outstanding
shares of the Company's capital stock are, and all shares which may be issued
pursuant to the Company Stock Plan or upon exercise of the Warrants will be,
when issued and paid for in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to any
preemptive rights of third parties in respect thereto. Upon consummation of the
Merger, each option outstanding shall be canceled and entitle the holder thereof
only to receive an amount in cash, if any, of the excess of the Merger
Consideration over the per share exercise price of such option times the number
of shares of Company Common Stock covered thereby.
(b) Each of the outstanding shares of capital stock of
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid, nonassessable and free of any preemptive rights in respect thereof, and,
except as disclosed in Section 4.2(b) of the disclosure letter dated the date
hereof from the Company to Parent (the "Company Disclosure Letter"), all such
shares are owned by the Company or by a Subsidiary of the Company free and clear
of any lien, claim, option, charge, security interest, limitation on voting
rights or encumbrance of any kind (collectively, "Liens"). Except for the
capital stock of its Subsidiaries or other entities described in Section 4.2(b)
of the Company Disclosure Letter, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, trust, limited liability company or other entity.
(c) As of the date of this Agreement, except as disclosed
in Section 4.2.(a) of this Agreement or Section 4.2(c) of the Company Disclosure
Letter, (i) no bonds, debentures, notes or other indebtedness having the right
to vote under ordinary circumstances (or convertible into securities having such
right to vote) ("Voting Debt") of the Company or any of its Subsidiaries are
issued or outstanding, (ii) there are no existing options, warrants, calls,
subscriptions or other rights or other agreements or commitments of any
character (collectively, "Rights") relating to the issued or unissued capital
stock, treasury stock or Voting Debt of the Company or any of its Subsidiaries
or obligating the Company or any of its Subsidiaries to issue, transfer or sell
or cause to be issued, transferred or sold any shares of capital stock or Voting
Debt of, or other equity interests in, the Company or of any of its Subsidiaries
or securities convertible into or exchangeable for such shares, Voting Debt or
equity interests or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such Right and (iii) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any Rights.
Section 4.3 Authority. The Company has the requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to, with respect to the Merger, the
approval and adoption of this Agreement and the Merger by the affirmative vote
of the holders of Company Common Stock entitled to cast at least a majority of
the total number of votes entitled to be cast by holders of Company Common
Stock. The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the Offer, the Merger and of the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, including by the approval of the
Company's Board of Directors, and no other
11
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated, other than, with
respect to the Merger, the approval and adoption of this Agreement and the
Merger by the Company's stockholders as described in the preceding sentence.
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery hereof by Parent and Purchaser,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, subject as to enforceability to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
similar laws relating to creditors' rights and to general principles of equity.
Section 4.4 Consents and Approvals; No Violations.
(a) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, domestic or foreign (a "Governmental Entity"), or
compliance with any law, statute, ordinance, rule or regulation that conditions,
restricts, prohibits or requires any notification or disclosure with respect to,
or is triggered by, the transfer, sale, lease or closure of any property, is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Offer, the Merger or the other
transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by the Company under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
with the SEC of the Schedule 14D-9 and, if applicable, the Company Proxy
Statement (as defined in Section 4.7) and such other filings as may be required
by the Exchange Act and the rules and regulations promulgated thereunder, (iii)
such filings, authorizations, orders and approvals with, of, to or from, the
Federal Energy Regulatory Commission (the "FERC") under the Federal Power Act,
as amended, that may be required in connection with the transactions
contemplated by this Agreement (the "FERC Approvals"), (iv) the filings,
authorizations, orders and approvals as may be required with, of, to or from
state and local governmental authorities, including state and local utility
commissions (the "Local Approvals") all of which are set forth in Section 4.4(a)
of the Company Disclosure Letter, and (v) the filing of the Certificate of
Merger with the Filing Office and appropriate documents with the New York Stock
Exchange and the relevant authorities of other jurisdictions in which the
Company is qualified to do business. Except as described in Section 4.4(a) of
the Company Disclosure Letter, neither the execution, delivery or performance of
this Agreement nor the consummation of the transactions contemplated hereby will
conflict with or result in any violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default, or give rise to any
right of termination, amendment, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in any change (other than
immaterial changes) in the rights or obligations under, or result in the
creation of any Lien on any property or asset of the Company or any of its
Subsidiaries pursuant to (any such conflicts, violations, breaches, defaults,
rights, changes in rights or obligations, or creations of Liens are herein
referred to, collectively, as "Violations"), any of the terms, conditions or
provisions of (i) the respective certificates or articles of incorporation or
by-laws or comparable organizational documents of the Company or any of its
Subsidiaries, (ii) any oral or written loan or credit agreement, note, bond,
mortgage, guarantee, indenture, lease, license, contract, agreement,
arrangement, executory commitment, instrument, permit, concession, franchise or
obligation
12
(each a "Contract") to which the Company or any of its Subsidiaries is a party
or by which any of them or any of their respective properties or assets may be
bound or affected or (iii) any judgment, order, writ, award, injunction, decree,
law, statute, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or their respective properties or assets, except, in the case
of clause (ii), for Violations that are not reasonably likely to prevent or
impair the consummation of the Offer or the Merger in any respect or to impair
the ability of the Company to perform its obligations under this Agreement and
which, individually or in the aggregate, have not had and are not reasonably
likely to have, a Company material adverse effect.
(b) Except as described in the Company SEC Documents (as
defined in Section 4.6) filed prior to the date of this Agreement, neither the
Company nor any of its Subsidiaries has been or is in default under or in
violation of (i) any judgment, order, writ, award, injunction, decree, law,
statute, ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets (except as set forth in
item 4 of Section 9.5 of the Company Disclosure Letter) or (ii) any Contract to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound or affected, except
for any such defaults or violations that are not reasonably likely to prevent or
impair the consummation of the Offer or the Merger in any respect or to impair
the ability of the Company to perform its obligations under this Agreement and
which, individually or in the aggregate, have not had and are not reasonably
likely to have a Company material adverse effect.
Section 4.5 No Regulation as Public Utility. Except as set
forth in Section 4.5 of the Company Disclosure Letter, neither the Company nor
any Subsidiary of the Company is subject to regulation as a public utility or
public service company (or similar designation) by the United States, by any
state in the United States or by any foreign country or political subdivision
thereof. To the knowledge of the Company, Parent will not be required to
register as a "holding company" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, and the rules and regulations thereunder, as a
result of its ownership of the Company and its Subsidiaries.
Section 4.6 SEC Reports and Financial Statements. Since July
14, 2000, the Company has filed with the SEC all forms, reports, schedules,
statements and other documents required to be filed by it under the Exchange Act
and the Securities Act of 1933, as amended (the "Securities Act"), and has
heretofore made available to Parent true and complete copies of all such forms,
reports, schedules, statements and documents (as they have been amended or
supplemented since the time of their filing to the date hereof and including all
such forms, reports, schedules, statements and documents filed with the SEC
after the date of this Agreement, collectively, the "Company SEC Documents").
The Company SEC Documents, including without limitation any financial statements
or schedules included or incorporated by reference therein, (i) did not at the
time they were filed, and in the case of the Company SEC Documents filed after
the date hereof, will not at the time they are filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (ii) complied
and, in the case of the Company SEC Documents filed after the date hereof, will
comply in all material respects with the applicable requirements
13
of the Exchange Act or the Securities Act, as the case may be, and the
applicable rules and regulations thereunder. The financial statements of the
Company included or incorporated by reference in the Company SEC Documents
comply and, in the case of the Company SEC Documents filed after the date
hereof, will comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been and, in the case of the Company SEC Documents filed after the
date hereof, will comply with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, to normal year-end audit adjustments which will not be
material in the aggregate) and fairly present and, in the case of the Company
SEC Documents filed after the date hereof, will fairly present (subject, in the
case of the unaudited statements, to normal year-end audit adjustments which
will not be material in the aggregate) the consolidated financial position of
the Company and its Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. Except as
specifically reflected, reserved against or otherwise disclosed in the financial
statements of the Company included in the Company SEC Documents or as otherwise
disclosed in the Company SEC Documents, in each case filed prior to the date of
this Agreement, or as disclosed in Sections 4.6, 4.9(i) or 9.5 of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
liabilities or obligations (absolute, accrued, fixed, contingent or otherwise),
that are required to be reflected on the consolidated financial statements of
the Company in accordance with GAAP, other than liabilities incurred after
September 30, 2001 in compliance with Section 6.1 (other than clauses (p) and
(t) of Section 6.1) had such Section been applicable at that time which,
individually and in the aggregate, have not had and are not reasonably likely to
have a Company material adverse effect, and there are no facts or circumstances
of which the management of the Company has knowledge that could result in any
claims against or obligations or liabilities (absolute, accrued, fixed,
contingent or otherwise) of the Company or any of its Subsidiaries, which
individually or in the aggregate, have had or are reasonably likely to have a
Company material adverse effect. The Company's combined unrestricted and
restricted cash balances as of December 31, 2001 as determined in accordance
with GAAP are as set forth in Section 4.6 of the Company Disclosure Letter.
Section 4.7 Disclosure Documents. (a) Neither the Schedule
14D-9 nor the information statement to be filed by the Company in connection
with the Offer pursuant to Rule 14f-1 under the Exchange Act (the "Information
Statement") nor any of the information supplied by the Company or any of its
Subsidiaries specifically for inclusion in the Offer Documents will, at the
respective times the Schedule 14D-9, the Information Statement or the Offer
Documents are filed with the SEC or are first published, sent or given to
stockholders, as the case may be, 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 were made, not misleading. At the respective times when they
are filed with the SEC or are first published, sent or given to stockholders,
the Schedule 14D-9 and the Information Statement will comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
applicable rules and regulations thereunder.
(b) The proxy or information statement relating to any
meeting of the Company's stockholders that may be required to be held in
connection with the Merger (as it may be amended from time to time, the "Company
Proxy Statement") will not, at the date mailed
14
to the Company's stockholders and at the time of the meeting of stockholders to
be held in connection with the Merger, 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 or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies or otherwise. The Company Proxy Statement will, when filed with the SEC
by the Company, comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder.
Section 4.8 Litigation. Except as disclosed in Section 4.8 of
the Company Disclosure Letter, there is no suit, claim, action, litigation,
proceeding, investigation or other application (hereinafter an "Action")
instituted or pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries before any Governmental Entity which (i)
individually or in the aggregate, has had or is reasonably likely to have, a
Company material adverse effect or (ii) as of the date of the Agreement seeks
to, or is reasonably likely to, delay or prevent the consummation of the Offer,
the Merger or the other transactions contemplated by this Agreement. Neither the
Company nor any of its Subsidiaries is subject to any outstanding order,
judgment, writ, award, injunction or decree other than those that impose
immaterial obligations on the Company or its Subsidiaries.
Section 4.9 No Material Adverse Change; Material Agreements.
Except as disclosed in the Company SEC Documents (i) except as described in
Section 4.9(i) and 9.5 of the Company Disclosure Letter, since September 30,
2001, there has not been any event, change or development which, individually or
in the aggregate, has had or is reasonably likely to have a Company material
adverse effect and (ii) except as described in Section 4.19 of the Company
Disclosure Letter, since September 30, 2001, neither the Company nor any of its
Subsidiaries has become a party to any agreement or amendment to an existing
agreement or has taken any action which would have been (or is) in violation of
Section 6.1 had such Section been applicable at the time. Except as described in
Section 4.9(iii) and (iv) of the Company Disclosure Letter, the execution,
delivery and performance of this Agreement and the transactions contemplated by
this Agreement will not constitute a "change of control" under, require the
consent or approval from or the giving of notice to any third party pursuant to,
or accelerate the vesting or repurchase rights under, the terms, conditions or
provisions of any Contract to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or affected. The Company has furnished to Parent all the agreements
("Officer Agreements") which set forth the amounts payable to the officers of
the Company and its Subsidiaries identified in Section 4.9(iv) of the Company
Disclosure Letter as a result of the transactions contemplated by this Agreement
and/or any subsequent employment termination.
Section 4.10 Taxes.
Except as disclosed in Section 4.10 of the Company Disclosure
Letter:
(a) Each of the Company and its Subsidiaries has duly
filed all Tax Returns (as defined in Section 4.10(c)) required to be filed by it
or appropriate extensions thereof have been properly obtained, all such Tax
Returns are complete and accurate and disclose all material Taxes (as defined in
Section 4.10(c)) required to be paid by the Company and its Subsidiaries,
15
and the Company and each of its Subsidiaries has duly paid or caused to be paid
all Taxes shown to be due on such Tax Returns in respect of the periods covered
by such Tax Returns and has made adequate provision in the Company's financial
statements for payment of all Taxes anticipated to be payable in respect of all
taxable periods or portions thereof ending on or before the date hereof. Section
4.10 of the Company Disclosure Letter lists the periods through which the Tax
Returns required to be filed by the Company or its Subsidiaries have been
examined by the Internal Revenue Service (the "IRS") or other appropriate taxing
authority, or the period during which any assessments may be made by the IRS or
other appropriate taxing authority has expired. All deficiencies and assessments
asserted as a result of such examinations or other audits by federal, state,
local or foreign taxing authorities have been paid, fully settled or adequately
provided for in the Company's financial statements, and no issue or claim for
Taxes has been asserted in writing by any taxing authority for any prior period,
the adverse determination of which would result in a deficiency which would have
a Company material adverse effect, other than those heretofore paid or provided
for in the Company's financial statements. There are no outstanding agreements
or waivers in writing extending the statutory period of limitation applicable to
any Tax Return of the Company or its Subsidiaries and no deficiency with respect
to any Taxes has been proposed, asserted or assessed against the Company or any
of its Subsidiaries. There are no liens for Taxes upon the assets of the Company
or of any of its Subsidiaries except liens relating to current Taxes not yet
due. Except as described in Section 4.10 of the Company Disclosure Letter, no
transaction contemplated by this Agreement is subject to withholding under
Section 1445 of the Code and to the knowledge of the Company, no stock transfer
Taxes, sales Taxes, use Taxes, real estate transfer Taxes, or other similar
Taxes will be imposed on the transactions contemplated by this Agreement. All
Taxes which the Company or any of its Subsidiaries have been required by law to
withhold or to collect for payment have been duly withheld or collected and paid
to the appropriate taxing authority. Neither the Company nor any of its
Subsidiaries is a party to any agreement, contract or arrangement that could
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code. Neither the Company
nor any of its Subsidiaries (i) has been a member of a group filing consolidated
returns for federal income tax purposes, other than the affiliated group of
which the Company is the common parent corporation, or (ii) is a party to a tax
sharing or tax indemnity agreement or any other agreement of a similar nature
that remains in effect.
