AGREEMENT AND PLAN OF MERGER
AND SCHEME OF ARRANGEMENT
by and among
NATIONAL GRID GROUP PLC,
NIAGARA MOHAWK HOLDINGS, INC.,
NEW NATIONAL GRID LIMITED,
and
GRID DELAWARE, INC.
Dated as of September 4, 2000
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TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER AND THE SCHEME........................................1
Section 1.1 The Merger.........................................1
Section 1.2 Effective Time of the Merger.......................2
Section 1.3 The Scheme.........................................2
Section 1.4 The Scheme Effective Time..........................2
Section 1.5 Governing Documents................................2
ARTICLE II TREATMENT OF SHARES..............................................3
Section 2.1 Effect of the Scheme on Parent Capital Stock.......3
Section 2.2 Effect of the Merger on the Company Capital Stock..3
Section 2.3 Exchange of Certificates...........................5
ARTICLE III THE CLOSING......................................................9
Section 3.1 Closing............................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................9
Section 4.1 Organization and Qualification.....................9
Section 4.2 Subsidiaries......................................10
Section 4.3 Capitalization....................................10
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance........................................11
Section 4.5 Reports and Financial Statements..................13
Section 4.6 Absence of Certain Changes or Events..............14
Section 4.7 Legal Proceedings.................................14
Section 4.8 Information Supplied..............................15
Section 4.9 Tax Matters.......................................15
Section 4.10 Employee Matters; ERISA...........................18
Section 4.11 Labor and Employee Relations......................20
Section 4.12 Environmental Protection..........................21
Section 4.13 Regulation as a Utility...........................24
Section 4.14 Vote Required.....................................24
Section 4.15 Opinion of Financial Advisor......................24
Section 4.16 Brokers...........................................24
Section 4.17 Insurance.........................................24
Section 4.18 Intellectual Property.............................24
Section 4.19 Nuclear Operations and NRC Actions................25
Section 4.20 Ownership of Parent or Newco Common Stock.........26
Section 4.21 State Antitakeover Matters........................26
Section 4.22 Commodity Derivatives and Credit Exposure Matters.26
Section 4.23 The Company Associates............................26
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Page
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ARTICLE V REPRESENTATIONS AND WARRANTIES
OF PARENT, NEWCO AND MERGER SUB.................................26
Section 5.1 Organization and Qualification....................26
Section 5.2 Capitalization....................................27
Section 5.3 Authority; Non-Contravention; Statutory Approvals;
Compliance........................................28
Section 5.4 Reports and Financial Statements..................29
Section 5.5 Absence of Certain Changes or Events..............30
Section 5.6 Legal Proceedings.................................30
Section 5.7 Information Supplied..............................30
Section 5.8 Tax Matters.......................................31
Section 5.9 Environmental Protection..........................32
Section 5.10 Votes Required....................................32
Section 5.11 Brokers...........................................33
Section 5.12 Insurance.........................................33
Section 5.13 Ownership of Company Common Stock.................33
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER..........................33
Section 6.1 Covenants of the Company..........................33
Section 6.2 Covenants of Parent...............................39
Section 6.3 Covenants of Newco................................40
Section 6.4 Alternative Arrangement Concerning Company
Nuclear Facilities................................40
ARTICLE VII ADDITIONAL AGREEMENTS...........................................41
Section 7.1 Access to Information.............................41
Section 7.2 Proxy Statement and Registration Statement; Listing;
Parent Disclosure Documents.......................42
Section 7.3 Regulatory Matters................................43
Section 7.4 Shareholder Approval..............................43
Section 7.5 Directors' and Officers' Indemnification..........44
Section 7.6 Public Announcements..............................46
Section 7.7 Rule 145 Affiliates...............................46
Section 7.8 Labor Agreements and Workforce Matters............46
Section 7.9 Employee Benefit Plans; Stock Options.............47
Section 7.10 No Solicitations..................................48
Section 7.11 Boards of Directors...............................50
Section 7.12 Charitable Contributions..........................51
Section 7.13 Anti-Takeover Statutes............................51
Section 7.14 Conveyance Taxes..................................51
Section 7.15 Expenses..........................................51
Section 7.16 Further Assurances................................52
Section 7.17 Restructuring of Transactions.....................52
Section 7.18 Integration Team..................................52
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Page
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Section 7.19 Newco Ordinary Shares.............................52
Section 7.20 ADR Depositary Agreement..........................52
ARTICLE VIII CONDITIONS......................................................53
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger........................................53
Section 8.2 Conditions to Obligation of Newco and Parent to
Effect the Merger.................................54
Section 8.3 Conditions to Obligation of The Company to Effect
the Merger........................................55
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...............................57
Section 9.1 Termination.......................................57
Section 9.2 Effect of Termination.............................58
Section 9.3 Termination Fee; Expenses.........................58
Section 9.4 Amendment.........................................59
Section 9.5 Waiver............................................60
ARTICLE X GENERAL PROVISIONS..............................................60
Section 10.1 Non-Survival; Effect of Representations
and Warranties....................................60
Section 10.2 Notices...........................................60
Section 10.3 Miscellaneous.....................................63
Section 10.4 Interpretation....................................63
Section 10.5 Counterparts; Effect..............................63
Section 10.6 Parties' Interest.................................63
Section 10.7 Governing Law.....................................63
Section 10.8 Submission to Jurisdiction; Waivers...............63
Section 10.9 Enforcement of Agreement..........................64
Section 10.10 Waiver of Jury Trial..............................64
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INDEX OF PRINCIPAL TERMS
Term Page
---- ----
1935 Act......................................................................13
Accounting Method Adjustment..................................................17
Acquisition Agreement.........................................................49
Acquisition Proposal..........................................................49
ADR Depositary.................................................................5
ADR Depositary Agreement.......................................................5
ADS Consideration..............................................................3
ADS Election...................................................................4
ADS Election Number............................................................4
ADS Election Shares............................................................5
Affiliate Agreement...........................................................46
Applicable Period.............................................................49
Atomic Energy Act.............................................................13
Average Price..................................................................4
BCL............................................................................1
Cash Amount....................................................................4
Cash Consideration.............................................................3
Cash Election..................................................................4
Cash Election Number...........................................................4
Cash Election Shares...........................................................4
Certificate(s).................................................................6
Circular......................................................................15
Closing........................................................................9
Closing Agreement.............................................................16
Closing Date...................................................................9
Code...........................................................................1
Companies Act.................................................................27
Company........................................................................1
Company Associates............................................................10
Company Common Stock...........................................................3
Company Disclosure Schedule....................................................9
Company Employee Benefit Plans................................................18
Company Financial Statements..................................................13
Company Intellectual Property.................................................25
Company Material Adverse Effect...............................................10
Company Meeting...............................................................44
Company Nuclear Facilities....................................................25
Company Preferred Stock.......................................................10
Company Required Consents.....................................................12
Company Required Statutory Approvals..........................................12
Company SEC Reports...........................................................13
Company Shareholders' Approval................................................24
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Term Page
---- ----
Company Subsidiary............................................................10
Confidentiality Agreement.....................................................41
Conveyance Taxes..............................................................51
Court..........................................................................1
date hereof....................................................................1
DGCL...........................................................................2
DOE...........................................................................13
Election.......................................................................5
Election Deadline..............................................................6
Election Number................................................................4
Environmental Claim...........................................................23
Environmental Documents.......................................................22
Environmental Laws............................................................23
Environmental Permits.........................................................21
ERISA.........................................................................18
Exchange Act..................................................................13
Exchange Fund..................................................................5
Exchange Ratio.................................................................4
Extended Termination Date.....................................................57
FCC...........................................................................13
FERC..........................................................................13
Final Order...................................................................54
Foreign Person................................................................16
Form of Election...............................................................6
FSA...........................................................................15
Governmental Authority........................................................12
Hazardous Materials...........................................................23
HSR Act.......................................................................43
Indemnified Liabilities.......................................................44
Indemnified Parties...........................................................44
Indemnified Party.............................................................44
Initial Termination Date......................................................57
IRS...........................................................................17
Knowledge.....................................................................12
Licenses......................................................................12
Listing Particulars...........................................................15
Merger.........................................................................1
Merger Consideration...........................................................3
Merger Effective Time..........................................................2
Merger Sub.....................................................................1
Mixed Election.................................................................5
New York Advisory Board.......................................................50
Newco..........................................................................1
Newco ADRs.....................................................................3
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Term Page
---- ----
Newco ADSs.....................................................................3
Newco Ordinary Shares..........................................................3
Newco Original Ordinary Shares................................................27
Newco Original Preference Shares..............................................27
Newco Special Share............................................................3
Non-Convertible Preferred Securities..........................................34
Non-Election Shares............................................................5
NRC...........................................................................13
Nuclear Approvals.............................................................54
Nuclear Sale..................................................................53
Nuclear Sale Agreement........................................................57
OFGEM.........................................................................30
Option........................................................................48
Out-of-Pocket Expenses........................................................59
Parent.........................................................................1
Parent ADRs....................................................................3
Parent ADSs....................................................................3
Parent Court Meeting..........................................................33
Parent Disclosure Documents...................................................15
Parent Disclosure Schedule....................................................26
Parent Financial Statements...................................................29
Parent Material Adverse Effect................................................28
Parent Merger Meeting.........................................................32
Parent Merger Shareholders' Approval..........................................32
Parent Ordinary Shares.........................................................3
Parent Plans..................................................................27
Parent Required Consents......................................................28
Parent Required Statutory Approvals...........................................28
Parent Scheme Meeting.........................................................33
Parent Scheme Shareholders' Approval..........................................33
Parent SEC Reports............................................................29
Parent Shareholders' Approval.................................................33
Parent Significant Subsidiary.................................................39
Parent Special Share...........................................................3
Parent Subsidiary.............................................................27
PBGC..........................................................................20
PCBs..........................................................................23
Per Share Amount...............................................................3
person.........................................................................8
Post-Closing Plans............................................................48
Power Act.....................................................................13
Proxy Statement...............................................................15
Registration Statement........................................................15
Release.......................................................................24
vi
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Term Page
---- ----
Representatives...............................................................41
Scheme.........................................................................1
Scheme Document...............................................................15
Scheme Effective Time..........................................................2
Securities Act................................................................13
Shares.........................................................................6
Subsidiary....................................................................10
Surviving Entity...............................................................2
Tax Change....................................................................35
Tax Controversy...............................................................17
Tax Return....................................................................16
Tax Rulings...................................................................16
Tax(es).......................................................................15
Termination Fee...............................................................59
Trading Day....................................................................4
U.K. Listing Authority........................................................15
U.S. GAAP.....................................................................13
Violation.....................................................................11
Voting Debt...................................................................10
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<PAGE>
AGREEMENT AND PLAN OF MERGER AND SCHEME OF ARRANGEMENT, dated
as of September 4, 2000 (referred to herein as the "date hereof"), by and among
National Grid Group plc., a public limited company incorporated under the laws
of England and Wales with registration number 2367004 ("Parent"), Niagara Mohawk
Holdings, Inc., a New York corporation (the "Company"), New National Grid
Limited, a private limited company incorporated under the laws of England and
Wales with registration number 4031152 ("Newco") and Grid Delaware, Inc., a
Delaware corporation and a wholly owned subsidiary of Newco ("Merger Sub").
WHEREAS, the Company, Parent and Newco have determined that it
would be in their respective best interests and in the interests of their
respective shareholders to effect the transactions contemplated by this
Agreement;
WHEREAS, the Board of Directors of Parent intends to recommend
to its shareholders a proposal to introduce Newco as a new holding company for
the Parent group pursuant to a scheme of arrangement (the "Scheme") to be
sanctioned by the High Court of Justice, London, England (the "Court"),
substantially in the form of the draft Scheme attached hereto as Exhibit A
subject to such amendments as Parent may reasonably deem necessary or desirable;
provided, that if such amendments would have a material adverse effect on the
benefits of the Merger for the holders of Company Common Stock, or such
amendments are not necessary to consummate the transactions contemplated hereby
and have any adverse effect on the benefits of the Merger to the holders of
Company Common Stock, such amendments may only be effected with the prior
written consent of the Company;
WHEREAS, the respective Boards of Directors of Parent, Newco,
Merger Sub and the Company have approved the merger (the "Merger") of Merger Sub
with and into the Company, whereby the Company will become a wholly owned
subsidiary of Newco, all pursuant to the terms and conditions set forth in this
Agreement; and
WHEREAS, for United States federal income tax purposes, it is
intended that the Scheme together with the Merger shall collectively qualify as
a transaction described in Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER AND THE SCHEME
Section 1.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Merger Effective Time, Merger Sub will be merged with and
into the Company in accordance with the Business Corporation Law of the State of
New York (the "BCL") and the
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General Corporation Law of the State of Delaware (the "DGCL"). The Company will
be the surviving entity in the Merger (the "Surviving Entity") and shall
continue its existence under the laws of the State of New York. The effects and
the consequences shall be as set forth in Section 1.5, Section 906 of the BCL
and Section 259 of the DGCL.
Section 1.2 Effective Time of the Merger. On the Closing Date
(as defined in Section 3.1) a certificate of merger complying with the
requirements of the relevant provisions of the BCL shall be executed and
delivered for filing with the Department of State of the State of New York with
respect to the Merger. The Merger shall become effective upon the later of the
filing of a certificate of merger relating thereto by the Department of State of
the State of New York and the filing of a certificate of merger relating thereto
with the Secretary of State of the State of Delaware or upon such later date as
is agreed upon by the parties and specified in such certificates of merger (the
"Merger Effective Time"); provided that the Merger Effective Time shall occur as
soon as reasonably practical but no later than seven days after the Scheme
Effective Time (as defined below).
Section 1.3 The Scheme. Subject to the terms and conditions of
this Agreement and the Scheme having been sanctioned by the Court and having
become effective in accordance with Section 1.4, on the Scheme Effective Time,
all of the issued and outstanding share capital of Parent shall be cancelled and
Parent shall issue and deliver to Newco such number of the Parent Ordinary
Shares as has been so cancelled in consideration of the allotment by Newco of
such number of Newco shares as shall be of an aggregate nominal amount equal to
the aggregate nominal amount of the Parent Ordinary Shares so cancelled.
Section 1.4 The Scheme Effective Time. This Scheme shall
become effective as soon as an office copy of the Court order sanctioning this
Scheme has been duly delivered to the Registrar of Companies for registration
and the order and relative minutes have been registered by him (such time being
referred to herein as the "Scheme Effective Time"); provided that the Scheme
Effective Time shall occur prior to the Merger Effective Time.
Section 1.5 Governing Documents. The memorandum and articles
of association of Parent as in effect immediately prior to the Scheme Effective
Time shall be the memorandum and articles of association of Parent following the
Scheme Effective Time, until duly amended, except that the memorandum and
articles of association of Parent following the Scheme Effective Time may
reflect a change in the name of Parent and such other changes as are appropriate
for Parent as a wholly owned subsidiary and any changes necessary to reflect any
cancellations or redemption of the Parent Special Share (as defined in Section
2.1) pursuant to the Scheme or otherwise. The certificate of incorporation and
by-laws of the Company as in effect immediately prior to the Merger Effective
Time shall be the certificate of incorporation and by-laws of the Company
following the Merger Effective Time, until duly amended. On or prior to the
Closing Date, Newco shall adopt memorandum and articles of association
substantially similar to the memorandum and articles of incorporation of Parent
immediately prior to the Scheme Effective Time, though they shall not be
required to (but may) provide for a Newco Special Share (as defined in Section
2.1) and Newco's name shall become "National Grid plc".
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ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Scheme on Parent Capital Stock. As
of the Scheme Effective Time, in accordance with the terms of the Scheme (a) all
ordinary shares of 11 13/17 pence each of Parent ("Parent Ordinary Shares")
outstanding on the Scheme Effective Time will be cancelled and the holders
thereof will receive in place of the Parent Ordinary Shares then held by them an
identical number of ordinary shares of Newco ("Newco Ordinary Shares"), (b) all
Parent Ordinary Shares represented by American Depositary Shares of Parent
("Parent ADSs"), each representing five (5) Parent Ordinary Shares and evidenced
by American Depositary Receipts ("Parent ADRs"), outstanding as of the Scheme
Effective Time will be cancelled and the holders thereof will receive in place
of the Parent ADSs then held by them an identical number of American Depositary
Shares of Newco ("Newco ADSs"), each representing five (5) Newco Ordinary Shares
and evidenced by American Depositary Receipts ("Newco ADRs"), (c) Parent will
issue and deliver Parent Ordinary Shares to Newco, and (d) if required by the
Secretary of State for Trade and Industry in the UK as a condition of giving its
consent to the Scheme, the Special Rights Redeemable Preference Share of Parent
with a nominal value of (pound)1 held by the Secretary of State for Trade and
Industry in the UK (the "Parent Special Share") shall be cancelled and one
Special Rights Redeemable Preference Share of Newco with a nominal value of
(pound)1 shall be issued by Newco to the Secretary of State for Trade and
Industry in the UK (the "Newco Special Share").
Section 2.2 Effect of the Merger on the Company Capital Stock.
As of the Merger Effective Time, by virtue of the Merger and without any action
on the part of any holder of Company Common Stock (as hereinafter defined):
(a) Conversion of Merger Sub Shares. Each share of common
stock, par value $0.10 per share, of Merger Sub issued and outstanding
immediately prior to the Merger Effective Time will be converted into one share
of common stock, par value $0.01 per share, of the Company (the "Company Common
Stock").
(b) Cancellation of Company Treasury Stock and Sub-Owned
Stock. Each Share of Company Common Stock, that is owned by the Company, Parent
or Newco or by any wholly owned Subsidiary of the Company, Parent or Newco, will
automatically be cancelled, retired and cease to exist, and no consideration
will be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to the other
provisions of this Section 2.2, each issued and outstanding share of Company
Common Stock (other than shares of Company Common Stock cancelled in accordance
with Section 2.2(b)) will be converted into the right to receive the Per Share
Amount (as defined below) in the form of (x) cash (in such form, the "Cash
Consideration"), (y) a number of Newco ADSs equal to the Exchange Ratio (in such
form, the "ADS Consideration"), or (z) a combination of Cash Consideration and
ADS Consideration determined in accordance with Section 2.2(h) (the "Merger
Consideration"). The "Per Share Amount" shall be determined as follows: (i) if
the Average Price is greater than or equal to $32.50 and less than or equal to
$51.00, the Per Share Amount shall be $19.00, (ii) if the
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Average Price is less than $32.50, the Per Share Amount shall be $19.00 reduced
by the product of (x) $12.67 (two-thirds of $19.00) and (y) the percentage
decrease in the Average Price below $32.50, and (iii) if the Average Price is
greater than $51.00, the Per Share Amount shall be $19.00 increased by the
product of (x) $12.67 (two-thirds of $19.00) and (y) the percentage increase in
the Average Price above $51.00. "Average Price" means the average of the closing
prices of Parent Ordinary Shares, as derived from the Daily Official List of the
London Stock Exchange plc (converted to a U.S. dollar value using the exchange
rate for each date for which the closing price is to be determined as reported
in The Financial Times) for 20 Trading Days selected at random (using procedures
mutually agreed upon by Parent and the Company) in the period of 40 consecutive
Trading Days ending on the close of business on the tenth Trading Day prior to
the Election Deadline, multiplied by five. "Trading Day" means a day on which
the London Stock Exchange plc is open for trading. The "Exchange Ratio" shall be
equal to the Per Share Amount as determined above divided by the Average Price.
(d) Cash Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Merger Effective Time shall be entitled to elect to receive Cash
Consideration for all or any part of such Company Common Stock (a "Cash
Election"). Notwithstanding the foregoing, the aggregate amount of Cash
Consideration to be paid in the Merger shall be $1,015,000,000 (the "Cash
Amount"). As used in this Agreement, the "Cash Election Number" shall mean the
aggregate number of shares of Company Common Stock converted into the right to
receive Cash Consideration in the Merger, which shall equal the Cash Amount
divided by the Per Share Amount; provided that Newco reserves the right in its
sole discretion to increase the Cash Election Number to more closely follow the
actual elections of the Company's shareholders (but not to a number which is
greater than the number of shares of Company Common Stock in respect of which a
valid Cash Election has been made).