(b) As of December 31, 2001, the net operating losses (as
defined in Section 172 (c) of the Code) of the Company and its consolidated
Subsidiaries for U.S. federal tax purposes that were eligible to be carried
forward to taxable years beginning after December 31, 2001, and the alternative
minimum tax net operating losses (determined under Section 56(d) of the Code)
eligible for such carryforward are each as set forth in Item 5 of Section 4.10
of the Company Disclosure Letter. Immediately before the date hereof, the
carryforward of such net operating losses was not subject to any limitation set
forth under Section 382 of the Code, any SRLY limitation set forth in Treasury
Regulations 1.1502-21(c) or 1.1502-22(c), or any similar limitation. Neither the
Company nor any of its Subsidiaries has engaged in any extraordinary transaction
since December 31, 2001, which would have the effect of reducing or limiting the
amount of such net operating losses or alternative minimum, tax net operating
losses eligible to be carried forward to any taxable year beginning after
December 31, 2001.
16
(c) For purposes of this Agreement, the term "Taxes"
means all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, use, transfer,
license, payroll, employment, withholding, environmental, ad valorem,
alternative or add-on minimum and franchise taxes, imposed by the United States
or any state, local or foreign government or subdivision or agency thereof,
including any interest, penalties or additions thereto. For purposes of this
Agreement, the term "Tax Return" means any report, return or other information
or document required to be filed with a taxing authority in connection with
Taxes.
Section 4.11 Benefit Plans; Labor Matters; Employment-Related
Agreements.
(a) With respect to the Employee Benefit Plans (as
defined in Section 4.11(b)), no event has occurred and, to the knowledge of the
Company, there exists no condition or set of circumstances, in connection with
which the Company or any of its Subsidiaries could be subject to any liability
that could reasonably be expected to have a material adverse effect on the
Company under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code or any other applicable law.
(b) Section 4.11(b) of the Company Disclosure Letter sets
forth a true and complete list of each employee benefit plan or program
maintained or contributed to by the Company or any of its Subsidiaries and
covering current or former employees and directors of the Company and its
Subsidiaries, including "employee benefit plans" within the meaning of Section
3(3) of ERISA (the "ERISA Plans"), and deferred compensation, stock option,
stock purchase, stock appreciation rights, stock based, incentive and bonus
plans (an "Employee Benefit Plan"). True and complete copies of all Employee
Benefit Plans, including any trust instruments and insurance contracts forming a
part of any Employee Benefit Plans, and all amendments thereto have been
provided or made available to Parent. Each Employee Benefit Plan is in
compliance in all material respects with all applicable provisions of ERISA, the
Code and other laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plan. All contributions
required to be made under the terms of any Employee Benefit Plan have been
timely made or have been reflected on the audited financial statements or
interim financial statements of the Company. There are no material instituted,
pending or threatened Actions against the Company or any of its Subsidiaries
with respect to any Employee Benefit Plan.
(c) Except as listed in Section 4.11(c) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to
or bound by any written:
(i) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by the
Company or any of its Subsidiaries without premium or penalty
on notice of 30 days or less under which the only monetary
obligation of the Company or any of its Subsidiaries is to
make current wage or salary payments and provide current
fringe benefits), consulting, advisory or service agreement,
employee loan agreement, or deferred compensation agreement;
or
17
(ii) contract or agreement with any officer, director or
employee (other than employment agreements disclosed in
response to clause (i) or excluded from the scope of clause
(i)), agent, or attorney-in-fact of the Company or any of its
Subsidiaries.
(d) Except as disclosed in Section 4.11(d) of the Company
Disclosure Letter, the Company and each of its Subsidiaries have complied in all
material respects with all applicable federal, state and local laws, rules and
regulations which relate to wages, hours, discrimination in employment and
collective bargaining and to its operations and none of them is liable in any
material respect for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing. Neither the Company nor any of its
Subsidiaries, is a party to, and none of such parties is, to the knowledge of
the Company, affected by or threatened with, any dispute or controversy with a
union or other labor matters involving its employees. Neither the Company nor
any of its Subsidiaries is materially affected by any dispute or controversy
with a union or with respect to unionization or collective bargaining.
(e) Except as set forth in Section 4.11(e) of the Company
Disclosure Letter, each Employee Benefit Plan that is intended to be qualified
under Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each trust
established in connection with any Employee Benefit Plan that is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that such trust is so exempt. To
the knowledge of the Company, no fact or event has occurred since that date of
any determination letter from the IRS which could affect adversely the qualified
status of any such Benefit Plan or the exempt status of any such trust and the
Company is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. Neither the Company nor any of its
Subsidiaries has engaged in a transaction with respect to any Employee Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, could subject the Company or any Subsidiary to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(f) Except as set forth in Section 4.11(f) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries maintains or
has ever maintained or contributed to any plan or program subject to Section 302
or Title IV of ERISA or to Section 412 of the Code, including, but not limited
to any ongoing, frozen or terminated "single-employer plan", within the meaning
of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither the Company, any of its Subsidiaries nor any ERISA
Affiliate has ever contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA.
(g) Except as set forth in Section 4.11(g) of the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
liability or obligation under any "employee welfare benefit plans" (as defined
in Section 3(1) of ERISA) to provide life insurance or medical benefits after
termination of employment or retirement to any employee or dependent other than
as required by Part 6 of Title I of ERISA. The Company or its Subsidiaries may
18
amend or terminate any such employee welfare benefit plan at any time without
incurring any liability thereunder.
(h) Except as set forth in Section 4.11(h) of the Company
Disclosure Letter, the consummation of the transactions contemplated by this
Agreement will not (x) entitle any employees of the Company or any of its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Employee Benefit Plans or (z) result
in any payments which would not be deductible under Section 162(m) or Section
280G of the Code.
(i) As of the date of this Agreement, to the knowledge of
the Company, none of the Company, any of its Subsidiaries or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective business of the Company or
any of its Subsidiaries, and there is no charge or complaint against the Company
or any of its Subsidiaries by the National Labor Relations Board or any
comparable governmental agency pending or threatened in writing, in each case
except where such actions, charges or complaints, individually or in the
aggregate, have not had and are not reasonably likely to have, a Company
material adverse effect.
(j) Section 4.11(j) of the Company Disclosure Letter sets
forth a true and complete (i) list of each agreement or letter (or form of
agreement or letter by position or category) relating to the terms and
conditions of employment or consulting services entered into as of the date
hereof between the Company or any of its Subsidiaries with any current or former
employees or consultants of the Company or any of its Subsidiaries (the
"Employment-Related Agreements") and (ii) a schedule of the current employees of
the Company and its Subsidiaries, including current salary, wages and projected
bonus payments for 2002 and expected date of annual employee reviews.
Section 4.12 Opinion of Financial Advisor. The Company's Board
of Directors has received the opinion of Credit Suisse First Boston Corporation,
the Company's financial advisor, to the effect that, as of the date of this
Agreement, the Per Share Amount to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders (other than
Parent and its affiliates) from a financial point of view, a copy of which
opinion will be delivered to Parent solely for informational purposes after
receipt thereof by the Board of Directors of the Company.
Section 4.13 Board Approval; Certain Antitakeover Provisions
Not Applicable. The Board of Directors of the Company has adopted resolutions
(i) approving and declaring advisable the Offer, the Merger and this Agreement,
(ii) declaring that it is in the best interest of the Company's stockholders
that the Company enter into this Agreement and consummate the Offer and the
Merger on the terms and subject to the conditions set forth in this Agreement,
(iii) recommending that the Company's stockholders accept the Offer, tender
their shares pursuant to the Offer and adopt this Agreement (if required by
applicable law) and (iv) approving the acquisition of the shares of Company
Common Stock by Purchaser pursuant to the Offer and the other transactions
contemplated by this Agreement. To the Company's knowledge, no state takeover
statute other than those with which this Agreement complies or similar statute
or
19
regulation applies or purports to apply to the Offer, the Merger or this
Agreement, or any of the transactions contemplated hereby. The restrictions of
Section 203 of the DGCL do not apply to the Company or any acquisition of shares
of Company Common Stock.
Section 4.14 Intellectual Property. Section 4.14 of the
Company Disclosure Letter contains a correct and complete list of all patents,
trademarks, service marks, domain names, trade names, copyrights and mask works
now or heretofore used or presently proposed to be used in the conduct of the
businesses of the Company and its Subsidiaries, which are owned by the Company
and its Subsidiaries and are material or are the subject of a pending
application or subsisting registration (whether material or not), or which are
licensed to the Company or its Subsidiaries (in such case setting forth in
Section 4.14 of the Company Disclosure Letter only the relevant license
agreements), excluding licensed computer software which is widely available and
which is not subject to individually negotiated terms. Except as described in
Section 4.14 of the Company Disclosure Letter, (i) the Company and its
Subsidiaries own exclusively all of their owned intellectual property rights
required to be listed in Section 4.14 of the Company Disclosure Letter, each of
which, to the Company's knowledge, is valid and enforceable, and possess
adequate licenses or other valid rights to use (without the making of any
payment to others or the obligation to grant rights to others in exchange) all
patents, patent rights, trademarks, trademark rights, service marks, domain
names, trade names, trade name rights, copyrights, mask works, know-how and
other intellectual property rights and proprietary information ("IP Rights")
necessary to the conduct of their businesses as presently being conducted,
except where the failure to have such licenses or rights, individually or in the
aggregate, has not had and is not reasonably likely to have a Company material
adverse effect, (ii) neither the Company nor any of its Subsidiaries has
licensed any IP Rights to any third party, (iii) the validity or enforceability
of such IP Rights and the title thereto of the Company and its Subsidiaries has
not been questioned in any litigation to which the Company or any of its
Subsidiaries is a party, nor, to the knowledge of the Company, is any such
litigation threatened; nor have any claims to such effect been made to the
Company or any of its Subsidiaries, (iv) the conduct of the businesses of the
Company and its Subsidiaries as now conducted does not and will not conflict
with IP Rights of others in any way which, individually or in the aggregate, has
had or is reasonably likely to have a Company material adverse effect and (v) no
proceedings are pending against the Company or any of its Subsidiaries nor, to
the Company's knowledge, are any proceedings threatened against the Company or
any of its Subsidiaries alleging any violation of IP Rights of any third party.
The Company does not know of (x) any use that has heretofore been or is now
being made of any IP Rights owned or exclusively held by the Company or any of
its Subsidiaries, except by the Company or any of its Subsidiaries or by an
entity duly licensed by it to use the same under an agreement described in
Section 4.14 of the Company Disclosure Letter or (y) any material infringement
of any IP Right owned by or licensed by or to the Company. All IP Rights
heretofore owned or held by any director, employee or officer of the Company or
any of its Subsidiaries and used in any business of the Company or any of its
Subsidiaries in any manner have been duly and effectively transferred to the
Company or such Subsidiary. Except as described in Section 4.14 of the Company
Disclosure Letter, the consummation of the Offer, the Merger and the
transactions contemplated hereby will not alter or impair the rights and
interests of the Company in any of the items listed in Section 4.14 of the
Company Disclosure Letter, and the Surviving Corporation will have the same
rights and interests in such items as the Company will have immediately prior to
the Effective Time. The Company and its Subsidiaries have taken all reasonable
measures to protect and preserve the
20
confidentiality of all trade secrets and confidential information owned or held
thereby, and to the knowledge of the Company, no person has made unauthorized
use or disclosure of such trade secrets or confidential information. Except as
set forth in Section 4.14 of the Company Disclosure Letter, there exists no
event, condition or occurrence which, with the giving of notice or lapse of
time, or both, would constitute a breach or default by the Company, or to the
Company's knowledge another Person, under any agreement granting IP Rights to
the Company, except where such event, condition or occurrence, individually or
in the aggregate, would be immaterial to the Company. No party to any such
agreement has given the Company notice of its intention to cancel, terminate or
fail to renew any such agreement. No party has given the Company notice of any
actual or alleged breach of or default under such agreement. Each such agreement
is valid and binding on the Company, and to the Company's knowledge each of the
other parties thereto.