(e) Cash Election Shares. If the aggregate number of shares of
Company Common Stock covered by the Cash Elections (the "Cash Election Shares")
exceeds the Cash Election Number, (1) the number of Cash Election Shares covered
by each Form of Election (defined below) will be determined by multiplying the
number of Cash Election Shares covered by such Form of Election by a fraction,
the numerator of which is the Cash Election Number and the denominator of which
is the number of Cash Election Shares, and (2) all Cash Election Shares not
exchanged for Cash Consideration will be exchanged for the right to receive ADS
Consideration (and cash in lieu of fractional shares in accordance with Section
2.3(e))
(f) ADS Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Merger Effective Time shall be entitled to elect to receive ADS
Consideration for all or any part of such holder's shares of Company Common
Stock (an "ADS Election"). Notwithstanding the foregoing, the aggregate number
of shares of Company Common Stock that may be converted into the right to
receive ADS Consideration in the Merger (the "ADS Election Number") shall be the
difference between the total number of shares of Company Common Stock issued and
outstanding immediately prior to the Merger Effective Time and the Cash Election
Number.
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(g) ADS Election Shares. If the aggregate number of shares of
Company Common Stock covered by ADS Elections (the "ADS Election Shares")
exceeds the ADS Election Number, (1) the number of ADS Election Shares covered
by each Form of Election (defined below) to be exchanged for Cash Consideration
will be determined by multiplying the number of ADS Election Shares covered by
such Form of Election by a fraction, the numerator of which is the Cash Election
Number less the number of Cash Election Shares and the denominator of which is
the aggregate number of ADS Election Shares, and (2) all ADS Election Shares not
exchanged for Cash Consideration will be exchanged for the right to receive ADS
Consideration (and cash in lieu of fractional shares in accordance with Section
2.3(e)).
(h) Mixed Election. Subject to the immediately following
sentence, each record holder of shares of Company Common Stock immediately prior
to the Merger Effective Time shall be entitled to elect to receive ADS
Consideration for part of such holder's shares of Company Common Stock and Cash
Consideration for the remaining part of such holder's shares of Company Common
Stock (the "Mixed Election" and, collectively with ADS Election and Cash
Election, the "Election"). With respect to each holder of Company Common Stock
who makes a Mixed Election, the shares of Company Common Stock such holder
elects to be converted into the right to receive Cash Consideration shall be
treated as Cash Election Shares for purposes of the provisions contained in
Sections 2.2(d) and (e), and the shares such holder elects to be converted into
the right to receive ADS Consideration shall be treated as ADS Election Shares
for purposes of the provisions contained in Sections 2.2(f) and (g).
(i) Non-Election Shares. Shares of Company Common Stock in
respect of which a timely and properly completed election has not been made (the
"Non-Election Shares") shall be deemed by Newco to be Cash Election Shares or
ADS Election Shares, as Newco shall determine.
Section 2.3 Exchange of Certificates.
(a) Scheme Exchange. The exchange of certificates representing
Parent Ordinary Shares and Parent ADRs in the Scheme shall occur substantially
in accordance with the provisions of Exhibit A hereto.
(b) Appointment of ADR Depositary for Merger Exchange. As of
the Merger Effective Time, Newco and Merger Sub will enter into an agreement
("ADR Depositary Agreement") with Newco's United States Depositary (the "ADR
Depositary"), which will provide that Newco or Merger Sub will deposit with the
ADR Depositary as of the Merger Effective Time, for the benefit of the holders
of shares of Company Common Stock for exchange in accordance with this Article
II, through the ADR Depositary, cash equal to the sum of the total aggregate
Cash Consideration and the number of Newco Ordinary Shares represented by the
Newco ADSs to be issued in the Merger (such cash and such Newco ADSs, together
with any dividends or distributions with respect thereto with a record date
after the Merger Effective Time and any cash payable in lieu of any fractional
Newco ADSs, being hereinafter referred to as the "Exchange Fund") pursuant to
Section 2.2 in exchange for outstanding shares of the Company Common Stock.
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(c) Merger Exchange Procedures.
(i) Not more than 90 days nor fewer than 30 days prior to
the Closing Date, the ADR Depositary will mail a form of election (the
"Form of Election") to holders of record of shares of Company Common
Stock (as of a record date as close as practicable to the date of
mailing and mutually agreed to by the Company, Newco and Parent). In
addition, the ADR Depositary will use its best efforts to make the Form
of Election available to the persons (as defined in Section 2.3(g)) who
become shareholders of the Company during the period between such
record date and the Closing Date. Any election to receive Merger
Consideration contemplated by Section 2.2(c) will have been properly
made only if the ADR Depositary shall have received at its designated
office or offices, by 5:00 p.m., New York City time, on the fifth
business day immediately preceding the Closing Date (the "Election
Deadline"), a Form of Election properly completed and accompanied by a
Company Share Certificate ("Certificate(s)") for the shares to which
such Form of Election relates, duly endorsed in blank or otherwise
acceptable for transfer on the books of the Company (or an appropriate
guarantee of delivery), as set forth in such Form of Election. An
election may be revoked only by written notice received by the ADR
Depositary prior to 5:00 p.m., New York City time, on the Election
Deadline. In addition, all elections shall automatically be revoked if
the ADR Depositary is notified in writing by Newco, Parent and the
Company that the Merger has been abandoned. If an election is so
revoked, the Certificate(s) (or guarantee of delivery, as appropriate)
to which such election relates will be promptly returned to the person
submitting the same to the ADR Depositary. Newco shall have the
discretion, which it may delegate in whole or in part to the ADR
Depositary, to determine whether Forms of Election have been properly
completed, signed and submitted or revoked pursuant to this Article II,
and to disregard immaterial defects in Forms of Election. The decision
of Newco (or the ADR Depositary) in such matters shall be conclusive
and binding.
(ii) As soon as reasonably practicable after the Merger
Effective Time, the ADR Depositary will mail to each holder of record
of a Certificate, whose shares of the Company Common Stock (the
"Shares") were converted into the right to receive Merger Consideration
and who failed to return a properly completed Form of Election, (i) a
letter of transmittal (which will specify that delivery will be
effected, and risk of loss and title to the Certificates will pass,
only upon delivery of the Certificates to the ADR Depositary and will
be in such form and have such other provisions as Newco, Parent and the
Company may specify consistent with this Agreement) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration determined by Newco pursuant to
Section 2.2(i).
(iii) At the Merger Effective Time, with respect to
properly made elections in accordance with Section 2.3(c)(i), and upon
surrender in accordance with Section 2.3(c)(ii) of a Certificate for
cancellation to the ADR Depositary or to such other agent or agents as
may be appointed by Newco, Parent and the Company, together with such
letter of transmittal, duly executed, and such other documents as may
reasonably be required by the ADR Depositary, the holder of such
Certificate will be entitled to receive in exchange
6
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therefor the Merger Consideration that such holder has the right to
receive pursuant to the provisions of this Article II, and the
Certificate so surrendered will forthwith be cancelled. In the event of
a transfer of ownership of Shares that are not registered in the
transfer records of the Company, payment may be issued to a person
other than the person in whose name the Certificate so surrendered is
registered if such Certificate is properly endorsed or otherwise in
proper form for transfer and the person requesting such issuance pays
any transfer or other taxes required by reason of such payment to a
person other than the registered holder of such Certificate or
establishes to the satisfaction of Newco, Parent and the Company that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.3, each Certificate will be deemed at
any time after the Merger Effective Time to represent only the right to
receive upon such surrender the Merger Consideration that the holder
thereof has the right to receive in respect of such Certificate
pursuant to the provisions of this Article II. No interest will be paid
or will accrue on any cash payable to holders of Certificates pursuant
to the provisions of this Article II.
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to the Newco ADSs with a record
date after the Merger Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the Newco ADSs represented thereby,
and no cash payment in lieu of any fractional shares shall be paid to any such
holder pursuant to Section 2.3(e), and all such dividends, other distributions
and cash in lieu of fractional Newco ADSs shall be paid by Newco to the ADR
Depositary and shall be included in the Exchange Fund, in each case until the
surrender of such Certificate in accordance with this Article II. Subject to the
effect of unclaimed property, escheat and other applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
Certificate representing whole Newco ADSs issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash payable in
lieu of a fractional Newco ADS to which such holder is entitled pursuant to
Section 2.3(e) and the amount of dividends or other distributions with a record
date after the Merger Effective Time theretofore paid with respect to such whole
Newco ADSs and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Merger Effective Time but prior
to such surrender and with a payment date subsequent to such surrender payable
with respect to such whole Newco ADSs. Newco shall make available to the ADR
Depositary cash for the foregoing purposes.
(e) No Fractional Securities. No Newco Certificates or scrip
representing fractional Newco ADSs shall be issued upon the surrender for
exchange of Certificates, and such fractional shares shall not entitle the owner
thereof to vote or to any other rights of a holder of Newco ADSs or Newco
Ordinary Shares. A holder of Shares converted in the Merger who would otherwise
have been entitled to a fractional Newco ADS shall be entitled to receive a cash
payment (without interest) in lieu of such fractional share in an amount
determined by multiplying (i) the fractional share interest to which such holder
would otherwise be entitled by (ii) the closing price per Parent ADS as reported
on the NYSE Composite Transaction Tape on the Closing Date.
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(f) No Further Ownership Rights in Company Common Stock. All
Newco ADSs issued upon the surrender for exchange of Certificates in accordance
with the terms of this Article II (including any cash paid pursuant to this
Article II) shall be deemed to have been issued (and paid) in full satisfaction
of all rights pertaining to the Shares theretofore represented by such
Certificates, subject, however, to any obligation of Newco or the Surviving
Entity to pay any dividends or make any other distributions with a record date
prior to the Merger Effective Time which may have been authorized or made with
respect to shares of Company Common Stock that remain unpaid at the Merger
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Entity of shares of Company Common Stock
that were outstanding immediately prior to the Merger Effective Time. If, after
the Merger Effective Time, Certificates are presented to Newco, the Surviving
Entity or the ADR Depositary for any reason, they shall be cancelled and
exchanged as provided in this Section 2.3, except as otherwise provided by law.
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Merger Effective Time shall be delivered by the ADR Depositary
to Newco, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Newco for payment of their
claim for such Newco ADSs or funds to which such holder may be due, subject to
applicable law. None of Newco, Parent, the Company, the Surviving Entity or the
ADR Depositary shall be liable to any person (as defined below) in respect of
any such Newco ADSs or funds from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
As used in this Agreement, the term "person" shall mean any natural person,
corporation, general or limited partnership, limited liability company, joint
venture, trust, association or entity of any kind.
(h) Investment of Exchange Fund. The ADR Depositary will
invest any cash included in the Exchange Fund, as directed by Newco, on a daily
basis. Any interest and other income resulting from such investments will be
paid to Newco.
(i) Lost Certificates. If any Certificate is lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Newco or
the Surviving Entity, as the case may be, the posting by such person of a bond
in such reasonable amount as Newco or the Surviving Entity, as the case may be,
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the ADR Depositary will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration and, if
applicable, any cash in lieu of fractional shares, and unpaid dividends and
distributions on Newco ADSs, pursuant to this Agreement.
(j) Certain Adjustments. If, after the date hereof and on or
prior to the Closing Date, the outstanding Parent Ordinary Shares or Parent ADSs
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, issue by capitalization of reserves,
split-up, combination, exchange of shares or rights issue, or any dividend
payable in stock or other securities is declared thereon with a record date
within such period, or any similar event shall occur, the Merger Consideration
will be adjusted accordingly to provide to the holders of the Company Common
Stock, the same economic effect as
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contemplated by this Agreement prior to such reclassification, recapitalization,
issue by capitalization of reserves, split-up, combination, exchange, rights
issue or dividend or similar event.
(k) Withholding Rights. Each of the Surviving Entity and Newco
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of the Company Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law, other than Conveyance Taxes (as defined in Section 7.14). To
the extent that amounts are so withheld by the Surviving Entity or Newco, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of the Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Entity or Newco, as the case may be.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125
West 55th Street, New York, New York 10019 at 10:00 A.M., local time, on the
business day that is no later than the first business day that is forty days
following the date on which the last of the conditions set forth in Article VIII
hereof (other than the condition set forth in Section 8.2(h)) is fulfilled or
waived and which is also after, but no more than seven days after, the condition
set forth in Section 8.2(h) hereof is fulfilled or waived, or at such other
time, date and place as the Company, Newco and Parent shall mutually agree (the
"Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, Newco and
Merger Sub as follows:
Section 4.1 Organization and Qualification. Except as set
forth in Section 4.1 of the schedule delivered by the Company on the date hereof
(the "Company Disclosure Schedule"), the Company and each Company Subsidiary (as
defined below) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has all requisite power and authority, and has been duly authorized by all
necessary approvals and orders to own, lease and operate its assets and
properties to the extent owned, leased and operated and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary other than in such jurisdictions where the failure so to qualify could
not reasonably be
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expected to have a material adverse effect on the business, assets, condition
(financial or otherwise), current or reasonably anticipated future results of
operations (measured by net income plus the after-tax effect of the Master
Restructuring Agreement amortization as reported in the most recent Company
Financial Statement (as defined in Section 4.5)) of the Company and the Company
Subsidiaries taken as a whole, other than effects resulting from execution of
this Agreement or affecting the electric utility business in the United States
generally or the specific matters set forth in Section 4.1 of the Company
Disclosure Schedule, or on the Company's ability to consummate the Merger (a
"Company Material Adverse Effect"). As used in this Agreement, (a) the term
"Subsidiary" of a person shall mean any corporation or other entity (including
partnerships and other business associations) of which at least a majority of
the voting power represented by the outstanding capital stock or other voting
securities or interests having voting power under ordinary circumstances to
elect directors or similar members of the governing body of such corporation or
entity shall at the time be held or owned, directly or indirectly, by such
person, and (b) the term "Company Subsidiary" shall mean a Subsidiary of the
Company.
Section 4.2 Subsidiaries. (a) Section 4.2(a) of the Company
Disclosure Schedule sets forth a list as of the date hereof of (i) all of the
Company Subsidiaries and (ii) all Company Associates and a list of any existing
agreements requiring the Company or any of Company Subsidiaries to make any
additional material investment in, or material loan or capital contribution to,
or guarantee any material obligation of, such Company Associates. For purposes
of this Agreement, "Company Associates" shall mean any corporation or other
entity (including partnerships and other business associations) that is not a
Company Subsidiary, in which the Company and/or one or more of its Subsidiaries,
directly or indirectly, owns an equity interest (other than investments in the
ordinary course of business in publicly-traded companies which constitute less
than 5% of the outstanding voting securities of such entity).
(b) Except as set forth in Section 4.2(b) of the Company
Disclosure Schedule, all of the issued and outstanding shares of capital stock
of each Company Subsidiary are validly issued, fully paid, nonassessable and
free of preemptive rights, and are owned, directly or indirectly, by Company
free and clear of any liens, claims, encumbrances, security interests, charges
and options of any nature whatsoever and there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement, obligating any such Company Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of its capital
stock or obligating it to grant, extend or enter into any such agreement or
commitment.
Section 4.3 Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of 300,000,000 shares of
Company Common Stock, and 50,000,000 shares of Preferred Stock, par value $0.01
per share (the "Company Preferred Stock"). At the close of business on September
1, 2000, (i) approximately 160,239,983 shares of Company Common Stock were
issued and outstanding, (ii) no shares of Company Preferred Stock were issued
and outstanding, and (iii) no bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into securities having the right to
vote) on any matters on which shareholders may vote ("Voting Debt"), were issued
or outstanding. As of the date hereof, all outstanding shares of Company Common
Stock are validly issued, fully paid and nonassessable
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and are not subject to preemptive rights. As of the Closing Date, all
outstanding shares of Company Common Stock will be validly issued, fully paid
and nonassessable and will not be subject to preemptive rights. As of the date
of this Agreement, except as set forth in Section 4.3(a) of the Company
Disclosure Schedule or pursuant to this Agreement, there are no options,
warrants, calls, rights, commitments or agreements of any character to which the
Company or any material Company Subsidiary is a party or by which it is bound
obligating the Company or any material Company Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or any Voting Debt of the Company or any material Company Subsidiary or
obligating the Company or any material Company Subsidiary to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
Except as set forth in Section 4.3(b) of the Company Disclosure Schedule, at the
Merger Effective Time, there will be no option, warrant, call, right, commitment
or agreement obligating the Company or any material Company Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of capital
stock or any Voting Debt of the Company or any material Company Subsidiary, or
obligating the Company or any material Company Subsidiary to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
Section 4.4 Authority; Non-Contravention; Statutory Approvals;
Compliance.
(a) Authority. The Company has all requisite power and
authority to enter into this Agreement and, subject to the receipt of Company
Shareholders' Approval (as defined in Section 4.14) and Company Required
Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject to obtaining Company Shareholders' Approval. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution and delivery hereof by the other signatories
hereto, constitutes the valid and binding obligation of the Company enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting or relating to the enforcement of
creditors rights generally or general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
(b) Non-Contravention. Except as set forth in Section 4.4(b)
of the Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company does not, and the consummation of the transactions contemplated
hereby shall not, in any respect, violate, conflict with or result in a breach
of any provision of, or constitute a default (with or without notice or lapse of
time or both) under, or result in the termination or modification of, or
accelerate the performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or the loss of a benefit under,
or result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or any of the Company
Subsidiaries (any such violation, conflict, breach, default, right of
termination, modification, cancellation or acceleration, loss or creation, is
referred to herein as a "Violation" with respect to the Company and such term
when used in Article V has a correlative meaning with respect to Parent)
pursuant to any provisions of (i) the charters, by-laws or similar governing
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documents of the Company or any of the Company Subsidiaries, (ii) subject to
obtaining the Company Required Statutory Approvals and the receipt of the
Company Shareholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority (as defined in Section 4.4(c)) applicable to the Company or any of the
Company Subsidiaries or any of their respective properties or assets or (iii)
subject to obtaining the third-party consents set forth in Section 4.4(b)(iii)
of the Company Disclosure Schedule (the "Company Required Consents"), any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of the Company Subsidiaries is a party or by
which they or any of their properties or assets may be bound or affected, except
in the case of clause (ii) or (iii) above for any such Violation which could not
reasonably be expected to have a Company Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
court, federal, state, local or foreign governmental or regulatory body
(including a stock exchange or other self-regulatory body) or authority (each, a
"Governmental Authority") is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby except as described in Section 4.4(c) of the Company
Disclosure Schedule (the "Company Required Statutory Approvals"). References in
this Agreement to "obtaining" such Company Required Statutory Approvals shall
mean making such declarations, filings or registrations, giving such notices,
obtaining such authorizations, consents or approvals, and having such waiting
periods expire as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d), Section
4.7, Section 4.10, Section 4.11 and Section 4.12 of the Company Disclosure
Schedule, or as disclosed in the Company SEC Reports (as defined in Section 4.5)
filed prior to the date hereof, neither the Company nor any of the Company
Subsidiaries is in violation of, is, to the Knowledge of the Company, under
investigation with respect to any violation of, or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (excluding Environmental Laws, compliance with which is
the subject of Section 4.12) of any Governmental Authority, except for possible
violations which individually or in the aggregate could not reasonably be
expected to have a Company Material Adverse Effect. As used herein, "Knowledge"
means the knowledge of the executive officers of the Company and Niagara Mohawk
Power Corporation. Except as set forth in Section 4.4(d) and Section 4.12 of the
Company Disclosure Schedule, or as expressly disclosed in the Company SEC
Reports, the Company and the Company Subsidiaries have all permits, licenses,
franchises and other governmental authorizations, consents and approvals (the
"Licenses") necessary to conduct their businesses as presently conducted except
such failures which individually or in the aggregate could not reasonably be
expected to have a Company Material Adverse Effect. All such Licenses are in
full force and effect, and there is no proceeding or investigation pending or,
to the Knowledge of the Company, threatened that could reasonably be expected to
lead to the revocation, amendment, failure to renew, limitation, suspension or
restriction of any such License which action could reasonably be expected to
have a Company Material Adverse Effect. Except as set forth in Sections 4.4(d),
4.7, 4.10 and 4.11 of the Company Disclosure Schedule, none of the Company or
the Company Subsidiaries is in breach or violation of or in default in the
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performance or observance of any term or provision of, and no event has occurred
which, with the lapse of time or action by a third party, could result in a
default by the Company or any Company Subsidiary under (i) their respective
charter or by-laws or (ii) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which it is a party or by which the Company or any Company
Subsidiary is bound or to which any of their respective property is subject,
except for possible violations, breaches or defaults which individually or in
the aggregate could not reasonably be expected to have a Company Material
Adverse Effect.