Section 4.15 Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock entitled
to vote with respect to the Merger is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
Section 4.16 Brokers. No broker, investment banker or other
person, other than Credit Suisse First Boston Corporation, the fees and expenses
of which are described in the engagement letter between the Company and Credit
Suisse First Boston Corporation dated October 3, 2001, a true, correct and
complete copy of which has been provided by the Company to Parent, and will be
paid by the Company, is entitled to any broker's, finder's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
Section 4.17 Environmental Matters.
(a) To the knowledge of the Company, except as disclosed
in Section 4.17 of the Company Disclosure Letter, the Company has not received
written notice alleging that the Company or its Subsidiaries have caused or
permitted or that there has been any release, emission, spill or discharge, in
violation of any Environmental Laws, of any Hazardous Substances on, in, around,
from or in connection with the Real Property, any property or facility which
they previously owned or leased, or any property or facility owned or operated
by any third party but with respect to which the Company or any of its
Subsidiaries have or may reasonably be alleged to have liability, except to the
extent that any such release, emission, spill or discharge, individually or in
the aggregate, has not had and is not reasonably likely to have a Company
material adverse effect.
(b) To the knowledge of the Company, the Company has
disclosed to Purchaser in writing true and complete copies of all environmental
audits, evaluations, assessments, studies or tests, in each case which are
non-privileged, relating to the Company, its Subsidiaries and the Real Property
which are in the possession of the Company and were prepared within five years
prior to the date of this Agreement.
In this Section 4.17, "Environmental Laws", "Hazardous
Substances" and "Real Property" shall have the following meanings:
21
"Environmental Laws" means all legal and binding statutes, laws,
regulations, ordinances, codes, rules and orders of governmental
authorities relating to the protection of the environment, occupational
health and safety, or the use, storage, disposal, discharge, packaging,
transport, handling, containment, clean-up or other remediation or
corrective action of any Hazardous Substances, in each case, as in
effect on the date hereof;
"Hazardous Substances" means all pollutants, contaminants, chemicals,
deleterious substances, hazardous material, toxic or hazardous wastes
or any other substance, matter or material regulated by or under
Environmental Laws; and
"Real Property" means the immovable property owned or leased by the
Company and its Subsidiaries, the municipal address of which has been
disclosed to Purchaser.
Section 4.18 Tangible Property; Real Property and Leases.
(a) The Company and its Subsidiaries have sufficient
title to all their tangible properties and assets to conduct their respective
businesses as currently conducted or as contemplated to be conducted, with only
such exceptions as, individually or in the aggregate, have not had and are not
reasonably likely to have a Company material adverse effect. Except as described
in Section 4.18 of the Company Disclosure Letter, the consummation of the Offer,
the Merger and the transactions contemplated hereby will not alter or impair the
rights and interests of the Company and its Subsidiaries in and to their
tangible properties and assets used to conduct their respective businesses as
currently conducted or as contemplated to be conducted, and the Surviving
Corporation will have the same rights and interests in such properties and
assets as the Company will have immediately prior to the Effective Time.
(b) Except as disclosed in Section 4.18 of the Company
Disclosure Letter, each parcel of real property owned or leased by the Company
or any of its Subsidiaries is owned or leased free and clear of all Liens other
than (i) Liens for current taxes and assessments not yet past due, (ii) inchoate
mechanics' and materialmen's Liens for construction in progress, (iii)
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such Subsidiary consistent with
past practice, and (iv) all matters of record, Liens and other imperfections of
title, which, in any of the cases of (i) through (iv) individually or in the
aggregate, have not had and are not reasonably likely to have a Company material
adverse effect.
(c) All leases of real property leased for the use or
benefit of the Company or any of its Subsidiaries to which the Company or any
such Subsidiary is a party requiring rental payments in excess of U.S. $100,000
during the period of the lease and all amendments and modifications thereto are
in full force and effect and have not been further modified or amended, and
there exists no default under any such lease by the Company or any such
Subsidiary, nor any event which with notice or lapse of time or both would
constitute a default thereunder by the Company or any such Subsidiary, except
as, individually or in the aggregate, has not had and is not reasonably likely
to have a Company material adverse effect. Except as described in Section 4.18
of the Company Disclosure Letter, the consummation of the Offer, the Merger and
the transactions contemplated hereby will not alter or impair the rights and
interests of the Company
22
in and to the leases described in the first sentence of this paragraph, and the
Surviving Corporation will have the same rights and interests in such properties
and assets as the Company will have immediately prior to the Effective Time.
Section 4.19 Contracts. Section 4.19 of the Company Disclosure
Letter lists, under the relevant heading, all Contracts, other than Employee
Benefit Plans and Employment Related Agreements disclosed in Section 4.11 of the
Company Disclosure Letter and any Contracts filed prior to the date hereof as an
exhibit to any Company SEC Reports, that exist as of the date hereof to which
the Company or any of its Subsidiaries is a party or by which it or such
Subsidiary is, or any of their assets or properties are, bound and which fall
within any of the following categories (all Contracts required to be listed in
Section 4.19 of the Company Disclosure Letter, "Material Contracts"): (a)
material Contracts not entered into in the ordinary course of the Company's and
its Subsidiaries' businesses; (b) joint venture and partnership agreements; (c)
Contracts which contain requirements for payments in excess of U.S. $100,000;
(d) Contracts relating to any outstanding commitment for capital expenditures in
excess of U.S. $250,000; (e) indentures, mortgages, promissory notes, loan
agreements or guarantees of borrowed money, letters of credit or other
agreements or instruments of the Company or its Subsidiaries or commitments for
the borrowing or the lending by the Company or providing for the creation of any
charge, security interest, encumbrance or lien upon any of the assets of the
Company with an aggregate value in excess of U.S. $100,000; (f) Contracts
providing for "earn-outs" or other contingent payments by the Company; (g)
Contracts associated with off balance sheet financing in excess of U.S. $100,000
in the aggregate, including but not limited to arrangements for the sale of
receivables; (h) stock purchase agreements, asset purchase agreements or other
acquisition or divestiture agreements; (i) Contracts containing material
restrictions on the Company's right to compete or exclusivity provisions granted
by the Company; and (j) any other Contract which is material to the Company,
irrespective of amount. All Contracts to which the Company or any of its
Subsidiaries is a party or by which it or such Subsidiary is bound are valid and
binding obligations of the Company or such Subsidiary and, to the knowledge of
the Company, the valid and binding obligation of each other party thereto except
such Contracts which, if not so valid and binding, individually or in the
aggregate, have not had and are not reasonably likely to have, a Company
material adverse effect. Neither the Company nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under or permit the
termination of, any such Contract except such violations or defaults under or
terminations which, individually or in the aggregate, have not had and would not
be reasonably be expected to have, a Company material adverse effect. Described
in Section 4.19(ii) of the Company Disclosure Letter are any Contracts (other
than tariffs applicable to the Company's or its Subsidiaries' relationship to
the relevant utility which are not otherwise required to be listed in Section
4.19 of the Company Disclosure Letter pursuant to the first sentence of this
Section 4.19), containing provisions pursuant to which the Company or its
Subsidiaries may be required to post surety bonds or cash collateral with a
third party, in each case specifying the amount of surety bonds and cash
collateral posted in respect of such Contract as of the date hereof (such
amount, the "Current Posted Amount"). As of the date hereof no party to such
Contracts has requested that the Company or its Subsidiaries post surety bonds
or cash collateral in excess of the Current Posted Amount set forth with respect
to such Contract in Section 4.19(ii) of the Company Disclosure Letter. Described
in Section 4.19(ii) of the Company Disclosure Letter are any Contracts (x)
23
pursuant to which the Company or its Subsidiaries has provided a guarantee or
credit or similar obligation in favor of a third party without a limitation as
to amount set forth in such Contract and (y) any Contracts which would be
covered by Section 6.1(e).
Section 4.20 PECO. The Company has taken all action necessary
to terminate, effective within 90 days of the date hereof, the Competitive
Default Services Coordination Agreement between the Company and PECO Energy Co.
("PECO"), the first amendment thereto, dated December 11, 2001, the Escrow
Agreement between the Company, and State Street Bank and Trust Company as escrow
agent, dated December 13, 2000 and any other Contracts to which both the Company
or any of its Subsidiaries and PECO are party (collectively, the "PECO
Contracts") and to return all PECO customers to PECO in accordance with the
terms of the PECO Contracts. The aggregate amount of liabilities or obligations
for which the Company and its Subsidiaries may be liable to PECO and its
affiliates pursuant to the agreements with PECO arising out of or relating to
the termination of the PECO Contracts and the Company's return of all PECO
customers to PECO, shall not exceed the amount set forth in Section 6.1(g) of
the Company Disclosure Letter.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power and authority, individually
or in the aggregate, has not had and is not reasonably likely to prevent the
consummation of the Offer or the Merger in any material respect or to impair the
ability of Parent or Purchaser to perform its obligations under this Agreement
and which, individually or in the aggregate, have not had and are not reasonably
likely to have, a material adverse effect on the Parent and its Subsidiaries.
Section 5.2 Authority. Each of Parent and Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by each of Parent and Purchaser and the
consummation of the Offer, the Merger and of the other transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of each of Parent and Purchaser and have been approved by the sole shareholder
of Purchaser. This Agreement has been duly executed and delivered by each of
Parent and Purchaser and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes a valid and binding obligation of Parent and
Purchaser, enforceable against Parent and Purchaser in accordance with its
terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and similar laws relating to creditors'
rights and to general principles of equity.
24
Section 5.3 Consents and Approvals; No Violations. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, or compliance with any law, statute, ordinance,
rule or regulation that conditions, restricts, prohibits or requires any
notification or disclosure with respect to, or is triggered by, the transfer,
sale, lease or closure of any property, is required by or with respect to Parent
or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Purchaser or the consummation by Parent and Purchaser of
the Offer, the Merger or the other transactions contemplated hereby, except for
(i) the filing of a premerger notification and report form by Parent under the
HSR Act, (ii) the filing with the SEC by Parent and Purchaser of the Offer
Documents and of such reports as may be required by the Exchange Act and the
rules and regulations promulgated thereunder, (iii) the filing of the
Certificate of Merger with the Filing Office and appropriate documents with the
relevant authorities of states in which the Company is qualified to do business,
(iv) any FERC Approvals and Local Approvals, all of which are set forth in
Section 5.3 of the disclosure letter dated the date hereof from Parent to the
Company (the "Parent Disclosure Letter"), (v) any applicable requirements of the
London Stock Exchange and (vi) the filings, approvals, orders, notices,
registrations, declarations and consents as may be required under any applicable
state takeover or similar laws. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions contemplated hereby
will result in any Violations of any of the terms, conditions or provisions of
(i) the respective certificates or articles of incorporation or by-laws or
comparable organizational documents of Parent or Purchaser, (ii) any Contract to
which Parent or any of its Subsidiaries is a party or by which any of them or
any of their respective properties or assets may be bound or affected or (iii)
any judgment, order, writ, award, injunction, decree, law, statute, rule or
regulation applicable to Parent or any of its Subsidiaries or their respective
properties or assets except, in the case of clause (ii), for Violations that are
not reasonably likely to prevent the consummation of the Offer or the Merger in
any material respect or to impair the ability of Parent or Purchaser to perform
its obligations under this Agreement and which individually or in the aggregate,
have not had and are not reasonably likely to have, a material adverse effect on
the Parent and its Subsidiaries.
Section 5.4 Disclosure Documents. (a) At the respective times
when they are filed with the SEC or are first published, sent or given to
stockholders, the Offer Documents will comply as to form in all material
respects with the applicable requirements of the Exchange Act, and the rules and
regulations thereunder. None of the Offer Documents or the information supplied
by Parent or Purchaser specifically for inclusion in the Schedule 14D-9 will, at
the respective times the Offer Documents (including any amendments or
supplements thereto) or the Schedule 14D-9 are filed with the SEC or are first
published, sent or given to stockholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) None of the information supplied by Parent or
Purchaser specifically for inclusion or incorporation by reference in the
Company Proxy Statement, if required as the case may be, will, at the date
mailed to the Company's stockholders and at the time of the meeting of
stockholders, 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.
25
Section 5.5 Financing. Parent and Purchaser collectively have,
through a combination of cash on hand, committed bank facilities and Parent's
U.S. commercial paper program, all the funds necessary to consummate the Offer
and the Merger.