Section 4.5 Reports and Financial Statements. Except as set
forth in Section 4.5 of the Company Disclosure Schedule, all material filings
required to be made by the Company and the Company Subsidiaries since January 1,
1998 under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Public
Utility Holding Company Act (the "1935 Act"), the Federal Power Act (the "Power
Act"), the Atomic Energy Act of 1954 (the "Atomic Energy Act"), the
Communications Act of 1934, applicable state public utility laws and regulations
or pursuant to the requirements of any other Governmental Authority have been
filed with the SEC, the Federal Energy Regulatory Commission (the "FERC"), the
Nuclear Regulatory Commission (the "NRC"), the Federal Communications Commission
(the "FCC"), the Department of Energy (the "DOE"), or the appropriate state
public utilities commission or such other appropriate Governmental Authority, as
the case may be, including all forms, statements, reports, agreements (oral or
written) and all documents, exhibits, amendments and supplements appertaining
thereto, and complied, as of their respective dates or as of the date of any
amendment thereto, in all material respects with all applicable requirements of
the appropriate statutes and the rules and regulations thereunder. The Company
has made available to Parent a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed with the SEC by the
Company pursuant to the requirements of the Securities Act or Exchange Act since
January 1, 1998 (as such documents have since the time of their filing been
amended, the "Company SEC Reports"). Except as set forth in Section 4.5 of the
Company Disclosure Schedule, as of their respective dates, the Company SEC
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in Section 4.5 of the Company Disclosure
Schedule, the audited consolidated financial statements and unaudited interim
financial statements of the Company included in the Company SEC Reports
(collectively, the "Company Financial Statements") have been prepared in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP")
(except as may be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly
present the financial position of the Company as of the dates thereof and the
results of its operations and cash flows for the periods then ended, subject, in
the case of the unaudited interim financial statements, to normal audit
adjustments which will not be material in amount or effect. True, accurate and
complete copies of the charter and by-laws of the Company, as in effect on the
date hereof, are included (or incorporated by reference) in the Company SEC
Reports.
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Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date hereof or as set
forth in Section 4.6 of the Company Disclosure Schedule, since December 31,
1999, the Company and each of the Company Subsidiaries have conducted their
respective businesses only in the ordinary course of business consistent with
past practice (other than with respect to the cessation of operations of non-
material Company Subsidiaries) and there has not been (a) any change that has
had or that could reasonably be expected to have a Company Material Adverse
Effect, (b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's outstanding capital stock (other than regular quarterly cash dividends
in accordance with the Company's present dividend policy), (c) any split,
combination or reclassification of any of its outstanding capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its outstanding capital stock,
(d) any entry by the Company or any of the Company Subsidiaries into any
employment, severance, change-of-control, termination or similar agreement with
any officer, director or other employee, or any increase in the severance or
termination benefits payable to any director, officer or other employee of the
Company or any of the Company Subsidiaries, other than any such agreement or
increase made in the ordinary course of business consistent in process and
amounts with past practice and any such agreement or increase offered pursuant
to a collective bargaining agreement or arrangement described in Section 6.1(m),
(e) any increase in the compensation or benefits not described in subsection (d)
above other than increases made in the ordinary course of business consistent in
process and amounts with past practice and increases made pursuant to a
collective bargaining agreement or arrangement described in Section 6.1(m), or
(f) any change in the method of accounting or policy used by the Company or any
of the Company Subsidiaries and disclosed in the financial statements included
in the Company SEC Reports.
Section 4.7 Legal Proceedings. Except as disclosed in the
Company SEC Reports filed prior to the date hereof or as set forth in Section
4.7, Section 4.9, Section 4.11 or Section 4.12 of the Company Disclosure
Schedule, (a) there are no claims, suits, actions, proceedings or hearings
before any court, governmental department, commission, agency, instrumentality
or authority or any arbitrator, pending or, to the Knowledge of the Company,
threatened, nor are there, to the Knowledge of the Company, any civil
investigations, audits or reviews by any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator pending or
threatened against, relating to or affecting the Company or any of the Company
Subsidiaries which would have a Company Material Adverse Effect; (b) to the
Knowledge of the Company, there are no criminal investigations by any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator pending or threatened against, relating to or affecting the Company
or any of the Company Subsidiaries, (c) there have not been any significant
developments since December 31, 1999 with respect to such disclosed claims,
suits, actions, proceedings, hearings, investigations, audits or reviews that
would have a Company Material Adverse Effect and (d) there are no judgments,
decrees, injunctions, rules or orders of any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator applicable to
the Company or any of the Company Subsidiaries except for such that could not
reasonably be expected to have a Company Material Adverse Effect.
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Section 4.8 Information Supplied. (a) None of the information
supplied or to be supplied by or on behalf of the Company for inclusion or
incorporation by reference in (i) the registration statement on Form F-4 to be
filed with the SEC by Newco in connection with the issuance of Newco ADSs in the
Merger (the "Registration Statement") will, at the time the Registration
Statement is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the proxy statement included in the
Registration Statement relating to the Company Meeting (as defined in Section
7.4(b)) to be held in connection with the Merger (the "Proxy Statement") and any
other documents to be filed by the Company with the SEC (including, without
limitation, under the 1935 Act) or any other Governmental Authority in
connection with the Merger will, at the dates mailed to shareholders and at the
times of such meetings, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement shall comply as to form in all
material respects with the provisions of the Securities Act and the Exchange Act
and the rules and regulations thereunder.
(b) The information supplied or to be supplied by the Company
for inclusion in any filing by Newco or Parent with the SEC or the Financial
Services Authority (the "U.K. Listing Authority") in respect of the Merger or
Scheme (including, without limitation, the Class 1 circular to be issued to
shareholders of Parent (the "Circular")), the listing particulars under Part IV
of the Financial Services Act 1986 of the United Kingdom (the "FSA") relating to
Newco Ordinary Shares (the "Listing Particulars") and the document, including an
explanatory statement, to be sent to shareholders of Parent in connection with
the Scheme (the "Scheme Document") (collectively with any amendments or
supplements thereto, the "Parent Disclosure Documents") will not, at all
relevant times, 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 and will be in accordance with the facts and will not omit
anything likely to affect the import of such information.
(c) Notwithstanding the foregoing provisions of this Section
4.8, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Registration Statement, the
Proxy Statement or the Parent Disclosure Documents based on information supplied
by Parent, Newco or Merger Sub for inclusion or incorporation by reference
therein.
Section 4.9 Tax Matters.
"Tax(es)," as used in this Agreement, means any federal,
state, county, local or foreign taxes, charges, fees, levies, or other
assessments, including all net income, gross income, sales and use, ad valorem,
transfer, gains, profits, windfall profits, excise, franchise, real and personal
property, gross receipts, capital stock, production, business and occupation,
disability, employment, payroll, license, estimated, stamp, custom duties,
severance or withholding taxes or other taxes or similar charges imposed by any
Governmental Authority, whether imposed directly on a person or resulting under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract or otherwise and
includes any
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interest and penalties (civil or criminal) on or additions to any such taxes or
in respect of a failure to comply with any requirement relating to any Tax
Return and any expenses incurred in connection with the determination,
settlement or litigation of any tax liability. "Tax Return," as used in this
Agreement, means a report, return or other information supplied to a
Governmental Authority with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes the Company or any of the Company Subsidiaries, on the one hand, or
Parent or any of the Parent Subsidiaries (or Newco following the Scheme
Effective Time), on the other hand. "Tax Rulings," as used in this Agreement,
shall mean a written ruling of a taxing authority relating to Taxes. "Closing
Agreement," as used in this Agreement, shall mean a written and legally binding
agreement with a taxing authority relating to Taxes. "Foreign Person" as used in
this Agreement, means any person other than a "United States person" as such
term is defined in Code Section 7701(a)(30).
Except as disclosed in Section 4.9 of the Company Disclosure
Schedule:
(a) Timely Filing of Tax Returns. The Company and each of the
Company Subsidiaries have filed all material Tax Returns required to be filed by
each of them under applicable law. All such Tax Returns were in all material
respects (and, as to such Tax Returns not filed as of the date hereof, will be)
true, complete and correct and filed on a timely basis (taking into account
applicable extensions).
(b) Payment of Taxes. The Company and each of the Company
Subsidiaries have, within the time and in the manner prescribed by law, paid
(and until the Closing Date will pay within the time and in the manner
prescribed by law) all material Taxes that are currently due and payable, except
for those Taxes contested in good faith.
(c) Tax Liens. There are no material Tax liens upon the assets
of the Company or any of the Company Subsidiaries except liens for Taxes not yet
due or for Taxes which are being contested in good faith.
(d) Extensions of Time for Filing Tax Returns. Except with
respect to Tax Returns related to real property Taxes, neither the Company nor
any of the Company Subsidiaries has requested any extension of time within which
to file any material Tax Return which Tax Return has not since been filed.
(e) Waivers of Statute of Limitations. Except with respect to
Tax Returns related to real property Taxes, neither the Company nor any of the
Company Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
material Taxes or material Tax Returns.
(f) Expiration of Statute of Limitations. The statute of
limitations for the assessment of all material Taxes has expired for all
applicable material Tax Returns of the Company and each of the Company
Subsidiaries or those Tax Returns have been examined by the appropriate taxing
authorities for all periods through 1990, except with respect to Tax Returns
that the statute of limitations has not expired solely by reason of the
carryback of a net operating loss from an open Tax year and Tax Returns related
to real property Taxes.
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(g) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or material Tax Returns of the Company or any of
the Company Subsidiaries and, to the Knowledge of the Company, no issue has been
raised in writing by any taxing authority in connection with any material Tax or
material Tax Return (a "Tax Controversy"), except with respect to Tax
Controversies involving real property Taxes that could not, individually or in
the aggregate, be reasonably expected to result in a Company Material Adverse
Effect.
(h) Availability of Tax Returns. Except with respect to Real
Property Taxes, the Company and the Company Subsidiaries have made available to
Parent complete and accurate copies, covering all open years, of (i) all
material Tax Returns, and any amendments thereto, filed by the Company or any of
the Company Subsidiaries, (ii) all material audit reports received from any
taxing authority relating to any Tax Return filed by the Company or any of the
Company Subsidiaries, including any proposed, asserted or assessed deficiencies
for Taxes that have not been resolved and paid in full, (iii) any material Tax
Rulings and material Closing Agreements entered into by the Company or any of
the Company Subsidiaries with any taxing authority, and all powers of attorney
currently in force granted by the Company or any of the Company Subsidiaries
covering all years ending on or before the Closing Date, and (iv) any material
agreements relating to the allocation or sharing of Taxes between or among the
Company and any of the Company Subsidiaries.
(i) Code Section 168. To the Knowledge of the Company, no
property of the Company or any of the Company Subsidiaries is property that the
Company or any such Subsidiary or any party to this transaction is or will be
required to treat as being owned by another person pursuant to the provisions of
Code Section 168(f)(8) (as in effect prior to its amendment by the Tax Reform
Act of 1986).
(j) Code Section 481 Adjustments. (i) Neither the Company nor
any of the Company Subsidiaries is required to include in income on any Tax
Return that has not been filed and made available to Parent any material
adjustment pursuant to Code Section 481(a) (an "Accounting Method Adjustment")
by reason of a voluntary change in accounting method initiated by the Company or
any of the Company Subsidiaries and (ii) to the Knowledge of the Company, the
Internal Revenue Service (the "IRS") has not proposed any such Accounting Method
Adjustment with respect to any Tax Return that the statute of limitations for
the assessment of all Taxes has not expired.
(k) Indebtedness. No material indebtedness of the Company or
any of the Company Subsidiaries is (i) "corporate acquisition indebtedness"
within the meaning of Code Section 279(b) or (ii) exempt facility bonds
described in Code Section 142 or industrial development bonds described in
Section 103 of the Internal Revenue Code of 1954, as amended, prior to the
enactment of the Tax Reform Act of 1986.
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(l) Intercompany Transactions. Neither the Company nor any of
the Company Subsidiaries has engaged in any intercompany transactions within the
meaning of Treasury Regulations Section 1.1502-13 for which any material income
or material gain will remain unrecognized as of the close of the last taxable
year prior to the Closing Date.
(m) Code Section 897(c). To the Knowledge of the Company, no
Foreign Person owns within the meaning of Code Section 897 and the Treasury
Regulations thereunder more than five percent (5%) of the Company Common Stock
during the period described in Code Section 897(c)(1)(A)(ii).
(n) Code Section 355(e). Neither the Company nor any of the
Company Subsidiaries has constituted a "distributing corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the past 24-month period or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(o) Tax Basis. As of December 31, 1999, to the Knowledge of
the Company, the aggregate tax basis of (i) the stock held, directly or
indirectly, by the Company other than the stock of Niagara Mohawk Power
Corporation and (ii) the property, plant and equipment held by Niagara Mohawk
Power Corporation is not, taken together, greater than $4,400,000,000.
(p) Neither the Company nor any of the Company subsidiaries
has taken any action or has any Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the Merger and the Scheme taken together from
qualifying as a transaction described in Section 351 of the Code or (ii) cause
the Merger to be subject to Code Section 367(a)(1).
Section 4.10 Employee Matters; ERISA.
(a) Each "employee benefit plan" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
bonus, deferred compensation, share option or similar option, employment
agreement, severance plan or similar option, plan, agreement or other written
agreement relating to employment, compensation, employment benefits, and any
other compensation or fringe benefits for employees, former employees, officers
or directors of the Company or any Company Subsidiaries effective as of the date
hereof or providing benefits as of the date hereof to current employees, former
employees, officers, trustees, or directors of the Company or pursuant to which
the Company or any of its Subsidiaries has or could reasonably be expected to
have any liability (collectively, the "Company Employee Benefit Plans") is
listed in Section 4.10(a) of the Company Disclosure Schedule (other than any
such agreement with an individual who was never an officer or a director of the
Company or any Company Subsidiary, if such agreement is not material when
considered individually and would not be material if considered in the aggregate
with all other such agreements with individuals who never were officers or
directors of the Company or any Company Subsidiary), is in material compliance
with applicable law except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, and has been administered and operated in all material
respects in accordance with its terms. Each Company Employee Benefit Plan which
is intended to be qualified within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the IRS
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as to such qualification and, to the Knowledge of the Company, no event has
occurred and no condition exists which could reasonably be expected to result in
the revocation of, or have any adverse effect on, any such determination.
(b) Complete and correct copies of the following documents
have been made available to Parent as of the date of this Agreement: (i) all
Company Employee Benefit Plans and any related trust agreements, insurance
contracts or other funding arrangements and any amendments to each, (ii) the
most current summary plan descriptions of each Company Employee Benefit Plan
subject to ERISA and any summary of material modifications issued since such
summary plan descriptions, (iii) the three most recent Form 5500s and Schedules
thereto for each Company Employee Benefit Plan subject to such reporting, (iv)
the most recent determination of the Internal Revenue Service with respect to
the qualified status of each Company Employee Benefit Plan that is intended to
qualify under Section 401(a) of the Code, (v) the most recent accountings with
respect to each Company Employee Benefit Plan funded through a trust or through
a funding arrangement and (vi) the most recent actuarial report of the enrolled
actuary of each Company Employee Benefit Plan with respect to which actuarial
valuations are conducted.
(c) Except as set forth in Section 4.10(c) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary maintains or
is obligated to provide benefits under any Company Employee Benefit Plan (other
than as an incidental benefit under a Plan qualified under Section 401(a) of the
Code) which provides health or welfare benefits to retirees or other terminated
employees other than benefit continuations as required pursuant to Section 601
of ERISA. Each Company Employee Benefit Plan subject to the requirements of
Section 601 of ERISA has been operated in material compliance therewith. Neither
the Company nor any Company Subsidiaries have contributed to a nonconforming
group health plan (as defined in Code Section 5000(c)). No person or entity
other than the Company or a Company Subsidiary is, or has in the last five years
been, considered to be within a controlled group with the Company or any Company
Subsidiary or under common control with the Company or a Company Subsidiary
within the meaning of Section 414 of the Code or Section 4001 of ERISA.
(d) Except as set forth in Section 4.10(d) of the Company
Disclosure Schedule, each Company Employee Benefit Plan covers only employees
who are employed by the Company or a Company Subsidiary (or former employees or
beneficiaries with respect to service with the Company or a Company Subsidiary).
(e) Except as set forth in Section 4.10(e) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary, within the
five-year period preceding the date of this Agreement, at any time contributed
to any "multiemployer plan," as that term is defined in Section 4001 of ERISA.
Neither the Company nor any Company Subsidiary is subject to "withdrawal
liability" as that term is defined in Part I, Subtitle E, Title IV, of ERISA and
if the Company or any Company Subsidiary were to withdraw from a "multiemployer
plan" at the Merger Effective Time, neither the Company, nor any Company
Subsidiary would have any "withdrawal liability" as that term is defined in Part
I, Subtitle E, Title IV, of ERISA.
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(f) No event has occurred, and there exists no condition or
set of circumstances in connection with any Company Employee Benefit Plan, under
which the Company or any Company Subsidiary, directly or indirectly (through any
indemnification agreement or otherwise), is likely to be liable under Section
409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or Section 4975 of the
Code.
(g) Neither the Company nor any ERISA Affiliate has incurred
any liability to the Pension Benefit Guaranty Corporation (the "PBGC") under
Section 302(c)(ii), 4062, 4063, 4064 or 4069 of ERISA, or otherwise that has not
been satisfied in full and no event or condition exists or has existed which
could reasonably be expected to result in any such material liability. No
"reportable event" within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived or extended has occurred with
respect to any Company Employee Benefit Plan that is a defined benefit plan
under Section 3(35) of ERISA within the 12-month period ending on the date
hereof.
(h) Except as set forth in Section 4.10(h) of the Company
Disclosure Schedule, no employer securities, employer real property or other
employer property is included in the assets of any Company Employee Benefit
Plan.
(i) Full payment has been made of all material amounts which
the Company or any Company Subsidiary was required under the terms of the
Company Employee Benefit Plans to have paid as contributions to such plans on or
prior to the Merger Effective Time (excluding any amounts not yet due) and no
Company Employee Benefit Plan which is subject to Part III of Subtitle B of
Title I of ERISA has incurred any "accumulated funding deficiency" within the
meaning of Section 302 of ERISA or Section 412 of the Code, whether or not
waived.
(j) Except as set forth in Section 4.10(j) of the Company
Disclosure Schedule, no amounts payable under any Company Employee Benefit Plan
or other agreement, contract, or arrangement, as a result of or in connection
with the Merger, is expected to fail to be deductible for federal income tax
purposes by virtue of Section 280G or Section 162(m) of the Code.
Section 4.11 Labor and Employee Relations. As of the date
hereof, except as disclosed in Section 4.11(a) of the Company Disclosure
Schedule or in the Company SEC Reports, (i) neither the Company nor any of the
Company Subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization and (ii) to the Knowledge
of the Company or any Company Subsidiary, there is no current union
representation question involving employees of the Company or any of the Company
Subsidiaries, nor does the Company or any Company Subsidiary have Knowledge of
any activity or proceeding of any labor organization (or representative thereof)
or employee group to organize any such employees. The Company has delivered or
otherwise made available to Parent true, correct and complete copies of the
collective bargaining agreements listed in Section 4.11 of the Company
Disclosure Schedule, together with all amendments, modifications or supplements
thereto. Except as disclosed in Section 4.11(a) of the Company Disclosure
Schedule or in the Company SEC Reports filed prior to the date hereof, there is
no unfair labor practice, employment discrimination or other material grievance,
arbitration, claim, suit, action, proceeding or employment related complaint
against the Company or any of the Company Subsidiaries pending,
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or to the Knowledge of the Company or any Company Subsidiary, threatened against
or affecting the Company or any Company Subsidiary before any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator, (b) there is no strike, lockout or dispute, slowdown or work
stoppage pending or, to the Knowledge of the Company or any Company Subsidiary,
threatened against or involving the Company or any Company Subsidiary, and (c)
there is no proceeding, claim, suit, action or governmental investigation
pending or, to the Knowledge of the Company, threatened in respect of which any
director, officer, employee or agent of the Company or any Company Subsidiary is
or may be entitled to claim indemnification from the Company or such Company
Subsidiary pursuant to their respective charters or by-laws or as provided in
the indemnification agreements listed in Section 4.11(c) of the Company
Disclosure Schedule. Except as set forth in Section 4.11(a) of the Company
Disclosure Schedule, to the Knowledge of the Company and each Company
Subsidiary, the Company and each such Company Subsidiary are in material
compliance with any and all laws in any relevant jurisdiction, including common
law, all applicable federal, state and local laws with respect to employment
practices, labor relations, safety and health regulations and mass layoffs and
plant closings.
Section 4.12 Environmental Protection.
(a) Except as set forth in Section 4.12 of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date
hereof:
(i) Compliance. The Company and each of the Company
Subsidiaries has been and is in compliance with all applicable
Environmental Laws (as defined in Section 4.12(d)(ii)) except where the
failure to so comply would not in the aggregate have a Company Material
Adverse Effect, and neither the Company nor any of the Company
Subsidiaries has received any communication (written or oral) from any
person or Governmental Authority that alleges that the Company or any
of the Company Subsidiaries is not in such compliance with applicable
Environmental Laws, except as would not in the aggregate have a Company
Material Adverse Effect. To the Knowledge of the Company and the
Company Subsidiaries, compliance with all applicable Environmental Laws
will not require the Company or any Company Subsidiary to incur
additional costs over the next five years, beyond those currently
recorded or budgeted for the five Company fiscal years beginning with
January 1, 2000, including, but not limited to, (i) the costs of
pollution prevention or control equipment that are known or anticipated
to be required over the next five years; and (ii) investigatory,
removal, remediation or response costs or investigatory, removal,
remediation or response costs known to be required over the next five
years, in each case, both on-site and off-site, except for such
additional costs that reasonably would not be expected to result in the
aggregate in a Company Material Adverse Effect.
(ii) Environmental Permits. The Company and each of the
Company Subsidiaries has obtained or has applied for all environmental,
health and safety permits and governmental authorizations, consents or
licenses (collectively, the "Environmental Permits") necessary for
their operations as presently conducted, and all such Environmental
Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending before the appropriate
Governmental Authority,
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except for such Environmental Permits that would not reasonably be
expected in the aggregate to have a Company Material Adverse Effect.
The Company and the Company Subsidiaries are in compliance with all
terms and conditions of the Environmental Permits, except where the
failure to so comply could not in the aggregate reasonably be expected
to have a Company Material Adverse Effect.
(iii) Environmental Claims. There are no written
Environmental Claims (as defined in Section 4.12(d)(i)) or, to the
knowledge of the Company's environmental, health and safety managers,
facts or circumstances which are reasonably likely to result in any
Environmental Claim which would have in the aggregate a Company
Material Adverse Effect pending (A) against the Company or any of the
Company Subsidiaries, (B) against any person or entity whose liability
for any such Environmental Claim, the Company or any of the Company
Subsidiaries has retained or assumed either contractually or by
operation of Environmental Law, or (C) against any real or personal
property, facility or operations which the Company or any of the
Company Subsidiaries owns, leases, occupies, uses or manages or has
formerly owned, leased, occupied, used or managed, in whole or in part.
(iv) Releases. To the knowledge of the Company's
environmental, health and safety managers, there are no Releases (as
defined in Section 4.12(d)(iv)) of any Hazardous Material (as defined
in Section 4.12(d)(iii)) that would be reasonably likely to result in
any Environmental Claim against the Company or any of the Company
Subsidiaries, or against any person or entity whose liability for any
Environmental Claim, the Company or any of the Company Subsidiaries has
or may have retained or assumed either contractually or by operation of
Environmental Law, except for any Environmental Claims which could not
reasonably be expected to have in the aggregate a Company Material
Adverse Effect.
(v) Predecessors. To the knowledge of the Company's
environmental, health and safety managers, there are no pending or
threatened Environmental Claims or facts or circumstances which are
reasonably likely to result in any Environmental Claim with respect to
any known predecessor of the Company or any of the Company Subsidiaries
which would have in the aggregate a Company Material Adverse Effect.
(b) Except as would not have in the aggregate a Company
Material Adverse Effect, the Company has provided or otherwise made available to
Parent: (i) copies of all material Environmental Permits, as well as material
environmental compliance reports, audits, studies, assessments, complaints,
notices of violations, orders or information requests (collectively,
"Environmental Documents") received by or conducted or prepared by or on behalf
of the Company or any of the Company Subsidiaries relating to the business,
operations, facilities or properties currently or formerly owned, leased,
managed, occupied, used or otherwise controlled by the Company or any of the
Company Subsidiaries; and (ii) based on records in the possession or the control
of the Company or any of the Company Subsidiaries, a complete list of all
material Hazardous Materials used, stored or generated in the course of the
Company's or any of the Company Subsidiaries' business or operations and all
off-site Hazardous Materials treatment, storage or disposal facilities used by
the Company or any of the Company Subsidiaries.
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(c) Notwithstanding any other representations and warranty in
this Article IV, the representations and warranties contained in this Section
4.12 constitute the sole representations and warranties of the Company with
respect to any Environmental Law, Environmental Permit, Environmental Claim,
Releases or Hazardous Material.
(d) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all
administrative, regulatory or judicial actions (whether civil or
criminal), suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or written notices of noncompliance or
violation by any person or entity (including any Governmental
Authority), alleging potential liability (including, without
limitation, potential responsibility or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, Release or threatened Release into the
environment of any Hazardous Materials at any location, whether or not
owned, operated, leased or managed by the Company or any of the Company
Subsidiaries (for purposes of this Section 4.12) or by Parent or any of
the Parent Subsidiaries (for purposes of Section 5.9),(B) circumstances
forming the basis of any violation or alleged violation of any
Environmental Law or (C) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any
Hazardous Materials.
(ii) "Environmental Laws" means any and all laws in any
relevant jurisdiction, including common law, all applicable federal,
state and local laws, codes, ordinances, directives, orders, rules and
regulations and binding administrative or judicial interpretations
thereof relating to pollution, the environment (including, without
limitation, ambient air, water (including groundwater and drinking
water, land surface or subsurface strata), natural resources as well as
protection of human health and safety from exposure to Hazardous
Materials, including without limitation, laws and regulations relating
to Releases or threatened Releases of Hazardous Materials, remedial
cleanup or otherwise relating to the manufacture, generation
processing, distribution, use, treatment, storage, disposal, deposit,
transport or handling of Hazardous Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, oil, coal ash, radioactive materials, coal tar or
other forms of MGP waste or by-products, radon gas, asbestos in any
form that is or could become friable, urea formaldehyde, foam
insulation, lead-based paint and any materials, transformers or other
equipment that contain dielectric fluid containing regulated
concentrations of polychlorinated biphenyls ("PCBs"), (B) any
chemicals, materials or substances which exhibit the characteristics of
or are now defined as or included in the definitions of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"contaminants", "toxic pollutants," or words of similar import under
any Environmental Law and (C) any other chemical, material, substance
or waste, exposure to which is now prohibited, limited
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or regulated under any applicable Environmental Law or harm from which
would be actionable under any Environmental Law.
(iv) "Release" means any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the atmosphere, soil, water (including groundwater)
or property and related improvements.
Section 4.13 Regulation as a Utility. (a) The Company is a
public utility holding company exempt under Section 3(a)(1) from all provisions
of the 1935 Act except Section 9(a)(2) thereof. Section 4.13 of the Company
Disclosure Schedule lists the subsidiaries of the Company that are "public
utility companies" within the meaning of Section 2(a)(5) of the 1935 Act and
lists the jurisdictions where each such Subsidiary is subject to regulation as a
public utility company or public service company. Except as set forth above and
as set forth in Section 4.13 of the Company Disclosure Schedule, neither the
Company nor any "subsidiary company" or "affiliate" of the Company is subject to
regulation as a public utility or public service company (or similar
designation) by the Federal government of the United States, any state in the
United States or any political subdivision thereof, or any foreign country.
(b) As used in this Section 4.13, the terms "subsidiary
company" and "affiliate" shall have the respective meanings ascribed to them in
Section 2(a)(8) and Section 2(a)(11), respectively, of the 1935 Act.
Section 4.14 Vote Required. The approval of the Merger by the
holders of a majority of the votes entitled to be cast by all holders of Company
Common Stock (the "Company Shareholders' Approval") is the only vote of the
holders of any class or series of the capital stock of the Company or any of the
Company Subsidiaries required to approve this Agreement, the Merger and the
other transactions contemplated hereby.
Section 4.15 Opinion of Financial Advisor. The Company has
received the opinion of Donaldson, Lufkin & Jenrette Securities Corporation,
dated the date of this Agreement, to the effect that, as of such date, Merger
Consideration is fair from a financial point of view to the holders of Company
Common Stock.
Section 4.16 Brokers. Except as relates to the services
provided by Donaldson, Lufkin & Jenrette Securities Corporation as financial
advisor to the Company, neither the Company nor any of its officers, directors
or employees has employed any broker, or finder or incurred any liability for a
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
Section 4.17 Insurance. Except as set forth in Section 4.17 of
the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries has received any notice of cancellation or termination with respect
to any material insurance policy of the Company or any of the Company
Subsidiaries.
Section 4.18 Intellectual Property. The Company and the
Company Subsidiaries own or have adequate rights to use all trademarks, trade
names, patents, service marks, brand
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marks, brand names, computer programs, databases, industrial designs and
copyrights used in the operation of their business (collectively, the "Company
Intellectual Property"), subject to such exceptions as to such ownership and
restrictions on such rights as could not reasonably be expected, individually or
in the aggregate, to have a Company Material Adverse Effect. All of the Company
Intellectual Property owned by the Company or one of the Company Subsidiaries is
free and clear of any and all Encumbrances, subject to such exceptions as could
not reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect, and neither the Company nor any of the Company
Subsidiaries has forfeited or otherwise relinquished any Company Intellectual
Property which forfeiture or relinquishment could reasonably be expected to have
a Company Material Adverse Effect. To the Knowledge of the Company, the use of
the Company Intellectual Property by the Company or the Company Subsidiaries
does not infringe upon, violate or constitute a misappropriation of any right,
title or interest in any intellectual property right (including, without
limitation, any trademark, trade name, patent, service mark, brand mark, brand
name, computer program, database, industrial design or copyright) of any other
person, and neither the Company nor any of the Company Subsidiaries has received
written notice of any claim or threatened claim that any of the Company
Intellectual Property is invalid, infringes the asserted rights of any other
person, and, to the Knowledge of the Company, the Company Intellectual Property
owned by the Company has not been used or enforced or has failed to be used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of such Company Intellectual Property, except for such
infringements, violations, misappropriations, interferences, claims, invalidity,
use, abandonments, cancellations or unenforceability that could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 4.19 Nuclear Operations and NRC Actions. (a) The
Company owns Nine Mile Point Nuclear Station Unit No. 1 and a 41%
tenant-in-common interest in Nine Mile Point Nuclear Station Unit No. 2 (the
"Company Nuclear Facilities"). Except as disclosed in the Company SEC Reports
filed prior to the date hereof, the operations of the Company Nuclear Facilities
are and have at all times been conducted in compliance with applicable health,
safety, regulatory and other legal requirements, and no Company Nuclear Facility
is in violation of any applicable health, safety, regulatory or other legal
requirements applicable to the Company Nuclear Facilities, except for such
failures to comply as could not in the aggregate be reasonably expected to have
a Company Material Adverse Effect. The Company Nuclear Facilities maintain
emergency plans designed to respond to an unplanned release therefrom of
radioactive materials into the environment and liability insurance to the extent
required by law, and such further insurance (other than liability insurance) as
is consistent with the Company's view of the risks inherent in the operation of
a nuclear power facility and with the general practices of the nuclear power
industry.
(b) Except as disclosed in the Company SEC Reports filed prior
to the date hereof, neither the Company nor any of its Subsidiaries has been
given written notice of or been charged with actual or potential violation of,
or, to the Knowledge of the Company, is the subject of any ongoing proceeding,
inquiry, special inspection, diagnostic evaluation or other NRC action of which
the Company or any of its Subsidiaries has received notice under the Atomic
Energy Act, any applicable regulations thereunder or the terms and conditions of
any license granted to the Company or any of its Subsidiaries regarding the
Company Nuclear Facilities that would have,
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or is reasonably likely to have, a Company Material Adverse Effect. No Company
Nuclear Facility is, as of the date of this Agreement, on the List of Nuclear
Power Plants Warranting Increased Regulatory Attention maintained by the NRC.
Section 4.20 Ownership of Parent or Newco Common Stock. None
of the Company or any of the Company Subsidiaries beneficially owns any Parent
Ordinary Shares, Parent ADSs, Newco Ordinary Shares or Newco ADSs.
Section 4.21 State Antitakeover Matters. Assuming the accuracy
of the representation contained in Section 5.13, no "fair price," "moratorium,"
"business combination," "control share acquisition," or other form of
anti-takeover statute or regulation under New York law is applicable to the
Merger and other transactions contemplated hereby.
Section 4.22 Commodity Derivatives and Credit Exposure
Matters. Except as set forth in Section 4.22 of the Company Disclosure Schedule,
as of September 1, 2000, the Company and the Company Subsidiaries do not in the
aggregate have (qualified on a marked-to- market basis and calculated with
respect to physical and financial positions exposure) (a) natural gas or
electricity forward price exposure exceeding $1 million, (b) pipeline
transportation (basis) exposure exceeding $1 million, or (c) credit exposures
(which is unsecured and not backed by letters of credit or enforceable
guarantees from A-rated credit providers) to any one counterparty that exceeds
$1 million.
Section 4.23 The Company Associates. The representations and
warranties set forth (a) in Sections 4.4(b) and (c) are true and correct with
regard to the Company Associates, and (b) in Sections 4.4(d), 4.6, 4.7, 4.10,
4.11 and 4.12 are, to the Knowledge of the Company, true and correct, as of the
date hereof, with regard to the Company Associates.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT, NEWCO AND MERGER SUB
Parent, Newco and Merger Sub represent and warrant to the
Company as follows:
Section 5.1 Organization and Qualification. (a) Except as set
forth in Section 5.1 of the schedule delivered by Parent on the date hereof (the
"Parent Disclosure Schedule"), Parent and each of the Parent Subsidiaries (as
defined below) is a corporation or other entity duly organized, validly existing
and in good standing (with respect to jurisdictions that recognize the concept
of good standing) under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority, and has been duly
authorized by all necessary approvals and orders to own, lease and operate its
assets and properties to the extent owned, leased and operated and to carry on
its business as it is now being conducted and is duly qualified and in good
standing (with respect to jurisdictions that recognize the concept of good
standing) to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes such
qualification necessary other than in such jurisdictions where the
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failure so to qualify could not reasonably be expected to have a Parent Material
Adverse Effect (as defined in Section 5.3(b)). As used in this Agreement, the
term "Parent Subsidiary" shall mean a Subsidiary of Parent.
(b) Newco is a corporation duly organized and validly existing
under the laws of England and Wales. Newco holds all of the issued and
outstanding shares of capital stock of Merger Sub, which is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Newco and Merger Sub have been incorporated solely for the purposes of
engaging in the transactions contemplated by this Agreement and have not
conducted any other business prior to the date hereof and will not conduct any
other business prior to the Closing Date except in connection with any activity
related to the consummation of the Scheme or the Merger.
Section 5.2 Capitalization. (a) As of the date hereof, the
authorized share capital of Parent consists of 2,125,000,000 Parent Ordinary
Shares and the Parent Special Share. At the close of business on September 1,
2000 (i) 1,484,609,903 Parent Ordinary Shares were issued and outstanding, (ii)
one Parent Special Share was outstanding and (iii) except as set forth in
Section 5.2 of the Parent Disclosure Schedule, no Voting Debt is issued or
outstanding. All outstanding Parent Ordinary Shares are validly issued and fully
paid and are not subject to preemptive rights, except as provided in Section 89
of the Companies Act of 1985 of the United Kingdom (the "Companies Act") and
except as set forth in Section 5.2 of the Parent Disclosure Schedule. As of the
date of this Agreement, except as set forth in Section 5.2 of the Parent
Disclosure Schedule or pursuant to this Agreement and the employment, severance,
deferred compensation or similar agreements that are maintained or contributed
to as of the date of this Agreement (the "Parent Plans"), there are no options,
warrants, calls, rights, commitments or agreements of any character to which
Parent or any Parent Subsidiary is a party or by which it is bound obligating
Parent or any Parent Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional capital or other shares or any Voting Debt
securities of Parent or any Parent Subsidiary or obligating Parent or any Parent
Subsidiary to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. Except as set forth in Section 5.2 of the Parent
Disclosure Schedule, or other than in connection with the Parent Plans, after
the Scheme Effective Time, there will be no option, warrant, call, right,
commitment or agreement obligating Parent or any Parent Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, any capital or other
shares or any Voting Debt of Parent or any Parent Subsidiary, or obligating
Parent or any Parent Subsidiary to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement.
(b) The authorized share capital of Newco consists of 100
ordinary shares ("Newco Original Ordinary Shares"), of which one share is issued
and outstanding. Prior to the Scheme Effective Time, two Newco Original Ordinary
Shares and 49,998 redeemable preference shares ("Newco Original Preference
Shares") shall be issued and outstanding.
(c) Prior to the Merger Effective Time, the authorized capital
stock of Merger Sub will consist of 100 common shares, par value $0.10 per
share, all of which will be issued and outstanding and owned by Newco. All such
outstanding common shares will be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
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Section 5.3 Authority; Non-Contravention; Statutory
Approvals; Compliance.
(a) Authority. Parent, Newco and Merger Sub have all requisite
power and authority to enter into this Agreement and subject to the receipt of
the Parent Required Statutory Approvals (as defined in Section 5.3(c)) and the
Parent Shareholders' Approvals (as defined in Section 5.10), to consummate the
Merger, the Scheme and related transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent, Newco and Merger Sub, subject to obtaining Parent
Shareholders' Approvals. This Agreement has been duly and validly executed and
delivered by Parent, Newco and Merger Sub and, assuming the due authorization,
execution and delivery hereof by the other signatories hereto, constitutes the
valid and binding obligation of Parent, Newco and Merger Sub enforceable against
such parties in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting or relating to the
enforcement of creditors rights generally or general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
(b) Non-Contravention. Except as set forth in Section 5.3(b)
of the Parent Disclosure Schedule, the execution and delivery of this Agreement
by Parent, Newco and Merger Sub does not, and the consummation of the
transactions contemplated hereby shall not, result in a Violation pursuant to
any provisions of (i) the charter, by-laws or similar governing documents of
Parent or any of the Parent Subsidiaries or Newco or Merger Sub, (ii) subject to
obtaining Parent Required Statutory Approvals and the receipt of Parent
Shareholders' Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any Governmental
Authority applicable to Parent or any of the Parent Subsidiaries or Newco or
Merger Sub or any of their respective properties or assets or (iii) subject to
obtaining the third- party consents set forth in Section 5.3(b) of the Parent
Disclosure Schedule (the "Parent Required Consents"), any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Parent
or any of the Parent Subsidiaries or Newco or Merger Sub is a party or by which
they or any of their respective properties or assets may be bound or affected,
except in the case of clause (ii) or (iii) above for any such Violation which
could not reasonably be expected to have a material adverse effect on the
business, assets, condition (financial or otherwise), current or reasonably
anticipated future results of operations of Parent and the Parent Subsidiaries,
taken as a whole, or on Parent's ability to consummate the Merger (a "Parent
Material Adverse Effect").
(c) Statutory Approvals. No declaration, filing or
registration with, or notice to or authorization, consent or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by Parent, Newco and Merger Sub or the consummation by Parent, Newco
and Merger Sub of the transactions contemplated hereby except as described in
Section 5.3(c) of the Parent Disclosure Schedule (the "Parent Required Statutory
Approvals"). References in this Agreement to "obtaining" such Parent Required
Statutory Approvals shall mean making such declarations, filings or
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registrations, giving such notices, obtaining such authorizations, consents or
approvals, and having such waiting periods expire as are necessary to avoid a
violation of law.