Section 5.6 Brokers. No broker, investment banker or other
person, other than Xxxxxx Xxxxxxx & Co., Inc., the fees and expenses of which
will be paid by Parent, is entitled to any broker's, finder's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent and Purchaser.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as
expressly contemplated by this Agreement or with the prior written consent of
Purchaser, during the period from the date of this Agreement to the Effective
Time, the Company will, and will cause each of its Subsidiaries to, conduct its
operations only in the ordinary and usual course of business consistent with
past practice and will use all reasonable best efforts, and, subject to the
express limitations and agreements set forth in this Section 6.1 and elsewhere
in this Agreement, will cause each of its Subsidiaries to use all reasonable
best efforts, to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
existing relationships with regulators, licensors, licensees, customers,
suppliers, employees and any others having business dealings with it to the end
that its goodwill and ongoing business shall be unimpaired at the Effective
Time. In addition to the foregoing, and except as otherwise set forth in Section
6.1 of the Company Disclosure Letter or as otherwise expressly contemplated by
this Agreement, the Company will not, and will not permit any of its
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Purchaser, to do any of the following:
(a) adopt any amendment to its certificate of
incorporation or By-Laws or comparable organizational documents;
(b) issue, reissue, sell, dispose of, encumber or pledge
or authorize or propose the issuance, reissuance, sale, disposal, encumbrance or
pledge of any of its capital stock of any class, or securities convertible or
exchangeable into capital stock of any class, or any rights, warrants or options
to acquire any convertible or exchangeable securities or capital stock, other
than the issuance of shares of Company Common Stock upon the exercise of stock
options, warrants or restricted stock grants outstanding on the date of this
Agreement in accordance with their terms;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) on or in respect of any class or series of its capital stock or
otherwise make any payments to its shareholders in their capacity as such,
except that any wholly owned Subsidiary of the Company may pay dividends and
make distributions to the Company or any of the Company's wholly owned
Subsidiaries;
26
(d) (i) adjust, split, combine, subdivide or reclassify
any of its capital stock or (ii) redeem, purchase or otherwise acquire, or
propose to redeem, purchase or otherwise acquire, any shares of capital stock of
the Company or of any of its Subsidiaries or any other securities thereof or any
rights, options or warrants to acquire such shares or other securities;
(e) incur indebtedness or other borrowing or assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any person (other than the
Company or a wholly owned Subsidiary of the Company);
(f) make any loans, advances or capital contributions to,
or investments in, any person, other than a wholly owned Subsidiary of the
Company in the ordinary course of business consistent with past practice;
(g) modify, amend or waive any right under or terminate
any Material Contract;
(h) settle or compromise any suit, proceeding or claim or
threatened suit, proceeding or claim with, or enter into any Contract with, or
enter into any amendments, waivers of rights under, or modification of, or
terminate, any Contracts with, International Business Machines Corp., America
Online, Inc., AOL Time Warner Inc. or Enron or their respective current or
former affiliates or representatives, as the case may be;
(i) settle or compromise any suits, proceedings or claims
or threatened suits, proceedings or claims, which settlements or compromises
involve, an amount of U.S. $250,000 or more, individually, or U.S. $1,000,000 or
more, in the aggregate, or which settlements or compromises, individually or in
the aggregate, are otherwise material to the operation of business as conducted
and as contemplated to be conducted;
(j) except (A) for changes that are required by
applicable law, or (B) to satisfy obligations as required under the terms of any
Employee Benefit Plan or Employment-Related Agreement in effect as of the date
hereof, (i) increase the salary, wages, compensation or fringe or other benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any of its Subsidiaries), (ii) pay any benefit or payment
not required by any existing Employee Benefit Plan or Employment-Related
Agreement (including, but not limited to, the granting of, or waiver of
performance or other vesting criteria under, stock options, stock appreciation
rights, shares of restricted stock or deferred stock or performance units),
(iii) grant any severance, retention or termination pay, (iv) enter into any
employment, consulting, retention or severance agreement with, any director,
officer or employee of the Company or any of its Subsidiaries, (v) establish,
adopt, enter into, make any new grants or awards under, terminate or amend any
Employee Benefit Plan or Employment-Related Agreement or plan, program or
arrangement that would be an Employee Benefit Plan or Employment-Related
Agreement if it were in effect on the date hereof, or any collective bargaining,
profit sharing, thrift, compensation, restricted stock, employment, termination,
severance or retention plan, agreement, trust, fund, policy or arrangement for
the benefit or welfare of any directors, officers or current or former
employees, except to the extent required by applicable law, or (vi) pay or
promise to pay any bonus, profit-sharing or special compensation
27
to any employee, officer or director or hire, without the consent of Parent, any
employee who would be entitled to an annual base salary greater than U.S.
$100,000, and with respect to all employees hired after the date hereof, where
the combined annual base salaries would exceed U.S. $1,000,000 in the aggregate;
(k) authorize or make capital expenditures in excess of
U.S. $500,000 in the aggregate or U.S. $100,000 individually;
(l) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, other than ordinary course acquisitions
of supplies used in the ordinary course of business consistent with past
practice;
(m) sell, lease, mortgage or otherwise encumber or
dispose of, or permit to exist any encumbrance on, or agree to sell, lease,
mortgage or otherwise encumber or dispose of, any of its customer contracts or
other assets, other than sales, leases or disposals and agreements to sell,
lease or dispose of, that are in the ordinary course of business consistent with
past practice;
(n) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any Subsidiary;
(o) (i) waive, release, relinquish or assign any contract
that is not a Material Contract (including any insurance policy) or other right
or claim, (ii) prepay any indebtedness of the Company or any of its Subsidiaries
or (iii) modify, cancel or forgive any indebtedness owed to the Company or its
Subsidiaries, other than, in each case specified in clause (i), (ii) or (iii),
in a manner in the ordinary course of business consistent with past practice and
which is not material to the business of the Company and its Subsidiaries;
(p) enter into any Contracts, which if they had been in
existence as of the date of hereof, would have been required pursuant to Section
4.19 to have been listed in Section 4.19 of the Company Disclosure Letter;
(q) change any of the accounting methods, principles or
practices used by it except as required by the SEC or GAAP;
(r) make any Tax election, except as required by law, or
settle or compromise any material tax liability;
(s) knowingly violate or fail to perform any obligation
or duty imposed upon it or any Subsidiary by any applicable federal, state or
local law, rule, regulation, guidance or ordinance; or
(t) authorize, recommend, announce, propose or agree to
take any of the foregoing actions or any action which would (i) make any
representation or warranty in this Agreement that is qualified as to materiality
untrue or incorrect, (ii) make any representation or warranty in this Agreement
that is not so qualified untrue or incorrect in any material respect or
28
(iii) except as otherwise permitted by the proviso to Section 6.7(a), be
reasonably expected to result in any of the conditions to the Offer set forth in
Annex A or to the Merger set forth in Article VII not being satisfied.
Section 6.2 Reasonable Efforts. Upon the terms and subject to
the conditions of this Agreement, unless, to the extent permitted by the proviso
to Section 6.7(a), the Board of Directors of the Company approves or recommends
a superior proposal (as defined in Section 6.7(a)), each of the parties hereto
will use all reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the Offer and the Merger, including (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any Governmental Entity
(including those in connection with any governmental antitrust review, the FERC
Approvals and the Local Approvals), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the obtaining of the
approval of the Enron Master Termination Agreement, the Enron Settlement
Agreement and the Enron Tender Agreement by the Bankruptcy Court pursuant to a
motion in the form attached hereto as Exhibit 6.2 with only such changes as
Purchaser and Parent may approve in writing, such approval not to be
unreasonably withheld or delayed (the "Motion"), (iv) the defending of any
claims, investigations, actions, lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the Offer and the Merger, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (v) the execution and delivery of any additional instruments
(including any required supplemental indentures) necessary to consummate the
Offer and the Merger. Subject to applicable laws and the terms of any relevant
agreements with third parties relating to the exchange of information, Parent
and the Company shall have the right to review in advance, and to the extent
practicable each will promptly consult the other on, any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the transactions contemplated by this Agreement, except that,
in the case of Parent, only to the extent such communications or notices would
have a material effect on Parent's ability to timely consummate the Offer or the
Merger. The Company and Parent shall keep the other apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications sent to or received by Parent or the Company and its
Subsidiaries, as the case may be, from any third party and/or any Governmental
Entity with respect to the transactions contemplated hereby, except that, in the
case of Parent, only to the extent such communications or notices would have a
material effect on Parent's ability to timely consummate the Offer or the
Merger. Each party shall afford the other party with advance notice of, and a
meaningful opportunity to participate in, any such communications to or from
Governmental Entities, except that, in the case of Parent, only to the extent
such communications or notices would have a material effect on Parent's ability
to consummate the Offer or the Merger, including, without limitation, a right to
attend, with advisors present, any meetings (telephonic or in person) with such
Governmental Entities.
29
Section 6.3 Access to Information. Upon reasonable notice, the
Company will (and will cause its Subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of Parent and
Purchaser, access, at all reasonable times during the period prior to the
Effective Time, to all its properties, facilities, books, Contracts, commitments
and records (including Tax Returns) and other information as reasonably
requested by such party and, during such period, the Company will (and will
cause each of its Subsidiaries to) furnish promptly to Parent and Purchaser (a)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of United
States federal securities laws or regulations and (b) all other information
concerning its business, properties and personnel as Parent or Purchaser may
reasonably request; provided that no investigation pursuant to this Section 6.3
or otherwise as undertaken in connection with the transactions contemplated
hereunder, shall affect or be deemed to modify any representation or warranty
made by the Company; provided, further, that the Company in responding to
requests from Parent or any Parent representative for access to records or other
information of a confidential and competitively sensitive nature may, prior to
expiration or termination of the waiting period under the HSR Act, limit such
access to Parent's outside accountants, counsel, financial advisors and other
outside representatives. During the period prior to the Effective Time, the
Company shall use all reasonable efforts to afford Parent and its
representatives with a meaningful opportunity to attend the Company's cash
management and risk management meetings when they occur, in person or by
telephone, solely as observers and without rights to participate in the
decision-making; provided that this sentence does not limit or modify any of
Purchaser's or Parent's other rights under this Agreement. The parties will hold
any information obtained pursuant to this Section 6.3 which is nonpublic, in
confidence in accordance with the terms of the letter agreement dated November
1, 2001, between Parent and the Company (the "Confidentiality Agreement"), and
in the event of termination of this Agreement for any reason each party will
promptly comply with the terms of the Confidentiality Agreement.
Section 6.4 Company Stockholders Meeting.
(a) If approval of this Agreement and the Merger by the
stockholders of the Company is required by law, the Company will use its best
efforts duly to give notice of, convene and hold a meeting of its stockholders
(the "Stockholders Meeting") for the purpose of voting upon this Agreement
(insofar as it relates to the Merger), the Merger and related matters as soon as
practicable following consummation of the Offer. The Company will, through its
Board of Directors, recommend to its stockholders approval and adoption of this
Agreement and approval of the Merger, except to the extent that the Board of
Directors of the Company shall have withdrawn its approval or recommendation of
this Agreement or the Merger as permitted by Section 6.7(a).
(b) Following the consummation of the Offer, if approval
of this Agreement and the Merger by the stockholders of the Company is required
by law, the Company will, as soon as practicable, prepare and file a preliminary
Company Proxy Statement with the SEC and will use all reasonable efforts to
respond to any comments of the SEC or its staff and to cause the Company Proxy
Statement to be mailed to the Company's stockholders. The Company will notify
Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Company
Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between
30
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Company Proxy Statement or the
Merger. If at any time prior to the approval of this Agreement by the Company's
stockholders there shall occur any event that is required to be set forth in an
amendment or supplement to the Company Proxy Statement, the Company will
promptly notify Parent thereof and prepare and mail to its stockholders such an
amendment or supplement. Parent and its counsel shall be given a reasonable
opportunity to review and comment upon any Company Proxy Statement and any
amendment or supplement thereto and any such correspondence prior to its filing
with the SEC or dissemination to the Company's stockholders and the Company
shall not mail any Company Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects.
(c) Notwithstanding the foregoing, if Purchaser or any
other Subsidiary of Parent shall acquire at least 90 percent of the outstanding
shares of Company Common Stock, and provided that the conditions to the
Company's obligations set forth in Section 7.1 shall have been satisfied or
waived, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without the approval of the stockholders of
the Company, in accordance with Section 253 of the DGCL. Parent agrees to cause
all shares of Company Common Stock purchased pursuant to the Offer and all other
shares of Company Common Stock owned by Purchaser, Parent or any Subsidiary of
Parent or with respect to which Parent then has the right to vote, if any, to be
voted in favor of the approval and adoption of this Agreement and the approval
of the Merger.
Section 6.5 Company Stock Plan; Warrants.
(a) Subject to the next sentence, the Company shall use
all reasonable best efforts to cause each holder of an outstanding option
(collectively, the "Employee Options") to purchase shares of Company Common
Stock granted under the Company Stock Plan, whether or not then exercisable, to
agree in writing prior to the Effective Time that (i) such holder shall be
entitled to receive from the Company on the Closing Date, in lieu of such
Employee Option, an amount in cash in respect of each share of Company Common
Stock subject to such Employee Option equal to the excess, if any, of the Merger
Consideration over the per share exercise price of such Employee Option (it
being understood that if there is no such excess with respect to any such
Employee Option, such holder will not be entitled to receive any cash,
securities or other consideration with respect thereto), and (ii) such Employee
Option shall be canceled immediately prior to the Effective Time. All amounts
payable pursuant to this Section 6.5 shall be subject to any applicable
withholding taxes and shall be paid without interest.
(b) At the Effective Time, each outstanding Warrant shall
be converted into an obligation of the Surviving Corporation to pay upon
exercise thereof, and a right of the holder thereof to receive in full
satisfaction of such Warrant, cash in an amount in respect thereof equal to the
product of (A) the Merger Consideration and (B) the number of shares of Company
Common Stock subject to such Warrant. The Surviving Corporation shall make the
payment of the amount determined in accordance with the foregoing sentence after
the Effective Time promptly upon any exercise by a holder of such Warrant in
accordance with its terms.