(d) Compliance. Except as set forth in Section 5.3(d), Section
5.6 and Section 5.9 of the Parent Disclosure Schedule, or as disclosed in the
Parent SEC Reports (as defined in Section 5.4) filed prior to the date hereof,
neither Parent nor any of the Parent Subsidiaries is in violation of, is under
investigation with respect to any violation of, or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (excluding any applicable Environmental Laws, compliance
with which is the subject of Section 5.9) of any Governmental Authority, except
for possible violations which individually or in the aggregate could not
reasonably be expected to have a Parent Material Adverse Effect. Except as set
forth in Section 5.3(d) of the Parent Disclosure Schedule, or as expressly
disclosed in the Parent SEC Reports or Parent Disclosure Documents, Parent and
the Parent Subsidiaries have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct their
businesses as presently conducted which are material to the operation of the
businesses of Parent and the Parent Subsidiaries. Except as set forth in Section
5.3(d) of the Parent Disclosure Schedule, each of Parent and the Parent
Subsidiaries is not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
the lapse of time or action by a third party, could result in a default by
Parent or any Parent Subsidiary under (i) their respective charters or by-laws
or (ii) any contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which
they are a party or by which Parent or any Parent Subsidiary is bound or to
which any of their property is subject, except for possible violations, breaches
or defaults which individually or in the aggregate could not reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.4 Reports and Financial Statements. (a) All material
filings required to be made by Parent and the Parent Subsidiaries since January
1, 1995 under the Securities Act, the Exchange Act, the 1935 Act, the Power Act,
and applicable state public utility laws and regulations have been filed with
the SEC, the FERC, the NRC, the FCC, the DOE or the appropriate state public
utilities commission, as the case may be, including all forms, statements,
reports, agreements (oral or written) and all documents, exhibits, amendments
and supplements appertaining thereto, and complied, as of their respective
dates, in all material respects with all applicable requirements of the
appropriate statutes and the rules and regulations thereunder. Parent has made
available to the Company a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed with the SEC by
Parent pursuant to the requirements of the Securities Act or Exchange Act since
October 7, 1999 (as such documents have since the time of their filing been
amended, the "Parent SEC Reports"). As of their respective dates, the Parent SEC
Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and unaudited
interim financial statements of Parent included in the Parent SEC Reports
(collectively, the "Parent Financial Statements") complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles in the United Kingdom applied on a consistent basis during the
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periods involved (except as may be indicated therein or in the notes thereto and
except with respect to unaudited statements) and fairly present (subject, in the
case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments (which are not expected to be, individually or in the
aggregate, materially adverse to Parent and Parent Subsidiaries taken as a
whole)) the consolidated financial position of Parent and its consolidated
subsidiaries as at the dates thereof and the consolidated results of operations
and cash flows for the periods then ended. True, accurate and complete copies of
the memorandum and articles of association of Parent, as in effect on the date
hereof, are included (or incorporated by reference) in the Parent SEC Reports.
(b) All material filings required to be made by Parent or any
Parent Subsidiaries since March 31, 1996 in the United Kingdom under the
Electricity Act 1989, have been filed with the Office of Gas and Electricity
Markets ("OFGEM") or any other appropriate Governmental Authority, as the case
may be, including all material forms, statements, reports, agreements and all
material documents, exhibits, amendments and supplements appertaining thereto,
including but not limited to all material rates, tariffs, franchises, service
agreements and related documents, complied, as of their respective dates, in all
material respects with all applicable requirements of the statute and the rules
and regulations thereunder.
Section 5.5 Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Reports filed prior to the date hereof or as set
forth in Section 5.5 of the Parent Disclosure Schedule, since March 31, 2000,
Parent and each of the Parent Subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice and there has not
been, and no fact or condition exists which has had or could reasonably be
expected to have a Parent Material Adverse Effect.
Section 5.6 Legal Proceedings. Except as disclosed in the
Parent SEC Reports filed prior to the date hereof or as set forth in Section
5.6, Section 5.8 or Section 5.9 of the Parent Disclosure Schedule, (a) there are
no claims, suits, actions or proceedings by any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator, pending or,
to the knowledge of Parent, threatened, nor are there, to the knowledge of
Parent, any investigations or reviews by any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator pending or
threatened against, relating to or affecting Parent or any of the Parent
Subsidiaries, which would have a Parent Material Adverse Effect, (b) there have
not been any significant developments since March 31, 2000 with respect to such
disclosed claims, suits, actions, proceedings, hearings, investigations, audits
or reviews that would have a Parent Material Adverse Effect and (c) there are no
judgments, decrees, injunctions, rules or orders of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
applicable to Parent or any of the Parent Subsidiaries, except for such that
could not reasonably be expected to have a Parent Material Adverse Effect.
Section 5.7 Information Supplied. (a) The Parent Disclosure
Documents (as defined in Section 4.8(b)) will, at all relevant times, include
(i) all information relating to Parent, and information which is within the
knowledge of each of the directors of Parent (or which it would be reasonable
for them to obtain by making inquiries) or (ii) all information relating to
Newco and information which is within the knowledge of each of the directors of
Newco (or which it would be reasonable for them to obtain by making inquiries),
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which, in each case, is required to enable the Parent Disclosure Documents and
the parties hereto to comply in all material respects with all United Kingdom
statutory and other legal and regulatory provisions (including, without
limitation, the Companies Act, the FSA, and the rules and regulations made
thereunder, and the rules and requirements of the U.K. Listing Authority) and
all such information contained in the Circular and Scheme Document will be in
accordance with the facts and will not omit anything likely to affect the import
of such information.
(b) None of the information supplied or to be supplied by or
on behalf of Parent, Newco or Merger Sub for inclusion or incorporation by
reference in (i) the Registration Statement (as defined in Section 4.8(a)) will,
at the time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (ii) the Proxy
Statement (as defined in Section 4.8(a)) will, at the dates mailed to the
Company shareholders and at the times of the Company Meeting (as defined in
Section 7.4(b)), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement and the Proxy Statement
included therein shall comply as to form in all material respects with the
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
(c) Notwithstanding the foregoing provisions of this Section
5.7, no representation or warranty is made by Parent, Newco or Merger Sub with
respect to statements made or incorporated by reference in the Registration
Statement, the Proxy Statement or the Parent Disclosure Documents based on
information supplied by the Company for inclusion or incorporation by reference
therein or based on information which is not made in or incorporated by
reference in such documents but which should have been disclosed pursuant to
this Section 5.7.
Section 5.8 Tax Matters.
(a) Newco, Merger Sub, Parent and the Parent Subsidiaries have
filed all material Tax Returns required to be filed by it, or requests for
extensions to file such Tax Returns have been timely filed or granted and have
not expired and all Tax Returns are complete and accurate in all material
respects. Newco, Merger Sub, Parent and the Parent Subsidiaries have paid (or
Parent, if applicable, has paid on their behalf) all Taxes shown as due on such
Tax Returns. The most recent financial statements contained in the Parent SEC
Reports reflect an adequate reserve for all Taxes payable by Parent and the
Parent Subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements, and no deficiencies for any Taxes have
been proposed, asserted or assessed against Newco, Merger Sub, Parent or any of
the Parent Subsidiaries that are not adequately reserved for, except for
inadequately reserved Taxes and inadequately reserved deficiencies that would
not, individually or in the aggregate, have a Parent Material Adverse Effect. No
requests for waivers of the time to assess any taxes against Newco, Merger Sub,
Parent or any of the Parent Subsidiaries have been granted or are pending,
except for requests with respect to such Taxes that, to the extent not
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adequately reserved, the assessment of which would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(b) Neither Newco, Parent nor any of the Parent Subsidiaries
has taken any action or has any knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the Merger and the Scheme taken together from
qualifying as a transaction described in Section 351 of the Code or (ii) cause
the Merger to be subject to Code Section 367(a)(1).
(c) On the Closing Date, Newco will directly own the whole
of the issued share capital of Merger Sub.
Section 5.9 Environmental Protection.
Except as would not, in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect, and except as set forth in Section
5.9(a) of the Parent Disclosure Schedule or in the Parent SEC Reports,
(a) Compliance. To Parent's knowledge, Parent and the Parent
Subsidiaries are in substantial compliance with all applicable Environmental
Laws and the terms and conditions of all applicable Environmental Permits, and
neither Parent nor any of the Parent Subsidiaries has received any written
notice from Governmental Authority that alleges that Parent or any of the Parent
Subsidiaries is not in such compliance with applicable Environmental Laws or the
terms and conditions of all such Environmental Permits;
(b) Environmental Claims/Releases. There are no Environmental
Claims, to Parent's knowledge, pending or threatened: (i) against Parent or any
of the Parent Subsidiaries; (ii) against any person or entity whose liability
for any Environmental Claim Parent or any of the Parent Subsidiaries has
retained or assumed either contractually or by operation of Environmental Law;
(iii) against any properties or operations that Parent or any of the Parent
Subsidiaries owns; or (iv) as the result of a Release of Hazardous Materials in
contravention of applicable Environmental Laws, at any properties or operations
that Parent or any of the Parent Subsidiaries owns.
(c) Parent Representations. Notwithstanding any other
representations and warranties in this Article V, the representations and
warranties contained in this Section 5.9 constitute the sole representations and
warranties of the Parent with respect to any Environmental Law, Environmental
Permit, Environmental Claim, Releases or Hazardous Material.
Section 5.10 Votes Required. (a) The only votes of the holders
of any class of shares of Parent that are required to approve (i) the Merger and
other transactions contemplated thereby are the affirmative vote of a majority
of such ordinary shareholders of Parent as (being entitled to do so) are present
in person and vote (or, in the case of a vote taken on a poll, the affirmative
vote by shareholders representing a majority of the Parent Ordinary Shares in
respect of which votes were validly exercised) (the "Parent Merger Shareholders'
Approval") at a general meeting of Parent Shareholders in relation to the Merger
and other transactions contemplated hereby (the "Parent Merger Meeting") and
(ii) the Scheme and other transactions
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contemplated thereby are, (x) at the meeting of Parent shareholders convened by
an order of the Court (the "Parent Court Meeting"), the affirmative vote of a
majority in number representing 75 percent of the value of Parent Ordinary
Shares present and voting (either in person or by proxy) and (y) with respect to
approval of the Scheme resolutions at an extraordinary general meeting of Parent
shareholders (the "Parent Scheme Meeting"), the affirmative vote of 75 percent
of ordinary shareholders of Parent as (being entitled to do so) are present in
person and vote (or, on the case of a vote taken on a poll, the affirmative vote
by shareholders representing 75 percent of the Parent Ordinary Shares in respect
of which votes were validly exercised) (together, the "Parent Scheme
Shareholders' Approval" and with the Parent Merger Shareholders' Approval, the
"Parent Shareholders' Approvals").
(b) Newco and Merger Sub have received all necessary
approvals, if any, from their respective shareholders required to consummate the
transactions contemplated hereby.
Section 5.11 Brokers. Except as relates to the services
provided by Rothschild, Inc. as financial advisor to Parent, all negotiations
relative to the Scheme and the Merger and the transactions contemplated hereby
have been carried out by Parent and Newco directly with the Company, without the
intervention of any person on behalf of Parent or Newco in such manner as to
give rise to any valid claim by any person against the Company, Parent, Newco or
any of their respective Subsidiaries for a finder's fee, brokerage commission or
similar payment.
Section 5.12 Insurance. Except as set forth in Section 5.12(b)
of Parent Disclosure Schedule, neither Parent nor any of the Parent Subsidiaries
has received any notice of cancellation or termination with respect to any
material insurance policy of Parent or any of the Parent Subsidiaries.
Section 5.13 Ownership of Company Common Stock. None of
Parent or Newco nor any of their Subsidiaries beneficially own any shares of
Company Common Stock.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of the Company. After the date hereof
and prior to the Merger Effective Time or earlier termination of this Agreement,
the Company agrees as follows, each as to itself and to each of the Company
Subsidiaries, except as expressly contemplated or permitted in this Agreement or
as set forth in Section 6.1 of the Company Disclosure Schedule or to the extent
Parent shall otherwise consent in advance in writing, which decision regarding
consent shall be made as soon as reasonably practical:
(a) Ordinary Course of Business. The Company shall, and shall
cause the Company Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use all commercially reasonable efforts to preserve
intact their respective present business organizations and goodwill, preserve
the goodwill and relationships with customers, suppliers and others having
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business dealings with it and, subject to prudent management of work force needs
and ongoing programs currently in force, keep available the services of their
respective present officers and employees. The Company shall not, and shall not
permit the Company Subsidiaries to, enter into a new line of business involving
any investment of assets or resources or any exposure to liability or loss to
the Company and the Company Subsidiaries taken as a whole; provided, however,
that notwithstanding the above and notwithstanding any other provision in
Section 6.1, the Company and any of the Company Subsidiaries may make equity
infusions into a Company Subsidiary to the extent required by law or a state
regulatory commission.
(b) Dividends. The Company shall not, and shall not permit any
of the Company Subsidiaries to: (i) declare or pay any dividends on or make
other distributions in respect of any of their respective capital stock except
(A) to the Company or the Company Subsidiaries, (B) Company Subsidiaries may
continue the declaration and payment of regularly scheduled dividends on, and
distributions required by the terms of, preferred stock or similar securities
not convertible into common equity securities ("Non-Convertible Preferred
Securities") (ii) split, combine or reclassify any of their respective capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of their respective
capital stock or (iii) redeem, repurchase or otherwise acquire any shares of
their respective capital stock, other than (x) for the purpose of funding
employee stock ownership plans and dividend reinvestment programs in accordance
with past practice and (y) redemptions, purchases or acquisitions required by
the terms of any Non-Convertible Preferred Securities of Company Subsidiaries.
(c) Issuance of Securities. The Company shall not, nor shall
it permit any of its Subsidiaries to issue or sell, or authorize or propose the
issuance or sale of, any shares of its capital stock or any option with respect
thereto (other than (i) the issuance of options or awards pursuant to the
Company Share Plans in accordance with their present terms and only in
connection with the hiring of new employees, and the issuance of shares of
Company capital stock upon exercise of such options or awards or (ii) the
issuance by a wholly owned Subsidiary of its capital stock to its direct or
indirect parent corporation, or modify or amend any right of any holder of
outstanding shares of capital stock or options with respect thereto).
(d) Charter Documents. The Company shall not amend or propose
to amend its charter or by-laws except as contemplated herein.
(e) No Acquisitions. The Company shall not, nor shall it
permit any of the Company Subsidiaries to, acquire (by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, 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 in the ordinary
course of its business consistent with past practice.
(f) No Dispositions. Except for dispositions in the ordinary
course of business consistent with past practice, the Company shall not, and it
shall not permit any of the Company Subsidiaries to, sell, lease (whether such
lease is an operating or capital lease), encumber or otherwise dispose of, or
agree to sell, lease, encumber or otherwise dispose of, any of its assets.
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(g) Limitation on Investment in Joint Ventures. Except as
required by applicable law or any agreement to which the Company or any of the
Company Subsidiaries is a party on the date hereof, the Company will not make,
and will not permit any Subsidiary to make, any additional investments in, or
loans or capital contributions to, or to undertake any guaranties or other
obligations with respect to any joint venture or partnership.
(h) Tax-Exempt Status. The Company shall not, and the Company
shall not permit any of the Company Subsidiaries to, take any action that (or
fail to take any action if such failure) could reasonably be expected to
jeopardize the qualification of the Company's outstanding revenue bonds which
qualify on the date hereof under Section 142(a) of the Code as "exempt facility
bonds" or as tax-exempt pollution control bonds under Section 103(b) (4) of the
Internal Revenue Code of 1954, as amended, prior to the Tax Reform Act of 1986.
(i) Tax Matters. Neither the Company nor any of its
Subsidiaries shall (i) make or rescind any material express or deemed election
relating to Taxes or grant any power of attorney with respect to any Tax
matters, (ii) make a request for a Tax Ruling or enter into a Closing Agreement,
(iii) settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or (iv) change in any material respect any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the taxable year ending
December 31, 1998, (in each case, a "Tax Change"); except for Tax Changes (A)
required by applicable law, (B) with respect to any Tax period that involve Tax
issues where the amount of income, gain, loss, deduction, credit, gross
receipts, property value or any similar item does not exceed $75,000,000 with
respect to such Tax period (or more than $75,000,000 in any subsequent Tax
period); provided that, the Company has informed and consulted with Parent and
Newco prior to making such Tax Change or (C) that are made with the written
consent of Parent, which consent will not be unreasonably withheld.
Notwithstanding the requirements of this Section 6.1(i), any Tax Change relating
to the Nuclear Sale shall not be subject to this Section 6.1(i). The Company
agrees to consult with and inform Parent and Newco of any events that are
reasonably likely to result in a Tax Change relating to the Nuclear Sale and
shall not make any such Tax Change without such consultation.
(j) Capital Expenditures. Except (i) as required by law, or
(ii) as reasonably deemed necessary by the Company after consulting with Parent
following a catastrophic event, such as a major storm, the Company shall not,
and the Company shall not permit any of the Company Subsidiaries to, make
capital expenditures during any fiscal year, except for capital expenditures
incurred by Niagara Mohawk Power Corp. not in excess of 110% of the amount
budgeted for such fiscal year by the Company for capital expenditures as set
forth in Section 6.1 of the Company Disclosure Schedule.
(k) Indebtedness. The Company shall not, nor shall it permit
any of its Subsidiaries to incur or guarantee any indebtedness (including any
debt borrowed or guaranteed or otherwise assumed, including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or enter
into any "keep well" or other agreement to maintain any financial condition of
another Person or enter into any arrangement having the economic effect of any
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of the foregoing other than (i) short-term indebtedness in the ordinary course
of business consistent with past practice (such as the issuance of commercial
paper or the use of existing credit facilities) in amounts not exceeding the
amounts set forth in Section 6.1 of the Company Disclosure Schedule, except as
reasonably deemed necessary by the Company after consulting with Parent
following a catastrophic event, (ii) long-term indebtedness in connection with
the refinancing of existing indebtedness either at its stated maturity or at a
lower cost of funds (calculating such cost on an aggregate after-tax basis) or
(iii) guarantees or "keep well" agreements in favor of wholly owned Subsidiaries
of the Company in connection with the conduct of the business of such wholly
owned Subsidiaries of the Company.
(l) Compensation, Benefits. Except as set forth in Section 6.1
of the Company Disclosure Schedule or as may be required by applicable law or as
contemplated by this Agreement, the Company shall not, and the Company shall not
permit any Company Subsidiary to, enter into or amend or increase the amount or
accelerate the payment or vesting or termination of any benefit or amount
payable under any employee benefit or compensation plan or other contract,
agreement, commitment, arrangement, plan, trust, fund or policy maintained by,
contributed to or entered into by the Company or any Company Subsidiary or
increase, or enter into any contract, agreement, commitment or arrangement to
increase in any manner, the compensation or fringe benefits, or otherwise to
extend, expand or enhance the term of employment, compensation or benefits of
any former, present or future director, officer or employee of the Company or
any Company Subsidiary, except for increases and accelerations that are made in
the ordinary course of business consistent in process and amounts with the past
practice or that are otherwise required pursuant to the current terms of the
Company Employee Benefit Plans, which in the aggregate for any group of
employees, officers or directors, do not result in a material increase in
benefits or compensation expense as of the effective date of this Agreement and
which would not result in (i) any material change in the amount of compensation
which will fail to be deductible for federal income tax purposes by virtue of
Section 280G or Section 162(m) of the Code or (ii) an acceleration or material
increase in "parachute payments" set forth in Section 4.10(a) of the Company
Disclosure Schedule as of the effective date of this Agreement.
Notwithstanding the foregoing, the Company shall not and the
Company shall not permit any Company Subsidiary to adopt, establish, enter into
or implement any new employee plan, benefit or compensation program or policy,
or any new employment, severance or retention agreement, or other new contract,
agreement or arrangement which would provide for any form of benefits or other
compensation, or pay any compensation or benefits to any former, present, or
future director, officer or employee of the Company or any Company Subsidiary
which was not in effect as of the effective date of this Agreement; provided,
however, that this sentence shall not apply to any such compensation or benefits
(A) provided pursuant to a collective bargaining agreement or arrangement
described in Section 6.1(m) or a discharge of liability permitted in Section
6.1(t), (B) provided pursuant to any compensation or benefit plan, program or
arrangement that is mutually agreed to, in writing, by the parties or (C) that
are otherwise required pursuant to the current terms of the Company Employee
Benefit Plans; provided further, that nothing in this Section 6.1(l) shall
prevent the Company from entering into severance agreements intended solely to
implement the terms of severance policies or programs in effect on the date
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hereof or from entering into retention or other arrangements as described in
Section 6.1 of the Company Disclosure Schedule.
(m) Labor Matters. Notwithstanding any other provision of this
Agreement to the contrary, the Company or the Company Subsidiaries may negotiate
successor collective bargaining agreements to those referenced in Section
4.11(a) of the Company Disclosure Schedule. The Company shall keep Parent
informed as to the status of, and shall consult with Parent as to the strategy
for, all material negotiations with collective bargaining representatives. The
Company and Company Subsidiaries shall act reasonably, consistent with their
obligations under applicable law in such negotiations.
(n) 1935 Act. The Company shall not, and the Company shall not
permit any of the Company Subsidiaries to, except as required or contemplated by
this Agreement, engage in any activities which would cause a change in its
status, or that of the Company Subsidiaries, under the 1935 Act.