31
Section 6.6 Company Benefit Plans. The Company agrees that,
for a period of one year following the Effective Time, the employees of the
Surviving Corporation as of the Effective Time will continue to be provided with
employee benefits that are substantially comparable in the aggregate to those
presently provided under the Company's current ERISA Plans. At the Effective
Time, the Company shall cause the Surviving Corporation expressly to assume the
Officer Agreements, the retention plans and the severance plans listed in
Section 4.11 of the Company Disclosure Letter subject to and in accordance with
their terms as of the date hereof. Nothing in this Section 6.6 shall be deemed
to in any way restrict the ability of the Surviving Corporation to terminate any
employee or any Employee Benefit Plan of the Surviving Corporation.
Section 6.7 No Solicitation.
(a) The Company shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney or other advisor or
representative of the Company or any of its Subsidiaries to, directly or
indirectly, (i) solicit, initiate, knowingly encourage or otherwise knowingly
facilitate any inquiries or the making of any takeover proposal, (ii) enter into
any agreement with respect to any takeover proposal or (iii) participate in any
discussions or negotiations regarding, or furnish to any person any nonpublic
information or data with respect to, or otherwise knowingly facilitate any
effort or attempt to make or implement, any takeover proposal; provided,
however, that (A) the Company may take such actions as are required by Rule
14e-2 and Rule 14d-9 promulgated under the Exchange Act with regard to a
takeover proposal, (B) until the earlier of (x) Purchaser's purchase of shares
of Company Common Stock pursuant to the Offer and (y) obtaining the affirmative
vote required to approve the Merger as set forth under Section 4.15, the Company
may participate in discussions or negotiations with, or furnish information to,
any person in response to an unsolicited bona fide written takeover proposal by
such person made after the date hereof, and (C) the Company may recommend such
an unsolicited bona fide written takeover proposal to the stockholders of the
Company, and may withdraw or modify its recommendation of the Offer, the Merger
and this Agreement if and only to the extent that, in the cases of clauses (B)
and (C), (i) such takeover proposal provides for the termination and final
settlement under the Interim Trading and Credit Agreement and any other Parent
supported trades or credit or guarantees of any nature and the payment to Parent
as of the date of signing any agreement with respect to such takeover proposal
of all amounts owing to Parent in respect thereof as of such termination, (ii)
the Board of Directors of the Company determines in good faith (after
consultation with independent financial advisors) that such takeover proposal
would, if consummated, be more favorable to the Company and its stockholders
from a financial point of view than the Offer and the Merger and that, in the
reasonable good faith judgment of the Board of Directors of the Company (after
consultation with independent financial and legal advisors), such takeover
proposal is reasonably likely to be completed by such third party, taking into
account all legal, financial and other aspects of the proposal and the person
making the proposal, (iii) the Board of Directors of the Company determines in
good faith after consultation with outside legal counsel that such action is
necessary for the Board of Directors of the Company to comply with its fiduciary
duties under applicable law and (iv) prior to providing any nonpublic
information or data to any person in connection with a takeover proposal by any
such person, the Board of Directors of the Company receives from such person an
executed confidentiality agreement on terms substantially similar to those
contained in the Confidentiality
32
Agreement (any such favorable takeover proposal being referred to in this
Agreement as a "superior proposal"). Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any officer, director or employee of the Company or any of its
Subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its Subsidiaries, acting on behalf of
the Company, shall be deemed to be a breach of this paragraph by the Company.
For purposes of this Agreement, "takeover proposal" means any proposal
(including, without limitation, any proposal or offer to stockholders of the
Company), other than a proposal by Parent or any of its affiliates, for a
merger, reorganization, consolidation, share exchange, business combination or
other similar transaction involving, or any purchase of all or any significant
portion of the assets or 5% or more of the equity securities of, the Company or
any of its Subsidiaries. For purposes of this Agreement, "takeover transaction"
means any transaction or purchase contemplated by a takeover proposal. The
Company immediately shall cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any takeover proposal.
(b) Subject to (a) above, neither the Board of Directors
of the Company nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation by the Board of Directors of the Company or any such
committee of this Agreement or the Merger or (ii) approve or recommend, or
propose to approve or recommend, any takeover proposal.
(c) The Company shall take all necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
(a) above of the obligations undertaken in this Section 6.7. The Company shall
notify Parent promptly if any inquiries, proposals or offers are received by,
any information or data is requested from, or any discussions or negotiations
are sought to be initiated or continued with, the Company, its affiliates or any
of their representatives with respect to or which could lead to any takeover
proposal indicating, in connection with such notice, the name of such person and
the terms and conditions of any proposals or offers and thereafter shall keep
Parent informed, on a current basis, of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. The
Company shall also promptly request that each person that has heretofore
executed a confidentiality agreement in connection with its consideration of any
takeover proposal to return all confidential information heretofore furnished to
such person by or on behalf of the Company or any of its Subsidiaries.
Section 6.8 Fees and Expenses.
(a) Except as provided in this Section 6.8, all fees and
expenses incurred in connection with the Offer, the Merger, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Offer or the Merger is consummated.
(b) The Company shall pay to Parent on or prior to the
time of termination, except as otherwise specified in clause (ii) below, a fee
of U.S. $4.65 million (the "Company Termination Fee"), payable in same day
funds, plus all Expenses (as defined below), if:
33
(i) this Agreement is terminated by Parent pursuant to
Section 8.1(e), but in the case of a termination pursuant to
and in accordance with 8.1(e)(i) by reason of a breach by the
Company of its representations and warranties set forth in
this Agreement, only if there is a breach by the Company of
its representations and warranties set forth in this Agreement
as of the date hereof that would give rise to the failure of a
condition set forth in Annex A hereto;
(ii) this Agreement is terminated by the Company or Parent
at any time after (A) the Offer shall have remained open for a
minimum of at least 20 business days, (B) the Minimum
Condition (as defined in Annex A) shall not have been
satisfied and the Offer is terminated pursuant to its terms
without the purchase of any shares of Company Common Stock
thereunder, and (C) any bona fide takeover proposal that is
more favorable to the Company and its stockholders from a
financial point of view than the Offer and the Merger shall
have been announced or otherwise have become public, and
within 12 months after the date of such termination any Person
(x) shall have become the beneficial owner of 50% or more of
the outstanding shares of Company Common Stock or other voting
power of the Company or (y) shall have commenced or shall have
publicly announced an intention to commence, a tender offer or
exchange offer for 50% or more of the outstanding shares of
Company Common Stock or other voting power of the Company;
provided that the Company Termination Fee and all Expenses
shall be paid by the Company promptly but in no event later
than two days after, in the case of (x), the Person's
ownership shall have met or exceeded the 50% threshold, and in
the case of (y), the earlier of the Person's commencement or
announcement of its intention to commence such tender offer or
exchange offer; or
(iii) this Agreement is terminated pursuant to Section
8.1(c), other than pursuant to 8.1(c)(i).
(c) If a Company Termination Fee becomes payable to
Parent in accordance with Section 6.8(b), then the Company shall reimburse each
of Parent and its affiliates upon demand for all reasonably documented
out-of-pocket fees and expenses, but not in excess of U.S. $1,250,000, incurred
or paid by or on behalf of Parent or any of its affiliates in connection with
the Offer, the Merger or the consummation of any of the transactions
contemplated by this Agreement, including all fees and expenses of counsel,
investment banking firms and, accountants of Parent (collectively, the
"Expenses").
(d) The Company acknowledges that the agreements
contained in paragraphs (b) and (c) of this Section 6.8 are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, Parent and Purchaser would not enter into this Agreement;
accordingly, if the Company fails to pay promptly any amount due pursuant to
this Section 6.8 and, in order to obtain such payment, Parent or any of its
affiliates commences a suit that results in a judgment against the Company for
any such amount, the Company shall pay also to Parent or such affiliate their
costs and expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the base rate of Citibank,
N.A. from the date such payment was due under this Agreement.
34
Section 6.9 Notification of Certain Matters. The Company will
give prompt notice to Parent and Purchaser, and Parent (or Purchaser, as the
case may be) will give prompt notice to the Company, of (a) the occurrence, or
non-occurrence, of any event the occurrence, or non-occurrence, of which would
be reasonably likely to cause (i) any representation or warranty of the
notifying party contained in this Agreement that is qualified as to materiality
to be untrue or incorrect or any representation or warranty of the notifying
party that is not so qualified to be untrue or incorrect in any material respect
or (ii) any covenant, condition or agreement of the notifying party contained in
this Agreement not to be complied with or satisfied in any material respect, and
(b) any failure of the notifying party to comply with or satisfy any covenant,
condition or agreement of the notifying party to be complied with or satisfied
by it hereunder in any material respect. The Company will give prompt notice to
Parent and Purchaser of any change or event which has had or is reasonably
likely to have a Company material adverse effect, and Parent (or Purchaser, as
the case may be) will give prompt notice to the Company of any change or event
which has had or is reasonably likely to have a material adverse effect on
Parent and its Subsidiaries.
Section 6.10 Certain Agreements. Parent and Purchaser
acknowledge and agree that, the purchase of shares of Company Common Stock
pursuant to the Offer will constitute a "Change of Control" within the meaning
of the Company Stock Plan and each Employee Benefit Plan, including, without
limiting the generality of the foregoing, the Company's Executive Deferred
Compensation Plan and Management Incentive Plan, and of each Officer Agreement,
and in addition, that at the time of such purchase, with respect to each officer
of the Company, for the purposes of each of the Officer Agreements, there will
be a material reduction and modification in the scope or level of the duties,
responsibilities, accountabilities or the effective authority associated with
such officer's position as a result of the Company ceasing to be a public
company.
Section 6.11 Public Announcements. The Company, Parent and
Purchaser will consult with each other and provide each other a meaningful
opportunity to review and comment on, before issuing any press releases or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press releases or
make any such public statements prior to such consultation and review and
comment process, except as may be required by applicable law or by obligations
pursuant to any listing agreement with the New York Stock Exchange or the London
Stock Exchange. In addition, the Company shall give Parent and its counsel a
reasonable opportunity to review and comment on any documents to be filed with
the SEC by the Company or any other public statements of the Company to be made,
to the extent such filings or statements contain information concerning the
Company's financial condition or results of operations, prior to their being
filed with the SEC or publicly released, and the Company agrees to give
reasonable consideration to the comments of Parent and its counsel in respect
thereof.
Section 6.12 State Takeover Laws. If any "fair price",
"control share acquisition" or "business combination" statute or other takeover
or tender offer statute or regulation shall become applicable to the
transactions contemplated by this Agreement, Parent, Purchaser and the Company
and their respective Boards of Directors shall use all reasonable efforts to
grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated
35
hereby and otherwise act to minimize the effects of such statute or regulation
on the transactions contemplated hereby.
Section 6.13 Indemnification. The Surviving Corporation, to
the extent permitted by applicable law, shall indemnify and hold harmless all
current or former officers and directors of the Company and of its Subsidiaries
(the "Indemnified Parties"), to the same extent and subject to the same terms as
such persons are currently indemnified by the respective charters and By-Laws of
the Company and of its Subsidiaries and under any indemnification agreement with
the Company, for acts or omissions occurring at or prior to the Effective Time.
Furthermore, the By-Laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in Article
Ten of the Company's Second Amended and Restated Certificate of Incorporation.
Parent will cause to be maintained by the Surviving Corporation for a period of
not less than six years from the Effective Time the Company's current directors'
and officers' insurance and indemnification policy to the extent that it
provides coverage for events occurring prior to the Effective Time (the "D&O
Insurance") for all directors and officers of the Company on the date hereof,
provided that if this Agreement is terminated prior to the consummation of the
Merger but after Purchaser's purchase of shares of Company Common Stock pursuant
to the Offer, then Parent shall cause such D&O Insurance to be maintained from
the date of such termination (unless the Effective Time occurs after such
termination in which case this proviso shall be of no force and effect);
provided, however, that in any case (i) the Surviving Corporation or Parent may
substitute therefor policies of at least the same coverage (with carriers at
least equal to in claims paying rating to the Company's existing carriers)
containing terms and conditions which are no less advantageous to the officers,
directors and employees of the Company and (ii) the Surviving Corporation or
Parent shall not be required to pay an annual premium for such insurance in
excess of two times the last annual premium paid prior to the date hereof, but
in such case shall purchase as much coverage as possible for such amount. The
provisions of this Section 6.13 are intended for the benefit of, and shall be
enforceable by, all current or former officers and directors of the Company and
of its Subsidiaries, and such directors' or officers' heirs and personal
representatives, and such persons shall be entitled to reimbursement by the
Surviving Corporation of fees and expenses (including reasonable attorneys'
fees) incurred to enforce the terms of this section. In the event the Surviving
Corporation 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 its properties and assets to any person, then the obligations of the
Surviving Corporation set forth in this Section 6.13 shall survive such
consolidation, merger or transfer. Parent shall be responsible for any breach by
the Surviving Corporation of the provisions of this Section 6.13, except in
respect of the obligations of the Surviving Corporation under the first and
second sentences of this Section 6.13. Any Indemnified Party wishing to claim
indemnification under this Section 6.13 from the Surviving Corporation (or
Parent in accordance with the terms of this Section 6.13), upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify the
Surviving Corporation or Parent, as the case may be, thereof. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Purchaser or the Surviving Corporation
shall have the right to assume the defense thereof and Purchaser and the
Surviving Corporation shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof unless counsel
for the Indemnified Parties reasonably
36
advises the Indemnified Parties that there are issues that raise conflicts of
interest between Purchaser and the Indemnified Parties that make such assumption
unadvisable, in which case the Indemnified Parties may retain counsel,
reasonably satisfactory to the Surviving Corporation or Parent, as the case may
be, and such party shall pay the reasonable legal expenses of such Indemnified
Party, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) the Surviving Corporation and Parent, as the case may be, shall
not be liable for any settlement effected without its prior written consent;
provided, that the Surviving Corporation or Parent, as the case may be, shall
not have any obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final, that the indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable law.