(o) Accounting. The Company shall not, and the Company shall
not permit any of the Company Subsidiaries to, make any changes in their
accounting methods, except as required by law, rule, regulation or U.S. GAAP or
except as mutually agreed to by the parties.
(p) Affiliate Transactions. The Company shall not permit any
of the Company Subsidiaries to, enter into any material agreement or arrangement
with any of their respective Affiliates (other than wholly owned Subsidiaries),
on terms less favorable to such party than could be reasonably expected to have
been obtained with an unaffiliated third-party on an arm's length basis.
(q) Rate Matters. Subject to applicable law and except for
non-material filings in the ordinary course of business consistent with past
practice, the Company shall consult with Parent prior to initiating any proposed
changes in its or any of the Company Subsidiaries' rates or charges (other than
automatic cost pass-through rate adjustment clauses), standards of service or
accounting or executing any agreement with respect thereto that is otherwise
permitted under this Agreement. The Company shall, and shall cause the Company
Subsidiaries to, deliver to Parent a copy of each filing or agreement related to
rates, changes, standards of service, accounting or regulatory policy which
could lead to a material change in any of those areas at least four days prior
to the filing or execution thereof so that Parent may comment thereon. The
Company shall, and shall cause its Subsidiaries to, make all such filings only
in the ordinary course of business (i) consistent with past practice or (ii) as
required by a Governmental Authority or regulatory agency with appropriate
jurisdiction or under existing settlement agreements to which the Company is a
party.
(r) Contracts. The Company shall not, and the Company shall
not permit any of the Company Subsidiaries to, except in the ordinary course of
business consistent with past practice, modify, amend, terminate, renew or fail
to use commercially reasonable efforts to renew any contract or agreement to
which the Company or the Company Subsidiary is a party, which is material to the
Company and the Company Subsidiaries taken as a whole, to waive, release or
assign any material rights or claims therein, or agree to any provisions thereof
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which would impede the ability of the Company to consummate the Merger, or in
respect of which the Merger would constitute a default, or would result in the
Merger triggering a right of termination by any unaffiliated parties.
(s) Insurance. The Company shall, and shall cause the Company
Subsidiaries to, maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are consistent
with the insurance maintained by the Company in the ordinary course of business
in accordance with past practice.
(t) Discharge of Liabilities. The Company shall not, and the
Company shall not permit any of the Company Subsidiaries to, pay, settle,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise and whether criminal, civil or
administrative in nature) material to the Company and the Company Subsidiaries
taken as a whole, other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice (which includes the
payment of final and unappealable judgments) or in accordance with their terms,
of liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company's reports filed with the SEC, or incurred in the
ordinary course of business consistent with past practice.
(u) Third Party Standstill Agreements. During the period from
the date of this Agreement through the Merger Effective Time, neither the
Company nor any of the Company Subsidiaries shall terminate, amend, modify or
waive any provision of any standstill agreement or any standstill provisions of
other agreements to which it is a party. During such period, the Company shall
take all appropriate steps to enforce the provisions of any such agreement.
(v) Cooperation, Notification. The Company shall (i) confer on
a regular and frequent basis with one or more representatives of Parent to
discuss, subject to applicable law, material business and operational matters
and the general status of its ongoing operations, (ii) promptly notify Parent of
any material changes in its business, properties, assets, condition (financial
or other), results of operations or prospects, (iii) promptly advise Parent of
any change or event which has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect and (iv)
promptly provide Parent with copies of all filings made by the Company or any of
the Company Subsidiaries with any state or federal court, administrative agency,
commission or other Governmental Authority in connection with this Agreement and
the transactions contemplated hereby.
(w) Third-Party Consents. The Company shall, and shall cause
the Company Subsidiaries to, use all commercially reasonable efforts to obtain
all the Company Required Consents. The Company shall promptly notify Parent of
any failure or prospective failure to obtain any such consents and, if requested
by Parent, shall provide copies of all the Company Required Consents obtained by
the Company to Parent.
(x) Tax-Free Status. The Company shall not, nor shall it
permit any of its Subsidiaries to, take any actions that would or would be
reasonably likely to, (i) adversely affect the status of the Merger and the
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Scheme taken together as a transaction described in Section 351 of the Code or
(ii) cause the Merger to be subject to Code Section 367(a)(1), and the Company
shall use all reasonable efforts to achieve such result.
(y) No Breach, Etc. The Company shall not, and the Company
shall not permit any of the Company Subsidiaries to, willfully take any action
that would or is reasonably likely to result in a material breach of any
provision of this Agreement or in any of its representations and warranties set
forth in this Agreement being untrue in a material respect on and as of the
Closing Date.
Section 6.2 Covenants of Parent. After the date hereof and
prior to the Merger Effective Time or earlier termination of this Agreement,
Parent agrees as follows, as to itself and to each of the Parent Significant
Subsidiaries, except as expressly contemplated or permitted in this Agreement,
or as set forth in Section 6.2 of the Parent Disclosure Schedule or to the
extent the Company shall otherwise consent in writing, which decision regarding
consent shall be made as soon as reasonably practical (as used herein, the term
"Parent Significant Subsidiary" shall mean any Parent Subsidiary that
constitutes a "significant subsidiary" within the meaning of Rule 1-02(w)(3) of
Regulation S-X of the U.S. Securities and Exchange Commission):
(a) Ordinary Course of Business. Parent shall cause the Parent
Significant Subsidiaries to carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and use all commercially reasonable efforts to preserve intact their
respective present business organizations and goodwill, preserve the goodwill
and relationships with customers, suppliers and others having business dealings
with them. Parent shall not, and shall not permit the Parent Significant
Subsidiaries to enter into a new line of business involving any material
investment of assets or resources or any material expense, liability or loss to
the Parent and the Parent Significant Subsidiaries taken as a whole; it being
agreed that the limitations contained in this Section 6.2(a) do not limit the
Parent or any of the Parent Significant Subsidiaries from entering into any line
of business in which Parent or any of the Parent Significant Subsidiaries or any
of its other affiliates is engaged on the date of this Agreement.
(b) Certain Mergers. Parent shall not, and shall not permit
any of its Subsidiaries to, 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 if the entering into of a definitive
agreement relating to or the consummation of such acquisition, merger or
consolidation could reasonably be expected to materially delay the consummation
of the Merger.
(c) Tax-Free Status. Parent shall not, nor shall it permit any
of its Subsidiaries to, take any actions that would, or would be reasonably
likely to, (i) adversely affect the status of the Merger and the Scheme taken
together as a transaction described in Section 351 of the Code or (ii) cause the
Merger to be subject to Code Section 367(a)(1), and Parent shall use all
reasonable efforts to achieve such result.
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(d) Other Actions. Parent shall not, and shall not permit any
of the Parent Subsidiaries to, take or fail to take any other action, including,
without limitation, amending or proposing to amend their respective charters,
by-laws or regulations, or similar organic documents (except as contemplated
herein), engage in any activities which would cause a change in its status, or
that of the Parent Subsidiaries, under the 1935 Act, or to make any changes in
their accounting methods (except as required by law, rule, regulation or
applicable generally accepted accounting principles), which would reasonably be
expected to prevent or materially impede, interfere with or delay the Merger or
the Scheme.
(e) Cooperation, Notification. Parent shall confer on a
regular and frequent basis with the Company to discuss, subject to applicable
law, (i) any material changes in its business, results of operations or
prospects, and (ii) any change or event which has had or, insofar as reasonably
can be foreseen, is reasonably likely to result in a Parent Material Adverse
Effect or materially impair the ability of Parent to consummate the Merger or
the Scheme, and will promptly provide the Company with copies of all filings
made by Parent or any of the Parent Subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
(f) Third-Party Consents. Parent shall, and shall cause the
Parent Subsidiaries to, use all commercially reasonable efforts to obtain all
Parent Required Consents. Parent shall promptly notify the Company of any
failure or prospective failure to obtain any such consents and, if requested by
the Company, shall provide copies of all Parent Required Consents obtained by
Parent to the Company.
(g) No Breach, Etc. Parent shall not, and Parent shall not
permit any of the Parent Subsidiaries to, willfully take any action that would
or is reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in this
Agreement being untrue on and as of the Closing Date.
Section 6.3 Covenants of Newco. (a) Prior to the Merger
Effective Time except as may be required by applicable law and subject to the
other provisions of this Agreement, Newco shall not engage, directly or
indirectly, in any business or activity of the type or kind, and not enter into
any agreement or arrangement with any person, or be subject to or bound by any
obligation or undertaking, which is inconsistent with this Agreement or the
Scheme.
(b) Conduct of Business of Merger Sub. Prior to the Merger
Effective Time, except as may be required by applicable law and subject to the
other provisions of this Agreement, Newco shall cause Merger Sub to (i) perform
its obligations under this Agreement in accordance with its terms and (ii) not
engage, directly or indirectly, in any business or activity of the type or kind,
and not enter into any agreement or arrangement with any person, or be subject
to or bound by any obligation or undertaking, which is inconsistent with this
Agreement.
Section 6.4 Alternative Arrangement Concerning Company Nuclear
Facilities. If, following the date hereof, the Company and Parent determine that
the Company Nuclear Facilities are likely to be sold but not on a timely basis
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in order to satisfy the condition contained in Section 8.1(e)(i), the Company
and Parent agree to consider in good faith alternatives to a Nuclear Sale prior
to the Closing, including but not limited to alternative governance, operational
and ownership arrangements under which Parent would be willing and able to close
the transactions contemplated by this Agreement without the Nuclear Sale having
occurred, consistent with the requirements of the Atomic Energy Act and
applicable NRC rules and regulations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice, (a)
the Company shall, and shall cause its Subsidiaries to, afford the officers,
directors, employees, accountants, counsel, investment bankers, financial
advisors and other representatives (collectively, "Representatives") of Parent
reasonable access, during normal business hours throughout the period prior to
the Merger Effective Time, to all of its properties, facilities, operations,
books, contracts, commitments and records (including, but not limited to, Tax
Returns and any information relating to any audits or other examinations of such
Tax Returns) and personnel (including the Company's environmental, health and
safety personnel) and (b) Parent shall, and shall cause the Parent Significant
Subsidiaries to, afford to the Representatives of the Company, reasonable access
to senior executives of Parent for the purpose of discussing Parent's business
(with reasonable access to the documents related thereto) during the period
prior to the Merger Effective Time. Each party shall, and shall cause its
Subsidiaries to, in addition to the advance approval requirements set forth in
Section 7.3(b), furnish promptly to the other (a) access to each report,
schedule and other document filed or received by it or any of its Subsidiaries
pursuant to the requirements of federal or state securities laws or filed with
or sent to the SEC, the FERC, the NRC, the DOE, the Department of Justice, the
Federal Trade Commission or any other federal or state regulatory agency or
commission that relates to the transactions contemplated hereby or, subject to
the terms of any then existing confidentiality requirements, that is otherwise
material to the financial condition or operations of the Company and its
Subsidiaries taken as a whole, or to Parent and its Subsidiaries taken as a
whole, as the case may be and (b) access to all information concerning
themselves, their Subsidiaries, directors, officers and shareholders and such
other matters as may be reasonably requested by the other party in connection
with any filings, applications or approvals required or contemplated by this
Agreement or for any other reason related to the transactions contemplated by
this Agreement. Each party shall, and shall cause its Subsidiaries and
Representatives to, hold in strict confidence all documents and information
concerning the other furnished to it in connection with the transactions
contemplated by this Agreement in accordance with the Confidentiality Agreement,
dated December 13, 1999, between the Company and Parent (the "Confidentiality
Agreement").
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Section 7.2 Proxy Statement and Registration Statement;
Listing; Parent Disclosure Documents.
(a) Preparation and Filing of Proxy Statement and the
Registration Statement; Listing. As soon as practicable after the date of this
Agreement, the Company shall, in cooperation with Parent and Newco, prepare and
file the Proxy Statement and Newco shall, in cooperation with the Company and
Parent, prepare and file the Registration Statement, in which the Proxy
Statement will be included as the prospectus. Parent, Newco and the Company
shall cooperate in the preparation of the Proxy Statement and the Registration
Statement and any amendments thereto and shall promptly notify each other of the
receipt of any comments from the SEC or any requests for any amendment or
supplement thereto or for additional information. The parties hereto shall each
use reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as practicable after such filing.
Each party hereto shall also take such action as may be reasonably required to
cause the Newco ADRs issuable in connection with the Merger to be registered or
to obtain an exemption from registration under applicable state "blue sky" or
securities laws; provided, however, that Newco shall not be required to register
or qualify as a foreign corporation or to take other action which would subject
it to service of process in any jurisdiction where Newco will not be, following
the Merger, so subject. The parties shall cause the shares of Newco ADRs
issuable in the Merger to be approved for listing on the NYSE upon official
notice of issuance. Each of the parties hereto shall furnish all information
concerning itself which is required or customary for inclusion in the Proxy
Statement and the Registration Statement. The information provided by any party
hereto for use in the Proxy Statement and the Registration Statement shall be
true and correct in all material respects without omission of any material fact
which is required to make such information not false or misleading. No
representation, covenant or agreement is made by any party hereto with respect
to information supplied by any other party for inclusion in the Proxy Statement
or the Registration Statement.
(b) Letter of the Company's Accountants. The Company shall use
its best efforts to cause to be delivered to Parent and Newco a letter of
PricewaterhouseCoopers, dated a date within two business days before the date of
the Registration Statement, and addressed to Parent and Newco, in form and
substance reasonably satisfactory to Parent and Newco and customary in scope and
substance for "cold comfort" letters delivered by independent public accountants
in connection with registration statements on Form F-4.
(c) Letter of Parent's Accountants. Parent shall use best
efforts to cause to be delivered to the Company a letter of
PricewaterhouseCoopers, dated a date within two business days before the date of
the Registration Statement, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
"cold comfort" letters delivered by independent public accountants in connection
with registration statements on Form F-4.
(d) Parent Disclosure Documents. Subject to applicable law,
Parent and Newco shall, as soon as reasonably practicable after the date of this
Agreement and in accordance with the listing rules of the U.K. Listing
Authority, prepare and submit to the U.K. Listing Authority for approval the
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Circular, and shall use its reasonable endeavors to have the Circular
approved by the U.K. Listing Authority as soon as reasonably practicable after
the date of this Agreement. Newco, Parent and the Company shall cooperate with
each other in the preparation of the Parent Disclosure Documents and any
amendments or supplements thereto as well as the preparation of any responses to
the U.K. Listing Authority in connection therewith. Each of the parties hereto
shall furnish all information concerning itself which is required or customary
for inclusion in the Parent Disclosure Documents. Each of Newco, Parent and the
Company agrees to use its reasonable best efforts to respond promptly to any
requests of the U.K. Listing Authority.
(e) Mailing to Shareholders. Each of the Company and Parent
shall, consistent with the requirements of the securities laws of the United
States and the United Kingdom, use their reasonable best efforts to cause the
Proxy Statement and the Circular to be mailed or dispatched to their respective
shareholders entitled to vote on the Merger and other transactions contemplated
hereby.
Section 7.3 Regulatory Matters.
(a) HSR Filings. Each party hereto shall file or cause to be
filed with the Federal Trade Commission and the Department of Justice any
notifications required to be filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations promulgated thereunder with respect to the transactions contemplated
hereby. Each party hereto will use all commercially reasonable efforts to make
such filings in a timely manner and to respond on a timely basis to any requests
for additional information made by either of such agencies.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its best efforts to prepare and file promptly all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain
all necessary permits, consents, approvals, clearance and authorizations of all
Governmental Authorities necessary or advisable to obtain the Company Required
Statutory Approvals and the Parent Required Statutory Approvals. The parties
agree that they will consult with each other with respect to obtaining the
Company Required Statutory Approvals and Parent Required Statutory Approvals;
provided, however, that it is agreed that Parent shall have primary
responsibility for the preparation and filing of any related applications,
filings or other material with Governmental Authorities other than the Nuclear
Approvals (as defined in Section 8.1(e)(ii)), with respect to which the Company
shall have primary responsibility. Each of Parent and the Company shall have the
right to review and approve in advance drafts and final applications, notices,
petitions, filings and other documents submitted to or filed with applicable
Governmental Authorities, which approval shall not be unreasonably withheld or
delayed. The Company shall not agree to the imposition of any condition in the
Company Required Statutory Approvals without the prior consent of Parent.
Section 7.4 Shareholder Approval.
(a) Approval of Parent Shareholders. Parent shall, through
its Board of Directors, (i) duly call, give notice of, convene and hold the
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Parent Merger Meeting, for the purpose of securing the Parent Merger
Shareholders' Approval as soon as reasonably practicable after the date hereof
and (ii) duly call, give notice of, convene and hold the Parent Scheme Meeting
and apply to the Court to convene the Parent Court Meeting required to complete
the Parent Scheme Shareholders' Approval at such time as Parent determines is
appropriate to insure that the Parent Scheme Shareholders' Approval may be
obtained not later than forty days following satisfaction or waiver of the
conditions set forth in Article VIII hereof (other than the condition set forth
in Section 8.2(h)). Subject to its fiduciary obligations with respect to a
transaction involving a change in control of Parent and the requirements of
applicable law, Parent shall include in the Circular the recommendation of the
Board of Directors of Parent that the shareholders of Parent approve the Merger
and the other transactions contemplated hereby and shall include in the Scheme
Document the recommendation of the Board of Directors of Parent that the
shareholders of Parent approve the Scheme, and shall use its reasonable
endeavors to obtain such approvals in accordance with its usual practices.
(b) Approval of the Company Shareholders. The Company shall,
through its Board of Directors, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Meeting"), for the purpose of securing
the Company Shareholders' Approval as soon as reasonably practicable after the
date hereof. Subject to fiduciary obligations and the requirements of applicable
law, the Company shall include in the Proxy Statement the recommendation of the
Board of Directors of the Company that the shareholders of the Company approve
the Merger and the other transactions contemplated hereby, and shall use its
reasonable best efforts to obtain such approval.
(c) Meeting Date for Merger Approvals. The Parent Merger
Meeting for the purpose of securing the Parent Merger Shareholders' Approval,
and the Company Meeting for the purpose of securing the Company Shareholders'
Approval shall be held on such dates as the Company and Parent shall mutually
determine.
Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, Newco shall, to
the fullest extent permitted by applicable law, indemnify, defend and hold
harmless (i) from and after the Merger Effective Time, each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Merger Effective Time, an officer, director or employee of the Company or any of
the Company Subsidiaries and (ii) from and after the Scheme Effective Time, each
person who is now, or who has been at anytime prior to the date hereof, or who
becomes prior to the Scheme Effective Time, an officer director or employee of
Parent (each an "Indemnified Party" and collectively, the "Indemnified Parties")
against (i) all losses, expenses (including reasonable attorneys' fees and
expenses), claims, damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement, arising out of actions or
omissions occurring at or prior to the Merger Effective Time or the Scheme
Effective Time, as the case may be (and whether asserted or claimed prior to, at
or after the Merger Effective Time or Scheme Effective Time, as the case may be)
that are, in whole or in part, based on or arising out of the fact that such
person is or was a director, officer or employee of such party (the "Indemnified
Liabilities"), and (ii) all Indemnified Liabilities to the extent they are based
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on or arise out of or pertain to the transactions contemplated by this
Agreement. In the event of any such loss, expense, claim, damage or liability
(whether or not arising before the Merger Effective Time or the Scheme Effective
Time, as the case may be), (i) Newco shall pay the reasonable fees and expenses
of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to Newco, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, (ii) Newco will
cooperate in the defense of any such matter and (iii) any determination required
to be made with respect to whether an Indemnified Party's conduct complies with
the standards set forth under relevant law and the memorandum of association or
by-laws of Newco shall be made by independent counsel mutually acceptable to
Newco and the Indemnified Party; provided, however, that Newco shall not be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld). The Indemnified Parties as a group may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of counsel to an Indemnified Party, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of such Indemnified Party and any other Indemnified
Party or Indemnified Parties.
(b) Insurance. For a period of six years after the Merger
Effective Time and the Scheme Effective Time, Newco at Newco's election (i)
shall cause to be maintained in effect an extended reporting period for current
policies of directors' and officers' liability insurance for the benefit of such
persons who are currently covered by such policies of the Company or Parent on
terms no less favorable than the terms of such insurance coverage or (ii)
provide tail coverage for such persons which provides coverage for a period of
six years for acts prior to the Merger Effective Time or the Scheme Effective
Time, as the case may be, on terms no less favorable than the terms of such
current insurance coverage.