Section 6.14 Additional Agreements.
(a) Throughout the period prior to the Effective Time,
the Company shall use its best efforts to afford Parent with timely advance
notice of, and a meaningful opportunity to participate in, any communications,
including, without limitation, a right to attend, with advisors present, any
meetings (telephonic or in person) with International Business Machines Corp.,
America Online, Inc., AOL Time Warner, Inc. or Enron, or their current or former
affiliates or representatives, as the case may be.
(b) Throughout the period prior to the Effective Time,
the Company shall provide to Parent weekly forecasts in advance and weekly
reports as soon as available, on its restricted and unrestricted cash balances.
(c) Throughout the period prior to the Effective Time, to
the maximum extent permitted by applicable law, the Company shall consult on an
ongoing basis with Parent with respect to the Company's existing value at risk,
and shall use its reasonable best efforts on an ongoing basis to agree with
Parent with respect to implementing a mutually satisfactory means for the
Company to promptly reduce the Company's value at risk. The Company agrees to
enter into an Interim Trading and Credit Agreement with Parent or its affiliates
(the "Interim Trading and Credit Agreement") substantially on the terms of its
prior similar agreements with the Enron entities, provided, that the advances
and trading exposures that are not cash collateralized shall be limited to not
more than U.S. $50 million. In addition, the Company agrees that as of the
Determination Date the Company will enter into such hedging transactions on
terms and subject to such agreements to which the Company will be a party as are
customary in such circumstances, as Parent and Purchaser may request in order to
substantially eliminate the effects of commodity price movements and weather on
the Company's value at risk. Parent and Purchaser agree to act, or arrange for a
third party to act, as counterparty to such hedging transactions and agreements.
(d) Upon a request by Parent to do so, the Company agrees
to take the actions described in Section 6.14(d) of the Company Disclosure
Letter, either prior to Purchaser's purchase of shares of Company Common Stock
pursuant to the Offer or prior to the Effective Time, as Parent shall specify in
such request.
37
(e) The Company will record a loss as set forth in
Section 6.14 of the Company Disclosure Letter in its fourth quarter accounts for
the calendar year 2001, in respect of the termination of all agreements with
Enron as contemplated by the Enron Settlement Agreement.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation To Effect
the Merger. The respective obligations of the parties to effect the Merger are
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) Stockholder Approval. If required by applicable law,
this Agreement (insofar as it relates to the Merger) and the Merger shall have
been approved and adopted by the requisite affirmative vote or consent of the
holders of the shares of Company Common Stock in accordance with applicable law
and the Company's Second Amended and Restated Certificate of Incorporation, as
amended.
(b) Purchase of Shares. Purchaser shall have accepted for
purchase and paid for shares of Company Common Stock pursuant to the Offer.
(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing or impairing the consummation of the Merger in any material respect
shall be in effect on the Closing Date.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated and
the Offer and the Merger contemplated hereby may be abandoned at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company of any matters presented in connection with the Merger:
(a) by mutual written consent of Parent, Purchaser and
the Company;
(b) by either Parent or the Company if:
(i) any permanent order, decree, ruling or other action
of a court of competent jurisdiction or other competent
Governmental Entity restraining, enjoining or otherwise
preventing the consummation of the Offer or the Merger shall
have become final and non-appealable;
(ii) any required approval of the Merger by the
stockholders of the Company shall not have been obtained by
reason of the failure to obtain the required vote upon a vote
held at a duly held meeting of such stockholders or at any
adjournment thereof, so long as the failure to obtain the
required vote was not
38
caused by a material breach of the terminating party of any of
its covenants or agreements set forth in this Agreement; or
(iii) Purchaser shall not have purchased shares of Company
Common Stock pursuant to the Offer on or before July 1, 2002
unless the failure to consummate the Offer is the result of a
material breach of this Agreement by the party seeking to
terminate this Agreement; provided, however, that the passage
of such period shall be tolled (but not for longer than an
additional three months) for any part thereof during which any
party shall be subject to a nonfinal order, decree or ruling
or action restraining, enjoining or otherwise prohibiting the
Offer;
(c) by the Company if Purchaser shall not have purchased
shares of Company Common Stock pursuant to the Offer and (i) (x) Parent and
Purchaser shall have breached or failed to perform in any material respect any
of their covenants or agreements under this Agreement, or (y) the
representations and warranties of Parent and Purchaser set forth in this
Agreement, taken as a whole, and without giving effect to any qualifications as
to materiality (whether expressed by reference to the words "material" or
"material adverse effect" or otherwise) therein, shall not have been accurate
and complete when made or thereafter shall have become inaccurate or incomplete,
except as has not had and is not reasonably likely to, individually or in the
aggregate, prevent or impair in any material respect, the timely consummation of
the Offer or the ability of Parent and its Subsidiaries to perform their
obligations hereunder, and in the case of (x) or (y), if any such breaches,
failures, inaccuracies or failures to be complete are susceptible to cure, have
not been cured within ten days following receipt by Parent and Purchaser of
notice (specifying in reasonable detail such breach or failure) of such matters
from the Company, or (ii) subject to compliance with and to the extent permitted
by the proviso to Section 6.7(a), the Board of Directors of the Company
authorizes the Company to enter into a binding written agreement concerning a
transaction that constitutes a superior proposal, (iii) the Company notifies
Parent in writing that it intends to enter into such an agreement, attaching the
most current version of such agreement to such notice, and Parent or Purchaser
do not make, within five days of receipt of the Company's written notification
of its intention to enter into a binding agreement for a superior proposal, an
offer that is at least as favorable, from a financial point of view (in the good
faith judgment of the Board of Directors of the Company, after consultation with
independent financial and legal advisors), to the stockholders of the Company as
the superior proposal, and (iv) the Company has paid to Parent an amount in cash
equal to the sum of the Company Termination Fee plus all Expenses as provided by
Section 6.8(b); it being understood that the Company agrees that it will not
enter into a binding agreement referred to in clause (iii) above until at least
the sixth day after it has provided the notice to Parent required thereby and to
notify Purchaser promptly if its intention to enter into the written agreement
referred to in its notification shall change at any time after giving such
notification;
(d) by the Company if Parent or Purchaser shall have
failed to commence the Offer within the time required in Section 1.1(a);
(e) by Parent if Purchaser shall not have purchased
shares of Company Common Stock pursuant to the Offer and (i) there has been a
breach by the Company of its representations, warranties, covenants or
agreements set forth in this Agreement, which breach
39
would give rise to the failure of a condition set forth in Annex A hereto, (ii)
the Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to Parent or Purchaser its approval or recommendation, of the
Offer, the Merger or this Agreement, (iii) the Board of Directors of the Company
shall have failed to publicly reaffirm such approval or recommendation within 10
business days of a request by Parent to do so, (iv) the Board of Directors of
the Company shall have endorsed, approved or recommended any other takeover
proposal, (v) the Company shall have entered into any agreement with respect to
any takeover proposal (other than this Agreement), or (vi) the Board of
Directors of the Company or any committee thereof shall have resolved to do any
of the foregoing;
(f) by Parent or Purchaser if the Merger shall not have
been consummated on or before November 30, 2002;
(g) as provided by Section 1.1(f); or
(h) by Parent or Purchaser if the condition set forth in
clause (h) or (l) of Annex A hereto shall not have been satisfied as of 60 days
after the date hereof.
Section 8.2 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Purchaser or the Company (or any
of their respective directors, officers, employees, agents or advisors
(financial, legal or accounting)), except for the provisions of Section 4.16,
Section 5.6, the last sentence of Section 6.3, Section 6.8, this Section 8.2 and
Article IX, and except to the extent that such termination results from the
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement; provided that in the event the
Company has paid Parent a termination fee and all Expenses pursuant to Section
6.8(b)(i) in respect of a termination by Parent pursuant to Section 8.1(e)(i)
for the Company's breach of its representations and warranties that was not
willful or intentional, the Company shall have no further liability or
obligation in connection with any such termination.
Section 8.3 Trading Arrangements. Notwithstanding anything
else to the contrary, the effectiveness of any termination of this Agreement by
the Company shall be conditioned upon the termination and final settlement under
the Interim Trading and Credit Agreement and any other Parent supported trades
or credit or guarantees of any nature and the payment to Parent of all amounts
owing to Parent in respect thereof as of such termination.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement will survive the Effective Time.
This Section 9.1 shall not limit any covenant or agreement of a party that by
its terms expressly contemplates performance after the Effective Time.
Section 9.2 Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before
40
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company, but, after any such approval, no amendment will be
made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.3 Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by the
respective Boards of Directors, may to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in a prior written instrument signed on
behalf of such party by a duly authorized officer of such party setting forth in
detail the extension or waiver.
Section 9.4 Notices. All notices and other communications
hereunder will be in writing and will be deemed given if delivered personally,
telecopied (which is confirmed) or 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 is specified by like notice):
(a) if to Purchaser to:
Windsor Acquisition Corporation
c/o Sullivan & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
(b) if to Parent to:
Centrica plc
Millstream, Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxx Xxxxxxx
Attention: Xxxxx Xxxxxx
Telecopy No.: 44 (1753) 494-602
41
with copies to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
(c) if to the Company, to:
NewPower Holdings, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telecopy No.: (000) 000-0000
with copies to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
Section 9.5 Interpretation. When a reference is made in this
Agreement to a Section, such reference will be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be deemed to include the
Company Disclosure Letter and the Parent Disclosure Letter. Whenever the words
"include", "includes" or "including" are used in this Agreement they will be
deemed to be followed by the words "without limitation". References to the
"Company" include the Subsidiaries of the Company unless the context clearly
requires otherwise. The phrases "the date of this Agreement", "the date hereof"
and terms of similar import, unless the context otherwise requires, will be
deemed to refer to February 20, 2002. The phrase "to the knowledge of the
Company" and similar phrases refer to the actual knowledge of any executive
officer or director of the Company. As used in this Agreement, any reference to
a "Company material adverse effect" means a material adverse effect on the
business, assets, liabilities, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole; provided, that (i) matters to the extent specified as excluded in
Section 9.5 of the Company Disclosure Letter and (ii) changes in wholesale
prices of electricity and natural gas in general, shall not be taken into
account in determining what constitutes a Company material adverse effect.
Without limiting the scope of what constitutes a Company material adverse
effect, the parties agree that the existence of any reasonable possibility that
the Company will become subject to criminal liability or material civil
liability as a result of the Company's dealings, association or relationship
with Enron or its affiliates shall be deemed to be a Company material adverse
effect (it being understood that mere allegations made in a lawsuit, complaint,
investigation, discovery request, publicity or otherwise do not in themselves
constitute such a
42
reasonable possibility; provided, however, that facts concerning actions or
omissions for which the Company or its directors, officers, employees or agents
(under circumstances in which such persons would be entitled to indemnification
from the Company) may be liable, may constitute such a reasonable possibility).
Section 9.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which will be considered one and the same
agreement and will become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 9.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred to herein)
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof, and (b) other
than Sections 6.10, 6.13 and 6.14(d), are not intended to confer upon any person
other than the parties hereto and thereto any rights or remedies hereunder or
thereunder.
Section 9.8 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE, EXECUTED, DELIVERED AND PERFORMED WHOLLY WITHIN THE STATE OF
DELAWARE, WITHOUT REGARD TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
Section 9.9 Specific Performance. The parties hereto agree
that if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
Section 9.10 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.11 Validity. The invalidity or unenforceability of
any provision of this Agreement will not affect the validity or enforceability
of any other provisions hereof, which will remain in full force and effect. Upon
such determination that any term or other provision is invalid or incapable of
being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in order that the transactions contemplated by this Agreement may be
consummated as originally contemplated to the fullest extent possible.
Section 9.12 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 8.1, an amendment
of this Agreement pursuant to Section 9.2 or an extension or waiver pursuant to
Section 9.3 shall, in order to be
43
effective, require (a) in the case of Parent, Purchaser or the Company, action
by its Board of Directors or the duly authorized designee of its Board of
Directors and (b) in the case of the Company following consummation of the
Offer, action by a majority of the members of the Board of Directors of the
Company who are not Independent Directors; provided, however, that in the event
that Purchaser's designees are appointed or elected to the Board of Directors of
the Company as provided in Section 2.7, thereafter but prior to the Effective
Time, the affirmative vote of a majority of the Independent Directors, in lieu
of the vote required pursuant to clause (b) above, shall be required to (i)
amend or terminate this Agreement by the Company, (ii) exercise or waive any of
the Company's rights or remedies under this Agreement, (iii) extend the time for
performance of Parent's and Purchaser's respective obligations under this
Agreement or (iv) amend the Company's Second Amended and Restated Certificate of
Incorporation or By-Laws. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of such rights.
44
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CENTRICA PLC
By: /s/ Xxxxx Xxxxxx
______________________________
Name: Xxxxx Xxxxxx
Title: General Counsel & Secretary
WINDSOR ACQUISITION CORPORATION
By: /s/ Xxxxxxxx Xxxxxxx
______________________________
Name: Xxxxxxxx Xxxxxxx
Title: Treasurer
NEWPOWER HOLDINGS, INC.
By: /s/ H. Xxxxxx Xxxxxxxx
______________________________
Name: H. Xxxxxx Xxxxxxxx
Title: Chairman, President &
Chief Executive Officer
Index of Defined Terms
Defined Term Location of Definition
Action................................................................................ Section 4.8(c)
Agreement............................................................................. Preamble
Bankruptcy Court...................................................................... Recitals
Certificate of Merger................................................................. Section 2.1(b)
Certificates.......................................................................... Section 3.1(c)
Closing............................................................................... Section 2.2
Closing Date.......................................................................... Section 2.2
Code.................................................................................. Section 3.5
Company............................................................................... Preamble
Company Common Stock ................................................................. Recitals
Company Disclosure Letter............................................................. Section 4.2(b)
Company material adverse effect ...................................................... Section 9.5
Company Proxy Statement............................................................... Section 4.7(b)
Company SEC Documents................................................................. Section 4.6
Company Stock Plan.................................................................... Section 4.2(a)
Company Termination Fee .............................................................. Section 6.8(b)
Confidentiality Agreement............................................................. Section 6.3
Constituent Corporations.............................................................. Preamble
Contract ............................................................................. Section 4.4(a)
DGCL.................................................................................. Section 2.1(a)
DLJ Tender Agreement.................................................................. Preamble
D&O Insurance......................................................................... Section 6.13
Determination Date.................................................................... Section 1.1(d)
Dissenting Stockholder................................................................ Recitals
Effective Time........................................................................ Section 2.1(b)
Enron................................................................................. Recitals
Enron Master Termination Agreement.................................................... Recitals
Enron Settlement Agreement............................................................ Recitals
Enron Tender Agreement................................................................ Recitals
Employee Benefit Plan................................................................. Section 4.11(b)
Employee Options...................................................................... Section 6.5(a)
Employment-Related Agreements......................................................... Section 4.11(j)
Environmental Laws.................................................................... Section 4.17(b)
ERISA................................................................................. Section 4.11(a)
ERISA Affiliate ...................................................................... Section 4.11(f)
ERISA Plans .......................................................................... Section 4.11(b)
Exchange Act.......................................................................... Section 1.1(a)
Expenses.............................................................................. Section 6.8(c)
Expiration Date....................................................................... Section 1.1(a)
FERC.................................................................................. Section 4.4(a)
FERC Approvals ....................................................................... Section 4.4(a)
1
Filing Office......................................................................... Section 2.1(b)
GAAP.................................................................................. Section 4.6
Governmental Entity................................................................... Section 4.4(a)
Hazardous Substances.................................................................. Section 4.17(b)
HSR Act............................................................................... Section 4.4(a)
Indemnified Parties .................................................................. Section 6.13
Independent Directors................................................................. Section 2.7
Information Statement................................................................. Section 8.7(a)
Interim Trading and Credit Agreement.................................................. Section 6.14(f)
IP Rights............................................................................. Section 4.14
IRS................................................................................... Section 4.10(a)
Liens................................................................................. Section 4.2(b)
Local Approvals....................................................................... Section 4.4(a)
Material Contracts.................................................................... Section 4.19
Merger................................................................................ Recitals
Merger Consideration.................................................................. Section 3.1(c)
Minimum Condition..................................................................... Annex A
Motion ............................................................................... Section 6.2
Offer................................................................................. Recitals
Offer Documents....................................................................... Section 1.1(b)
Offer to Purchase..................................................................... Section 1.1(a)
Officer Agreements.................................................................... Section 4.9
Parent................................................................................ Preamble
Parent Disclosure Letter.............................................................. Section 5.3
Paying Agent.......................................................................... Section 3.2(a)
PECO.................................................................................. Section 4.20
PECO Contracts........................................................................ Section 4.20
Per Share Amount...................................................................... Recitals
Person ............................................................................... Section 6.8(b)
Purchaser............................................................................. Preamble
Real Property......................................................................... Section 4.17(b)
Rights................................................................................ Section 4.2(c)
SEC................................................................................... Section 1.1(a)
Securities Act........................................................................ Section 4.6
Schedule 14D-9 ....................................................................... Section 1.1(a)
Schedule TO........................................................................... Section 1.1(b)
Stockholders Meeting.................................................................. Section 6.4(a)
Subsidiary............................................................................ Section 3.1(b)
superior proposal..................................................................... Section 6.7(a)
Surviving Corporation................................................................. Recitals
takeover proposal..................................................................... Section 6.7(a)
takeover transaction ................................................................. Section 6.7(a)
Tax Return............................................................................ Section 4.10(c)
Taxes................................................................................. Section 4.10(c)
Violations............................................................................ Section 4.4(a)
Voting Debt........................................................................... Section 4.2(c)
2
Warrants.............................................................................. Section 4.2(a)
3
ANNEX A
to
Agreement and Plan of Merger
Certain Conditions of the Offer. Notwithstanding any other
provision of the Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to Parent's obligation to
pay for or return tendered shares of Company Common Stock promptly after
termination or withdrawal of the Offer), pay for, or may delay the acceptance
for payment of or payment for, any tendered shares of Company Common Stock, or
may, in its sole discretion (subject to the Merger Agreement), terminate or
amend the Offer if (i) there shall not have been properly and validly tendered
pursuant to the Offer and not withdrawn prior to the expiration of the Offer a
number of shares of Company Common Stock which, together with the number of
shares of Company Common Stock owned by Parent or Purchaser, if any, that
represents at least a majority of the total issued and outstanding shares of
Company Common Stock (assuming the exercise of all options, warrants and other
rights to purchase shares of Company Common Stock then outstanding that have an
exercise price equal to or less than the Per Share Amount) (the "Minimum
Condition"), (ii) any applicable waiting periods under the HSR Act shall not
have terminated or expired, (iii) any necessary FERC Approvals shall not have
been obtained or made, (iv) any necessary notices, filings or approvals listed
on Schedule 4.4. of the Company Disclosure Letter or Section 5.3. of the Parent
Disclosure Letter shall not have been obtained or made and any waiting periods
shall not have expired without commencement of a hearing process that has not
resulted in approvals necessary for the Company to continue its business in such
jurisdiction provided that, none of the notices, filings or approvals referred
to in clauses (iii) and (iv) shall be deemed obtained or made if such shall be
subject to or result in any condition or restriction the effect of which,
together with any other such conditions or restrictions, is reasonably likely to
(x) have a Company material adverse effect, (y) have a material adverse effect
on Parent's North American business or (z) materially and adversely impact the
reasonably anticipated economic and business benefits to Parent and its
Subsidiaries of the transactions contemplated hereby, or (v) if on or after the
date of the Merger Agreement, and at or before the Expiration Date, as such date
may be extended from time to time pursuant to the Merger Agreement, any of the
following events shall occur:
(a) there shall have occurred (i) any general suspension
of, or limitation on prices for, trading in securities on the New York
Stock Exchange or the London Stock Exchange, (ii) any material decrease
in the number of U.S. Dollars that can be purchased for a given amount
of British pounds sterling or euro, or a suspension of, or limitation
on, the markets therefor, (iii) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States
or the United Kingdom, (iv) any outbreak or escalation of major
hostilities in which the United States or the United Kingdom is
involved, any declaration of war by Congress or any substantial
national or international calamity or emergency directly or indirectly
involving the United States or the United Kingdom, which has affected
and continues to affect adversely and materially the capital markets in
the United States or the United Kingdom, or (v) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
A-1
(b) (i) the Company shall have breached or failed to
perform in any material respect any of its covenants or agreements
under the Merger Agreement which breach or failure is incapable of
being cured or has not been cured prior to the earlier of (x) the final
Expiration Date and (y) within 10 days after the giving of written
notice thereof (specifying in reasonable detail such breach or failure)
to the Company, provided that if any executive officer of Parent shall
have been aware of facts giving rise to -------- such breach or failure
and aware that such facts constitute such a breach or failure, more
than 10 days in advance of the final Expiration Date and Parent or
Purchaser shall not have delivered notice thereof to the Company until
less than 10 days in advance of the final Expiration Date, and by
reason of the Company not having 10 days to cure, the Company is unable
to cure such breach or failure notwithstanding its reasonable best
efforts to do so, the Company shall be entitled to effect a cure during
such additional amount of days as would add to 10 days from the date
the notice was actually given to the Company, or (ii) (A) each of the
representations and warranties of the Company contained in Sections
4.2, 4.3, and 4.5 shall not have been accurate and complete when made
or thereafter shall have become inaccurate or incomplete, or (B) the
other representations and warranties of the Company set forth in the
Merger Agreement, taken as a whole, and without giving effect to any
qualifications as to materiality (whether expressed by reference to the
words "material" or "material adverse effect" or otherwise) therein,
shall have not been accurate and complete when made or thereafter shall
have become inaccurate or incomplete, except with respect to (B) only,
as has not had and is not reasonably likely to have, individually or in
the aggregate, a Company material adverse effect;
(c) there shall have been threatened, instituted or
pending any suit, claim, action, litigation, proceeding, investigation
or other application by or before any Governmental Entity which has any
reasonable likelihood of success: (i) challenging or seeking to, or
which is reasonably likely to, make illegal or otherwise directly or
indirectly restrain or prohibit, or seeking to, or which is reasonably
likely to, impose voting, procedural, price or other material
requirements, in addition to those required by Federal securities laws
and the DGCL each as in effect on the date of the Offer, in connection
with the making of the Offer, the acceptance for payment of, or payment
for, some of or all the shares of Company Common Stock by Parent,
Purchaser or any other affiliate of Parent or the consummation of the
Offer or the Merger or the consummation of the transactions
contemplated by the Offer or the Merger; (ii) seeking to obtain any
material damages relating to the transactions contemplated by the Offer
or the Merger; (iii) seeking to prohibit, or impose any material
limitations on, Parent's or Purchaser's ownership or operation of all
or any material portion of their or the Company's business, license or
other assets (including the business, license or other assets of their
respective affiliates and Subsidiaries), or to compel Parent or
Purchaser to dispose of or hold separate all or any material portion of
Parent's or Purchaser's or the Company's business or assets (including
the business or assets of their respective affiliates and Subsidiaries)
as a result of the transactions contemplated by the Offer or the
Merger; (iv) seeking to impose material limitations on the ability of
Parent or Purchaser effectively to acquire or hold or to exercise full
rights of ownership of the shares of Company Common Stock including,
without limitation, the right to vote the shares of Company Common
Stock purchased by them or their affiliates on an equal basis with all
other shares of Company Common Stock on all matters properly presented
to the stockholders; or (v) seeking to
A-2
require divestiture by Parent, Purchaser or any other affiliate of
Parent of any shares of Company Common Stock, or any statute, rule,
regulation, judgment, decree, order or injunction (whether temporary,
preliminary or permanent) shall be proposed, with a reasonable
possibility of success, enacted, promulgated, entered, enforced or
deemed to become applicable to the Offer or the Merger or the business
operations of the Company or its Subsidiaries by any Governmental
Entity that results in (or would result in) any of the effects of, or
has (or would have) any of the consequences referred to in clauses (i)
through (v) above;
(d) any person, entity or group shall have entered into a
definitive agreement with the Company with respect to a takeover
proposal (as defined in Section 6.7 of the Merger Agreement) with or
involving the Company or any of its Subsidiaries;
(e) any event, change or development shall have occurred
or been discovered, which, individually or in the aggregate, has had or
is reasonably likely to have a Company material adverse effect (as
defined in Section 9.5 of the Merger Agreement);
(f) (i) after the date of the Merger Agreement, any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Parent or Purchaser or
any of their respective Subsidiaries or affiliates (collectively, a
"Person") shall have commenced, or shall have publicly announced an
intention to commence (or such intention shall have become public), a
tender offer or exchange offer for 15% or more of the shares of Company
Common Stock, or (ii) the Board of Directors of the Company (or a
committee thereof) shall have amended, modified or withdrawn in a
manner adverse to Parent or Purchaser, its recommendation of the Offer
or the Merger, or shall have endorsed, approved or recommended any
other takeover proposal, or shall have resolved to do any of the
foregoing;
(g) the Company or any of its Subsidiaries (i) is
dissolved (other than pursuant to a consolidation, amalgamation or
merger), (ii) makes a general assignment, arrangement or composition
with or for the benefit of its creditors, (iii) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law
or other similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an
order for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the
institution or presentation thereof, (iv) has a resolution passed for
its winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger), (v) seeks or becomes
subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets, or (vi) has a secured
party take possession of any significant assets or has a distress,
execution, attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is not
dismissed, discharged, stayed, or restrained, in each case within 30
days thereafter;
A-3
(h) the approval by the Bankruptcy Court, with respect to
the execution, delivery or performance of the Enron Master Termination
Agreement, the Enron Settlement Agreement, the Enron Tender Agreement
by each of the parties thereto, other than Parent and Purchaser, shall
not have been obtained or shall not remain in full force and effect;
(i) the consummation of the transactions under the Enron
Settlement Agreement shall not have occurred;
(j) the Offer, if it shall have been extended pursuant to
Section 1.1(e), shall not have expired;
(k) Enron or any of the other parties thereto (other than
Parent and Purchaser) shall not have complied with their covenants and
agreements in the Enron Tender Agreement; or
(l) the Bankruptcy Court shall not have granted a final
non-appealable order approving the Motion without the imposition of any
conditions or limitations with respect thereto;
(m) the Merger Agreement shall have been terminated by
the Company or Parent or Purchaser in accordance with its terms, or
Parent or Purchaser shall have reached an agreement or understanding in
writing with the Company providing for termination or amendment of the
Offer or delay in payment for the shares of Company Common Stock;
which, in the reasonable judgment of Parent and Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Purchaser) giving rise to any such conditions, makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payment for the
shares of Company Common Stock.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances (including any action or inaction by Parent or Purchaser) giving
rise to such condition or may be waived by Parent or Purchaser, by express and
specific action to that effect, in whole or in part at any time and from time to
time in its sole discretion. The failure by Purchaser at any time to exercise
any of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
A-4
SCHEDULE 1.1
A-5
SCHEDULE 1.1
The Offer Price shall be adjusted to account for changes in the value
of the Commodity Position Cost caused by commodity price movements as follows:
(a) If the Second Commodity Position Cost Per Share is within $.065 of
the First Commodity Position Cost Per Share, then the Offer Price shall not be
adjusted and shall remain $1.05.