(c) Successors. In the event Newco or any of its successors or
assigns (i) consolidates with or merges into any other person or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person or entity, then, and in each such case,
proper provision shall be made so that the successors and assigns of Newco shall
assume the obligations set forth in this Section 7.5 and in Sections 7.8 and
7.9.
(d) Survival of Indemnification. To the fullest extent
permitted by law, (i) from and after the Merger Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of the Company and the Company Subsidiaries with respect
to their activities as such prior to the Merger Effective Time, as provided in
the charter and by-laws or similar governing documents in effect on the date
thereof, or otherwise in effect on the date hereof and disclosed to Newco in
writing prior to the date hereof, shall survive the Merger and shall continue in
full force and effect for a period of not less than six years from the Merger
Effective Time and (ii) from and after the Scheme Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of Parent and the Parent Subsidiaries with respect to
their activities prior to the Scheme Effective Time, as provided in the
memorandum or articles of association, charter, by-laws or similar governing
documents on the date thereof, or otherwise in effect on the date hereof and
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disclosed to Newco in writing prior to the date hereof, shall survive the Scheme
and shall continue in full force and effect for a period of not less than six
years from the Scheme Effective Time.
(e) Benefit. The provisions of this Section 7.5 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives and (ii) are in addition to, and
not in substitution for, any other rights to indemnification that such person
may have by contract or otherwise.
Section 7.6 Public Announcements. Except as otherwise required
by law or the rules of any applicable securities exchange or national market
system or any other Governmental Authority, so long as this Agreement is in
effect, Newco, Parent and the Company will not, and will not permit any of their
respective Subsidiaries or Representatives to, issue or cause the publication of
any press release or make any other public announcement with respect to the
Merger and other transactions contemplated by this Agreement without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed. Newco, Parent and the Company will cooperate with each other in the
development and distribution of all press releases and other public
announcements with respect to the Merger and other transactions contemplated
hereby, and will furnish the other with drafts of any such releases and
announcements as far in advance as practicable.
Section 7.7 Rule 145 Affiliates. Within 30 days after the date
of this Agreement, the Company shall identify in a letter to Newco all persons
who are, and to such person's best knowledge who will be at the Closing Date,
"affiliates" of the Company, as the case may be, as such term is used in Rule
145 under the Securities Act. The Company shall use commercially reasonable
efforts to cause its affiliates (including any person who may be deemed to have
become such an affiliate after the date of the letter referred to in the prior
sentence) to deliver to Newco on or prior to the Closing Date a written
agreement substantially in the form attached as Exhibit 7.7 (each, an "Affiliate
Agreement").
Section 7.8 Labor Agreements and Workforce Matters.
(a) Labor Agreements. Newco shall honor or cause the
appropriate subsidiary to honor all collective bargaining agreements in effect
as of the Merger Effective Time until their expiration, and shall assume all of
the rights and obligations provided under such collective bargaining agreements.
(b) Workforce Matters. Subject to applicable law and
obligations under applicable collective bargaining agreements, for a period of
two years following the Merger Effective Time, reductions in workforce, if any,
in respect of U.S. employees of Newco and its Subsidiaries shall be made on a
fair and equitable basis as determined by Newco, and any employee whose
employment is terminated or job is eliminated during such period shall be
entitled to participate on a fair and equitable basis as determined by Newco in
the job opportunity and employment placement programs offered by Newco or any of
its Subsidiaries for U.S. employees for which they are eligible. Workforce
reductions, if any, carried out following the Merger Effective Time by the
Surviving Entity shall be done in accordance with all applicable collective
bargaining agreements, and all laws and regulations governing the employment
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relationship and termination thereof including, without limitation, the Worker
Adjustment and Retraining Notification Act and regulations promulgated
thereunder, and any comparable state or local law.
Section 7.9 Employee Benefit Plans; Stock Options.
(a) For a period of two years immediately following the
Closing Date, the compensation, benefits and coverage provided to current
employees and retirees of the Company or any Company Subsidiary, other than
those covered by a collective bargaining agreement, who continue employment with
Newco or one of its Subsidiaries (the "Affected Employees") pursuant to
compensation and employee benefit plans or arrangements maintained by Newco or
one of its Subsidiaries shall be, in the aggregate, not less favorable (as
determined by Newco and the Surviving Entity using reasonable assumptions and
benefit valuation methods) than those provided, in the aggregate, to such
Affected Employees by the Company and any Company Subsidiary immediately prior
to the Closing Date. Newco shall, and shall cause the Surviving Entity and its
other Subsidiaries to, honor in accordance with their terms and applicable law
(i) all compensation, benefit, and funding obligations as in effect as of the
date hereof or as may later be in effect in accordance with the terms of this
Agreement to current and former officers of the Company or any Company
Subsidiary, and to their beneficiaries, that are described in any applicable
employment agreement or other Company Employee Benefit Plan (including, but not
limited to, the Company's Supplemental Executive Retirement Plan) of the Company
or any Company Subsidiary and that are accrued, owed or mutually agreed to on or
before the Merger Effective Time as set forth in Section 4.10(a) of the Company
Disclosure Schedule and (ii) all other obligations to Affected Employees and
current and former directors of the Company and any Company Subsidiary, and to
their beneficiaries, under employment, severance, consulting and retention
agreements or arrangements and all Company Employee Benefit Plans that are
accrued, owed or mutually agreed to on or before the Merger Effective Time, as
set forth in Section 4.10(a) of the Company Disclosure Schedule. In addition to
the foregoing, Newco shall and shall cause the Surviving Entity or its other
Subsidiaries to pay any Affected Employees whose employment is terminated by
Newco, the Surviving Entity or other Subsidiary within 24 months of the Closing
Date, a severance benefit package equivalent to the severance-related benefits
in effect under the following Company plans and programs as of the effective
date hereof (subject to the modification described in the following (i)): (i)
the Niagara Mohawk Involuntary Severance Plan (Section 1.9 of the Niagara Mohawk
Involuntary Severance Plan shall be amended prior to the Merger Effective Date
to provide that a job offer by Newco or one of its Subsidiaries shall not
prevent an involuntarily terminated Affected Employee from receiving severance
benefits under such Plan if such job offer is for employment that is more than
fifty miles one-way from the Affected Employee's work location at the time of
such involuntary termination); (ii) the Niagara Mohawk Medical and Prescription
Drug Plan For Eligible Participants In the Involuntary Severance Plan; and (iii)
the "Career Center" and "Reimbursement For Job Training Educational Expenses"
benefits described in the Company's "Transition Benefits" summary that describes
transition benefits for eligible management employees whose jobs are abolished
as a direct result of the Company's restructuring efforts.
(b) The compensation, benefits and coverage provided to
employees who are covered by a collective bargaining agreement described in
Section 7.8(a) shall be provided subject to the terms of such collective
bargaining agreement.
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(c) Newco shall, or shall cause its Subsidiaries to, give the
Affected Employees full credit for purposes of eligibility, vesting, benefit
accrual (including, without limitation, benefit accrual under any defined
benefit pension plans) and determination of the level of benefits under any
employee benefit or fringe benefit plans or arrangements maintained by Newco or
one of its Subsidiaries for such Affected Employees' service with the Company or
any Company Subsidiary (or any prior employer) to the same extent recognized by
the Company or any Company Subsidiary immediately prior to the Closing Date,
except where such credit would provide duplication of benefits. With respect to
any employee benefit plan or arrangement established by Newco or one of its
Subsidiaries after the Closing Date (the "Post-Closing Plans") that is not
intended to replace any Company benefit for Affected Employees in existence
immediately prior to the Merger Effective Time, service shall be credited in
accordance with the terms of such Post- Closing Plans consistent with the
crediting of service for employees of Parent and Parent Subsidiaries who
participate in such plan or arrangement.
(d) Newco shall, or shall cause its Subsidiaries to, (i) waive
all limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Affected Employees under any welfare benefit plan of Newco or its Subsidiaries
in which such Affected Employees may be eligible to participate after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such Affected Employees and that have not been satisfied
as of the Closing Date under any welfare benefit plan maintained for the
Affected Employees immediately prior to the Closing Date, and (ii) provide each
Affected Employee with credit for any co-payments and deductibles paid prior to
the Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare benefit plans that such Affected Employees are
eligible to participate in after the Closing Date.
(e) Except as may be limited by any applicable law or
collective bargaining agreement, Newco and its Subsidiaries shall neither be
required to or prevented from merging the Company's benefit plans, agreements,
or arrangements into Newco or its Subsidiaries benefit plans, agreements, or
arrangements or from replacing the Company's benefit plans, agreements or
arrangements with Newco or its Subsidiaries benefit plans, agreements or
arrangements.
(f) At the Merger Effective Time each stock option outstanding
pursuant to the Company's 1992 Stock Option Plan (the "Option"), whether or not
then exercisable, shall be cancelled and shall only entitle the holder thereof
to receive an amount in cash from the Company equal to the result of multiplying
(i) the number of shares of Company Common Stock previously subject to such
Option by (ii) the excess of the Cash Consideration over the per Share exercise
price of such Option. The Company shall use its reasonable efforts to take all
action necessary to effectuate the foregoing provision.
Section 7.10 No Solicitations. (a) From and after the date
hereof, the Company (i) shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any of its Representatives to, directly or
indirectly, (A) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any inquiries or
the making of any offer or proposal (including, without limitation, any offer or
proposal to its shareholders) which constitutes or may reasonably be expected to
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lead to an Acquisition Proposal (as defined herein) from any third party or (B)
engage in any discussions or negotiations or furnish any confidential
information or data to any person or group relating to any Acquisition Proposal
and (ii) shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties with respect to any
Acquisition Proposal; provided, however, that if, at any time prior to the date
on which the Company Shareholders' Approval has been obtained (the "Applicable
Period"), the Board of Directors of the Company (A) determines in good faith,
based upon the written opinion of outside counsel that such Board's fiduciary
duties under applicable law with respect to the Acquisition Proposal require it
to do so in order to act in a manner consistent with its fiduciary duties to the
Company shareholders under applicable law and (B) concludes in good faith based
on the written advice of its financial advisors that the person or group making
such Acquisition Proposal has adequate sources of financing to consummate such
Acquisition Proposal and that such Acquisition Proposal, if consummated as
proposed, is materially more favorable to the Company shareholders from a
financial point of view than the Merger, the Company may, in response to an
Acquisition Proposal which was not solicited by it or which did not otherwise
result from a breach of this Section 7.10(a), and subject to providing prior
written notice of its decision to take such action to Parent in compliance with
Section 7.10(b), (x) furnish to such third party information with respect to
itself and its business, properties and assets pursuant to a customary
confidentiality agreement on terms not in the aggregate materially more
favorable to such third party than the terms contained in the Confidentiality
Agreement and (y) engage in discussions or negotiations regarding such
Acquisition Proposal. As used herein, "Acquisition Proposal" shall mean any
proposal or offer (other than by another party hereto) for a tender or exchange
offer, merger, consolidation or other business combination involving the Company
or any of its material Subsidiaries or any proposal to acquire in any manner,
directly or indirectly, 10% or more of the shares of capital stock in or a
substantial portion of the assets of the Company or any of its material
Subsidiaries.
(b) Except as expressly permitted by this Section 7.10,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, in any manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the Merger or
this Agreement, (ii) fail to reaffirm such approval or recommendation upon
Parent's request, (iii) approve or recommend any Acquisition Proposal or (iv)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") relating to any Acquisition Proposal. Notwithstanding the foregoing,
in the event that during the Applicable Period the Board of Directors of the
Company (i) determines in good faith based upon the written opinion of outside
counsel that such Board's fiduciary duties under applicable law with respect to
the Acquisition Proposal require, to do so in order to act in a manner
consistent with its fiduciary duties to the Company shareholders and (ii)
concludes in good faith based on the written advice of its financial advisors
that the person or group making such Acquisition Proposal has adequate sources
of financing to consummate such Acquisition Proposal and that such Acquisition
Proposal, if consummated as proposed, is materially more favorable to the
Company shareholders from a financial point of view than the Merger, such Board
of Directors may terminate this Agreement pursuant to Section 9.1(e) (and
concurrently with or after such termination, if it so chooses, cause the Company
to enter into any Acquisition Agreement with respect to any Acquisition
Proposal), but only at a time that is (x) during the Applicable Period and is
after the fifth business day following receipt by Parent of written notice
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advising Parent that the Board of Directors of the Company is prepared to accept
an Acquisition Proposal, specifying the material terms and conditions of such
Acquisition Proposal and identifying the person making such Acquisition
Proposal, (y) after the Company and its respective financial and legal advisors
have given Parent a reasonable opportunity during such five-day period following
receipt by Parent of such written notice to make such adjustments in the terms
and conditions of this Agreement as would enable the Company to proceed with the
Merger or other transactions contemplated hereby on such adjusted terms, and (z)
after the Company and such advisors have negotiated in good faith with Parent
with respect to any such adjustments; provided that the Company's ability to
terminate this Agreement pursuant to Section 9.1(e) is conditioned upon the
concurrent payment by the Company to Parent of any amounts owed by it pursuant
to Section 9.3(c).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.10, the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Acquisition Proposal, the material terms and conditions of such request or
Acquisition Proposal and the identity of the person making such request or
Acquisition Proposal. The Company shall keep Parent informed of the status and
details (including amendments or proposed amendments) of any such request or
Acquisition Proposal.
(d) Nothing contained in this Section 7.10 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2 promulgated under the Exchange Act or from making any disclosure
to its shareholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law.
Section 7.11 Boards of Directors.
(a) Newco Board. Newco shall take such action as may be
necessary to appoint (i) all members serving on the Parent Board of Directors
immediately prior to the Effective Time, (ii) the current Chief Executive
Officer of the Company and (iii) one additional person presently serving as an
outside director of the Board of Directors of the Company on the date hereof, as
determined by Parent, to serve on the Newco Board of Directors following the
Effective Time.
(b) Advisory Board. Promptly following the Merger Effective
Time, Newco shall cause the Surviving Entity to establish an advisory board (the
"New York Advisory Board") which shall be maintained for at least two years and
which shall be comprised of up to 12 persons who were, immediately prior to the
Merger Effective Time, serving as non-executive members of the Company's Board
of Directors, who are not appointed to serve on Newco Board of Directors and who
are willing to serve in such capacity on the New York Advisory Board. The
function of the New York Advisory Board shall be to advise the Surviving
Entity's Board of Directors with respect to general business as well as
opportunities and activities in the State of New York and to maintain and
develop customer relationships in the State of New York. The New York Advisory
Board shall meet no less frequently than three times a year. The members of the
New York Advisory Board shall each be named to serve as members thereof for a
period of two years; provided, however, that Newco shall have no obligation to
cause the Surviving Entity to elect or appoint, and may cause the Surviving
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Entity to remove, any member of the New York Advisory Board if Newco reasonably
determines that such member has a conflict of interest that compromises such
member's ability to serve effectively as a member of the New York Advisory Board
or any cause exists that otherwise would allow for removal of such person as a
director of the Surviving Entity if such person were a member of the Surviving
Entity's Board of Directors.
(c) National Grid USA Board. For a period of two years
commencing at the Effective Time, the current Chief Executive Officer of the
Company shall serve as Chairman of the Board of Directors of National Grid USA
and two other current executive officers of the Company as determined by Parent
will serve on the Board of Directors of National Grid USA.
Section 7.12 Charitable Contributions. The parties agree that
provision of charitable contribution and community support within the region
served by the Company serves a number of important goals. After the Merger
Effective Time, Newco intends to cause the Surviving Entity to provide
charitable contributions and community support within the region served by the
Company at annual levels substantially comparable to the annual level of
charitable contributions and community support provided, directly or indirectly,
by the Company and its public utility subsidiary within the region served by the
Company during 1999.
Section 7.13 Anti-Takeover Statutes. If any "fair price,"
"moratorium," "business combination," "control share acquisition" or other form
of anti-takeover statute or regulation shall become applicable to the Merger or
any other transaction contemplated hereby, each of Parent and the Company and
the members of their respective boards of directors shall grant such approvals
and take such actions consistent with their fiduciary duties and in accordance
with applicable law as are reasonably necessary so that the Merger and such
other transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the Merger and other
transactions contemplated hereby.
Section 7.14 Conveyance Taxes. The Company, Parent and Newco
shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
Taxes, any transfer, recording, registration and other fees, and any similar
Taxes ("Conveyance Taxes") which become payable in connection with the
transactions contemplated by this Agreement that are required or permitted to be
paid on or before the Merger Effective Time. Newco shall pay, without deduction
or withholding from any amount payable to the holders of any shares of the
Company Common Stock, any such Conveyance Taxes which become payable in
connection with the transactions contemplated by this Agreement, on behalf of
the shareholders of the Company.
Section 7.15 Expenses. Subject to Section 9.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that those expenses incurred in connection with printing the Proxy/Registration
Statement, the filing fee relating to the Proxy/Registration Statement and for
expert witnesses retained for the purpose of advising and supporting approvals
where both Company and Parent have filed for approval from the same regulator,
shall be shared equally by the Company and Parent.
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Section 7.16 Further Assurances. Each party shall, and shall
cause its Subsidiaries to, execute such further documents and instruments and
take such further actions as may reasonably be requested by any other party in
order to consummate the Merger in accordance with the terms hereof. Parent and
Newco shall, and shall cause their respective Subsidiaries to, execute such
further documents and instruments and take such further actions as may
reasonably be requested by any other party in order to consummate the Scheme in
accordance with the terms hereof, provided that Parent and Newco may amend the
terms of the Scheme as they deem reasonably necessary or desirable, provided
further that if any such amendment would have a material adverse effect on the
benefits of the Merger to the shareholders of the Company, such amendment will
require the consent of the Company.
Section 7.17 Restructuring of Transactions. It may be
preferable to effectuate a business combination between Parent and the Company
by means of an alternative structure to the Merger and the Scheme. Accordingly,
if, prior to satisfaction of the conditions contained in Article VIII hereto,
Parent proposes the adoption of an alternative structure that otherwise
substantially preserves for Parent, the Company and the holders of the Company
Common Stock the economic and Tax benefits of the transactions contemplated
thereby then the parties shall use their respective best efforts to effect a
business combination among themselves by means of a mutually agreed upon
structure other than the Merger that so preserves such benefits, including
without limitation, a structure that does not require consummation of the
Scheme. In particular, in the event that Parent determines that approval of the
Scheme is uncertain and it waives the condition set forth in Section 8.2(h),
Parent and the Company agree to adopt an alternative business combination
transaction that does not require consummation of the Scheme. In the event that
the parties adopt a restructured transaction, the Agreement shall be revised to
reflect such transaction as determined necessary by the parties hereto and prior
to closing any such restructured transaction, all material third party and
Governmental Authority declarations, filings, registrations, notices,
authorizations, consents or approvals necessary for the effectuation of such
alternative business combination shall have been obtained and all other
conditions to the parties' obligations to consummate the Merger and other
transactions contemplated hereby, as applied to such alternative business
combination, shall have been satisfied or waived.
Section 7.18 Integration Team. As soon as practicable after
the date hereof, Parent and Company shall, subject to limitations imposed by
applicable law, create an integration steering team with representatives
appointed by the CEOs of Parent and the Company, and chaired by Parent. The
integration steering team shall be responsible for facilitating the integration
of the two companies as subsidiaries of Newco.
Section 7.19 Newco Ordinary Shares. Newco agrees that the
Newco Ordinary Shares delivered by it on the Closing Date shall be validly
issued and fully paid.
Section 7.20 ADR Depositary Agreement. Newco, Merger Sub and
the ADR Depositary shall enter into the ADR Depositary Agreement in a form
satisfactory to Newco, Parent and the Company.
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ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions, except, to the extent permitted
by applicable law, that such conditions may be waived by the parties in writing
pursuant to Section 9.5:
(a) Shareholders' Approvals. The Parent Shareholders'
Merger Approval and the Company Shareholders' Approval shall have been obtained.
(b) No Injunction. No court of competent jurisdiction or other
competent Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making illegal or
otherwise restricting, preventing or prohibiting consummation of the Scheme, the
Merger or other transactions contemplated hereby.
(c) Proxy/Registration Statement. The Proxy/Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness shall have been
issued and remain in effect.
(d) Listing of Shares. The U.K. Listing Authority shall have
agreed to admit to the Official List of the U.K. Listing Authority (subject to
allotment) (i) the Newco Ordinary Shares represented by the Newco ADSs issuable
in the Merger pursuant to Article II, and (ii) the Newco Ordinary Shares issued
pursuant to the Scheme and such agreement shall not have been withdrawn, and the
Newco ADSs issuable in the Merger pursuant to Article II shall have been
approved for listing on the NYSE upon official notice of issuance.