(b) If the Second Commodity Position Cost Per Share is less than the
First Commodity Position Cost Per Share BY MORE THAN $0.065, then the Offer
Price shall be an amount equal to:
(x) $1.05
plus
(y) the result obtained by subtracting $0.065 from the
amount determined by subtracting the Second Commodity Position Cost
Per Share from the First Commodity Position Cost Per Share.
(c) If the Second Commodity Position Cost Per Share is greater than the
First Commodity Position Cost Per Share BY MORE THAN $0.065, then the Offer
Price shall be an amount equal to:
(x) $1.05
less
(y) the result obtained by subtracting $0.065 from the amount
determined by subtracting the First Commodity Position Cost Per
Share from the Second Commodity Position Cost Per Share;
provided that the Offer Price shall not be less than zero.
(d) For purposes of this Schedule 1.1, the following terms shall have
the meanings specified:
"Business Day" means any day on which NYMEX is not closed.
"Cash Balance of the Month Price" means (i) if the Price Source is
Natural Gas -- NYMEX, then Natural Gas -- ICE with the applicable strip being
for the balance of the month (abbreviated "Bal Month" or "Balance Month") and
(ii) if the Price Source is Power -- ERCOT Peak -- ICE, then Power -- ERCOT Peak
-- ICE with the applicable strip being for the balance of the month (abbreviated
"Bal Month" or "Balance Month").
"Cash Daily Price means (i) if the Price Source is Natural Gas --
NYMEX, then Natural Gas -- Xxxxx Hub -- Gas Daily and (ii) if the Price Source
is Power -- ERCOT Peak -- ICE, then Power -- ERCOT Peak -- Megawatt Daily.
"Commodity Position Cost", on any date, means the following, calculated
using amounts determined as of such date:
5 N
ABSOLUTE VALUE [ (SIGMA) [ (SIGMA) (VCM * PMCM) / (1 + RM) ] ]
C = 1 M = 1
, where:
VCM means volume for commodity C in delivery month M (see
Exhibit A attached for volumes applicable to each
commodity by delivery month), where a short volume is
indicated by a negative number, and a long volume is
indicated by a positive number.
PMCM means, on any date, the arithmetic average of the
Specified Price calculated on the Pricing Dates for
such date for commodity C in delivery month M.
RM means the discount rate applicable to delivery month
M (as set forth in Exhibit A).
"Commodity Position Cost Per Share", on any date, means the Commodity
Position Cost on such date divided by the number of Fully Diluted Shares.
"Expiration Date" means with respect to a Price Source and a specific
Interval Period, the last Business Day on which the Price Source publishes a
price for such Interval Period (e.g., the last Business Day that NYMEX --
NATURAL GAS publishes a price for the Delivery Month March 2002 is February 26,
2002). If the Determination Date should occur after the Expiration Date with
respect to a Price Source and a specific Interval Period, then the Determination
Date shall be deemed to have occurred on the Expiration Date with respect to
such Price Source and specific Interval Period.
"First Commodity Position Cost Per Share" means the Commodity Position
Cost Per Share on the date hereof.
"Gas Daily" means Gas Daily, or any successor publication, published by
The XxXxxx-Xxxx Companies, Inc., or its successor.
"ICE" means the Intercontinental Exchange, Inc. or its successor.
"Interval Period" shall mean the time period (i.e., one month or a
block of contiguous months) containing the applicable delivery month as set
forth in Exhibit A. For
2
Interval Periods of one month, the Interval Period and the delivery month shall
be the same and can be used interchangeably.
"Megawatt Daily" means Megawatt Daily, or any successor publication,
published by The XxXxxx-Xxxx Companies, Inc., or its successor.
"MMBTU" and "mmbtu" each means one million British thermal units.
"MWH" and "mwh" each means megawatt hour.
"Natural Gas -- CGT/Appalachia -- ICE" means the price per MMBTU as
published by ICE having the product description "NG Fin BS, LD1 for IF" and the
hub description "TCO" for the strip corresponding to the applicable Interval
Period stated in U.S. Dollars
"Natural Gas -- Xxxxx Hub -- Gas Daily" means the price per MMBTU of
natural gas stated in US dollars, published under the heading, "Daily Price
Survey: Louisiana-Onshore South: Xxxxx Hub: Midpoint", in the issue of Gas Daily
that reports prices effective for such calendar day. If Gas Daily does not
publish a price effective for such calendar day, then the price for such
calendar day shall be the price published by Gas Daily effective for the closest
preceding calendar day for which Gas Daily has published a price.
"Natural Gas -- ICE" means the price per MMBTU as published by ICE
having the product description "NG Fin, FP for LD1" and the hub description
"Xxxxx" for the strip corresponding to the applicable Interval Period stated in
U.S. Dollars
"Natural Gas -- NYMEX" means the price per MMBTU of natural gas on the
NYMEX of the futures contract applicable to the Interval Period stated in U.S.
Dollars.
"Natural Gas -- SONAT/LA -- ICE" means the price per MMBTU as published
by ICE having the product description "NG Fin BS, LD1 for IF" and the hub
description "SONAT-T1" for the strip corresponding to the applicable Interval
Period stated in U.S. Dollars
"NYMEX" means the New York Mercantile Exchange or its successor.
"Power -- ERCOT Offpeak -- ICE" means the price per MWH as published by
ICE having the product description "Firm-LD Off-Peak" and the hub description
"Ercot Off-Peak" for the strip corresponding to the applicable Interval Period
stated in U.S. Dollars
"Power -- ERCOT Peak -- ICE" means the price per MWH as published by
ICE having the product description "Firm-LD Peak" and the hub description
"Ercot" for the strip corresponding to the applicable Interval Period stated in
U.S. Dollars
"Power -- ERCOT Peak -- Megawatt Daily" means the price per MWH of peak
electricity stated in US dollars, published under the heading, "Trades for
Standard 16-hour Daily Products: ERCOT: Index", in the issue of Megawatt Daily
that reports prices effective for such calendar day. If Megawatt Daily does not
publish a price effective for such calendar day, then
3
the price for such calendar day shall be the price published by Megawatt Daily
effective for the closest preceding calendar day for which Megawatt Daily has
published a price.
"Price Source" means Natural Gas -- NYMEX, Natural Gas -- ICE,
Power-ERCOT Peak -- ICE, Power -- ERCOT Offpeak -- ICE, Natural Gas -- SONAT/LA
-- ICE and Natural Gas -- CGT/Appalachia -- ICE.
"Pricing Dates" for any date means such date and the first two Business
Days immediately preceding such date, except that if such date is the date of
this Agreement, then the "Pricing Dates" for such date means such date and the
first two Business Days immediately succeeding such date; provided that if the
Specified Price is determined on the basis of quotations from Referenced
Dealers, the Pricing Date shall not include any preceding Business Days for
which the Specified Price was also determined on the basis of quotations from
Referenced Dealers.
"Referenced Dealers" shall mean Amerex, Prebon, NatSource, TFS, Sempra
Energy Trading Corp., Xxxxxx Xxxxxxx Capital Group Inc., Aquila Energy Marketing
Corp. and any other leading dealer in natural gas or electricity that is
mutually agreed to by Parent and the Company.
"Second Commodity Position Cost Per Share" means the Commodity Position
Cost Per Share on the Determination Date.
"Specified Price" shall mean:
(i) if the Price Source is Natural Gas -- NYMEX, the closing
settlement price on the Pricing Date for the applicable Interval Period
as published by NYMEX; and
(ii) if the Price Source is published by ICE,
(a) the volumetric weighted average of all
transactions completed on the Pricing Date for the applicable
Interval Period, or
(b) if (a) is not applicable because no transactions
have been completed on the Pricing Date, the arithmetic mean
of the bid quotation and the ask quotation as of 2:30 P.M.
Eastern Standard Time on the Pricing Date for the applicable
Interval Period.
If the Specified Price can not be determined as set forth above due to the
failure of the Price Source to announce or publish the Specified Price, and the
Price Source is:
(i) Natural Gas -- NYMEX, then Natural Gas -- ICE shall be
substituted as the Price Source and the Specified Price shall be
determined as set forth in (ii) above, or
(ii) published by ICE, then the Specified Price for such
Pricing Date shall be determined on the basis of quotations from Xxxxxx
Xxxxxxx Capital Group Inc.,
4
Aquila Energy Marketing Corp. and two additional Referenced Dealers
(one chosen by each party) by seeking actual quotations at the mean of
the "bid" and "ask" from such Referenced Dealers and taking the
arithmetic average of those quotations obtained; provided that if four
quotations are not available, then the maximum number of quotations,
fewer than four quotations, then obtainable shall be used; and if no
quotations are available then Parent and the Company shall mutually
agree on an alternative method for determining the Specified Price. All
quotations obtained shall reflect, in all material respects, pricing on
the same basis as the original Price Source (including, but not limited
to, the same commodity specifications, delivery period, delivery
location and whether delivery is firm or interruptible), and all
ERCOT-related pricing shall reflect "seller's choice" transactions that
are not zone specific.
Furthermore, if the Specified Price is for an Interval Period which is contains
two or more months, then each month in such Interval Period will carry an
Interval Weighting (a percentage as set forth in Exhibit A). The Interval
Weighting applicable to each month in the Interval Period shall be multiplied by
the Specified Price for the Interval Period and the product shall be the
Specified Price for the applicable month in the Interval Period.
Notwithstanding the foregoing, if (i) the Price Source is Natural Gas -- NYMEX
or Power -- ERCOT Peak--ICE, (ii) the applicable Interval Period includes only
one delivery month and (iii) the Determination Date occurs in a month following
the month in which the Expiration Date with respect to such Price Source and
such Interval Period occurred, then the last sentence in the definition of
"Expiration Date" shall not apply and the Specified Price shall be equal to the
volumetric weighted average price for such Interval Period calculated as
specified in the next sentence. For purposes of the next preceding sentence, (i)
the daily volume during such Interval Period shall be deemed to equal the volume
for the delivery month included in such Interval Period divided by the total
number of days in such delivery month and (ii) the price for each calendar day
in such Interval Period occurring (A) on or prior to such Pricing Date shall be
deemed to equal the Cash Daily Price applicable to such calendar day and (B)
after such Pricing Date shall be deemed to equal the Cash Balance of the Month
Price.
5
EXHIBIT A Page 6
DISCOUNT RATE
MERGER AGREEMENT DATE 8-Feb-02
PER ANNUM RATE = 5%
(M) DELIVERY MONTH INTERVAL PERIOD DISCOUNT RATE (R)
---------------------------------------------------------------------------------------------------
1 Xxxxx-00 Xxxxx-00 0.0000
0 Xxxxx-00 Xxxxx-00 0.0083
3 May-02 May-02 0.0125
4 June-02 June-02 0.0167
5 July-02 July-02 0.0208
6 August-02 August-02 0.0250
7 September-02 September-02 0.0292
8 October-02 October-02 0.0333
9 November-02 November-02 0.0375
10 December-02 December-02 0.0417
11 January-03 January-03 0.0458
12 February-03 February-03 0.0500
13 Xxxxx-00 Xxxxx-00 0.0000
00 Xxxxx-00 Xxxxx-00 0.0583
15 May-03 May-03 0.0625
16 June-03 June-03 0.0667
17 July-03 July-03 0.0708
18 August-03 August-03 0.0750
19 September-03 September-03 0.0792
20 October-03 October-03 0.0833
21 November-03 November-03 0.0875
22 December-03 December-03 0.0917
23 January-04 January-04 0.0958
24 February-04 February-04 0.1000
25 Xxxxx-00 Xxxxx-00 0.0000
00 Xxxxx-00 Xxxxx-00 0.1083
27 May-04 May-04 0.1125
28 June-04 June-04 0.1167
29 July-04 July-04 0.1208
30 August-04 August-04 0.1250
31 September-04 September-04 0.1292
32 October-04 October-04 0.1333
33 November-04 November-04 0.1375
34 December-04 December-04 0.1417
35 January-05 January-05 0.1458
36 February-05 February-05 0.1500
37 Xxxxx-00 Xxxxx-00 0.0000
00 Xxxxx-00 Xxxxx-00 0.1583
39 May-05 May-05 0.1625
40 June-05 June-05 0.1667
41 July-05 July-05 0.1708
42 August-05 August-05 0.1750
43 September-05 September-05 0.1792
44 October-05 October-05 0.1833