(e) Statutory Approvals. (i) Either (x) the sale by the
Company of its Nuclear Facilities (the "Nuclear Sale") shall have closed, the
Company shall have received the purchase price therefor, and conforming license
amendments shall have been issued by NRC to reflect the change in ownership or
(y) Parent and the Company shall have agreed to an alternative to the Nuclear
Sale in accordance with the provisions of Section 6.4 hereof with respect to
which all required approvals, authorizations and consents from Governmental
Authorities, including, without limitation, any necessary order of the NRC
consenting to the transfer of the operating licenses for the Company's Nuclear
Facilities and any necessary conforming license amendments, have been received.
(ii) Each of (x) the Company Required Statutory
with respect to the approval of the New York Public Service Commission,
Approvals, including, confirmation that PowerChoice will remain in effect in
accordance with its terms in all material respects following consummation
of the Merger, (y) the Parent Required Statutory Approvals, and (z) any
declaration, filing, registration with, or notice to or authorization,
consent or approval of any Governmental Authority required in connection
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with (A) the Nuclear Sale, as well as a determination by the New York Public
Service Commission of the level of recovery of stranded costs resulting from the
Nuclear Sale or (B) any alternative arrangement to the Nuclear Sale agreed to in
accordance with the provisions of Section 6.4 hereof (collectively, the "Nuclear
Approvals"), shall have been obtained at or prior to the Merger Effective Time,
such approvals shall have become Final Orders (as defined below), and such Final
Orders shall not, individually or in the aggregate, impose terms or conditions
which (x) with respect to the Company Required Statutory Approvals and the
Nuclear Approvals, could reasonably be expected to have a Company Material
Adverse Effect taking into account the allowed recovery of any stranded costs
from the Nuclear Sale, (y) with respect to the Parent Required Statutory
Approvals, could reasonably be expected to have a Parent Material Adverse Effect
or (z) with respect to the Company Required Statutory Approvals, the Parent
Required Statutory Approvals and the Nuclear Approvals, could reasonably be
expected to materially impair the ability of the parties to complete the Merger
and the transactions contemplated hereby. A "Final Order" means action by the
relevant regulatory authority which has not been reversed, stayed, enjoined, set
aside, annulled or suspended, with respect to which any waiting period
prescribed by law before the transactions contemplated hereby may be consummated
has expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been satisfied.
(f) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have otherwise expired.
Section 8.2 Conditions to Obligation of Newco and Parent to
Effect the Merger. The obligation of Parent and Newco to effect the transactions
contemplated by this Agreement shall be further subject to the satisfaction, on
or prior to the Closing Date, of the following conditions, except as may be
waived by Parent and Newco in writing pursuant to Section 9.5:
(a) Performance of Obligations of the Company. The Company
(and/or the appropriate Company Subsidiaries, as applicable) shall have
performed in all material respects its agreements and covenants contained in or
contemplated by this Agreement which are required to be performed by it at or
prior to the Merger Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
(i) on and as of the date hereof and (ii) on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except for representations and warranties that expressly
speak only as of a specific date or time which need only be true and correct as
of such date or time), except where the failure of representations or warranties
to be true and correct could not, individually or in the aggregate, be
reasonably expected to result in a Company Material Adverse Effect. For purposes
of this Section 8.2(b), qualifications in any representation or warranty as to
"materiality" or a "Company Material Adverse Effect" shall be disregarded.
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(c) Closing Certificates. Parent and Newco shall have received
a certificate signed by the chief financial officer of the Company, dated the
Closing Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 8.2(a) and Section 8.2(b) have been satisfied.
(d) Tax Opinion. Parent and Newco shall have received an
opinion from PricewaterhouseCoopers, counsel to Parent and Newco, in form and
substance reasonably satisfactory to Parent and Newco, dated as of the Closing
Date, substantially to the effect that the Merger, together with the Scheme will
be treated for United States federal income tax purposes as a transaction
described in Section 351 of the Code, and no gain or loss will be recognized by
Parent or Newco as a result thereof. In rendering such opinion,
PricewaterhouseCoopers may require and rely upon representations reasonably
satisfactory to PricewaterhouseCoopers contained in certificates of officers of
the Company, Parent, Newco and Merger Sub.
(e) Company and Parent Required Consents. All material Company
Required Consents and Parent Required Consents shall have been obtained and
OFGEM shall not have imposed any modifications to any conditions of the license
held by National Grid Company plc under the Electricity Act 1989 that would
reasonably be expected to have a Parent Material Adverse Effect.
(f) Affiliate Agreements. Newco shall have received Affiliate
Agreements, duly executed by each "Affiliate" of the Company, substantially in
the form of Exhibit 7.7, as provided in Section 7.7.
(g) Permits. To the extent that the continued lawful
operations of the business of the Company or any Company Subsidiary after the
Merger requires that any license, permit (including, without limitation,
Environmental Permits) or other governmental approval be transferred to Parent
or any Parent Subsidiary or issued to Parent or any Parent Subsidiary, such
licenses, permits or other authorizations shall have been transferred or
reissued to Parent or such Parent Subsidiary at or before the Closing Date,
except where the failure to transfer or reissue such licenses, permits or other
authorizations would not have a Company Material Adverse Effect immediately
after the Merger Effective Time.
(h) Court Sanction. The Court shall have sanctioned the
Scheme on terms contemplated by this Agreement, and the Parent Shareholders'
Scheme Approvals shall have been obtained.
Section 8.3 Conditions to Obligation of The Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5:
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(a) Performance of Obligations of Parent and Newco. Parent
(and/or the appropriate Parent Subsidiaries, as applicable) and Newco shall have
performed in all material respects its agreements and covenants contained in or
contemplated by this Agreement which are required to be performed by it at or
prior to the Merger Effective Time.
(b) Representations and Warranties. The representations and
warranties of Parent, Newco and Merger Sub set forth in this Agreement shall be
true and correct (i) on and as of the date hereof and (ii) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except for representations and
warranties that expressly speak only as of a specific date or time which need
only be true and correct as of such date or time), except where the failure of
representations or warranties to be true and correct could not, individually or
in the aggregate, be reasonably expected to result in a Parent Material Adverse
Effect. For purposes of this Section 8.3(b), qualifications in any
representation or warranty as to "materiality" or a "Parent Material Adverse
Effect" shall be disregarded.
(c) Closing Certificates. The Company shall have received a
certificate signed by the chief financial officer of Parent and Newco, dated the
Closing Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 8.3(a) and Section 8.3(b) have been satisfied.
(d) Tax Opinion. The Company shall have received an opinion
from Bryan Cave LLP, special tax counsel to the Company, in form and substance
reasonably satisfactory to the Company, dated as of the Closing Date,
substantially to the effect that the Merger, together with the Scheme will be
treated for United States federal income tax purposes as a transaction described
in Section 351 of the Code and no gain or loss will be recognized by the Company
pursuant to the Merger and no gain or loss will be recognized by shareholders of
the Company who receive solely Newco ADSs pursuant to the Merger. In rendering
such opinion, Bryan Cave LLP may require and rely upon representations
reasonably satisfactory to Bryan Cave LLP contained in certificates of officers
of the Company, Parent, Newco and Merger Sub.
(e) Parent Required Consents. All material Parent
Required Consents, the failure of which to obtain would have a Parent Material
Adverse Effect, shall have been obtained.
(f) Legal Opinion. The Company shall have received an opinion
from CMS Cameron McKenna, counsel to Parent, in form and substance reasonably
satisfactory to the Company, dated as of the Closing Date, substantially to the
effect that the Newco Ordinary Shares represented by the ADSs issued as the ADS
consideration are validly issued and fully paid.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date, whether before or after approval by the
shareholders of the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of
Newco, the Company and Parent;
(b) by either Parent or the Company:
(i) if any state or federal law, order, rule or
regulation is adopted or issued, which has the effect, as supported by
the written opinion of outside counsel for such party, of prohibiting
the Merger, or by Parent or the Company, if any court of competent
jurisdiction in the United States or any state shall have issued an
order, judgment or decree permanently restraining, enjoining or
otherwise prohibiting the Merger, and such order, judgment or decree
shall have become final and nonappealable;
(ii) by written notice to the other parties, if the
Merger Effective Time shall not have occurred on or before December 31,
2001 (the "Initial Termination Date"); provided, however, that the
right to terminate the Agreement under this Section 9.1(b)(ii) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure
of the Merger Effective Time to occur on or before such date; provided,
further, that (A) if on the Initial Termination Date any of the
conditions to the Closing set forth in Section 8.1(e) shall not have
been fulfilled but (x) to the extent that the condition set forth in
Sections 8.1(e)(i) and 8.1(e)(ii) (with respect to the Nuclear
Approvals only) shall not have been fulfilled, the Company shall have
entered into a binding definitive agreement for the Nuclear Sale (the
"Nuclear Sale Agreement") or satisfactory alternative arrangements
shall have been reached pursuant to Section 6.4 and (y) all other
conditions to the Closing shall be fulfilled or shall be capable of
being fulfilled, then the Initial Termination Date shall be extended to
March 31, 2002 (the "Extended Termination Date"), and (B) if as of the
Extended Termination Date, the conditions to Closing set forth in
Section 8.1(e)(ii) (with respect to the Nuclear Approvals only) shall
not have been fulfilled but all other conditions to the Closing shall
be fulfilled or shall be capable of being fulfilled and the Nuclear
Sale Agreement remains in effect, then the Initial Termination Date
shall be extended to August 31, 2002;
(iii) by written notice to the other parties, if
Parent Merger Shareholders' Approval shall not have been obtained at a
duly held Parent Merger Meeting, as the case may be, including any
adjournments thereof, or the Company Shareholders' Approval shall not
have been obtained at a duly held Company Meeting, including any
adjournments thereof;
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(c) by Parent, by written notice to the Company, if (i) there
shall have been any breach of any representation or warranty, or any breach of
any covenant or agreement of the Company hereunder, which breaches individually
or in the aggregate would result in a Company Material Adverse Effect, and such
breach shall not have been remedied within 20 business days after receipt by the
Company of notice in writing from Parent, specifying the nature of such breach
and requesting that it be remedied, or Parent shall not have received adequate
assurance of a cure of such breach within such 20 business-day period or (ii)
the Board of Directors of the Company shall withdraw or modify in any manner
adverse to Parent its approval of this Agreement and the transactions
contemplated hereby or its recommendation to its shareholders regarding approval
of this Agreement, the Merger and other transactions contemplated hereby;
(d) by the Company, by written notice to Parent, if (i) there
shall have been any breach of any representation or warranty, or any breach of
any covenant or agreement of Parent or Newco hereunder, which breaches
individually or in the aggregate would result in a Parent Material Adverse
Effect, and such breach shall not have been remedied within 20 business days
after receipt by Parent and Newco of notice in writing from the Company,
specifying the nature of such breach and requesting that it be remedied, or the
Company shall not have received adequate assurance of a cure of such breach
within such 20 business-day period, (ii) the Board of Directors of Parent shall
withdraw or modify in any manner adverse to the Company its approval of this
Agreement and the transactions contemplated hereby or its recommendation to its
shareholders regarding approval of this Agreement, the Scheme (if it remains a
condition under Section 8.2(h) hereof) and the Merger and other transactions
contemplated hereby or (iii) Newco shall fail to deliver or cause to be
delivered the Merger Consideration to the ADR Depositary required pursuant to
Section 2.3 at a time when all other conditions to Newco's obligations to close
have been satisfied or waived in writing by Newco; or
(e) by the Company in accordance with Section 7.10(b);
provided, that, in order for the termination of this Agreement pursuant to this
paragraph (e) to be deemed effective, the Company shall have complied with all
provisions of Section 7.10, including the notice provisions therein, and with
applicable requirements, including the payment of the Termination Fee, of
Section 9.3(c).
Section 9.2 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent pursuant to Section 9.1, there
shall be no liability on the part of either the Company or Parent or Newco or
their respective officers or directors hereunder, except that the agreement
contained in the last sentence of Section 7.1, Section 7.14, Section 9.3,
Section 10.2 and Section 10.9 shall survive any such termination.
Section 9.3 Termination Fee; Expenses.
(a) In the event that this Agreement is terminated (i) by the
Company pursuant to Section 9.1(d)(ii) as a result of an action by the Board of
Directors of the Parent prior to obtaining the Parent Merger Shareholders'
Approval or (ii) by Parent pursuant to Section 9.1(c)(ii) as a result of an
action by the Board of Directors of the Company prior to obtaining the Company
Shareholders' Approval, then (A) in the event of termination pursuant to Section
9.1(c)(ii), the Company shall pay to Parent and (B) in the event of termination
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pursuant to Section 9.1(d)(ii), Parent shall pay to the Company, (promptly but
in each case no later than five (5) business days after the date of termination
of this Agreement) by wire transfer of same day funds, a termination fee of
$150,000,000, plus, in each case, all of the terminating party's documented
out-of-pocket expenses and fees incurred by the party (including, without
limitation, fees and expenses payable to all legal, accounting, financial, and
other professionals arising out of, in connection with or related to the
transactions contemplated by this Agreement) not in excess of $10,000,000 (the
"Out-of-Pocket Expenses").
(b) In the event that (i) this Agreement is terminated by the
Company pursuant to Section 9.1(e), or (ii) there shall have been an Acquisition
Proposal involving the Company or any of its Affiliates that has not been
withdrawn and thereafter this Agreement is terminated by Parent or the Company
in the circumstances described in Section 9.1(b)(ii) or (b)(iii) or in
accordance with Section 9.1(c)(i) and, in the case of this clause (ii) only, a
definitive agreement with respect to such Acquisition Proposal is executed
within two years of such termination, then the Company shall pay Parent a
termination fee (the "Termination Fee") equal to $150,000,000 in cash plus the
Out-of-Pocket Expenses of Parent; provided however, that, if such termination
has occurred pursuant to Section 9.1(b)(ii) solely as a result of the failure to
meet conditions set forth in Sections 8.1(e)(i) and (ii) with respect to the
Nuclear Sale and Nuclear Approvals only, then the Company shall pay the
Termination Fee plus the Out-of-Pocket Expenses of Parent if a definitive
agreement with respect to such Acquisition Proposal is executed within one year
of such termination; provided further that there is no arrangement or
understanding between the Company and the party making the Acquisition Proposal
at the time of such termination.
(c) The parties agree that the agreements contained in this
Section 9.3 are an integral part of the transactions contemplated hereby and
constitute liquidated damages and not a penalty. The parties further agree that
if any party is or becomes obligated to pay a termination fee pursuant to
Sections 9.3(a) and (b), the right to receive such termination fee shall be the
sole remedy of the other party with respect to the facts and circumstances
giving rise to such payment obligation. If this Agreement is terminated by a
party as a result of a willful breach of a representation, warranty, covenant or
agreement by the other party, the non-breaching party may pursue any remedies
available to it at law or in equity and shall be entitled to recover any amounts
thereunder. Notwithstanding anything to the contrary contained in this Section
9.3, if one party fails to promptly pay to the other any fee or expense due
under this Section 9.3, in addition to any amounts paid or payable pursuant to
such Section, the defaulting party shall pay the costs and expenses (including
legal fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime rate of
Citibank, N.A. from the date such fee was required to be paid.
Section 9.4 Amendment. This Agreement may be amended by the
Boards of Directors of the parties hereto, at any time before or after obtaining
the Company Shareholders' Approval, the Parent Shareholders' Approvals and prior
to the Merger Effective Time, but after such approvals, only to the extent
permitted by applicable law. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
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Section 9.5 Waiver. At any time prior to the Merger Effective
Time, the parties hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
law. Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed by a duly
authorized officer of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and
Warranties. No representations or warranties in this Agreement shall survive the
Merger Effective Time, except as otherwise provided in this Agreement.
Section 10.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) when sent by reputable overnight courier service or (c) when
telecopied (which is confirmed by copy sent within one business day by a
reputable overnight courier service) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(i) If to the Company, to
Niagara Mohawk Holdings, Inc.
300 Erie Boulevard West
Syracuse, New York 13202
Attn: William Edwards
Senior Vice-President and Chief
Financial Officer
Telephone: 315-474-1511
Facsimile: 315-428-3406
with a copy to
Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Janet Geldzahler, Esq.
Telephone: 202-956-7695
Facsimile: 202-293-6330
and
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(ii) if to Parent, to
National Grid Group plc
National Grid House
15 Marylebone Road
London NW1 5JD
United Kingdom
Attn: Stephen Box
Group Finance Director
Telephone: 011-44-20-7-312-5600
Facsimile: 011-44-20-7-312-5655
and
National Grid USA
25 Research Drive
Westborough, MA 01582
Attn: Richard P. Sergel
President and Chief Executive Officer
Telephone: 508-389-2000
Facsimile: 508-366-5498
with a copy to
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
Attn: Steven H. Davis, Esq.
and Thomas J. Moore, Esq.
Telephone: 212-424-8000
Facsimile: 212-424-8500
and
CMS Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD
United Kingdom
Attn: Sean M. Watson, Esq.
Telephone: 011-44-20-7-367-3000
Facsimile: 011-44-20-7-367-2000
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(iii) If to Newco, to
New National Grid Limited
15 Marylebone Road
London NW1 5JD
United Kingdom
Attn: Stephen Box
Director
Telephone: 011-44-20-7-312-5600
Facsimile: 011-44-20-7-312-5655
and
National Grid USA.
25 Research Drive
Westborough, MA 01582
Attn: Richard P. Sergel
President and Chief Executive Officer
Telephone: 508-389-2000
Facsimile: 508-366-5498
with a copy to
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
Attn: Steven H. Davis, Esq.
and Thomas J. Moore, Esq.
Telephone: 212-424-8000
Facsimile: 212-424-8500
and
CMS Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD
United Kingdom
Attn: Sean M. Watson, Esq.
Telephone: 011-44-20-7-367-3000
Facsimile: 011-44-20-7-367-2000
(iv) If to Merger Sub, to
Grid Delaware, Inc.
25 Research Drive
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Westborough, MA 01582
Attn: Richard P. Sergel
President
Telephone: 508-389-2000
Facsimile: 508-366-5498
Section 10.3 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof other than the Confidentiality Agreement and (b) shall not be
assigned by operation of law or otherwise.
Section 10.4 Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Reference to any "person" shall include reference to any
predecessor or successor of such person. Reference to any United States legal
term for any action, remedy, method of judicial proceeding, legal document,
legal status, court, official or legal concept or thing shall in respect of any
jurisdiction other than the United States be deemed to include what most nearly
approximates in that jurisdiction to the United States legal term.
Section 10.5 Counterparts; Effect. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
Section 10.6 Parties' Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and, except
for the rights of Indemnified Parties as set forth in Section 7.5, nothing in
this Agreement, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS EXECUTED IN AND TO BE FULLY PERFORMED IN SUCH STATE, WITHOUT GIVING
EFFECT TO ITS CONFLICTS OF LAW RULES OR PRINCIPLES.
Section 10.8 Submission to Jurisdiction; Waivers. Each of
Parent and the Company irrevocably agree that any legal action or proceeding
with respect to this Agreement or for recognition and enforcement of any
judgment in respect hereof brought by another party hereto or its successors or
assigns may be brought and determined in the Supreme Court of the State of New
York in New York County or in the United States District Court for the Southern
District of New York, and each of Newco, Parent and the Company hereby
irrevocably submits
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with regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction of the
aforesaid courts. Any service of process to be made in such action or proceeding
may be made by delivery of process in accordance with the notice provisions
contained in Section 10.2. Each of Newco, Parent and the Company hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) the defense of sovereign immunity, (b) any claim that it is not
personally subject to the jurisdiction of the above- named courts for any reason
other than the failure to serve process in accordance with this Section 10.8,
(c) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (d) to the fullest extent
permitted by applicable law that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
Section 10.9 Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement was not performed in accordance with its specified
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 10.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its respective officer thereunto duly authorized as of
the date first written above.
NATIONAL GRID GROUP PLC
By: /s/ Richard P. Sergel
----------------------
Its: Group Director, North America
NIAGARA MOHAWK HOLDINGS, INC.
By: /s/ William E. Davis
---------------------
Its: Chairman and Chief Executive Officer
NEW NATIONAL GRID LIMITED
By: /s/ Richard P. Sergel
----------------------
Its: Director
GRID DELAWARE, INC.
By: /s/ Richard P. Sergel
----------------------
Its: President
